‘on its way to build a sustainably profitable business’

Uber Technologies Inc (NYSE: UBER) is up 15% on Tuesday even after the mobility company swung to a $2.60 billion loss for its fiscal second quarter.

Why are Uber shares up this morning?

The price action is primarily related to the free cash flow that came in much better than expected and revenue that more than doubled in Q2. Reacting to the earnings report on Yahoo Finance, Tom White (Equity Analyst at DA Davidson) said:

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Uber is well on its way to building a sustainably profitable and self-funding business. Most important for institutional investors was that they pulled forward their positive FCF by a couple quarters and hinted that’ll continue no matter what the macro backdrop looks like. That’s what you’re seeing with the stock reaction.

He also sees great potential in Uber One (membership programme) and is convinced that the multi-product platform gives it an edge over the competitors, including Lyft. Uber shares are still down about 35% for the year.

Key takeaways from Uber Q2 results

• Lost $1.33 per share versus an EPS of 58 cents last year
• Revenue shot up 105% on a year-over-year basis to $8.10 billion
• Consensus was 27 cents of per-share loss on $7.36 billion in revenue
• Mobility revenue jumped 120% on a 55% increase in bookings
• Gross margin stood at 32.8%; much better than the Street estimate

Other notable figures and future outlook

Other prominent figures in Uber Q2 results include a 36.9% annualised growth in delivery revenue as bookings went up 7.5%. Its stake in Zomato, Grab, and Aurora, resulted in a $1.70 billion hit this quarter, as per the earnings press release.

For the current financial quarter, Uber forecasts $29 billion to $30 billion in gross bookings – roughly in line with expectations.

Wall Street currently has a consensus “buy” rating on Uber shares with upside to $45 on average.