Uber Stock Up On Q1 Earnings Report Despite $1B Loss

Uber Technologies Inc. reported a net loss of $1.01 billion on revenue of $3.1 billion for the first quarter ending March 31 with its non ride-hailing business, Uber Eats, showing upbeat growth. The Q1 report is Uber's first as a publicly-traded firm.

The net loss amounted to $2.26 per share in the first quarter compared with net income of $3.75 billion ($1.84 per share) year-on-year. Results for Q1 2018 were boosted by Uber's sale of operations to Grab and Yandex.

The loss of $1.0 billion compares to Uber's forecast of $1.0 billion to $1.11 billion.

Uber’s stock rose more than 3% during a conference call with analysts where the huge growth potential for Uber Eats took center stage. It closed at $39.80, down 0.25% after opening at $40.07. After-hours saw a recovery to $40.50.

On the other hand, revenue came to $3.1 billion and was in line with the high end of the range Uber forecast for Q1. Uber previously said it expected first-quarter revenue in the range of $3.04 billion to $3.1 billion. Seven analysts polled by Refinitiv IBES on average expected revenue of $3.04 billion.

On a positive note, gross bookings, which measure the total value of rides before driver costs and other expenses, rose 34% to $14.6 billion year-on-year. Bookings rose a scant 3.4% from the previous quarter, confirming the difficulty of recruiting new riders in the heavily saturated ride-hailing market.

“Earlier this month we took the important step of becoming a public company, and we are now focused on executing our strategy to become a one-stop shop for local transportation and commerce,” said CEO Dara Khosrowshahi.

“In the first quarter, engagement across our platform was higher than ever, with an average of 17 million trips per day and an annualized gross bookings run-rate of $59 billion.”

Analysts note that ride-hailing is growing much slower than other segments of Uber’s far-flung business. Revenues in Uber’s ride-hailing department grew only 9% from the same period last year compared to the company’s overall revenues growth of 20%.

Uber reported a negative core platform contribution margin for the second quarter in a row. It plunged to a negative 4.5% in Q1 compared to a 17.9% rise during the same period last year. The core platform contribution margin is the amount of profit Uber makes from its core platform business divided by adjusted net revenue.

On the other hand, Uber Eats revenue zoomed 89% while its gross bookings grew 108% quarter-on-quarter. Adjusted net revenue for the segment grew 31% to $239 million. Gross bookings improved 108% to hit $3.07 billion.

Khosrowshahi said Uber Eats has the potential to grow significantly and has the potential to overtake ride-sharing. He said if Uber Eats gets to this point “that would be an enormous win for us.”

As had been widely feared, Uber’s performance on the public market has been less than sterling. Investors and Wall Street experts expected an initial market cap of about $100 billion. What they’ve got now is only $67 billion, or $5 billion lower than the $72 billion valuation Uber earned with its last private financing.

“Seems largely uneventful,” said Atlantic Equities analyst James Cordwell. “The lack of Q2 or (fiscal year) guidance is a little disappointing -- will be interesting to see if there is any forward commentary on the call.”