Q2 2022 Uber Technologies Inc Earnings Call
His prepared remarks, and supplemental slides to our Investor Relations website earlier today and we ask you to review those documents if you haven't already.
We will open the call to questions. Following brief opening remarks from <unk> with that let me hand, it over to Dara.
We delivered another strong quarter with gross bookings on an annualized run rate of $116 billion.
An all time high EBITDA of $364 million, another all time high and well above our guidance range and positive free cash flow for the first time ever of $382 million.
Despite the uncertain global economic environment and considerable foreign exchange headwinds, we've issued Q3 EBITDA guidance that shows strong incremental progression and we remain confident in our ability to deliver healthy top and bottom line growth strong margin improvement and yes free cash flow.
All the while continue to responsibly invest in technical innovation owner satisfaction and durable long term growth.
As I've said before we continue to benefit from a secular increase in the on demand transportation of people and things as well as the shift back from retail spend to services spend and we continue and we intend to continue capitalizing on these growth tailwind in a profitable manner.
With that let's open the call to questions.
Alright.
At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad. Your first question is from the line of Ross Sandler with Barclays. Your line is open.
Hey, guys nice job on a quarter.
Just two questions first Dara.
How would you characterize like the overall operating environment today versus pre pandemic, you seem to be gaining category share and a lot of the smaller competitors from private markets are retrenching, even some of your larger competitors are struggling a bit so as life getting easier.
Sure.
Ore to be successful that'd be the first question and then the second question Nelson.
The <unk> guide assumes another solid incremental margin.
Can you just flush out.
Where that's coming from is that just fixed cost leverage that you expect to see over time or are you seeing more markets kind of reach that top 20 above target margin level that you had talked about at the analyst day. Thanks a lot.
Hey, Ross. Thank you for the question. So I'll go first in terms of the guidance. So what we're seeing is.
We're seeing first of all from a revenue margin perspective real uptick on the delivery side as were just the cost per transaction is just improving and so we're doing a really good job of the team in terms of creating efficiencies. There we're seeing gross profit improvement across both mobility and delivery.
And then we are getting the fixed cost leverage that you referenced.
Again, the business operating really well right now and again, we're really proud of the performance that we had in the second quarter and so we expect to keep it up on the balance of the year.
This is the operating environment.
Alright.
The source of operating environment goes listen no one wishes for a tough economic environment or elevated inflation, that's affecting so many of us including newer drivers, but at the same time from a competitive standpoint. There is no question that this operating environment.
Is stronger for us.
We are able to in this environment I think.
So our capital discipline as you've seen in terms of the margin increase in free cash flow generation as well at the same time because of our scale and because we've been making these investments for years, we're able to continue to invest in a new.
New vertical business and Relaunching Uber.
Sure.
Investing in <unk> et cetera. So we also continue to invest in top line. So that our topline growth continues to be durable.
And in a different environment the platform advantages that we brought the scale advantages the global advantage that we brought to some extent.
Some times.
We're kind of out shout. It by just higher spend by competitors, so in an environment, where capital discipline becomes more important.
I think the larger players and we are the largest players the most diversified players and were definitely more diversified than anyone else's as far as the kinds of businesses that we are and our global footprint.
And then the players who have true platform advantages, which again is Uber really start coming to the four so when we look at the competitive environment. This is the strongest we felt competitively globally.
Since Nelson and I probably started here.
And hopefully the overall environment will get better and the competitive environment will continue as is.
Next question.
<unk>.
Your next question is from the line of Doug Anmuth with Jpmorgan. Your line is open.
Thanks for taking the questions.
Theres, obviously been a lot of discussion about increased incentives in the market, but it seems like you've been able to improve the driver experience and exercise discipline on incentives. So hoping you could talk more about how you're doing that and then Nelson perhaps you can just talk about.
Some of the interplay here and driving the free cash flow above EBITDA in <unk> and just how you're thinking about the relationship of the two over the next couple of years. Thanks.
Sure as far as.
