Uber (UBER) Delivers Impressive Quarterly Report Fueled By Robust Rideshare Demand And Cost Controls

1:40 pm Tuesday, November 01st, 2022

Investors are catching a ride on Uber (UBER) shares today after the ridesharing and food delivery company reported solid 3Q22 results and provided a better-than-expected outlook for Q4. Buoyed by robust demand for travel and favorable consumer spending patterns, UBER’s mobility unit achieved quarterly record highs for Gross Bookings ($13.7 bln) and Adjusted EBITDA ($898 mln). Despite the macroeconomic uncertainties, rideshare demand remains brisk while UBER continues to take a conservative approach with costs.

Importantly, UBER expects this momentum to continue.

For Q4, the company guided for Adjusted EBITDA of $600-$630 mln, comfortably beating analysts’ estimates. Another key element of UBER’s profitability and expense management strategy has been its decision to rein in driver incentives. With active drivers now above September 2019 levels, UBER is no longer facing the severe driver shortage that plagued it and rival Lyft (LYFT) throughout 2021 and early 2022.

During the earnings call, Khosrowshahi noted that October is trending to be UBER’s strongest month ever for Mobility and for total company Gross Bookings. Overall, for Q4, UBER guided for Gross Bookings of $30-$31 bln, equating to yr/yr growth of 23-27% on a constant currency basis. That’s roughly in line with this quarter’s growth of 26%.

UBER credits improved network efficiencies, an increasing contribution from advertising, and marketing optimization, for the significant improvement in Adjusted EBITDA.

At first glance, UBER’s results may not look overly positive since it posted a GAAP loss of $0.61/share, missing expectations. That number, though, includes losses on its investments in Didi Global and Grab Holdings, so it’s not reflective of UBER’s operational performance. On an operational basis, UBER is firing on all cylinders, as evidenced by its rapidly ascending Adjusted EBITDA metric. Issues outside of its control, such as the Labor Department’s potential decision to reclassify gig-economy workers as regular employees, remain an overhang on the stock. For today, though, the spotlight is shining bright on UBER’s solid results, which also provide a bullish data point for LYFT’s upcoming earnings report on November 7.