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Uber’s first quarter a mixed bag, stock up after hours on margin outlook

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Uber Technologies Inc. (NYSE: UBER) reported first quarter 2019 results which were $0.01 share worse than analyst expectations at a loss of $2.26 per share. Revenue of $3.1 billion was $20 million better than forecasts.

Total revenue increased 20 percent year-over-year to $3.1 billion. Gross bookings increased 34 percent year-over-year to $14.6 billion.

Other Bets revenue, primarily consisting of Uber Freight – a digital freight matching marketplace, increased 263 percent year-over-year to $145 million. This was well ahead of the company’s guidance issued in its amended S-1 filing, besting the top-end of the gross bookings guidance range by $12 million (first quarter 2018 bookings were $40 million). The segment lost $71 million in the first quarter 2019.  

UBER does not provide specifics on the profitability of Uber Freight, instead including the division’s results with Other Bets. By comparison, the Uber Freight group posted revenue in excess of $125 million in the fourth quarter of 2018 with $359 million in total gross bookings in 2018. Other Bets generated $373 million in 2018 revenue with a $152 million loss for the year.


Uber Freight officially launched in the U.S. in May 2017 and has contracted with over 36,000 carriers representing more than 400,000 drivers, serving over 1,000 shippers. In April, Uber Freight announced a rollout across Europe.

Management didn’t provide many updates on the freight business on the call, but there were some key takeaways. They said that their recent partnership with SAP SE (NYSE: SAP) is progressing. This deal will integrate the Uber Freight offering into the SAP Logistics Business Network allowing supply chain participants from both companies access to transportation rates from Uber’s digitally activated carrier network. Also, this will provide real-time quotes as well as guaranteed freight capacity, simplifying the load management and execution functions.

Additionally, management said that they were confident in their ability to grow the freight division as they continue to have great success bringing on new enterprise shippers and meaningfully build out new routes. Lastly, management expects to see 200 percent growth in the freight division in 2019.

On a consolidated basis, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was a loss of $869 million, more than three times the first quarter 2018 loss and $52 million worse than the fourth quarter 2018 result.


That said, expenses as a percentage of adjusted net revenue increased in some key cost buckets as the company attempts to gain share. Sales and marketing expense was up to 36.4 percent of adjusted net revenue (25.9 percent in the first quarter of 2018 and 35.3 percent in the fourth quarter of 2018) and research and development expense increased to 14.7 percent of adjusted net revenue in the quarter, 90 basis points and 100 basis points higher than the same comparable periods, respectively.

Going forward, management said it expects the core platform (ridesharing and eats) contribution margin to improve sequentially throughout the year (minus 4.5 percent in the quarter). Seeking Alpha reported that the stock is 3.5 percent higher in after-hours trading on this news.

It appears that incentives paid to drivers and promotions to riders have stabilized, but will continue to be headwinds as the company continues to grow market share. Further, incentives to restaurants will likely be a headwind in Uber Eats. The company is trying to leverage its ridesharing customer base to grow its Uber Eats business and is seeing good traction in these efforts.

On the call, management said that the pricing market for its core platform has been less aggressive and that mobility providers are, “competing more on brand, product and technology.” Additionally, they feel like global competition is stabilizing in some key markets.

Management said that Uber Eats has been challenging as there are many well-funded competitors, but they believe that this total addressable market is larger than ridesharing, specifically calling out China as having great potential. They said that there will be consolidation in the food delivery business and that they plan to be part of it, however their first choice is to grow this business organically.

UBER’s stock debuted with an initial public offering price of $45 per share, the low-end of the announced $44 to $50 range, placing a market valuation of $82.4 billion on the shares, raising just north of $8 billion from the equity raise. Since then, the stock has dropped more than 11 percent to its recent closing price of $39.80.

UBER Stock Chart – Seeking Alpha



Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.