Uber Technologies Inc. (UBER) had a quarter that would make most companies jealous: record free cash flow, a World Cup tourism windfall, and a big acquisition to boot. But Wall Street is a tough crowd, and the ride-hailing giant's softer-than-expected third-quarter guidance has investors hitting the brakes.
Shares fell 2.57% to $70.14 in premarket trading Wednesday after the company reported second-quarter results that largely matched expectations, but offered an earnings outlook that missed the mark.
The Numbers That Matter
Uber reported revenue of $14.19 billion for the quarter, up 12% from a year earlier but slightly below the analyst consensus estimate of $14.24 billion. Adjusted earnings came in at 81 cents per share, right in line with what analysts were looking for.
Gross bookings, the total value of rides and deliveries, jumped 24% year over year to $58.02 billion, or 22% on a constant-currency basis. That's the kind of growth that gets people excited, and it's not hard to see why.
World Cup Fever and Beyond
CEO Dara Khosrowshahi credited the FIFA World Cup for a surge in ride demand during the quarter, with more than 8 million tourists using Uber across host cities in the United States, Canada, and Mexico. That's a lot of people needing a lift to the stadium.
Trips rose 18% year over year to 3.87 billion, while monthly active platform consumers increased 16% to 208 million. The company's profitability also improved, with GAAP income from operations up 30% to $1.89 billion and GAAP net income attributable to Uber up 30% to $2.39 billion. Adjusted EBITDA climbed 33% to $2.82 billion.
Delivery and Freight Steal the Show
While mobility remains the core business, delivery and freight are where the growth is happening. Mobility revenue inched up just 1% to $7.36 billion, but delivery revenue surged 28% to $5.25 billion, and freight revenue jumped 26% to $1.58 billion.
Gross bookings tell a similar story: mobility bookings climbed 22% to $28.99 billion, delivery bookings rose 26% to $27.46 billion, and freight bookings were up 25% to $1.57 billion.
Uber isn't just resting on its ride-hailing laurels. The company recently agreed to acquire Germany-based Delivery Hero in a $14.8 billion deal, which will expand its food and grocery delivery business into new markets. That's a big bet on the idea that people want everything delivered, not just rides.
The Autonomous Future
Uber is also going all-in on self-driving cars, planning to invest more than $10 billion over the coming years to scale autonomous vehicles. Khosrowshahi said the company is well positioned as the industry shifts from testing autonomous technology to commercial deployment.
In a concrete step forward, Uber's partner, U.K.-based robotaxi developer Wayve, received Private Hire Vehicle licenses from Transport for London. That clears another hurdle toward launching autonomous rides in London, and more than 100,000 people have already signed up to be among the first riders. The future is coming, and it might just be driverless.
Cash Flow and Buybacks
Uber's financial engine is humming. The company repurchased about $518 million of its shares during the quarter and generated $2.79 billion in free cash flow. For the first time, trailing 12-month free cash flow exceeded $10 billion. That's a lot of cash to fuel growth, buybacks, or maybe a few more acquisitions.
The Guidance Hangover
But here's the rub: for the third quarter, Uber expects gross bookings of $58.25 billion to $60.25 billion, representing constant-currency growth of 18% to 22%. That's solid, but the company forecast adjusted earnings of 84 cents to 88 cents per share, below the analyst consensus estimate of 89 cents.
That slight miss on the bottom line is enough to sour the mood, even after a quarter that included a World Cup boost and record free cash flow. Investors are a fickle bunch, and guidance is what matters for the road ahead.
So, Uber is celebrating a strong quarter, but the party might be a little quieter in the months ahead. The company is investing heavily in the future, and that's a story worth watching.
