Earnings Preview: What to Expect from Uber’s Q1 2025 Report

Uber Technologies (UBER) is set to release its first-quarter 2025 results on May 7, before teh market opens. Analysts anticipate earnings of 51 cents per share on revenues of $11.6 billion, according to Zacks Consensus Estimates. This reflects a 2% increase in earnings estimates over the past 60 days. In contrast, Uber reported a loss of 32 cents per share in the first quarter of 2024. the revenue consensus suggests a 14.5% increase from the year-ago quarter.

Full-Year Projections: Revenue Growth vs. EPS Contraction

Looking ahead to the full year 2025, revenue is projected to reach $50.4 billion,a 14.6% increase year-over-year. Though, the consensus estimate for full-year earnings per share (EPS) is $2.51, indicating a 45% year-over-year contraction.

Earnings History: A Mixed Bag

Uber’s recent earnings history shows a pattern of exceeding expectations, having surpassed EPS estimates in three of the past four quarters. The average earnings surprise was a notable 133.5%.

Will Uber Beat Expectations This Time?

According to Zacks’ model,an earnings beat is not conclusively predicted for this quarter. The model requires a positive Earnings ESP (expected Surprise Prediction) coupled with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) to increase the odds of an earnings beat.Currently, uber has an Earnings ESP of -0.20% and a Zacks Rank #3.

Challenges on the Horizon: Inflation,currency,and Weather

Several factors could have dampened Uber’s gross bookings in the first quarter. High inflation, currency headwinds, and unfavorable weather conditions are potential challenges. the company anticipates a strong U.S. dollar will negatively impact its results. Uber projects gross bookings in the range of $42 billion to $43.5 billion for the quarter, representing a 17-21% growth on a constant currency basis compared to the first quarter of 2024.

The strong dollar is expected to have a significant impact. The guidance includes an estimated 5.5 percentage point impact from a strong greenback. It implies a roughly 7 and 4 percentage point currency headwind to Mobility and Delivery growth, respectively. The freight sector is also expected to show revenue declines due to a challenging market.

A Silver Lining: Tariffs and Investor Focus

The first quarter, spanning January to March, preceded the implementation of new tariffs, mitigating their impact on the reported numbers. Investors are expected to pay close attention to management’s guidance for future performance.

Autonomous Vehicles and FTC Scrutiny

Uber’s focus on autonomous vehicles remains a key growth driver. Updates on this front are anticipated during the earnings call. Additionally, the company may address the U.S.Federal Trade Commission’s lawsuit alleging deceptive billing practices.

Stock Performance: Outperforming the Competition

Despite recent market volatility, Uber has demonstrated strong performance, with a 34.1% year-to-date gain. This contrasts sharply with the Zacks Internet-Services industry,which has declined in double digits,and the S&P 500 index,down 5.7%. Competitors like Lyft (LYFT) have seen a 3.4% decline, while DoorDash (DASH) has gained 17% year-to-date, still underperforming Uber.

Valuation: A Premium Price Tag

From a valuation standpoint, Uber is trading at a premium. Its price-to-sales ratio stands at a forward earnings multiple of 28.66, exceeding the industry average of 17.12.The company holds a Value Score of D. In comparison, Lyft’s forward earnings multiple is 10.99, while DoorDash’s P/E ratio is 75.32. Lyft and DoorDash have Value Scores of B and F, respectively.

Balancing Act: Headwinds vs. Diversification

While Uber’s valuation may seem high,and the company faces challenges such as high debt levels,concerns about slowing gross bookings,and FTC allegations,its diversification efforts and shareholder-friendly approach are noteworthy.Uber’s significant market capitalization ($169.46 billion) positions it to weather turbulent times.

Diversification is crucial for mitigating risks, and Uber has actively pursued acquisitions, geographic and product expansions, and innovations. Its international market expansion provides geographical diversification. Strategic partnerships, notably in the robotaxi market, allow Uber to tap into promising technologies without incurring massive R&D costs.

Investment Strategy: Hold, But Wait

The recommendation is to hold onto Uber stock. Though, investing before the upcoming results may not be advisable. Waiting for management’s commentary on tariffs and updated guidance is prudent to assess the potential impact.