Earnings Call: Q1 2020

May 7, 2020

Good afternoon, everyone, and thank you for calling today's Uber Technologies Q1 2020 earnings conference call. I will now turn the call over to our first speaker, Emily Reuter with Investor Relations. Ma'am, please go ahead. Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies first quarter 2020 earnings presentation. On the call today, we have Dara Casa Shahhi and Nelson Shea. Also have Kent Scofield, 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.com. I'll 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 believe, expect, intend, and may. 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's Discussion And Analysis of Financial Conditions, and results of 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 filed with the SEC. Following prepared remarks today, we will open the call for 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. Thanks, Emily, and thank you all for joining us today. It's been 7 weeks since I updated you last the state of our business. In that time, there have been some hopeful signs. CDs are beginning to open up or at the very least plan for recovery, early but promising results in clinical trials for potential treatments and vaccines and perhaps most inspiring law global solidarity in support of those on the front lines, but there remains a lot unknown. Clear that the city, states and countries will take action to reopen different speeds and in different ways, and there's a little consensus over the right way to do it. Given this backdrop, I want to tell you ally managing Uber, both through this crisis and for the long term. My objective is based on the old when great Wayne Gretzky quote, skate to where the puck is going, not to where it's been. For Uber, that means tight focus in 3 key areas. First, while we have a very strong balance sheet, it's my job to ensure that remains the case, regardless of how fast or slow the recovery is. Accordingly, we're taking a hard look at our overall cost structure and our other bets to ensure our core business of rides and Eats emerges stronger than ever. We significantly reduced our marketing incentive spend and deferred real estate CapEx for planned offices in Chicago, Dallas and Mexico City. Kareem, our wholly owned subsidiary in the Middle East, took the difficult step of reducing its workforce by 31%. Yesterday, consistent with lower trip volumes and our hiring freeze, we announced a reduction in our customer support and recruiting teams, by more than 3700 employees. In this morning, we announced that we're merging our jump unit into line. With this deal, Uber customers will still have access to bikes and scooters through our app, resulting in an annual EBITDA savings of $160,000,000 in addition meaningful CapEx savings. Altogether, the actions we've taken and the actions we intend to take in the near future will result and a reduction of more than $1,000,000,000 in annualized fixed costs versus our Q4 plan. Reaching profitability as soon as possible remains a strategic priority for us. We believe that disruption caused by COVID 19 will impact our timeline by a matter of quarters and not years. 2nd, at a time when our Ride business is now significantly due to shelter in place, our Eats business is surging. We've seen an enormous acceleration in demand since mid March, with 89% year over year gross bookings growth in April, excluding India. And just last week, each crossed the $25,000,000,000 gross bookings annual run rate. Additionally, there's been a tremendous increase in restaurant sign ups leading up to rapid improvement in selection in major markets like the U. S. As well as behavioral shifts, but the willingness of all the part of fine dining establishments to sign up for delivery. We believe these aggressively only in markets where we're confident we can establish or defend a number 1 or number 2 position. Consistent with that strategy on Monday, we announced equalize it 8 countries. This move will allow us to redouble our efforts in markets with larger long term potential and higher returns like the U. S. Improving each margin and cost structure over time, just as we did with rides, remains a key priority and we're seeing improvements due to larger order sizes, improved career efficiency and more efficient marketing and customer acquisition. Finally, I want to talk about what we're seeing in a Ride business today, and I won't sugarcoat it. COVID-nineteen has had a dramatic impact on rides with the business down globally around 80% in April. Still, there's some green shoots driving restraint optimism. We've seen week on week growth globally for the past 3 weeks. This week is tracking to be our 4th consecutive week of growth. Last week, we saw a 9% trip growth and 12% gross bookings growth globally week on week. We believe that US is off the bottom. US gross bookings were up last week by 12% overall week on week, including New York City up 14% San Francisco, up 8%, Los Angeles up 10% and Chicago up 11%. Perhaps more interestingly, gross bookings in large cities across Georgia and Texas, these are two states that have started opening up significantly, are up substantially from the bond at 43% 50%, respectively. Hong Kong is back to 70% of pre crisis gross bookings levels. And in India, we began operating again in designated green and orange zones, which account for more than 80% of the country's 7 33 districts. In France, a survey of riders who are active before COVID shows 2 thirds expect to take their next Uber ride within a month 90% expected to do the same in less than 3 minimums and 98% of all riders say they will take a trip against adjusting pre COVID usage will build back steadily. Nevertheless, it's very early days. Rx is that the recovery will vary geographically and will be nonlinear, meaning we'll see some markets or recovery, while others temporarily retreat. As the only truly scaled global player, we think this represents an advantage, both in terms of revenue coming in as well as operational insights we can apply across markets. Today, we've