Earnings Call: Q3 2020

Nov 5, 2020

Ladies and gentlemen, thank you for standing by, and welcome to Uber Technologies Q3 2020 earnings conference call. At this time, Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today Ms. Emily Rooter, Investor Relations. Please go ahead. Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies' third quarter 2020 earnings presentation. On the call today, we have Dara Kostatahi and Nelson Shea. We also have Fology, Christian Murphy, and this is Emily Reuter, from the Investor Relations team. During today's call, we will present both GAAP and non GAAP financial measures. Additional disclosures regarding these non GAAP measures, including a reconciliation of GAAP to non GAAP measures, are included in the press release, supplemental slides, and our filings with the SEC, each of which is posted to investor. Uber dotcom. I will remind you that these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call may be deemed to be forward looking statements. Such statements can be identified by terms such as beliefs, expect, intend, and may. You should not place undue reliance on forward looking statements. Actual results may differ materially from these forward looking statements, and we do not undertake any obligation to update any forward looking statements we make today. For more information about factors that may cause actual results to differ materially from forward looking statements, please refer to the press release we issued today, as well as risks and uncertainties included in this section under the caption Risk Factors And Management Discussion And Analysis of Financial Conditions and results and operations in our annual report on Form 10 K filed with the SEC on March 2, 2020, and in any subsequent Form 10 Qs and Form 8 Ks by with the SEC. Following prepared remarks today, we will open the call to questions. The remainder of this discussion, all growth rates reflect year over year growth and on a constant currency basis, unless otherwise noted. With that, let me hand it over to Dara. Thanks, Emily, and thanks everyone for joining us today. It's hard to believe that it's been 8 months since I first spoke with you about the coronavirus pandemic. Without question, can on the world has been one of the most significant events of our lifetimes, and we've moved quickly as a company to respond. We've taken steps to prepare our mobility business for any recovery scenario and to seize a vastly expanded opportunity ahead for delivery business. All while improving the overall health of the company by taking out more than 1,000,000,000 in fixed costs, strengthening our balance sheet, and more rigorously allocating capital with a focus on our core two quarters with September run rate gross bookings reaching nearly $65,000,000,000, down just 6% compared to last year. And despite the 50% decline in mobility gross bookings, we ended Q3 with total company adjusted EBITDA only 7% lower than last year, and we expect to improve adjusted EBITDA year on year in Q4. Whether consumers want to see if they go some place somewhere in their city or to get something delivered to their door in 30 minutes. Uber is becoming their go to app. September alone, over 80 million people generated more than 425,000,000 trips or deliveries across our platform. Well, I'm even more proud of, though, is that we connected 3,200,000 drivers and delivery people to earnings opportunities and over 560,000 restaurants and small businesses to their customers during an unprecedented economic crisis. I'll now dive into each of our core segments, starting with mobility. Unsurprisingly, the mobility recovery continues to be directly correlated with a level of lockdown restrictions in any given city. When cities start to move, so too does Uber. Mobility gross bookings continued to improve throughout the third quarter, nearly doubling from q 2 levels and down 50% year on year. We saw mobility GPs improve, 10% month on month rate, offset by slower gains in the US and Canada and a modest contraction in EMEA, driven by the new lockdown orders. The US has been an overall drag on our global recovery. As a point of comparison, mobility GPs outside of the US were down 34% on October. Versus down 55% in the US. But we have some bright spots even in the US. Since bringing the case count under control over the past few months, New York City has improved significantly, with bookings recovered to 63% of year ago levels in October. We're seeing Uber recovery faster than taxi and public transit in the city indicating a deep level of consumer trust we believe stems from a safety technology investments and the reliability of our service. New York City rider engagement is up double digits year on year, but it's particularly up week, while New York weekday commute and weekend gross bookings have recovered to roughly 85% of prior year levels. Weekday gross bookings outside of commute hours have recovered to nearly 100% of prior year levels. Elsewhere, Brazil, our largest market on trips recovered to 87% of prior year levels in October. We're seeing workday commute, weekend cases nearly fully recovered year on year with airports of course lagging. All early evidence we see makes it increasingly clear that it's a question of when, not if our mobility business will recover. These trends give us the confidence that mobility will fully recover as public health situation improves, and as people return to Uber to get to work, go shopping, or reunite with their friends or family. Finally, it's important to note that we're continuing to invest in product innovation to drive growth. For existence, our taxi business grew nearly 20% year on year in Q3, and auto rich haves and motorbikes are recovering faster than the rest of our mobility segment. We're leading in and seeing strong momentum with Uber for business, nearly 40% of our top 50 enterprise accounts are new since March, driven by increased demand for new products, including specialized commute offerings and guest products such as vouchers. Now switching over to our delivery business, which is benefiting from a massive structural shift in the consumer behavior. As I've noted before, consumers are quickly becoming custom to the mass of having anything delivered to their door in half an hour, much like the magic of having a car show up in a few minutes. It's my belief that the tailwinds behind this category are so strong that we can continue to deliver exceptional growth, while also improving profitability. In Q3, accelerated to a 135 percent annual growth rate and reached a $35,000,000,000 GB run rate. Adjusted net revenue nearly tripled year on year, expanding take rates of 13.3% and improving adjusted EBITDA margin as percentage of ANR by more than 10 points quarter on quarter. This growth is coming not only for an influx of new users, but also from higher engagement from existing users, with