Massive Moat, Relentless Growth, and a Bright AV Future — Uber Is Still a Buy
The market still undervalues Uber’s moat, growth runway, and role in the coming robotaxi revolution.
On August 8, Uber Technologies released its second-quarter results and delivered another excellent quarter. Headline numbers surpassed consensus estimates, top-line growth remained stable and strong, margins continued to expand, and cash flows are excellent.
Furthermore, underlying numbers also continue to point in the right direction, with Uber still gaining users at a rapid rate (despite its size), engagement continues to grow, and Uber’s growth initiatives continue to pay off.
In other words, Q2 showed that Uber is still firing on all cylinders, and the company’s numbers tick all the boxes. Therefore, today I want to review the Uber Q2 results, take a close look at its growth drivers, once more delve into its AV (autonomous vehicle/Robotaxi) future, and subsequently update my investment thesis, financial projections, and target price.
Interestingly, the share price reaction post-earnings was mild, with shares practically flat for the week, even as Uber shares are already far from expensive, with autonomous driving concerns among investors still lingering.
Yet, in the meantime, Uber continues to execute brilliantly, and its AV strategy is gaining traction, with recent developments only confirming my conviction in Uber as the long-term AV/Robotaxi winner. Additionally, gross bookings and revenue continue to rise at a high-teens pace (and not expected to slow down), margins are expanding, GAAP profitability is now consistent, and free cash flow is scaling rapidly, reaching over $8 billion over the last twelve months.
And yet shares trade at just 31x this year’s earnings, a PEG of only just above 1x, and 23x TTM FCF.
A bargain and no-brainer? Let’s find out by going over the numbers and considering recent developments!
Uber is ticking all the boxes with its Q2 results!
This quote from management’s Q2 prepared remarks sums up the quarter pretty well:
“Q2 was another exceptional quarter for Uber, with highly profitable growth driven by all-time highs in platform audience and frequency.”
Indeed, Uber pretty much ticked all the boxes with its Q2 results. It continues to see strong and stable demand across its business, fueled by healthy underlying growth dynamics, with its dual growth engine (growing users and engagement) continuing to fire on all cylinders. Subsequently, this strong growth still leads to rapidly increasing operating leverage, with Uber consistently GAAP profitable and steadily turning into a true FCF machine.
Starting with probably the most critical number to investors, Uber continues to deliver extremely impressive growth in its global user base, or its Monthly Active Paying Customers (MAPCs). In Q2, this number tipped over 180 million, reaching a new record high and growing by 15% YoY, which actually shows a slight acceleration compared to recent quarters, which is remarkable at its already huge base. This was the best YoY growth in just over a year.
As shown above, Uber has demonstrated an excellent ability to keep growing its user count at a fairly stable mid-teens rate, which, again, is extremely impressive. For reference, in Q2, the company added a whopping net 10 million MAPCs compared to Q1.
Meanwhile, Uber is not just growing its user base, which is already providing plenty of growth by itself, but each of these users is also using Uber more frequently than ever before, with engagement at an all-time high. In Q2, users averaged 6.1 trips per month, which is up 2% YoY.
A big driver of this continues to be growth in cross-platform users, although the runway here remains significant. For reference, these cross-platform users, those using both delivery and mobility, use Uber much more frequently and have retention rates over 35% higher. As a result, these users also generate over 3x the Gross Bookings and profits, making them extremely favorable.
So, this cross usage drives higher retention, higher engagement, and subsequently higher value. And Uber still has a lot of room to run. Today, still only 1 in 5 users make use of both services! Furthermore, while mobility continues to be the primary source of user acquisition, 30% of mobility users have never tried delivery, and 75% have not yet used Uber’s Grocery & Retail (“G&R”) offering.
Long story short, Uber still has a lot of room to run by simply cross-promoting.
Additionally, Uber is seeing excellent traction with its Uber One subscription. This hit 36 million members in Q2, growing 60% YoY and adding 6 million sequentially, which is a robust performance. Furthermore, retention remains healthy. Once again, these users carry much higher value, already accounting for 40% of total gross bookings.
