Uber Q3 FY2021 Earnings Preview: Key Insights and What to Expect

Focus on Uber's Ride-Hailing Gross Bookings

Highlights to Watch

• Analysts predict an EPS of -$0.31, improving from -$0.62 in Q3 FY2020.
• Significant year-over-year growth expected in rides gross bookings.
• Revenue anticipated to rise steadily as Uber’s ride-hailing segment rebounds from pandemic lows.

Uber Technologies Inc. (UBER), which went public over two years ago, faced a dramatic $6.8 billion net loss last year due to the COVID-19 pandemic severely impacting its core ride-hailing revenue. However, with vaccine distributions and easing restrictions, Uber’s revenue is making a strong comeback this year, driven by renewed demand for its mobility services.

As Uber prepares to release its Q3 FY2021 earnings on November 4, investors will closely examine whether the company’s financial recovery continues. Although analysts forecast a second consecutive quarterly adjusted loss per share for the fiscal year, revenue growth is expected to remain robust, albeit at a slower rate than the previous quarter.

Gross bookings for Uber’s rides segment will be a focal point. This metric, representing the total dollar value generated by Uber’s Mobility business, was deeply affected by the pandemic. Analysts anticipate a sharp year-over-year increase in rides gross bookings, though growth may decelerate compared to the prior quarter.

Uber’s stock performance has lagged behind the broader market over the past year. After a strong rally from November 2020 to April 2021, shares declined sharply in May and, despite brief recoveries, have generally underperformed since. Over the last 12 months, Uber’s total return stands at 23.2%, trailing the S&P 500’s 39.9% return.

Uber’s Earnings Track Record

In Q2 FY2021, Uber surpassed analyst expectations with earnings and revenue growth, posting positive EPS for the first time since early 2018. Revenue soared by 105.4% year-over-year, ending a streak of declines. The company’s net income benefitted from unrealized gains of $1.4 billion and $471 million from equity revaluations in Didi and Aurora, respectively.

Conversely, in Q1 FY2021, Uber reported its 12th consecutive quarterly loss per share, with revenue down 10.6% year-over-year. Despite this, signs of recovery emerged as ride-hailing demand began to increase and the delivery segment expanded.

For Q3 FY2021, analysts expect Uber to return to a negative EPS, marking the second loss this fiscal year. Revenue growth is forecasted at a strong 58.9% year-over-year but at a slower pace than Q2. Full-year FY2021 projections indicate a third consecutive annual loss per share, with revenue growth expected to hit 46.8%, the fastest in recent years.

Source: Visible Alpha

Critical Metric: Rides Gross Bookings

Investors will prioritize Uber’s rides gross bookings, a vital indicator of the Mobility segment’s health. This segment connects riders with drivers across various vehicle types, distinct from Uber’s Delivery and Freight divisions. Gross bookings encapsulate the total dollar value from Uber’s services, including taxes and fees, with rides gross bookings representing the ride-sharing portion.

Before the pandemic, Uber’s annual rides gross bookings grew by 32.3% in FY2018 and 19.7% in FY2019. However, FY2020 saw a drastic 46.5% drop due to widespread lockdowns and reduced travel. The decline continued into Q1 FY2021 with a 37.7% year-over-year decrease but rebounded sharply in Q2 FY2021 with a 183.7% increase. Analysts predict a continued recovery in Q3 FY2021, expecting 70.2% growth year-over-year. Despite this progress, rides gross bookings may not fully return to pre-pandemic levels soon. For FY2021, estimates point to a 38.7% rise to $36.9 billion, still below the $49.7 billion peak in FY2019.

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