Uber Technologies (UBER.N) results disappointed analysts after the ride-hailing company failed to beat sales estimates even as competitor Lyft recently posted expectation-busting earnings.

Analysts called the quarter “messy” and offering “more bad news than good.” With a loss of US$5.2 billion for the second-quarter, the business update also reignited debate about when Uber will turn a profit.

Uber shares dropped as much as 9.9 per cent on Friday, following results on Thursday after the market had closed. Uber is now down 13 per cent since its initial public offering in May. Lyft shares, meanwhile, slid 2.2 per cent, giving back some of Thursday’s gains after a beat-and-raise report.

Among positives, some analysts pointed to an improvement in gross margins, while others highlighted that the revenue miss was down to a driver appreciation award related to Uber’s IPO.

Here’s what analysts have to say about Uber’s second-quarter results:

Citi, Itay Michaeli (neutral, PT $45)

• Uber’s second quarter didn’t deliver the degree of upside that was likely implied by the stock’s 8 per cent rally Thursday, post Lyft’s beat/raise, but the quarter did show progress with respect to sequential take-rates and operating leverage, particularly within Rides.
• “We thought management conveyed an upbeat tone regarding the Rides competitive environment, as well as the path to profitability.”

Susquehanna, Shyam Patil (neutral, PT $42)

• “While we continue to view Uber as a once-in-a-generation company with an opportunity to revolutionize transportation and logistics, we believe business complexity, lack of visibility into forward numbers, and a precarious competitive landscape are likely to keep shares range bound.”

Loop Capital, Jeffrey Kauffman, Rob Sanderson (buy, $54 PT)

• “Messy” set of results slightly overshadowed by “noise and confusion” from reporting complications. But top-line growth was a little better than expected, even if expectations had been raised by Lyft’s results.
• But the long-term debate about Uber, similar to Lyft, revolves around when it will be a profitable business and “we see little to sway opinions more positive or negative” from the second-quarter numbers.

Morgan Stanley, Brian Nowak (overweight, PT up to $57 from $56)

• Results show good top and bottom-line momentum, reasons to be bullish on Uber’s opportunity to become the “next mobile utility.”
• Profitability is coming through faster than expected with gross margins better across the board and recent marketing restructuring likely to lead to more efficient spending.

RBC, Mark Mahaney (outperform, $62 PT)

• Adjusted net revenue miss was almost entirely down to a one-time driver appreciation award related to the company’s IPO. The underlying results look “solid.”
• Overall, comes away from results “incrementally more positive” on Uber given improving competitive dynamics, with take rates on track to rise and with losses lessening.

Evercore ISI, Benjamin Black (outperform, $60 PT)

• While Uber’s second quarter results and in-line full-year 2019 guide on the back of Lyft’s beat and raise was probably not enough short-term given the pop into the numbers, the overall print provided “a little something for both bulls and bears.”
• Evercore was encouraged by adjusted Core Platform (CP) take-rates expanding while operational leverage was “strong,” though bears pointing to the ‘chicken and the egg’ problem over profits and growth may carry the day.

Loup Ventures, Gene Munster

• There was “more bad news than good” in Uber’s results and the bottom line for the firm is that as a growth company, “you have to beat your revenue numbers.”
• The biggest negative is Uber has a lower return on invested capital from its international strategy than rival Lyft does from its domestic push. Notably, Uber’s revenue per rider effective declined in the quarter, compared to a rise for Lyft.

--With assistance from Esha Dey