Earnings Call: Q2 2020

Aug 6, 2020

Ladies and gentlemen, thank you for standing by, and welcome to the Uber Technologies, Inc. Q2 2020 earnings conference call. At this session. Would now like to hand the conference over to your speaker today. Thank you. Emily Reuter, Investor Relations. Please go ahead, ma'am. Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies 2nd quarter 2020 earnings presentation. On the call today, we have Dara Kostasahi and Nelson Che. We also have Ken Scofield, and this is Emily Reuter, 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 release, supplemental slides, and our filings with the SEC, each of which is posted to investor. Uber.com. Please note we have also posted an updated 2020 investor presentation on our investor page. I will remind you that these numbers are unaudited and may be subject to change. Certain statements in this presentation that on this call may be deemed to be forward looking statements. Such statements can be identified by terms such as believe, accept, 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, which please refer to the press release we issued today, as well as risks and uncertainties included in the section under the caption Risk Factors and Management's Discussion and Analysis financial condition and results of operations in our annual report on Form 10 K filed with the SEC on March 2, 2020, and in any subsequent 10 Qs and Form 8 Ks filed with the SEC. Following prepared remarks today, we will open up the call to questions. The remainder of this discussion all growth rates reflect year over year growth unless otherwise noted. With that, let me hand it over to Dara. Emily and apologies to everyone about the technical difficulties to start with. On our last earnings call, May, said that we were planning for nonlinear recoveries that vary geographically and that's exactly what we've got, particularly across the U. S. Where the reopening has been uneven at best. And while we would have all hoped that by now we have a clear line of sight to the end of the pandemic, Hope it's not a strategy and it's my job to ensure that Uber is well prepared for any scenario. Before I get into details on our Q2 results, I wonder we half, some of the actions that we've taken so far and the trends that we're seeing today. In the early days of the crisis, we moved at Uber speed to stabilize our mobility business and to capitalize on the enormous tailwinds behind delivery. More than 2 thirds of our cost of revenue and OpEx, excluding stock based comp, are not fixed. So simply if a trip doesn't happen, most of its costs don't yield. Is that variable cost structure coupled with the tough decision on headcount? Met that our Mobility segment still generated $50,000,000 in positive adjusted EBITDA profit in the quarter, despite a 73% year on year drop in gross bookings. Meanwhile, our delivery segment saw massive acceleration. Growing growth bookings of 122 percent year on year, excluding exited markets, while improving margins, 59 percentage points. It's become clear that we have a hugely valuable hedge across our 2 core sets. There's a critical advantage in any recovery scenario. When travel restrictions left, You know that Mobility trips rebound. If restrictions continue or need to be reimposed, our delivery business will compensate And as a scale global player, we get the benefit of recovery whenever and wherever it happens, even if some cities and countries lag behind others. We've leveraged these 2 factors to grow total company gross bookings at constant currency from the Q2 bottom of negative 45 percent year on year to about minus 12% in the month of July, driven by mobility being down 53% year on year and delivery up 134% year on year. The bottom line is that we've taken swift action on everything that's within our control cutting more than $1,000,000,000 in annual fixed costs versus our Q4 plan, rapidly deploying new mobility products to meet changing needs and expanding delivery beyond food. We did this while innovating in safety to ensure that our core lives experience is ready for customer's second post trip. And as a side note, please please please wear masks. Regardless, of the ultimate shape of the recovery curve, I'm confident that the work we've done has ensured that we're well positioned. Our actions have strengthened our foundation brought renewed focus and energy to our core business and have seen us operating and innovating more effectively than ever before. Now a bit more on the delivery business. At a roughly $30,000,000,000 annual gross bookings run rate at the end of Q2, our delivery business alone is now as big as a ride business was when I joined the company in 2017. He's essentially built a second Uber in under 3 years with an accelerating growth profile a global footprint and an enormous TAM. And while some of the recent surge in delivery due to COVID, I believe we're witnessing a much more profound shift in consumer behavior that will last well beyond the pandemic. Consumers are quickly becoming custom to the magic of having anything delivered to their a half an hour, much like the magic of having a car show up in a few minutes. This is an opportunity that will be many comps larger than even weeks and one that Uber is uniquely positioned to lead. We've turned our natural advantages and a disciplined capital framework into number 1 or number 2 competitive position in the vast majority of our countries. In the U. S, year on year GV growth accelerated to over 110% with order volumes growing over, over 80% to nearly 100,000,000 orders in Q2. We now have a strong position in the majority of the top 10 U. S. Markets, representing nearly half of the categories look and I'm happy to report that we made significant gains in New York City with gross bookings growing 120% year on year in Q2 and 150% year on year in June. We're now number 1 in the Outer Barrows and we continue to narrow the gap in the end. In July, we