Q1 2024 Earnings Summary
- Strong Growth in Mobility and Delivery Segments: Uber's Mobility gross bookings grew 26% year-over-year on a constant currency basis in Q1 2024. Delivery gross bookings grew 17% on a constant currency basis, with U.S. and Canada growth rates even higher. New products like Hailables, U4B, Health, Reserve, and UberX Share are growing 80% year-over-year and contributing to over 20% of new customers.
- Expanding Subscription Revenue with Uber One: Uber One membership fees have surpassed $1 billion. Members generate 32% of Mobility and Delivery gross bookings, up year-over-year, and spend 3.4 times more than non-members per month.
- Growth in High-Margin Advertising Business: Uber's advertising run rate reached $900 million in Q4 2023. The company is expanding into non-restaurant advertising, including grocery sponsored items, which can achieve higher percentages of gross bookings. Rider ads show strong engagement with click-through rates over 2.5%, compared to an industry average of less than 1%.
- Regulatory changes in Seattle and New York have led to significant decreases in delivery order volumes and active couriers. In Seattle, delivery order volumes decreased by 45%, resulting in 30% of active couriers leaving the platform. Similarly, in New York City, Uber had to reduce the number of couriers by close to 25% due to new regulations.
- Intensifying competition from DiDi in Latin America is forcing Uber to spend aggressively to defend its market position, which may impact profitability. Uber observes DiDi being "highly competitive and spending into the marketplace quite aggressively", leading Uber to "lean in as a response".
- Uber's investment in grocery and retail delivery is still not profitable and continues to impact Delivery segment margins. Despite gross bookings being "up about 40%", the grocery business is "still not at a positive EBITDA margin".
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Bookings Growth Outlook
Q: Any changes to your bookings outlook for Q2 amid headwinds or tailwinds?
A: Uber expects consistent top-line growth of over 20% in Q2, similar to Q1, despite a 5 percentage point FX headwind to Mobility's year-over-year gross bookings growth, primarily due to the Argentine peso. Mobility is expected to grow in the mid-20% range at constant currency. Demand remains strong, with similar trends in audience growth, frequency, and pricing as in Q1. -
Investment Strategies and Margins
Q: What investments did you hold back on in Q1, and how will this affect growth and margins?
A: In Q1, Uber intentionally held back investments with lower ROI due to seasonal trends affecting returns. Specifically, they reduced spending to encourage drivers, couriers, merchants, and consumers, as ROI is lower in Q1. They plan to ramp up these investments in Q2, which may slightly decrease Mobility's adjusted EBITDA margins quarter-over-quarter. Despite this, Uber is confident in the continuous improvement of Mobility margins and aims to drive durable growth throughout the year. -
Competitive Dynamics in Latin America
Q: How is competition in Latin America affecting Uber's outlook?
A: Uber is experiencing healthy Mobility volume growth in Latin America, in the mid-20% range. Although a competitor, DiDi, signaled capital discipline, Uber hasn't seen them pull back and notes that DiDi is still spending aggressively. Uber is responding by investing aggressively to defend its position, leveraging its strong P&L and increasing margins. -
Impact of Autonomous Vehicles
Q: How is Uber approaching the impact of autonomous vehicles and new competition?
A: Uber believes autonomous vehicle technology will greatly benefit the industry and Uber in the long term, offering safer rides and expanding the marketplace by lowering prices. However, the technology will take time to develop, with a lengthy transition period involving both human drivers and AVs. Uber aims to partner with AV providers, utilizing its global systems, pricing, matching, and demand to drive utilization of AV assets. They are open to collaborating with both big and small players in the AV space. -
Deceleration in Monthly Trips for MAPC
Q: Can you explain the deceleration in monthly trips for MAPC in Q1 and expectations for Q2?
A: The deceleration is due to seasonal impacts and one-time events. The deconsolidation of the non-ridesharing portion of the Careem business contributed about 1 percentage point decrease. Also, stronger demand in Brazil around Carnival last year didn't recur this year, and shifts in Easter and Ramadan timing affected comparisons. Despite these factors, Uber remains confident, expecting mid-20% year-over-year Mobility growth at constant currency in Q2. -
Delivery Strategy and Instacart Partnership
Q: How does the Instacart partnership fit into your suburban delivery strategy?
A: Uber is growing faster in suburbs than in urban areas, focusing on building audience, increasing selection, correct pricing, and high-quality service. The Instacart deal brings a high-quality, targeted suburban audience to Uber Eats, benefiting merchants by attracting demand from high-end consumers. This partnership positions Uber well for continued growth in suburban markets.