Uber Technologies (UBER  ) reported first-quarter results that missed on the top-line but missed on the bottom-line. However, the earnings result was driven by the company's $1.6 billion profit from its self-driving unit, ATG.

Overall, Uber Eats is driving the company's growth, while its ride-sharing unit is slowly improving from the depths of the spring. However, the company faces a major challenge with a shortage of workers that could force the company to raise rates which would compress margins.

Inside the Numbers

In Q1, Uber posted a net loss of $0.06 per share which was significantly better than expectations of -$0.54 per share. Revenue came in below expectations at $2.9 billion vs $3.3 billion.

Overall, Uber had a loss of $108 million in the quarter which was an improvement from a $968 million loss in its previous quarter. However, a major factor was its $1.6 billion gain from the sale of its self-driving unit, ATG. A better measure for the company would be its operating performance which resulted in a loss of $1.5 billion.

Given the nature of the pandemic and how different regions were locked down and restricted travel at different times, it's tough to make year-over-year comps for Uber. However, the company expects to become profitable on an adjusted EBITDA basis by the end of the year. The company also warned that its delivery business would face tougher comps and likely lead to its revenue growth rate decelerating.

In Q1, mobility gross bookings came in at $6.8 billion, 38% lower than last year. Delivery gross bookings were $12.5 billion, a 166% gain from last year. Total revenue for Uber Eats was $1.7 billion, a 28% increase from the previous quarter.

In its conference call, management struck an optimistic tone as it said that ridership is on the upswing, and the company has been successfully adding more restaurants to its food-delivery platform including an agreement with GoPuff to supply more convenience-store and grocery items.

Of course, a major challenge will be recruiting drivers as many likely left the platform once the pandemic began last March. Uber is looking to spend $250 million on a one-time stimulus aimed at getting drivers back on the road. Currently, it has 3.5 million drivers on its platform which is a 22% decrease from last year. Not enough drivers would likely result in longer wait times and higher fares which could lead consumers to consider other options.

Stock Price Outlook

Uber is down by nearly 30% over the last 3 months. While the economy's gradual reopening is clearly a positive development, it's been an underperformer due to the rotation out of growth stocks. Therefore, investors should remain cautious in the near term but have a constructive outlook in the longer term.

Uber is dominant in ride-sharing, and this category should resume its growth once the world returns to normal. Given expectations of a huge burst in travel due to the coronavirus, the company should see a major boom in revenues in the second half of the year.