announced our intention to acquire Postmates, which achieved $4,000,000,000 annualized gross bookings run rate in Q2. We believe this acquisition will continue to bolster a relatively smaller position in important cities like Los Angeles and Across the U. S. Southwest. And offer greater restaurant selection while increasing order density, improving delivery efficiency and reducing costs. Non U. S. Bookings account for 55 percent of delivery volume. We're now in the number one position in a number of strategic high spend markets, which account for over 2 thirds of our international bookings, including Australia, Canada, France, Japan, and Mexico. In many other key markets, we have secured a number 1 position in larger Anchor City, such as London and Taipei from which we can expand nationally. This strategy allows us to gain competitive share while improving margins. We're now adjusted EBITDA profitable in 2 of our top broad international GV markets and expect to make meaningful progress towards profitability, not only country by country, but for an entire delivery portfolio. In many of our international markets, much of our competition continues to come from aggregator incumbents, either don't want to enter the logistics of delivery or struggling to do By contrast, we offer restaurants the best of both worlds, use your own couriers or use these couriers whenever demand outstrips your in house delivery capacity as has increasingly been the case during auctions. In many markets, we've seen that restaurants with their own carriers actually end up calling Uber Eats Curriers around 30% of the time, demonstrating the unique advantages that we bring and one that we believe will hasten the shift towards the delivery model. Using our existing network, we're moving quickly into new delivery of the service offering, which we see as a very high potential opportunity. We piloted partnerships delivering home goods, pet supplies, and pharmacy items. In other novel uses of our networks, our Uber Connect option led consumers send small packages plans and family via Uber X drivers. It's a huge hit with the Google Latin America with 3,000,000 trips globally since early June. And just last month, following promising launches of the Europe and Australia, we've expanded glossary to the U. S. To sign the partnership with Cornershot. Cornerstrom has seen incredible traction in Latin America and we're excited to bring a strong product and execution in the U. S. The COVID crisis has moved food delivery from a luxury to utility. And as we add more use cases, our service will move from utility to daily needs. As such, we're ramping up our subscription efforts, including nationwide rollout of each east pass, which combines free food and grocery delivery. And eventually Uber Pass, which combines both RISE and East Benefits in one monthly package. All of this activity has resulted in new customer acquisition monthly active eaters, orders per eater, basket size, and eater retention, all being up year on year, and quarter on quarter, both globally ex India and in the U. S. This translation is something simple, more loyal and delighted eaters across the globe. Finally, shifting to our mobility business, which I would describe as a tale of 10,000 Cities. Our mobility recovery clearly dependent on the public health situation in any given area. Asia, ex India is in the recovery lead. We've seen gross bookings of Hong Kong and New Zealand at times exceed pre COVID highs. European trends have also been encouraging. France, Spain, Germany, amongst others, has improved to being down 35% or less year over year recently. The U. S. Is lagging with GVs down around 50 to 85% in our top markets with cities like New York leading in the recovery and some West Coast cities like Tampa Cisco and LA will further beyond. Our global geographic footprint remains a huge advantage, and we're seeing evidence that confirms what we've always believed that when cities move, again, solar business. We'd observe that workday and commit trips bounced back sharply after lockdowns left. But it's now clear that we can as social hour use cases return quickly to, confirming the critical role Uber plays in people's lives. I'm also proud of the speed in which we reacted to extraordinary circumstances, our longstanding focus on safety, but it's lead in industry with our door to door safety standards. Combination of new technology like mass detection, shared responsibility through enforcement of our community guidelines, education from health experts, a partnership with leading brands like Clorox, Tall and Unilever. And thanks to our global scale, we've been able to purchase 30,000,000 now than other hygiene supplies for drivers with more to come. The global scope not only provides diversification during uncertain times, it also allows to lean in and invest more in technical innovation than our competitors. We recently focused on 3 areas. First, we build new products for new use cases. Our hourly option lets you book one car for several hours so that you can run errands without having to request a trip at each stop along the way. And our Uber for business team has built a new shared log solution, which matches only employees from the only employees from the same company. Look us up if you want to get back to work safely and affordably with their coworkers. 