seen that the rebound is led by weekday not to 5 trips, including commute use cases. For reference, in 2019, 80% of our gross bookings were delivered from trips in a user's home city, meaning people traveled around their own communities, and 95% from trips in a user's home country. We expect that a recovery led primarily by commute trips will open up exciting new prospects for Uber for business, as companies look to move their employees to and from offices as well as partnership opportunities with transit agencies to move essential workers. We're aggressively pursuing both. And already working with MTA in New York to do the latter. Now a bit more on our Q1 performance. Our Ride's business experienced strong momentum through February with year over year gross bookings growth of nearly 20% for the 2 month period, consistent with Q4 2019. As the lockdowns began to affect our business in mid March, we experienced trip and gross bookings declines of nearly 40%. And despite this Sun deterioration, we're able to maintain strong Q1 take rate of 22.8 percent and RISE adjusted EBITDA margin of 23.5 percent of adjusted net revenue clearly demonstrating the variable cost structure of our rides business. Our rides focus has now turned to recovery, specifically on providing safe, experience for drivers and riders as they start to move around their communities again. And as we publicly confirmed several days ago, We're working through plans to require drivers and riders to wear masks or face coverings when using Uber in certain countries, including the U. S. As a category leader, we intend to continue to set the standard for safety moving forward. As Arrive's business recovers, we believe we have a structural advantage for a number of reasons. Rides only players have been disproportionately impacted. While our ride bookings were down 80% in April, our total company is only off about 40% helped significantly by Eats. Eats has also allowed us to maintain high engagement with our existing customers, to bring in new customers onto our platform. This positions us to have a faster recovery than rides only players. We also have a profitable ride business globally with many non U. S. Markets that are higher margin allowing us to cross subsidize as necessary. Our marketplace will also enter recovery from a position of strength since we have a larger rider and driver base. Poorly many drivers have bet their time on Uber during this period because we've been able to offer them an alternative source of work in food delivery. Finally, we expect our shared rides will be less important in the near term. This was historically sweet spot for our primary competitor in the U. S. With around a 50% category position on shared routes. Now, turning to Eats, which performed extremely well in Q1. Generating $4,700,000,000 gross bookings, up 54% year on year and accelerating net revenue to 124% growth year on year, while expanding take rate to 11.3 percent and significantly reducing EBITDA loss to $313,000,000. In addition to our core East product, we're seeing strong demand for grocery and convenience items. Given that, we've accelerated our plans, launching partnerships with supermarket chains, convenience stores around the world, allowing them to sell a limited menu of everyday essentials via our restaurant platform. From early March levels, grocery and convenience gross bookings increased 117% over the same period, of store funds increased 34%, including Care4, 1 of Europe's largest supermarket chains. Finally, in the next few months, we expect to close with operations in Chile, Mexico, Brazil, as well as Toronto. Given the expected stickiness of grocery post COVID, and our footprint in LatAm, we look forward to closing this transaction as soon and creating an integrated product across the Partnership, Uber and Uber Eats app. While no one could have predicted incredibly proud of the quick and decisive action our team has taken to respond to the ever changing environment. And now over to Nelson for more details on the numbers. Thanks, Dara. Now on to the GAAP results for Q1 2020. With comparisons. Our GAAP revenue of $3,500,000,000 was up 14%. GAAP costs to revenues excluding D and A of 1,800,000,000 decreased to 50% from 54 percent of revenue in Q1 of twenty nineteen. GAAP EPS was a loss of $1.70 and compares to a loss of $2.23 in Q1 of 2019. For the remainder of the call, unless otherwise noted, I will discuss key operational measures, excluding pro form a adjustments. Our total global trips of $1,700,000,000 grew 7%. Global Chips were driven primarily by growth in Eats, particularly in EMEA and Latin America. MAPCs were $103,000,000, up 11%. As a reminder, our MAPCs are calculated as an average during the 3 months of the quarter and March was heavily impacted by the pandemic. Total company gross bookings of $15,800,000,000 grew 8% or 10% on a constant currency basis. Adjusted net revenue, percent of gross bookings, up 180 basis points as both Rides and Eats improved take rates. Non GAAP cost of revenues, excluding D and A decreased 46% from 50% of ANR. Insurance and payments as a percent of ANR improved quarter over quarter year over year. Turning now to non GAAP operating expenses. Operations and support decreased year over year to 15% from 16% of adjusted net revenue. Reflecting continued ride support efficiency improvements, partially offset by a mix shift to Eats, where we are making progress automating customer support, but where contact rates remained higher than rides. Sales and marketing decreased to 26% from 36% of adjusted net revenue versus Q1 2019, marketing and promotion spend, particularly in rides. R and D remains flat. G and A increased to ATNR versus the year ago quarter. Quarter over quarter, our spend remained relatively flat, but increased as a percentage of adjusted net revenue 2019. Our Q1s of $612,000,000 or $257,000,000 improvement year over year. RISE gross bookings of $10,900,000,000 declined led by the U. S, but due to the COVID-nineteen impacts taking hold in March, offset by positive growth