Good afternoon. My name is Christine, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Uber Technologies, Inc Q1 2019 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star then one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Kent Schofield, head of investor relations, you may begin your conference.
Thank you, Christine, and thank you for joining us today. Welcome to Uber Technologies' Q1 2019 earnings presentation. On the call today, we have Dara Khosrowshahi, CEO, Nelson Chai, CFO, and this is Kent Schofield, Head of Investor Relations. During this call, we will present both the GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, is included in the press release, supplemental slides, and our filings with the SEC, each of which is posted to investor.uber.com. I will remind you that these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call may be deemed to be forward-looking statements. Such statements can be identified by terms such as believe, expect, intend, and may. You should not place undue reliance on forward-looking statements.
Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today, as well as risks and uncertainties, including in the sections under the captions 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in our final perspectives filed with the SEC in connection with our IPO on May 13, 2019. Following prepared remarks today, we will open the call to questions. With that, let me hand it over to Dara.
Kent, thank you. Welcome everyone to our first earnings conference call as a public company. We're very excited. Our IPO earlier this month was an important moment for Uber. It was a culmination of nearly a decade of work to build a network, products, technology, and operational excellence that power our global platform today. It's also the result of more recent changes, including our adoption of world-class governance standards, an update to our cultural values, and a shift towards long-term partnership with cities, regulators, and the millions of people and organizations who use our technology to earn income or grow their business every day. While I'm proud of what we've achieved with the IPO, I've told our team that it is ultimately just one moment in a much longer journey.
We have an even greater duty to create long-term value for our investors, our customers, our employees, and our many stakeholders. We'll do this by making the Uber platform a one-stop shop for the movement of people and powering local commerce around the world at a massive scale, over 700 cities in 63 countries. Today, we're pleased to report another quarter of strong growth, demonstrating the continued success of our platform strategy. Q1 2019 gross bookings grew 34% year-on-year on a reported basis and 41% year-on-year on a constant currency basis, and excluding divestitures, producing an annualized run rate of $59 billion. Our monthly active platform consumers or MAPCs grew an impressive 33% year-on-year to 93 million.
However, those 93 million MAPCs represent only 2% of the population in the 63 countries where we operate our ridesharing products and an even smaller percent of the population in those countries, where they use Uber Eats. We believe our platform model allows us to acquire, engage, and retain customers with a cost as well as efficiency and effectiveness advantage over our rivals, typically monoline competitors. These efforts are just getting started as we penetrate into a $12 trillion total addressable market. Now, onto Q1 2019 platform updates. In ridesharing, Q1 gross bookings grew 22% year-on-year and 29% on a constant currency basis and excluding some divestitures. Some ridesharing highlights.
Part of our commitment to increasing driver engagement and satisfaction, we launched Uber Pro, our driver rewards program, in 15 cities in Q1 and now have expanded across the U.S. Among other things, we're helping drivers to lower their operating costs with gas and car maintenance discounts. We're also providing access to tuition-free college education at Arizona State University Online for qualifying drivers or, if they choose, a member of their family. Meanwhile, we're growing our partnerships with Hertz, Fair, Localiza, and other vehicle suppliers to enable more drivers to use Uber if they don't have access to a vehicle, which is 1 of the biggest inhibitors for potential drivers to earn on our platform. For riders, we've launched Uber Rewards across the U.S. to recognize and reward our most loyal consumers.
Leveraging the breadth of our platform, consumers can earn points using ridesharing and Eats towards benefits that make their everyday Uber experience even better, including price protection for specific routes, priority pickups at airports, and free Eats deliveries. Consumer satisfaction with Uber Rewards has been over 85%. In ridesharing marketplace tech, we implemented a new dispatch optimization model that's able to use a 10x-denser graph that allows us to dramatically increase the potential rider and driver pairs to enable lower ETAs. In the U.S., our gross bookings category position on a dollar basis has been stable at 70 ± 2 percentage points versus our largest competitor since Q1 of 2018. In Q1 of 2019 specifically, our category position was stable at 69%.
