Q4 2020 Uber Technologies Inc Earnings Call
And.
[music].
Ladies and gentlemen, thank you for standing by and welcome to Ubers Q for 2020 earnings Conference call.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
And you require any further assistance please press star zero.
I would now like to hand, the conference over to your Speaker today Biology, Krishnamurti Investor relations. Thank.
Thank you. Please go ahead Sir.
Thank you David Thank you for joining us today and welcome to Uber technologies fourth quarter and fully go try and for any.
Earnings presentation on the call today, we have CEO Dara close Roche Ie, and CFO and Nelson and say this is biology krish from mostly from 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 and non-GAAP measures are included in the press release supplemental slides and our filings with the SEC each of which is posted to Investor day Uber Dot.
Comp either remind you that these numbers are unaudited and may be subject to change.
Certain statements and this presentation and on this call are forward looking statements such statements can be identified by <unk> such as believe expect intend and May you should not place undue reliance on forward looking statements actual results may differ materially from these forward looking statements and we do not undertake any obligation.
And to update any forward looking statements, we make today, except as required by law.
For more information about factors that may cause actual results to differ materially from forward looking statements. Please refer to the press release, we issued today as well as these risks and uncertainties described and our most recent quarterly report on form 10-Q for the quarter ended September 32000, and cleaning and other filings made with the SEC.
And when available.
Following prepared remarks today, we will open the call to questions.
For the remainder of this discussion all growth rates reflect year on year over year growth and are on a constant currency basis, unless otherwise noted.
With that let me hand, it over to Dara.
Thank you for allergy and thanks for everyone for joining us today.
Last earnings call. The World has made considerable progress and the fight against Covid, while there's still a lot of work to do we're cautiously optimistic.
And our growth will continue and in fact accelerate over the next quarter.
However longer recovery take ubers business remains well positioned.
Despite and renewed locked down for Q4, we ended the year with total company gross bookings nearly flat year on year in December with gross bookings turning positive in January and.
Disciplined execution and increased scale and our delivery business allowed us to improve our adjusted EBITDA by 161 million and year on year and Q4.
This quarter and marks the completion of a series of portfolio actions that began in Q2 with a goal of focusing the company on its two massive core opportunities of mobility and delivered.
We executed 17 transactions and 2020, including acquisitions that increase our run rate our run rate gross bookings by over 6 billion and.
And divestitures of noncore operations that combined with other cost optimization actions reduced our annualized EBITDA losses by over $1 billion.
These transactions, coupled with disciplined operational execution and continued product innovation and put us in a stronger and more focused foundation heading into 2021.
Such increase.
Increased confidence and our ability to reach breakeven this year, while continuing to invest and long term initiatives quotes for our core.
Looking ahead, our strategic priority in 2021 is to continue for harnessed the power that our platform with multiple and growing product offerings can uniquely provide.
And wherever you need to go with whatever you need to get Uber can help.
We believe our highly engaged consumer base on delivery and will drive stronger and mobility growth as cities reopening on the flip side, we expect mobility to become an increasingly powerful acquisition channel for our delivery business for us.
Our redesigned Uber Super App.
Already generated more than 10% of first time heaters and Q4.
We plan to accelerate cross platform usage for a renewed focus on our Uber path and eats SaaS membership programs.
This will only become more valuable as we added new benefits and vertical like pharmacy and alcohol.
Memberships and ramped up significantly in Q4 with over 5 million members across 60 countries and we have aggressive global and extensive plans and 2021.
Now I'll dive into each of the core seven first mobility, which continues to be effected by lockdowns around the world mobility, GBS and improved modestly and the fourth quarter up 50% from Q3 levels, but still down 47% year on year.
In January gross bookings were down 47% year on year decline and 10% month on month close to elevate a holiday activity in December.
We're seeing extremely encouraging trends in APAC, and Latin America with growth bookings and those two regions down only 25, 25% to 30% in January.
Two of our largest markets, Brazil, and Australia were down only 10% to 20% and generate for Taiwan grew 16% year on year.
The recovery and in these markets demonstrate consumers pent up desire to start moving again, while we brits continuing to gain share versus other modes of transportation.
Over the next six months will begin to prepare our business to go from preservation mode to read and condition.
This means investing in new mobility products, such as Uber Reserve rentals transit taxis, and motorbikes and rolling out new segment that offer and likely discomfort.
We'll focus on re engaging writer for their second first trips and re engaging driver to meet ramping demand.
We do these things right and the public health situation improves as expected. We're bullish that we can deliver strong growth and expanding margin and the second half of the year.
Now turning to delivery, where we continued to execute well against the massive expansion and the category.
We narrowed our focus to markets that we consider attractive and where we can win and we are now number one for number two and nearly the entirety of our delivery footprint.
And the same time, we're scaling our next strategic leg up 10 plus year growth.
Spanning our offerings into adjacencies and beyond food delivery and that's a broader instant on demand local commerce.
Q4, gross bookings grew 128% and reached a 44 billion dollar run rate and December <unk>.
<unk> revenue more than tripled and adjusted EBITDA margin as a percentage of revenue improved 100 points year on year.
We've seen our business accelerate and generally for over 150%.
Year on year growth.
As the rate continues to provide a natural hedge and markdown.
It's become clear that the pandemic has increased consumers appetite for on demand delivery of not just food, but all growth and will take.
A major step for adjusted enormous opportunity for.
For our acquisition of corner shop opened up grocery delivery for Uber, where we've rapidly expanded globally.
