Key Points
Bookings grew more than 20% for a fifth straight quarter, and Q4 guidance points to more of the same.
Revenue grew only half as fast as bookings because of business model changes the release doesn't explain.
Adjusted profit leaves out legal reserves that showed up at a similar size a year ago.
Uber Technologies (NYSE:UBER) grew gross bookings 20% in the third quarter, its fifth straight quarter above 20%. Shares were up about 0.8% in pre-market trading. GAAP operating income rose 30% to about $1.4 billion. Uber is growing fast, and more of each booking dollar is now turning into profit.
Key numbers
- Gross bookings: $59.8 billion, up 20% year over year.
- Revenue: $14.8 billion, up 10% year over year.
- Non-GAAP operating income: $2.3 billion, up 38% year over year.
- Q4 bookings guidance: $63.25 billion to $65.25 billion, up 18% to 22% in constant currency.
What it means
Revenue grew half as fast as bookings, but that isn't a demand problem. Uber says business model changes cut 8 percentage points off revenue growth. Mobility revenue even slipped while Mobility bookings grew. The release doesn't explain the changes, so bookings and trips are the better gauge of demand for now.
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The profit story is stronger. Corporate overhead and platform R&D grew much more slowly than bookings, so those fixed costs got spread over far more rides and orders. That's how non-GAAP operating income hit a record 3.9% of bookings.
The adjusted figures deserve a closer look, though. Uber left $857 million in charges out of non-GAAP operating income. The biggest piece, reserves for legal and regulatory matters such as driver classification, was about the same size a year ago. Charges that keep coming back look more like a cost of doing business than a one-time hit.
What to watch next
Watch whether Uber delivers its guided 34% to 39% growth in Q4 non-GAAP EPS. Also watch whether about 700 driverless vehicles are on the platform by year-end, as management expects.
David Kretzmann has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.