Uber's Q1 2021 Earnings: A Detailed Analysis

This week, Uber released its Q1 2021 earnings report, mirroring a similar release from Lyft. Interpreting these results requires careful examination, much like with its competitor.

We will analyze both companies’ performance concurrently to gain a comprehensive understanding of the current state of the ride-hailing and food-delivery industry.

Key Financial Results

Uber’s revenue figures fell short of projections, yet its profitability exceeded expectations. Specifically, the company recorded $2.9 billion in revenue for the quarter.

This represents a significant difference compared to the $3.28 billion anticipated by investors. Despite this revenue shortfall, Uber demonstrated improved financial performance.

While analysts predicted a loss of $0.54 per share, Uber’s actual GAAP results showed a more contained loss of only $0.06 per share.

Investor Reaction

The market reacted to Uber’s performance with a decline in its stock value. Currently, the company’s stock is down approximately 4% in after-hours trading.

Understanding the Discrepancies

Were you taken aback by the revenue miss? Perhaps surprised by the profit gain? Or even concerned by the stock price decrease? A deeper dive into the figures is warranted.

Let's begin to dissect the data to understand the underlying factors influencing Uber’s Q1 2021 results.

Revenue underperformance requires further investigation, while the positive surprise in profitability suggests effective cost management or other favorable conditions.

Uber’s Quarterly Performance

Several factors influenced Uber’s performance during the quarter. Notably, the COVID-19 pandemic played a significant role. The effects of the pandemic are visible throughout Uber’s results, primarily impacting the ride business negatively while simultaneously boosting its delivery operations.

Examining the company’s gross bookings data, which encompasses both segments, provides further insight:

It’s important to observe that Uber’s total platform spending increased year-over-year. This is a positive indicator. The growth in the delivery sector, when compared to the same period last year, was exceptionally strong. (The inclusion of Postmates should be considered.) The decline in the ride-hailing business appears relatively moderate in contrast. Furthermore, Uber’s freight initiatives are becoming increasingly significant.

Let's now analyze Uber’s revenue figures for the same period. Remember that gross bookings represent the total amount spent by Uber users through the company’s apps. Revenue, conversely, reflects Uber’s earnings from these gross bookings.

Here’s a visual representation of the data:

The results regarding gross bookings begin to appear less favorable at this point. While delivery revenue experienced remarkable growth, exceeding its gross bookings growth rate, the ride-hailing business showed the opposite trend. A $600 million accrual related to the resolution of historical driver classification claims in the U.K. also impacted the company’s Q1 2021 ride-hailing revenue.

This accrual stemmed from Uber’s obligation to classify its U.K. drivers as employees. As reported by TechCrunch in March, this entailed “all drivers in the U.K. will be paid holiday time based on 12.07% of their earnings, which will be paid out every two weeks. Drivers will also be paid at least the minimum wage (called the National Living Wage) after accepting a trip request and after expenses,” alongside a pension scheme.

Excluding the U.K. accrual, Uber’s ride-hailing revenue reached $1.453 billion, bringing total revenues to $3.5 billion for the period, surpassing expectations. (However, the complexity doesn’t end there!)

Turning to adjusted profits, here’s a summary of the company’s performance during the quarter:

Today, I want to emphasize Uber’s adjusted profits over its GAAP results, as the latter were inflated by a one-time $1.6 billion sale of its self-driving business. Therefore, a year-over-year comparison based on adjusted figures may be more equitable. It’s important to note, however, that Uber’s adjusted EBITDA results do not include the impact of the U.K. accrual. If you find this frustrating, you’re not alone; Uber’s results serve as a compelling case study in complexity for business schools.

Regarding the data itself, Uber’s adjusted EBITDA loss improved by 41% to $359 million. Uber aims to achieve positive adjusted EBITDA this year, making this a key metric to monitor. Closer examination reveals that despite the food delivery segment remaining unprofitable, even on an adjusted basis, the decline in ride-hailing adjusted income was beneficial. Fortunately, the company’s corporate losses decreased significantly compared to the previous year, resulting in an overall reduction in adjusted losses.

Are we beginning to see Uber’s results recover from the COVID-19 impact experienced last year? The answer is yes. Considering that COVID-19 initially affected Asian markets before spreading globally, these regions experienced lockdowns earlier and, in some cases, returned to normalcy more quickly. Therefore, when we observe the following data:

It becomes clear that Uber’s APAC business is thriving. This should be encouraging for those optimistic about the company’s future.

Determining the overall significance of these numbers is a valid question, and a difficult one to answer. Here are a few key points to consider:

• Uber faces regulatory challenges not only in the U.K. but also in California, a crucial market for the company.
• The company addressed numerous inquiries regarding driver supply, which could pose a challenge moving forward. Despite safety concerns, the company reported an increase in driver availability. However, with trips down 13% year-over-year, this remains a factor to watch.
• Achieving aggregate adjusted profitability will be difficult unless the delivery business begins to generate adjusted EBITDA or ride-hailing experiences a substantial resurgence.

Your interpretation of these factors should provide a clear indication of Uber’s potential performance in upcoming quarters. Prior to the earnings release, investors anticipated a $0.45 per share loss for Q2 2021, based on $3.68 billion in revenue. We will soon see how the company performs.

TechCrunch and Extra Crunch will provide further coverage of Uber and Lyft’s earnings, and their implications for the broader startup mobility sector tomorrow.