delivery MAPCs growth over 70% and trip growth over 110% excluding markets that we exited, eater restaurant delivery driver retention all increased year on year quarter on quarter. And we continue to add new eaters at an elevated level. We did all of this with consistent improvement in the unit economics of this business in each quarter of this year. On the competitive front, we improved our category position in most major markets around the world, including growing GVs at triple digits year on year in several large markets, including the U. S, Canada, UK, France, Spain, Japan, Taiwan, among other In the UK, we continued delivering gross bookings growth of nearly 200%. On a trip basis, we're now only about 30% smaller than the reported numbers from Just Eat's takeaway. This compares to 60% smaller a year ago. While the US remains one of our most competitive markets globally, we made real progress in the quarter, with GBs up roughly 123% year on year. We improved our position in 11 of the top 15 markets, including New York City, Chicago, Washington, DC, Boston, and Atlanta. Bookings in New York City grew more than a 150 percent sustaining our momentum from Q2, even as a city led the US and reopening. We've also made meaningful progress in corporate ordering with our Uber for Business platform, adding new enterprise customers like Bank of America, Unilever, and citadel. We also lean into a number of growth opportunities during the quarter. We closed our commercial transaction in all markets, excluding Mexico, and scaled our grocery business to over 30 markets, exceeding 1,000,000,000 in annual in annual run rate. We expanded Uber Eats Uber Eats Pass to 4 additional countries, surpassing a combined 1,000,000 paid members across Uber Pass and Eats Pass. We're particularly encouraged by the improved use of the trends we see with our each pass members and will continue to roll out our other markets in Q4. Our ads offering is now live in the US with over 30,000 restaurants running ad campaigns, many with significantly positive ROI. Even with the substantial growth investments, we continue to make progress towards profitability. In Q3, we had over 10 delivery countries adjusted EBITDA breakeven or better. While we recognize we have, we still have enormous opportunity for growth and investment in the segment We're confident that we can lean in and turn delivery EBITDA profitable sometime next year. Lastly, quick word on Proposition 22, which we're happy to say passed with a healthy margin in California. This important question has now been settled in the most populous state in the country. California voters listen to what the vast majority of drivers want. New benefits and protections with the same flexibility. Going forward, drivers and delivery people in California will be guaranteed a minimum, earning standard, healthcare contributions, accident insurance, increased safety protections, and more. We feel strongly that this is the right approach. We should be adding benefits to gig work to make it better, not getting rid of it altogether in favor an employment only system. That's why going forward, you'll see us more loudly advocate for new laws like Prop 22, which we believe struck the balance between preserving the flexibility that drivers value so much while adding protections to that all gig workers deserve. Our proposal for a new pragmatic approach is supported by 82% of drivers and 76% of voters and it's a priority for us to work with governments across the US and the world to make this a reality. To sum up, while the last 8 months have been tough for me, for a team, and for the millions of people and businesses who rely on our technology, I'm more optimistic than ever about Uber's future. The tough actions we took, the resilience we've demonstrated give me confidence that will emerge from the pandemic on an even stronger foundation, more nimble, more innovative, and more relevant to people's lives than ever before. Now over to Nelson for more details on the numbers. Thanks, Tara. In spite of the unpredictable environment, I'm pleased with our ability adapt quickly to respond to the challenges of COVID, stabilizing the business in the case of mobility and seizing new opportunities for delivery. All with the relentless focus on cost discipline and a drive towards quarterly adjusted EBITDA profitability in 2021. I will now discuss key operational metrics as well as non GAAP financial measures. All comparisons are year over year and on a constant currency basis, unless otherwise noted. Total company gross bookings declined 8% but improved 44% quarter over quarter. Adjusted net revenue ANR was $2,800,000,000, down to 19%, again, up 47% versus the 2nd quarter. NA and R take rate was 19.1 percent of gross bookings, down 238 basis points year over year, but up 32 basis points quarter over quarter. Non GAAP cost of revenue, excluding D and A, increased to 46% 45% of ANR, but down $320,000,000 on an absolute base driven by lower volumes in our mobility business, resulting in a decrease in insurance and payment costs. Turning now to non GAAP operating expenses, which include pro form a adjustments, such as stock based compensation and restructuring charges. Operations and support decreased to 12% from 13% of ANR and was down $119,000,000 on an absolute dollar basis, reflecting the headcount reduction in absence of taping. 2nd quarter. Sales and marketing increased to 32% 30% of ANR, but decreased to $152,000,000 on an absolute dollar basis as we saw lower marketing and promotion spend in our mobility business. R and D increased to 14% from 13% of ANR was down $75,000,000, primarily driven by a decrease in people spend. G and A increased to 18% 15% of ANR and again down 14% from a year ago. Quarter over quarter, our spend increased $76,000,000, but improved as a percentage of ANR at four percentage points and continued top line recovery. Our Q3 2020 total company adjusted EBITDA loss was 625,000,000. Now I'll provide additional segment detail on our segments, starting with mobility. Mobility bookings of $5,900,000,000 improved 94 percent quarter over quarter and was down 50% year over year. And ANR of $1,400,000,000 improved 74 72% quarter over quarter and was down 51% year on year, all take rate of 23.1% improved year over year due to rationalization of incentive spend, mainly in the U. S. And in Canada. Despite a significant headwind to our top line performance, mobility adjusted EBITDA was $245,000,000 or 18% of mobility ANR. Improving $195,000,000 quarter on quarter. Now to delivery, we've seen continued tailwinds related to stay at home orders as well as the consolidation of Corner Shot results this quarter, driving delivery gross bookings to $8,600,000,000, up 135%. Delivery ANR of $1,100,000,000, up 191 percent due to an increase in food delivery orders, higher basket sizes from state home order demand