Uber vs Lyft 2025: $8.5B FCF Turnaround vs 7/10 Earnings Quality
LYFT has higher gross margin (42.6%) AND better earnings quality (7/10) than UBER. So why is LYFT barely profitable? The answer: OpEx. LYFT spends 42.2% of revenue on operating expenses vs UBER's 30.6%. Our 5-pass filing intelligence reveals how scale economics beat unit economics in rideshare.
Uber vs Lyft 2025: $8.5B FCF Turnaround vs 7/10 Earnings Quality
Last Updated: December 30, 2025 Data Currency: Q3 2025 10-Q filings. UBER (filed November 4, 2025) | LYFT (filed November 5, 2025)
TL;DR: LYFT has higher gross margin (42.6%) AND better earnings quality (7/10) than UBER (39.7%, 6/10). So why is LYFT barely profitable? The answer: OpEx. LYFT spends 42.2% of revenue on operating expenses vs UBER's 30.6%. Scale economics beat unit economics. UBER's $16.64B net income includes a $4B one-time tax benefit, but even adjusted, the profitability gap is massive. LYFT wins on sustainability, UBER wins on scale.
Executive Comparison (Q3 2025 TTM)
| Metric | UBER | LYFT | Winner |
|---|---|---|---|
| Earnings Quality Score | 6/10 | 7/10 | LYFT |
| Gross Margin | 39.7% | 42.6% | LYFT |
| OpEx % of Revenue | 30.6% | 42.2% | UBER |
| Operating Margin | 9.2% | 0.4% | UBER |
| Net Income TTM | $16.64B | $0.15B | UBER (110x) |
| FCF TTM | $8.66B | $1.08B | UBER (8x) |
| SBC/Revenue | ~3.5% | 1.06% | LYFT |
| SBC Trend | Elevated | -25% YoY | LYFT |
| Hidden Liabilities | $2.0B accrued | Undisclosed | TIE |
| Risk Score | 3/10 | 3/10 | TIE |
| Forward P/S | 3.51x | 0.97x | LYFT (cheaper) |
Source: MetricDuck 5-pass filing intelligence extraction
Analyze these rideshare companies: MetricDuck extracts hidden liabilities, accounting quality, and risk factors from SEC filings that standard screeners miss. View UBER Filing Intelligence | View LYFT Filing Intelligence
The FCF Turnaround Story
Both rideshare companies achieved profitability, but the scale of transformation is starkly different.
UBER: From $8.5B Loss to $8.5B FCF
Uber's turnaround is one of the most dramatic in tech history. The company went from an $8.5 billion net loss in 2019 to generating $8.66 billion in free cash flow by Q3 2025.
UBER 8-Quarter FCF & Margin Trend
| Period | FCF TTM | Net Income TTM | Revenue TTM | Op Margin |
|---|---|---|---|---|
| Q3 2025 | $8.66B | $16.64B | $49.61B | 9.2% |
| Q2 2025 | $8.54B | $12.63B | $47.33B | 9.5% |
| Q1 2025 | $7.79B | $12.29B | $45.38B | 8.5% |
| Q4 2024 | $6.89B | $9.86B | $43.98B | 6.4% |
| Q3 2024 | $5.96B | $4.40B | $41.95B | 6.4% |
| Q2 2024 | $4.75B | $2.01B | $40.06B | 5.0% |
| Q1 2024 | $4.17B | $1.39B | $38.59B | 4.0% |
| Q4 2023 | $3.36B | $1.89B | $37.28B | 3.0% |
FCF Growth: +158% in 2 years ($3.36B → $8.66B)
LYFT: From Loss to Barely Profitable
Lyft's turnaround is less dramatic but still meaningful. The company moved from burning cash to generating positive FCF.
LYFT 8-Quarter FCF & Margin Trend
| Period | FCF TTM | Net Income TTM | Revenue TTM | Op Margin |
|---|---|---|---|---|
| Q3 2025 | $1.08B | $0.15B | $6.27B | 0.4% |
| Q2 2025 | $1.05B | $0.09B | $6.11B | -0.9% |
| Q1 2025 | $0.98B | $0.06B | $5.96B | -1.4% |
| Q4 2024 | $0.85B | $0.02B | $5.79B | -2.1% |
| Q3 2024 | $0.74B | -$0.07B | $5.46B | -3.8% |
| Q2 2024 | $0.48B | -$0.06B | $5.10B | -3.7% |
| Q1 2024 | $0.13B | -$0.18B | $4.68B | -6.9% |
| Q4 2023 | -$0.10B | -$0.34B | $4.40B | -10.8% |
Op Margin Improvement: +11.2pp in 2 years (-10.8% → +0.4%)
Both companies are now profitable and FCF positive. But the gap is enormous: UBER generates 8x the FCF with 8.8 percentage points more operating margin. Why?
The OpEx Efficiency Gap: Why Unit Economics Don't Equal Profits
Here's the counterintuitive finding that explains everything: LYFT has better unit economics but can't convert them to profits.