2nd, we're doubling down on adding new vehicle like taxis. We've seen that taxi drivers have increased their time on Uber by 25% during the pandemic and we believe we can help them find new sources of demand. We reached a big milestone with our taxi launch in Tokyo, and yesterday's acquisition of Autocab and the UK will deepen our taxi offerings. We're also adding auto repairs and motorbikes since we expect many riders in emerging markets to shift from public minibuses towards the lower cost option 3rd, we're becoming a key partner for transit agencies to help them deliver more efficient, accessible, and equitable service. In June, we announced the first ever software deal with the power on demand transit in Marin County, California In our acquisition of Route Match, we together Uber's expertise in on demand mobility with Route Match's proven capabilities in the space. In sum, we're the global leader in Raj Sharon. We've leveraged our brand, our platform and our technical capabilities to organically build food delivery business as big as ride sharing. We're now leveraging ride sharing expanded to every mobility category. And we're leveraging food delivery to build a real time logistics engine for all local commerce at UberScout. And we're doing it right now. In your city and across the globe. Now over to Nelson for more details on the numbers. Thanks, Tara. Like Dara, I'm very pleased with our execution in an evolving environment. We continue to achieve adjusted EBITDA profitability in our mobility business, quickly grew and improved our delivery business margins, significantly tightened our cost structure and increased our focus on our core businesses, And coupled with our strong cash position, we are well positioned to withstand continued uncertainty while driving towards our stated profitability target. 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. Year over year comparisons for total company, mobility and delivery adjusted net revenue exclude the impact of our Q2 2019 driver appreciation award of seen with our IPO. Total company gross bookings declined 32%. Adjusted net revenue or ANR was $1,900,000,000, down 37% Our ANRT rate was 18.8 percent of gross bookings, up 53 basis points. Excluding the driver of free reward our take rate was down 100 and 40 basis points as delivery, which has a lower take rate became a larger part of the business. Non GAAP cost of revenues excluding DMA decreased to 46% from 51% of ANR. The decrease was primarily 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 exclude pro form a adjustments such as stock based compensation and restructuring charges. Operations and support increased year over year to 19% from 16% of adjusted net revenue. However, it was down $89,000,000 on an absolute dollar basis, reflecting mitigating actions taken in the second quarter offsetting loss of leverage on the top line. Sales and marketing increased to 36% from 34% of adjusted net revenue, but was down $284,000,000 as we saw lower marketing and promotion spend in our mobility business. R and D increased to 22% from 16% of ANR and was down $33,000,000, primarily driven by a decrease in people's spend. And G and A increased to 22% from 15% of ANR, but was down $9,000,000 from a year ago. Quarter over quarter, our spend decreased $148,000,000, an increase as a percentage of ANR due to top line pressure from COVID. Our Q2 twenty twenty total adjusted EBITDA loss was $837,000,000. Now I'll provide additional detail on our dollars. Starting with Mobility, mobility gross bookings of $3,000,000,000 declined 73% and ANR of $793,000,000 declined 68% while take rate of 26% improved both year over year and quarter over quarter due to rash utilization of incentive spend. Despite a significant headwind to our top line performance, mobility adjusted EBITDA was $50,000,000, or 6.3% of mobility ANR. Now on to delivery. We capitalized on the tailwinds related to stay at home orders driving delivery gross bookings to $7,000,000,000, up 113% or 122% ex India and other markets that we have delivery ANR of $885,000,000 was up 163% due to mix shift towards small and medium sized restaurants driving higher baskets is coupled with carrier payment efficiencies, mainly in the U. S. Delivery ANR take rate was 12.7%. 240 basis points year over year and up 100 and 40 basis points quarter over quarter due to overall improvement in basket sizes and rationalization of incentive spend. Additionally, we realized the benefit from exiting India earlier this year and are seeing an additional 80 basis points benefit from business model changes in some countries that reclassify certain payments and incentives as cost of revenue. Delivery adjusted EBITDA was a loss of 2 $2,000,000 or negative 26.2 percent of ANR. That represents an 81000000 dollars 33% point quarter over quarter improvement, respectively. Onto Freight, which grew AMR to $211,000,000 and adjusted EBITDA was a loss of $49,000,000. We are pleased with the progress in our freight business as we continue to invest in technology to drive efficiency in the logistics industry. Through recent partnerships with Oracle and Bluejay, our real time pricing and booking APIs now integrated into all major TMS providers, allowing shippers to create a more resilient supply chain in response to COVID and generating 200% quarter over quarter API revenue growth. Our machine learning algorithms enable more loads to be booked by carriers as bundles, reducing MP miles and improving utilization. On to ATG and other technology programs, the adjusted EBITDA loss for the quarter was $91,000,000. Following a brief period of simulation only development, We are pleased that Uber ATG restarted test track and public road operations for self driving vehicles in Pittsburgh this quarter after implementing a series of measures consistent with expert guidance primarily a jump, which we divested to Lime in May. Lime is now available through the Uber app in 50 cities, and Lime recently won operating permits in Key City, like tariffs, Chicago, and Denver. After winding down our jump operations this quarter, we are no longer reporting this segment. In Q2 2020, corporate G and A and platform R and D of $492,000,000, which represents the G and A and R and D not allocated to one of our segments. Decreased 21% due primarily to the layoffs we announced in Metty, as well as lower accrued taxes associated with the decline in mobility. As mobility rebalance Q3, we expect to see some absolute dollars grow modestly quarter on quarter. In terms of liquidity, we ended the quarter with