Uber Reports Earnings on Thursday: 3 Key Things to Watch

With ridesharing hit hard by COVID-19, Uber will likely direct investor focus to Eats and grocery delivery.

Uber investors are about to get a fuller picture of how the COVID-19 has affected its overall business, for better and for worse. 

The rideshare giant is slated to report its June quarter earnings on Thursday after the close of trading, and investors can expect a breakdown of usage trends in Uber's core ridesharing segment, in Uber Eats, and in newer initiatives like grocery delivery. Uber  (UBER) - Get Uber Technologies, Inc. Report shares closed 1.6% higher on Wednesday to $33.20 ahead of earnings. 

On average, analysts are expecting a non-GAAP loss of 65 cents per share and revenue of $2.1 billion for Uber's second quarter. Here are the key themes to watch.

In Uber's first-quarter earnings report, investors got a sneak peek at what COVID-19 meant for Uber's core ridesharing segment. At that time -- the second week of May -- Uber said that global bookings were down 80% in April, but had begun to slowly recover in some markets where economic activity had reopened.

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On Thursday, Uber management will likely offer more detailed commentary on how much of a recovery they've seen, as businesses reopen, at least in a limited capacity, in many markets. Wall Street is expecting just $792 million in Rides revenue in the June quarter, followed by an uptick to about $2 billion in sales the following quarter. Investors will be listening closely for guidance or color on whether that September quarter sales projection is realistic. 

2. Eats Growth

With Uber's rides segment hit hard by the pandemic, Uber Eats has been a bright spot. The stay-home environment led to a surge in Eats demand at the end of the first quarter, and the growth is expected to continue. Analysts are modeling for $996 million in Eats revenue for the June quarter -- exceeding Rides revenue for the first time. 

"On Uber Eats, we'll likely continue to see meaningful strength in gross bookings; we estimate +100% growth (to $6.6B) in 2Q20, but see upside to our estimates," wrote Wedbush's Dan Ives in a preview this week. Better-than-expected Eats growth would be a plus for virus-laden Uber. But since the segment loses money,  investors will be keeping an eye on profitability trends in the segment as well. Eats is expected to lose $276 million on an EBIDTA basis in the June quarter, a narrower loss compared to the preceding quarter. 

3. Postmates Commentary

Ahead of an eventual recovery to rideshare demand, Uber is making moves into other services -- namely, grocery delivery. In July, it integrated Cornershop, a Chile-based grocery delivery service, into its app. (Uber announced plans to acquire Cornershop last year, but hasn't yet closed the deal owing to regulatory hurdles in some markets.)

Also in July, Uber bought U.S. based courier service Postmates for $2.65 billion in stock. The company described the buyout as a complement to its growing efforts in "the delivery of groceries, essentials, and other goods." On Thursday, expect Uber management to expound upon what the deal means, and how it plans to leverage grocery deliveries as its rideshare business struggles.