What happened
Shares of Uber Technologies (UBER -1.44%) were up 12% as of 12:39 p.m. ET on Tuesday after showing improved profitability in its latest earnings report.
The stock had fallen nearly 28% year to date going into the report, but the positive reaction to management's outlook could signal momentum heading into 2023.
So what
For the third quarter, the ridesharing service reported revenue of $8.3 billion, beating expectations for $8.12 billion. While Uber reported a wider loss per share than Wall Street expected, management guided for continued improvement in adjusted operating margin.
The number of monthly active platform customers and trips completed were up 14% and 19%, respectively, over the year-ago quarter. CEO Dara Khosrowshahi credited the reopening of major cities, strong recovery in travel, and a shift in consumer spending from retail to services for the strong growth in the quarter.
Khosrowshahi mentioned that they are not seeing any consumer weakness on the business. The main factor hurting the company's financials right is the rising U.S. dollar, which is pressuring reported gross bookings and profit margin. Reported gross bookings increased 29% year over year, but excluding the negative impact from currency fluctuation, bookings would have increased 32%.
Now what
The biggest factor sending the stock higher after earnings was management's guidance for improved profitability. Management expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to come in between $600 million to $630 million in the fourth quarter. That is better than the $564 million the Street expected.
Khosrowshahi's belief that Uber will continue to build on their momentum in generating meaningful profits has strengthened the bullish case for investors.