With close mates, we bolstered our local commerce capability through their delivery as a service offering that already accounts for Walmart Apple and 711 new customers.
And December delivered as a service represented 18% of both make orders and we intend to scale and Thats out further along with Uber direct product.
Lastly, we announced our agreement to acquire Drizzly, which will add the leading online alcohol marketplace for our portfolio.
And it is growing at 300% year on year and is already profitable on an EBITDA basis.
These new initiatives.
And will remain and investment priority going forward and in 2021, and we expect to invest 200 to tuition and $50 million pre integration synergies to grow the business by meaningful multiples.
While we leaned into growth. We also made significant progress overall on overall delivery profitability. Thank.
And Q4, we had 15 countries generating over $100 million of EBITDA on just over $2 $5 billion of gross bookings.
We remain confident that delivery will turn EBITDA profitable in 2021, although we will not hesitate to lean and during the first half of the year.
While the external environment remains uncertain and I am more optimistic than ever about Uber future. We've established the world's largest mobility platform with a leading position and every major region that we operate in.
Five years, we built the world's largest food delivery platform outside of China, which is growing substantially faster than the category and which we're using for demand to expand into high potential adjacencies.
These two platforms that are synergistic and our powered by many common components sales by the most talented tech team and the business for <unk>.
And we're focused and we're operating a global scale and we will innovate relentlessly to make consumers line a bit easier and to create more earnings opportunities for drivers couriers and our merchant apartments.
<unk> is ready to go now.
And now I'm going to open it for more details on the numbers.
Thanks, Dara, we continue to execute well against the tough operating environment for our mobility business investing for growth and delivery, while improving total company adjusted EBITDA for both year on year and quarter on quarter.
During the quarter, we completed significant portfolio realignment actions, including our divestiture of Atg and acquisition of postpaid.
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 were down, 4%, but up 16% quarter over quarter.
Revenue was $3 2 billion down, 15%, but up 13% quarter over quarter. Our revenue take rate was 18, 5% of gross bookings down 221 basis points year over year, and down 62 basis points quarter over quarter, as our business, who ex continue to shift towards delivery.
Non-GAAP cost of revenue, excluding D&A increased to 45% from 43% of revenues, but down 177 on an absolute dollar basis, driven by lower volumes and our mobility business.
Turning now to non-GAAP operating expenses, which exclude pro forma adjustments such as stock based compensation and restructuring charges.
Operations and support was down $123 million a year on year, reflecting new leverage from head count reduction actions taken and the second quarter share.
And marketing decreased $209 million as a result of lower marketing and promotion spend and our ability and business.
R&D was down $126 million.
Primarily driven by a decrease and head count related spend.
G&A was there.
$80 million, a year on year and quarter on quarter, our spend decreased $10 million and improved as a percentage of revenue by two percentage points and continued top line recovery.
Our Q4 2020 total company adjusted EBITDA loss was $454 million, improving $161 million year over year and $171 million per quarter over quarter.
Now ill provide additional detail on our segments.
Starting with mobility and mobility gross bookings of $6 8 billion improved 15% quarter over quarter.
It was down 47% and year on year and revenue of $1 5 billion improved 8% quarter over quarter, but was down 51% year over year.
Revenue take rate of 21, 7% declined 90 basis points year over year with a 40 basis point impact from a onetime driver litigation settlement in Q4, and with lower take rate geographies, such as Latam for covering faster than expected.
And quite a significant headwind to our top line performance mobility, adjusted EBITDA was $293 million for our 20% of mobility revenue improving $48 million quarter over quarter.
Now onto delivery.
We've seen continued tailwind related to stay at home orders driving delivered gross bookings for $10 1 billion up 128%.
We consolidated a postpaid and December which contributed eight points to year on year growth.
Delivery revenue of $1 4 billion up 220% significantly outpacing gross bookings growth.
Preliminary revenue take rate was 13, 5% up 391 basis points year on year, and up 21 basis points quarter on quarter.
The year over year expansion was driven by higher basket sizes.
<unk> network efficiencies and an increase and subscription revenue from each pad.
Additionally, we realized a 100 basis point benefit year on year from business model changes and from countries that reclassify certain paying for incentives of cost of revenue.
Delivery adjusted EBITDA with a loss of $145 million for negative 10, 7% of revenue that represents a $38 million or five four percentage points quarter over quarter improvement respectively.
Now on to freight, which grew revenue, 43% and year on year to $313 million and adjusted EBITDA loss was $41 million.
Operating EBITDA margin improved 12 percentage points quarter over quarter and year on year.
Market rates remained elevated in Q4, putting constraining pressure on both industry margins and ship our supply chain.
And this challenging environment, we've seen strong adoption of our digital offerings like API book loads and Uber freight enterprise.
<unk> technology enables to provide shippers with real time and transparent access to carriers and as a result, we saw 45% quarter on quarter increase and active user base of these products and.
Additionally, <unk> technology and that provides for automated visibility and to nearly 80% of loads moved resulting in better service at lower operating costs.
Feel good about the progress of rate, making and we are encouraged by the numerous awards for the team has won for service and technology from both industry pundits and our larger shippers.
And to Atg and other technology programs and adjusted EBITDA loss for the quarter was $72 million.
As a reminder, we divested atg and Uber elevate during the quarter with both transactions closing in January.
Q4, 2020, corporate G&A and platform R&D for $489 million, which represents the G&A and R&D not allocated for one of our segments improved 24% and year on year and slightly improved quarter over quarter on an absolute basis.
