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Uber Technologies (UBER) stock is on a tear without brakes in sight. Following the company’s Q1 earnings, which dropped yesterday, the numbers were hot in the top and bottom lines. Robust growth in ridesharing and delivery, plus game-changing autonomous vehicle partnerships, keep Uber’s engine purring.
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Meanwhile, free cash flow is rising, turning Uber into a cash-generating beast. In fact, I’m forecasting that a $100 per share price target is closer than many investors may think, as declining share-based compensation and growing capital returns form a compelling investment case.
Uber’s Q1: Growth That Won’t Quit
Yesterday’s Q1 earnings report showed Uber still has its foot on the accelerator pedal. Gross bookings grew 14% year-over-year to $42.8 billion, or 18% on a constant currency basis, fueled by an 18% jump in trips to 3 billion and a 14% rise in monthly active platform consumers to 170 million.
CEO Dara Khosrowshahi credited stronger user retention and “rapid innovation” in both the Mobility and Delivery segments. Partnerships with key autonomous vehicle players like Alphabet’s (GOOGL) Waymo, Volkswagen (VWAGY), and Aurora also spark excitement. Khosrowshahi called AV tech “the single greatest opportunity ahead,” noting that Waymo’s Austin fleet outperformed 99% of human drivers in trip volume.
We now see that Uber’s growth isn’t only about more rides or food orders at scale. The Uber One membership program ballooned to 30 million members, up 60% year-over-year, powering stickier customer engagement. Management’s doubling down on new offerings like airport shuttles and rider verification to boost safety, which keeps drivers happy and supply steady. Uber’s ever-improving services are actively shaping the future of mobility, boosting user satisfaction, and naturally leading to greater adoption. A virtuous circle of sorts.
Profitability Metrics Steal the Show
Uber’s bottom-line metrics were even more praiseworthy, with adjusted EBITDA soaring 35% to $1.9 billion, and margins reaching a record 11.2%. That’s a massive leap from last year’s 6.5%. However, free cash flow was the absolute stunner at $2.3 billion. To illustrate, Uber actually matched operating cash flow and set an all-time high, showing that it can essentially achieve a 100% FCF conversion rate. Uber’s business model is so incredibly scalable that seeing such a significant margin expansion makes sense as the revenue base moves up.