Incentives et cetera go Youre, absolutely right, which is we've been able to apply discipline here. Let me you can't spend your way to glory.
And in any business and what we've really started to focus on our three things. One is what are the overall, earning of drivers going to be the second is what is the driver onboarding experience because we're adding drivers very very quickly to the platform and then what is it dry.
Our experience look like once they are on platform can we redeem them for longer et cetera.
And I think the combination of all three of our onboarding processes improved significantly, including our being able to bring on new drivers to deliver for each one.
<unk> been essentially move them over to.
Driving people in working for mobility, where earnings levels are higher.
So our onboarding flows are much more efficient than they happen in the past, which allows us to essentially bring onboard drivers at lower cost convert a higher percentage of drivers who have shown an interest in earnings.
On the platform than you've seen us invest in our driver experience chiefly with a number of new innovations, including showing your destination upfront showing your full fare upfront new.
New innovations like trip radar and now we're rolling out a new Uber pro loyalty program that gets drivers up to 2% to 6% off when they use our debit card for using <unk>.
<unk>.
In buying gas that's all about the job our experience as well and then on the incentive side as a result of just the onboarding experience getting better drivers being able to earn multiple ways on Uber and overall utilization being at very very high levels that has resulted in Pi driver earnings.
So drivers at the U S who are cross dispatching.
Our earning about 30 Bucks an hour.
Which is very attractive earnings and drivers who are in mobility only that tends to pay higher are making $37 per utilized our.
As a result of the strong economics. This is all the while our taking driver incentives down as a percentage of overall bookings as.
As we drive more efficiency through the system. So right now at the machine is working and we're very very competitive place to earn.
And it's showing in the driver retention numbers.
On the question on cash flow. So if you recall back on Investor Day, I made the commentary that.
Free cash flow trailed adjusted EBITDA by about $1 billion annually.
So I'm not updating the number for you, but I would say that we do expect that we will outperform.
As you see just the.
The EBITDA margin as a percentage of gross bookings to improve that obviously helps in terms of what flows through the bottom line, but we are spending time in terms of looking a little bit more at our working capital and managing it.
And then again it is important to note, it's not a direct correlation from EBITDA to cash flow because they are different financial statements of cash flows very much more of an annual thing. So you pay out bonuses in Q1 as an example, you get the benefit of accrued bonus.
The rest of the quarters.
So youll see us continue to do it I do expect that we'll do better than the $1 billion target.
Cash free cash flow is actually a GAAP number as well so it's not like adjusted in and out and so.
So again, we will continue to update this over time when it makes sense, but we're really proud and we knew we would get there because think about all the steps we took.
During the pandemic and if you think about all the platform moves now to be asset light. Additionally, the other thing is.
We were doing some build out on <unk>.
Will it stay like mission Bay, and some of the year's path. So most of that stuff is behind US now and so as you think about the business and the current operating platform. This should be a really really strong cash flow generator, which I think you've probably heard from Dar and myself over the past couple of months.
Okay. Thank you Beth.
Next question.
Our next question is from the line of Brian Nowak with Morgan Stanley . Your line is open.
Thanks for taking my question. Good morning, guys. So I had a couple of questions. Darren I was wondering could you just update us a little bit on sort of where are you in the U S. When it comes to average rider wait time is versus when you were where you would have been in the past versus where you targeted to be.
Anything on sort of conversion rate.
Writers are gone in search and actually book a trip you are how are those metrics anything on supply as well I'll be curious to hear in the new update on Uber Uber 110 million users helpful.
What are we seeing in frequency and spend per user on the Uber one user base. Thanks.
Sure <unk>.
Far as the experienced the metrics in terms of.
Serge wait times.
Those experienced metrics continued to move in the right direction, we're not where we want to be but they are certainly moving in the right direction, which is now kind of search scripts in the U S.
In July we are in the teens about 14%, we actually have a graph in our supplemental.
14% of trips and Thats coming down from the twenties.
<unk>. So Serge has continued to move in the right direction.
And then U S wait times are running at an average of four and a half minutes now and they were in the five to six minute timeframe.
