Uber Technologies Inc (NYSE: UBER), on Tuesday, reported to have ended its fiscal third quarter with a loss. Shares are still up more than 15% this morning.
Why are Uber shares up that much?
Investors refrained from punishing the ride-hailing company primarily for its upbeat guidance.
For Q4, Uber expects $30 billion to $31 billion in gross bookings versus analysts at $29.6 billion.
Its forecast for adjusted EBITDA stands at $600 million to $630 million – also well ahead of $568 million that experts had anticipated. Discussing the earnings report on CNBC’s “Squawk Box”, CEO Dara Khosrowshahi said:
[Our results] is a reflection of where the economy is going. U.S. consumer remains strong and they’re spending on services and we’re in the service sector, which is why we gave out the healthy outlook.
Uber shares are still down more than 30% for the year. Gross bookings this quarter were up 13% (constant currency) in “delivery”. The Chief Executive added:
Delivery continues to grow. We accelerated a bit off of Q2 and what we’re focused on in delivery is profitability. Profitability of that business is improving radically – EBITDA of $181 million this quarter and we’ll keep pushing.
Notable figures in Uber’s Q3 earnings report
- Lost $1.20 billion versus the year-ago $2.40 billion
- Per-share loss came down from $1.28 to 61 cents
- Adjusted EBITDA was $516 million this quarter
- Revenue jumped 72% year-on-year to $8.34 billion
- Consensus was $456 million on $8.11 billion revenue
Uber CEO sees tailwinds moving forward
Adjusted EBITDA margin climbed to an all-time high in Q3 that generated $358 million in free cash flow, as per the earnings press release. CEO Khosrowshahi also noted:
We’ve always talked about Uber being an all-weather company. When we look at our business, we feel tailwinds. But we’re being cautious, even though the business is incredibly strong.
That enthusiasm is shared by the Wall Street as well. It recommends buying Uber shares and sees upside in them to $47 on average – up another 55% from here.
Freight revenue declined 4.0% sequentially, reflecting the descent in shipping costs. The broader strength in Uber’s revenue, though, was related to premium pricing versus the taxi cabs, which the Chief Executive said were not modulating.
Number of drivers worldwide is an all-time high. In the U.S. we’re about 80% recovered in terms of drivers back to the service and pricing levels have started to modulate. We’re hoping to continue to meter pricing to consumers.
Last month, we reported the U.S. Department of Labour to have proposed a new rule that could disable Uber from classifying its drivers as independent contractors.