Uber Earnings: What Happened

UBER Rides gross bookings were below estimates ,Eats gross bookings exceeded.

Key Takeaways

  • EPS was -$0.54 vs. -$0.56 analysts predicted.
  • Revenue came in below analyst expectations.
  • Eats gross bookings were higher than predicted, while Rides gross bookings were lower.
  • The company retrospectively adjusted FY 2019 revenue to reflect implementation of a new accounting policy; one impact was that Q4 FY 2019 reported revenue dropped to $3.8 billion.

What Happened

Uber reported mixed results for its Q4 FY 2020 earnings. EPS of -$0.54 was an improvement as compared to -$0.64 for Q4 FY 2019 and 2 cents per share better than analysts predicted. However, revenue of $3.2 billion was lower than analyst expectations. This performance is potentially mitigated by Uber's announcement that the company adjusted its accounting policies; as a result, previously reported revenue from Q4 FY 2019 decreased to $3.7 billion, indicating a YOY decline of 15.5%. Uber's gross bookings were similarly mixed. Gross bookings for the company's Rides segment, referred to as "Mobility" in its earnings release, declined by 49.8% YOY and was below analyst expectations. On the other hand, gross bookings for the Eats segment, referred to as "Delivery," came in ahead of analyst expectations and increased by 129.8% YOY to $10.1 billion.

(Below is Investopedia's original earnings preview, published February 8, 2021.)

What To Look For

Uber Technologies Inc. (UBER), the ride-hailing service that went public in 2019, has been among the hardest-hit companies during the COVID-19 pandemic. The company's ride-hailing segment, by far its biggest, has been severely hurt as millions of people shelter at home and as more people move away from big cities, Uber's biggest markets.

Investors will watch to see how dramatically these trends have impacted Uber when the company reports earnings on February 10, 2021 for Q4 FY 2020. Analysts expect Uber to post a net loss per share for the 11th straight quarter as revenue declines year-over-year (YOY) for the third straight quarter.

Investors are also likely to focus on Uber's gross bookings for both its Rides and Eats segments. These two metrics reflect how the company's ride-hailing and food delivery services, respectively, have fared during the pandemic. Analysts expect gross bookings for Rides to drop significantly YOY, as gross bookings for Eats more than double.

Uber's stock lagged the broader market for much of the past year. As the pandemic began in earnest in late March and early February of 2020, Uber shares plummeted farther than the market as a whole, and the stock did not fully recover for months. Uber shares, however, began to soar after the company's Q3 FY 2020 earnings report on November 5. Since then, they have outpaced the broader market. Uber shares have provided investors with a total return of 59.1% over the past 12 months compared to the S&P 500's total return of 16.6%.

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

Uber has yet to post a quarter of positive EPS since going public in 2019. Uber posted EPS of -$4.71 in Q2 FY 2019, its biggest loss during the nearly four-year period from early FY 2017 to late FY 2020. Still, the company's losses have been gradually narrowing during the past 6 quarters, although perhaps at a slower pace during the pandemic. In Q3 FY 2020, Uber posted the smallest quarterly loss since going public, or -$0.62 per share. Now, analysts predict Q4 FY 2020 EPS of -$0.56, which would be even smaller.

Uber's revenue has also been hurt in recent quarters by the pandemic as revenue in the ride-hailing business has plunged. After more than two years of quarterly companywide revenue growth YOY, this trend reversed beginning in Q2 FY 2020. Analysts estimate that Q4 revenue will decline by 10.8% YOY, the smallest YOY decline in the past three quarters.

Uber Key Metrics
  Estimate for Q4 FY 2020 Q4 FY 2019 Q4 FY 2018
Earnings Per Share ($) -0.56 -0.64 -1.97
Revenue ($B) 3.6 4.1 3.0
Gross Bookings, Rides ($B) 7.4 13.5 11.5
Gross Bookings, Eats ($B) 9.7 4.4 2.6

Source: Visible Alpha

As mentioned above, investors will also focus on two other key Uber metrics: gross bookings from its ride-hailing service, where Uber has traditionally gotten most of its revenue, and from its food delivery service. These gross bookings metrics are defined as the total dollar value, including applicable taxes, tolls, and fees, generated from Uber's Rides and Eats segments, respectively. The metrics make no adjustment for consumer discounts and refunds, nor for driver earnings and incentives.

Uber Rides typically has been the company's primary source of revenue. But in Q2 FY 2020 Uber Eats generated more revenue than Rides for the first time. The reason for the shift between segments is due to the COVID-19 pandemic.

The Rides segment has been hit especially hard. As lockdowns introduced to limit the spread of the disease have kept people indoors, fewer customers are utilizing Uber's ride-hailing service. This negatively impacts the segment, which Uber calls Rides. Gross bookings for the Rides segment declined 5.0% in Q1 FY 2020, the first drop since at least the first quarter of 2017. The subsequent two quarters of 2020 saw steeper drops YOY of 75.0% and 53.0%, respectively. Analysts estimate that Uber will post another steep decline in Q4 FY 2020, down 45.1% YOY.

Uber's food delivery business, by contrast, has thrived amid the pandemic as consumers increase orders for food deliveries instead of eating out. The young Uber Eats segment has posted dramatic quarterly growth for the past two years. The past two quarters have seen Eats gross bookings climb at the fastest rate in more than a year, by 105.6% in Q2 and 133.7% in Q3 of FY 2020. Now, analysts estimate that Eats gross bookings will grow by 121.1% YOY in Q4 FY 2020. Nonetheless, Uber's delivery segment has yet to make a profit as of the latest quarter. Uber measures profits in its segments by adjusted EBITDA. Q3 2020 adjusted EBITDA for Uber's delivery segment was -$183 million. Investors will watch to see whether Eats can get closer to profitability in Q4.

Article Sources
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  2. Wall Street Journal. "Uber, Lyft Face a No-Sharing Economy."

  3. Uber Technologies Inc. "Uber Announces Date of Fourth Quarter and Full Year 2020 Results Conference Call."

  4. Visible Alpha. "Financial Data."

  5. Uber Technologies Inc. "Uber Announces Results for Third Quarter 2020."

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