Ridesharing app Uber reported a second quarter loss, but beat analysts expectations in sales posting its first ever free cash flow of $382 million. Cheddar News speaks with Caleb Silver, Editor in Chief at Investopedia.com, about what's fueling its record revenue. 


Closing Bell

Uber Beats Revenue Expectations, Shares Surge Despite Loss

Welcome back to closing bell on shadow news everyone while ride hailing app, Uber posting a surprise second quarter sales beat this morning, total gross bookings reaching 29.1 billion, that's a 33% from the same time a year ago and it generated free cash flow for the first time ever in the second. So joining me now is Caleb, silver editor in chief of investopedia. Caleb is good to see you. So it sounds like Uber making quite the rebound from the depths of the pandemic when a lot of people were staying home. Still this despite inflation and higher gas prices, what changed for the company in these past three months? Well, the company is seeing a rebound in travel, a rebound in bookings, a rebound in booking gross bookings in general, but across mobility, across delivery and across its transport businesses. So it's got those three business is firing on all cylinders. Now if you want to get into why they're performing, why they were able to get two free cash flow, they did have some changes with the UK mobility business plus the acquisition of trance place by Uber freight that did help juice the numbers a little bit, which is probably how they got there. If you look at adjusted, uh, they still post a pretty big loss there. Uh, but just 364 million. If you look at realized losses, it's a little bit more substantial than that. But the company is experiencing a rebound and that's translating into some better profitability figures. Once you adjust out all those numbers and this company has yet to really be profitable. We've been waiting a long time for this. The company went public in 2019. The stock is still down 30% from its I. P. O. Day even though it's having a huge day today and it's up 36% in the past month. Yeah, some stock popping about 19% today. So you're right, definitely positive reaction today, but a far cry from where it was just even when within this past year. So, so what did we glean here Caleb in this report and the earnings call about the company's strategy and path forward. Obviously it does ride hailing but it also is getting deeper and deeper into the food and alcohol delivery business. Yeah, when I was looking at sort of the balance of revenue and the balance of bookings, it looks pretty strong given that these were just new initiatives a year or two years ago. So you feel, look at mobility, gross bookings $13.4 billion that's really substantial. Then you look at delivery gross bookings 13.9 billion. A lot of balance there, the gross bookings for mobility at 57% and for delivery up 12%. So they're getting that balance now, they're not so dependent on the ride delivery, they're working in the food and liquid delivery as you say and freight is starting kick in a little bit here. So the company finally getting the three legs of the stool working at the same time, that's translating into better numbers and the CFO said on the call today, they want to be a little bit more asset light. Uh, so this is their transition to an asset light business that has better gross margins. You're seeing that through delivery obviously, but they're still very dependent on travel, They're very dependent on international travel and airport travel, airport travel alone, airport gross bookings up 139% kristen in the past year. That's a very big deal that shows that we're back on the road again. And Uber is benefiting from that. It's pretty amazing. I'm just wondering to Caleb, I don't know if there is any clear connection that we can make here, but as the economy does slow down, maybe that means in some cases demand might window, but I would think from the drivers supply standpoint, even though gas prices are high, people might want to have a side hustle, they might want to have another revenue stream, any sort of elements or clues to gather from that as we do start to see the economy slow. Yeah, Uber has said that it's attracting more drivers, creating more benefits for drivers. Don't forget, it still has that HR five that amendment up in the California legislature to deal with that could come back under appeal how it treats its drivers, whether they're independent contractors or employees favorable for Uber so far, but they mean that might not stick. So it's got that looming that said, it's trying to become a more driver friendly company under the new Ceo has been there a few years right now. It's not so new anymore. It's become a little bit more driver friendly. It's also expanded it businesses so it's operating a little bit more efficiently and a little bit more balanced across all of its areas. If we do go into a recession, not great news for Uber, which depends so heavily on travel and especially airport to hotel, airport to city travel. If that business goes down, Uber's business is going to suffer as well. But maybe delivery will pick up again just like it did during the pandemic. So I know the Ceo Darcos Rajshahi, many people said when he took over from Travis Kalanick years ago, of course Kalanick, the founder um kind of the out, their aggressive founder as he's been described based on stories at least in the media darko, joseph whose job was in essence to clean up right. Kind of the situation that Travis had left the company in. Now obviously is trying to focus on its core, grow its business in new revenue streams but the stock is still pretty depressed Caleb. And so despite the pop today with the depression that we've seen in the stock, Do you think that there is a believable story building here for investors that this is a company that down the road can pay off? I think a lot of that depends on freight and Uber has moved aggressively into the freight business. Obviously it's got its freight business that just made a big acquisition there as well. So that's a big deal for the company. The driverless vehicles. The driverless freight business could be big but those are long term bets Uber needs to keep generating that free cash flow quarter after quarter to get investors back into the story. Remember this company went public, it was one of the most fanfare companies to go public. People were talking about 100 and $2020 billion value for Uber around its I. P. O. We're looking at a company with a market cap of about 57 billion. Not teeny by any means but far lower than a lot of people thought it would be by this point in time. And has done a great job of cleaning up the company. It still has some legal issues that we talked about those a month or two ago with the Wall Street Journal investigation with the I. C. I. J. Into the way that the company was run under Travis Kalanick. That's in the past. That doesn't mean those legal issues are not gonna resurface today. All right, Caleb silver, editor in chief of investopedia dot com Caleb great insight as always, thank you