in Latin America and EMEA and grew 6% on a constant currency basis, the take rate of 22 point year over year and quarter over quarter due to rationalization of incentives and high amounts of January February. RISE adjusted EBITDA of $581,000,000 or 23 in the months January February, RISE producing a record 30% adjusted EBITDA margin. Each gross bookings of $4,700,000,000 grew 54% on a constant currency basis, driven by continued tailwinds from stay at home orders in the U. S. And international markets. Eeth ANR of $527,000,000, up 124% on a constant currency basis due to a mix shift towards small and medium sized restaurants driving higher basket sizes, coupled with courier payment efficiencies, mainly in the U. S. Excluding East India, which we divested to Zomato in January of this year, each take rate was 11.6%. This represents a significant 150 basis point improvement quarter on quarter. Which puts us well on our path to achieving our 15% long term take rate target. Importantly, we are confident these take rate improvements are structural improvements. Each adjusted EBITDA loss was $313,000,000 or negative 59.4 percent of percent or $148,000,000 quarter over quarter improvement. Dollar losses in Q2 to be similar to Q1, which would be another year over year improvement, despite Eads gross bookings likely coming in well above our plan. Furthermore, we expect adjusted EBITDA margins to continue to improve in Q3. Uber Freight grew ANR to $199,000,000 adjusted EBITDA loss of $64,000,000. Our Other Bets segment had ANR of $30,000,000 and an adjusted EBITDA loss of $63,000,000 will move off of our P and L. ATGs adjusted net EBITDA was a loss of $108,000,000. And our Q1 twenty twenty corporate G and A and platform R and D of $645,000,000, which represents the G and A and R and D not allocated to one of our five segments increased 14%. In terms of liquidity, we ended the quarter with approximately $9,000,000,000 in cash and cash equivalents and short term investments with access to over $2,000,000,000 from our revolver. Since the $1,500,000,000 in Kareem and Cornershop commitments for 2020 that we discussed on our March 19 call. We expect 2020 CapEx to be in the $550,000,000 to $600,000,000 range. In January February, we produced a Ride segment EBITDA margin of 30% of ANR, a 22% year over year improvement over Q1 twenty nineteen's margin of 8% by focusing on efficiency and cost risk demonstrated by quarter over quarter segment EBITDA margin improvement of 46% as a percentage of ANR. We will continue to make progress towards our Eats long term profitability targets. And finally, while a lot remains unknown, you can expect us to continue to focus on liquidity, exercise prudent financial discipline, and take actions to maintain our position our strength. Our goal remains the same returning our growth to business and achieving profitability for all of our stakeholders. Which we are now All right. Operator, can we get started? Our first question comes from Brian Nowak with Morgan Stanley. I have 2 Just the first one, Dara, I wanted to kind of pick your brain a little bit on the way you think about new business opportunities and the way the business overall could emerge and change post COVID into 'twenty one. You talked a little about grocery and essentials. Maybe you talked to us about opportunities you see and other investments need to make to really capitalize on those. And then the second one, just around safety for riders and drivers, maybe talk to us about how you think about using technology and innovation to really improve the safety of the rides for everyone? Thanks. Sure, Brian. Absolutely. So in general, as far as new business goes, there is a silver lining to this unbelievably tragic, COVID virus, which is the business that we have, of Eats And the category in general just look like just looks like it is going to be substantial actually increased and some would save on multiples. And we had already signed up, an agreement to buy the majority of Corner Shop, which is a very big grocery player, in LatAm as well. And so we know the grocery segment. We've got a great team from Gourner shop who's working on grocery. And essentially, we're going to bring Gourner shop in when that deal closes, And hopefully, give the corner shop audience the significant kind of, of exposure that, our rides app and our ETF brings on a global basis. We haven't called it, you can imagine, the opportunity goes, the new opportunities aren't a stretch. Acceleration of our Q1 growth rates, which actually beat our own internal plans and Q2 growth rates are submitted. With grocery, we've already started with some essentials as it relates to eat. We've got grocery coming in. And then we're developing some new certain, some new services, such as Uber Connect and Uber Direct, where retailers can send packages and also we can send P2B packages as well. When you put this all together, actually the core business and the opportunities in the core business, and we don't have to look far for very substantial continuing growth going forward. That's how we look at it. And then as far as safety providers and drivers go, you know, we have been leaders in safety. Safety has has been an absolute priority at this company, ever since I joined We were leaders in terms of safety providers and drivers previously. And now we're absolutely looking at. It's a combination of logistics and technology. We're shipping millions of PPE and masks, cleaning supplies, etcetera. To our drivers to make sure that that first drive and the second and continuing drives that our riders take are safe and they feel safe. And, we are looking at technologies such as, for example, our selfie technology, where we make sure that the driver who has been, who signed up is the actual driver who's driving, we can use that technology, for example, potentially make sure that the driver is wearing a mask where appropriate. So we're absolutely exploring technology, and you need a combination of technology, logistics, and local know how in order to operate safely at the