Uber (NYSE:UBER) delivered stellar Q2 financials, with gross bookings and adjusted EBITDA at an all-time high. Furthermore, it turned cash flow positive, which is encouraging. Its Q2 performance shows that customers are returning to its platform, implying that better days are ahead for this mobility service provider. Demand for transportation is returning, and Uber is there to meet it.
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A Sneak Peek into Uber’s Q2
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Coming back to Uber’s Q2 performance, its monthly active platform consumers increased 21% year-over-year. Meanwhile, trips rose 24%. Uber’s gross bookings of $29.08 billion came ahead of the consensus estimate of $28.94 billion and increased 33% year-over-year. Further, its revenues of $8.07 billion surpassed Street’s estimate of $7.36 billion and more than doubled compared to the prior-year period.
Thanks to the higher revenues, Uber delivered adjusted EBITDA of $364 million, exceeding analysts’ forecast of $260.8 million.
Momentum Expected to Sustain for Uber
Uber’s Q2 financial and operating performance indicates that on-demand transportation is recovering well despite challenges from inflation. Uber’s CEO, Dara Khosrowshahi, stated that Uber benefits from a “secular increase in the on-demand transportation of people and things as well as a shift back from retail spend to services spend.”
Uber expects to deliver gross bookings of $29.0 billion to $30.0 billion in Q3, compared to $23.1 billion in the prior-year quarter. Further, it projects adjusted EBITDA in the range of $440 million to $470 million, reflecting a sharp improvement on a year-over-year basis.
Uber’s CFO Nelson Chai stated, “We became a free cash flow generator in Q2, as we continued to scale our asset-light platform, and we will continue to build on that momentum.” Chai added, “This marks a new phase for Uber, self-funding future growth with disciplined capital allocation, while maximizing long-term returns for shareholders.”
Bottom Line: All Signs are “Go” for UBER
Uber’s strong performance and guidance are encouraging. Uber is confident it will deliver healthy top and bottom line growth, margin improvement, and free cash flow in the coming quarters.
Acknowledging the same, Wedbush analyst Daniel Ives stated, “despite rising ride share prices throughout the US/Europe clearly consumers are still moving to the Uber platform especially as travel, shifting to the office, and other post pandemic trends take hold globally with Uber poised to benefit into 2023.”
Uber stock has received 26 Buy and three Hold recommendations for a Strong Buy rating consensus. Moreover, analysts’ average price target of $46.22 implies 58% upside potential.
Uber also has positive signals from hedge fund managers and insiders who have accumulated its stock. All in all, Uber stock sports an Outperform Smart Score of 9 out of 10.
