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

Investing.com -- Moody’s Ratings has upgraded the senior unsecured notes ratings of Uber Technologies, Inc. (NYSE:UBER) (Uber) to Baa1 from Baa2. The outlook for the ratings has also been revised to positive from stable. The decision is based on Uber’s strong financial profile, which is characterized by robust growth and increasing profitability.

Raj Joshi, Senior Vice President at Moody’s Ratings, stated that Uber has been showing strong growth in its Mobility and Delivery platforms, despite their large scale. The company has also made substantial improvements in profitability. Uber’s adjusted EBITDA, as reported by the company, has seen a 49% increase year-on-year in the twelve months ending March 2025. During this period, the company generated $7.8 billion in free cash flow.

The ratings upgrade and the positive outlook reflect Uber’s strong operating performance. Moody’s expects the company’s balanced financial policies to further strengthen its financial profile. Uber’s management has a proven track record of achieving its 3-year growth outlook for the business and free cash flow generation.

Uber has a robust liquidity position with approximately $7.2 billion of unrestricted cash and short-term investments, as of May 2025. The company also has a strong free cash flow and an undrawn $5 billion revolving line of credit. Additionally, Uber holds $9.1 billion (book value) of minority equity interests and other investments in various online transportation businesses.

If the US economy continues to grow positively, Moody’s expects Uber’s free cash flow to exceed $8 billion and $10 billion in 2025 and 2026, respectively. This is in comparison to the $10.7 billion of outstanding debt. The total debt to EBITDA is expected to decline from 2.3x at the end of the first fiscal quarter in March 2025 to 1.5x by the end of 2026, assuming constant debt levels.

Uber has a substantial operating scale with $171 billion of annualized gross bookings in the first quarter of 2025. The company also boasts high revenue diversity by geographic regions and services. Uber has strong organic growth prospects, supported by the management’s track record of expanding service offerings and increasing driver and merchant supply on its platforms.

The rise of autonomous vehicle technologies and their increasing commercial adoption could significantly change the competitive landscape and the economic structure of the industry in the coming years. Despite the potential increase in competition, Uber’s strong position as a large aggregator of consumer demand and history of operating services with their idiosyncratic variations in demand and consumer preferences positions the company well to capitalize on these market opportunities.

Regulatory and litigation risks related to the company’s reliance on independent contractors remain, but these risks have moderated. Uber’s strong financial profile, improving relations with regulators, and ability to grow its business and profitability by adapting its business model to regulatory requirements in multiple jurisdictions evidence its ability to manage regulatory risks.

The positive rating outlook reflects Moody’s expectation that Uber will maintain a solid financial profile characterized by robust liquidity, strong free cash flow generation, and balanced financial policies, leading to a decline in gross leverage to below 2x by year-end 2026.

Moody’s could upgrade Uber’s ratings if the company maintains robust revenue and adjusted EBITDA growth, and if management’s financial policies continue to support sustained improvements in credit metrics. Conversely, Uber’s ratings could be downgraded if operating or competitive challenges, a shift toward shareholder-friendly financial policies, a significant increase in debt related to acquisitions, or increased regulatory risks lead to a significant erosion in liquidity or total debt to EBITDA sustained above 2.5x.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.