As Uber expands its subscription business to more countries every quarter and increasingly becomes a critical part in many lives, I expect Uber One’s growth to remain very strong for years to come, driving considerable value through much higher engagement.
Add to that Uber’s immense room for international expansion, and it’s clear Uber still has plenty of levers to pull to keep fueling growth over the decade ahead. In Europe and the Middle East, in particular, Uber’s opportunity remains huge. Gross bookings here are only about half those of the U.S. and Canada, even as the market is twice as big. Therefore, Uber continues to heavily invest in these regions, fueling trip growth of nearly 30% YoY in Q2.
Really, Uber has no lack of room to grow!
Getting our focus back to the Q2 results, it’s worth pointing out that Uber’s supply base (drivers) also grew by 20% in Q2 to 8.8 million.
This is what gives Uber an unmatched size advantage—its massive, reliable driver network ensures faster pickup times, better geographic coverage, and greater service reliability than any competitor can match, reinforcing its moat and making the platform increasingly indispensable for both riders and drivers.
Additionally, as supply outpaces demand, Uber sees less need for driver bonuses to increase availability, which, in turn, drives up margins.
Anyway, this excellent growth in both users and engagement was what drove strong growth in trips in Q2, with this growing by 18% YoY to 3.3 billion.
This remains stable from recent quarters, and remarkably strong considering some macro concerns pressuring consumer spending. Clearly, Uber isn’t feeling much of an impact, which I believe to be a clear indication that Uber really isn’t that economically sensitive.
You see, Uber’s ability to grow steadily despite a softer macro backdrop comes down to the fact that its services have shifted from being a luxury to something closer to a necessity. In its early years, ride-hailing was often treated as an occasional splurge. Today, in many cities and suburbs, it’s part of everyday life, used for commuting, getting to the airport, running errands, or late-night transport. Post-pandemic lifestyle changes, such as lower car ownership among younger people, hybrid work patterns, and denser urban living, have only made this stickier.
Food delivery shows a similar pattern. While it still carries an element of discretion, it’s also heavily relied upon for convenience and logistics—busy parents, elderly users, or corporate orders, for instance. And with Uber Eats expanding into groceries, convenience items, and retail, more of its transactions now fall into categories that hold up even when consumers cut back on dining out.
On top of that, Uber’s global presence and mix of business lines help balance out localized slowdowns—weakness in one market or segment can be offset by strength in another. The result is a business that’s less vulnerable to cyclical swings than many expect.
Back to the Q2 results, this continued strong consumer demand allowed Uber to report healthy gross bookings growth of 18% YoY to $46.8 billion, driven by both its mobility and delivery operations. This remains stable from Q1.
Ultimately, this translated into Q2 revenue of $12.7 billion, up 18% YoY amid a flat take rate. This beat consensus estimates by $230 million and shows good revenue momentum amid strong underlying dynamics and a healthy take rate.
Looking at the performance by operation, delivery impressed me the most in Q2. Uber continues to gain momentum in this market, driven by growing users, engagement, and the success of its latest functionality additions, leading to record delivery volumes and profitability in Q2.
Delivery trips grew by 17%, while gross bookings grew by 20% to $21.7 billion, driven by growing membership adoption and robust G&R growth, as Uber continues to rapidly scale these operations, growing its G&R offering at the fastest rate in three years. Additionally, delivery user growth accelerated for the ninth straight quarter, which is a critical indicator of long-term success and excellent near-term traction. Overall, this led to accelerating growth, as highlighted below.
Most importantly, Uber continues to outgrow the underlying market across all regions and gain market share, as it has done consistently over recent years. As a result, it now holds either the #1 or #2 category position in the vast majority of its operational regions.
Ultimately, this translated into constant currency revenue growth of 23% YoY in Q2 to $4.1 billion, helped by a higher take rate.
Moving to mobility, the company is seeing steady momentum, with growth remaining strong. YoY trip growth was 19% for the fourth straight quarter in Q2, driven by record engagement and a growing user base, offsetting slower price growth. This led to 18% growth in mobility gross bookings to $23.8 billion, indicating a slight loss in momentum here, though underlying dynamics remain strong.