kind of scale that we do on a global So we absolutely believe we're going to be, the leaders in defining the safety of this platform going forward. Great, thanks. You're welcome. Next question. Thank you. Our next question comes from Justin Post with Bank of America. Can you talk about market share trends for rides in your bigger businesses Obviously, U. S, maybe Mexico and London. What you're seeing there and are there opportunities for you to take some share here in this environment? And then, with travel, I know it's an important topic airport trips. Can you talk about how important they are? Just remind us on bookings and then, how important they are for profitability? Thank you. Sure. In terms of share dynamics and then Nelson will take the airport question. In terms of share dynamics, we did see early on in this year, we made certain adjustments to our model in California to really solidify our position as a platform and solidify our position in terms independent work, our drivers getting more information, the payments going directly to drivers, etcetera. And that did result in some loss and category position in California markets. We haven't seen substantial changes since, and frankly, the business being down so much of data is pretty sparse. In Mexico and the UK, nothing I'd say the share the share in general has been pretty stable. There's lots of competitors out there, multiple competitors in both in the UK and in Mexico, but of promotions, etcetera. We're pretty stable going into COVID. We haven't seen things change significantly during this period. And I think, some of you may have heard our competitors saying in general kind of promotions are down couponing is down. And I think a lot of, competitors are focused more on profitability. So we don't see much remarkable coming out of this crisis, we do think we have an advantage because we are engaged with customers and 1,000,000 and 1,000,000 of eaters today. That engagement is substantial with grocery and other products, we're going to increase that engagement already with our drivers, for example, about 40% of our drivers who were active with rides have a cross dispatch to eat in the month of April, which is an all time high. So the engagement that we have gives us a structural advantage coming back from the crisis without having to spend a bunch of capital buying our way, into category position, so to speak. Nothing. You want to talk about airports? Yeah. So Justin, our airports are are important to us. But as Dara said in his prepared remarks, you know, 80% of our gross bookings are see, delivered from the user's home. So for us, airports are about 15% of our rides growth bookings and about 16% of our rides segment EBITDA So it is important. And we do expect that that recovery will take a little bit longer. Our next question comes from Ross Sandler with Barclays. Sorry, you mentioned that Georgia and Texas cities are up 50% from the bottom. So I assume that means they're 20% of peak now up to 30% of peak. Does that sound right? And how does the curve on the recovery in those open cities look compared to Hong Kong at the same stage? And do you think that is Hong Kong now that they're back to 70% are they taking share from public transportation? Any color on that, will be great. Thank you. Yes, Ross, it's too soon to tell regarding the share from transportation. I'll start with Hong Kong. The recovery is uneven. We've we've had, certain weeks where Hong Kong was down, 40% from peak, 50% from peak. Now it's it's definitely getting better. So, time, so, certainly, the passage of time seems to be pushing trend in the positive direction. I think it's too early to say, whether or not there is share being taken from public transport in talking to many of our you for B customers. They are expressing some consternation at bringing back their employees using public transport. So I'd say from a conversational basis, from, feedback that we're getting, especially from our U4B customers, it does seem like commute is going to be the use case that's going to lead. And I wouldn't be surprised if, if there's some share shift from transit, but it's too early to tell at this point. I will also say that we believe that we can help transit come back. We absolutely believe in partnerships with transit agencies, you've seen us put transit on our app, But more and more, we're offering services to transit, for example, during off hours, between for MTA, between midnight. And I think it's 5 am during hours when it just doesn't make sense to run a transit system and or they might want to clean. So I do think that we can be a part of the solution as to how cities get to move again. I think we'll be one of the early movers, and we're certainly going to look to partner with transit going forward. As far as Georgia and Texas, Nelson, do you know the particulars as to whether what percentage of peak they are? I mean, it's I'd say they're smaller markets, but the trends definitely look better. But, Allison, anything to add there? Yeah. Yeah. No, I don't So I don't know, maybe Ken, Emily, we can follow-up. All right. Next question. Our next question comes from Heath Terry with Goldman Sachs. Dara, obviously, you've made a lot of progress on this commitment, to rationalizing markets where You're not number 1, number 2. Do you have any sense for your competitors that fall into that category? The markets where they're not number 1, number 2, to what degree you're seeing or expect to see sort of similar action action out of out of them. I obviously know you're not in their head, but to the extent that using your gut and your industry knowledge sort of what you expect to see on that front? Any sense of timing that you might have? Yes, Heath, from a macro standpoint, I would say rationalization, both in the rides category and in the food category, has been the name of the game. These all of these competitors have been burning money for a long time. We're really unique in the rides category of scale and that we're global and it rides very, very profitable. Our EBITDA