We've more recently seen signs of competition becoming more focused on brand and product versus incentives, which is a trend that has continued into Q2 2019, and we think which is a healthy trend for the business. In Latin America, our category position has been stable since the beginning of the year, and we've seen a stabilization of competitive intensity as well. We continue to maintain what we estimate to be a large per-trip efficiency advantage over our largest competitor in the region, and we've improved our competitive response to new rollouts by other players in the market. We're also in the early stages of rolling out Eats in the region, which will allow us to uniquely capitalize on the synergies between the two offerings, as we're the only company in LatAm that offers both Rides and Eats.
Onto our Eats business, which grew 109% year-over-year during Q1 to $3.1 billion in gross bookings and at 117% on a constant currency basis excluding divestitures. This growth is impressive on its own, but even more so that Q1 2019 represents year-over-year growth over Q1 of last year, which is a quarter at which we believe Eats became the largest online meal delivery player outside of China. Our 2018 goal of improved restaurant selection was achieved with 220,000 restaurants on the platform at the end of 2018, we continue to add selection at an aggressive pace. We'll continue to improve restaurant selection, including the launch of self-service sign-up portals, as well as our new aggregator business model that allows restaurants to use their own couriers to deliver to consumers.
In the U.S., we continue to see great extension of our platform into suburban markets that are oftentimes earlier in their engagement cycle with rideshare. We have a strong category position in Uber Eats in Japan, which we think will be a spearhead for our ridesharing business, and we continue to make category position gains in EMEA. Last and certainly not least, we expanded our Starbucks partnership to seven large U.S. cities and now have begun international pilots. A bit about our Other Bets segment, which grew Q1 gross bookings by 230% year-on-year to $132 million. Uber Freight continued to make rapid progress in building our logistics on-demand platform throughout Q1, with growth for the quarter exceeding 200% year-on-year.
More and more large global enterprise shippers are beginning to benefit from Uber Freight's vast carrier network, transparency, real-time pricing, and more, with many notable new customers joining Q1, such as CVS, Sysco, Petco, and Heineken. To better support our enterprise shippers and further integrate into their supply chains, we've announced a strategic partnership with SAP, providing customers seamless access to the Uber Freight network, enabling real-time booking and on-demand freight capacity 24/7. Onto New Mobility. The quarter began with the release of a new version of the Jump e-bike in January, featuring next-generation hardware that improves connectivity, is more durable, and has a swappable battery. New Mobility gross bookings grew strongly quarter-over-quarter as we carried our continued expansion across the U.S. for both bikes and scooters, and our first movement into a European market, a focus that has continued in Q2.
We also launched our first public transit product in partnership with the city of Denver, which has shown early positive results, as well as furthering the expansion of Uber's platform of non-ridesharing products. On our ATG group, Toyota, Denso, and SoftBank Vision Fund agreed to invest $1 billion, implying a $7.25 billion valuation for Uber ATG on a post-money basis, which we expect to close in July 2019. This investment and expanded commercial partnership will further deepen ATG-Toyota collaboration and add Denso's expertise for next-generation autonomous vehicles. The investment and agreement is a great recognition of the progress that our team has made to date.
Our in-house efforts remain focused on the commercialization of autonomous vehicles within our network. This includes developing our own autonomous driving software and hardware stack, but it also includes making our network ready to deploy other partners' autonomous technologies, of which Toyota and Daimler have already been announced. Now I'll pass it on to Nelson to cover the Q1 financials in some detail.
Thanks, Dara. Now on to Q1 2019, which as a reminder, came in at or near the high end of the financial ranges we provided last month in our prospectus. Our GAAP revenue of $3.1 billion was up 20% year-over-year. Our GAAP cost of revenues, excluding D&A, of $1.7 billion increased to 54% from 45% of revenue in Q1 of 2018. Our GAAP EPS was a loss of $2.26 per share compared to a gain of $1.84 in Q1 of 2018, which benefited from a $3.2 billion gain attributable to the Grab and Yandex transactions that closed during that quarter.
