Uber: Performance is flawless, but scared by Robotaxi again?

"International Didi" $Uber Tech(UBER.US) released its Q3 2025 financial report before the U.S. stock market opened on the evening of November 4. Overall, it showed remarkable growth, accelerating and outperforming expectations. However, while absolute profit growth was decent, it slightly underperformed high expectations, and the momentum of profit margin expansion has significantly narrowed. Key points are as follows:

1. Ride-hailing was decent, but food delivery was "truly" strong: This quarter, the Mobility business's order volume grew 20% year-on-year, with a significant quarter-on-quarter acceleration of 4 percentage points. However, excluding the impact of exchange rates, the actual quarter-on-quarter acceleration was only 1 percentage point, not as strong as it might initially appear.

In contrast, the growth in the delivery business was quite robust, with this quarter's order volume growing approximately 25% year-on-year, and accelerating 5 percentage points quarter-on-quarter. Even excluding the favorable exchange rate, it still accelerated 4 percentage points quarter-on-quarter. According to the company, the annualized order volume for non-food deliveries such as fresh produce and daily necessities has reached $12 billion (up from $10 billion last quarter), accounting for 17% of the current total delivery order volume, which is the main reason for the continued high growth rate of the delivery business.

2. Delivery business stronger than expected: The accelerated growth in order volume this quarter was mainly due to significant improvements in both monthly active users (+17%) and order frequency (+4%). According to the company, the new scenario of fresh and grocery delivery has significantly contributed to acquiring new customers and increasing user stickiness.

As a result, the order volume growth rate this quarter reached 22.5%, with a significant quarter-on-quarter acceleration. However, the average order value still declined by 0.3% year-on-year, suggesting a downward trend in product structure (a negative signal for profit margins) despite favorable exchange rates.

3. Revenue and monetization: strong delivery but average ride-hailing: This quarter, the take rate for the ride-hailing business only increased by 8 basis points year-on-year, and slightly declined quarter-on-quarter. The monetization rate weakened against the trend, partly due to the downward shift in product structure, but competitive factors cannot be ruled out (watch for explanations in the earnings call). This resulted in the ride-hailing revenue growth rate only accelerating by 1 percentage point (not matching the order volume performance).

In contrast, the monetization rate for the delivery business continued to rise, with a year-on-year increase of about 60 basis points on a not-low base, driving the revenue growth rate for the delivery business to accelerate significantly by 4 percentage points to 29%, stronger than the order volume growth rate. This is mainly due to Uber's contribution from advertising monetization.

Therefore, in terms of revenue and monetization, the delivery business is strong, but the ride-hailing business is not outstanding.

4. Despite strong growth, gross profit did not expand, and expenses accelerated: First, this quarter's gross profit grew 21% year-on-year, although the absolute growth rate is not low, the gross margin was 39.8%, with zero quarter-on-quarter improvement and only a 0.2 percentage point year-on-year increase, slightly below expectations. It is surprising that the gross margin did not rise despite favorable exchange rates, increased scale, and improved advertising monetization. Besides the slight decline in average order value (downward product structure), other factors dragging it down should be noted.

Meanwhile, the growth in expense spending also accelerated significantly, with total expenses this quarter increasing 26% year-on-year, partly due to the recognition of approximately $470 million in one-time legal expenses in management expenses. Even excluding this impact, expenses still grew 12% year-on-year, showing a clear expansion trend compared to the previous long-term growth rate of no more than 10% or even negative growth.

5. Profit margins across segments are not impressive: Due to almost no improvement in gross margin and a significant rise in expense spending, this quarter's profit performance was not outstanding. Adjusted EBITDA this quarter was approximately $2.26 billion, growing 33.5% year-on-year, but still slightly underperforming expectations. The profit margin (as a percentage of order volume) was 4.54%, with a year-on-year increase of only 41 basis points, the lowest margin improvement since 2022.

By business segment: 1) The ride-hailing business's adj. EBITDA profit margin was 8.1%, with a year-on-year increase of only 0.1 percentage points, slightly below market expectations. 2) The delivery business's adj. EBITDA profit margin also declined by 0.1 percentage points quarter-on-quarter, with a narrowed year-on-year increase, also below expectations.

