Uber (NYSE: UBER) shares finished 19% higher following the company's Q2 earnings report despite missing on the bottom line. However, the company issued better than expected guidance and also was successful in terms of becoming cash flow positive for the first time in its history.
The stock price reaction is similar to what we are seeing in other tech companies as investors seem to have priced in near-term weakness and are focusing on an improving outlook. Uber's beat on the top-line also provides insight that travel demand continues to be strong and not exactly consistent with the prevailing recession narrative.
Inside the Numbers
In Q2, Uber reported a $1.33 in earnings per share which badly missed analysts' estimates as the company took a $1.7 billion writedown on its investments in Aurora, Grab, and Zomato. Even accounting for this, the company lost $900 million in the quarter.
On an EBITDA basis, Uber generated $364 million which was well above its previous forecast of $255 million. Gross bookings were up 33% to reach $29.1 billion which was in line with its Q1 forecast.
Uber's mobility division has gross bookings of $13.4 billion, a 57% increase from last year. In contrast, Uber's delivery division generated $13.9 billion, a 12% increase from last year.
Mobility continues to outpace deliveries in terms of revenue generation - another sign that the economy is returning to normal. Mobility had $3.55 billion in revenue, while delivery had $2.7 billion in revenue. Freight continues to grow with $1.83 billion in revenue.
The adverse economic conditions have benefitted Uber in that drivers are returning to the platform as it noted an acceleration in new driver sign-ups and activity. New driver sign-ups increased by 76% compared to last year. In Q2, the company had 1.87 billion trips, a 9% increase from last quarter and 24% up from last year.
As a result, wait times have significantly declined with rides at all-time highs in many major markets. The company also continues to adopt new driver-friendly policies like letting them choose what trips they want to take and see their earnings before they accept a trip.
It also issued a better-than-expected forecast for Q3. The company expects gross bookings between $29 billion and $30 billion and adjusted EBITDA of $440 million to $470 million.