approximately $7,800,000,000, an unrestricted cash, cash equivalents and short term investments, enacted over $2,000,000,000 from our revolver, providing us with ample liquidity to withstand the recovery of hedged. Given the unique circumstances affecting our business in Q2, I'll provide a few context around our expectations for Q3 performance. We expect a mobility ANR take rate of 22% to 24%. As mobility recovers from the lows Q2, we are back to strategically investing in the business, including some incentives as drivers return to the platform. Where we land within this range will largely depend on slope of the recovery in the U. S relative to the rest of the world and the resulting business mix. Given deliveries, large margin improvement quarter over quarter, we expect Eats adjusted EBITDA half dollars losses in Q3 to be in line with Q2. We expect adjusted EBITDA margins continue to improve in Q4. We expect stock based compensation in each of Q3 and Q4 to be $200,000,000 to $250,000,000 after a decline in Q2 due to May's reductions in force All in all, despite the headwinds that COVID-nineteen is created for our business, we have a mobility business that still achieved profitability on adjusted EBITDA basis despite being down significantly in the quarter. We have a delivery business that is quickly improving on all respects, both on the top line and on an adjusted EBITDA margin basis. We took decisive action on costs across the entire company, removing over $1,000,000,000 in annualized costs, including reducing the corporate G and A and platform R and D, by over $150,000,000 quarter over quarter, and we have a strong balance sheet to weather at bumpy recovery. All this taken together gives us questions. Operator, can we please take And your first question comes from the line of Ross Sandler with Barclays. Hey guys, just a question on the the food business. So I think there's been a lot of debate in the industry as to whether, or not pure play delivery companies like yours can turn a profit. And thanks for the additional details in those slides. Looks like that's happening in France and Belgium, but not yet anywhere else. So I guess what's what are you doing in those two markets that is allowing for that profitability curve to move up and where do we stand on that curve in the U. S? And Nelson, you said it's going to be improved in 4Q. So what from a timing perspective, when should we expect the, the food side of the business to get to that breakeven? Yes, Ross. As far as the debate goes, we stand firmly on the belief that pure play delivery companies can and will be profitable, and we think it's a pretty easy answer. Like, we don't think that debate is worthwhile, so to speak. It's only a question of when and it's only a question of what those long term margins will be We have laid out a long term margin profile of 15% of ANR and about 33% of EBITDA. We wouldn't be doing it unless we felt confident there. To be clear, the Belgian is actually one of our smaller countries internationally. And we had said that we're profitable in 2 of our top 5 international countries and there are a number of other countries that we are also profitable in. But we also want to make the point with investors that were profitable in countries that count. So it's not France and Belgium, it's other countries. And listen, I think as far as what we're doing, it's a combination of factors. The revenue margins are healthy. You've got a business that is either in CP1 CP2, so that you can get real liquidity on the delivery side in the marketplaces and can bring cost per transaction down. And in many of those markets, we have a very big eater base so that we don't need to lead into new as a percentage of our overall ear base, quite as much as Westin and Japan, that's growing at 304 percent where just, you know, we've got less than 5% of restaurants signed up where you're really leading into new leaders and new reps as well. But when we look from a structural basis of the margins of the business, you fast forward a couple of years from now, we think we will be profitable in the vast majority of the countries in which we operate. If we're not profitable, it's specifically because we're trying to achieve something strategically, whether it's a growth target or we're trying to expand the number of categories, that we're in, etcetera. So We land firmly on the one side of the debate and we have a lot of data internally and very confidence in the teams to, to win that debate on hand. Could we get next question? And your next question comes from the line of Eric Sheridan with UBS. Taking the question. Maybe 2, if I can. 1st, in the parts of the world where rides has beginning to cover. Curious if you give us any granularity on whether the market inefficiencies are coming through in the business. In which case, maybe the incremental ride is more profitable than it was in a pre COVID world either due to the competitive intensity or some of the changes you've made in the business. And then the parts of the world where you have the Eats asset, and the rides business? How is some of the cross marketing efforts gone to bring people into the east side of the portfolio and generate a higher LTV of those users. Thanks so much. Hi, Eric. Is this supposed to generalize every single market is different and unique based on based on the competitive factors. That said, the actions that we took in Q1, Q2 on the cost side we believe have structurally improved the profitability of our mobility business. So all things being equal, you know, we talked about in January for the 1st 2 months, our mobility business had a 30 plus percent EBITDA margin. Those during those months, the mobility business would actually deliver a higher EBITDA margin, even that 30% But when we look at the competitive landscape, every single country is different, there are some countries where we're leaning in to include driver supply. There are some countries working