From that standpoint that is a very very nice improvement again, we have more work to do ahead of us, but all of the experienced metrics are moving in the right direction conversion is stable now we're looking to increase it over over a period of time conversion of stable and when we look at supply.
The supply situation continues to improve.
Our the number of new driver of sign ups in the U S were up 76% on a year on year basis.
So we have a very strong flow of new drivers, who are signing up coming on to earn.
And 70 over 70% of them have said that inflation and what they are seeing right now in terms of the cost of groceries the cost of living plays a part in that position.
For them to come onto the platform and as you know <unk> has an unrivaled platform in terms of flexibility being able to earn when you want where you want and.
And right now the earnings levels are quite attractive and as we continue to work on our experienced the driver experience better customer service more information.
We think that driving for Ruger will continue to be a really attractive alternative so right now the marketplace look strong.
September for US is a very very big month the summer months.
<unk>.
Stay stable and then September and Q4, it really takes off so while right now the experienced metrics are moving in the right direction. The team is very very focused on September plus back to school and making sure that the experience remains the best ride sharing experience out there.
Membership as.
As far as membership goes.
We're very positive in terms of the trends that we're seeing.
We are now at about 10 million members.
They're excited about Uber Uber one has now been launched in seven markets globally.
About 23% of our overall gross bookings come from.
Members, that's 32% for delivery membership now is more focused on delivery at this point over a period of time, we're going to kind of bring in the mobility benefits as starz as well.
And generally we are seeing increased engagement.
As a result of being a member members.
About two seven times is two seven times the gross bookings.
On Uber than non members. So we think it's a pretty significant engagement lever and it's a pretty significant.
<unk> lever as well so we are definitely like what we're seeing with membership.
Would add to that for us what we have with Uber as we first bring in customers and of course, we've got.
The greatest front end in terms of both rides and eats so we can bring on more new customers than of their model line platforms. We then cross sell customers and then once we cross cut.
Customers, we move them into membership as well so the strategic ability to cross sell the strategic ability for us to drive gross bookings per audience.
It's just structurally advantaged for us our membership as a piece of that strategy.
Alright, great. Thanks.
Paul.
Next question your.
And your next question comes from the line of Mark Mahaney with Evercore ISI. Your line is open.
Two questions. Please first can you talk about the markets that are still lagging that are still in recovery phase and if there's anything you can do to to get those markets back up and I'm sorry, that's on the mobility side and then secondly, just because we've talked so much about recession risk during this earnings season.
You see in your business is that of your segments, particularly in the delivery segment of economic sensitivity lower ordering smaller basket size is something that indicates that that that part of the business is.
Impacted by macro thank you.
I'll do the first one naphtha into the second one in terms of mobility market.
The lagging really the only ones that I would point out are in the U S. San Francisco.
Los Angeles.
<unk>.
Our lagging nationwide recovery in our markets you can get more people in San Francisco that would help.
I think it's got it has to do with some of these cities open up people go into work et cetera, but otherwise the recovery for us has been pretty broad and we've been very pleased in terms of the recovery on on a global basis. When we look at use cases now the travel use cases is back.
Very very strongly.
<unk> business, our managed business has doubled on a year on year basis as well. So companies we saw in travel as well. So the recovery is pretty broad, but there are a couple of cities and especially west coast cities in the U S where the recovery.
It's still it's still trailing but when we look overall.
Everything is getting better mark.
We expect.
Trends to continue to improve as we go back into the second half.
Mark do you want talk to inflation hits the Mark in terms of your second question, we actually haven't seen it right. So.
If you look at trade down across our major countries, we actually look at cohorts, depending on income levels and we haven't seen any discernible trend trends, what I would tell you and we've seen more spikes and peaks more based on the Covid activity. So recently in Japan.
Covid Spike and you saw demand spiked for delivery.
But so it's been a little bit more about still the Copa trade recovery and things that happen there than we've seen impact on inflation at least so far.
And to some extent.
