Uber's total bookings surged 21% in Q3, but operating profit missed expectations, shares fell over 4% pre-market | Earnings Report

Uber's total bookings surged 21% in Q3, but operating profit missed expectations, shares fell over 4% pre-market | Earnings Report

Before the US stock market opened on November 4 Eastern Time, Uber released its third quarter report. For the three months ending September 30, operating profit was $1.11 billion, while analysts previously expected $1.62 billion. Adjusted EBITDA was $2.26 billion, also slightly below expectations. Despite weak operating profit, operating data was impressive, with total gross bookings up over 20% year-on-year to $49.7 billion, the largest increase since 2023.

Financial performance:Q3 revenue was $13.47 billion, up 20% year-on-year; market expectation was $13.26 billionNet profit was $6.6 billion, up 154% year-on-year

Core business progress:Monthly active users (MAPCs) increased 17% to 189 million; trips per user per month grew 4%Mobility gross bookings grew 20% to $25.1 billion; adjusted EBITDA grew 21% to $2 billionDelivery gross bookings grew 25% to $23.3 billion; adjusted EBITDA surged 47% to $921 millionFreight business continued to be sluggish; gross bookings remained flat at $1.3 billion and the segment is still in loss

Adjusted EBITDA grew 33% to $2.26 billion

The earnings report provided a relatively broad outlook for Q4, reflecting management’s uncertainty about business trends in the coming months. Q4 guidance for total gross bookings is $52.25-53.75 billion (up 17%-21% year-on-year), lower than the Q3 growth rate of 22%; adjusted EBITDA guidance is $2.41-2.51 billion (up 31%-36% year-on-year).

Strong business growth, profit pressure persists

From the business data, Uber indeed delivered a solid operational performance in Q3. Gross bookings for Q3 grew 21% year-on-year to $49.7 billion, exceeding analysts' expectations. This standout increase in gross bookings was mainly driven by Mobility and Delivery, reflecting robust market demand.

CEO Dara Khosrowshahi stated that travel growth in the US market was accelerated by the "popularization of low-cost products and alleviation of insurance pressures," and strong summer travel activities boosted international demand. Overall trip volume achieved the largest increase since the post-pandemic rebound.

According to the financial report, the company achieved operating profit of $1.111 billion in Q3 ending September 30, far below analyst expectations of $1.622 billion. CFO Prashanth Mahendra-Rajah said in his speech that part of the reason was undisclosed legal and regulatory matters. Additionally, adjusted EBITDA was $2.226 billion, also slightly lower than expectations.

Can the rapid growth in Delivery be sustained?

The highlight of Q3 came from Delivery, with adjusted EBITDA surging 47% to $921 million, far exceeding Mobility’s growth rate of 21%. This difference reflects the scale effect emerging in Delivery, but at the same time reveals Uber's increasing reliance on a single growth engine.

The competitive landscape for delivery is complex, with DoorDash applying pressure in the US market, while local players are strong in international markets. Delivery revenue grew 29%, but gross bookings increased 25%, which means Uber is increasing its take rate on the platform. This strategy can improve company profitability in the short term.

Freight continues to underperform, with gross bookings flat at $1.3 billion and adjusted EBITDA posting a $20 million loss. Although the loss is small, amid ongoing industry sluggishness, when this business will become profitable remains unknown.

Six strategic focus areas unveiled for the first time

On Tuesday, CEO Khosrowshahi publicly outlined Uber’s six strategic mid-term growth areas for the first time. These include expanding rideshare and delivery, building a hybrid platform with human and autonomous vehicles, offering diverse gig work types, and developing generative AI.

Uber has made public progress in these efforts, including forming more than a dozen partnerships for autonomous vehicles, creating AI annotation businesses for enterprises, and launching new digital tasks for drivers. The company only started sharing its vision details earlier this year.

CFO Mahendra-Rajah said Uber has divested about $1.4 billion from its $10.3 billion equity investments in other companies. These proceeds will be allocated to priorities like launching more autonomous taxis worldwide.

After the earnings release, Uber’s pre-market stock price fell more than 4% to $99.72 per share. Year-to-date, Uber’s stock has risen more than 57%.

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