margins were running over 30% as a percentage of ANR in Jan Feb. And I think in the East category, in the food in the food category, you were seeing a bunch of consolidation. There's a bunch of consolidation happening on a global basis. Where bigger players can not only provide better service for restaurants and consumers, but can provide a better service kind of on a on an economic basis that that is sustainable. I do think there's a question, which is this food delivery grocery category just got a lot bigger. There's a ton of new customers coming to this category. What we've seen with the category is the biggest challenge is kind of new customer acquisition, then there's very high frequency, very high satisfaction of the product. So we think there's just kind of this booster in terms of the category. My instinct is that the commercial and the capital, kind of rationalization is still going to continue. But it is a big category and big categories that just got bigger tend to attract some capital. So my instinct is you'll see similar plays from other players. The market seemed to like rationalization. And I think ultimately the market going to drive long term behavior. But the category got bigger and capital chases the category and certainly growth is at a premium right now. So see. It's hard to be absolutely productive. Great. Thanks, John. Really appreciate it. You're welcome. Next question. You. Our next question comes from Doug Anmuth with JP Morgan. Sure, taking the question. Dror, you talked about the 40% of U. S. And Canada first who've caused dispatch to eat in April. How do you ensure their loyalty as you come out of the crisis And then secondly, I just wanted to ask you about your investments in ATG, what you're thinking is there during this time. Thanks. Yes, Doug. The loyalty of both our riders and drivers is based on the service that we provide them. And we want to make sure that our drivers feel safe. And I do think that in the recovery scenario as these countries open up, our platform is going to be an incredibly important platform for people to start earning again. So I think if we bring the volume and we have a structural advantage in that our volume with rides is not only going to come back and we don't know exactly how fast it's going to come back, but it's on the comeback trail. But having Eats just provides a structural advantage. And ultimately, it's about the service that takes care of them in terms of safety, and then its ability to earn again during a time when, the economic damage to a lot of folks in need has been very, very significant. And you also remember that we were consistently 1st and for example, providing our drivers with help if they were diagnosed with COVID or they had to shelter home. So I think we've consistently shown leadership and we're there for them. And, you know, we're not going to stop them from working on any other platform or using any other we're an open platform. But I think if we're consistent, we take care of them and we give them an opportunity to earn, I think we'll be just fine. As far as our ATG investments, listen, I think this is, from a long term standpoint, ATG has always been a long term investment you could hypothesize that some people are going to be are going to feel safer, with a car that, that is driven by a robot than a person. Our job number 1 is to make sure that they that they feel safe with a person driving, but the fundamental ATG technology, it's relevant the market size hasn't changed. That said, in a market like this where capital is the year and we bring discipline to everything that we do, we are asking every part of the company. That includes ATG to make sure that every dollar you spend is a dollar that brings a return, and that's going to include the ATG group as well as other groups. Great. Thank you, Josh. You bet. Next question. Our next question comes from Eric Sheridan with UBS. Taking a question. Maybe a few on E Dara wanted to get your perspective as more supply comes into the Eats business. What you're seeing from a competitive dynamic on either driving demand on the user side and how sort of a more level playing field of supply in some markets is playing out in terms of end market demand. And market share? And then what does that mean for the long term profitability of Eats? Sure, Eric. In terms of supply, We are absolutely improving on the supply front, both on absolute basis and relative to our competitors as well. We've signed up Chipotle. We signed up Shake Shack. We've got Dunkin' on our platform as well. So there are big brands that are coming onto our platform that creates, more demand and the more choice we have, the more restaurants we have available for search, we see conversion going up. So I think on the restaurant supply front, We are making progress. We are not satisfied. We think that there's, significant progress to be made And what's interesting is we're seeing the kind of acceleration in growth rates that we're seeing in April and it continues in May, if anything, it's improving. Despite my belief, and I think the team's belief that we can do better on the supply on the supply front. So if I were to characterize our each business, we're not fully optimized on supply. We're still signing up a ton of restaurants. These restaurants need us. And we want to make sure we're there for them. And right now, the trends in terms of supply look very, very good. Now, I do think that the big brands and the national brands or the global brands are really important elements of our marketplace. I would, make sure folks know that our small and medium restaurants still account for the vast majority of our volume, and are a big part are going to continue to be a big part of our volume going forward. So the big brands are kind of great customer acquisition vehicles. They're terrific food quality. They're safe. They bring a lot of folks in, but small and medium businesses, and restaurants continue to be a significant part of of our business and our growth going forward. In terms of the margins, revenue