Uber Shares Fall: Revenue Beat Overshadowed by Core Losses

Uber Reports Second Quarter Financial Results

Following the closing bell today, Uber, the leading U.S. ride-hailing company, disclosed its financial performance for the second quarter. These results were released a day after its competitor, Lyft, published its own Q2 earnings report.

While Lyft achieved positive adjusted EBITDA during the quarter, Uber did not replicate this success. However, Uber recorded a net income of $1.14 billion, largely attributed to its investments in companies such as Didi and Aurora Innovation.

Financial Highlights

Uber’s gross bookings reached $21.9 billion in Q2, representing a substantial 114% increase year-over-year. This resulted in revenues of $3.93 billion for Uber, a 105% jump from the $1.91 billion reported in Q2 2020.

The company maintains its trajectory toward pre-tax profitability, reaffirming its expectation to achieve adjusted EBITDA profitability by the fourth quarter, as stated in its earnings release.

Analyst Expectations and Market Reaction

Analysts anticipated revenues of $3.74 billion and earnings per share of -$0.51, according to Yahoo Finance data. Uber surpassed revenue expectations, but fell short of forecasts regarding its adjusted EBITDA loss.

The expected adjusted EBITDA loss was -$324.5 million, however, the actual loss amounted to $509 million. Consequently, Uber’s shares experienced a decline of over 8% in after-hours trading, though some recovery has occurred, leaving shares down by more than 6%.

Segment Performance

In terms of gross bookings, Uber’s ride business demonstrated the most significant growth in Q2 2021, increasing by 184% to $8.84 billion compared to the previous year. Delivery, a significant contributor to gross bookings, grew by 85% to $12.91 billion.

Despite the larger gross bookings from delivery, Uber generates less revenue per dollar spent compared to ride-hailing. The two segments produced revenues of $1.96 billion and $1.62 billion, respectively.

Uber Freight, the company’s smallest division by revenue, experienced 64% growth, reaching $348 million. Uber is actively expanding this division through strategic acquisitions and partnerships, aiming for adjusted EBITDA breakeven by the end of 2022.

Uber Freight Acquisition

Last month, Uber Freight completed the acquisition of Transplace from TPG Capital for approximately $2.25 billion. This deal included $750 million in Uber stock and the remaining amount in cash.

Profitability Analysis

Collectively, Uber’s ride-hailing and delivery businesses did not achieve profitability. However, the ride-hailing business did generate $179 million in positive adjusted EBITDA, although this was lower than the Q1 2021 result.

The delivery business continued to report negative adjusted profits, with a loss of $161 million. Uber’s overall adjusted EBITDA for Q2 2021 was -$509 million, a 39% improvement year-over-year, but still below breakeven.

Impact of Investments

Uber’s operating loss of $1.19 billion was offset by $1.93 billion in nonoperating income. This income primarily stemmed from unrealized gains on debt and equity securities, including a $1.4 billion gain on its Didi investment and a $471 million gain on its Aurora Investments.

The initial public offering of Didi occurred during the second quarter.

Geographic Performance

The APAC region exhibited the fastest revenue recovery, with a 227% increase from $217 million to $709 million. EMEA followed with a 159% growth, from $358 million to $929 million.

Revenue in the United States and Canada grew by 76%, from $1.13 billion to $1.98 billion, while Latin America saw a more moderate 44% increase.