competitors are leaning in as well. But I, but generally when we look at our when we look at our profit profile coming out of the crisis, we see it as constructive overall as it relates to the whole portfolio. As far as the cross marketing with Ethos as gauntlets. And I think the story of each tells hotel, which is we've basically taken this business from single digit 1,000,000,000 to $30,000,000,000 run rate. It's all been organic. It has been on top of the mobility platform that we've had. It's a technical platform. It's an operations platform and it's also brand that we built off of. We did mention in the lab quarter that we've seen increasing cost dispatch rate between our, ride driver, so to speak. Who are moving over to delivering for each. We especially see that in markets that have more of a suburban profile and those cross dispatch percentages remain elevated Although as we see the mobility business come back, kind of you're seeing more of our drivers coming back and driving just just on mobility. So the cross dispatches, it's the magic on the supply side. And then on the demand side, new leader acquisition remains very healthy. The number of that we have per month remains healthy and LTV is increasing actually pretty significantly because basket sizes are up number of orders per eater are up and retention rates are up. So when we put the combination of all three of those, higher basket size, higher retention, higher number of order per eater, and then you've seen our revenue margins come up. Actually all four of those factors points to a much, much significantly increased LTV on an either basis. So like every single one of those trends is healthy. And we haven't seen any signs of slackening or weakening on any of those trends. Thanks so much, Darr. Can we get our next question? And Brian Nowak, your line is open. Great. Thanks for taking my questions. I have 2. The first one, Dara, on delivery of the service, moving beyond Eats and people. I'm curious to hear about some of the 1 or 2 of the key strategic steps and invest sense that you think of being the most important to overcome that you think are really going to help determine the timing of that business scaling and sort of your timing of when you can really realize that opportunity of delivery as a service And then the second one on Eats, just so we can sort of understand the underlying health of this business, any help on how fast the number of eaters or into the third quarter? Thanks. Sure, Brian. As far as the kind of the strategic pillars that we need in order to expand into adjacent categories. It really is about supply and demand. So on the supply side, now we have over 10,000 partners, who have partnered up with us These are grocery stores, marketplace, essential stores, etcetera. You first have to establish the supply into the marketplace. And frankly, with the environment being what it is with home delivery just becoming an everyday use case for every single category, we're having, we're not having a problem of building out the supply on a local basis. Once you build up the supply, then you've got to build up the demand, And that's really where, consumer habits come into play. And consumer habits are actually difficult change. So we are merchandising these new categories on the app in different ways. We have actually pretty useful experience on the mobility app where we have been upselling, you know, what we call RDE riders to eaters. So we are having some experience as to how do you introduce a new product to an audience without cannibalizing that audience. We've been doing it for more than a year on the ride to each side. So we're going to use the same exact experience on the each path in order to introduce eaters into the new categories. So you might see some, some, services that allow you to take grocery as a separate category. You'll see grocery appearing as a new category on the RISE app You'll also see essentials, etc show up in the flow essentially, as someone searches food in their neighborhood on the app. So there are multiple, multiple ways in which we're starting to introduce this new category in order to make sure that an eater who comes to eat finds the food that he or she is looking for, but also realizes, oh, wow, look, I can get pharmacy. I can create groceries. I can get every day essentials in 30, 40 minutes, with this app, and it's a very differentiated use case from what's available elsewhere. It'll take time, but I think you've seen the evidence of our moving from rides to each building or to each business we're going to use the same exact learning, to build the adjacent categories. Now are also acquiring the majority of Corner Shaw, which has been grocery, which has been focused purely on grocery, has great entrepreneurial team has built a great business in Latin America moving over all of those learnings because they're unique learnings in terms of thinking and tackling etcetera, getting a team that's solely focused on groceries. So you already have a best of breed solution and then introducing that best of breed solution to the millions of riders and eaters that we have. Is a great shortcut that was made possible as part of that acquisition. Nelson, do you want to answer the second question as far as growth trends? Yes, sure. So in terms of the growth trends, our MAPCs were up 70% in the second quarter, year over year, accelerating in July. The new eaters in the 2nd quarter were up over 50%. We're seeing double digit increases in basket size. And if you think about stay at home orders, We are one of the reasons that's driving our cake rate improvement is just higher basket sizes. And so we are seeing good trends and seeing good trends even in July. Great. Thanks. Next question comes from the line of Mark Mahaney with RBC. And the recovery that you're seeing in those. I saw that slide you had about work to commute social airport in Hong Kong, New Zealand, another market you think that's