Uber Technologies (UBER) reported the firm's third quarter financial results on Thursday evening. The firm posted GAAP EPS of a loss of $1.28 per share, which fell short of consensus view of almost a full dollar per share. This net result also compares quite unfavorably with the GAAP EPS loss posted in the third quarter of 2020 ($-0.62). As for revenue, Uber generated sales of $4.85B over the three month reporting period. This number beat Wall Street and was good enough for annual growth of 72.6%.
Adjusted EBITDA printed at a pedestrian, but positive $8M. So, why the net loss that total $2.4B? The firm states that $2B of that $2.4B came directly from a revaluation of the firm's equity investments. In short, the firm is heavily invested in DiDi Global (DIDI) , also known as the "Uber of China" and as we know, DiDi Global to date has laid an egg. Oh, and after having what was truthfully a very decent quarter, the guidance was cautious. Let's explore.
Nuts & Bolts
Gross Bookings increased 57% year over year to $23.113B (an all-time high) with Mobility Gross Bookings up 67% to $9.9B, Delivery Gross Bookings up 50% to $12.8B,and Freight Gross Bookings grew 39% to $402M.
The above mentioned $8M adjusted EBITDA print represents Uber's very first profitable (on an adjusted basis) quarter as a public company. This very pedestrian result, really tells a tale of a company being torn in different directions. Adjusted EBITDA for the Mobility segment that includes the well known taxi service that we all have used, enjoyed adjusted EBITDA of $544M, up 122% from a year ago. Adjusted EBITDA for the Delivery segment improved from $-183M a year ago to $-12M, while adjusted EBITDA for the Freight segment saw an increase from $-73M to $-35M. The really heavy part of the firm is in Corporate G&A, and Platform R&D. This area did see an improvement in adjusted EBITDA, though ever so slight, from $-510M to $-489M.
Geographically, in terms of revenue distribution, the U.S. and Canada saw impressive 66% growth to $2.648B, while totals but not growth were much smaller elsewhere. EMEA (Europe, Middle East and Africa) experienced 80% growth to $1.064B. APAC (Asia Pacific) showed tremendous growth of 131% to $743M, and lastly Latin America contributed $390M in revenue, up 29%.
Looking ahead, the firm guided fourth quarter gross bookings to a range spanning $25B to $26B, with adjusted EBITDA likely to fall into a wide range that starts at $25M and tops out at $75M. This is well light of the almost $100M that Wall Street was looking for. While I think Wall Street may have taken the DIDI investment a bit more tightly than they might have, this conservative guidance is one reason why the shares sold off overnight.
I also think as Wall Street has come to see the guidance as perhaps intentionally light, the shares have recovered through the early hours on Friday morning. My opinion? Uber may have to wait until the dawn of truly autonomous driving until the firm will have the potential to truly excel in terms of profitability, but this business is truly growing. For the first time in a long time, I am feeling better about Uber.
The firm's net cash position is actually down a touch over the past 12 months if one includes short-term investments, which I do. However, the firm has seen significant growth in restricted cash, and when counting that cash, there is growth not only in the cash position, but in total assets. Total liabilities are up over 12 months on growth in long-term debt. Still assets in total amount to more than 150% of liabilities less equity. The balance sheet is in fine shape.
Readers will see that UBER hit stiff and strict resistance in October at the 38.2% Fibonacci retracement level of the February through September selloff. This stock has retaken both its 50 day SMA and 21 day EMA, that line offering recent support. There is however an unfilled $40/$42 gap that had been created in September and it is highly conceivable that there will be an attempt at some point to fill that gap.
With the shares trading so close to recent resistance and not that close to where I think the shares might go, I will not be buying equity in this name at this level today. I am willing however to take on discounted equity risk over time and get paid to do so.
Right now, UBER January $42 puts are still paying about $1.40 and UBER January $40 puts are paying between $0.90 and $0.95. I find writing those puts more attractive right now than I do purchasing equity at today's premium pricing.