Uber's senior unsecured notes rating upgraded to Baa1 by Moody's

Moody's has upgraded Uber's senior unsecured notes to Baa1 from Baa2, revising the outlook to positive, citing the company's robust growth and increasing profitability, with adjusted EBITDA up 49% year-over-year and $7.8 billion in free cash flow for the twelve months ending March 2025. The upgrade reflects Uber's strong operating performance and Moody's expectation that balanced financial policies will further strengthen its financial profile, projecting free cash flow to exceed $8 billion and $10 billion in 2025 and 2026, respectively, while total debt to EBITDA is expected to decline to 1.5x by the end of 2026.

Analysis

Moody's upgrade of Uber Technologies' senior unsecured notes to Baa1 from Baa2, coupled with a revised positive outlook, reflects a significant strengthening of the company's financial profile. This improvement is underpinned by robust growth in its Mobility and Delivery platforms, leading to a 49% year-over-year increase in company-reported adjusted EBITDA and $7.8 billion in free cash flow for the twelve months ending March 2025. Uber maintains a strong liquidity position, with approximately $7.2 billion in unrestricted cash and short-term investments as of May 2025, an undrawn $5 billion revolving credit facility, and $9.1 billion in minority equity investments. Moody's projects Uber's free cash flow could surpass $8 billion in 2025 and $10 billion in 2026, potentially driving down total debt to EBITDA from 2.3x (Q1 2025) to 1.5x by the end of 2026, against $10.7 billion in outstanding debt. The company's substantial operating scale, evidenced by $171 billion in annualized gross bookings in Q1 2025, revenue diversification, and a proven management track record in achieving growth targets, are key strengths. While the rise of autonomous vehicle technologies presents a long-term industry shift, Uber's demand aggregation capabilities position it favorably. Regulatory and litigation risks associated with its independent contractor model are noted as having moderated, with the company demonstrating adaptability. The positive outlook anticipates continued financial strength, aiming for gross leverage below 2.0x by year-end 2026 through sustained robust performance and balanced financial policies.

Key Decisions for Investors

• The Moody's upgrade to Baa1 and positive outlook signal increased creditworthiness and financial stability for Uber, which could positively impact its cost of capital and investor sentiment.
• Investors should monitor Uber's ability to consistently generate strong free cash flow, achieve its targeted reduction in debt-to-EBITDA to 1.5x by 2026, and maintain disciplined financial policies, especially concerning shareholder returns versus debt reduction.
• Key factors for ongoing assessment include the company's strategic navigation of the evolving autonomous vehicle landscape, effective management of residual regulatory risks, and continued execution on growth initiatives within its Mobility and Delivery segments.