Uber shares slip 3% as earnings report falls short of lofty expectations

Uber Technologies Inc. (UBER) released its earnings report for the fourth quarter of 2023, announcing robust revenue growth and impressive earnings. Shares are seeing a sell-the-news reaction as expectations were high heading into the print. 

Uber's revenue for the quarter reached $9.94 billion, a 15% increase compared to the same period last year and higher than the estimated $9.78 billion.

The ride-hailing and delivery giant's gross bookings reached $37.58 billion, a 22% year-over-year increase, surpassing the estimated $37.12 billion. Uber's mobility bookings amounted to $19.29 billion, slightly surpassing the estimated $19.1 billion, while delivery bookings reached $17.01 billion, exceeding the estimated $16.76 billion. Freight bookings were in line with expectations, totaling $1.28 billion. 

Uber's earnings per share (EPS) experienced substantial growth, reaching $0.66, compared to $0.29 in the previous year. The company's adjusted EBITDA rose significantly by 93% year-over-year to $1.28 billion, beating the estimated $1.23 billion. The net income attributable to Uber Technologies, Inc. skyrocketed to $1.43 billion from $595 million in the same quarter of the previous year. 

One notable highlight of the earnings report was the increase in monthly active consumers platform, which reached 150 million, a 15% year-over-year growth. This growth demonstrates Uber's ability to retain and attract new users to its platform, further solidifying its position as a market leader. 

Uber's strong financial performance was driven by its core segments, with both mobility and delivery revenues experiencing impressive growth. Combined mobility and delivery revenue grew by 22% year-over-year, reaching $8.7 billion. This growth was fueled by a 29% increase in mobility bookings and a 19% increase in delivery bookings. 

The Mobility segment reported gross bookings of $19.3 billion, a 29% increase year-over-year. The segment's revenue grew by 34% to $5.5 billion, with revenue margin increasing to 28.7%, up 90 basis points (bps) year -over-year and 40 bps quarter-over-quarter. Mobility adjusted EBITDA increased by $434 million to $1.4 billion, with an adjusted EBITDA margin of 7.5% of gross bookings. 

The Delivery segment reported gross bookings of $17.0 billion, a 19% increase year-over-year. The segment's revenue grew by 6% to $3.1 billion, but revenue margin decreased to 18.3%, down 220 bps year-over-year and up 10 bps quarter-over-quarter. Delivery adjusted EBITDA increased by $235 million to $476 million, with an adjusted EBITDA margin of 2.8% of gross bookings, up from 1.7% in Q4 2022 and 2.6% in Q3 2023. 

The Freight segment reported revenue of $1.3 billion, a 17% decrease year-over-year and flat quarter-over-quarter. The segment's adjusted EBITDA loss was $14 million, a decrease of $6 million year-over-year and $1 million quarter-over-quarter.

Moreover, Uber achieved a significant milestone, with trips during the quarter growing by 24% year-over-year to 2.6 billion. The company's adjusted EBITDA margin as a percentage of gross bookings also improved, rising to 3.4% from 2.2% in the fourth quarter of the previous year. This improvement reflects Uber's ability to achieve better cost leverage from higher volumes. 

Uber has provided guidance for the first quarter of 2024. The company expects gross bookings to range from $37 billion to $38.5 billion, with adjusted EBITDA estimated to be between $1.26 billion and $1.34 billion. 

Despite the impressive earnings report, Uber's stock faced a slightly negative market reaction, as investors had exceptionally high expectations for the company. The stock had already been trading at a high valuation, and some shareholders had hoped for even better results. Consequently, Uber's earnings needed to exceed these high expectations to please the market, but they fell short of such lofty anticipation.

It is worth noting that Uber faced certain challenges during the fourth quarter, including business model changes that impacted revenue growth. In some countries, certain sales and marketing costs were classified as contra revenue, negatively affecting mobility, delivery, and combined mobility and delivery revenue growth by 5%, 11%, and 7% respectively. 

Additionally, business model changes resulted in a 110 bps negative impact on mobility revenue margin and a 190 bps negative impact on delivery revenue margin. 

Overall, Uber's strong Q4 earnings report showcases the company's ability to maintain healthy growth in both its mobility and delivery segments. The substantial increase in gross bookings, revenue, and adjusted EBITDA highlights Uber's ability to adapt to changing market dynamics and effectively leverage its platform. Although the stock failed to meet some investors' lofty expectations, Uber's solid financial performance emphasizes its position as a leader in the ride-hailing and delivery industry.

$UBER(UBER)