We could be seeing evidence, where it's helping us in that it's a very significant consideration base for drivers coming off of the system.
Over 70% of drivers that inflation has played a part in their decisions come onto the platform.
Thank you Dara Thank you Nelson.
Youre welcome.
Our next question. Your next question is from the line of Justin Post with Bank of America. Your line is open great. Thanks, a couple maybe just for Nelson.
Firstly on the margin improvement, obviously, a big focus in the quarter. Just wondering if you've pulled forward. Some of your margin improvement or are there really changes versus your 5 billion outlook are you trending above that in some areas and then the second question on delivery I think we're looking for acceleration in the second half.
Has that changed and is that something that behavior is changing just because of the economy. Thank you.
Sure. So the first question regarding the 'twenty four targets. So when we laid them out there we had a lot of confidence in terms of our ability to hit them and so obviously the performance hopefully it should give you guys. The confidence that we're going to at least hit them.
Yes, we've been working we've been operating really well and Dr started on it across the company in terms of managing both growth future investment and importantly margin and cash flow and EBITDA and so the company's operating really well right now.
And so I would tell you that we do expect that we'll continue we'll continue to see us improve.
So our gross margins as well as the bottom line Youll see us continue to refocus and invest in businesses for the future and continue to improve the bottom line and you should expect that that ramp will continue and so we have a high degree of confidence in terms of our ability to go through that in terms of specifically, what's going on right now.
Yes, we are.
Operating better we don't see any on the delivery side in the back half.
I would tell you that if you asked me. This is just Nelson talking.
You could see trends on the top on the delivery, but the margins will be there and the EBITDA will be there. So we have high degree of confidence you've heard us talk in the past about levers that we have and so again, we'll pull the levers. So we're going to definitely we will make the guidance that we put out there at least that's our full attention.
And then just one other factor for delivery in the second half resolving these foreign exchange.
That has moved against us since our last guidance and.
When you look at the delivery business in the U S. For example, Uber eats grew 25% overall in the U S. We grew 21% so some of the <unk>.
Slowdown in terms of delivery growth comes from foreign exchange and it's in a number of those European markets, where we do see some of our competitors pulling back as well, but when we look overall at <unk>.
Every business that team is really executing and especially executing on the bottom line improvement.
Great. Thank you.
You bet next question. Your next question is from the line of Eric Sheridan with Goldman Sachs. Your line is open.
Thank you so much for taking my question, maybe two topics.
For business nice growth there any sense you can give us on some of the fall of activity Youre seeing broadly around Uber for business and how that might be able to capitalize on either a return to work or returned to business travel as you look out over the next 12 months to 18 months and then second with each you've invested a lot in diversification of the platform.
<unk> into new categories around convenience grocery and Paul can you talk about how that wider diversification of categories is maybe change some of the velocity of scene of shopping or change some of the LTV of the users of Uber eats. Thanks, so much.
So as far as <unk> were hugely optimistic and actually we continue to invest then you furby.
Salesforce et cetera.
LTV to CAC ratios are very very attractive in terms of bringing on new sales teams.
And we're really selling to significant enterprise customers out there both in the tech space and the non tech space a lot of these enterprises. Some of them are going back to returning to offer some of them or not but they are getting on the road.
So the champion use case that we're seeing with <unk>.
Is actually the business traveler getting out on the road again.
And obviously a sales call over zoom is one thing, but the sales per person comes in to see you in person. It gives a different impression and we are seeing are you for b clients.
And getting their teams on the road because as you can imagine, especially in this kind of environment.
<unk> growth.
As becoming more dear.
And so a lot of salespeople are hitting the road and that's definitely definitely helping the <unk> business. We are also actively upselling.
Our <unk> product into your furby silver.
So we're seeing some customers for example by our vouchers product what it may look like as you get a free lunch. If you sit in this particular session.
To learn about I'll call. It some some new enterprise software capabilities.
And the <unk> voucher becomes a way for customer acquisition, we're seeing similar kinds of.
Deals with online gambling et cetera, so lots of partnerships with us as it relates to your furby and to some extent on the advertising side as well.
