Uber Q2 FY 2021 Earnings Report Preview: What to Look For

Uber Technologies Inc. (UBER) is beginning to see its core ride-hailing business rebound after demand for taxi services cratered last year due to people sheltering at home amid the COVID-19 pandemic. But the resurgence in the company's mobility business isn't stopping it from doubling down on its food delivery business, which has greatly benefitted throughout the pandemic. Uber added grocery deliveries to its delivery-services roster last year amid the pandemic and has recently announced partnerships with both Albertsons Companies Inc. (ACI) and Costco Wholesale Corp. (COST).

Investors will be focused on how Uber's combined mobility, delivery, and freight businesses performed when the company reports earnings for Q2 fiscal year (FY) 2021 on August 4, 2021. Analysts expect Uber to report another loss per share. But they are forecasting revenue to expand for the first time since the first quarter of FY 2020.

Investors will also be specifically focusing on Uber's gross bookings for its ride-hailing mobility business. Mobility gross bookings is a key metric indicating the total dollar amount generated by Uber's ride-hailing business, which was significantly impacted by the COVID-19 pandemic. Analysts expect mobility gross bookings to rise for the first time since the final quarter of FY 2019.

Uber's shares have outperformed the broader market over the past year. The stock surged in late October through the first week of November, following the U.S. presidential election. It then continued to climb for several months as positive developments concerning COVID-19 vaccine efficacy results were released.

However, since peaking in the first half of February, the stock began to slide after the company issued its earnings report for Q4 FY 2020. Its outperformance gap has narrowed significantly since then. Shares of Uber have provided a total return of 43.7% over the past year, above the S&P 500's total return of 35.4%.

Uber Earnings History

Uber’s stock continued to fall after it released earnings results for Q1 FY 2021. The company posted a loss per share that was narrower than what analysts were expecting. However, revenue missed expectations by a significant margin, falling 10.6% compared to the year-ago quarter. This marked the fourth straight quarter of declining revenue, although Uber did note that it was beginning to see increased demand for its ride-hailing services.

In Q4 FY 2020, Uber's loss per share was slightly less than what analysts expected. But revenue came in below consensus estimates, falling 15.5% compared to the year-ago quarter. The revenue decline was not as rapid as the 20.9% fall in the previous quarter nor the 34.1% drop registered in Q2. Uber highlighted the growth of its delivery business during the pandemic, which it said doubled over the past year.

Analysts are expecting Uber to post another loss per share in Q2 FY 2021, but revenue is expected to improve considerably. Revenue for the quarter is expected to rise 95.3%, ending the streak of declines begun in Q2 FY 2020.

For full-year FY 2021, analysts are currently forecasting a loss per share of $1.28, which would be the third straight annual loss per share, but the smallest out of the three. Annual revenue, meanwhile, is expected to expand 41.4%, which would be the fastest rise in at least the past four years.

^{Source: Visible Alpha}

The Key Metric

As mentioned above, investors will also be focusing on Uber's mobility gross bookings. Uber's mobility business connects consumers with drivers, who provide rides in a range of different types of vehicles, including cars, motorbikes, and minibuses.

Gross bookings is a key metric defined as the total dollar value, including applicable taxes, tolls, and fees, generated by Uber's various businesses. Uber operates a mobility, grocery delivery, and freight shipping business, with mobility gross bookings representing the portion of total gross bookings that are generated by the ride-sharing segment of the company's operations. The pandemic has taken a huge toll on Uber's ride-hailing business. However, despite ongoing risks, the business is bouncing back amid vaccine rollouts and the relaxation of lockdown restrictions.

In FY 2018 and FY 2019, the two years prior to the onset of the COVID-19 pandemic, Uber's mobility gross bookings rose 32.3% and 19.7%, respectively. Then, in FY 2020, gross bookings for the ride-hailing business plunged 46.5% as people sheltered at home and many businesses that would normally be the destination for ride-hailing customers were forced to shut down. Mobility gross bookings continued to decline in the first quarter of FY 2021, falling 37.7% compared to the year-ago quarter. This marked the fifth straight quarter in which mobility gross bookings fell.

Analysts are expecting a bounce-back in Q2 FY 2021, predicting that mobility gross bookings will increase 171.2% YOY. This would represent the first rise since the final quarter of FY 2019, albeit from a low base. For full-year FY 2021, analysts are currently forecasting mobility gross bookings to rise 37.6%. However, the total value would still be below levels reached prior to the start of the pandemic.