coupled with network efficiencies, namely in the U. S. Delivery and our take rate was 13.3%. Up 2.56 basis points a year over year and up 56 basis points quarter over quarter due to overall improvement in basket size and rationalization of incentive spend. Additionally, we realized an 80 basis point benefit year over year from business model changes in some countries that reclassifies certain payments and incentives as cost of revenue. Delivery adjusted EBITDA was a loss of 183,000,000 or negative 16.1 percent of ANR, but that represents a $49,000,000 10% improvement quarter over quarter, respectively. On to freight, which grew ANR 32 percent to $288,000,000 and adjusted EBITDA was a loss of 73,000,000. Freight EBITDA margin improved nearly 12 percentage points year over year, but weakened 2 percentage points quarter over quarter. The shift in consumer consumption from services to goods as a result of COVID has led to a surge in demand for freight. Combined with industry wide driver shortages, this has led to a rise in market rates and pressure on margin across the industry and our freight business. Despite the industry headwinds, we are encouraged by the progress made this year. Tech driven solutions can provide value shippers and carriers, and we've seen this through the strong growth of digital channels like API Kindred loads and adoption of other SaaS solutions, like Uber Freight Enterprise. Over time, these real time solutions were to reduce our exposure to market volatility, while also delivering strong economics. Onto ATG and other technology programs, The adjusted EBITDA loss for the quarter was $104,000,000. In Q3, we returned our test vehicles to the streets of Washington, D. C. Addition to continuing operations in the Pittsburgh market. Our represents the G and A and R and D, not allocated to one of our segments, improved 18% and held relatively flat quarter on quarter on an absolute dollar basis As a percentage of total ANR, corporate G and A and R and D improved 8 percentage points quarter over quarter, as we saw fixed cost leverage from restructuring actions taken in Q2. As a reminder, platform R and D represents over a third of the spend in the category, and the corporate G and A also includes accrued sales taxes and other fees. In terms of liquidity, we ended the quarter with approximately $7,300,000,000 in unrestricted cash, cash equivalents short term investments and have access to over $2,000,000,000 from our revolver, providing us with ample liquidity to manage through the recovery ahead. Based on October trend, I'll provide a few comments around our expectations for Q4. In October, mobility was $28,000,000,000 annualized gross bookings run rate. While we expect the recovery to continue, we would highlight two factors to consider in Q4, First EMEA, which was our most recovered geography in Q3, started experiencing new lockdowns in October, including in France and UK. EMEA Mobility gross bookings declined 3 percent month over month in October. And FX will continue to be a drag on year on year trend particularly flat TAM as our most recovered geography today. For context, the Brazilian real has appreciated roughly 30% year on year, and we saw 3 point adverse impact from FX in Q3. In October, mobility gross bookings were down 44% year over year on a constant currency basis, about 47% year over year on a reported basis. We expect mobility A and R take rates to be relatively flat year on year, consistent with normal seasonal declines, despite adverse geographical mix due to slower recovery in the US. For context, as a percentage of mobility gross book in the US is currently 10 percentage point lower than in 2019. We expect delivery adjusted EBITDA losses in Q4 to be similar to Q3 levels on an absolute basis with sequential improvements beyond Q4. As a reminder, we are leaning into delivery opportunities, including with incremental brand marketing, spending in the U. S. And Europe, as well as investments in our growing grocery business. We expect stock based compensation in Q4 to be $200,000,000 to $250,000,000. Overall, I'm pleased with the health of the business today. And the progress we have made throughout this year. Importantly, we are not letting up on our profitability goals, even with our mobility gross bookings still down significantly. In Q3, we produced $245,000,000 in mobility adjusted EBITDA, up nearly $200,000,000 quarter on quarter. But another way, this quarter's mobility adjusted EBITDA margin of 18% was down only 4 percentage points year on year. Demonstrating the structural improvements and profitability we have achieved despite the impact of the pandemic. Based on our current cost structure, we are confident that we can achieve total company adjusted EBITDA breakeven with mobility gross booking 10% to 20% lower than Q4 2019 levels, and we now expect delivery to be breakeven sometime in 2021. With that, I'll let I'll open it up to questions. And our first question will come from the line of Brian Nowak of Morgan Stanley. Please go ahead. Thanks for taking my questions. I have 2. The first one on the individual cities or markets where you've seen sharper recovery in rides. Jimmy, can you just talk to us about what you're seeing in the competitive environment side for either drivers or riders Then the second one, congrats on Prop 22. Congrats. Question on that, as we're sort of thinking about it, philosophically, talk to us about how you think about Prop 22 now impacting the pricing for the riders as well as strategies that could change the way you think about attracting drivers and maximizing their overall earnings? Thanks. Alright. Thank you very much for, for the question. As far as the recovery, recovering, markets, what's, and the competitive environment there, I'd say the environment is constructive, a couple of notes. Generally, in certain markets, and the USB example, as the markets come back, we're actually in more of an undersupply position than an oversupply position. As these markets come back. Just, we have to make sure that drivers understand that it takes to, to drive I think that they're very comforted by the investments that we've made in technology and how clear we have been, as it relates to our no mask, no ride, policy. But it takes time. And, you know, these are human beings and what's happening outside is, is, is very tough. So the the driver supply coming back is a bit slower than we would want. Someone say that's a 1st class problem, and we are putting some incentives into the market in order to make sure that drivers come back. And they have great earnings opportunities during a period where economically more and more people need those earnings opportunities. As it relates to riders, what we are seeing is that the earlier cohort of riders who is coming back tends to be more price sensitive. These are folks who, you know, have to come back to