And the percentage of total revenue corporate G&A and apart from R&D improved three percentage points quarter over quarter as we saw fixed cost leverage.
In terms of liquidity, we ended the quarter with approximately $6 8 billion of 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 January trends I'll provide a few comments around our expectations for Q1 performance and.
In January and mobility gross bookings for out of $25 billion annualized run rate.
147% and year on year on a constant currency basis were down 49% on a reported basis.
Cohort and flows remain elevated with associated and movement restrictions and many of our largest markets, including the U S. The U K, Canada and France, we.
We are targeting and the ability to take rate relatively flat quarter over quarter consistent with normal seasonality, although market mix based on Covid cases may impact take rate positively or negatively.
Turning to delivery well provide some color around quarter over quarter EBITDA progression expectations.
Given the continued influx of new consumers to the category, particularly in markets like Europe, we are continuing to lean into delivery opportunities, including.
Including with incremental brand marketing spend customer acquisition spend as well as investments and our growing grocery and other new verticals and <unk>.
Q4 incremental spending for grocery postpaid was offset by one off benefits.
During Q1, and we expect the incremental investment of roughly $40 million to $50 million towards postpaid groceries and other new verticals for.
For our close rates in particular.
And narrow the losses as we move through integration and remain on track to delivering the 200 plus million and run rate synergy goals, we disclosed last year.
As we progress throughout the year and <unk>.
The EBITDA should improve significantly and we remain confident and achieving breakeven at some point in 2021.
Putting it altogether, we expect total company gross bookings to return to year on year growth and Q1. Despite the current COVID-19 impacts and mobility is delivery continues to drive strong growth.
Based on current mobility gross bookings levels and anticipated delivery investments we.
Expect Q over Q1, adjusted EBITDA for the flat or down quarter over quarter before we start seeing meaningful improvement throughout the rest of the year for.
We're pleased with the progress we've made and the last year with growth now and a stronger footing with a strong liquidity position with nearly $7 billion and cash and while the bulk of our portfolio rational as actions are behind US. We will continue to focus on activities that drive value to our shareholders, including monetizing our equity Stakes.
Done recently with a small portion of our <unk> stake and executing strategic transactions such as strictly for.
We remain on track with turning EBITDA profitable in 2021, and we are confident that Uber can deliver sustained strong top line growth as we move past this pandemic and with that we'll open it up for questions.
And as a reminder to ask a question and you will need to press star one on your telephone to.
Withdraw your question. Please press the pound or hash key please standby and while we compile the Q&A roster.
Your first question comes from the line of Justin Post with Bank of America. Your line is open.
Great and I Hope you can hear me, okay, I'm actually and our new where I got back.
Couple of questions I guess for adjustment and you can ask questions from Ono variety thought.
And it sounds like some of your more of your markets have turned profitable for delivery. So I'm guessing what is enabling that is at scale are you finding operational efficiencies and are any market take a long term target and then I guess a second question just how are trends and the U S. Obviously youre going to be compared to here.
Public comps and just how are you doing on delivery and rides and the U S market share wise.
Yes sure.
I'd say, it's basically on delivery the general business is scaling.
As our as we bring more restaurants onto the platform as we bring more users onto the platform of careers onto the platform essentially we get to drive and network density.
As the network gets more dense essentially a carrier has.
Less and less mouth to cover for the average delivery and.
And our algorithms are getting smarter and in terms of routing in terms of wait time with restaurants and optimizing.
Every.
Every last percentage and order to drive our cost per transaction efficiency, we shouldn't helps our net revenue.
And also really helps carrier earnings because they are being productive a higher percentage and the time.
And that they are on on network.
That in addition to just the business scaling up right. If you're tripling revenue I can tell you that we're certainly not tripling.
Head count or tripling overheads. So you just have revenue synergy which is pretty beneficial.
And we continue also to benefit from basket size increases.
And.
And as basket size increase the cost of a delivery stays the same and again that accrues to margin as well. So I would say, there's not a single element.
And that is responsible for the improvement in margin, but it's many elements coming together and frankly, it's the team and the technology focused on continuing to drive hyper efficiency.
And every part of the business I think the last part I would I would say is that as your customer base as your established customer base becomes a higher percentage of your overall customer base.
You've seen us increase our membership base from 1 million to $5 million as you get a higher percentage of members as you get a higher percentage of customers, who have been with the and for a period of time your marketing cost should come down as a percentage of bookings or revenue, we're not there yet we're leaning in.
But I think that as I look forward 234 years on the delivery business. There is more efficiency, but right now were finding a lot of.
A lot of new customers and on the marketing side generally we are leaning in.
And also getting the additional benefit of.
New meters through our through our mobile mobility business.
And as far as the.
The the the trends versus other players and the U S. I would say that most of the process, obviously lift who's our largest competitor released their numbers yesterday.
I would say that there are there are no surprises as it relates to their numbers. They are a strong operator, and and and I would say that generally we see our trends roughly comparable to their trends.
From the insurance side, we've been pretty consistent and executing well there. So we don't have these.
Surprises so to speak.
As it relates to the delivery business.
We are in the U S growing at very significant rates triple digit rates, we see January trends and the U S actually.
Moving over already strong trends that we saw in Q4.
B can't exactly tell how we're doing versus all of our competition and the us.
But we think that were more of and holding our own and frankly there is there is more to do there.
With a real focus on improving our restaurant selection.
Which which I think holds significant upside for us.
Great. Thanks Dara.
And that question.
