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Uber Freight Sees Jump In Q2 Revenue; Parent Company Turns In Weak Performance

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Uber Freight Sees Jump In Q2 Revenue; Parent Company Turns In Weak Performance

Uber Freight's revenue rose strongly in the second quarter of 2020 compared to last year while its negative earnings before interest, taxes, depreciation and amortization (EBITDA) increased slightly.

Uber Freight's second-quarter revenue was $211 million, up from $167 million, an increase of 27% on a constant currency basis. Meanwhile, EBITDA for the segment rose to a loss of $49 million compared to a loss of $52 million in the second quarter of last year.

However, the EBITDA figure for the quarter was also better than the first-quarter Uber Freight EBITDA of negative $64 million. The $211 million revenue figure also was a sequential improvement to the $198 million in revenue from the first quarter.

Uber is looking for investors in its Freight segment. In the company's earnings statement, it said little about the segment, except to note that it had launched in-app bidding for freight, which it said "increases pricing flexibility and improves our market clearing abilities." It also noted the  signing of TMS integration partnerships with BluJay and Oracle.

On the earnings call with analysts, CFO Nelson Chai said Uber is "pleased with the progress in freight … as we continue to invest in technology." Uber Freight's machine learning algorithms "allow more loads to be booked and to reduce empty miles."

In the earnings statement, Uber said its spot revenue in the Freight segment generated through API integrations was up 200% from the second quarter of 2019.

Uber has changed the name of its Eats division to Delivery, which includes the former Uber Eats service. EBITDA in the Delivery segment improved by 19% to negative $232 million from $286 million. But it was in revenue that Uber Delivery showed tremendous growth, rising to $885 million from $337 million, a 172% increase on a constant currency basis. 

The overall picture for Uber was not as positive as those two segments. The mobility division, which includes its ride-sharing business, saw net revenue drop to $793 million from $2.34 billion last year, a 64% decline on a constant currency basis. That business still did manage to post a positive adjusted EBITDA of $50 million, but it was $506 million in the second quarter of last year, a 90% decline. 

The bottom line was an adjusted EBITDA loss for the company of $837 million, compared to negative $656 million last year. Monthly active platform consumers dropped to 55 million from 99 million a year ago, and trips were down 56% to 737 million from 1.677 billion a year ago.

Gross bookings for Uber declined to $10.2 billion, a 32% decline year-on-year on a constant currency basis. The difference in Mobility vs. Delivery was striking: Mobility gross bookings were down 73% while Delivery grew 113%.

Overall, the company's GAAP-basis earnings per share of negative $1.02 was 14 cents worse than Wall Street consensus, according to SeekingAlpha. Revenue of $2.24 billion was better than consensus by $60 million. 

There also was a gross bookings consensus estimate of $10.5 billion versus actual total of $10.2 billion. Trips of 737 million were well below the consensus of 876 million, and the drop to 55 million users of the platform was well below the consensus of 82 million. 

Gross bookings and revenue are not the same thing at Uber. Mobility's revenue was down 67% from the second quarter of 2019 while Delivery revenue was up 103% during that time. 

Like any startup — though in the case of Uber, as a public company, it probably should not be called that — cash on hand and the speed of the cash burn is key. Cash stood at $6.75 billion at the close of the quarter, down from $10.8 billion at the close of 2019. Short-term investments rose to $1 billion from $440 million. But overall, total current assets declined to $9.66 billion from $13.9 billion. Total assets, which include line items not as liquid as those in the total current assets category, declined to $28.2 billion from $31.7 billion. 

In the statement accompanying the release of the financial report, CFO Chai cited the fact that Mobility EBITDA remained profitable in the quarter, that Delivery EBITDA was stronger despite still being in the red and that the company eliminated $1 billion in costs, "reducing corporate G&A and Platform R&D costs by over $150 million."

"All this, in addition to our strong balance sheet, bolsters our continued confidence that we will achieve Adjusted EBITDA profitability before the end of 2021," Chai said.

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Photo by Jake Blucker on Unsplash

 

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