The Paradox Explained:
| Metric | UBER | LYFT | Gap |
|---|---|---|---|
| Gross Margin | 39.7% | 42.6% | LYFT +2.9pp |
| OpEx % of Revenue | 30.6% | 42.2% | LYFT +11.6pp |
| Operating Margin | 9.2% | 0.4% | UBER +8.8pp |
| GP-to-OpEx Ratio | 1.30x | 1.01x | Scale efficiency |
LYFT's 42.2% OpEx burden completely wipes out its 2.9pp gross margin advantage and then some.
Why This Happens
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Fixed Cost Leverage - UBER spreads G&A and R&D across 8x more revenue. A $1 billion R&D budget is 2% of UBER's revenue but would be 16% of LYFT's.
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Platform Economics - Uber Eats and Freight share infrastructure (tech, support, insurance systems) with Mobility. LYFT only has one segment.
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Advertising Efficiency - UBER's brand awareness reduces customer acquisition costs. LYFT must spend more as a percentage of revenue to stay visible.
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Insurance Scale - Larger risk pool enables better rates. UBER's actuarial data from millions of rides provides pricing power LYFT can't match.
The Bottom Line: LYFT wins the battle (unit economics) but loses the war (scale economics). A GP-to-OpEx ratio of 1.01x means LYFT barely covers its operating expenses with gross profit. UBER's 1.30x gives it a 30% buffer to absorb cost shocks and generate profit.
The Earnings Quality Inversion: LYFT Scores Higher
Here's another paradox: the barely profitable company has better earnings quality than the highly profitable one.
Earnings Quality Comparison
| Quality Dimension | UBER | LYFT | Winner |
|---|---|---|---|
| Overall Score | 6/10 | 7/10 | LYFT |
| Accounting Aggressiveness | Neutral | Neutral | TIE |
| SBC/Revenue | ~3.5% | 1.06% | LYFT |
| SBC Trend | Elevated | -25% YoY | LYFT |
| One-Time Items | $4B tax benefit | None | LYFT |
| Goodwill Growth | Stable | +55% | UBER |
| Red Flags | 2 | 3 | TIE |
Why LYFT Scores Better
1. SBC Discipline
LYFT's stock-based compensation is remarkably low for a tech company and declining:
- LYFT SBC: $66.6M quarterly (1.06% of revenue), declining 25% YoY
- UBER SBC: $438M quarterly (~3.5% of revenue), elevated with $3.9B unvested liability
From Our Pass 2 Extraction (LYFT):
"SBC expense of $66.6 million. SBC as a percentage of revenue is 1.06%... SBC growth of -25.17% year-over-year indicates declining expense."
LYFT's SBC discipline means less shareholder dilution and more sustainable earnings.
2. No One-Time Items Distorting Earnings
UBER's $16.64B net income includes a massive one-time boost:
From Our Pass 2 Extraction (UBER):
"Release of valuation allowance on Netherlands' deferred tax assets resulted in a substantial tax benefit ($4.0 billion)."
This $4B is a non-cash accounting benefit that won't recur. Adjusted net income is closer to $12.6B—still impressive, but 25% lower than reported.
3. LYFT's Goodwill Risk
The one area where LYFT loses: goodwill jumped 55% ($251M → $389M) from acquisitions (Freenow, TBR Global Chauffeuring). This creates future impairment risk if international expansion disappoints.
The Cash Conversion Paradox
Cash conversion ratios appear to favor LYFT dramatically, but the numbers are misleading:
| Company | FCF | Net Income | FCF / NI |
|---|---|---|---|
| UBER | $8.66B | $16.64B | 0.52x |
| LYFT | $1.08B | $0.15B | 7.2x |
LYFT's 7.2x ratio looks better, but it's distorted by two factors:
- LYFT's tiny $150M net income makes any FCF look large in comparison
- SBC add-backs ($267M/year) are massive relative to small earnings
UBER's 0.52x ratio reflects the $4B one-time tax benefit that didn't generate cash. Excluding it, UBER's conversion improves to ~0.69x.
Hidden Liabilities: Same Risk, Different Capacity
Both companies face significant hidden liabilities, but UBER has far more capacity to absorb losses.
Hidden Liabilities Comparison
| Exposure | UBER | LYFT |
|---|---|---|
| Accrued Litigation/Tax | $2.0B | Undisclosed |
| Total Debt | $9.6B | Minimal |
| Driver Classification Risk | HIGH | HIGH |
| Cash Position | $9.1B | Lower |
| Risk Absorption Capacity | 8x larger | Limited |
The Same Existential Risk
Both companies describe driver classification as a HIGH severity risk:
UBER (Q3 2025 10-Q):
"We are involved in numerous legal proceedings globally, including putative class and collective class action lawsuits, demands for arbitration, charges and claims before administrative agencies..."
LYFT (Q3 2025 10-Q):
"Litigation seeking to reclassify drivers as employees is pending and/or threatened in multiple jurisdictions, which may require significant business model alteration."
Different Capacity to Absorb
The Scale Math:
| Cost Absorption | UBER | LYFT |
|---|---|---|
| G&A increase Q3 2025 | +$480M (88%) | Flat |
| As % of Revenue | 0.97% | N/A |
| Same $480M hit to LYFT | N/A | 7.6% |
UBER can absorb a $480M legal hit as a rounding error. The same hit to LYFT would wipe out all profitability and then some.