In terms of profit, neither the ride-hailing nor the delivery business performed exceptionally well.

Dolphin Research's View:

Based on the above analysis, it can be seen that Uber's performance this quarter was undoubtedly not bad. The core growth in ride-hailing and delivery business order volumes both accelerated quarter-on-quarter, exceeding expectations. Although changes in product structure may have led to a decline in average order value, resulting in not very strong ride-hailing revenue growth and unimpressive gross margin improvement. Coupled with rising expenses, this quarter's profit margin and profit growth did not exceed expectations. However, objectively speaking, an adj. EBITDA growth rate of over 33% is certainly not bad, at most not as outstanding compared to higher expectations.

From a business perspective, this performance clearly shows: 1) The natural expansion of the delivery business from food delivery to fresh and grocery is a growth direction with huge potential, not only reflected in incremental fixed amounts but also having spillover benefits for the platform's user scale and user stickiness, which can be considered the biggest highlight.

2) Additionally, in advertising monetization (especially in the delivery business), Uber has not yet fully penetrated, especially with the growth of fresh and grocery further expanding the company's advertising monetization space.

3) However, the mixed signal is that the ride-hailing business's supply of more low-priced products, while possibly helping accelerate order volume growth, may not contribute significantly to revenue and profit increments.

Looking ahead, the company's guidance implies a total order volume growth rate midpoint of nearly 20%, continuing to accelerate from this quarter and slightly exceeding expectations. The implied adj. EBITDA midpoint year-on-year growth of 33.6% is roughly consistent with this quarter's growth rate, which is good but below the market's higher expectations.

It can be seen that the performance this quarter is basically the same, maintaining strong and exceeding expected growth, with good but not particularly outstanding profit growth, and the implied profit margin expansion is still relatively limited.

In terms of valuation, according to Dolphin's estimates, the company's net profit will reach approximately $10 billion by 2027 (slightly higher than Bloomberg's consensus estimate), and after this performance, the market is unlikely to raise subsequent profit expectations. The current market value corresponds to a PE multiple of about 19x~20x. Dolphin believes this valuation level based on profits two years later is relatively neutral under the "belief" premise.

However, as Dolphin previously mentioned, there is basically no substantial impact of autonomous ride-hailing on the company's performance. Although currently, "multi-party coexistence" in autonomous ride-hailing is more likely than "one dominant player," Uber has announced various investment plans with more and more car manufacturers or autonomous driving companies. But with substantial progress by companies like Waymo and Tesla in this business, this huge risk, although it cannot yet be accurately judged how much it will negatively impact, is undoubtedly getting closer to being unveiled.

Below are the core charts of this quarter's financial report:

I. Fresh and grocery business drives both user volume and stickiness higher

This quarter, the Mobility business's order volume grew 20% year-on-year, with a significant quarter-on-quarter acceleration of 4 percentage points. However, excluding the impact of exchange rates, the actual growth rate only increased by 1 percentage point quarter-on-quarter. Thus, the ride-hailing growth is indeed impressive, continuing to accelerate on a not-low base, but not as strong as it might initially appear.

In contrast, the Uber Eats delivery business showed a significant real improvement, with this quarter's order volume growing approximately 25% year-on-year, and accelerating 5 percentage points quarter-on-quarter, even excluding the favorable exchange rate, it still accelerated 4 percentage points quarter-on-quarter. The growth rate has continued to rise for three consecutive quarters. According to the company, the annualized order volume for non-food deliveries such as fresh produce and daily necessities has reached $12 billion (up from $10 billion last quarter), accounting for 17% of the current total delivery order volume, which is the main reason for the continued high growth rate of the delivery business.

The core order volume growth rate for both delivery and ride-hailing combined is 22%, also showing a significant acceleration and outperforming the market expectation of 20%.

In terms of price and volume drivers, this quarter's order volume growth rate significantly improved mainly due to volume contributions, with core business order volume growing 22.5% year-on-year, accelerating approximately 4 percentage points quarter-on-quarter, significantly outperforming market expectations.