Mainly contributing to the steady loss in momentum is moderating pricing power, as Uber is prioritizing slower pricing growth to boost user satisfaction and underlying growth. As a result, trip growth is actually holding up well, but the value of each trip isn’t growing at a similar rate. This impact is visible below.
Ultimately, this translated into mobility revenue of $7.3 billion, up 18% in constant currency.
Moving on to the bottom-line performance, Uber fully benefited from strong top-line growth, which combined with continued cost discipline, led to record profitability and healthy YoY gains.
Q2 adjusted EBITDA reached a record high of $2.1 billion, up 35% YoY, driven by significant operating leverage and a healthier supply market. This translates into an EBITDA margin of 16.8%, up 180 bps YoY. As visualized below, Uber has been rapidly making progress on profitability, growing its EBITDA margin by over 12 percentage points since 2022, not reporting a single quarter of sequential decline.
Further down the line, Uber reported a GAAP operating income of $1.5 billion, up 82% YoY, and a net income of $1.4 billion, translating into an EPS of $0.63, beating consensus estimates by $0.01. Do note that EPS continues to be unrepresentative due to Uber’s equity portfolio, although this only added $17 million to net income in Q2.
Finally, Uber reported a Q2 FCF of $2.5 billion, up 44% YoY and reflecting a 20% FCF margin. However, its FCF continues to be best measured on a TTM basis due to working capital seasonality and the timing of cash payments. Over the last twelve months, Uber delivered an FCF of $8.5 billion, up 80% YoY and reflecting an EBITDA conversion of 114%, which suggests Uber now has significant earnings power and is turning into a real FCF machine.
Especially important here are Uber’s excellent reinvestment metrics, suggesting that the company is very well able to use its considerable cash flows to generate value. For reference, Uber’s TTM ROE sits at a very impressive 46%, while its TTM ROIC sits at 19%, and this has been trending up strongly, as shown below.
Anyway, these strong cash flows allowed Uber to maintain a healthy balance sheet. As of the end of Q2, Uber held a total cash position and equivalents of $7.4 billion against $12.3 billion in debt. I know, this leaves it in a net debt position, which isn’t ideal. However, Uber also has $8.7 billion in equity stakes in publicly listed companies. It plans to monetize these stakes in the years ahead to use for AV investments and balance sheet strengthening.
Therefore, I still view Uber’s financial health as strong, with plenty of liquidity and manageable debt.
Meanwhile, Uber is using this liquidity and its strong and rapidly growing cash flows to opportunistically buy back shares to offset dilution and reward shareholders. In Q2, it bought back $1.4 billion of common stock, which was fully covered by FCF and alone was almost enough to offset FY25 SBC.
Since Q1 2024, Uber has now bought back $4.4 billion worth of shares, and it doesn’t plan to slow down. Last week, Uber announced a new additional buyback program of $20 billion, bringing its total authorization to $23 billion, which will allow Uber to buy back 12% of its outstanding shares at current prices. This is a massive vote of confidence and a good use of cash.
Ultimately, I don’t think there is much negative to say about Uber’s Q2 report – it ticked all boxes.
Uber is the Gateway to large scale AV adoption
There wasn’t much AV news concerning Uber last quarter, with especially few comments on this during the earnings call or prepared remarks, which honestly disappointed me a little.
However, there were still a few interesting announcements over recent months that do further fuel my confidence in Uber’s robotaxi future.
First, let me start by briefly addressing my bullish Uber/Robotaxi thesis. While Uber stepped away from building its own autonomous technology years ago, that decision now looks like a masterstroke. Instead of spending billions on R&D with uncertain timelines, Uber has positioned itself as the go-to platform for any AV operator that wants instant access to hundreds of millions of riders. With 180 million monthly active users, a presence in over 70 countries, and deep integration into everyday urban life, Uber offers what AV companies lack most—scale, brand familiarity, and a ready-made demand base.
