Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Uber Technologies Inc (UBER, Financial) reported a record quarter with gross bookings growing 21% on a constant currency basis.
- Adjusted EBITDA grew 71% year-on-year, demonstrating strong profitability.
- The company generated record quarterly GAAP operating income.
- Uber's audience expanded by 14%, with frequency growing by 6%, supported by 7.4 million drivers and couriers globally.
- Uber One membership now covers 50% of delivery gross bookings, enhancing customer loyalty and recurring revenue.
Negative Points
- Concerns about how Uber Technologies Inc (UBER) would perform in a recession, despite current strong consumer metrics.
- The company faces challenges in maintaining profitability while investing in new products like autonomous vehicles (AVs).
- There is uncertainty around the regulatory environment for AVs, which could impact future growth and deployment.
- The cost structure may be impacted by new agreements with independent contractors, such as the recent deal in Massachusetts.
- Market consolidation and rationalization in the delivery sector could pose competitive challenges.
Q & A Highlights
Q: Dara, can you provide more detail on what you're seeing in Arizona around the incrementality of rides from the AV partnership? How do we think about the relative unit economics and your strategy of reinvesting dollars to drive more AV growth versus delivering profitability?
A: Dara Khosrowshahi, CEO: While I can't speak specifically to Arizona due to confidentiality with Waymo, we see significantly higher utilization for AV players on our network compared to their own. Our marketplace tech drives this utilization, making it economically viable. We believe AVs will be part of our long-term strategy, but we don't expect substantial profits from AVs in the next 5-10 years.
Q: Can you talk about the importance of the BYD partnership for bringing new EVs into global markets and how it might tie into AV over time?
A: Dara Khosrowshahi, CEO: The partnership with BYD is crucial for our electrification goals. Uber drivers are switching to EVs five times faster than regular drivers, and BYD offers cost-effective, high-quality EVs. We're bringing over 100,000 BYD EVs onto our platform globally. BYD's significant investments in AV technology also make them a promising partner for future AV initiatives.
Q: How do you think about the potential for increased utility and frequency in the delivery network as you layer more supply and evolve the consumer experience?
A: Dara Khosrowshahi, CEO: The long-term growth in delivery is promising, especially with our expansion into grocery and retail. We now have 1.1 million merchants on the platform, and each new merchant improves conversion and choice. Multiproduct consumers spend three times more than single-product users, and our membership product covers over 50% of bookings, driving strong volumes.
Q: What would you expect to happen to mobility in a consumer downturn or recession?
A: Dara Khosrowshahi, CEO: In a downturn, we typically see an improvement in driver supply due to a weaker job market. This leads to lower surge pricing and better ETAs, making the service more compelling. We're also investing in affordability through membership programs and lower-cost products like UberX Share and two-wheelers. We believe we can perform well in both upturns and downturns.
Q: Can you help us understand how much of the rideshare demand takes place during peak hours and the value proposition to AV partners?
A: Dara Khosrowshahi, CEO: Significant peaks occur during rush hours, and we shape demand and supply through variable incentives. In an AV world, the car is always there, so a hybrid network of humans and robots can handle peaks and valleys more effectively. We're confident in acquiring AV content globally and believe our marketplace will have a strong position.
Q: How has mobility usage progressed across cohorts over the past year, and what does it tell you about driving frequency higher through multiproduct adoption?
A: Dara Khosrowshahi, CEO: Frequency numbers for both mobility and delivery are up year-on-year, helped by multiproduct usage and membership. Newer products like UberX Share and two-wheelers have significantly higher frequency. Overall, the frequency trends are very constructive across all cohorts.
Q: What's the status of your ride hail advertising business, and can you provide more color on the Instacart partnership?
A: Dara Khosrowshahi, CEO: For mobility ads, we're focused on quality over quantity, ensuring a good experience for riders and advertisers. Click-through rates are over 2.5%. The Instacart partnership is encouraging, with basket sizes 20% higher than our base and strong demand from suburban markets.
Q: Can you talk about subsidies and incentives for drivers and consumers and how you see them evolving?
A: Prashanth Mahendra-Rajah, CFO: Globally, supply is in a better position, allowing us to pivot incentive dollars to drive demand. We continue to balance incentives to ensure market liquidity and fund future growth products. We're also expanding into new geographies and products, maintaining our financial framework.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