As far as new verticals go we're quite satisfied in terms of the growth of that team.
It's at about a four and a half billion dollar run rate in terms of gross bookings we are investing in this business and despite investing in this business and it's in the hundreds of millions of dollars you can see the profitability that we've been able to drive with the delivery business overall, it's really because of the scale and efficiency that were bringing to bear and what we're seeing with new vertical customers.
Is that <unk> customers, who also order from new verticals tend to stay with us tend to have higher frequency.
And it's really a part of the power of the platform that we're having if you ride with US if you eat with US if you drink with us if the order groceries with US we just become an everyday part of your life you top that off with the membership program.
And we think we have a relationship with customers.
That really can't be duplicated.
In industry on a global basis, that's what the strategy is all about and we're quite optimistic about our progress to date.
Next question please.
Next question is from the line of Lloyd Walmsley with UBS. Your line is open.
Thanks for taking the questions a couple if I can first just in the prepared remarks, you talked about feeling good on the 2022, our guidance I guess in the interim do you still feel good about mobility bookings growth in 2003, that's higher than 19 or is the tenure of kind of macro and the <unk>.
<unk> focus on profitability kind of take that off the table as something you want to commit to and then secondly can you help us understand some of the sources of the upside.
Outside to delivery incremental margins like how much was that.
<unk> investment in new verticals or the AD business scaling in a competitive environment.
Any further color you can give us to help understand that and kind of how that trends looking ahead.
Yeah, So lloyd.
Yes, we did add the statement in there about 2024.
Yes, we feel really good about how the business is operating today.
Yes, we can't control the macro world and so I don't really want to give you a TV guidance for delivery for next year, but the business continues to grow well and we are making investments and again, we're not through the Covid recovery number one number two the business continues to grow loans. So we have a lot of ramp left and so.
Mac and the team feel really confident in terms of our ability to grow next year.
So again, we feel really good about our competitive positioning and how the businesses are operating today and the trends down the road the platform's operating quite well.
What I would say in terms of delivery, it's really all of the above.
So I would say that we're working really hard and you heard my earlier comment about the fact that our our deliver our growth our revenue margins are improving because the team and we've worked through a lot in terms of improving to start courier efficiency or the cost per transaction.
Worked on all the different lines to try to find more efficiency and we are doing a better job. If you will about capital allocation in terms of promotion and yes, you do get the benefit of the fact that some of the private competitors.
Got away and some of the public competitors are getting the joke and I understand that EBITDA durable company you have to make money and so I think that is all positive.
Think about it in terms of the.
Margin structure, and the profitability of our delivery business down the road.
And yes, we continue to ramp up our AD business thats going quite well so if all of the above and so I think we've talked about it at Investor day, and we will continue to execute our plan our over execute our plan if you will.
Lloyd.
The.
Go under the covers a little bit in terms of how we do this stuff usually when youre driving profitability, there's a trade off with topline, but theres actually a lot of work going on algorithm in.
In terms of for example, how do we price.
How do we price trips on the delivery side per transaction what percentage of trips do we batch how quickly.
Through our Alco algorithm to recalculate, the most efficient route or the most efficient price to offer to a particular carrier on a particular route all of those technical investments are able to drive cost per transaction down while keeping courier utilization high.
<unk> and carrier earnings at a high level. So there literally is no trade off other than the time of the engineer kind of working on the algorithm. It's the same thing when we talked about upfront pricing and upfront destination for drivers, which is all things being equal. It is the number one kind of feature that they've been asking for there's a lot of algae.
And the work that has to go into pricing that trip properly not only taking into account, Tom and destination, but where you are going what the probability of getting a trip back to the center of town, where you can get another trip et cetera.
A bunch of that work on the technical side that allows us to improve profitability <unk> experience without a trade off in terms of top line growth.
That's where the magic happens and that's what a lot of effort is going into that kind of effort is pretty hard to duplicate from competitors, who were kind of look at the service and say, while Theyre doing X lets just do X as well.
