Weak ride-hailing, strong food delivery, is Uber at another crossroads?

"International Didi" $Uber Tech(UBER.US) released its Q2 2025 financial report before the U.S. stock market opened on the evening of August 6. Overall, the performance was stable, with few highlights or shortcomings. The detailed points are as follows:

1. Ride-hailing business underperformed expectations again: The main shortcoming of this performance is that the order growth rate of the ride-hailing business once again underperformed expectations, with actual year-on-year growth of 15.6%, below the sell-side expectation of 16.3%. Although the underperformance is not significant, the market was generally optimistic about the performance, especially considering the favorable exchange rate, which is somewhat disappointing.

Moreover, although the nominal growth rate seems to have improved significantly, after excluding the exchange rate impact, the "real" order growth rate this quarter was 18%, which is a slowdown compared to 20% in the previous quarter, possibly causing market concerns about the resilience of ride-hailing demand.

2. Food delivery business stronger than expected: Conversely, the food delivery business, which the market was not optimistic about before the performance, saw order growth of nearly 20% year-on-year this quarter, significantly accelerating from 15% in the previous quarter, outperforming market expectations by 2.5%. Even excluding the favorable exchange rate, the growth rate this quarter still accelerated by 2 percentage points quarter-on-quarter. This is the first time since 2021 that the growth rate of food delivery orders at constant exchange rates has returned to 20%.

3. Price and volume drivers: This quarter, the year-on-year growth rate of core business order volume was 18.2%, basically flat quarter-on-quarter, remaining around 18% for four consecutive quarters. The increase in the nominal growth rate of core order value this quarter was mainly driven by the narrowing of the year-on-year decline in average ticket price from 3.2% in the previous quarter to 1.2%.

Considering the exchange rate factor alone, the favorable impact on the nominal ticket price this quarter should be around 3 percentage points, suggesting that the actual decline in average ticket price is larger, likely due to changes in product structure and market share structure.

4. Revenue and monetization: This quarter, the comprehensive monetization rate of the ride-hailing business was 30.7%, basically flat quarter-on-quarter, but 0.5 percentage points higher than market expectations. The revenue growth rate of the ride-hailing business was nearly 19%, offsetting the slight underperformance of order value expectations.

In contrast, the monetization rate of the food delivery business continued to rise both year-on-year and quarter-on-quarter, reaching 18.9%, mainly driven by increased advertising monetization. However, the market had more sufficient expectations for this, only slightly exceeding market expectations by 0.3 percentage points.

Due to stronger order growth and more monetization rate improvement, the revenue of the food delivery business grew nearly 25% year-on-year this quarter, outperforming market expectations by about 3.7%.

Overall, thanks to the slight improvement in the monetization rates of both ride-hailing and food delivery businesses, revenue performance was slightly stronger than order value, but the difference was not significant.

5. The overall gross margin this quarter was 39.8%, slightly down quarter-on-quarter, and the year-on-year increase also narrowed, below the market expectation of 40.3%. Although the monetization rate still slightly improved, the gross margin performance was not good. Dolphin Research believes this is due to the continued expansion of the actual ticket price decline after excluding the exchange rate impact.

In terms of expenses, total expenditure this quarter was $3.59 billion, slightly higher than market expectations, but the year-on-year growth rate was only 5%, significantly lower than the revenue growth rate. The expense ratio is still being passively diluted.

Trend-wise, as the monetization rate and gross margin continue to slightly improve, and the expense ratio is being passively diluted, the operating profit margin continued to rise by 0.9 percentage points quarter-on-quarter this quarter. However, from the perspective of expectation difference, as the gross margin underperformed expectations, operating profit was also slightly weaker than expected.

6. Profit is also stronger in food delivery and weaker in ride-hailing: Looking at segment profits, the profit margin (adj. EBITDA/Bookings) of the ride-hailing business was consistent with expectations at 8%, rising year-on-year but weakening quarter-on-quarter. Due to the slight underperformance of order value expectations, the adj. EBITDA profit of the ride-hailing business was also slightly below expectations.

In the food delivery business, as the monetization rate continued to rise both year-on-year and quarter-on-quarter, the adj. EBITDA profit margin rose from 3.7% to 4% quarter-on-quarter. And with order value also outperforming expectations, the resonance of both factors led to the profit of the food delivery business outperforming expectations by 7%.

