On Tuesday morning, Uber Technologies (UBER) released the firm's second quarter financial results.
Over the three months ended June 30th, UBER posted a GAAP EPS of $0.18 on revenue of $9.23B. The profitable earnings print beat Wall Street by almost twenty cents and compares more than nicely to the $-1.33 print for the year ago period. The revenue number, however, fell short of estimates, while still being good enough for year over year growth of 14%.
Gross bookings grew 16% (18% in constant currency) to $33.6B. Within that headline number, Mobility gross bookings grew 25% (28% in cc) to $16.7B, as Delivery gross bookings grew 12% (14% in cc) to $15.6B. Trips grew 22% during the quarter to 2.3B for an average of roughly 25M trips per day.
As revenue was growing 14%, the cost of that revenue grew 7% to $5.153B. All costs and operating expenses increased just 1.3% to $8.904B as administrative expenses dropped 42.3%. This took operating income to $326M, up from $-713M a year ago, and after factoring for interest and taxes, net income of $394M, up from $-2.601B (not a misprint).
- Mobility generated revenue of $4.894B, up 38% (40% in cc). UBER's take rate on Mobility increased from 26.6% to 29.3%. Segment adjusted EBITDA increased 52% to $1.17B.
- Delivery generated revenue of $3.057B, up 14% (17% in cc). UBER's take rate on Delivery increased from 19.4% to 19.6%. Segment adjusted EBITDA increased 232% to $329M.
- Freight generated revenue of $1.279B, down 30% (30% in cc). Segment adjusted EBITDA decreased from $5M a year ago to $-14M.
For the current quarter, UBER is anticipating gross bookings of $34B to $35B, and to produce an expected EBITDA of $975M to $1.025M.
For the period reported, UBER generated operating cash flow of $1.19B. Out of that comes just $50M in CapEx, leaving free cash flow of $1.14B, up from just $382M a year ago. The firm has not returned capital to shareholders, so a lot of this cash ended up on the balance sheet.
Taking a look at that balance sheet, UBER ran with a cash position of $6.442B, including $909M in restricted cash. Current assets wound up the quarter at $10.664B. Current liabilities add up to $8.635B, including no debt. The firm's current ratio stands at a healthy enough 1.24.
Total assets amount to $34.068B. This includes goodwill and other intangibles of $9.758B. At 28.6% of total assets, I'd keep an eye on this, but I do not at this time find this troubling. Total assets also include another $2.556B in restricted cash not labeled as "current." Total liabilities less equity comes to $24.24B. This does include long-term debt of $9.255B.
In summary, cash flows are strong to very strong and improving, while the balance sheet is in solid shape. Sure, I'd like to see that (not restricted) cash position beefed up a bit, but I am a balance sheet drill sergeant. UBER investors do not need to let this worry them.
There's a lot to like here. Surprising, but also convincing profitability due to cuts in operating expenses as much as to revenue growth. Free cash flow explosion. Healthy enough balance sheet. Strong performance in two of three sectors. I don't know what you do with Freight.
There's less freight to move these days, at least globally. So far that's been a low margin business for this firm even when it works. I am sure management is thinking about that, but this is a tenacious bunch, as is their leader... CEO Dara Khosrowshahi. That dude is perseverant.
Readers will see that these shares bottomed in June and July of 2022, which is where our Pitchfork model begins. The shares popped, then consolidated from August 2022 into February 2023. That's what built the actual fork. Since really late December, the shares - with an upside exception in February and a downside exception in April 2023 - have largely taken a steady ride upward, while remaining within the lower chamber of said Pitchfork.
Both Relative Strength and the daily MACD (moving average convergence divergence) are strong and bordering on actually being technically overbought. Using the pitchfork as a guide, and seeing how the 200 day SMA (simple moving average) came to the rescue in April, I think these shares can be purchased down to the 50 day SMA and more aggressively down to $40. The shares could hit some rough terrain as the central trendline of this Pitchfork is approached.
I am not one to get caught up in this morning's upward momentum. That said, I think going out a couple of months and writing October 20th $42.50 puts for about $1.50 looks rather attractive. If that frightens, the same trader could protect his or herself by purchasing a like amount of October 20th $37.50 puts for about $0.60. That's a net credit of $0.90 to wait for the stock to come to you, and it pays if the stock never does.