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UBER's Delivery Business Aids Growth Despite Expense Woes

Uber Technologies, Inc. UBER currently benefits from efforts to expand its Delivery operations. However, a rise in total costs and expenses poses a threat to Uber’s bottom line.

Uber incurred an adjusted loss of 18 cents per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of 27 cents. The bottom line improved year over year. Total revenues of $6,854 million also outperformed the Zacks Consensus Estimate of $6,202 million. The top line jumped more than 100% year over year.

How is Uber Faring?

Uber’s Delivery business is witnessing a boom with online order volumes surging amid the pandemic. Revenues from the segment increased 44% year over year in the first quarter of 2022, while gross bookings from the unit augmented 12%. Revenues and gross bookings from the Delivery segment increased significantly in 2021 as well. The segment reached adjusted EBITDA profitability in the fourth quarter of 2021. During first-quarter 2022, Delivery adjusted EBITDA was $30 million against an adjusted EBITDA loss of $200 million in the year-ago quarter. Uber’s efforts to expand its Delivery business are laudable.

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Continued recovery in the Mobility business is encouraging. With increased vaccinations in the United States and some other key markets, Uber is seeing a constant improvement in demand for Mobility. In the fourth quarter of 2021, gross bookings from Mobility improved 67% year over year to $11,340 million, nearly reaching the pre-pandemic levels. Mobility revenues jumped more than 100% year over year in the first quarter, while gross bookings from the unit improved 58%. For the second quarter of 2022, Uber expects gross bookings of $28.5 billion-$29.5 billion.

Rise in total costs and expenses also poses a threat to Uber’s bottom line. Total costs and expenses surged 33% year over year in 2021 with sales and marketing expenses rising 33.7% and cost of revenues ascending 81.4%. The same surged 65.7% year over year in the first quarter of 2022 with sales and marketing expenses rising 14.5% and cost of revenues augmenting more than 100%.

Zacks Rank & Key Picks

Uber currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks within the broader Computer and Technology  industry are as follows:

Airbnb, Inc. ABNB sports a Zacks Rank #1 at present. ABNB has a stellar surprise history, with its earnings having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 67.8%.

Airbnb is riding on an improvement in the travel industry.

Baidu BIDU carries a Zacks Rank #2 (Buy), currently. BIDU has a stellar surprise history, with its bottom line having outperformed the Zacks Consensus Estimate in each of the preceding four quarters, the average being 52.9%.

Shares of Baidu have gained 1.8% in the past month.

BlackLine, Inc. BL carries a Zacks Rank of 2. Its long-term expected earnings growth rate is 14%.

BL has a stellar surprise history, with its earnings having outperformed the Zacks Consensus Estimate in three of the preceding four quarters (missing the mark in one), the average beat being 74.6%.


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