generally representative what you could see? And I guess I want to know what I'm trying to get at is, as we go a structural change in work from home. There's the possibility that we will just have fewer work commutes structurally going forwards. But So just comment on that that addressing that risk that that part of your business is just going to be structurally under pressure for the next couple of years as we just commute And then what data you've seen so far that out of support server feed status suggests that commute rides can come back quickly. Thanks. Yes, Mark. We've been desperately looking for trends to identify ways in which the future would be different from the past. And frankly, we haven't come up with any. So Workday is back. Workday commute is back. Workday commute and a couple of these markets, Hong Kong, New Zealand, Sweden, is already was already at certain points above kind of pre COVID highs. So, why the hypothesis of stay at home is a strong one. It's especially strong in tech corridors. The reality that we're seeing is that app cities open up, then, people get back to work, and that's the only pattern that we can discern at this point. We talked about travel continuing to de week, although even travel in France, airport trips are looking like they're bouncing back up. We'll be watching this closely. Obviously, it'll be very interesting for us to see if people aren't going to commute as much as they did in the past. My belief, however, is that if they move from a big city to smaller city, well, we're going to expand into the small city. And if they don't go to work, people will kind of get out of their house. And Uber is going to be a consistent utility, a consistent way of folks to have access to mobility without having to pay 1000 of dollars for a car and will be kind of an increasing and improving use case in people's lives. It may change the exact use cases by place but we haven't seen any signs now, that there would be any kind of permanent damage to the business I'd say on the contrary based on some markets that have come back and have opened up, we've seen the business bounce back. You're welcome. Next question. And your next question is from the line of Justin Post with Bank of America. I guess Nelson, maybe you could help us understand the difference between the profitable delivery markets and the overall business with margins down 26%. What are the big differences competitively or is it just maturity of the markets? And then second, maybe you could give us a California, this may be for Dara, AB5 legislation and court update and, kind of how you're thinking about the ballot initiative rollout and advertising and how you think that rolls out here over the next 3 months? Thank you. So Justin, I'll start and then Dara will do the second question. Really, we've seen improvement across the overall delivery space. And you heard it in our upfront comments and you see in the press release. And if you think about what are the markets that are doing quite well, We have a very strong market position. It's a market that does have a very high propensity of 3P business. And the take rates are strong. And it's really that straightforward, and we're doing a better job in terms of operating the business and getting better current efficiency. And so we are seeing that play out. And we're even hearing in India, which you know in past calls, we would call because of how challenging it is, even in the market like India today, the unit economics are improving as we see through our investment in Zomato. So I think what you're seeing right now, at least in this COVID world is, the margins are improving. There's more reliance. There's more stay at home. There's more small businesses, and it's really is driving better unit economics because of the basket sizes, improving the take rates. And again, we believe that as we continue to do it, we will lean into certain marketplaces. We try to grow and take advantage of the growth and you're seeing the tremendous growth we're having. But we are confident in terms of our profitability path in this business over the next couple of years. And then as far as, AB5 Prop 22, look, and I think the point of Prop 22 for us is that we do think that it there's a better way. The vast majority of drivers who drive either on our platform or on Lyft or couriers, etcetera do so on a part time basis, do not want to be employees and value the flexibility that they get using our our platforms. And what we've offered with Prop 22, we think is the best of both worlds, which is the flexibility that the vast majority of drivers want to use, platforms like ours along with protection social veterans, weight protections, health care, etcetera, which we think now is an expectation of study and it's it's, completely appropriate to this new way of working. So when we look at profitability, it makes all the sense in the world. It is actually what drivers want. We got more than 75,000 drivers that are already supporting the campaign. And again, on a 4 to 1 margin, drivers prefer to remain independent. So we think it makes all the sense in the world. Now the ballot initiative is moving. We think we've got a great message. We've got terrific supporters in the community as well. Who actually care about drivers versus labor unions and politics. They actually are taking into account the wants and needs of drivers and safety, our ridership safety prices availability of mobility to a wide swath of the cities. And we, we think it's a better position and we're confident in as far as the Bauer campaign goes. In the courts, obviously, it's going to be up to the judiciary to determine, whether 85 applies to us, we have made significant changes to our business model. Riders pay drivers directly. Drivers have a full understanding of the ride before they make a decision accept a ride or not accept a ride. Drivers can set their own price. We even have a product. It's subscription product