7. Next quarter's guidance is moderate: Similar to the stable performance this quarter, the company's guidance for the next quarter implies a year-on-year growth rate of about 19% for the median total order value, which is significantly better than the market expectation of 16%. However, this guidance includes a 1 percentage point tailwind from the acquisition of Trendoy's food delivery business. Excluding the impact of the acquisition and exchange rate factors, the actual growth rate median of 18% is the same as this quarter, with no acceleration tendency.

The profit guidance (adj. EBITDA) is $2.24 billion, basically in line with market expectations. The implied year-on-year growth median of 32.5% is slightly slower than this quarter's 35%. The profit guidance is also not outstanding.

Dolphin Research's View:

Based on the above analysis, it can be seen that both the performance this quarter and the guidance for the next quarter are basically moderate, with no significant highlights or shortcomings. Specifically, the following points can be summarized:

1) The growth trend of the ride-hailing business, which the market is optimistic about, is not as strong as expected, showing some signs of weakening. It is necessary to pay attention to whether the demand for ride-hailing will remain resilient in the context of renewed concerns about the weakening of the U.S. economy.

On the contrary, the food delivery business, which was not highly regarded, performed better than expected. Combined with DoorDash's better-than-expected performance, the more discretionary food delivery demand did not deteriorate significantly as the market feared when consumption weakened.

2) Whether due to changes in product structure or the overall weakening of consumer purchasing power, the recent continuous decline in ticket prices is an issue that needs attention. It remains to be seen whether this means that American consumers are also entering a "consumption downgrade" cycle or whether the decline in prices will stimulate demand release. If ticket prices continue to decline, it will be a negative trend for profitability.

3) Uber's effectiveness in cost control remains excellent, continuing to release profit margins. However, trend-wise, the pace of improvement in the adj. EBITDA profit margin over the past 2-3 quarters is gradually slowing. Future profit growth may further align with revenue growth.

Beyond short- to medium-term performance, the market's most concerned issue is undoubtedly the competitive pressure that Robotaxi may bring. Recently, there have been many developments in this area, including:

1) The most closely watched potential competitor, Tesla, officially began a Robotaxi pilot operation in Austin in late June, currently providing test services to invited users in limited areas of the city. The subsequent plan is to expand the operation range to the entire city of Austin and add a pilot operation in the San Francisco area.

In response, Uber has recently signed cooperation agreements with several companies for autonomous ride-hailing, including:

1) In mid-to-late July, Uber partnered with Lucid and Nuro to jointly develop the next generation of L4 autonomous ride-hailing vehicles, which will be exclusively deployed on the Uber platform. For this, Uber invested about $300 million in Lucid.

2) In late July, Uber announced a partnership with Baidu's Apollo Go to deploy Apollo Go's L4 autonomous ride-hailing vehicles in the Asian and Middle Eastern markets on the Uber platform.

3) In June, Uber signed a cooperation agreement with WeRide and the Dubai Roads and Transport Authority to deploy Robotaxi services in Dubai, expected to launch commercial operations in early 2026.

4) In May, Uber partnered with Pony.ai to announce the deployment of autonomous ride-hailing services in the Middle Eastern market and integration into the Uber platform.

Although it is impossible to predict which technical path and which companies will ultimately succeed, two relatively clear development routes can be seen. One is companies like Waymo and Tesla, which adopt a relatively closed-loop operating ecosystem, taking responsibility for both the development of autonomous driving technology and the final operation of autonomous ride-hailing vehicles.

The other is companies like Uber, which are unlikely to develop Tier-1 autonomous driving technology independently, thus adopting a more open ecosystem. The development of technology and vehicles is entrusted to multiple partners, while Uber provides ride-hailing platform functions and acts as a "technology incubator."

Therefore, Dolphin Research believes that the extent of the impact of autonomous ride-hailing on Uber may mainly depend on whether top autonomous driving technology will ultimately be monopolized by a few leading companies or become a public-like function. If it is the former, Uber may face greater impact, and vice versa.

In terms of valuation, Uber's current valuation is approximately 24x-25x the net profit of 2026, corresponding to the company's more commonly used adj. EBITDA metric, which is just over $10 billion in 2026 (about 5% of GB), currently around 17x. At the current overall valuation level of the U.S. stock market, Uber's current valuation can be said to be relatively neutral.

However, it should also be noted that the current market forecast models basically do not reflect any potential impact of autonomous ride-hailing on performance. In other words, the current valuation reflects the expectation that autonomous ride-hailing will not have much impact on Uber. In the short to medium term, this expectation is indeed not a big problem, but in the long term, there is still a risk of being overly optimistic.

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

I. Core Operating Indicators