Uber beats estimates, Roku growth slows down, Etsy lowers guidance for Q3

Myles Udland and Brian Sozzi break down earnings which include: Uber’s core business posting a loss of $509 million despite beating on the top and bottom lines in Q2, Roku topping estimates as earnings show a slow in growth, and Esty announcing lower Q3 guidance on the heels of beating Q2 expectations.

Video transcript

BRIAN SOZZI: Earnings season madness continues in full force. Myles, we talked a little bit about Uber. We talked some Etsy. Let's talk Roku. The stock is getting absolutely slaughtered right now. The fourth trending ticker on the Yahoo Finance platform. Shares are down about 8% premarket, and another stay-at-home trade company that had an earnings call last night and said, hey, guys, things are slowing down. You may want to recalibrate your models because they're completely wrong.

MYLES UDLAND: I mean, I think it's still-- they put it out there, so it's not like Roku is trying to hide this number, but I think it is still shocking. Streaming hours were a decrease of 1 billion from their fiscal first quarter, so that would be the second calendar quarter of 2020. And look, I think it's a positive, right, for each of us. And we can start to see some of our normal activities coming back-- this is a funny shot. We've got the video stuck inside the chart.

But I think just to come out with a number and be, like, oh yeah, people watched Roku for a billion fewer hours in the most recent quarter, is certainly surprising, and I think is a reminder that, while Roku-- I think you can still build a very strong case-- it doesn't take a genius to do this-- build a case that Roku has a lot of sickle headwinds behind it-- secular headwinds behind it, I should say. And that the company maybe was on a new trajectory, setting a new trajectory as a result of COVID. They are still going to be lapping some of the most extraordinary figures that they probably could have ever imagined, having come up in the first half of 2020.

BRIAN SOZZI: It is interesting, and I will point out some other metrics on Roku, but Viacom-CBS, in their earnings this morning, noted streaming hours were up quarter over quarter, which is very interesting to see that and stack it against Roku. Just worth calling out.

MYLES UDLAND: They just launched their app.

BRIAN SOZZI: Fair.

MYLES UDLAND: I'm not going to bite on that one.

BRIAN SOZZI: But just staying back, going back to the Roku disappointment, active customer accounts 55.1 million. Street was at about 56 million. Miss, no go. Streaming hours, to your point, $17.4 billion, that fell short of estimates by about $2 billion. Player revenue, that little stick you getting a Home Depot or Target. Player revenue, $112.8 million. That also missed estimates. Average revenue per user also short of estimates.

MYLES UDLAND: You know something else that I think flags in here as a potential concern for Roku, and you asked Mickey Drexler this yesterday about the holiday season. And our friend Jeff Macke would remind us that the holiday season has started. It is very much a holiday shopping--

[INTERPOSING VOICES]

MYLES UDLAND: I mean, come on. You know, break out the Santa hats. We are in the holiday season.

Roku saying towards the end of their letter that they are expecting to still have supply chain constraints and component cost increases associated with its players, as we head into a season when a lot of people might be buying Roku players for either themselves or for family members. And they expect those constraints and cost increases for players and for their partners.

So certain cable companies or certain TVs, they'll have Roku integrated or you get a free Roku with it. They expect those are going to continue into next year. So Roku is certainly still feeling the chip-related component crunch, and maybe they will be supply constrained into a very important season for selling the physical, little-- we'll call them gizmos.

BRIAN SOZZI: There's a lot of technology in there. Roku doesn't get enough credit for it. What do you want to do? Uber or Etsy? Jump ball.

MYLES UDLAND: Let's do Uber.

BRIAN SOZZI: All right. Uber, you mentioned at the top of the show, Myles, that they're a pretty large miss in terms of adjusted operating profits. Well, they really didn't have any. $500 million operating loss. The Street was looking for a $325 million operating loss, and that is not a good look compared to what Lyft came out with in its most recent quarter.

They turned a profit for the first time in that company. They outlined more profits are to come here, and you have Uber here really whiffing on estimates. Another loss, they invested a lot in driver incentives. And really it remains, in my view, a company that is hard to understand, and a hard company to value.

MYLES UDLAND: I think the understanding part is where it still is a challenge for Uber just because of how drastically their model, their mix, has changed within the last year. Some of that has to do with acquisitions they've made, but the Uber Eats part of the business is larger now than the mobility part of the business.

Obviously, that was going to be the case in the pandemic, but now as we emerge out of it, I mean-- $12.9 billion in gross bookings from the delivery business. $8.6 from the mobility business. And the growth rate in terms of revenue, faster for delivery. Up 122% in the most recent quarter, versus a 106% increase in mobility revenues during the most recent quarter.