Your next question comes from the line of Brian Nowak with Morgan Stanley. Your line is open.
Thanks for taking my question I have two first one dara.
And the cost reductions and the adjustments you've made for the business throughout 2020, and now with the rides business kind of continuing to evolve how do you think about sort of the long term rides profitability now do you sort of remove those costs and the mix of the business continues evolving and the second question on Uber pass and even share.
For us about frequency or user behavior, and Uber pass members versus non members and then you mentioned sort of being more aggressive to drive adoption what types of strategies have you not yet really deployed to drive that growth and that over past.
Yes, I'll start with your SaaS and I'll have Nelson talked about.
The long term P&L.
As far as Uber basketballs.
We are very early and the development of paths I mean, we've really started meeting and to pass.
Middle of last year.
We built that eats pass essentially.
And from that.
And the mainline Uber pass team had built.
And as a result, you see pretty significant acceleration and I think the last time, we talked to you. We had 1 million paid members and we got 5 million total members.
With that number expected to go up very significantly in 2021.
And I don't want to give away competitive information.
And the frequency.
Pass members is significantly higher than the frequency of non past members, so going out and acquiring pass members.
And while there may be unprofitable in period.
If you look at the frequency increases and apply them to some reasonable lifetime value estimates.
This becomes a very very strong profit pool for us that either we can pull to the bottom line or we can use to reinvest and and other appropriate markets.
Nelson do you want to talk on margins. So Brian we have not updated our long term margin book.
And we believe we'll continue to make progress towards and as you know even.
Given the Covid restrictions as you heard in my prepared comments, we were at 20% and mobility in the fourth quarter as you know and the first quarter of last year, we were at higher rate around 30% and so were pretty constant our ability to do that the incremental margins. We're seeing are kind of and the mid forty's versus Q3 and.
And then a lot of it just pass through and continue to leverage against and get the efficiencies against our fixed cost base and so we're pretty optimistic.
And that as we get more COVID-19 recovery as people start moving.
And that.
We think we're very bullish in terms of the profitability profiles for our mobility business.
And the other.
The other factor to add there is Nelson and I are constantly and managing the business based on portfolio of kind of profit and opportunities and while we talk about the delivery business and rightly. So based on the growth of that business right now as it relates to mobility and when we look at the Germany's other world Japan.
Argentina, and new markets to get into as we look at the opportunity to power tax new technology, Inhalable and general when we think about.
The opportunity of shared rides when things open up and then we look at our transit.
Team there are many many growth opportunities and the mobility segment.
So I do think that we will take some of the incremental margins that we see and mobility and reinvest and growth opportunities because we expect our mobility business to grow at very attractive rates for years and years and years.
And I think we're one other few companies around that can afford to invest and those areas and I think taxes are going to want more demand, obviously, you've heard about transit.
Needing help in terms of Tac and in terms of cost effectiveness.
And we want healthy run rate be part.
And part of our solution, but it's also a great opportunity for us.
And from a margin.
And Brian <unk> from Ing.
And actually one last thing is I would say that you've heard us talk and the past about where we would see recovery and <unk>.
As we talked about being 10 or 20% down in terms of getting towards breakeven and so obviously, we have more and more room now because of the actions we took and so again, we're feeling much better about it but as Dara said, we are going to take some of that profitability and invest back in.
So it doesn't actually change the.
Full year outlook on when we're going to achieve total company profitability, but we certainly have more degrees of freedom and so again Dara covered and we covered in our prepared remarks from all the actions we took last year and so we feel very good about how we're set up.
Moving forward.
Great. Thank you both.
And welcome next question.
Your next question comes from the line of Eric Sheridan with UBS. Your line is open.
And so much for taking the questions and maybe a few on the concepts of what you've already seen and some of the markets with mobility that have started to improve curious just maybe following up on the last day instruments from the comments you made in the prepared remarks, just what form is that taking and neither stoking demand growing and retaining the user base.
On the customer side as opposed to investing more heavily on the supply side and investing and deepening on the supply side and the markets have recovered and or jump started the profit recovery and how should we be thinking about cap being applied more globally and what we should be watching for in terms for form those investments might take thanks guys.
Sure, Eric and I think.
And that.
And the team that we have on the mobility side is.
Has dealt with the significant changes and volumes and mobility and pretty incredible rate for Q2, we were able to drive segment EBITDA profitability.
And as the markets come back.
One is that we're seeing both social use cases come back so social use cases, and a bunch of the markets that have come back or like over 100% year on year and workday commute users come back only going to use case that hasnt come back to the airport and.
And the teams are very closely watching the balance between supply drivers who are coming onto the platform.
And demand, which are our our riders for.
Who who are also coming coming back onto it onto the platform and what's really exciting is that the the.
The Corona virus and and everything that's happened, it's actually changed the nature of some of our riders.
Using our mobile as a use case. So if you look at for example, our Brazil. We are at 90 plus percent recovering and Brazil, yet 30% of our riders who happens to be.
Very high value riders hasn't even come back so our business is already 90% back and then 30% of high value riders of total riders, who happen to be very high value. They haven't even started to right again, so we're seeing some pretty attractive signs.
The team has been able to balance the marketplace pretty effectively.
I do think that if I'm worried about one thing going into the second half of the year is are we going to have enough drivers too.
To meet the.
The demand that we're going to have and the mobility segment.
But I think the team has proven itself over and over again and as the mobility business comes back we will look to continue to fund some of them new new use cases, Halo bowls transit et cetera, but frankly, we've been doing that anyway, because those kinds of long term bets are bets that we should be pushing during good or bad times does that answer your question.