work. They don't have the option sometimes to to stay at home. And as a result, we're seeing a cohort that is more price sensitive in general, which is a little bit different than what we've seen in the past. Which will provide some margin pressure for us, although I tell you, if you look at our margins now, we're more than making it up in terms of this one, etcetera. So as the world returns to normal, we think there will be margin upside as cohort of riders that kind of come back represent a more fulsome, kind of example of the ridership that we had, pre pandemic All that said, as it relates to the competitive environment, it's constructive. All the competitors are being rational, and we don't see that changing. As far as your second question, Prop 22 increases in strategies, listen, I think on Prop 22 for now, what we are really focused on is making sure, that we do everything that we can to get the benefits that Prop 22 promises to driver, to drivers as quickly as possible. There's some calculations that you have to do in terms of minimum earning standards, etcetera. So we are very much focused on the execution on Prop 22 as it relates to, our drivers. And Traverse to use a platform. It may have some implication as it relates to rates, but we think that any, any, any effect that it has on rates will not have a significant effect on trip volumes one way or the other based on the kinds of sensitivities that we've seen in the past. Your next question will come from the line of Heath Terry of Goldman Sachs. Please go ahead. Great. Thanks. You mentioned the recovery that you're seeing in New York, as you look at the recovery in, places like New York, Hong Kong, even what you were seeing in London before the more recent lockdowns. Can you give us a sense in terms of the characterization of the, the type of of customers that you're seeing, the level of activity, what you're seeing in terms of business versus leisure versus, you know, obviously, the the the travel part, which is going to be smaller. And then, and then what, you know, what that sort of tells you about the, the pace of the, the recovery that that we can expect in terms of, other markets opening back up even is, you know, we start to see lockdowns, like what we're seeing in Massachusetts. Happen. So just appreciate any sort of additional kind of insight around the ride hailing business that you can that you can share, based on that. And then you mentioned sort of the rationality of competition, interested in any insight into how that carries over to the, food delivery business, post some of the consolidation that we've seen there. Thank you. Sure. As far as the the shape of the recovery. I mean, first of all, the the shape of, recovery, it's a city by city recovery. That very much depends on the health situation on a local basis, which as is, finally, obviously, we can't do anything about all other than making sure our platform is the safest transportation platform out there. And I think, and I really do think it is in terms of the technology that we have, invested there. We looked at kind of well as a recovery. Does, commute come back faster, workday come back faster, we can't come back faster, etcetera. And on a global basis, there is no tale to tell, which I consider great, which is the business just comes back. And there are some markets where, work, use cases are coming back faster than non work use cases. The one interesting trend that we are seeing is, as I mentioned in New York, that the, that kinds of use cases that riders are using to engage with Uber seem to be changing, and we are getting kind of a broader demand set at broader hours of the day. So people are using, the service, whereas they might have used it only in commute hours. They're kind of extending the hours, which might be us be more flexible in terms of how they live, or might be entirely new use cases, say, I gotta go get groceries and I, and I'm gonna use Uber. The second factor that we are observing is that Uber's coming back faster than other transportation alternatives. I think we all want mass transit to come back the mass transit systems in many cities have been, transit with investments that we've made in route match, but we're seeing Uber, for example, come back much faster than the mass transit. Same thing as it relates to taxi, for example, when we look at our volumes, versus taxi in New York City, Uber's coming much faster than Taxi. Again, I think because of investments we made on the platform, because of all the information that our riders have, and our no mass NOI policy, for example. So I think, to sum it up, the evidence that we're seeing is comes back when cities come back. And if anything, Uber is an advantage form, of transportation versus alternatives as it come back. It's very early. Is this going to translate into long term behavior? We're kind of seeing the food certainly translate into long term behavior. So we, we like where we stand, but, you know, we like everyone else are are waiting for for the world to open up. As far as confident if the food delivery, space goes. Again, nothing of notes. We are focused on our own service making sure that our reliability or dependability, the average time to order, etcetera, all of these areas continue to improve. We're very much focused on optimizing cost per trip and kind of the number of contacts that we have, and the result of all that, along with the Uber brand, and are continuing to lead into the Uber brand with, for example, the tonight I'll be eating campaign has resulted in our ability to improve margins. And generally improve our competitive position over our competition. So nothing of notes call out on the competitor front one way or the other, other than growing faster than our competitors, and we're going to keep it that way. Your next question will come from the line of Justin Post of Bank of America. Please go ahead. I guess, I'll focus on the delivery business. You're clearly kind of doubling down as a company buying Corner Shop and, Postmates. But, just give us a flavor of, do you think that business could be bigger than or similar to rides at maturity. Secondly, I think you said you expect it delivered to be profitable next year. Just want to double check that. And what's different about the cities that are profitable versus those that aren't? And then third, maybe a corner shop update. Sure, absolutely. I'll start and then Nelson, if you can take on the delivery profitability question, As far as the sock delivery marketplace, listen, I think that the TAM that we see in this segment is just big as the transportation TAM. It is very, very significant. And the the crisis, the emic crisis certainly has introduced new customers to the segment, at a velocity that frankly we had not anticipated. We could not have anticipated, you know, on hindsight, the fact that we doubled down on this, on