COVID-19 Restriction Easing... Uber Expands Performance Improvement Margin

Profitability Concerns Eased by Turnaround to Surplus
Increased Synergy Between Mobility and Delivery Sectors
Performance Expected to Rebound This Year as Omicron Impact Subsides

[Asia Economy Reporter Minji Lee] Despite the impact of the Omicron variant virus, Uber, which succeeded in turning a profit, is expected to further increase its performance improvement this year.

On the 13th, Uber's stock price stood at $35.29. Although it announced solid fourth-quarter results on the 9th (local time), it did not show a significant rise as the first-quarter guidance was lower than market expectations.

In the fourth quarter, Uber's gross bookings reached $25.9 billion, up 51% year-over-year, and net revenue was $5.8 billion, an 83% increase compared to a year ago. Both figures significantly exceeded market expectations of $25.9 billion and $5.8 billion, respectively. Following the previous quarter, Uber continued its profitability, achieving a net income of $892 million, reflecting valuation gains from Grab and Aurora. The number of active customers grew 27% year-over-year to 118 million. The number of rides reached 17.7 billion, recovering to 93% of the level in the fourth quarter of 2019, before the COVID-19 pandemic.

By segment, the Mobility segment's gross bookings were $11.3 billion, a 67% increase compared to a year ago. Net revenue grew 55% to $2.3 billion, influenced by demand recovery in the Asia region. The take rate was 20.1%, down 220 basis points (1bp=0.01%p) from the previous quarter. This decline was due to off-season effects and high revenue refunds related to driver reclassification in the UK. Adjusted EBITDA rose $282 million year-over-year to $575 million.

The Delivery segment's gross bookings increased 34% year-over-year to $13.4 billion. Revenue grew 78% to $2.4 billion. The take rate rose significantly to 18%, influenced by accounting changes in some regions. Excluding this, the take rate was around 14%. Adjusted EBITDA was $25 million, marking the first profitability since listing.

With Uber's successful turnaround to profitability, concerns about profitability appear to have been partially alleviated. In the third quarter, the gross bookings from consumers using Uber One reached about 6% of the total, and subscribers purchased with over 50% higher frequency than non-subscribers, with order amounts more than 10% higher. Kyungrok Lee, a researcher at Samsung Securities, explained, "Synergies between business segments are occurring on both the consumer and supplier sides, so once the impact of Omicron subsides, the synergy effect will become more pronounced."

The company provided first-quarter guidance with gross bookings of $25 billion to $26 billion and adjusted EBITDA profit of $100 million to $130 million, both slightly below market expectations. This reflects the assessment that the Omicron variant virus will continue to affect ride volumes from the first quarter. Although the guidance was lower than market estimates, it is analyzed to be better than competitors. Researcher Kyungrok Lee stated, "Competitors' first-quarter guidance was 13% below market expectations, while Uber's was only 5% lower. The Delivery segment continues to record steady top-line growth following the completion of the Drizly acquisition, and the Mobility segment plans to add P2P car sharing services after acquiring Car Next Door, so synergies between the two segments are expected."

Currently, Uber's stock is trading at a 2022 PSR of 3 times, lower than competitors. Yongje Jung, a researcher at Mirae Asset Securities, said, "If COVID-19 restrictions are eased, performance will rebound," and added, "Considering that COVID-19 regulations are gradually being relaxed, especially in Europe, this year's revenue is expected to reach $26.2 billion, a 50% increase compared to a year ago."

This content was produced with the assistance of AI translation services.