And.
And it does thanks for the color and by the way happy New year channel team hope everyone's up well thanks a lot.
Q.
Next question.
Your next question comes from the line on for Ross Sandler with Barclays. Your line is open.
Hey, guys a couple questions on delivery.
And we hold some grumblings about increased competition and each business and the U K, Japan and Australia, So as your outlook.
Changed at all for those.
And with three big countries and is still on track for breakeven and is up $40 million of incremental investing is that for each of these offerings.
Adjacencies like corner shop, and and posting rates et cetera, and and the second one is currently.
And from what we understand and we'll see the AD marketplace, you kind of break even on the transaction and then EBITDA is coming from the advertiser side. So I guess, how does that fit in and and other practices that theyre doing it could be applied to a corner shop eats or.
The rest of the Uber Thanks, a lot.
Got it and I'll, let Nelson and talk about the.
Investment, but as far as the competitive environment goes listen the only environment, we've known and delivery is competitive.
And we were relatively late to the game there were a bunch of marketplace players who had.
Already been and some cases incumbent.
And I think based on the results that Youre seeing.
We're able to make progress grow the business grow faster than the category and improve margins and I think that speaks to the power of the platform. It speaks to the fact that.
We have access to many many common components as it relates to.
And our tech platform, our identity platform risk and insurance.
Et cetera, and it speaks to the power of the Uber brand and ops teams, who are local and understand.
And market deeply so.
And I wouldn't characterize the competitive environment is getting any better or worse I would characterize it as continuing to be intense but it's been that way since we started Nelson.
And do you want to talk through share repurchase.
So in terms of investment I think we said it was going to be probably an incremental $40 million to $50 million from the first quarter and that is for postpaid it's groceries.
As well as other adjacencies.
In terms of your question on specifically around food delivery.
Again, you've heard us talk from the past we have for capital allocation model. We go through with every months.
We continue to lean in and invest and grow.
You are right, we are and very competitive marketplace and as Dara mentioned, we believe we're winning and places like the U K and Japan, where we're seeing.
Hi, triple digit type of growth.
And the quarter and we are continuing to improve the economics and then obviously the RSV and some market places like the Australia as you called out and others that we've called out and the path in terms of not just being very very strong from a top line perspective, but also bringing a very good from a margin perspective as well.
And we can only and like the number of markets that are profitable that then we can use the degree either reinvest or we can use to increase the overall profit profile just the quantum number of markets is increasing and the dollars that those markets are contributing to the P&L for also improving so those are good trends, but again.
Within the context of a very competitive marketplace and with these kinds of category growth I, certainly wouldn't count on it getting any better.
And then the only thing I would add is that I think you heard in my prepared remarks.
We'll deliver against the $200 million of synergies and post mix.
And we announced the transaction and so as those synergies come in again it'll be less in terms of the drag if it is and the first quarter, but again as Dara mentioned there are there are some areas that we will continue to invest for growth.
Operator next question.
Your next question comes from the line of Mark Shmulik with Bernstein. Your line is open.
Yes, hi, Thanks for taking my question a couple if I may the first just wanted to follow up on Aaron's question. One other thing and take you mentioned are and some of those international markets like Australia, where and at 30% or the Super users have been returned.
Can you share a little bit of color all right.
But that was Brazil to be specific sorry, Brazil, yes can.
Can you share some color on and who is kind of driving that demand as it is just other kind of returning users or any kind of cross sell that you are seeing from kind of the delivery side is that customer acquisition channel and then second question just.
Thank you called it the Super apps.
And as we just kind of look ahead any updates on the roadmap there and the timing and how you think about integrating the different pieces and to that Super App. Thank you.
Sure.
Terms of the user base I think that it's.
It has increasingly become apparent that.
Uhuh or as a transportation platform.
Is recovering faster than other transportation offerings, and most of the markets and which we operate and I think it reflects the investments that we've made and safety.
The technology that we left and to make sure that drivers are mass stopped.
And and the trust that investors have.
And sorry that riders have and.
And the platforms that we're building.
So we see our our service come back faster and a taxi and many cases, we see our volumes come back faster than transit and it's because it's for consumer trust and it's because of the investments that we're making so we are.
We are seeing new customer acquisition.
It's a customer base that tends to be a bit more price sensitive. So generally I would tell you that our trips are growing faster than bookings generally if you. If you look at many of these.
Many of these markets.
And the consumer who.
There is a set of consumers, we're lucky enough, who don't need to go to work that can work remotely that for the consumer who hasnt come back and when that consumer comes back and we think it will there will be an enormous tailwind because we'll have a bunch of new customers, who have switched over from other forms of transportation and then we'll have our loyal base coming back is.
Well, so we think the setup is actually.
A pretty good setup.
One factor that has been a little bit surprising to us is that we've also seen non urban riders come come onto the platform.
With new.
New use cases, and et cetera, so in many and maintenance fees and core come back we've seen kind of.
The outer boroughs come back, but we've also seen suburbs come back as well.
And again I think it's because we are a trusted pharma trends transportation, you've got a lot of information regarding our platform.
And we've invested and I think we're seeing that we're seeing the results of those investments.
But what was the second question again.
And just around the Super App and the timeline and roadmap.
Yeah.
I don't again, I don't want to give away from that.
And that's competitive but.
The team is I think there are two factors as it relates to the roadmap one is that we're adding more categories.
And and.
And as a result, you will see a super App that is more complete.