this category as aggressively as we did for the past 2, 3 years, it's either foresight or, or, or being lucky, and it's probably a combination of both. The point that I would make as it relates to delivery, how big it can get is the extraordinarily low penetration. That we still have in terms of the restaurant universe being on the each platform. We talked about 560,000 restaurants being on the platform. In the U. S, we have about 30% of restaurants in the U. S. In the U. K, we've got 16% of restaurants and France, it's 15% of restaurants. In Mexico, Brazil, it's about 10% of restaurants. In Japan, it's less than 5% of restaurants on our service. So that would tell you that that that the growth that we have going forward is is going to be many multiples as we penetrate deeper and deeper into newer restaurants. Now I think that's an incremental restaurant that bring on to the platform probably is not gonna be quite as productive as the restaurants already on the platform, but it just tells you that we're very, very early the penetration here. I'm not gonna make a call as to whether mobility or delivery are gonna be bigger. I want those teams to fight it out. I think the great thing about is that we've got both. We have a path to profitability for both. And we have a natural hedge as well as global scope. That's no other companies even close to. Nelson, do you want to talk about delivery profitability? And then I'll end with Kershaw? Sure. So what happens when in countries where we we are profitable, we have a very strong, what we call competitive position, you call market share across a number of the key cities in the country. This leads to very, very good selection, as well as mid teens type take rates, which we've talked about, how important it is in past. It tends to be teams that are really executing well in terms of building the brand investment, and then continue to make some of the operational improvements. So you've heard Darg actually call out the progress we're making in the UK. And so that has all the making of how you get the country to be very profitable like we have already in the system. So the result of all this is we tend to have really high customer loyalty. And then, you know, we, we have this great experience. And so, you know, in for instance, we actually have a 24 minute average delivery time. And so we just really outperformed everybody. And so, you know, again, there's nothing special. It's just that teams are doing a great job, and we think that we'll be able to bring more countries, towards those type of metrics as we continue down the path. Great. And then as it relates to Cornershop, it's very early. We we love the Cornershop team, And our grocery business now is a combined between Cornershop and, our, our delivery platform over $1,000,000,000 in run rate. We expect that to be multiples of that $1,000,000,000 next year. So we're leaning forward, pretty strongly as it relates to corner shop, we've signed up a number of partners, Eastern Grocers, Red Apple, Sainsbury's, many, many brands all around the world, and we think we're in the very, very early days. Notes for investors that we have not closed Cornershop Mexico, Mexico is one of, corner shops leading markets. We are optimistic that we'll receive an approval from Cofese, that been undergoing the rigorous analysis here of the acquisition. You know, we see the transaction benefits customers, merchants, and earners, and allow Uber and Corner Shop to just bring far more options to consumers, for a service that's now classified as essential there. So it'll we think, we're looking forward getting into, Mexico. Hopefully, if Cafe approves the deal, and I think it'll showcase Mexico's a real world class hub for entrepreneurship and foreign investment. Our next question comes from the line of Mark Mahaney of RBC. Please go ahead. Yes, I'm sorry. Two questions, please. First, I think you provided a little bit of a trading update for mobility, for the December quarter. Could you do the same thing with, with each I'm sorry, you did for Mobility but not for delivery, any update on delivery for the quarter. That growth rate is staggeringly high. Obviously, it's to come down, but, you know, the, how do you think about the rate at which that comes down? And so the segment EBITDA, for the quarter in Q4, largely because we are investing behind the business that I may put. So if that business continues to do extremely well, we're very, very optimistic. I don't think Dara would have made we would not have made the commentary about profitability on delivery at some point next year, if we didn't see the efficiency as well as the the consumer adoption that's going on. And, Mark, in terms of the use cases, listen, that they're very broad. I haven't looked at it, personally as to what the use cases are. What's interesting is that the number of trips per per rider, not all of ridership is back, but the riders who are starting to use their service, the trips per rider is up significantly. And during these kind of other times, the trip's provider is actually up double digits. And I think Listen, if you live in a city, Uber is just a utility type of use case, people use it for all kinds of different, uses. We've introduced hourly rentals. We've we've introduced the ability to deliver packages as well. So all of the new use cases that we're introducing essentially broaden the service we're certainly seeing that broadening translate into a greater use of the service in different times of the day. Okay. Thanks Darr. Thanks, Thomas. You're welcome. Next question. Your next question will come from the line of Mark Smolletta of Bernstein. Please go ahead. Yes, hi guys. Thanks for taking the question. A couple if I may. The first, you mentioned a bit about kind of, what were some of the drivers behind the MAPC number. And would love if there's any incremental color you can share in terms of what's making that up in terms of whether it's just returning users, new users, I know you launched the new iOS app and like how that cross sell might be going would be great to hear. And then the second one is, as we think about the delivery business, it sounds as it's now up and running, grocery certainly and I saw pharma as well. How do we think about the changing economics of the delivery business as all of those kind of new businesses that are sitting within it? Thank you. Sure. As far as MAPCs goes, what we're seeing very, very significant MAPCs growth for, for the delivery business as expected. The number of new eaters coming onto the platform remains at elevated levels, and the retention of those eaters has also increased on a year on year basis. So we got more eaters. They're staying longer. They're ordering more and that translates into very, very strong massive growth. We're seeing a good MAPCs bounce back on the mobility side of the business, and mobility is