with drivers where they can buy a subscription from us and secure a number of leads. And if essentially that driver then secured leads and gets 100% of the payment of any ride that they provide and they can accept rides or not accept rides is completely up to them. We're essentially out of the transaction. We're a subscriber or a subscription provider of leads. To those drivers. So, we think we've got a great road as it relates to Prop 22. And we also think that we have a very strong position, which is based on facts and based on how we've changed our product in the courts as well and time will tell whether or not the legislature or the voters and the court agreed with our position. Great. Thank you. Maybe one follow-up. On the California market share situation, has some of the changes and I know we talked about it in the last call impacted maybe U. S. Market share in the last quarter? We think that some of the changes were a headwind as it relates to our market share in California. For example, acceptance rates for drivers went down in certain circumstances that the driver didn't want to pick someone up or drop someone up off at a certain area. So we do think that our category position in California did get hurt as up of the changes. Now volumes are down. So it didn't have a significant effect on our overall trip volume. When we look at our category position on a nationwide basis in the U S, it's pretty flat since since January, no significant change. And your next question comes from Arndham Research. A couple of questions. First of all, Can you give us a sense of your outlook for the competitive environment in the U. S. Market as you bring Postmates on board and ramp up new services, but also seeing competitors that may have quite a bit of capital to deploy in aggressive incentives in the States. And I'm just curious about your comment about resuming incentives in rides. And how do you see the incentive environment in the U. S. Playing out over the next, over the next few years? And then I'll give a follow-up after that. Thank you. Hi Richard. I'll start with the rise and I'll finish on delivery. Look, I think on the rise market, what we've seen, the pattern that we've seen and and as it relates to competitive environment is, ourselves, our largest competitor has transitioned from focusing on incentives to buy or establish share or category position. Focusing on service and focusing on brands, focusing on technology to establish category position. We think that's healthy competition, and we like our position as it relates to brand and the service and what kind of a service our technology can deliver. I don't expect it to change. I do think that in the early parts of the recovery in the U. S, We are seeing less drivers on balance come back onto the platform than elsewhere in the world. That could have something to do with unemployment chunks. So we will be putting some incentives into the market. Nothing pops about revenue margin trends in Q3 versus Q2 in the mobility segment, that's because we intend to lean in a little bit to make sure that we have kind of the right kind of liquidity in the U. S. Market outside of the U. S. Competitive position, again, there are certain flare ups, but we're very confident and overall, we see our mobility profitability in Q1, even in a very tough quarter. We think our profitability, we think our profitability profile will improve in Q2, Q3, Q4. We don't see or sorry, Q3, Q4. We don't see any change there. As far as the delivery settings goes, within the U. S. Is a very competitive market. Obviously, you've got DoorDash, you've got Grubhub, But then you've got Amazon in the marketplace. You've got grocery players, etcetera. This is a broad market. We don't define it as just food. As I said in my prepared remarks, we're really thinking about overall local commerce, and we see lots of competition but also we see a very large category, a historic kind of demand wave behind us And we think within a competitive environment, we can have constructive margin profiles going forward. Okay, thanks. And then just a quick follow-up on that. I mean, just looking at excess driver incentives, they went off a bit this quarter and And even though obviously you had a very, strong revenue growth, can you give us a reflection of the way you're thinking about excess driver incentive for low value local deliveries and balancing that with the ability to match those deliveries and still have them available in a short time frame. Apologies for the job parking in the background. No worries. Nothing on top of that. Yes, sure. So look, I think that, as you know, you saw from the top line our top line grew tremendously. You saw me go through the statistics before. So it's not surprising on an absolute basis you're going to see that number go up. We are doing a better job in terms of, courier efficiency in other parts of the country. Some of them are a little bit business model So there have been a few countries where we've gone onshore and have seen the benefit of that in our courier efficiency. We will continue to focus on driving out and building the business. We don't manage the business for the next delivery. And we are trying to work with our tech teams to continue to allow us to batch more efficiently. But ultimately, we want to make sure we provide the best experience we can, for the, for the end users. So, you know, it's you'll see us continue to innovate continue to work on it. It is an area that, as we looked at Postmates, they're actually they do a very, very good job of. It's something that when we looked at what they were doing. It's something that we think they do very well. And so I think you'll see us continue to do a better job in terms of optimizing both batching and continuing to, career efficiency. And, Richard, sometimes when we see a significant dislocation, in demand. And as a dislocation that was positive, when COVID happened, we saw huge spikes in demand