margins, you've seen the trends and I think we can continue to improve revenue margins. This is about, generally SMBs have higher margins. We are improving our courier efficiencies. The more demand we have kind of the more concentration we can have a market, we can batch more couriers, couriers kind of, carrying more than 1, more than one package, etcetera. And in general, better technology can improve our revenue margin as far as utilization goes as well. So I do think that the take rate improvements that you have seen are going to continue and we're quite confident in that. The only thing I would add is that you can you can hear to see, exit non performing countries, like we did yesterday, this earlier this week, and like we did in India. And so we're gonna continue to optimize and, you know, work part in our capital allocation model. And just to give folks a little more character on SMBs, our SMB gross bookings grew at three times the pace of our non SMB business from February to April. So SMB is growing really, really quickly and our SMB self-service business grew at 70%. Which is like five times the pace of non SMB businesses over the same period. So this is SMB structurally. 1 is we're helping a lot of these restaurants stay in business during incredibly difficult times. So it's like we're doing good, but it's also structurally good for the business going forward. Great. Thanks for all the color. You're welcome. Next question. Thank you. Our next question comes from Mark Schumwick with Bernstein. For taking the question. A couple, if I may. The first, you shared the stat around 40% of drivers being able to move over and support the Eats business. Any color in terms of the demand side and the customers? How many of those Uber ride sharing folks are now adopting trying to eat. And then anything around, cost of acquisition that you could talk about would be great around any discounts offers versus like pre COVID level. How much inbound demand are you seeing would be great. And then for my second question, it's always tough to make headcount reductions. It sounds like a lot of the folks have been in the recruiting and customer service departments. How much of that headcount kind of comes back as demand comes back? And then, are there any incremental efficiencies see here with kind of a new way of doing business? Thank you. Yes, absolutely. As far as demand side, I don't want to disclosed any particulars, but we have been using the rides platform and we're getting more and more effective in using the rides platform to, to cross promote into Eats. You'll see them in some of the designs of our RISE app, which is there, they'll be right up front rise it eats in other categories. For example, grocery could be another category, transit could be another category. So on the product side, we're getting much better. And I say we are in the early innings of continuing to cross promote different kinds of services. This is also going to be possible on Eats. Again, grocery and some of the neighboring services as well. So we have seen substantial pickup, a higher and higher percentage of our RISE customers are using Eats. And I think that we're generally in the early innings there. The one exception I would tell you is there are certain markets in Europe, for example, where restaurants have closed. So restaurant supplies is well down. So on those markets, you don't see as much of the cross pollination. As far as the cost of acquisition trends, go, We're seeing actually pre hopeful trends. There's always a trade off between cost of acquisition and then the amount of volume that you can bring costs. In general, we are happy with our cost of acquisition. We continue to improve our technology there or tracking there. We still think we have improvement ahead of us. And in general, we think we can be in a place where we are pushing for volume at the same customer acquisition costs or less. And be able to improve revenue margins and EBITDA margins overall on our Eats business. It's just we're at a very good place. The teams are executing well. And the technology and the capabilities are getting, are getting better and better. If you look at each, for example, monthly active platform, consumers are up 50% year on year since Q1 of 2019. And I don't think anyone on the team would say that we are doing as well as we can or should on the on the customer acquisition front. Nelson, you want to talk about the headcount, and how much comes from back end or how much comes back as demand comes back? No, no, I would be happy to. So, yes, we did we did make the move. And, as everybody knows, those are tough decisions that have to be made. We do expect that, as business continues to grow, I don't think we will you'll see us adding back at that same level. As you know, the company has been very much focused on efficiency and what we call contactless service. And we've been seeing good marks there. And so you'll see us continue. And then the only other thing I'd want to add is that, you know, we're continuing to look across our business and our platform. For more efficiencies. And so you should make sure that as you get off the call that that you hear that, I think the deal that you saw today that we did with, of Lyme as well, is also a good proxy. The reality is the world has changed, right? And so we don't know when the recovery going to be. We think we're very well positioned today. It's incumbent upon us to make sure we come out of this even stronger and better positioned. It's not lost upon us. We are going to take the actions that we think are necessary, that we continue to strengthen our core rides in each businesses. And there is no there's no sacred cows. And so we are going to look at everything, across the whole platform. And so that is something that is going on right now. All right. Next question. Thank you. Our next question comes from Jason Helfstein with Oppenheimer. I had two questions, I guess. On Eats, it looks like you're coming from a lower take rate than your peers. I I there's probably some