A month has gone by since the last earnings report for Uber Technologies (UBER). Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Uber due for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Uber's Q2 Loss Wider Than Expected
Uber incurred a loss of $1.02 per share, wider than the Zacks Consensus Estimate of a loss of 78 cents. However, the amount of loss narrowed by 78.4% year over year.
Meanwhile, total revenues of $2,241 million surpassed the Zacks Consensus Estimate of $2,175.6 million. The top line plunged 29.2% year over year due to weakness in the ride-hailing segment, thanks to coronavirus confining people to their homes.
Following an organizational change in the third quarter of 2019, Uber started reporting through five segments, namely, Mobility (formerly Rides), Delivery (formerly Eats), Freight, Other Bets, and Advanced Technologies Group (“ATG”) and Other Technology Programs.
In the second quarter, majority (54%) of the company’s revenues came from Delivery. Revenues from this segment surged more than 100% year over year to $1,211 million. The company’s delivery business is experiencing a boom with orders from homebound customers surging. Mobility revenues dropped 67% year over year to $790 million and Freight revenues climbed 27% to $211 million. Revenues from Other Bets came in at $4 million, down 86%. Meanwhile, ATG and Other Technology Programs generated revenues of $25 million in the reported quarter.
Total revenues declined 36% to $1,250 million in the United States and Canada. While revenues fell 44% to $232 million in Latin America, it slid 21% to $401 million in Europe, the Middle East and Africa. The same soared 30% to $358 million in the Asia-Pacific region. Monthly active platform consumers declined 44% to $55 million.
Gross bookings from Mobility declined 75% to $3.05 billion. Meanwhile, gross bookings from Delivery augmented more than 100% to $6.96 billion. Gross bookings from Freight also climbed 27% to $212 million. However, gross bookings from Other Bets plummeted 67% to $5 million. Total gross bookings decreased 35% to $10.22 billion.
Despite higher driver incentives, cost of revenues (excluding depreciation and amortization) at Uber, decreased year over year. Total expenses declined 55.5% year over year to $3.85 billion with sales and marketing expenses falling 39.8% and research and development expenses decreasing 80.9%.
Uber exited the second quarter with cash and cash equivalents of $6.75 billion compared with $10.87 billion at the end of 2019. Long-term debt, net of current portion at the end of the quarter, was $6.69 billion compared with $5.71 billion at 2019-end.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
Currently, Uber has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren’t focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Uber has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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