Uber shares surge after Q1 report!

Uber Technologies Inc. rallied as much as 6.4% to $34.7 on Tuesday, after the tech giant reported its Q1 earnings and revenues that beat analysts estimates. 

Key highlights from company report:

• Revenue grew 29% YoY to $8.8 billion, estimate $8.72 billion  - revenue growth significantly outpaced Gross Bookings growth due to a change in the business model for our UK Mobility business. 

  • Gross Bookings grew 19% YoY to $31.4 billion, estimate $31.47 billion

  • Mobility Gross Bookings of $15.0 billion +40% YoY, estimate $14.83 billion

  • Delivery Gross Bookings of $15.0 billion +8% YoY, estimate $14.96 billion

  • Trips during the quarter grew 24% YoY to 2.1 billion, estimate $1.67 billion

• Net loss $157 million, includes $320m net benefit (pre tax) primarily due to net unrealized gains related to the revaluation of Uber’s equity investments. 

• Adjusted Ebitda $761 million, estimate $678.6 million. Adjusted EBITDA margin as a percentage of Gross Bookings was 2.4%, up from 0.6% in Q1 2022. Incremental margin as a percentage of Gross Bookings was 12.0% YoY. 

• Net cash provided by operating activities was $606 million and free cash flow, defined as net cash flows from operating activities less capital expenditures, was $549 million. 

• Unrestricted cash, cash equivalents, and short-term investments were $4.2 billion at the end of the first quarter.

Uber revenue in millions, source: Company's Financia Statement

In the financial statements, the company stated that despite a sluggish economic outlook and rising inflation, consumers are spending more on rides and food delivery, leading to increased engagement and profitability for Uber. The company's adjusted earnings before interest, taxes, depreciation, and amortization reached $761 million, beating expectations. The report also highlighted Uber's success in weathering the economic slowdown better than its rival, Lyft, which is set to report its results later this week. Despite fewer-than-expected monthly active users, Uber's ride-hailing bookings of $15 billion beat projections, with the increased engagement attributed in part to lower fares and new mobility products. The company has also seen an increase in active ride-share drivers, up 35% from last year, reflecting an increase of over one million. Uber Eats, which grew rapidly during the pandemic, has helped to cushion the impact of the decrease in ride-hailing demand. 

Company also highlighted that drivers engagement is at an all-time high, with strong earnings levels. 

By rolling out innovative new Mobility products, we have not only attracted new drivers and riders to the platform, but they are engaging with us more often. Consequently, we are seeing constructive category position trends across most of our major markets with expanding profitability, even as our competitors continue to compete on incentives and price.

Dara Khosrowshahi, CEO

Q2 outlook

Nelson Chain, CFO stated that the company delivered record profitability and free cash flow in Q1, and is poised to expand profitability again in Q2. The company expects adjusted earnings before interest, taxes, depreciation, and amortization of $800 million to $850 million in the current quarter. While Uber has not announced widespread cost cuts or layoffs, the company has lowered headcount through performance reviews during the first quarter and expects its workforce to be "flat to down" in the quarters ahead.

Uber (UBER.US) stock price is currently trading at $34.9, which is up by 6.9%. This indicates a bullish sentiment among investors towards Uber's future prospects after strong Q1 financials.