Stocks that you should keep an eye on: Uber and Lyft

Record Rides Adjusted EBITDA of $631 million, fully covering our Corporate G&A and Platform R&D 

Financial Highlights for Third Quarter 2019 9 ( As found on Uber Website)

• Gross Bookings grew $3.7 billion year-over-year to $16.5 billion, representing 29% year-over-year growth, or 32% on a constant currency basis.
• Revenue growth accelerated to 30% year-over-year from 14% in the second quarter of 2019.
• Adjusted Net Revenue (“ANR”) growth accelerated to 33% year-over-year, or 35% on a constant currency basis as both Rides and Eats ANR take-rates improved quarter-over-quarter to 22.8% and 10.7%, respectively.
• Net loss attributable to Uber Technologies, Inc. of $(1.2) billion, which includes $401 million in stock-based compensation expense, improved quarter-over-quarter in part due to revenue growth of $647 million.
• Rides Adjusted EBITDA of $631 million was the Rides segment’s 8th positive Adjusted EBITDA quarter in a row and covered our Corporate G&A and Platform R&D of $623 million.
• Adjusted EBITDA of $(585) million improved $71 million quarter-over-quarter.
• Unrestricted cash and cash equivalents were $12.7 billion, which was up $0.9 billion from the second quarter of 2019 primarily due to the sale of $1.2 billion of senior unsecured notes and the closing of the $1.0 billion investment in ATG.

Third Quarter 2019 Financial and Operational Highlights

“We expect ANR growth to accelerate again in Q4 and continue to focus on financial discipline. As such, we are improving our full-year Adjusted EBITDA guidance by $250 million to a loss of $2.8-2.9 billion,” said Nelson Chai, CFO. “We are also providing additional disclosure, both to deliver more visibility into our business and to further align our internal focus on efficiency with our external reporting.”

For Lyft, here are the figures that came in. 

Third Quarter 2019 Financial Highlights

• Lyft reported Q3 revenue of $955.6 million versus $585.0 million in the third quarter of 2018, an increase of 63 percent year-over-year.  
• Net loss for Q3 2019 was $463.5 million versus a net loss of $249.2 million in the same period of 2018. Net loss for Q3 includes $246.1 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition, as well as $86.6 million related to changes to the liabilities for insurance required by regulatory agencies attributable to historical periods. Net loss margin was (48.5%) in the quarter and (42.6%) in the third quarter of 2018.
• Adjusted net loss was $121.6 million versus an adjusted net loss of $245.3 million in the third quarter of 2018. Adjusted net loss is adjusted for amortization of intangible assets, stock-based compensation expense, payroll tax expense related to stock-based compensation, changes to the liabilities for insurance required by regulatory agencies attributable to historical periods, and expenses related to acquisitions.  
• Lyft reported Contribution of $479.2 million versus $263.2 million in the third quarter of 2018, up 82% year-over-year. Contribution Margin increased to 50.1% from 45.0% versus the third quarter of 2018. 
• Adjusted EBITDA was ($128.1) million versus ($263.2) million in the third quarter of 2018. Adjusted EBITDA Margin was (13.4%) versus (45.0%) in the third quarter of 2018.  

Outlook:

For Q4, we anticipate: 

• Revenue to be between $975 million and $985 million 
• Q4 revenue growth to be between 46% and 47% year-over-year
• Adjusted EBITDA loss to be between $160 million and $170 million (improved from prior implied guidance between $240 and $245 million)

For FY 2019, we anticipate:

• Revenue to be between $3.57 billion and $3.58 billion (up from between $3.47 billion and $3.50 billion)
• Annual revenue growth rate to be approximately 66% (up from between 61% and 62%) 
• Adjusted EBITDA loss to be between $708 million and $718 million (improved from prior guidance between $850 million and $875 million)

Conclusion: These are big numbers for Uber and Lyft, although both companies are not profitable yet, they are on their way to profitability, we hope.  As a result, Investinport likes to be ahead of the race and we believe that Uber and Lyft is worth the look. 

Disclaimer: Investingport owns LYft and Uber in our portfolio and we plan to add more.