Q3 2020 Uber Technologies Inc Earnings Call
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Ladies and gentlemen, thank you for standing by and welcome to the Hubert Technologies Q3, 2020 earnings conference call at.
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Thank you operator.
Joining us today and welcome to <unk>, We're technologies third quarter 2020 earnings presentation.
The call today, we have dark Charlie Nelson check.
So have biology Christian Murphy and this is Emily brighter in the Investor Relations team.
During today's call, we will present, both GAAP and non-GAAP financial measures additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the press release supplemental slides and our filings with the SEC each of which is posted to investor Dot Dot Com I remain.
And use that these numbers are unaudited maybe subject to change.
Certain statements in this presentation and on this call may be deemed to be forward looking statements.
About 65% in the U S.
But we have some bright spots even in the U S.
Bringing the case count under control over the past few months, New York City has improved significantly with bookings recover to 63% a year ago levels in October.
We're seeing Uber recovering faster than taxi and public transit in the city, indicating a deep level of consumer Trust, we believe stems from a safety technology investments and the reliability of our service.
New York City runner engagement is up double digits year on year, but it's particularly up during non peak hours, suggesting the emergence of new use cases.
As of last week, while New York weekday commute and weekend gross bookings fabric covered roughly 85 per cent of prior your levels weekday gross bookings outside of commute hours have recovered to nearly 100 per cent of prior year levels.
Elsewhere, Brazil, our largest market on trips recover to 87% in the prior year levels in October.
We're seeing worked a commute we can use cases nearly fully recovered year on year with the airports of course lagging.
All early evidence we see makes it increasingly clear that it's a question of when not if our mobility business will recover these trends give us a confidence that mobility will fully recover as public health situation improves as people return to Uber to get to work go shopping or reunite with their friends or family.
Finally, it's important to note that we're continuing to invest a product innovation to drive growth.
Adjusted net revenue nearly tripled year on year, expanding take rate to 13.3% and improving adjusted EBITDA margin as a percentage of anr by more than 10 points quarter on quarter.
This growth is coming not only from an influx of new users, but also from higher engagement from existing users with delivery maps the growth over 70% and trip growth over 110% excluding markets that we exited theater restaurant delivery driver retention, all increase year on year and quarter on quarter.
And we continue to add new eaters, an elevated level. We did all of this with consistent improvement in the unit economics of this business in each quarter of this year.
On the competitive front, we improved our category position in most major markets around the world, including GB growing GBS at triple digits year on year in several large markets, including the US, Canada, UK, France, Spain, Japan, Taiwan amongst others.
In the UK, we continued to expand our national footprint outwards from our leading position in London, delivering gross bookings growth of nearly 200%.
On a trip basis, we're now only about 30% smaller than the reported numbers from Justice takeaway. This compares to 60% smaller a year ago.
While the U.S. remains one of our most competitive markets globally, we made real progress in the quarter with GBS up roughly 123% year on year we.
We improved our position in 11 of the top 15 markets, including New York City, Chicago, Washington, DC, Boston and Atlanta.
Bookings in New York City grew more than 150% sustaining our momentum from Q2, even as the city led the U.S. and reopening.
We've also made meaningful progress in corporate ordering with a rubber for business platform, adding new enterprise customers like Bank of America, Unilever and Citadel.
We also leaned into a number of growth opportunities during the quarter, we close our core shop transaction in all markets, excluding Mexico and scaled our grocery business to over 30 markets exceeding 1 billion in annual run rate.
We expanded over east.
These past two four additional countries, surpassing a combined 1 million paid members across Superfast Annies pass, we're particularly encouraged by the improved usage trends, we see with our eat fast members and will continue to rollout or other markets in Q4.
Our ads offering is now live in the us with over 30000 restaurants running AD campaigns, Manny with significantly positive ROI.
Even with the substantial growth investments, we continue to make progress towards profitability in Q3, we had over 10 delivery countries adjusted EBITDA breakeven or better.
While we recognize we have we still have enormous opportunity for growth and investment in the segment were confident that we can lean in and turn delivery EBITDA profitable sometime next year.
Lastly, quick one on proposition 22, which we're happy to say pass with a healthy margin in California. This important question has now been settled in the most populous state in the country, California voters listened to what the vast majority of drivers launch new benefits and protections with the same flexibility.
Going forward drivers and delivery people in California will be guaranteed a minimum earning standard healthcare contributions accident insurance increased safety protections and more.
We feel strongly that this is the right approach, we should be adding benefits the gig work to make it better not getting rid of it altogether in favour of unemployment only system.
That's why going forward, you will see us more valley advocate for new laws like prop 22, which we believe strike the balance between preserving the flexibility that drivers value. So much while adding protection is that all get workers deserve.
Our proposal for new pragmatic approach is supported by 82% of drivers and 76% of voters and it's a priority for us to work with governments across the us and the world to make this a reality.
To sum up let.
While the last eight months have been tough for me for team and for the millions of people and businesses, who rely on our technology I'm.
