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UBER Benefits From Delivery Business Amid Rising Expenses
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Uber Technologies, Inc. (UBER - Free Report) is benefiting from the improvement in Delivery operations and recovery in Mobility operations. Shares of Uber have gained 51.4% so far this year against the industry’s growth of 31.2%.
Image Source: Zacks Investment Research
The company recently reported first-quarter 2023 loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents. In first-quarter 2023, Uber reported a loss of $3.04 per share. Total revenues of $8,823 million outperformed the Zacks Consensus Estimate of $8,697.5 million. The top line jumped 29% year over year.
How is Uber Doing?
Uber’s Delivery business continues to witness a boom, with online order volumes surging amid the pandemic. Revenues from the segment increased 23% year over year in the first quarter of 2023, while gross bookings from the unit augmented 8%.
During first-quarter 2023, Delivery adjusted EBITDA was $288 million higher than the adjusted EBITDA of $30 million in the year-ago quarter. Further, Uber’s efforts to expand its Delivery business through acquisitions of Postmates (completed in December 2020) and alcohol delivery startup Drizly Inc. (for $1.1 billion in 2021) are praiseworthy.
Continued recovery in the Mobility business is encouraging. Mobility revenues jumped 72% year over year to $4,330 million in first-quarter 2023 as ride volumes continued to rebound, while gross bookings from the unit improved 40% to $14,981 million. For the second quarter of 2023, Uber expects gross bookings in the range of $33 billion-$34 billion.
With a focus on financial discipline, recovery in Mobility operations and an improvement in Delivery adjusted EBITDA and betterment in Uber’s Adjusted EBITDA are encouraging. The company generated an adjusted EBITDA of $761 million in the first quarter of 2023 compared with an adjusted EBITDA of $168 million in the year-ago period. For the second quarter of 2023, Uber expects adjusted EBITDA between $800 million and $850 million.
Despite the aforementioned tailwinds, a rise in total costs and expenses continues to weigh on Uber’s bottom line. In first-quarter 2023, total costs and expenses grew 23.8% year over year, with the cost of revenues increasing 30.6%. Increased spending on driver incentives in some markets also weighs on Uber’s performance.
Uber exited the first quarter of 2023 with cash and cash equivalents of $4,045 million, lower than the long-term debt, net of the current portion of $9,257 million. This implies that the company does not have enough cash to meet its debt obligations.
Copa Holdings has an expected earnings growth rate of 52.54% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 14.6% over the past 90 days. Shares of CPA have soared 39.9% over the past six months.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 9.14%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 14.6% over the past 90 days. Shares of UAL have soared 4.2% over the past six months.
Alaska Air has an expected earnings growth rate of 44.83% for the current year. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 9.1% over the past 90 days. ALK has a long-term expected growth rate of 24.23%.
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UBER Benefits From Delivery Business Amid Rising Expenses
Uber Technologies, Inc. (UBER - Free Report) is benefiting from the improvement in Delivery operations and recovery in Mobility operations. Shares of Uber have gained 51.4% so far this year against the industry’s growth of 31.2%.
Image Source: Zacks Investment Research
The company recently reported first-quarter 2023 loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents. In first-quarter 2023, Uber reported a loss of $3.04 per share. Total revenues of $8,823 million outperformed the Zacks Consensus Estimate of $8,697.5 million. The top line jumped 29% year over year.
How is Uber Doing?
Uber’s Delivery business continues to witness a boom, with online order volumes surging amid the pandemic. Revenues from the segment increased 23% year over year in the first quarter of 2023, while gross bookings from the unit augmented 8%.
During first-quarter 2023, Delivery adjusted EBITDA was $288 million higher than the adjusted EBITDA of $30 million in the year-ago quarter. Further, Uber’s efforts to expand its Delivery business through acquisitions of Postmates (completed in December 2020) and alcohol delivery startup Drizly Inc. (for $1.1 billion in 2021) are praiseworthy.
Continued recovery in the Mobility business is encouraging. Mobility revenues jumped 72% year over year to $4,330 million in first-quarter 2023 as ride volumes continued to rebound, while gross bookings from the unit improved 40% to $14,981 million. For the second quarter of 2023, Uber expects gross bookings in the range of $33 billion-$34 billion.
With a focus on financial discipline, recovery in Mobility operations and an improvement in Delivery adjusted EBITDA and betterment in Uber’s Adjusted EBITDA are encouraging. The company generated an adjusted EBITDA of $761 million in the first quarter of 2023 compared with an adjusted EBITDA of $168 million in the year-ago period. For the second quarter of 2023, Uber expects adjusted EBITDA between $800 million and $850 million.
Despite the aforementioned tailwinds, a rise in total costs and expenses continues to weigh on Uber’s bottom line. In first-quarter 2023, total costs and expenses grew 23.8% year over year, with the cost of revenues increasing 30.6%. Increased spending on driver incentives in some markets also weighs on Uber’s performance.
Uber exited the first quarter of 2023 with cash and cash equivalents of $4,045 million, lower than the long-term debt, net of the current portion of $9,257 million. This implies that the company does not have enough cash to meet its debt obligations.
Zacks Rank & Stocks to Consider
Uber currently carries a Zacks Rank #3 (Hold).
Investors interested in better-ranked stocks from the Zacks Transportation sector can consider Copa Holdings, S.A. (CPA - Free Report) , United Airlines (UAL - Free Report) and Alaska Air Group, Inc. (ALK - Free Report) . Copa Holdings and United Airlines currently sport a Zacks Rank #1 (Strong Buy), while Alaska Air carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Copa Holdings has an expected earnings growth rate of 52.54% for the current year. CPA delivered a trailing four-quarter earnings surprise of 33.35%, on average.
The Zacks Consensus Estimate for CPA’s current-year earnings has improved 14.6% over the past 90 days. Shares of CPA have soared 39.9% over the past six months.
United Airlines has an expected earnings growth rate of more than 100% for the current year. UAL delivered a trailing four-quarter earnings surprise of 9.14%, on average.
The Zacks Consensus Estimate for UAL’s current-year earnings has improved 14.6% over the past 90 days. Shares of UAL have soared 4.2% over the past six months.
Alaska Air has an expected earnings growth rate of 44.83% for the current year. The Zacks Consensus Estimate for ALK’s current-year earnings has improved 9.1% over the past 90 days. ALK has a long-term expected growth rate of 24.23%.