still even with delivery being at the elevated levels that it is. The mobility business has a significantly higher number of MAPCs than delivery. So mobility for us, one is coming back, nicely with strong margins, but it's a great loud speaker that we have as it relates to the new app. And what we're seeing happen is that with 0 cannibalization of our mobility business, we are able to introduce a whole new segment of, ride users to Uber Eats. And often, we see them coming back Uber Eats within the mobility app itself. So we actually, early on, we expected, well, you know, we'll throw them to Uber Eats, download the app, sometimes they'll use the RISE app, sometimes they'll use the Eats app, a double digit percentage of folks who use the the RISE app. Now we're just using kind of the Eats, web view inside of the RISE app, which we think is a great sign. So it's this, we think, is a pretty strong advantage. It is, it's increasing the frequency of use for our mainline Uber app and it's introducing a new, a whole new segment to each and it's kind of a growth channel that we have that some of our competition clearly doesn't have. In terms of the new businesses, the way I've simplified is as is clearly a very high margin business, and, and something that we're quite excited about grocery and pharma on balance are going to be lower margin than our mainline business because they're just not nearly as mature. So I think you can you can the the grocery and pharma will have negative, effects on margin going forward as will have a positive effect. We think we have capability as it relates to our portfolio to balance the investments and the growth, to get our delivery business to profitability next year? Great. Thank you. Next question will come from line of Ross Sandler of Barclays. Please go ahead. Hey, guys. This is Doctor Prop 22. You had provided some stats that if you had rolled this out in 2019, it would have caught it would have cost you a little bit more in a blog post a few months ago. If we apply that to just the unit economics, you're already above the minimum wage in a lot of markets. So what's the incremental driver earnings or cost that you'll have to absorb, post Prop 22 rolling out, you know, I would say in in in all US markets, maybe if you just do a per unit and then maybe a 2022 impact. And then back to the frequency and retention for Eats, Dara, you just mentioned that, you know, you're seeing a huge uptick, what do you see in frequency and retention for each customers relative to pre COVID levels that, you know, informed you about your ability to kind of retain some of this GMV, that you're seeing right now longer term. And anything that you're seeing in the data that suggest that the uptick is permanent versus, temporary. Thanks a lot. I'll start with the second announcement. If you can finish up with the first as far as the economics go. As far as the frequency and retention, listen, it's going to be difficult to kind of look forward, and and one way in which we we try to understand what's going to happen post COVID is to compare markets like a New York or certain countries that have opened up let's say France before the lockdown, or are in a process of opening up in advance of the other countries and to see whether the retention tricks or the basket size, etcetera, whether these metrics go down. And we haven't seen any evidence of that. There's no question that, you know, we are, we are benefiting from the higher MAPCs, higher retention, higher basket size, higher frequency, of order. As we look at open markets that have opened up, we don't see any significant degradation of any of those metrics. We'll watch as we go forward. There's no question in my mind that this represents fundamentally, there's a fundamental behavioral shift, that has gone on. I think, you know, people aren't gonna stop using Amazon. People aren't gonna stop using Eats. And we're taking advantage of that not only to grow our mainline business, but also to get into local commerce adjacencies I think we're one of the very few companies in the world to be able to take advantage of that at this kind of scale. Allison, do you want to talk prompt 22? Yes. So Ross, obviously, there's a lot of ifs to NAND. So it's difficult to really, answer it. And so it's not because you have to do it based on you know, certain volumes. But, you know, obviously, it's very important that, you know, we maintain the independent contractor status. It will like it will result in that probably 5% type increase, you know, in order to cover the incremental, whether it be minimums, whether it be incremental benefits, And we do expect that much of it will be passed along. Now it could be different depending on the city by city or or the time of day. But again, we as Dara said earlier, we do believe that it'll be, manageable, and we don't believe based on the models we run that it will have a material impact in terms of demand. And this specific to the mobility business? Specific mobility. Yeah. Next question. Next question will come from the line of Eric Sheridan of UBS. Maybe one big picture 1 and one, following up on perhaps 22. From a big picture perspective, Dora, how should we be thinking about the type of behaviors you're seeing as the product set you offer to consumers continues to widen and the proposition to continue to go a little bit deeper in terms wallet share in local commerce and what that might mean for sort of spend per customer on an annualized basis or maybe even reflecting it back to costs, whether you could see that a large inflection point in terms of marketing ROI that might give you a differentiated edge versus your competitors? And then 22, with the industry having won, how should we be thinking about what that means for either other states or maybe even a national solution has been a lot covered in the press on potential paths forward, for the industry to be regulated, not in the form 85 was, but, but maybe to find a middle ground here, I would love to effect about that as well. Thanks. Absolutely. So, Eric, what we see consistently is that as we add utility, to both our mainline Uber app and our each app and utility. There's just more to do, in kind of full, well designed way, the engagement with our app, increases. So again, with, with our mainline app, we, as we add choices, etcetera, these choices don't cannibalize the mainline use of that, and we're very careful to make sure we test and learn and understand what the use cases are so that we're not getting in your way. But in general, as we increase utility, as we increase choice, engagement increases, and as engagement increases, then retention rates, etcetera, increase increase as well. We are now in a position to do this for 2 apps and 2 very large segments in mobility as far as getting deeper into mobility, not just rides, but we've got taxi product internationally. We're