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Uber Q4 Earnings: Growth Not As Strong As It Seems

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Investment Thesis

Uber’s (NYSE:UBER) capacity has been underwhelming since going public. It is presently down complete 40% from its all-time precocious and still trading 20% beneath its IPO price. The institution has precocious travel live pinch shares up astir 70% from its 52-week low. A batch of optimism came from nan amazingly beardown maturation and profitability successful its latest quarterly earnings. But if you dive deeper into nan report, nan results mightiness not beryllium arsenic bully arsenic claimed. After nan rally, nan existent valuation besides looks a spot stretched, particularly pinch gross maturation slowing this year. I for illustration nan company’s prospects but I do not spot overmuch further upside astatine nan moment. Therefore I complaint Uber arsenic a hold.

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Q4 Earnings

Uber reported its fourth-quarter earnings earlier this period and nan results look very strong, particularly connected the apical line. However, this is mostly caused by aggregate business exemplary changes which affected nan income statement. Excluding these changes, nan consequence isn’t really that impressive. At first glance, gross accrued 49% YoY (year complete year) from $5.78 cardinal to $8.6 billion. But you tin already show this is not integrated arsenic full bookings and trips only accrued 19% YoY. Monthly progressive level consumers were up moreover little pinch conscionable an 11% summation YoY from 118 cardinal to 131 million.

Uber

Uber

If we dive deeper, mobility gross benefited by $1.2 cardinal owed to a alteration successful nan business exemplary for nan UK mobility business. Excluding nan changes, mobility would beryllium $2.94 cardinal alternatively than $4.14 billion, and nan YoY maturation summation would beryllium 28.9% alternatively than 82%. The segment’s return complaint would besides beryllium 19.8% alternatively than 27.8%, which would mean a 30 ground points driblet YoY alternatively than a 770 ground points gain.

Due to business exemplary changes successful immoderate different countries (not UK), transportation gross besides benefited by $686 cardinal this 4th and $138 cardinal connected a YoY comparable basis. The segment’s return complaint benefited from a 480 ground points summation and a 70 ground points dispersed YoY. Excluding this take, nan complaint would beryllium 15.7% compared to 20.5%. The YoY summation would besides beryllium 180 ground points alternatively than 250 ground points.

Uber

Uber

Uber

Uber

Freight gross besides included the acquisition of Transplace. The institution did not disclose its gross but we tin do immoderate calculations and make an estimate. The acquisition was $2.25 cardinal and assuming it was purchased astatine a PS ratio of 2x (Uber is presently trading astatine ~2x), this gives america an yearly gross of astir $1.1 cardinal and quarterly gross of astir $280 million. This intends excluding nan acquisition, freight gross would really beryllium $1.26 cardinal alternatively than $1.54 billion, which represents a YoY summation of 16.7% alternatively than 43%. If we exclude each nan benefits, nan full gross would beryllium $6.44 cardinal alternatively than $8.61 billion. Growth would beryllium 23.2% alternatively than 49%.

The institution besides isn’t arsenic profitable arsenic it looks. Gross profit only accrued 23.6% from $2.67 cardinal to $3.3 cardinal arsenic costs of income were up 71% to $5.3 billion. The gross profit separator declined importantly from 46.2% to 38.3%. This quarter’s income included a nett unrealized summation of $756 cardinal related to nan revaluation of Uber’s equity investments (which is apt owed to stocks rallying successful January). Excluding this, nan institution would’ve posted a nett nonaccomplishment of $(161) cardinal alternatively than a nett income of $595 million. It is besides worthy noting that nan company’s cognition still isn’t really profitable, arsenic it posted an operating nonaccomplishment of $(142) million. Not to mention gross benefited from each these changes. The operating/net nonaccomplishment would beryllium overmuch larger if it didn't.

Uber

Uber

Overall, I don’t deliberation this quarter's financial consequence genuinely reflects nan company’s operating capacity arsenic outer changes heavy impacted nan financial statement.

Investors Takeaway

After nan monolithic rally, Uber seems reasonably weighted successful my opinion. The institution is presently trading astatine a fwd PE ratio of 37.6x (on a Non-GAAP basis) which is not inexpensive by immoderate means. This would beryllium justified if nan gross maturation genuinely is 49% but 23.2% connected an adjusted ground is not capable to support further aggregate description . Not to mention gross maturation is expected to slow to nan mid-teens successful FY23, according to Seeking Alpha’s expert estimate.

Uber is not a bad institution astatine each and I do for illustration its prospects, particularly pinch Lyft (LYFT) struggling which could trim competition. However, I do not deliberation now is nan correct clip to bargain yet. The latest net consequence was affected by excessively galore changes and it is difficult to spot nan company’s existent operating performance. I would for illustration to spot much clarity successful respect to profitability and operating leverage. The valuation is besides a spot stretched aft nan rally and pinch slowing growth, I do not spot overmuch further upside potential. Therefore I complaint nan institution arsenic a hold.

This article was written by

Felix Fung floor plan picture

I americium a student presently studying sociology and economics astatine nan University of New South Wales. I conscionable started penning and I admit immoderate type of feedbacks and comments.

Disclosure: I/we person nary stock, action aliases akin derivative position successful immoderate of nan companies mentioned, and nary plans to initiate immoderate specified positions wrong nan adjacent 72 hours. I wrote this article myself, and it expresses my ain opinions. I americium not receiving compensation for it (other than from Seeking Alpha). I person nary business narration pinch immoderate institution whose banal is mentioned successful this article.

Editor: Naga



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