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Earnings Results: Uber is cash-flow positive as rides, delivery and revenue beat expectations

Uber Technologies Inc. stock rose sharply Tuesday as the ride-hailing and delivery giant’s revenue and forecast beat expectations, and as it reported positive free cash flow for the first time.

Uber UBER, +14.67% shares climbed 15.1% in morning trading, to put it on track for the highest close since May 4, and the best one-day performance since it soared 17.8% on March 24, 2020.

Uber reported growth across its business year over year, with overall gross bookings of $29.1 billion, beating analysts’ expectation of $28.93 billion. Mobility, or rides, gross bookings were $13.4 billion, compared with $8.64 billion in the year-ago period. Delivery gross bookings were $13.9 billion, up from $12.91 billion in the first quarter last year. Analysts expected $12.64 billion in rides gross bookings and $14.49 billion in delivery gross bookings.

“When we look at the competitive environment, this is the strongest we’ve felt since [Chief Financial Officer Nelson Chai] and I have been here,” said Dara Khosrowshahi, Uber’s chief executive, on a conference call with analysts Tuesday morning. 

Uber also reported free cash flow of $382 million, beating expectations of $106.7 million, though it posted a second-quarter loss of $2.6 billion, or $1.33 a share. That compared with net income of $1.14 billion, or 58 cents a share, in the year-ago period. Uber said the loss included $1.7 billion in losses related to the revaluation of its Aurora, Grab and Zomato stakes. 

Revenue more than doubled to $8.1 billion from $3.93 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast a loss of 27 cents a share on revenue of $7.36 billion.

The company reported adjusted Ebitda of $364 million, compared with an adjusted Ebitda loss of $509 million in the prior year period. Ebitda stands for earnings before interest, taxes, depreciation and amortization; Uber further excludes additional items such as costs associated with stock-based compensation and more.

As it tries to ensure an adequate supply of workers, the ride-hailing giant announced last week that it would let most U.S. drivers see fares up front so they can decide if a trip is worth accepting. The company said it would also let drivers see other nearby trip requests.

Khosrowshahi said on the conference call that driver supply continues to improve, with inflation affecting drivers’ decision to come onto the platform.

“The machine is working,” he said. “We’re in a competitive place to earn, and it’s showing in driver retention numbers.”

In response to an analyst’s question about whether improving driver supply will help lower the prices of rides, Chai said he expects prices to improve but that the company would spend on driver incentives in markets where they’re needed.

Khosrowshahi said markets on the West Coast, such as San Francisco, L.A. and Seattle, continue to lag in the recovery from pandemic-related effects.

Meanwhile, Chai said in response to another analyst question that the company has not seen inflation have any “discernible” effect on the demand for delivery.

Investing.com senior analyst Haris Anwar cited Uber’s continued growth in delivery as a strength. “The biggest positive for the ride-hailing company is that Uber Eats and its delivery services haven’t lost momentum even after the reopening [from pandemic-related lockdowns],” he said.

Uber expects third-quarter gross bookings of $29 billion to $30 billion and adjusted Ebitda of $440 million to $470 million. Analysts expect gross bookings of $30 billion, adjusted Ebitda of $383 million, and are forecasting a loss of 19 cents a share on revenue of $7.67 billion.

Shares of Uber have fallen 32.5% so far this year, while the S&P 500 index SPX, -0.06% has decreased 14.1% year to date.

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