And then just as important as adding more categories is that we're adding we're using machine.
Machine learning technology to make sure that the choices that we surface to you.
As either a rider or heater.
And are the best most personalized choices and as you can imagine we have more data than anyone else and appealed and we understand not only usage within mobility and within delivery, but across the two so.
And so the combination of more choice and more personalization, we think is pretty powerful.
And the.
For 10% of new <unk> that.
And I pointed out and Q4 and that was with the Super App being available for the first quarter and Android.
And so like that number is going to go up and.
Well, we haven't really driven as delivery back to mobility and a big way, our focus has been more and mobility and delivery and but we see real potential as far as deliveries for mobility or delivery to alcohol or delivery to grocery.
And those are all areas that we're focused on.
Next question operator.
Your next question comes from the line of Doug Anmuth with Jpmorgan. Your line is open.
Great. Thanks for taking the question.
You may have touched on it briefly on Drizzly and acquisition.
Just wondering if you can help us understand more just the rationale and kind of from a build versus buy perspective, and then also a little bit more around the unit economics of the business. Thanks.
And I think for us as far as build versus buy it went down too.
Got to know the Drizzly team, we're super Super and impressed with them.
And I think that while at a high level, it's easy to say well. This is delivery of all things and its delivery food or deliver groceries or dilutive alcohol actually each of these verticals can be quite idiosyncratic.
And it is hard when you have a generalized platform to go in and really really deep as far as for example, how do you search for products. So.
And one small example.
People who come to.
For each app tend to search for restaurant for a merchant first and then product.
People, who come to a drizzly tend to search product for US and then merchant what are you looking for or do you want.
And our IPA.
The big old product for us than the <unk> team is able to identify the merchants who are able to fulfill all of our product based on a combination of speed and price and then you did and then you go merchants second that's just one example of how these two products that seem similar and over a period of time are going to come together they are actually and.
<unk> early iterations and it's the details that really really count quite idiosyncratic quite different with alcohol, you've got the regulatory environment, which is different from state to state to state as you know we're highly highly regulated company on a local basis and we just saw a drizzly team, who built who built fast.
For the build profitably and also did it the right way. So I think putting together like a product that is first class merchant base that is highly penetrated and introducing them to the giant audience that we have.
That's a pretty powerful combination and you've seen it.
Executed on and other tech companies.
And I think we will be able to turbocharge curiously growth hopefully.
And also.
And that team to execute the way that they've been executing which is at a very very high level.
Thanks, a lot for any any snakes I'll go ahead sorry.
I was just going to follow up ask for any more color just on how you think about unit economics, and and take rate and the business yes.
Yes, so the smelter and so.
As you might expect for take rates for the basket sizes are larger versus the traditional.
Wide or even.
For food delivery and.
And then as Dara mentioned it is a little different because it's mostly a <unk> business and so what they do for connect local merchants and so if you have not used the product should they do a wonderful job and then what they do is that they are competing and so and they are providing in most cases the carrier if not they do use third party for us as well and so the economics.
Ex U are quite or quite good and as Dara mentioned earlier.
They are profitable today and.
And as you know and there are small and we think for a huge opportunity to continue to grow and navigating through all of the various state by state liquor. So if youre a new state of Pennsylvania do you actually can't buy liquid you can only buy beer and.
And it differs by state and so they've done a very very good job in terms of setting it up but again, we like the unit economics a lot other basket sizes are very strong.
Great. Thank you both.
Also I think the media opportunity there is pretty interesting as it is and.
Delivery space generally.
Okay next question operator.
Your next question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is open.
Thanks, guys I have two questions. If I can just first can you just talk a little bit more about your strategy for passing along the kind of prop 22 costs are you passing the entire amount along to customers.
And in California, what are you seeing kind of competitors do and and customers react and then the second one can you talk about Uber direct how big of a priority is that for this year and besides maybe grocery what are some of the focus areas in terms of your partnerships and anything you can share and kind of unit.
And omics for that would be would be helpful. Thanks, Okay. So I'll cover prop 'twenty two so first of all we believe proximity and she was the write offs and for drivers and riders and Heber.
And the price increases are manageable when compare to the 100 plus increases associated with traditional appointment that we would've seen us exit most markets in California, and not just us book, but our.
Our other competitors as well.
So for mobility, we've increased prices to account for most of the new car.
So we've absorbed a small amount ourselves and for delivery the cost impacts are larger than mobility and while the price increases have accounted for the majority of the cost.
For the customer, but we have seen slightly bigger impact and mobility and so I guess the short answer is we have seen some costs and we do think that's right.
A fair amount on our consumers, but we've also absorbed some ourselves.
And then on Uber direct.
As we mentioned the direct business is about 18% of our.
And of course mates business and Q4, it's a much much smaller percentage of Uber and overall business and our focus on the enterprise has mostly been.
As it relates to you for B and now eats for business, where we've seen incredible enterprise growth but.
Bank of America for example, using.
Each for business. So this is actually a I would consider it a relatively greenfield opportunity for Uber.
We have we.
We focused on initially kind of a consumer to consumer packaged delivery for Uber connect which has been very.
Interesting and above the enterprise business is one where frankly, we're going to take the lead from the <unk> team, who has built out those capabilities already has merchant relationships with Apple with Walmart and many others and with our scale and our geographic footprint, which was broader we think we can scale that business out.
And quite attractive body for the unit economics of the business that we've seen we're close rates are encouraging.
And we think that it will be additive business at margins that are generally comparable.