However, the average order value still declined by 0.3% year-on-year, and with favorable exchange rates, the main reason for the decline in average order value should be the downward shift in product structure, especially with more low-priced products in the ride-hailing business.

From the user data perspective, the reason for the significant acceleration in order volume growth this quarter is that both the platform's monthly active users and order frequency showed significant acceleration. Combined with the company's explanation, the penetration of fresh and grocery delivery business outside of food delivery has made significant contributions to acquiring new users and increasing the order frequency of existing users.

II. Ride-hailing monetization under pressure, advertising drives delivery monetization rate higher

From a revenue perspective, although the nominal growth rate of ride-hailing order volume improved significantly this quarter, the ride-hailing revenue growth rate only increased by 1 percentage point this quarter. The reason behind this is that the take rate for the ride-hailing business only increased by 8 basis points year-on-year, and slightly declined quarter-on-quarter. Despite significant acceleration in business volume and favorable exchange rates, the monetization rate weakened against the trend. Dolphin believes this is partly due to the downward shift in product structure, but competitive factors cannot be ruled out (including Lyft and various Robotaxi services), watch for further information in the earnings call.

In contrast, the monetization rate for the delivery business continued to rise, with a year-on-year increase of about 60 basis points on a not-low base, driving the revenue growth rate for the delivery business to accelerate significantly by 4 percentage points to 29%, further amplifying the order volume growth rate. Although it is not yet clear whether the monetization rate for fresh and grocery is higher or lower than that for food delivery, it shows that Uber's advertising monetization rate continues to rise.

As for Uber's freight business, this quarter's revenue was approximately $1.31 billion, roughly flat year-on-year. Adding up all business segments, Uber's total revenue this quarter was approximately $13.5 billion, with year-on-year growth accelerating to 20.4%, further accelerating from the previous quarter and slightly outperforming expectations. Excluding favorable exchange rates, total revenue growth also increased by 1 percentage point quarter-on-quarter.

III. Strong growth, but with expense expansion, profit is not impressive

As can be seen from the above, Uber's performance in terms of growth this quarter was quite impressive, but profit growth did not bring unexpected surprises.

First, this quarter's gross profit grew 21% year-on-year, although the absolute growth rate is not low, the gross margin was 39.8%, with zero quarter-on-quarter improvement and only a 0.2 percentage point year-on-year increase, slightly below expectations. Therefore, gross profit growth did not amplify compared to revenue growth.

This is surprising given favorable exchange rates, increased business scale effects, and improved advertising monetization. Besides the slight decline in average order value (downward product structure), other influencing factors should be noted.

Meanwhile, as business growth accelerated, this quarter's expense spending also significantly accelerated. Total expenses this quarter increased 26% year-on-year, mainly due to management expenses recognizing approximately $470 million in one-time legal expenses, resulting in an 88% year-on-year increase. However, even excluding this one-time impact, expense growth was still 12% year-on-year. Compared to the long-term growth rate of no more than 10% or even negative growth since 2023, there is a clear expansion trend.

With gross margin basically stagnant and expense spending growth significantly rising, Uber's profit performance this quarter was not outstanding. Adjusted EBITDA this quarter was approximately $2.26 billion, growing 33.5% year-on-year, but still slightly underperforming expectations. The profit margin (as a percentage of order volume) was 4.54%, with a year-on-year increase of only 41 basis points, the lowest margin improvement since 2022.

By business segment: 1) The ride-hailing business's adj. EBITDA profit margin was 8.1%, with a year-on-year increase of only 0.1 percentage points, slightly below market expectations. This reflects the stagnation in monetization rate improvement and the impact of expense growth.

2) The delivery business's adj. EBITDA profit margin also declined by 0.1 percentage points quarter-on-quarter, with a narrowed year-on-year increase, also below expectations. However, due to the revenue exceeding expectations significantly, the final profit was still better than expected.

3) The freight business's loss this quarter also significantly expanded to $20 million, more than doubling compared to the first two quarters of this year. The group's headquarters-level loss was $680 million, with a slight quarter-on-quarter increase of $30 million.