Uber, Lyft Seek Earnings Spark With Shares Below IPO Prices

(Bloomberg) -- Uber Technologies Inc. and Lyft Inc. will get a chance to jump-start their languishing stocks when they report second-quarter financial results this week.

With shares of both ride-hailing companies trading more than 10% below their initial public offering prices, investors will be looking for signs that revenue growth remains strong and that they remain on track toward profitability. Lyft will be the first to report on Wednesday after markets close. Uber’s release is on Thursday.

“We view June results as a key step in the right direction for both Lyft and Uber going forward to gain much needed credibility,” Wedbush analysts Ygal Arounian and Daniel Ives wrote in a research note.

Uber and Lyft, whose IPOs were among the highest-profile deals this year, have struggled to attract investors amid skepticism about the future of ride-hailing services and the companies’ ability to generate profits. Uber is expected to report a second-quarter GAAP net loss of $5.27 billion on $3.05 billion of revenue, according to the average analyst estimate compiled by Bloomberg. While most of the losses are related to stock-based compensation tied to the IPO, it doesn’t help the company make a case that it will eventually turn a profit.

At $501.6 million, Lyft’s anticipated second-quarter net loss is paltry in comparison, but still worrisome for an outfit expected to generate $809.4 million in revenue.

Both companies are expected to benefit from an improvement in ride-hailing pricing as they cut back on discounts, according to Macquarie Capital analyst Maynard Um. Lyft, whose business is mostly focused on the U.S. ride-hailing market, may reap bigger benefits from lower incentive spending, while Uber faces stiffer competition internationally and in the food-delivery and freight businesses.

“This is a sector viewed as arguably uninvestable by some folks given how unprofitable it is, how competitively fluid it is, how there’s a significant risk of regulatory shock to the business model,” D.A. Davidson analyst Tom White said in an interview.

Lyft can move the needle by delivering financial metrics that are in line or slightly above forecasts, while Uber needs to show that revenue growth is accelerating, White said.

Key metrics to watch for Uber include adjusted net revenue, gross bookings and the take rate, which is the portion of fares that go to the company. For Lyft, which will not be providing bookings or take rate figures, analysts are focused on revenue per rider and the number of active riders.

Analysts on an average see gross bookings of $15.83 billion and monthly active platform consumers of $101.16 million in the second quarter for Uber, according to a Bloomberg MODL consensus estimate. Lyft is expected to report 21.34 million active riders for the quarter, with revenue per active rider of $37.93.

Lyft shares were trading up as much as 3.9% in New York on Wednesday ahead of the results. Uber gained 2.2%.

What Bloomberg Intelligence Says:

“Monetization of active riders will likely improve for Lyft in 2Q, after the company raised prices and lowered subsidies for riders in the U.S.”

“Uber could see a modest deceleration in its second-quarter top-line and ride growth in the U.S. amid recent price increases, coupled with tough comparisons.”

“While rider expansion is likely to taper, we believe take rates across the existing rider base should improve as the company sees a pickup in shared rides,” for Uber.

Mandeep Singh, Technology Analyst

Just the numbers

Lyft Estimates

• 2Q revenue estimate $809.3 million (range $801 million to $838 million)
• 2Q adjusted loss per share estimate $1 (range loss/share 79c to $1.50)
• 2Q adjusted Ebitda loss estimate $274.6 million (range loss $262 million to $280 million)
• 3Q revenue estimate $841.7 million (range $807 million to $885 million)
• 3Q adjusted Ebitda loss estimate $336.8 million (range loss $298 million to $426 million)
• FY revenue estimate $3.32 billion (range $3.28 billion to $3.56 billion)
• FY adjusted Ebitda loss estimate $1.16 billion (range loss $985.0 million to $1.22 billion)

Uber Estimates

• 2Q loss per share estimate 79c (range loss/share 53c to $1.49)
• 2Q adjusted Ebitda loss estimate $979.12 million (range loss $595 million to $1.24 billion)
• 2Q adjusted net revenue estimate $3.05 billion (range $2.92 billion to $3.20 billion)
• 3Q adjusted net revenue estimate $3.35 billion (range $3.25 billion to $3.68 billion)
• 3Q adjusted Ebitda loss estimate $947.13 million (range loss $595 million to $1.17 billion)
• FY adjusted Ebitda loss estimate $3.64 billion (range loss $2.68 billion to $4.30 billion)
• FY adjusted net revenue estimate $12.87 billion (range $12.64 billion to $13.69 billion)

Data

Lyft

• LYFT 21 buys, 12 holds, 3 sells; average PT $70: Bloomberg data
• Implied 1-day share move following earnings: 10.6%

Uber

• UBER 23 buys, 11 holds, 1 sell; average PT $52: Bloomberg data
• Implied 1-day share move following earnings: 8.9%

Timing

Lyft

• Earnings Aug. 7 after market close
• Conference call website

Uber

• Earnings Aug. 8 after market close
• Conference call website

To contact the reporters on this story: Jeran Wittenstein in San Francisco at jwittenstei1@bloomberg.net;Esha Dey in New York at edey@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Richard Richtmyer, Morwenna Coniam

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