mix issues when we look at consolidated. But just talk about what that means, you know, you're kinda coming from low to higher and and a lot of them are going from higher to lower and kind of what that does with your positioning with the restaurants. And then has there been any discussions on, as cities try to deal with social distancing, particularly debt, then cities? Is there things that that that you can do to work with them, etcetera, that that could work out in your favor? Thank you. So I'll take the first one. I think Dara will take the second part of that. So in terms of the margins, it is very difficult to look across the different each companies and compare because as you know, some are many of them are either single geography or just a few. And as you know, we're global. And so we operate in over 50 countries. And so it's very, very difficult. And so as you know, we've been taking the actions to improve our each profitability, including the actions we took earlier this week, took the actions we took in the beginning of the year and we, took our India business and sold it into Zomato. And so, it is very difficult to do that. If you look peer on peer, in this, there are some places in some countries where we are over indexed against some of the large chains. And so that will tend to drive down the take rates versus a competitor that is more SMB. But as you heard from Dara's commentary, we're seeing tremendous growth as we continue to build up our SMB businesses, as well as our customers, as well as even some of the smaller higher end businesses that are are signing up now as a result of COVID-nineteen. And so that really is driving the take rate improvement that we're seeing and that we should continue to expect to see into the second and third quarter. We're seeing this. We're seeing higher basket sizes. We are taking some operational steps on courier efficiency, and this will all translate into us continue to make progress against our longer term Eats target margins. Sara, you want to capture the other part of the question? Yes, absolutely. I think as far as, social distancing and working either with cities or states or countries, we're going to be responsible. We want to be part of the solution. And and not part of the problem. And and you've seen that, for example, with our app, when there was shelter in place, and someone tried to use the Uber app, we'd make sure that they really needed to use the the Uber app. We're now focused much more on TPE, making sure that our drivers have masks, shipping, cleaning supplies, for them to ride as well, because we want everyone to be safe. Riders wearing masks or encouraging them to wear masks, encouraging them to wash hands, etcetera. So we're a very big platform. And as as part of being a big platform, we're going to work with city, states, and our constituencies to make sure that we are helping educate the public, so that we can have a return to kind of the life that we all loved. But also do so in a responsible way. And and we're absolutely gonna be part of that solution. And then as far as transit goes, again, you can see some of the partnerships that we're striking with transit agencies. We are going to be there, step by step. And, to be part again of turning these cities back on, but making sure that we're we're turning them back on in, in a safe way. All right. Next question. Thanks. The extent to which this crisis is catalyzed new business, new businesses opportunities, for Uber and Dara, I think you've talked about this a little bit in the past, but the you've got this network built up and the extent of, you know, expanding it beyond Eats into more, you know, packages and your doing it for essentials and assist the catalyst that breaks out that opportunity for you. Thank you very much. Yeah, Mark, I think in these times of crisis, you have to keep things simple. We have an incredible opportunity. It's not a new opportunity, but it just got a lot bigger. And it's called Eats. And we have rides, which is the globe, the only global player, number 1, and basically everywhere that we operate with margin. So we're going to focus on that core because that core is really, really strong. And we think those 2 together can work incredibly well there is a really interesting opportunity for Uber Eats business to get into, grocery, both organically and with our acquisition of Corner Shop And then with both rides and needs, we are going to absolutely work on package delivery, because we just think it's it's going to be a much bigger part of of retail in general going forward, and we can play our part. So the good news is that the growth opportunity is in the core and we already have global scale in the core and we have great business leaders, great technical leaders in that core as well. And we're going to focus on that right now. Okay. Thank you, Dara. You're welcome. Comes from Boyd Walsmanly with Deutsche Bank. Thanks. I just wanted to just get an update on some of the kind of clavis markets and any progress you made pre COVID? And then is there any change in how you think about those markets coming out of out of COVID? That you can give us an update on? Yes. We were making a strong progress on the cloud as markets. You know, the, the Germany was a, was a great highlight, and very growing at triple digits, essentially. Pre, COVID, Argentina was a very promising market for us. That, that was, that was growing quickly. I'd say that our Clovis markets in general were 80% on a pre COVID basis. There's no reason to think that structurally post COVID. Anything's going to change. I think Germany has done a great job of opening up their market, so to speak. And as these markets open up, We're going to open up with them and we're going to do so in a safe way. Okay. Thank you. You're welcome. Next question. Next question comes from Youssef Squali with SunTrust. Great. Thank you. This is Derek. You've alluded to this in some of your remarks curious if you could comment maybe more specifically on how this new environment changes your positioning with