Q4 2022 Uber Technologies Inc Earnings Call
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Speaker 1: I
Speaker 2: you
Speaker 3: If you would like to ask a question during this time, simply press the star, follow by the number one on your telephone keypad.
Speaker 4: Thank you. It is now my pleasure to turn today's conference over to Mr. Bology, Krishna Murphy. Sir, please go ahead. Thank you.
Speaker 5: Additional disclosures regarding these non- GAAP measures , including a reconciliation of gap and non- GAAP measures are included in the press release, supplemental slides, and are filings with the SEC, each of which is posted to investor.cougar.com. As a reminder, these numbers are unordered and may be subject to change.
Speaker 6: Certain statements in this presentation and on this call are forward looking statements. Such statements can be identified by terms such as belief, expect, intent and may, and you should not place undue reliance in forward looking statements. Actual results may differ materially from these forward looking statements and we do not undertake any obligation to update and
Speaker 7: most recent annual report on form 10K for the year ended December 31 2021 and in other filings made for DSEC and published.
Speaker 8: We publish our quarterly earnings fresh release 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 Dharap. With that, let me hand it over to Dharap. Thanks for all the questions.
Speaker 9: Uber delivered a strongest quarter ever in Q4 with gross bookings of 26% year on year on a constant currency basis. Adjusted at the DAF, 665 million exceeded the high end of our guidance for the sixth quarter on the road and we delivered strong incremental adjust to the EBITDA margin of 12%.
Speaker 10: At the same time, we're laser focused on making Uber the best platform for earners with over 5.4 million people earning on Uber around the world, another all-time high.
Speaker 11: We're entering the year with great momentum. Mobility, trip growth is accelerating, and delivery remains resilient. But we are far from complacent, and we'll continue to hold ourselves to high standards of growth and profitability to deliver yet another record year in 2023. With that, let's open it up to questions.
Speaker 12: Your first question comes from the line of Eric Sheridan with Goldman Sachs.
Speaker 13: Please go ahead. Thanks so much. Maybe two questions if I could. As you take forward to 2023 and you sort of aligned an array of products between delivering mobility, how should we be thinking about Uber 1 as a subscription product and elements of either leaning in? It's interesting. price out thenet, the app, you're still going desire for your data and aim for data, and there's not enough broadly.
Speaker 14: Yeah, absolutely. So, in terms of Uber 1, we think Uber 1 is a terrific membership program. It's the only one. If you think about the Uber 1 benefits, we think about that as content. So, Uber 1 has the best content in terms of mobility subscriptions and movement subscriptions.
Speaker 15: than any other similar subscription. We've got over 12 million members up with membership having nearly doubled for 2022, which is terrific. And our efforts here are quite active. I mean, we are pushing Uber1. You'll see it on our delivery services. You'll see it on our mobility surfaces.
Speaker 16: members do on a monthly basis. So it creates great stickiness. And member retention is 15% greater than non-member retention. So in period in the initial months in which we acquire a member, that member is actually well-making because the discounts that we offer greater than the in period value of that 4.1x.
Speaker 17: We shuttered down to a bunch of businesses and unfortunately we did have to let go over 20% of our head count. So we've been really focused on efficiency since then. I think you've heard us lay out our plans and I think our mentioned on KBC, you know, in 2021 we wanted to really push hard for EBITDA profitability and again we achieved that metric in 2021.
Speaker 18: Last year we talked about being free cash deposit at some point in the year and again we achieved that metric. And now we're talking about being GAP operating cost at some point later in the year and we expect to continue to achieve that metric. Now we've done this and you've mentioned the criminal margins. We've done this because we've focused officially on cost and we've been laser focused on it. So.
Speaker 19: Our head count will largely be relatively flat this year, and even if you go back to the build that many companies had over the past few years, we've grown our head count about 10% excluding the freight business over the period of time, and our gross bookings went from 62 billion in 2019 to 115 billion last year.
Speaker 20: And again, as Darra mentioned, the year started off quite well, which is why he saw us raise guidance for the first quarter. And we're going to continue to leverage our cost base, which is driving the ankle on the margins that you're seeing the throughput.
