Uber (UBER, Financial) demonstrated its business resilience with impressive Q2 results, swinging back to profitability and achieving 16% revenue growth, up from 15% last quarter.
- In Q1, Uber reported a surprise loss of $0.32/share due to unrealized losses on equity investments and litigation costs. The slight miss on Mobility Gross Bookings raised concerns about demand for Uber's largest business segment. These concerns grew stronger ahead of the Q2 report, especially after a disappointing earnings season for the airline industry.
- Despite softening consumer spending trends, Uber's business remained robust in Q2. CEO Dara Khosrowshahi highlighted that the company’s higher-income customer base is still in great shape. Total Gross Bookings grew by 21% on a constant currency basis, matching Q1's growth.
- The Mobility segment was particularly strong, with Gross Bookings of $20.6 billion, up 27% year-over-year (constant currency), compared to 26% growth in Q1. Trip growth exceeded 20% for the sixth consecutive quarter, reaching 21%. Growth was steady across use cases, with strong international performance in Latin America, Brazil, Australia, and India.
- Delivery segment Gross Bookings grew by 17% (constant currency) to $18.1 billion, showing the stickiness of this business despite tough macroeconomic conditions. The expansion into the grocery vertical has boosted growth, with about 15% of Uber Eats customers now using grocery services, up 200 basis points year-over-year. Customer retention for grocery is also improving.
- Advertising, a high-margin business, is becoming a significant contributor to Delivery. Ad spend on grocery and retail more than tripled year-over-year, helping adjusted EBITDA for the segment surge by 79% to $588 million.
- Overall, Uber's adjusted EBITDA jumped by 71% to a quarterly record of $1.570 billion, surpassing its guidance of $1.45-$1.53 billion. The company forecasts Q3 adjusted EBITDA of $1.58-$1.68 billion, slightly beating expectations at the midpoint of the range.
In summary, Uber's diversified business model and affluent customer base are helping to shield the company from macroeconomic headwinds. While a severe economic downturn could impact its business, Uber's "growth engine is continuing to hum," as Khosrowshahi stated.