And our bottom line basis.
And because youre not going to get kind of revenue net revenue margins.
Got it for the same as our marketplace business, but from a bottom line kind of variable contribution margin basis. We think the unit economics are going to be roughly comparable.
It's a pretty cool promising business and we're looking forward to the close knit team.
And building on their efforts.
Alright, thank you.
You're welcome next question operator.
Your next question comes from the line of Jason <unk> with Oppenheimer. Your line is open.
Thank you for your question Nelson can you unpack maybe the.
Quarter to quarter decline and the mobility.
Mobility take rate.
And then maybe comment a bit how we should think about it in the first quarter and then Dara I mean, we're all kind of working through our Tam models.
And just maybe how you're thinking about ramping grocery versus convenience versus pharmacy versus alcohol and yet.
And how you think about U S versus international because I think the business is kind of right now and unit economics by geography and.
So the big driver of the take rate change for mobility is really just mix.
You heard Dara talk earlier about the fact that Brazil is almost 80% 80, 85%, 90% of where it was for.
Pre crisis and so.
So, Brazil, which as you know is one of our larger marketplaces has come back a lot faster than a place like the U S and parts of Western Europe, and so it's really just mix shift related I think you heard in my prepared comments on the call. We expect take rates to be largely flattish and the first quarter, but again, there could be some variability based on <unk>.
Mix shift.
And as we see more recovery and some of the markets like the U S or like parts of Western Europe, but you should see the new.
Shift benefit is that items.
And then as far as the Adjacencies and and how we think about the adjacencies.
Corner shop has been a.
A part of our business for longer.
For a bit of time now.
Team that again has really built that business quite effectively with a relatively small amount of capital.
So they have built a pretty efficient core.
Cost base.
And and a service that.
Really is driving a significant amount of loyalty is as far as their customer base goes.
So listen I think if I were to order and I think the grocery opportunity is very significant and.
And when you look at the percentage of consumers, who have ordered grocery delivery and have used grocery delivery versus let's say food delivery actually grocery delivery is substantially behind in terms of adoption.
And food delivery.
So we think the opportunity with grocery is significant we don't think the markets have been won.
We have obviously the corner shop team has a big presence already and Latin America Uber has a very big presence in Latin America.
So the Latam markets are absolutely a priority.
But I think for Europe, and the U S are very high potential markets and the U S. I think our approach is going to be more merchant led.
We will look to sign a significant merchants and obviously, then we will expand and geographies that match up.
Those are those merchants and Europe, we're going to be quite opportunistic so certain countries like France. For example, we are off to a really really strong start there organically through the main line Uber.
For service, so I think grocery we're kind of working on all fronts, but the the global scope that we have is unique.
We're going to scale the business.
Interest rates down the business at multiples of the run rate that we're at now which is the billion and a half run rate.
And the unit economics, we don't have to kind of prove out the unit economics. The corner shop team has already proven out the unit economics. So it's about taking attractive unit economics, scaling and really investing and building and the merchant.
And the merchant relationships over a period of time.
Alright.
And.
Next question, yes.
Yes. Your next question comes from the line and do Youssef Squali with true Securities. Your line is open.
Great. Thank you two questions. Please one is actually and just a follow up to that question Dara and maybe focusing on grocery and convenience store opportunity. So the competitive landscape you can see pretty intense probably even more intense than.
And then delivery could you just speak to the competitive advantages that you see Uber is having relative to your key competitors.
And kind of what are the key issues that still need to be ironed out before you kind of basically.
And maybe accelerate the investments and there beyond what Tom just said earlier about Q1, and then on top 22, it's now being challenging core by some drivers and labor Union does that worry you and where are you and your discussions with <unk>.
Policymakers and other states and I guess, especially given the new administration. Thanks a lot.
Sure.
I think on.
On grocery I'll keep it simple.
We have over 90 million monthly active platform consumers right now on the platform.
And we have proven.
With our mobility business being able to drive consumers to our delivery app.
Basically for free.
And the ability to move consumers and audiences across the platform because they trust Uber They trust our brands, we have all their information and they trust us with their payment information and they trust with our location.
So we've already we've already done it.
And and I think we can do the same but with grocery because we essentially already proven out the unit economics, and we don't need to make the unit economics work and unit economics already work, we have a global audience.
And that's we think a substantial strategic advantage.
Versus our competition, it's really the merchant relationships that we have to work on.
And in many markets, we are in great shape and in some markets. We have to we have to develop those merchant relationships.
On.
And the.
Prop 22, we've got 20, West our Chief legal officer.
On the line I think from <unk>.
Are you on M <unk>.
Comments on.
Sure, but could you just repeat the.
Roughly two I know it was driver support that I didn't get the full question.
Yes, so just.
Saying that its basically being challenged in court.
At least one labor unions, and some drivers and so.
Is that something that you know where are you where are you at this point and just broadly speaking where are you and your discussions with policymakers and other space to try to use profit 22, as a blueprint for other geographies.
So taking that last.
Question first.
And those conversations are.
Ongoing and and we were very clear after 'twenty two that we thought it was a good model and good base from which to have conversations about how you have and independent contractor plus model and one that allows for benefits and addition to the flexibility and independence.
And that that we know earners prefer.
So those conversations are ongoing and various venues around the country and with regard to the losses.
And I have seen with the California Supreme Court actually denied.
And the lawsuit.
And it was not properly brought and at the Supreme Court level.
We expect that that losses will probably show up again, and some other form and a lower court, but on the merits and it's not one that particularly concerns us.