Speaker 21: Your next question comes from the line of Brian Nook with Morgan Stanley .
Speaker 22: Thanks for taking my questions. I have two. The first one on frequency and engagement on the platform. You made really good progress now. I think 5.4 trips per month. This is about five last year, but still below, I think the peak level DARA used to talk about in 2019. The question of frequency is, where have you made the most-
Speaker 23: progress, sort of getting that frequency per rider up. And how do you think about the key drivers throughout 23 to sort of get that back to 2019 levels and beyond? Then the second one is on the incremental margins. You have the delivery incremental margins continue to deliver above your analyst's target.
Speaker 24: The pace of the improvement will certainly slow down.
Speaker 25: And then in terms of the frequency of trips, that there are really fourth actors that I will point to. First of all, we just talked about our membership program as we increase the number of members in our member base and the coverage of members who tend to buy more, who tend to buy more frequently.
Speaker 26: just mathematically you're going to drive frequency up. Second process of how the platform, we are constantly cross-promoting between mobility and delivery, and essentially sending free or cheaper traffic from one platform to the other.
Speaker 27: new products that we are adding on in higher selection, thriving higher frequency as well. And then last and certainly not least is the reopening, the shift of spend from products to services is benefiting us. So there is a tailwind in terms of people getting out.
Speaker 28: people shopping more, people going out to dinner more, etc. And that is helping our business as well. So it's really membership, platform, new products, and then the macro environment that's helping frequency. And we expect to see that frequency, that 5.4, continue to increase over a per-ta time.
Speaker 29: Great, I'll go ahead and take you both.
Speaker 30: So you know that in the letter that you saw about a 4% increase in conversion. So I guess just some context around that. How does this innovation compare to others that you've shipped in the past in terms of?
Speaker 31: It's very difficult to predict impact, but I will tell you that the upfront destination and front fares has been one of our largest releases ever. It takes a huge amount of work in the background in terms of training models, testing it out.
Speaker 32: It's an important part of the information that drivers process through, ask you whether or not they want to accept a particular trip or not. And it has just been a home run for us in terms of the number of trips that are...
And for example, we see a much higher percentage of fulfillment rates than we did previously, and now we're carefully rolling out and bunded, and we will continue to roll it out by market by market. So difficult to predict, you know, what our engineers are going to come up with. We're very, very happy with this feature, but I would never underestimate the power of
Absolutely. So, I think the biggest one for us has been reserved. If you look overall at the portfolio of new products that we've introduced, those new products count for about $6 billion of EBITDA, gross bookings I wish were EBITDA, but gross bookings for the quarter.
And it's about 20% of our growth. And that portfolio is growing at about 100% year on year. So it will continue to be a larger and larger portion of our overall bookings. And reserve is the biggest one. We talked about it being over $2 billion. It is a terrific...
You know, our dream is to have all of our trips shared in an ED. That would be a beautiful thing in terms of condition, in terms of the environment as well. And then last and certainly not least is halibals, right? There are two, we live, three, we live, there's, but especially taxis.
There are over 20 million vehicles that are hailable weak vehicles in the world about 4.5 million taxis. It's a huge space of drivers and vehicles that we think we should power, we're sure power, because we are the number one kind of.
Thank you.
Next question please.
Thanks for sharing my question. Maybe one for Darra, one for Nelson. On the outlook for 24, I think there's been some headwinds from FX and some other things. Any updates on that, and maybe some of the puts and takes, as you think about that, that you gave last year. And then Nelson, a couple of the cost.
issues maybe in a quarter, the New York minimum driver fee changes and insurance costs. Maybe you could cover those and how you're thinking about the potential impact in 23 things. Well, maybe I'll try to answer both of them. So in terms of the effects, I mean, we do give you constant currency numbers. The effects have gotten better.
gap operating profit at some point this year. And again, we think that we will continue to do well versus the targets we laid out. In terms of some of the cost, those are things that we just have to continue to mitigate, specifically on New York.
for having the challenges now to do the actual work because the repair car is much different. The rear view mirror that was 70 bucks is now 700 with all the electronics. And so we, frankly, and obviously our earners are part of that ecosystem.
properly trained. So we are in the middle of our rollout in the UK and we'll continue to roll it out across major markets where appropriate. I would expect that up front variant destination will be rolled out in all of our markets globally by the end of the year in market to
Thanks for maintaining the questions. I just wanted to circle back on the delivery margins. Could you just help us, Nelson, perhaps split out some of the improvement across network efficiencies, advertising, and marketing in-centre optimization? Thanks.
