Q2 2024 Earnings Summary
- Uber demonstrated strong financial performance with Q2 gross bookings growing 21% on a constant currency basis and adjusted EBITDA growing 71% year-on-year, showcasing its ability to deliver profitable growth at scale.
- Uber's platform is resilient even in economic downturns, as consumer demand remains strong and driver supply increases during weaker job markets, leading to improved pricing and reliability. This countercyclical nature positions Uber to perform well in any scenario.
- Uber is uniquely positioned to be an indispensable partner for autonomous vehicle (AV) providers, offering enormous demand without AV players needing to invest in customer acquisition or marketplace technology. With its vast network and technological capabilities, Uber can significantly enhance asset utilization for AV partners.
- Increasing costs due to providing benefits to drivers: Uber's settlement in Massachusetts includes providing certain health care, family, and medical leave benefits to drivers, which will be factored into their operating model and cost structure. This could increase operational costs and impact profitability.
- Heavy investment in autonomous vehicles without near-term profits: Uber does not expect to make substantial profits from autonomous vehicles (AV) over the next 5 to 10 years, indicating a long-term investment that may weigh on profitability in the near term.
- Capital allocation challenges due to exceeding funding capacity: Uber's numerous areas for potential investment "greatly exceed" their ability to fund within their current financial framework, presenting challenges in capital allocation and potentially limiting growth if not managed effectively.
-
Autonomous Vehicles Strategy
Q: What's your strategy for AV growth versus delivering profitability?
A: Uber is investing in Autonomous Vehicles (AV) as a new product, reinvesting profits from scaling other products with lower margins. Although AV margins are lower now, they leverage their cost base as they scale. They don't expect substantial profits from AV over the next 5 to 10 years, but aim to build marketplace liquidity during this hybrid period where both human drivers and AVs will coexist. ( ) -
Delivery Business Profitability
Q: What's driving delivery profitability, and how confident are you in achieving EBITDA profit in grocery and retail?
A: Delivery had a strong quarter with 10% incremental margins, benefiting from scale and cost efficiencies. Technological advances reduced costs per transaction, and advertising revenue exceeded $1 billion on a run-rate basis. Grocery profitability is improving by leveraging the platform to reduce customer acquisition costs, with 15% of Eats customers now using grocery, up 200 basis points year-over-year. Retention in grocery is also improving. ( ) -
AV Partnerships and Utilization
Q: Can you provide more detail on AV partnerships and unit economics, especially in Arizona?
A: While specific details about Arizona and Waymo are confidential, Uber observes significantly higher utilization of AVs through their network compared to AVs operating independently. By driving higher utilization, they believe they can more than offset their 20% global take rate. Early data is encouraging, and Uber expects to be the most liquid marketplace for both human drivers and AVs during this hybrid period as AV technology develops and regulations evolve. ( ) -
Mobility Growth Drivers
Q: What are the drivers of mobility growth between Monthly Active Platform Consumers (MAPC) and frequency?
A: Mobility grew 27% year-over-year in Q2 at constant currency, expecting mid-20s growth in Q3. Growth comes from expanding the user base and increasing frequency. Monthly penetration of consumers over 18 is less than 20% across top 10 countries, indicating room for growth. Only about half of riders take 1 to 2 trips per month, presenting potential to increase frequency through product innovation and improved reliability. ( ) -
BYD Partnership
Q: Discuss the importance of the BYD partnership for EVs and its connection to AV over time.
A: Electrifying the fleet is crucial; Uber drivers switch to electric vehicles 5x faster than average drivers. Affordability is the main barrier, and BYD offers cost-effective, quality EVs. Uber plans to introduce over 100,000 new BYD EVs across key global markets. BYD is also investing billions in AV technology, and Uber anticipates partnering with them in both EVs and AVs. ( ) -
Delivery Market Positioning
Q: How do you view your asset portfolio and market positioning in delivery amid market consolidation?
A: Uber strategically exited markets where they couldn't be #1 or #2. They've gained category position in delivery in every top 10 market year-over-year. The combination of strong execution, technological advancements, and the platform's power positions them well. They are very happy with their portfolio and observe strong retention and habitual use in the delivery business. ( ) -
Increasing Delivery Frequency
Q: How does increasing supply in the delivery network impact utility, frequency, and platform growth?
A: There's significant growth potential, especially by expanding into grocery and retail, whose TAM is larger than food delivery. With over 1.1 million merchants, up 13%, and merchant penetration under 50% in most countries, adding merchants improves conversion and marketing opportunities. Multiproduct consumers spend 3x more than single-product consumers. The membership program now accounts for over 50% of bookings, driving more frequent use. ( )
Research analysts covering Uber Technologies.