Shares of Uber Technologies fell after the company issued a modest adjusted profit forecast and said litigation costs weighed on third-quarter profits, overshadowing strong growth in its rideshare and delivery businesses.
The San Francisco company said in a statement Tuesday that operating income for the three months ended Sept. 30 was $1.11 billion. Analysts had expected $1.62 billion, according to data compiled by Bloomberg. Chief Financial Officer Prashanth Mahendra Raja said in prepared remarks that part of the reason was undisclosed legal and regulatory issues. Adjusted earnings before interest, taxes, depreciation and amortization came in at $2.26 billion, slightly below expectations.
Uber also said fourth-quarter adjusted EBITDA would be between $2.41 billion and $2.51 billion, with the midpoint below the average analyst estimate of $2.49 billion.
Uber shares fell nearly 10% after the market opened in New York, paring some of the losses, the biggest intraday decline since Dec. 5, 2024. The stock has risen 65% since the beginning of the year through Monday’s close, significantly outperforming the S&P 500 index.
The earnings results and outlook upended an otherwise upbeat report that included Uber posting its strongest quarterly growth since late 2023. Customers are ordering more rides and deliveries than expected, showing that the company’s efforts to offer a broader range of services in more locations are paying off.
Total bookings in the third quarter (a closely watched metric that includes ride-hailing, delivery orders, driver and merchant revenue but not tips) rose 21% to $49.7 billion, beating analysts’ expectations. CEO Dara Khosrowshahi said in prepared remarks that strong summer travel activity boosted international demand, but “increased adoption of lower-cost products and easing insurance pressure” accelerated U.S. travel growth.
This led to a significant increase in overall ridership in the third quarter, which Uber says was the largest increase in the company’s history, excluding the post-pandemic recovery.
The company expects this momentum to continue into its busiest season. Bookings forecast for the fourth quarter of $52.25 billion to $53.75 billion also exceeded expectations, representing growth of 18% to 22%, according to Bloomberg calculations.
The market’s harsh reaction contrasted with largely positive comments from Wall Street analysts.
William Blair researchers said Uber “remains well-positioned, with adjusted EBITDA expected to continue expanding, particularly in 2025-2026, coupled with continued free cash flow expansion.” Jefferies analysts wrote that the report supports confidence in the sustainability of mid-teens booking growth and EBITDA growth of more than 20% through 2027.
These latest results could affect expectations for other ride-hailing and food delivery companies as investors closely monitor cues about the health of U.S. consumers. Ride-sharing company Lyft and delivery rival DoorDash are both scheduled to report earnings after the close of trading on Wednesday. Lyft stock fell as much as 6.8%, and DoorDash also fell as much as 2.3% before erasing its losses.
Starting in the first quarter of next year, Uber plans to change the way it reports its profitability, moving from reporting adjusted operating profit to adjusted EBITDA. When it presents its outlook for the first quarter, it will also move on to forecasting adjusted earnings per share.
Mahendra-Raja said the new format does not change the company’s three-year outlook. “We are well positioned to deliver on our long-term financial commitments while also making strategic investments to adequately fund our growth initiatives,” he said in his remarks.
Khosrowshahi on Tuesday publicly outlined for the first time Uber’s six strategic areas of focus for growth over the medium term. These include expanding ride-sharing and delivery businesses, building hybrid platforms with both humans and autonomous vehicles, offering multiple types of gig work, and developing generative artificial intelligence.
Uber has made public progress on these efforts, including signing more than a dozen self-driving car partnerships, creating an AI labeling business for enterprises, and launching new digital tasks for drivers. The company only started sharing details of its vision earlier this year, but even then, its comments were directed only to employees.
Mahendra-Raja said Uber sold about $1.4 billion of the $10.3 billion it invested in other companies. Proceeds will be allocated to priorities such as launching more robotaxis around the world.
Khosrowshahi said on a post-earnings conference call with analysts that the bet on self-driving cars won’t pay off for years because the company is working to make more self-driving cars available to customers, something Uber has previously warned.
“Every new product we bring to market starts at a loss and no profit, and the pattern is the same every time,” he said, calling this a “barbell strategy” for Uber’s new bet. “When liquidity and confidence improve, consumer demand also increases and their willingness to pay for improvements increases. That’s how we’ve done it 10, 15 times and over and over again.”
Mr. Lunn writes for Bloomberg.