investing in in mass transit, and many other bikes and scooters in our partnership with Lime. So we're expanding into other use cases as it relates to transportation. So anytime you wanna go someplace, you come to us. We have the cross promotion from our, mainline Uber app into our Eats app. And with Eats, now we're extending from just food, now to grocery and pharmacy and other categories as well. And we're seeing again greater engagement, greater retention, higher spend, as it relates to these consumers. We're underscoring this higher engagement, with going out and launching Eats pass and Uber Pass are subscription products. So subscription products essentially allow riders or eaters to get a discount for, for a subscription fee every month. We have over 1,000,000 subscribers. We see growth there is being very, very significant, and we see the frequency of our East Pass and Rise Pass subscribers move up a notch, a significant notch in terms of the number of times that they come back. So I think that we've got this kind of a structured platform to apps One of which is making a transition from, rides to all transportation. The other one that's making a transportation from grocery to all local commerce, the 2 of them essentially will be cross promoting each other, and we will have a foundation of a payments platform routing platform, but also a membership platform as well. We think this puts us in an enviable position on a competitor front, but it's a lot of work to do from the teams. It's not going to be a plus 50%. It's like all of this work gets you advantages of 2, 3, 4% in terms of customer acquisition, lifetime value on a quarter by quarter basis. So the compounding effect of all this we think puts us in a very, very strong competitive position. As far as prompt 22 and your question at at as to its its expansion, Listen, we have always come forward. We were the first to come forward with this IC plus model, the idea that, driver deserve flexibility plus benefits. I wrote a New York Times op ed about this. We want to have a dialogue, with with governments and other states. We have had really constructive dialogue in other countries, like India, just passed the legislation that we think was very constructive. So absolutely, we will have dialogue. And I think with dialogue, usually you wind up at the right place, which is a middle ground. And we think just this IC plus model, it has huge support with our drivers. It has huge support of the voters. We think over the long term it's going to win. Next question? Your next question will come from the line of Cara Fragou of New Street Research. Please go ahead. I was looking at your marginal economics between the second and the first quarter in the recovery. And it looks like you if I look at rides, you have like a marginal take rate, if I take your A and M like different growth in divided by growth in bookings of 20%. And then on that, you have an EBITDA margin of about 35%. And so my question was does that reflect where your economics outside of the U. S? It looks like that's where you, you got most of your growth? And should we expect once you grow sequentially with a stable mix, should we expect to start seeing your target profitability metrics, 25% take rate and 45% EBITDA margin showing up on a marginal basis like that. So so, Pierre, I thank you for the question. You know, yes, yes, we are seeing continued improvement in the bottom line March sequentially, as the business starts coming back on specifically on mobility. If you listen to the first quarter call, we actually talked about the fact that if you looked at the February year to date number pre COVID, we are actually getting to about a 30% margin as a percentage of ANR. Already. And so we knew that we are well, we are, we are confident in terms of our ability to get to our longer term margin targets because of the leverage we have. With the actions that we took on the productivity side, again, we feel confident that as the world recovers, And you've seen the quarter over quarter recovery, both at the top and the bottom line for our mobility business that we will be able to achieve those longer term margins. The butt part of it is that, you know, the COVID or Kirby is real. And so, obviously, as places like Paris and London go back into lockdown, that impacts the number of rides and how peep how much people are going out. The fact that all of us are on on these calls right now, you know, we're all sitting in, in our own different homes, Again, so once we start moving around, we're confident we will get to our longer term margins. Before pre COVID, we were already getting there mobility side of the business. And so we we do know, especially based on the actions we're taking that we will again. And if you look at our our Q3 performance, based on the ride business being down 50% year over year, we think that it showed very good margin profile. Thank you. And maybe a quick follow-up similar question on, on delivery, you, on issue, so you've increased revenues massively more than double them. And we're still far from your target margin. So I guess this is not that much scale scaling out that is going to improve profitability in delivery. So how should we expect that to to come through, going forward? And an earlier question we talked about, what is it about the countries where, we're profitable today? As you know, our delivery business is really the older breeds business is a little more than four years old. And so we've the business has gone has grown tremendously. We run the largest food delivery business side of China globally now. You've seen the tremendous growth we have. And so we've made tremendous improvement in terms of improving the bottom line on the efficiency side we've talked in the past about getting towards those mid teen type of take rates in that business, which we have in those countries. So as we continue to grow in the business, as we continue to move our competitive position. Again, we think that we will be there. But again, the pass on the the mo the delivery margins will take a little bit longer just like it took in terms of getting there for the, the rides part of the business. And I'll remind you that that there are many markets where penetration and the restaurant penetration is 10%, 15%, 20%. So we think that's the right strategic way forward is to lean in on growth and drive profitability, and we can do both. So we're in a great position to be able to deliver both. Next question. Your next question will come from the line of Alex Potter of Piper Sandy. Please go ahead. Yep. Thanks. Maybe just a quick follow-up on that question. You know, you talk about the areas where around participation here at the 10, 20, 30 percent penetration rate. Regionally, is that are you talking primarily about suburbs there in the US? And if sell? What's a status update? And then I have