Uber stock jumps premarket on revenue beat, earnings loss
Yahoo Finance Live anchors discuss second-quarter earnings for Uber.
Video Transcript
- Also here, let's get the check in on Uber. Getting a boost in the free market after beating on revenue. Here is how shares are trading ahead of the bell. You see them-- the shares of U-B-E-R, yeah, just like the name of the company. It's up by about 12% as of right now here.
And a few things to call out because they were able to generate free cash flow in the quarter that came in of about $382 million in the second quarter. That actually topped some of the analysts' estimates as well. And then also, they were seeing a surge in that travel demand actually contributing to this-- higher bookings and then additionally, that also moving through to the revenue side as well.
- Yeah it's-- Uber. This is just a fascinating quarter here. Now the ticker is overtaking Pinterest as the top ticker on the Yahoo Finance platform. But to your point Brad, two things that stood out-- the free cash flow turnaround through. $82 million in free cash flow-- the market really likes to hear this from a company that's been promising free cash flow for about a year. It looks like they finally delivered it as more people returned to the platform and were willing to pay higher prices.
Also, all businesses were profitable on an adjusted operating basis, Julia, which is another thing the market likes to see because CEO Dara Khosrowshahi has been promising cash flow, promising profit margins after a year plus of cost cuts, and he finally delivered it. It just took a lot of time.
- And it's so-- it's the cost cuts in combination with the demand that the company is seeing. And demand, interestingly, not just from people taking Ubers but people driving on Uber. Khosrowshahi said that new driver sign-ups on Uber up 76% year over year, which is pretty remarkable. I mean, we're coming from pandemic low, but nonetheless, despite all that we have talked about as customers of Uber complaining about the fares going up, drivers certainly have expressed a lot of discontent for various reasons related to Uber. And yet there is still that demand.
The other thing that catches my eye here that Khosrowshahi said is that Uber One subscriptions reaching 10 million members. And that's the monthly subscription where you get discounted rides, yada, yada, yada. Now I have to say, Uber has been offering promotions on that front. I think I got a free month of it.
- I got one too.
- And then forgot to cancel it. And so then I ended up paying for a month, but now I'm canceling it. So I do wonder what kind of attrition there will be following those kinds of promotions for Uber One.
- Right. And that attrition-- the number of people that actually cancel after that membership runs out is going to be critical for how much they see that reoccurring booking that comes through, not just on the ride side but also on the eats side as you look at that Uber One membership as the equivalent of an Amazon Prime membership, if you would, for an Uber.
But particularly here though, as we do think about where this year was vastly different than last year. I mean, some of the year over year comps-- it just wasn't even close when you look at the number of rides. Trips during the quarter-- that grew 24%. They saw 21 million trips per day on average, and the larger question I think, going forward for Uber is how they can actually maintain profitability and start to appease shareholders even more.
- And unclear how this business performs in any recession if we get it early next year. But look, while Dara deserves praise here, let's stop short of perhaps really giving him the old slap on the back on both shoulders here. I mean this company IPOed at $45. I mean, it might open up around $25 a share or $26 a share after the pop here, and that's nothing to write home about.
- Yeah, and two quick things on that front as well. The delivery business bookings rose 7% and came in a little bit shy of estimates. And we know that this business like counterbalances each other, right? So that's something to keep in mind. And secondly, the company has not been very good at investing, right?
So it has stakes in things like Grab, Aurora Innovation, Zomato, and it had to take a write-down related to that. Now we know that it's been tough investing in this environment, particularly in startups, but nonetheless that is something that caught my eye. Lyft, by the way, reports on Thursday. So that'll be interesting to watch as well.