Uber's ride-hailing growth slowed as drivers ran short, and it is shifting incentives to fix it

Uber's ride-hailing business grew more slowly in the September 2026 quarter, and the company says the trouble was on the driver side of its app. Mobility gross bookings, the total riders paid for trips before drivers and Uber split the money, rose 18% from a year earlier (17% in constant currency), down from 22% (20% in constant currency) the quarter before, and slower than the 22% growth in delivery. Management said the result fell short of its own expectations because driver numbers did not keep pace with rider demand in several international markets, and the chief financial officer singled out high fuel prices in Brazil and India as a drag on drivers.

That matters more than a slowdown elsewhere would, because Mobility is where Uber makes most of its money. Last quarter its segment operating income, the company's measure of each segment's profit before corporate overhead and platform R&D, was far larger than delivery's, while freight lost a little. Calculated from those three figures, Mobility earned about 70% of the segments' combined profit.

The remedy Uber described is a transfer inside its own pricing. Chief executive Dara Khosrowshahi said that a year ago more incentive money went to riders to keep fares down, and that the company is now cutting rider incentives to pay drivers to show up instead; he added that this can sometimes mean higher prices for riders, which the company watches. The chief financial officer, Balaji Krishnamurthy, said the fourth-quarter driver spending would affect take rate, the share of bookings Uber keeps as revenue, and would not move margin in any meaningful way.

Last quarter's numbers show little of that cost yet. Mobility segment income came to 8.0% of the segment's gross bookings, calculated from the filed results, up from 7.4% a year earlier and 7.6% the quarter before. Mobility revenue did fall from a year earlier even as bookings grew, but the company attributes a large part of the gap in total revenue growth to changes in how some of its businesses are booked, so that decline cannot be read as the new driver incentives.

The company has put its claim in the guidance. For the fourth quarter it guided gross bookings growth of 18% to 22% in constant currency, the same band the chief financial officer described as steady over recent quarters, and non-GAAP earnings per share growth that he put at 37% at the midpoint. If the driver spending is as contained as management says, the Mobility margin should hold up while take rate falls; the fourth-quarter results will carry both figures.

Management also offered reasons for optimism and some explanations that cannot yet be tested. Mr Krishnamurthy said driver supply growth picked up in October, with notable gains in Brazil and India, and that the U.S. was more resilient than the international markets, though growth there also eased. Fuel prices and immigration in Canada are the company's explanations for the shortage; the filed numbers show the slowdown, not its cause.

Uber says it can fund all of this. Free cash flow was $2.5 billion last quarter, and buybacks fell to $750 million from $1,463 million a year earlier, although across the first nine months of the year they still took more than half of free cash flow, calculated from the cash-flow statement. Mr Khosrowshahi said that in the early days Uber would carry robotaxi fleets on its own balance sheet, though Mr Krishnamurthy said the capital involved in the near term is fairly limited and that larger fleets, from 2028, should be financed by third-party capital; the company expects about 700 fully driverless vehicles on its network by year-end and more than 2,000 in 2027. Mr Khosrowshahi said the company has "plenty of capital" for both acquisitions and buybacks, and the driver money comes out of rider incentives rather than new spending.