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Uber's (UBER) Q3 Loss Wider Than Expected, Shares Decline

Zacks Equity Research
·4 min read

Uber Technologies, Inc. UBER incurred a loss of 62 cents per share in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of 60 cents. However, the loss narrowed by 8.8% year over year. Meanwhile, total revenues of $3,129 million missed the Zacks Consensus Estimate of $3,143.7 million. The top line dropped approximately 18% year over year due to weakness in the ride-hailing segment, thanks to coronavirus keeping most people homebound.

Following this lower-than-expected third-quarter performance, Uber’s shares declined 2.2% in after-hours trading on Nov 5. Shares of the company’s rival Lyft, Inc. LYFT dipped 1.5% as a consequence. Lyft carries a Zacks Rank #4 (Sell).

Following an organizational change in the third quarter of 2019, Uber, carrying a Zacks Rank #3 (Hold), started reporting through five segments, namely, Mobility (formerly Rides), Delivery (formerly Eats), Freight, Advanced Technologies Group (“ATG”) and Other Technology Programs, and All Other (formerly Other Bets). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Uber Technologies, Inc. Price, Consensus and EPS Surprise

Uber Technologies, Inc. Price, Consensus and EPS Surprise
Uber Technologies, Inc. Price, Consensus and EPS Surprise

Uber Technologies, Inc. price-consensus-eps-surprise-chart | Uber Technologies, Inc. Quote

In the third quarter, majority (46.4%) of the company’s revenues came from Delivery. Revenues from this segment skyrocketed more than 100% year over year to $1,451 million. The company’s delivery business is experiencing a boom with online order volumes from homebound customers surging. Mobility revenues plunged 53% year over year to $1,365 million, while Freight revenues climbed 32% to $288 million. Meanwhile, ATG and Other Technology Programs generated revenues of $25 million, up 47%.

Total revenues declined 30% year over year to $1,674 million in the United States and Canada. While revenues fell 39% to $320 million in Latin America, it increased 20% to $641 million in Europe, the Middle East and Africa. Moreover, the same soared 43% to $494 million in the Asia-Pacific region. Monthly active platform consumers declined 24% to $78 million.

Gross bookings from Mobility declined 53% to $5,905 million. Meanwhile, gross bookings from Delivery augmented more than 100% to $8,550 million. Gross bookings from Freight also climbed 30% to $290 million. Total gross bookings slipped 10% to $14,745 million.

Cost of revenues (excluding depreciation and amortization) decreased year over year despite higher driver incentives. Total expenses declined 13.7% year over year to $4,245 million with sales and marketing expenses falling nearly 17% and research and development expenses decreasing 34.7%.

Uber exited the third quarter with cash and cash equivalents of $6,154 million compared with $10,873 million at the end of 2019. Long-term debt, net of current portion at the end of the quarter, was $6,667 million compared with $5,707 million at 2019-end.

The company continues to be hopeful about its ability to achieve adjusted EBITDA profits before the end of 2021.

Additionally, the recent passage of Proposition 22 by California voters marks a major victory for Uber. This win will allow the company to retain the independent contractor status for its drivers, thus exempting it from the California state law, which would have forced Uber to reclassify its drivers as employees. Classifying drivers as employees would have inevitably raised labor costs for the company. Proposition 22 however, requires Uber to provide its workers with some new benefits and protections.

Performance of Other Computer & Technology Stocks

Within the broader Computer and Technology sector, AMETEK, Inc. AME and Fitbit, Inc. FIT recently reported earnings numbers.

AMETEK’s third-quarter 2020 adjusted earnings of $1.01 per share beat the Zacks Consensus Estimate by 6.3%. Net sales of $1.13 billion surpassed the Zacks Consensus Estimate of $1.09 billion. The stock carries a Zacks Rank of 3.

Fitbit, carrying a Zacks Rank #4, incurred a loss (adjusted) of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents. The company’s total revenues of $363.9 million surpassed the Zacks Consensus Estimate by 21.7%.

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