Uber (UBER) is scheduled to report results of its fiscal third quarter after the market closes on Monday, November 4, with a conference call scheduled for 5:00 pm ET. What to watch for:
1. GUIDANCE: On its Q2 earnings conference call, Uber said it sees FY19 adjusted EBITDA ($3.2B)-($3B) and FY19 constant currency gross bookings of $65B-$67B. Uber CFO Nelson Chai said on the Q2 earnings call, "While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we made good progress in that direction." The company added that the competitive environment and Uber's position in it continue to be "stable," and that it will invest in most strategic markets in the back half of the year.
2. FOOD DELIVERY: On October 15, Burger King announced that its food can now be delivered "right to your doorstep" through Uber Eats, saying, "BK guests nationwide can now place a food order with the tap of a button on the Uber Eats app." Yahoo Finance reported that same day that Wendy's (WEN), which has an exclusive delivery service deal with DoorDash, may add Uber Eats and GrubHub (GRUB) as delivery partners by year-end.
Earlier in the quarter, on August 28, Uber shares slid after McDonald's (MCD) announced it had expanded its delivery relationship with DoorDash, despite most McDonald's restaurants also offering Uber Eats. On August 27, Panera Bread announced the availability of national delivery service for the first time through DoorDash, Grubhub and Uber Eats.
Internationally, Reuters reported on September 9 that Uber Eats planned to end its service in South Korea. In a statement, Uber Eats Korea said, "After two years' partnering with local restaurants to offer convenient, reliable food delivery, we have made the difficult decision to discontinue Uber Eats in South Korea at the end of October 14, 2019."
3. HIRING FREEZE, LAYOFFS: On August 9, Yahoo Finance reported, citing company emails, that Uber cancelled on-site interview for engineers amid a hiring freeze for tech teams. The report stated that recruiters have informed candidates that "there have been some changes" and previously open opportunities were "put on hold."
On August 14, a report from Business Insider said that Uber CEO Dara Khosrowshahi told employees at an all-hands meeting that he is cutting costs like "anniversary balloons," as nervous engineers worry about layoffs.
On September 10, Uber let 435 employees go across its product and engineering divisions, according to a TechCrunch report. Overall, the layoffs amount to roughly 8% of the teams, with 170 people leaving the product team and 265 leaving the engineering team. The job cuts had no impact on Eats or Freight operations, the report said, citing a source familiar with the situation. Meanwhile, the ride-sharing giant is lifting the hiring freeze on the product and engineering teams that has been in place since early last month, TechCrunch noted. "Our hope with these changes is to reset and improve how we work day to day-ruthlessly prioritizing, and always holding ourselves accountable to a high bar of performance and agility," an Uber spokesperson told TechCrunch. "While certainly painful in the moment, especially for those directly affected, we believe that this will result in a much stronger technical organization, which going forward will continue to hire some of the very best talent around the world."
4. NORTHCOAST SAYS RIDE-HAILING HEALTHY DURING Q3: Northcoast analyst John Healy said his Q3 channel checks into ride-hailing conditions in the U.S. market indicate a backdrop that was "healthy at the margin with no meaningful slowdown." Further, Uber Technologies seemed to win some of the "tug-of-war battle" between itself and Lyft (LYFT), as drivers seemed "marginally more pleased" with their time spent with Uber, Healy said. He believes that at the margin, drivers during Q3 moved a bit more of their usage towards Uber. Meanwhile, Lyft continues to "inch pricing higher" for rides in many markets, while Uber is taking a more wait and see approach, added Healy. The analyst lowered his Q3 estimate for Uber to (65c) from (63c). Healy kept a Neutral rating on both stocks, but sees Lyft as the "cleaner/pure play story and at the margin more attractive."
5. COWEN SEES SOLID RESULTS FOR UBER: Cowen analyst John Blackledge expects Uber to report solid Q3 results, led largely by rising Rides & Eats “Monthly Active Platform Consumers,” or “MAPCs,", with accelerating adjusted net revenue growth given rising take rates. The analyst said strong revenue growth in the second half of 2019, coupled with recent headcount cuts and more rational Rides pricing in key markets, could improve the EBITDA loss trajectory heading into 2020. He noted the company's IPO lockup expires on November 6. Blackledge reiterated his Outperform rating and $60 price target on Uber shares.