This platform-first approach means Uber doesn’t need to “win” the hardware or AI race. It can partner with multiple AV developers—Waymo, Baidu, WeRide, and others—and instantly deploy their vehicles into its ecosystem. The result is a capital-light way to dominate the robotaxi market, no matter which autonomous technology ultimately proves best. And because riders are already conditioned to open the Uber app for transportation, there’s a strong chance that, in the AV era, hailing a robotaxi will simply feel like hailing any other Uber.
Meanwhile, some on Wall Street fear that companies like Tesla could bypass Uber entirely, launching their own direct-to-consumer robotaxi networks. While this is possible in theory, in practice it would require building not just a fleet, but also a trusted, scaled, multi-market consumer platform, and that’s where the challenge lies. Uber has spent well over a decade building dense, liquid networks in hundreds of cities, solving complex local regulatory puzzles, and earning user trust across 131 billion miles worth of trips. That kind of density and operational infrastructure cannot be replicated overnight, even by a company with Tesla’s brand and resources. Tesla could build the cars and the driving system, but matching Uber’s scale in customer acquisition, driver coordination, payments, safety, local market expertise, and multi-modal offerings would take years and billions of dollars—and by then, Uber’s AV integration would be deeply entrenched.
Furthermore, what makes Uber especially well positioned is the nature of its moat in the AV world. Its competitive advantage isn’t just scale in terms of users and drivers—it’s the liquidity of that marketplace. In every major city where Uber operates, there’s already a critical mass of riders and vehicles available at all times, ensuring short wait times and high utilization. For an AV operator, plugging into Uber instantly delivers demand without the cost of building it from scratch. This demand-side dominance is sticky: once consumers know they can open Uber and get a ride—human or autonomous—within minutes, there’s little reason to try a new, untested app.
Would you go with an untested Tesla app with lower availability, likely longer wait times, and a mostly untested platform when Uber is available? It would be just for the sake of getting a Tesla, and I can tell you that is not a broader market priority.
Uber remains unmatched.
In my view, this combination of unmatched scale, ingrained consumer habits, global regulatory know-how, and a capital-light, partner-friendly model makes Uber not just a participant in the AV revolution, but one of its inevitable winners. The fear of disruption from Tesla and others is understandable, but in reality, Uber is far more likely to be the indispensable gateway through which AV adoption reaches mass scale.
If anything, Uber will massively benefit from the AV revolution, not be disrupted by it.
Moving the focus back to today, at this point, Uber’s priority is to get as many AV partners as possible, and this is where Uber continued to make progress in Q2. Here are some important announcements:
Uber now offers Waymo AVs exclusively on its platform in Atlanta, and the results so far have been well above expectations, with the companies planning to expand by hundreds of vehicles in the coming quarters.
Uber doubled its Waymo service area in Austin to 90 square miles. Meanwhile, Tesla has faced operational struggles with one of its first releases in Austin.
Uber expanded its service area in Abu Dhabi in partnership with WeRide, now covering about half of Abu Dhabi’s core areas. It also plans to launch in Riyadh later this year.
Uber announced a massive deal with Baidu, which is already by far the largest robotaxi provider in China, and through a partnership with Uber, now expands abroad, launching services in Asia (excluding China) and the Middle East. This is a great win for Uber, with Baidu one of the front-runners in AV technology. The fact that this company, with great infrastructure capabilities in China, chooses Uber to expand abroad really is telling.
Uber also announced a one-of-a-kind deal with EV manufacturer Lucid and AV technology company Nuro, to launch a robotaxi fleet. Lucid will supply the cars, Nuro the AV technology, and Uber the infrastructure, launching first in the U.S. Interestingly, this fleet will be Uber’s own, operating alongside its third-party fleet partners.
Positively, the costs for Uber will be low, at less than 0.1% of its market cap, according to BofA analysts, so Uber will operate its own fleet, but split the costs with its partners, which I believe is a good deal!
Ultimately, these are strong announcements and a continuation of what we have seen in recent quarters, as Uber continues to grow its AV fleet through over 20 AV partners, including some of the largest and very best, like Waymo and Baidu.
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Outlook & Valuation
In addition to strong Q2 results, Uber’s Q3 outlook also didn’t disappoint, showing an expectation for continued strong momentum across its business.
