Reports Q2 results on Wednesday, August 4 after market close
Expected Revenue: $3.7 Billion
EPS Expectation: Loss of $0.54
Uber Technologies (NYSE:) is in a difficult position these days. As ride bookings bounce back as the economy reopens, the world's largest taxi service is struggling to win back drivers in its post-pandemic environment.
Analysts on average expect San Francisco-based Uber to report revenue of $3.74 billion, up more than 20% from and 39% more than the same period a year ago.
This strong rebound comes after bookings collapsed last year as the rapid spread of the COVID virus forced governments to institute and enforce lockdowns, along with massive shutdowns of businesses and offices.
But if UBER's ride segment returns, the business equation isn't the same. The transportation services technology platform is now spending more on driver recruitment, which means greater losses and a longer time until the company sees a profit.
Bonuses and other incentives to get drivers back on the road will cut Uber's fare by about 20% this quarter, the company told investors in May. Uber Chief Executive Officer Dara Khosrowshahi has set a goal for the company to have an adjusted quarterly profit by the end of the year.
During lockdowns, many drivers took other jobs or stayed at home as the coronavirus wiped out ride demand. In April, Uber said it would spend $250 million on bonuses and other hiring incentives. The stock is down 13% in the same period when the Index gained about 14% year-to-date. UBER shares closed at $43.49 Monday.
Added to the situation: the outlook for the labor crisis is not expected to end soon. The problem will persist into the third quarter, according to a Wall Street Journal report, putting further pressure on Uber and its main rival, Lyft (NASDAQ:). Both will face a shifting dynamics of gig work, which they recognize will require long-term solutions.
"This is a moment of deep introspection and reflection for a company like ours to pause and say, 'How do we make the proposition more attractive to drivers in the longer term?'" Carrol Chang, Uber's chief of driver operations for the US and Canada, said in the report. "It's definitely a reckoning."
Another key aspect of Uber's business transformation during the pandemic was its delivery business, which the company quickly expanded from meals to beverages, groceries, parcels and prescriptions. Tomorrow's results will provide some insight into whether consumers will continue to use UberEats after the pandemic.
Delivery revenues soared during the pandemic, providing crucial support when Uber's taxi services were struggling. These sales increased an additional 28% in the first quarter from the prior quarter to $1.7 billion. That's more than triple what it was a year ago.
Bottom Line
There is considerable uncertainty about the business model for car journeys in the post-pandemic environment. Uber must demonstrate its ability to overcome labor shortages without significantly increasing costs, while proving that it can support the growth of its delivery business.