Alright, thank you.
Operator, let's take the last question.
Certainly your last question comes from John Blackledge from Cowen Your line is open.
Great. Thanks for the two questions first on mobility could you just discuss views on the business for cash.
And the long term profit.
<unk> profile for the new verticals relative to each long term profit profile. Thank you for.
Sure I'll gets around on mobility and Nelson, maybe if you can talk to other profit profile listen I think as far as new mobility recovery goes.
<unk>.
This year the recovery timing is going to be very much dependent on when and how cities open up.
So while we can't predict quarters, we can certainly predict direction.
And I think we've proven out and big markets like Brazil, and Australia, which is as these markets open up the business comes back.
And and it will start growing again. This is a business that is growing for many many years, it's fundamentally a better way of of moving and I think what's really encouraging is that we are seeing a new customer base come onto our platform. During these very difficult times.
And when you combine that with our customer base, who is going to start going to work again, who's going to start going out again, and our loyal customer base. Historically, I think youre going to have a very strong growth profile. So theres no doubt in my mind that as we go to look at next year 2022, or 2023, our mobility business.
<unk> will grow at substantial double digit rates.
And I believe that we will we will take share from other modes and mobility, because we have demonstrated.
And the other platform for efficacy of the platform.
And the ease of use the dependable mess.
And the affordability of the platform as well so I'm very very optimistic as it relates and mobility trends, what im even more optimistic about all the investments that we're making and other modes of transport and helping for transit.
Agencies other world recover and rebound of power and taxis with our routing or her E mail technology or pricing technology et cetera. These I think it will be incremental positives.
And putting all together I think it adds up to essentially a platform for any kind of transport and your city.
And a unique platform in terms of the scale and global scope.
I think that travel.
Internal company business travel well.
We will probably come back a bit slower. So it may take a couple of years to come back companies have cut down on it they are using zoom et cetera.
So I think that will be a slow return, but I think external travel salespeople going to visit clients once you've got salesperson and when a client with a personal visit versus someone who just try to win a client I assume theyre going to have plenty of folks traveling out.
Just like they have for years and years and years, so internal travel business travel and maybe a little slow to recover from about external business travel. We think will recover very quickly and I think leisure travel will bounce back really quickly.
And and significantly not just this year, but.
Next two or three years, so we're pretty optimistic again, we can't predict near term timing, but when we look over a couple of years.
The trends are there and I think we've got a great kind of.
Investment profile as well as profit and cost profile as the business comes back.
And you want to take the second question.
Sure so in terms of.
New new verticals and and delivery, it's actually too early to comment or be too specific but hopefully it will.
Proven to be pretty disciplined in terms of how we view investment and we've been talking about it with our investors and the.
And all of you folks over the past quarters in terms of how we go through our research allocation you've seen and you saw during the course of 2020, the number of different actions, we've taken including not just acquiring but also moving away from things that didn't do we didn't take made sense from a long term profit perspective, we're going to continue to test and try a lot of different.
Things and you probably heard Dara talked before about the fact that.
And we really want and over the next hour and so and doing so we are trying to figure out over the over the course for the next few years as we move from Covid recovery what are those things that we have the right to play and you will see us when you're in and.
And as you know we've announced that we're doing some.
Pharmacy type things and places like New York, you've already talked a little bit about drizzly on the call and you've heard us talk a little bit about corner shop and grocery. So we think the rate a number of different verticals that youre going to see us continue to build on and it's all about building and bringing in more people into the community and so you hear about how many people we can active users.
And so we will continue to build on it and we will be disciplined in terms of the economics and you heard on day one of the things we really like for just the basket sizes and you've heard us talk and the past about the way you drive margin as we get you get scale you have you have.
You.
<unk> got a good basket sizes, and you can generate margins and so we'll continue to do that.
I mean, just the only thing to add a rate.
It's pretty simple and that our customer acquisition costs will structurally be lower.
All things being equal than our competitors customer acquisition cost and in these early markets.
Because all of these markets and are in very very early adoption customer acquisition costs tend to be very significant as a percentage of what the economics, what I'm really excited about with our membership program now it's 5 million members strong is that.
Membership programs, just becomes more and more powerful will be the only membership program that is.
Providing discounts on tube, providing discounts on rise per value for.
Free grocery delivery free alcohol delivery etcetera, we will have the deepest and most meaningful.
Local membership high and high frequency and local membership model and while that will result, and is not only a structural advantage in terms of customer acquisition costs, but also hopefully and advantage in terms of customer retention and lifetime value and then underneath all of that we've built the payments ecosystem rebuilt identity ecosystem.
We have teams on the ground and every single one of these cities so overhead cost and operational cost should actually be more efficient than any of the other players.
Better cash better LTV more attractive.
A more attractive margin.
Margin profile and you put that together and you have the makings of.
And did it and mobility, we did it and food, we're going to do and and delivery.
Thanks, so much.
For them.
Youre welcome.
Alright, I think policy that was the last question if I'm correct is that right, yes, yes, alright, great.
And I did want to say a special thank you to the <unk>.
<unk> 2020.
I think has been and a super difficult year for the world.
It's really difficult year for us as a team, but I'm just incredibly proud of how the team stood up.
We asked ourselves the question like how can we help our community for US how can we help our drivers for for careers first.
And the team really really stepped up this year, we've got a huge amount of work ahead of us.
And you really stepped up so thank you for that as far as our investors go.
And we will talk to you next quarter and thank you for for your interest and thank you for your investment.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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