Uber Technologies (NYSE:UBER) saw its shares drop 5.3% to $68.18 in Wednesday's session, as investor concerns over a cautious profit outlook and a hefty $10 billion-plus robotaxi investment plan overshadowed a strong second-quarter performance. The stock's decline came despite gross bookings exceeding analyst consensus, highlighting a market more focused on capital allocation than underlying demand.
Q2 results: bookings beat, revenue slight miss
For the quarter ended June 30, Uber reported gross bookings of $58.022 billion, surpassing the LSEG consensus estimate of $57.060 billion by 1.7%. Revenue came in at $14.191 billion, marginally below the $14.240 billion expected, while adjusted earnings per share (EPS) of $0.81 edged past the FactSet consensus of $0.80. The company also recorded 3.87 billion trips, an 18% year-over-year increase, and monthly active consumers rose 16% to 208 million.
CEO Dara Khosrowshahi touted the company's "platform advantage," noting that the number of first-time users added in the quarter was the highest in five years. However, the headline revenue figure was dampened by a $1.1 billion UK accounting adjustment that shifted driver payments to contra-revenue, reducing reported growth by roughly eight percentage points. This accounting change did not affect underlying business fundamentals, as mobility bookings grew 22% and segment operating income improved 28%.
Profit leverage and segment performance
Mobility segment operating income rose 28% to $2.66 billion, with operating margin expanding 36 basis points to 7.64% of bookings, despite revenue growth of just 1% due to the accounting shift. Delivery remained the key profit driver, with bookings up 26% and operating income climbing 38%, pushing its margin to 3.84%.
The company's forward guidance, however, signaled a narrower beat. For the third quarter, Uber guided gross bookings to a midpoint of $59.25 billion, roughly in line with consensus, but adjusted EPS guidance of $0.84-$0.88 (midpoint $0.86) came in three cents below the LSEG consensus of $0.89. Management noted that currency effects would reduce reported bookings growth by one percentage point, yet the midpoint still implies sequential bookings growth of 2.1% and EPS growth of 6.2%.
Capital commitments: robotaxis and Delivery Hero
The primary investor concern is how Uber plans to fund its ambitious growth initiatives. The company intends to invest over $10 billion in robotaxis over multiple years, covering equity stakes, fleet support, and vehicle purchases. This comes on top of a $14.8 billion acquisition of Delivery Hero's (ETR:DHER) food delivery business. Both initiatives are significant relative to Uber's trailing free cash flow of $10.1 billion, though they operate on different timelines.
Uber expects to finance the Delivery Hero deal through a mix of available cash and additional borrowing, targeting gross leverage below two times. The transaction is slated to close in the second half of 2027. CEO Khosrowshahi also confirmed ongoing collaboration with Waymo, Alphabet's (NASDAQ:GOOGL) autonomous driving unit, in Austin and Atlanta.
Analyst reactions and price targets
Following the earnings release, analysts were mostly positive but cautious on the near term. Four out of five brokers maintained buy-equivalent ratings, but four lowered their price targets. Mizuho raised its target to $112 from $110, implying 64.3% upside, while Wells Fargo trimmed to $89 from $100 (30.5% upside). Barclays cut to $106 from $107, BNP Paribas to $106 from $108, and Daiwa to $72 from $80, with the latter's neutral stance suggesting only 5.6% upside. The consensus price target among 50 analysts stands at $102.20, representing nearly 50% upside from Wednesday's close.
Adam Ballantyne, a shareholder at Cambiar Investors, described the robotaxi investment as "in line with my own thinking," anticipating billions in funding over four to five years. The market's reaction suggests a wait-and-see approach, balancing long-term growth prospects against near-term capital intensity.
As U.S. cash markets prepared to open Thursday, premarket trading was underway, with investors digesting the mixed signals from Uber's results and guidance.
