Uber Q3 FY2021 Earnings Report Preview: What to Look For

Focus on UBER rides gross bookings

Key Takeaways

  • Analysts estimate EPS of -$0.31 vs. -$0.62 in Q3 FY 2020.
  • Gross bookings for the rides business is expected to rise sharply YOY.
  • Revenue is expected to rise at healthy pace as Uber's ride-hailing business continues to rebound from pandemic-depressed lows.

Uber Technologies Inc. (UBER), which went public nearly two and a half years ago, suffered a staggering $6.8 billion in net losses last year as the fast-expanding COVID-19 pandemic caused a drastic plunge in the revenue from its core ride-hailing business. But this year, Uber's revenue is rebounding as vaccine rollouts and easing of restrictions dramatically boost demand for the company's ride-hailing services again.

Investors will be focused on whether Uber's financial performance continues to improve from the hit it took last year when the company reports earnings on Nov. 4, 2021 for Q3 FY 2021. The news may be mixed. Analysts expect the company to post its second quarterly adjusted loss per share in this fiscal year. That's in spite of analysts' expectations that revenue will grow at a robust, albeit slower pace compared to the previous quarter.

Investors will also be specifically focusing on gross bookings for Uber's rides business. Ride's gross bookings is a key metric indicating the total dollar amount generated by Uber's Mobility segment, which was significantly impacted by the COVID-19 pandemic. Analysts expect rides gross bookings to rise dramatically compared to the same quarter a year ago, but still at a slower pace compared to the most recent quarter.

Shares of Uber have underperformed the broader market over the past year. The stock had been significantly outperforming between early November 2020 and late April 2021. But it fell sharply in early May. And after a brief rebound through early July, it began to slide again and started to lag the market by the end of the month. The stock had a few brief periods of outperformance in late September and the first half of October but is currently underperforming. Uber's shares have provided a total return of 23.2% over the past year, below the S&P 500's total return of 39.9%.

One Year Total Return for S&P 500 and Uber
Source: TradingView.

Uber Earnings History

Uber reported Q2 FY 2021 earnings and revenue that surpassed analysts' consensus estimates. The company posted positive earnings per share (EPS) for the first time since the first quarter of FY 2018 as revenue soared 105.4% year over year (YOY), ending a streak of four straight quarters of declines. Uber noted that its net income benefited from unrealized gains of $1.4 billion and $471 million due to the revaluation of its equity investments in Didi and Aurora, respectively.

In Q1 FY 2021, Uber beat analyst expectations for both earnings and revenue. The company posted its 12th consecutive quarterly loss per share. Revenue fell 10.6% compared to the year-ago quarter, marking the fourth straight quarter of falling revenue. Uber noted that demand for its ride-hailing business was beginning to pick up again as its delivery business continued to expand.

Analysts expect Uber's earnings to turn negative again in Q3 FY 2021 and for revenue growth to slow compared to the year-ago quarter. It would be the second loss per share in FY 2021. Revenue is still expected to rise at a robust pace of 58.9% YOY, but markedly slower than the pace in Q2. For full-year FY 2021, analysts expect Uber to report its third consecutive annual loss per share. Annual revenue is forecast to rise 46.8%, which would be its fastest pace in at least the past four years.

Uber Key Stats
Estimate for Q3 FY 2021 Q3 FY 2020 Q3 FY 2019
Earnings Per Share ($) -0.31 -0.62 -0.68
Revenue ($B) 4.5 2.8 3.6
Rides Gross Bookings ($B) 10.1 5.9 12.6

Source: Visible Alpha

The Key Metric

As mentioned above, investors will also be focusing on Uber's rides gross bookings. Uber's rides business, which comprises its Mobility segment, connects consumers with drivers, who provide rides in a range of different types of vehicles, including cars, motorbikes, and minibuses. The Mobility segment is distinct from Uber's other two business segments: Delivery and Freight. Gross bookings is a key metric defined as the total dollar value, including applicable taxes, tolls, and fees, generated by Uber's various businesses. Rides gross bookings represent 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, the business has been bouncing back this year amid vaccine rollouts and the relaxation of lockdown restrictions.

Prior to the onset of the pandemic, Uber's annual rides gross bookings rose 32.3% and 19.7% in FY 2018 and FY 2019, respectively. Then, in FY 2020, gross bookings for the ride-hailing business plunged 46.5% as people sheltered and worked at home, curtailing both personal and professional trips with services such as Uber. Rides gross bookings continued to decline in the first quarter of FY 2021, falling 37.7% YOY. However, they bounced back in Q2 FY 2021, rising 183.7% YOY. Analysts expect rides gross bookings to continue rebounding in Q3 FY 2021, forecasting growth of 70.2% YOY for the quarter. But even with two consecutive quarters of solid growth, Uber's rides gross bookings may not fully recover to pre-pandemic levels. For full-year FY 2021, analysts estimate that rides gross bookings will increase 38.7% to $36.9 billion, but that would be well below Uber's peak of $49.7 billion rides gross bookings in FY 2019.

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