He is already working on the thanks for the questions.
Yes, it really is and the teams are working hard and I think that kind of under the covers work is underappreciated.
And it's also a very very very difficult to duplicate so we love that kind of work alright.
Alright next question. Your next question is from Deepak <unk> with Wolfe Research. Your line is open.
Great. Thanks for taking the questions Dara just wanted to ask about Uber reserve. It seems like it's at a $2 billion run rate already what is the penetration in markets, where it currently is available and then how should we think about this scaling you noticed kind of the margins are higher on this can you also talk a little bit about that and then maybe one question for <unk>.
It seems like mobility take rate calculating this correctly was down a bit quarter to quarter and excluding the UK accounting accrual change I know theres a lot of moving pieces from fewer pass throughs et cetera, but can you back that out a little bit on how should we think about the underlying kind of comparable take rate and then also flow through into the EBITDA margin.
<unk> as a percent of bookings on the rates business.
First of all I'll answer the first one.
Second question first on the take rate so yes, it was down in.
In the quarter.
As you know, we don't really focus on take rate.
Give it to you guys focus on it and it's more of an annual thing.
Two big things.
Surcharge has definitely had an impact and so that was probably 100 basis points and then the other one is really just less search so you've heard us talk about the fact that we've invested in our marketplace. The health of our marketplace is better now and so when there is less surge that actually impacts the take rate and so the combination of both was really what happened in the quarter.
I don't know I don't think that you should think about.
A big shift in terms of take rates going forward I think I think we are.
Our historically makes sense, but again, that's really just like what happened in the quarter.
And then as far as.
Reserve goes.
We're super excited about the product as one of our fastest growing products and yet margins on reserve on average are higher its more of a premium product and part of our strategy here is to segment our customer base, we've got the largest customer base.
Looking for mobility services generally.
And our ability to take segments of that customer base and then build.
Product for those segments.
Really another scale advantage that we have that we bring to bear in terms of reservations, it's single digit percentage.
Our total trips in the markets in which it is launched we are continuing to launch reserve in many many markets.
And it's a combination of reserving premium cars, but also we are offering reserve for <unk> as well and it's just a great experience like I've used it when I go to dinner with my wife, and instead of us hustling down to meet the car.
The driver can wait for 15 minutes and it's not a problem as well so we're seeing real consumer delight as it relates to reserve drivers make more money.
Drivers can anchor their day.
First morning drive and they know they're going to get to the airport and they'll get a airport jive back et cetera.
So it's working.
As a business in terms of margins, it's absolutely driving consumer delight.
And it's our fastest growing product right now and it's growing in scale and drivers love it as well because their earnings are higher and again, it's an anchor for them during their day that they can pre plan.
So team has done a great job and we'll keep rolling it out globally.
Next question please.
Your next question comes from the line of James Lee with Mizuho. Your line is open.
Great. Thanks for taking my questions I would like to give some updated maybe on regulation.
For example, in Massachusetts can you talk about maybe the conversation you're having with breaking later.
Issues you guys are working on to reach a settlement with ballot is no longer available and also in the U K. When do you expect your peers starting to adopting the work of class. So the regulation is more equally implemented an industry. Thank you.
Sure absolutely so as far as Massachusetts go.
We're constantly in dialogue with.
With legislature with Labor Representatives, often in the U S in many states as well.
<unk> as it related to ballot.
<unk> is clearly winning.
And the reason for that is that.
Voters know what drivers want 10 drivers want the.
The flexibility of independent contractor status.
Along with benefits as well.
It's what we call this IC plus model, which is <unk> plus benefits whether those benefits.
Include minimum earnings or some kind of health care or accident insurance et cetera.
Those benefits are benefits that we then negotiated on a local basis on a state to state basis, and we are absolutely happy.
And open.
To get to a negotiated settlement if we get there.
Don't get there we're confident we will take our next shot at the ballot.
And we're confident in our chances, but the most important thing is that this new model is IC plus models overwhelmingly what drivers want.