So, again, that story continues to change for Uber. The take rate obviously is going to be lower in delivery than it is in mobility. That's still a loss leader, and you can obviously see that from these results. And I think another part of this, Sozzi, gets to-- well, now do we really have two similar stories? Should Lyft and Uber be as closely related as I think a lot of investors make them, or should we kind of accept here that they are kind of completely different companies?

BRIAN SOZZI: Completely different companies. I think Lyft realized about a year and a half ago, the fourth quarter of 2019, they reset Street expectations, cut a lot of expenses out of their business really, I would say, before the pandemic. And they just want to be a pure play ride company. I believe there are still scooters in there, as well. They are also thinking about--

MYLES UDLAND: Bikes, I think.

BRIAN SOZZI: Yeah, they're also trying to do a little bit in terms of transports, so transporting types of materials. But it was weird to see the stock reaction yesterday, down 11%, and you're seeing it under pressure again today. In a quarter where they had profits and they will have profits again, at least in terms of their guidance. John Zimmer, Lyft co-founder, he's going to be on it in the 11 o'clock hour, 11:15 or so. Looking forward to talking to him. I'll ask him more about the Street's reaction.

MYLES UDLAND: And, you know, something else-- trying to pull up the call here for Uber. Something else that Dara Khosrowshahi, he talked at length about wait times and about comps to 2019. Just a couple of highlights that I can pull out here-- total gross bookings in New York, London, and Paris are 30% higher than July 2019. The way it's phrased, it's not clear if it's higher in each individual city or taking them collectively, but certainly three obviously major key markets for them. So bookings higher than 2019, a theme we continue to see in earnings results.

But also talking, as Lyft did, on their call and in their letter about wait times. And saying that surge levels in wait times-- this is according to Uber-- are back to nearly normal in Miami, Atlanta, Dallas, Houston, and Phoenix. But in major cities, like New York, San Francisco, and LA-- Houston and Phoenix aren't major cities? We'll leave that one-- demand continues to outpace supply, and prices and wait times remain above our comfort levels.

And I know that we had discussed this, I believe, on Monday's program ahead of these results, that anyone you talk to on the street, everyone's frustrated by pricing, frustrated by wait times. The only person I know who's taken an Uber and not complained about it in the last three weeks is Jared Blikre. He took one yesterday, didn't complain about it because it was actually faster than the subway. But that these companies are talking about it as much as they are, I think speaks to the magnitude of the problem.

BRIAN SOZZI: And I should note it is actually Brian Roberts, Lyft's CFO, coming on the 11 o'clock hour, 11:15. He's a good follow on Twitter. I encourage you to follow him there, but--

MYLES UDLAND: We like all CFOs that tweet.

BRIAN SOZZI: Yeah, he's in the game. And lastly, we'll just hit Etsy real quick here. Just looking over some of the Street reaction to this quarter, it's not looking pretty here. You have [INAUDIBLE] saying, quote, "it is a disappointing outlook for Etsy." Seeing sluggishness in some parts of the business, of course, with masks as well. Roth downgrading the stock from a buy, and also cut its price target as well. And Jefferies is one of the lone bulls. They're staying bullish. They say the story remains intact, this quarter says it doesn't.

MYLES UDLAND: And look, coming out, missing on top line guidance for the third quarter, that's never going to be a positive. Something else that Etsy did in their release-- and granted, Etsy, General Motors, completely different companies-- but GM got hit on that guidance a little bit. We just talked to Paul Jacobson, and what GM did in their release, and what Paul told us, he wants to give the Street a number they think they can hit.

But GM widened their guidance range for their EBID, and I don't think the Street really liked that that much, even though it was an upgrade. Well, Etsy didn't have guidance for the full year, and I think that we're now starting to see the patience investors had with these no guide quarters. That's starting to wane, obviously.

BRIAN SOZZI: Paul Jacobson rocking the mid-engine Corvette. Love it.

MYLES UDLAND: So I wanted to make a joke about his Delta Medallion Status, but that's really what he's driving these days.

BRIAN SOZZI: Well, you know it's in his garage.

MYLES UDLAND: But he left Delta, so we don't need to still talk about that.

BRIAN SOZZI: In his garage I'm sure he has a nice 747 parked next to his new mid-engine Corvette.

MYLES UDLAND: I mean, are you going to become a car guy overnight? He's been on the job like a year. He's just going to buy four cars to become a car guy?

BRIAN SOZZI: Maybe you should.

MYLES UDLAND: Yukon's are great. Buy one of those, and then work your way into becoming a car guy.

BRIAN SOZZI: That's like a $70 ride on [INAUDIBLE] though.

MYLES UDLAND: At least.