UBER's $9.1B cash position and access to debt markets creates a "risk moat." Both face the same lawsuit. Only one can afford to lose.
The Autonomous Vehicle Question
One factor not captured in financial metrics: UBER has autonomous vehicle exposure. LYFT doesn't.
UBER-Waymo Partnership
- Status: Active in Austin and Atlanta (exclusive)
- Fleet: 100+ Waymo vehicles, scaling
- Ratings: 4.9 stars average
- Model: Uber handles fleet management, Waymo handles autonomy
LYFT's Human Driver Focus
LYFT has no major AV partnership announced. Management focuses on "marketplace health" and human driver engagement.
The Valuation Gap Explained:
UBER's 3.5x P/S vs LYFT's 1x P/S partly reflects AV optionality. If autonomous scales, UBER has platform integration and operational experience. LYFT's valuation assumes permanent margin disadvantage without AV upside.
This is a free call option embedded in UBER's valuation that LYFT doesn't offer.
Investment Framework
Different investors should prefer different rideshare stocks based on their priorities.
Investment Profile by Objective
| Investor Type | Recommendation | Rationale |
|---|---|---|
| Growth Investors | UBER | 20% revenue growth, 3 segments, AV optionality |
| Value Investors | LYFT | 1x P/S (vs 3.5x), margin convergence potential |
| Quality Investors | LYFT | 7/10 EQ, declining SBC, cleaner earnings |
| Risk-Tolerant | LYFT | Higher beta, 12.5x upside if margins converge |
| Conservative | UBER | Scale moat, risk absorption capacity |
Analyst Sentiment
| Metric | UBER | LYFT |
|---|---|---|
| Consensus | Strong Buy | Buy |
| Analyst Count | 47 | 30 |
| Average Target | $109-117 | $22-25 |
| Current Price | ~$85 | ~$19.62 |
| Upside to Target | 30-45% | 11-29% |
The Margin Convergence Question
Scenario Analysis:
| If Margins Converge... | UBER | LYFT |
|---|---|---|
| LYFT reaches 5% op margin | Stable | 12.5x improvement |
| UBER compresses to 5% | -46% decline | N/A |
| Status quo continues | Premium justified | Discount justified |
LYFT at 1x P/S prices in permanent margin disadvantage. If LYFT reaches even 5% operating margin (half of UBER), the stock reprices dramatically. Management's "cost discipline" guidance suggests slow convergence at best.
Screen for ROIC leaders: Compare UBER and LYFT against sector peers on return on invested capital. Explore the ROIC Screener →
Key Takeaways
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UBER transformed from $8.5B loss (2019) to $8.66B FCF (2025)—a 158% FCF increase in 2 years.
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LYFT has better unit economics (42.6% gross margin vs 39.7%) but loses at the operating level due to OpEx burden (42.2% vs 30.6%).
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LYFT wins on earnings quality (7/10 vs 6/10) with lower SBC (1.06% vs ~3.5%) and declining dilution.
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UBER's earnings include a $4B one-time tax benefit that won't recur. Adjusted profitability is 25% lower than reported.
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Both face the same driver classification risk but UBER has 8x capacity to absorb losses.
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UBER's valuation premium (3.5x vs 1x P/S) reflects scale economics and AV optionality.
Deep dive into these companies: MetricDuck's 5-pass filing intelligence extracts hidden liabilities, accounting quality signals, and risk factors that don't appear in financial screeners.
Methodology
Primary Sources:
- Uber Q3 2025 10-Q (SEC EDGAR, filed November 4, 2025, CIK: 0001543151)
- Lyft Q3 2025 10-Q (SEC EDGAR, filed November 5, 2025, CIK: 0001759509)
Data Extraction:
- Pass 1 (Narrative Intelligence): Management tone, strategic priorities, forward guidance
- Pass 2 (Accounting Quality): Earnings quality scores, SBC analysis, red flags
- Pass 3 (Hidden Liabilities): Contingent exposures, litigation, regulatory matters
- Pass 4 (Risk Landscape): Overall risk assessment, competitive position
- Pass 5 (Segment Performance): Revenue trends, margin analysis by segment
Financial Metrics:
- TTM metrics calculated from BigQuery XBRL data warehouse
- 8-quarter trend analysis from SEC filings (2023-2025)
- OpEx efficiency ratios calculated as (Revenue - Gross Profit - Operating Income) / Revenue
Limitations:
- Analysis based on quarterly filings only; annual 10-K may provide additional context
- UBER's gross margin calculation may differ from company-reported non-GAAP metrics
- Forward-looking statements in filings are management estimates subject to change
- Earnings quality scores are model-generated assessments, not guarantees
- AV partnership details from public announcements, not SEC filings
Disclaimer
This analysis is for informational purposes only and does not constitute investment advice. The information is based on SEC filings and our proprietary filing intelligence extraction. Readers should conduct their own research and consult with financial advisors before making investment decisions. Past performance is not indicative of future results. MetricDuck is not a registered investment advisor.
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