Friday Aug.07, 2020

🚘 Uber's tale of two earnings

_Uber's still living at its parents'_
_Uber's still living at its parents'_

Hey Snackers,

Employee of the Week award goes to: Max, a two-year-old German Shepherd who located a missing mother and her baby who were stranded in a ravine — all during his 1st shift. Throw the dog a bonus.

Stocks rose for the 5th day straight. The techy Nasdaq closed above 11K for the 1st time, propelled by soaring Apple and Facebook shares. The big July jobs report drops today — it'll tell us if economic recovery continued or slowed in the face of rising COVID cases and re-closures.

Ride

Uber rides out a sales plunge as Eats bookings double (still no profit)

Please Purell the AUX cord... Uber's sales fell 29% last quarter because ride-sharing has a germy ring to it. Uber was operating under full corona-conomy lockdowns. Virus fears kept riders away, and the bars/restaurants you would normally Uber to were closed, anyway. But Uber's sales were still better than expected, because it's a tale of two businesses:

  • Ride-share bookings plunged 73%, significantly worse than expected. Uber did 737M trips, less than half the 1.7B from the same quarter last year. But...
  • Delivery bookings surged 113% on demand for Eats. Uber made more than double from Eats than it did from Rides. Food delivery was the perfect yin to ride-sharing's pandemic yang.

Hungry for acquisitions... Uber lost $1.8B last quarter, which sounds pretty bad — but it's better than the $5.2B it lost during Q2 of last year. Uber slashed costs by sadly laying off 14% of its workforce (~3.7K employees). It also transferred its uber-unprofitable Jump line of e-scooters/bikes to Lime, which it majorly invested in. But Uber has been on a shopping spree since July.

  • Postmates: Uber acquired it for $2.6B to decrease competition in the heated food-delivery market.
  • Routematch: Uber bought the public transit software company to connect you to public transport in-app.
  • Autocab: Yesterday, Uber announced it's acquiring the UK-based taxi software company to connect you to rides where Uber doesn't operate.

How many pivots does it take to profit?... 11-year-old Uber has yet to turn a profit. Investors are getting impatient: Uber stock has plunged 16% since its May 2019 IPO price. With the pandemic hurting ride-share and CA regulators requiring gig workers to be treated like full-time employees, Uber's trying to lose the "gig" rep. Its latest acquisitions show it's positioning itself as a pure software platform. Uber's goal: turn an (adjusted) quarterly profit by this year — TBD if it'll happen.

Grub

Restaurant Brands' sales plunge, but Popeyes soars against all odds

The favorite child wins again... Restaurant Brands International is the parent of Burger King, Popeyes, and Canadian coffee chain Tim Hortons. RBI's sales plunged 25% last quarter on pandemic-pummeled foot traffic, even though online sales more than doubled. Once again, RBI's favorite child brought home a stellar report card (the other siblings are jealous):

  • Tim Hortons' same-store sales plunged 29%. Timmy usually makes up 60% of RBI's sales, and is the third thing people associate with Canada besides poutine and ice hockey.
  • Burger King's same-store sales fell a Whoppering 13%. The Impossible Whopper wasn't enough to save it.
  • Popeyes sales jumped nearly 25%. The chicken icon soared on the wings of its viral fried Chicken Sandwich, which RBI calls a "game changer in every way" (#ProudSandwichParent).

Blame the homemade avo toast... The pandemic has us WFH'ing, which means fewer mid-morning breakfast runs. That's why java-brewing, donut-cranking Tim Hortons got hit especially hard. Starbucks and Taco Bell also noted drops in breakfast sales. Even though 93% of RBI's locations have reopened, we're still in WFH mode. That's why Timmy's sales were still down by the end of July, while BK's recovered and Popeyes' soared.

Being a one-hit wonder isn't enough... RBI can't ride on the back of its poster child Popeyes forever. Even in the quarter before lockdowns, BK's sales were barely up 3% and Tim Hortons' were down 4%. That trend is concerning, especially given that Timmy usually accounts for over half of RBI's sales. To grow in the future, RBI will have to revitalize BK and Timmy, just as it revitalized Popeyes with the Chicken Sandwich.

What else we’re Snackin’

  • Nook: Nintendo has its best April-June quarter in 12 years — software sales more than 2X'd thanks to "Animal Crossing," and Switch sales nearly 3X'd to 5.7M units.
  • TokOff: The US Senate voted to ban TikTok on all government-issued devices. BTW: Microsoft now reportedly wants to buy all of TikTok.
  • Corolla: Toyota posts its weakest 1st quarter profit in nine years — car sales halved and profit plunged 98% to just $132M.
  • RT: Twitter adds labels for government officials and "state-affiliated" media, but not for personal accounts of heads of state.
  • Epic: Fortnite-maker Epic Games raises $1.8B in fresh cash, bringing its valuation to $17.3B (ICYMI: gaming is a corona-conomy thriver).
  • MedMan: Trump signs an executive order requiring the government to buy essential drugs from US companies instead of China.

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Friday

Disclosure: Authors of this Snacks own shares of Uber, Apple, and Twitter

ID: 1296050

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