And then again, we've talked about some new business things. And so, ads is the easiest example where you've seen that continue to grow. So the ads business we continue to expect to continue to grow and accelerate the growth. And so we'll see the benefits in the margins. I think we'll continue to run a fish market place. And so, yeah, I think you should expect that we'll continue to drive.
as well as the margin, the profitability, and I don't want to be too prescriptive in terms of exactly how what we're doing. And I think Joe's on ads for folks out there, we passed 500 million in annual run rate, and that's based on increasing the number of active advertisers that we have by 80% on a year on your basis.
We committed to a billion dollars in revenue by 2024, and we are progressing very, very well against that target, so you should expect to see more upside, both by the way in our delivery business, but also in our mobility business.
Thank you, boss.
You back? Next question.
Great, thanks for taking the questions. So first, on the weekly active user penetration, it seems like in some markets like UK, you're already about kind of the pre-COVID levels, but it's still below in large markets like US. Is there any broad reason for this lag on the user side? And how should we kind of think about this in 2023?
And then for Nelson, as we go into the annual cycle, I hate to be the guy that asked the SPC question, but how should we think about the target compensation levels in 2023? Any high level of color you can share on your thoughts there will be helpful.
Yeah, I'll start on the user trends and then I'm nothing can talk SPC. You know, the reason for the US trailing is really the West Coast. So if you look at the US, it's really a tale of two coasts. If you look at a Miami or a New York or a Atlanta or you know, get an off the coast and off the coast and it's epic.
In January , we are having on a daily basis in mobility and the US trips approach pre-COVID levels as well. So all the trends are moving in the right direction, but the West Coast is definitely leaving the US behind the recovery on a global basis.
So regarding stock-based comp, so we are looking at all parts of our cost structure, including employee compensation. We recognize, and there is a fair amount of noise, particularly on the west coast regarding stock-based compensation.
employment levels to be our headcount to be relatively stable this year. We will continue to focus on performance management across all of our businesses. So you saw that we took some action in our freight business in January and now specific to freight in the marketplace and there will be some other pockets of that that will happen during the course of the year.
Guys, very salty. Thank you, Paul.
in that plan. And then secondly, do you think that driver supply is benefiting and all yet from its slower economic growth and to the extent we're seeing some of that or eventually see that, how do you think about pricing and take rate on the mobility side?
If you get better, better and better supply, thanks. Yeah, look, Lloyd, I don't want to get into too much of the particular of Uber1 because, as you can imagine, a bunch of information, the data there is proprietary. But if we get an Uber1 member who sticks around for a year, that Uber1 member generally will be unprofitable.
our merchant base, an increasing percentage of a merchant base in a delivery business, is willing to pay to have, let's say, advantage exposure to the most valuable members that we have as it relates to the audience. And as you can imagine, the audience...
is a high demo audience that moves, that spends on services that get out of the house, and it's a very, very attractive demographic, both for emergence and for advertisers as well. In terms of driver supply, driver supply levels are very, very healthy, right? Drivers are up 35% on a year on your basis, new driver.
count this up 34% on a year-on-year basis. And we have heard from our drivers that inflation is a factor that they consider about 70% of them that are coming onto the platform or coming on to...
It results in a service where surgical levels are coming down. So, surgical levels in January , for example, in the US are 120 percent. ETAs are coming down. ETAs in the US are about 4 and a half minutes in January as well.
So the marketplace itself is getting a lot more healthy and drivers are earning well at the same time, which is exactly what we want.
Next, questions on the line of Ron Josie with City.