I'm more optimistic than ever about hoover's future. The tough actions. We took the resilience. We've demonstrated give me confidence that will emerge from the pandemic on an even stronger foundation more nimble more innovative and more relevant to people's lives than ever before.
Now over to Nelson for more details on the numbers.
Thanks to our.
In spite of the unpredictable environment I'm pleased with our ability to adapt quickly to respond to the challenge that code.
Stabilizing the business in the case mobility and seizing new opportunities for delivery.
All of the relentless focus on cost discipline, and a drive towards quarterly adjusted EBITDA profitability in 2021.
I will now discuss key operational metrics as well as non-GAAP financial measures all comparisons are year over year and on a constant currency basis, unless otherwise noted.
Total company gross bookings declined, 8%, but improved 44% quarter over quarter adjusted.
Adjusted net revenue of at our was $2.8 billion down, 19% again up 47% versus the second quarter.
Our our take rate was 19.1% of gross bookings down 238 basis points year over year, but up 32 basis points quarter over quarter.
Non-GAAP cost of revenue, excluding DNA increased 46% to 45% of NR, but down $320 million on an absolute basis.
By lower volumes in our mobility business, resulting in a decrease in insurance.
Turning now to non-GAAP operating expenses, which include pro forma adjustments such as stock based compensation and restructuring charges.
Operations and support decreased 12% to 13% of an art and was down $119 million on an absolute dollar basis, reflecting headcount headcount reduction actions taken in the second quarter.
Sales and marketing increased to 32% and 30% of banner, but decreased $152 million on an absolute dollar basis, as we saw lower marketing and promotion expense in our mobility business.
R&D increased to 14% from 13% of bank and are down $75 million, primarily driven by a decrease in peoples bank.
DNA increase to 18%, 15% of NR, when again down 14% from year ago.
Quarter over quarter, our spend decreased $76 million, but improved as a percentage of NR a four percentage points continued topline recovery.
Our Q3 2020 total company adjusted EBITDA loss was 625 million.
Now I'll provide additional segment detail on our segments starting with mobility.
Mobility gross bookings of 5.9 billion improved 94% quarter over quarter and was down 50% year over year, and and our $1.4 billion improved 70, 472% quarter over quarter and was down 51% year on year, while take rate of 23.1% improved year over year.
Due to rationalization of incentive expense, mainly in the us and Canada.
Despite a significant headwind to our topline performance mobility, adjusted EBITDA was $245 million or 18% of mobility, and our improving $195 million quarter on quarter.
Now to delivery.
Are you seeing continued tailwinds related to stay at home orders as well as the consolidation of corner shop results this quarter driving delivery gross bookings to $8.6 billion up 135%.
Delivery and our $1.1 billion up 191% due to an increase in food delivery orders higher basket sizes from stayed home order demand coupled with network efficiencies mainly in the U.S.
Delivery and our take rate was 13.3% up 256 basis points year over year, and up 56 basis points quarter over quarter due to overall improvement in basket sizes and rationalization of incentives.
Additionally, we will be realized an 80 basis point benefit year over year from business model changes in some countries that reclassify certain payments and incentives as cost of revenue.
Delivery adjusted EBITDA was a loss of $183 million or negative 16.1% of an art, but that represents a $49 million and 10% improvement quarter over quarter, respectively.
Freight, which grew and our 32% to $288 million and.
And adjusted EBITDA was a loss of 73 million.
EBITDA margin improved nearly 12 percentage point year over year, but we can two percentage points quarter over quarter.
The shift in consumer consumption from services to goods as a result, the covance has led to a surge in demand for freight.
Combined with the industry wide driver shortages. This has led to a rise in market rates and pressure on margins across the industry and our freight that.
Despite the industry headwinds we are encouraged by the progress made this year.
Tech driven solutions can provide value to shippers and carriers and we've seen this through the strong growth of our of digital channels like Apiay tendered loads and adoption of other SaaS solutions.
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Over time, these real time solutions will reduce our exposure to market volatility while also delivering strong economics.
On the 80, G. and other technology program the.
The adjusted EBITDA loss for the quarter was $104 million in Q3, we returned our test vehicles to the street to Washington, DC. In addition to continuing operations in the Pittsburgh market.
Our Q3, 2020, corporate DNA and platform R&D up 510 million, which represents the gn and R&D not allocated to one of our segments improved 18% and held relatively flat quarter on quarter on an absolute dollar basis.
As a percentage of total and our corporate DNA in R&D improved eight percentage points quarter over quarter as we saw fixed cost leverage from restructuring actions taken in Q2.
As a reminder platform R&D represents over a third of the spend on the category in a corporate DNA also includes accrued sales taxes and other fees.
In terms of liquidity, we ended the quarter with approximately $7.3 billion in unrestricted cash cash equivalents and short term investments and have access to over $2 billion from our revolver, providing us with ample liquidity to manage through the recovery ahead.
Based on October trends I'll provide a few comments around our expectations for Q4.