Uber’s first set of results as a publicly listed company were always going to be closely scrutinised, and its generally well known that IPO costs can act as a drag on the first set of numbers, so expectations were always going to be on the low side for this latest set of numbers.
However, optimism was a little bit higher, given the positive market reaction to Lyft’s numbers which came out on Wednesday. In fact, the Uber share price finished the day over 7% higher as a result of this, well above its post-IPO lows of $36.
Uber results disappoint despite low expectations
Against the low expectations, Uber’s Q2 numbers still managed to disappoint on pretty much every level, posting an eye-watering loss of $5.2bn for the quarter. The company said that the size of the loss reflected the impact of its IPO in May, with $3.9bn in stock related expenses accounting for most of that. Given that the IPO raised $8bn, that’s still a shockingly high number that hasn’t been recycled back into the business. Quarterly revenues also came in below expectations, with the company reporting $2.87bn, below estimates of $3.05bn.
Uber share price: is there growth ahead?
The business is certainly growing with monthly active users increasing from 91 million at the end of last year to 99 million, and the number of trips rising to 1.7 billion. Gross bookings are expected to rise between 31-35% year on year, with margins also expected to improve quarter on quarter. With numbers like these, one would expect the Uber share price to have decent prospects.
Uber Eats has also continued to grow well, with a rise in revenues last year of 149% to $1.5bn, and this growth continued in this latest quarter with a further rise of 72% in revenues. While encouraging, these are still very low numbers when set against an expectation that losses are still expected to be in the billions of US dollars in the years ahead, and this will be reflected in the Uber share price.
CEO Dara Khosrowshahi said that he expected losses to peak this year and come in at about $3.2bn, and start declining thereafter. “In 2020, and 2021, you’ll see losses come down”, he said.
While these words are encouraging, I’d be even more worried if he said they weren’t going to come down. And the concern is that these levels of losses still don’t point to a particularly sustainable business model. It will be interesting to see how the Uber share price reacts to the disappointing Q2 numbers when the US markets open today.