one follow-up on freight. Generally, our penetration in the cities or larger cities is higher than our penetration in the suburbs. But again, like Nelson said, we really got into this business in a real way 4 years ago. So we just have lots of expansion room and greenfield in smaller cities, secondary cities, 2 surety cities, as well as suburbs. We are certainly making, headway in the suburbs, in the U. S, but there are areas like Japan, for example, where know, we were very much focused on Tokyo and some of the other big cities, but now we're growing at over 300%. And it is expansion into secondary cities, but also, outside of, of city proper in places like Japan as well. So the move Secondary CD suburb, suburb removed. It's not a US only effort. It really is a global effort. Okay. Great. You had a freight question? Yeah. So I guess just on strategic fit, I mean, obviously, it it makes a ton of sense we talk about each, basically in the same breath as mobility, and you can cross sell, and there's so much strategic fit between those how do you see freight fitting into that? Can you lever, all of the work that you have and all of the great that you have in gene stuff that we can do, internally. But, it is a little bit different because it is not a consumer facing business. We think the freight's a very attractive business. You know the progress we've made there. But you also know that, we recently raised $500,000,000 from Greenbrier at a roughly $3,300,000,000 valuation. And we believe that money, that investment will allow us to fund freight until it's profitable. The business continues to scale and grow. And we love the fact that it's doing it, and we kind of judge it on its own. If there, would there ever be a point I don't know, but right now we kind of like what we're seeing from the freight business right now. The freight marketplace went through a very challenging summer because of the increased demand in terms of trying to get goods shipped across the country. And there's a tight labor supply because of the, some of the, the, the $600 a week, weekly stuff, but we we're working through that. The business is getting better more globally. And so we'll see. So as you know, Uber has had a lot of different businesses. As you know, we've made decisions during the course of the year and really focusing on the core. And you know, we we we continue to look after an outbreak of operating today and we'll continue to evaluate. I think the the one other measure that I'll make is that there's no question that freight is benefiting from the marketplace technology, pricing technology, the technical staff and the structure that that we have. Now freight is focused on, really, delivery from warehouse to store, each and our delivery business is focused on delivery from store, to last mile, to to home. You can imagine a world that's not a world that is will be here tomorrow, but we're not betting for tomorrow, right? We're betting for 3 to 5 years from now. Where we start chaining together warehouse to last mile. And again, I think it is a solution that we uniquely are suited to bring and I think it would be a stage 2 or or 3 if we get there. Alright. Next one. We have time for one more question from Benjamin Black of Evercore ISI. Sneak me in here. I had 2 quick ones here. So the first one on growth here, I'd be curious if you could talk about the longer term opportunity you see in grocery from a top line and also from a margin standpoint? And also from the perspective of driving users, the Uber Pass, just given that grocery is there? Is a higher frequency product. And then secondly, I know you guys mentioned driver supply has been tight, on the mobility side. I'm curious to hear how you see that playing out in the next few quarters and how that relates to your outlook for take rates on the mobility side in 2021? Thank you. Yeah. I'll take the first one Nelson can take the second one. Listen, I think I think as it relates to grocery, what what the asset that we have is we have a giant audience in terms of our, both mobility business and delivery business. So we're able to build a grocery business with an audience already and really deepen that engagement with the audience. And so we think the grocer business can, again, increase engagement increased retention. And when we look at Corner Shop, for example, the percentage of Corner Shop volume that comes from ownership members, and by the way, it's that we're we're going to have all of the different memberships talk to each other is much higher than the percentage So we do think that the membership slash subscription angle, is a pretty substantive one as it relates to grocery. Grocery is never going to be a high margin, a high margin type of a product, but it is a very, very high engagement product, but big basket sizes, and we think it can be a very compelling part of the opportunity here. We're, we're investing carefully. But again, are having the fulfillment stack or having the routing stack or having the couriers or having the audience already gives work, for that category. Nelson, do you want to take the last one? Sure. So in terms of drivers of 5, the first thing I wanna make sure that people understand is the take rate is relatively year over year, despite some of the shortages and the U. S. Mix being a smaller percentage of the total. So I would say that, driver supply improved during the quarter. Still lagged a little bit on the recovery. In the US, what I would say is some of the imbalances are really more kind of weekend late night hours as people are starting to get out more. And then internationally, it's mainly because in places like Brazil, Latin Latin America, where the where the marketplace and the demand has increased dramatically, trying to keep up with it. We think it's gotten better We think there's a little bit more of an imbalance. I'm not going to really kind of comment too many quarters out because there's a lot of us do the recovery, both on the rider and the driver side. But it has improved versus the second quarter. I think a lot of it has to do with our efforts. I think people appreciate a lot of the safety efforts that we've taken. No maximum ride and some of the other, enhancements that we've had to try to make, drivers more cost, comfortable I think some of the stimulus as well has put people out there driving a little bit more. And so we are seeing it improve. And particularly versus the last quarter. Thank you so much. Appreciate it. Alright. I think that's the last questions. Thank you, everyone, for joining us, this quarter. And huge thank you to, the Uber teams, Nelson and I get to talk to you about these numbers, but they're the ones who do all the work. So thank you very much to, Tmover, and, we'll talk to you next quarter. This concludes today's conference call. Thank you very much for participating. You may now disconnect.