the TFL? Thanks so much. Well, yeah, it means with the TFL. We're, we're going to have our Dane Court, we're confident of the changes that we've made to, to the service. We think that, we are setting a bar for safety. We have been setting a bar for safety. And I think we're improving on our own bar for safety. And now with COVID, we're gonna keep, upping the ante, so to speak, in terms of, in terms of, safety. We have a great partnership with a National Health Service to to help while people are in need of help. It's tough to tell as to whether COVID is going to delay things one way or the other truly changes, the relationship And we are confident of our position, and, and, you know, I think that we'll see we'll, we'll have our day in court and, and we like our chances. Next question. Thank you. We have a question from John Blackledge with Cowen. Great. Thanks. Yes. Two questions. On Eats, do you think the level of growth in April is sustainable as we round through the year? Potentially given people's concerns about eating out and despite a looming bad macro environment. And then on grocery, what the pandemic online grocery demand as years, as you alluded to, Dara, how are you going to address, grocery delivery in the US just given existing platforms and deals they have with large grocers? Thank you. Yes. In terms of the Eats growth and is a sustainable, listen, it's very difficult to predict what's happening in these markets. It certainly does seem to be sustainable over this period. If anything, the trends with Eats are getting better. And the trends that we described in April, were trends during periods in which some big European markets in terms of restaurants, etcetera, were closed. So we're optimistic of trends in the category. And we think that the capability of the team is only improving as well. We're very happy with the execution that we see. So is the category did the category just get much bigger? Yes. Did millions of millions of new customers essentially try out the category? Yes. And are we in, a superior position to be one of those services that they try and then continue to engage with? Yes. So I think we're in a great position, but I think it'd be foolish to try to predict particulars in terms of growth rates. We are optimistic as it relates to Eats. In general, on the grocery side, Corner Shop is, is our big play there. We've announced that acquisition. Corner Shop is quite focused in Latin America. You know, that we have a very big, rides business in Latin America. So Latin America is can be not only a big market, but also high margin market as well. And I think in the U. S, Right now, just the category is so big that we think that there's going to be room for more than one player. And we have very big scale in terms of audience. We're in many of these cities already. So we're able to get started in these cities in a very low cost way versus someone starting up in the category. We saw kind of very, very strong early signs from grocery just with essentials. And I do think it's something that can scale and we can be one of the scale players, but we're going to do so in a careful way. We're not going to buy our way into share we're going to earn our way. And I think we're in a pretty good position to earn our. Thank you. Thank you. You're welcome. Operator, can we have one more question, please? Yes, sir. We have a question from Brian Fitzgerald with Wells Fargo. Thanks guys. So my question is around this. To what degree are you seeing franchises allocate National advertising budget and spend to yourselves in the food delivery industry as a means to to advertise shifting budgets, supporting the medium in the industry. You know, case in point for context, McDonald's requires, I think, 4 or 5% of gross sales to be spent on advertising. So that is something that I think would would subsidize, subsidize you guys and support you guys. So that's my question. Thanks. Yes, Brian, it's a good question. I think in general, the category, it makes a lot of sense. I mean, the national players are, are smart. They're incredible marketers. I mean, they build these incredible brand. And you can expect them to allocate brand to where the growth is. So I would absolutely not be surprised to see a McDonald or, Chipotle or other national brands, focus their advertising more on delivery. I don't think it's a hard sell right now. And and I think that it's going to benefit them and it's going to benefit, the category as well. I do think that for us, advertising in general, on Eats, especially is a pretty interesting category, when I was in the olden days, when I was running Expedia, advertising and travel turned out to be a very fast growing category that, that was incredibly high margin. You've seen leading players like Amazon, that have built product search and then build advertising on top of product search as well. And I think that we've got the same opportunity me with Eats. So when we talk about the revenue margin opportunity for Eats, that's really a revenue margin opportunity for the pure play. And we think that there's an advertising opportunity with Eats as well. Just as you see MCAPS in supermarkets, you know, you could see MCAPS in the Eats Feed, for example. So it's early, but we have seen play run before, and we have an excellent engineering team who can build pretty fast and we're quite optimistic as far as the advertising opportunity inside of the each product. And then eventually it might go to the rides product as well. So with that, I think that's it. I would like to thank everyone for joining us. This is a extraordinary time. So we appreciate the time. And again, I do want to thank, everyone at or all all the employees, I think this has been a very, very tough time, but I think that we, we as a company have risen to the occasion. There's a lot of hard work ahead of us. But, I know that as a company, we're more than up for it. So thank you very much for joining. We'll talk to you, next quarter. And, stay safe. That does conclude the conference call. You may now disconnect.