And California drivers are very very happy about the outcomes there in Washington, We got to a good negotiated optum as well and we continue to have dialogue all across the U S.
In terms of the U K.
We are having at this point I believe that our competitors are properly charging.
As we have been.
As it pertains to the model so we're on a level playing field there but.
But we think as far as worker designation. There is still more work to do work with designation again, it looks like the IC plus model that we talked about we stepped up.
And designated drivers in the U K as workers, we think it's the right thing to do.
Also good for business because it makes driving for Uber more attractive and we need more drivers in the U K. So it makes a heck of a lot of sense, we think it is inevitable.
That our competitors will have to do the same.
This is a ruling that came straight from the Supreme Court.
And we think it's the law of the land in it.
As a matter of time before our competitors come into play I will also say that the UK business.
It remains healthy U K margins are solidly profitable our competitive share in the UK is as strong as it's been.
So the UK business continues to operate well and in the U K, it's really actually more about the rider experience, we need more drivers out there.
And Thats really the focus is about making sure that the marketplace is balanced.
And I think the regulatory situation and the competitive situation and definitely headed in the right direction.
Operator, we'll take one last question please.
Your final question comes from the line of Brad Erickson with RBC capital markets. Your line is open.
Hi, Thanks, just to follow up on the mobility side, you mentioned the driver incentives continue to come down certainly seems like the labor environment split somewhat to starting to be a tailwind for you. So I guess.
Do you see those incentives continuing to fall and then secondarily what effect if any do you see any of that having on pricing here going forward are there any other levers you are looking to pull on pricing given any recent tendencies writers are showing elasticity wise.
Yes.
As you know we're in 70 countries, which means we're intense apps in marketplaces, so to make that macro statement.
It is hard certainly in the U S. In the second quarter, that's what we saw but again, we do operate our markets on a market by market basis, and we've done a really really great job into our highlighted earlier about bringing more supply on and drivers. We also continue to work to make the driver experience better and you probably saw some of the product enhancements that we rolled out last week.
So that all helps and so yes, when we lower incentives either through surgery or just because we plan our pricing does improve for the end user which is great and so we like that marketplace, but again I would tell you that there are certain marketplaces as market start up and come out of Covid that you should expect it to be some incentives, though as in San Francisco.
For our Boston, which are two markets that are are lagging if you on the Covid recovery you should assume that there's going to be some incentives to help drive the supply in the marketplace, there and vice versa as markets get overheated and so we continue to manage that supply we do a really good job at that team does a great job and we do think over time pricing, we will continue to.
Improve because our marketplace continues to improve in terms of how it's operating.
But again.
It's too hard to make the blanket statement and Brad the other thing that I would remind you of is that we don't manage incentives and our revenue margins as an output metric.
Managing for gross bookings growth.
The marketplace experienced ETA'S surge and then ultimately EBITDA margins of course.
And the EBITDA margin guidance that we gave you for Q3 shows very very healthy margins going forward and the revenue the revenue margin number that we get to it's almost like it is.
And output is an accidental output because we are managing to a bunch of other.
Metrics.
And a lot of what happens in revenue margin is algorithmic by nature, and it's designed to balance the marketplace, while delivering strong incremental profitability for shareholders as well, so we consider incentives and revenue margins a tool.
But right now the trends as it relates to that tool continues to be positive.
We are looking forward to Q forward September back to school were going to have a lot of demand. So we are preparing ourselves for that increase in demand.
And so we're going to continue being in the marketplace to make sure that drivers come onto the platform stay on the platform because Q4 is going to be a great quarter for us and it's going to be great quarter for them as well.
Alright.
With that.
You bet with that thank you for joining the call and gum big Thank you to the Uber teams announcement I get to talk about this stuff, but it's the result of a lot of hard work from our teams globally. So a big thank you from announcement to the Uber teams.
Lots of work ahead of US I appreciate you joining the call and we'll talk to you next quarter.
Ladies and gentlemen, thank you for participating. This concludes today's call you may now disconnect.
Yes.
Yes.
Okay.
Yeah.