Uber reported strong growth in its third-quarter earnings report on Wednesday, but stumbled on the bottom line after absorbing a $479 million charge for what the company described as undisclosed legal and regulatory matters. The hit to profitability overshadowed a quarter that otherwise marked one of the largest trip-volume increases in the ride-hailing giant’s history.
Uber reported operating income of $1.11 billion for the quarter ended September 30, significantly below the $1.62 billion analysts had expected. CFO Prashanth Mahendra-Rajah attributed the shortfall partly to these legal and regulatory issues during the company’s earnings call, though Uber did not provide specific details about which cases or settlements the charge covered.
The legal expense appeared in Uber’s financial statements as part of “certain legal, tax, and regulatory reserve changes and settlements,” a line item the company uses in calculating adjusted EBITDA. According to Uber’s earnings release, these matters relate to “certain significant legal proceedings or governmental investigations” that have “limited precedent, cover extended historical periods and are unpredictable in both magnitude and timing.”
Uber did not immediately respond to Fortune‘s request for comment.
All gas, no brakes
Despite the profit miss, Uber posted revenue of $13.47 billion for the quarter, up 20% from the prior year and beating Wall Street’s estimate of $13.28 billion. Gross bookings—the total dollar value of rides, deliveries and other services on its platform—climbed 21% to $49.74 billion, topping the $48.73 billion analysts expected.
“Uber’s growth kicked into high gear in Q3, marking one of the largest trip-volume increases in the company’s history,” CEO Dara Khosrowshahi said in a statement. The company logged 3.5 billion trips during the quarter, a 22% increase from the same period last year.
Net income for the quarter reached $6.62 billion, or $3.11 per share, compared with $2.61 billion, or $1.20 per share, a year earlier. However, the net income figure included a $4.9 billion benefit from a tax valuation release, meaning the company’s operational performance was considerably less robust than the headline number suggested.
Uber’s legal fronts
The legal charge comes as Uber faces multiple legal battles across different fronts. In September, the U.S. Department of Justice filed a $125 million lawsuit alleging the company discriminated against passengers with disabilities. Uber has also filed its own RICO lawsuits against personal injury lawyers in several states, claiming they conspired with medical providers to inflate minor accident claims.
Uber’s stock is down roughly 7% as of Tuesday morning following the earnings release, despite having climbed about 46% year-to-date. The decline reflected investor disappointment with both the third-quarter profit miss and the company’s fourth-quarter guidance, which called for adjusted EBITDA between $2.41 billion and $2.51 billion—slightly below the $2.48 billion analysts expected.
For the fourth quarter, Uber forecast gross bookings between $52.25 billion and $53.75 billion, representing growth of 17% to 21% on a constant currency basis. The company also announced it would begin reporting adjusted profit forecasts instead of adjusted EBITDA starting with its first-quarter 2026 guidance, aligning with practices typical of more mature companies.
Mahendra-Rajah emphasized the company’s overall financial health despite the legal hit. “We delivered another impressive quarter on both the top and bottom lines, with accelerating growth and record profitability,” he said in prepared remarks. “This consistent execution positions us very well to invest in the many accretive growth opportunities ahead, while maintaining our commitment to returning capital to shareholders.”
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.