Great, thanks for taking the question. You know, Darron, delivery, we're constantly talking about or getting questions on the demand side here just to get in macro challenges. And, you know, from what we're hearing on growth in January for delivery and accelerating expected growth, I guess, in February , March, you know, you mentioned habitual in the letter. How much do you think of this growth here in delivery's category adoption? Formation...
Well, I think that overall in the category, the delivery category has been pretty resilient, post-pandemic, certainly more so than a lot of other categories that benefit from the pandemic. That said, we are growing faster than the category generally if you look at us globally, certainly in Europe .
We are seeing many of our competitors pull back significantly from what were unhealthy spend levels in the past that didn't make any sense. They made sense in terms of the problem, but they certainly did make sense in terms of bottom line. And for Austin delivery, we're benefiting from the power of the platform, you know, very cheap audience.
You've got our membership business that again is adding higher frequency, higher spend, more retention as well. We're the only player out there that has membership both on mobility and delivery benefits as well. And then you've seen our tech which is optimization around cost per transaction.
Thank you, Doris. Next question, next question. Next question comes from the line of John Callentoni with Jeffries.
Yeah, the first thing I'd say, John , is that I've never seen a permanent competitive advantage in my life and we don't expect to, right? So the advantages that we have in terms of our business and immobility, we are gating category position and we're gating category position, certainly in the U.S.
with membership to win category position the right way and the right way for us is grow strong top line faster than the category and leverage about online so that you're profitable and you continue to increase profit margins as well So right now we are seeing kind of the
But we are going to have to stay an retose to continue to gain category position while improving margins. And we don't take a minute of that for granted. You know, we'll continue to invest the results in the last year, year and a half have been really, really good. And the trends that we're seeing for an hour are really good. But the minute we take our foot off the gas, you know.
As you know, it's just a little bit of a cyclical nature to what's going on in more broadening industry. The business continues to do well. And so as you know, we bought the Transplace business in December of 2021. We spent a fair amount of last year integrating the business and Transplace Fort Field Business continues to be resilient with everything going on.
Shippers and so we're doing that right now and we've made some organizational tweaks. We do expect that you'll see us getting contraction there, but the overwhelming cycle that's going on right now more broadly on the freight industry is going to continue to impact our business. And so that business will continue to lag likely versus where we would have hoped and certainly versus a year ago where it was a much different dynamic more broadly in this country.
Operator, we'll take a last question now. Thank you. Here last question comes from the line of Nick Kill, Devnaughting with Bernstein.
Hi, thanks for taking my questions. Just a couple, please. Looks like the leverage on promotional spending has been quite good. I think it's the third quarter in a row of sales and marketing dollars stepping down. How much more efficient can that line get? And as a follow on to that, when you think about your ambitions on gross bookings growth, I mean, do you expect to ramp promotional spending down the...
That's been our path and I talked about when we took our big call to action in 2020. So as a company, we were focused on growth and efficiency.
We recognize that we put out targets last year, and our goal is to make sure we achieve or over-achieve against them, which I believe we have, if you think about the last six quarters. And so there are times when we might take some incremental dollars and spend back in a specific marketplace.
And that would be strategic reasons why we do it. There might be some situations where we pull back. So we have a capital allocation framework that we've had now for the past few years. And it's working well, is what I would say. And so I don't want to say, could we actually get very super efficient in the quarter maybe, would we likely not?
We still think there's a lot of growth, and so our goal is to really think about it, so our set kind of where the puck's going, and making sure that we are investing behind those growth levers so we can deliver the kind of top line growth we're doing, and delivering over, delivering up to the bottom line, which we have to do.
And, of course, in terms of ramping SNM to drop-top line, the way I describe our activity is that it's exactly like Nelson said. Generally, we want to leverage all of our cost lines, you know, the cost of sales, marketing costs.
or that's a specific product. You see us with our Super Bowl ad with Uber 1. You know, that's an expensive ad that is leaning into Uber 1 to draw growth in a very, very strategic product of ours. So strategically overall, our efficiency or draw efficiency process business then allows us to
All right. Appreciate the color. I think that's it. Yeah, you bet. Thank you everyone for joining us. Huge thank you for the Uber team delivering another great quarter. And big thank you to our earners who without them, none of this would be possible.