in many, many markets, we just had difficulty catching up in terms of couriers available and the dependability of the network. So in those situations, sometimes we will take up incentive to make up for the dislocation then the marketplace tends to start to, get into some kind of equilibrium and then you can start taking incentive down. So when we look at career incentives, cost per transaction, now that we are more now that we see more of an equilibrium, now that more restaurants are joining our service, so that we can batch more, we see cost of courier kind of moving in a constructive direction. Good. Thank you. You're welcome. Next question. And your next question comes from the Great. Thank you. You guys mentioned hitting profitability sometime in 2021. So I'm just curious to hear What do you need to see to get comfortable in actually calling a quarter? Is it faster cadence of the ride recovery or is it narrowing losses on the east side? And then secondly, could you talk a little bit about your restaurant mix? How sticky have the SMB's restaurant been on your platform during the recent reopening? And relatedly, how should we think about delivery revenue margin for the next couple of quarters? Thank you. Okay. So I'll start and then let's start with the back half of that question. So in terms of our path to profitability and our confidence, it is a number of different things. We believe we have enough things at our disposal. You saw us take sides of action in the second quarter, you saw it narrow our focus as a company in terms of our core businesses. At the end of the day, the single biggest driver of what quarter next year is really going to be on the COVID recovery and its impact on our mobility business. And so we have different scenarios out there depending on what outcome happens in terms of does the market recover? We're going to stay where it is today, which is roughly down 50 does it actually start improving? Let's say it's down 25. Does it actually get that hooked down? Or does it actually get back to 2019? And depending on where that recovery comes, that will really dictate the timing of 'twenty one. And so as we get a little bit more visibility, it seems like, particularly here in the U S, things have only gotten murph here, and not clearer over the past few weeks here. But as that comes, we'll have a better view in terms of which quarter we think will get profitability. We are going to continue to build out in approve the economics of the delivery business. We will continue to invest in it, but we are going to continue to improve the investment there. And then you saw us take the decisive cost actions. So again, we will get a better sense as we have a better sense on the COVID recovery. Yes. And as far as the, the restaurant stickiness, so we did see some restaurant churn in April. And frankly, that was because, some restaurants went through incredibly, unfortunately, some of it went out of business. Or closed essentially. Since then, when you look at May, June, July, we have seen restaurant retention rates that have been very, very high, all around the world, really a historical high. I think that we've been, you know, just a much, much higher percentage of our restaurants business. You could see the dollars in gross bookings that we do in restaurants has gone up significantly on a year on year basis. We're introducing tools that restaurants or can use, whether they want to launch their own site, We've introduced kind of notifications for restaurant managers so that they can, if an order comes in, that is an accepted, etcetera, they know that there's more business out there for them. So the engagement that we have with our restaurants has gone up and as a result of the stickiness of our services with our restaurant is really close to all time highs, if not at all time highs. Was there a third question that you asked that we missed one? Yes. It was more along the lines of the revenue margin for the delivery business over the next couple of quarters, just given the favorable mix shift to the I think the restaurants? Yeah, I think that, you know, we don't want to take quarter, quarter to quarter, but you've seen our take rates improve, pretty consistently. We think that the take rate path is a positive path. So we see upside as it relates to our take rate. We talk about net revenue margin, long term revenue margins of 15% for delivery business. And we're confident we can achieve those margins and potentially higher margins, going forward. You should note that Q4 from a seasonality basis has it kind of pressurized on take rates. So on a year on year basis, you see kind of Q4 over Q4 year on year, the trends are going to be, should be positive. But from Q3 to Q4, there's usually some seasonality in Q4 as it relates to revenue margins. Next question. Hello, operator. Could you take the last question, please? Looks like we're we're missing the last question. Alright, everyone. Thank you very much for joining us in Q2. It was a tough quarter. But I am just incredibly proud of how the teams executed. I think that we pivoted in a big way We took some tough actions as it relates to costs. We said to buy this some dear, dear colleagues of ours. But we have secured the path forward. And while we can't predict the road to recovery, we've got a business that is just moving and an incredibly positive direction as it relates to delivery. And on the mobility side, we are seeing the bounce back where countries are bouncing back. I think we've proven to you again and again that we can deliver and that when cities open up, Uber opens up, and we're very hopeful of what we see going forward within the context of a very, very tough environment. It has been, this hopeful look forward is only possible because of incredibly hard work of our employees. And the drivers and couriers who are out there, on the front line. So many, many thanks to everyone involved and thank you everyone for joining.