Equity Research 06.08.2021

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Uber Technologies, Inc.

Uber Technologies, Inc. (Ticker: UBER) develops and operates technology applications supporting a variety of offerings on its platform. The Company’s operating segments include Mobility, Delivery, Freight, and Advanced Technologies Group (ATG). Mobility refers to products that connect consumers with Mobility drivers who provide rides in a variety of vehicles, such as cars, auto-rickshaws, motorbikes, minibusses, or taxis. The delivery offer allows consumers to search for and discover local restaurants, order a meal, and either pick up at the restaurant or have the meal delivered and, in certain markets, also includes offerings for grocery.

Uber beat estimates on the top and bottom line and turned an unexpected one-time profit during Q2 2021.

Here’s how Uber did, compared with expectations:

  • Earnings per share: 58 cents vs. an expected loss of 51 cents
  • Revenue: $3.93 billion vs. $3.75 billion expected

Uber reported a net income of $1.1 billion for the quarter. That was largely due to unrealized gains of $1.4 billion in Didi and $471 million in Aurora. Shares of Didi have dropped about 37% over the last month, however, shrinking Uber’s stake in the company by $2 billion last week. Uber’s operating loss was still $1.19 billion.

Its adjusted EBITDA loss was $509 million, down $150 million from the prior quarter but an improvement of $328 million from last year. EBITDA refers to earnings before interest, taxes,D&A.

Uber reaffirmed its expectation that it will reach profitability on an adjusted EBITDA basis by the end of this year.

Here’s how Uber’s largest business segments performed in the second quarter of 2021:

  • Mobility (gross bookings): $8.6 billion, up 184% from a year ago; Mobility gross bookings were at a $39 billion run rate in July, with gross bookings up 6% month-over-month and 83% recovered versus July 2019. Uber reported 1.51 billion trips on the platform, up 4% from Q1 and 105% from the year-ago quarter. Uber said its drivers and couriers earned an aggregate of $7.9 billion during the quarter.
  • Delivery (gross bookings): $12.9 billion, up 85% from a year ago. Delivery gross bookings were at a $51 billion run rate in July, with gross bookings up 4% mom, up 56% YoY, and up over 260% versus July of 2019.

The company has struggled with supply and demand imbalances because of the pandemic, leading to surge pricing and increased wait times. CEO Dara Khosrowshahi said on the company’s call with investors that prices and wait times aren’t meeting company targets.

U.S. and Canada mobility gross bookings were up 7% mom and 76% recovered versus July 2019, while trips were up 9% month-over-month. EMEA and LATAM were nearly fully recovered on a gross bookings basis versus July 2019, while APAC was better except India, Australia, and Taiwan impacted by new lockdowns.

Next, M&A.

Indeed, their delivery business has organically grown at a greater than 100% compound growth rate over the past four years. At the same time, they levered M&A including divestitures. Last year they divested several assets, along with cost rationalization, which helped improve the cost base by over $1 billion. For example, Careem has led the markets in the Middle East to turn into some of the most profitable markets, operating well above long-term margin targets. More recently, the acquisition of Postmates has helped them establish a No. 1 position in Los Angeles, the second largest delivery market in the U.S.

Turning to balance sheet. The past several months have been eventful for Uber’s equity investment portfolio as several portfolio companies took steps to become publicly traded entities, including DiDi, Zomato, Grab, Aurora, and Joby. At the end of Q2, their equity stakes portfolio was carried at nearly $15 billion, for over $7 per Uber Share.

SHARE PRICE – Since August 2020, the stock surge by 30,9%. The share price (06/08/2021) closed at $43,07 per share.

Outlook:

Q3 2021, they expect that total company gross bookings will be between $22 billion and $24 billion and total company adjusted EBITDA will be better than the loss of $100 million. About Q4 2021, they expect to achieve total company EBITDA profitability. More precise outlook at Q3 2021 for the full year.

 

 

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