Q4 2023 Earnings Summary
- 1. Uber is achieving strong growth in key metrics, with trip growth of 24% year-on-year outpacing gross bookings growth for the fourth consecutive quarter, indicating robust demand and market share gains in both mobility and delivery segments.* , ,
- 2. The company is successfully expanding high-margin businesses and new revenue streams, including Uber Advertising, which is at a $900 million-plus run rate, on track to surpass $1 billion ahead of schedule, and the Uber One membership program, which has grown to 19 million members contributing about 45% of delivery gross bookings, enhancing customer loyalty and frequency.* , ,
- 3. Uber is leveraging technology and AI to improve operational efficiency and customer engagement, with initiatives like upfront fares improving driver satisfaction and marketplace efficiency, and personalized promotions increasing user engagement and transaction frequency, demonstrating the power of its integrated platform.* ,
- Rising insurance costs are expected to be a headwind in 2024, as motor vehicle insurance is up 20% year-over-year, increasing insurance cost per trip for the U.S. and potentially impacting profitability.
- The grocery and retail segment, despite achieving a $7 billion gross bookings run rate, is not yet profitable and is expected to remain unprofitable in 2024, possibly affecting overall margins.
- Incremental margins in the mobility segment may face pressure due to ongoing investments in new products and markets, leading to less acceleration in margin expansion despite overall EBITDA growth.
-
Mobility Pricing Impact
Q: How will mobility pricing affect growth in 2024?
A: Mobility pricing remained relatively flat year-over-year in 2023, and Uber actively works to maintain current price levels to drive growth through increased transactions. The company does not see price as restricting growth, with transactions growing 24% and gross bookings growing 21% on a constant currency basis. They target different demographics with products like UberX Share to appeal to cost-conscious consumers. -
Profitability and Margins
Q: What is the outlook for mobility incremental margins?
A: Uber focuses on absolute EBIT dollar growth, leveraging revenue growth and platform power. Mobility incremental margins grew to 10% in Q4, but they can fluctuate due to mix and investment decisions. The company expects continued EBITDA margin growth but anticipates less acceleration in incremental margins as they invest in growth areas. -
Increasing User Engagement
Q: How will Uber increase frequency and engagement operationally?
A: The key to increasing frequency is providing reliable and predictable service across all occasions. For Mobility, this means maintaining low ETAs and minimizing surge pricing. For Delivery, it involves eliminating errors and meeting delivery promises. Uber leverages AI algorithms and targeted promotions to encourage cross-platform use, such as offering a coffee promotion when commuting to work. The 19 million members in the membership program also drive higher frequency, with 45% of delivery gross bookings coming from members. -
Advertising Growth
Q: What's driving the strong growth in advertising revenue?
A: The biggest strength is from small businesses, with 550,000 advertisers earning an average of 8x their spend. Enterprise clients and CPG companies are fast-growing segments, utilizing new tools like sponsored items in grocery. Journey Ads on the mobility platform are growing as well, attracting higher CPM brand advertising. -
Grocery and Retail Expansion
Q: How is the grocery and retail business progressing?
A: Uber's grocery and retail gross bookings are now at a $7 billion run rate. The focus is on upselling to Uber Eats customers and increasing the number of eaters who also order grocery and retail, now up to 14%. They are adding more merchants globally and improving catalog searchability. While not yet profitable, the business's unit economics are improving and expected to perform better in 2024. -
Uber One Enhancements
Q: What new features are planned for Uber One membership?
A: Uber One has 19 million members across 25 countries, with 45% of delivery gross bookings coming from members. The focus has been on expanding globally and increasing retention through features like annual memberships. Future enhancements will include new mobility features designed to surprise and delight customers. -
Upfront Fares Impact
Q: What's the plan for upfront fares expansion?
A: Upfront fares have been successfully rolled out in the U.S. and other markets, with a focus now on tuning the product. Uber uses AI algorithms to better match trips with drivers' preferences, improving efficiency. The extensive data and AI capabilities give Uber a competitive advantage over time. -
Market Share Growth
Q: Which geographic areas are showing strong growth?
A: In Delivery, Uber grew category position in 10 out of its top 10 markets, with membership driving 45% of delivery gross bookings. In Mobility, standout regions are Latin America and Asia Pacific, with strong growth in countries like Japan, Korea, Australia, Taiwan, and India. In Latin America, two-wheelers are driving significant trip growth. -
Uber Teen Demand
Q: How is Uber Teen performing in the market?
A: Uber Teen is expanding into new markets and shows high frequency of use, matching that of adults. Parents appreciate the safety features, such as tracking rides and contacting drivers directly. Teens are invited by parents and tend to use the service daily, indicating strong demand and potential for long-term customer retention. -
Management Insights
Q: What are the underappreciated aspects of Uber internally?
A: Prashanth observed a high level of excitement and mission-driven focus within the organization on building products for users, earners, and partners. There is strong internal conviction around driving profitable growth, with significant runway over the next few years to leverage both growth and profit.
Research analysts covering Uber Technologies.