As a reminder and per the language in our prospectus, we expect a large stock-based compensation charge in Q2 associated with restricted stock units that vested in conjunction with our IPO. For the remainder of the call, I will discuss key operational metrics as well as non-GAAP financial measures, excluding pro forma adjustments unless otherwise noted. First, our total company global trips of 1.5 billion grew 36% year-over-year, excluding our Q1 2018 divestitures in Southeast Asia and Russia. Growth was driven by Eats and Eats-related trips growing globally in excess of 80% year-over-year and by strong ridesharing performance, particularly in Latin America. MAPCs grew 33% year-over-year to 93 million. We continue to see strong new MAPC additions to the platform via Uber Eats and NeMo. Total company gross bookings grew 34% to $14.6 billion.
On a constant currency and ex-divestiture basis, bookings grew 41% year-over-year. As a reminder, we report our businesses as two segments, Core Platform, which includes Ridesharing and Uber Eats, and Other Bets, which includes Freight, our logistics platform, New Mobilities, which are our bikes and scooters. ATG, our autonomous driving effort, is included in research and development. Adjusted Net Revenue or ANR of $2.8 billion was up 14% year-over-year. ANR was up 18% on a constant currency basis. Core Platform ANR of $2.6 billion was up 10% year-over-year. Core Platform ANR was 14% year-over-year on a constant currency basis. Ridesharing ANR was up 10% year-over-year. Eats ANR was up 31%, and they are up 14% and 32% year-over-year, again, on a constant currency and ex-divestiture basis.
Our ANR as a percentage of gross bookings declined 400 basis points year-over-year to 18%, primarily due to Eats, which has a lower take rate than Ridesharing, growing as a percentage of the core mix. In particular, in India, where increased incentives to consumers, drivers, and restaurants drove nearly half of the year-over-year decline in Uber Eats take rate to 8% from 12% a year ago. Additionally, an increase in the use of Ridesharing driver incentives, in particular in the U.S. and Latin America, to compete with other companies in the category. In Q2 2019, we expect Core Platform ANR as a percentage of gross bookings to improve sequentially from Q1, due in part to increased rationality in U.S. Ridesharing industry that Dara mentioned earlier, and new Uber Eats service and small basket fees launched in the U.S. at the end of the quarter.
We expect these benefits to continue into the back half of 2019 and result in ANR year-over-year growth rates to accelerate. Non-GAAP cost of revenues excluding D&A increased to 50% from 42% of ANR and was flat at 9.4%, with Q1 2018 as a percentage of gross bookings. Cost of revenue was flat as a percentage of gross bookings as improvements in insurance costs were offset by an increase in cost of revenues due to Freight and NeMo's growth or merchant model, where Freight partners payments and NeMo scooter hardware and field costs are included in cost of revenue. We continue to make progress on payments and are realizing efficiencies through our efforts.
Additionally, we have expanded our launch of Uber Cash, our closed-loop digital wallet, to Mexico and Brazil in an effort to provide a more seamless payment experience and help our customers save more money. On the insurance front, we launched a way for drivers to file an incident report in-app through a series of simple steps where they provide information and upload photos. This allows Uber and our insurance partners to respond promptly and more effectively to provide support to drivers and riders. Turning to operating expenses, operations and support increased to 16% from 15% of adjusted net revenue and decreased to 3% from 3.4% of gross bookings versus Q1 of 2018. The decrease as a percentage of gross bookings was primarily to improve platform leverage, which more than offset Uber Eats growing as a percentage of our mix.
Although we view it as a long-term operational execution opportunity for Eats, the online food delivery industry has higher support contact rates than Ridesharing. Sales and marketing increased to 36% from 26% of adjusted net revenue and increased from 6.9% from 5.8% of gross bookings in Q1 2018. This increase as a percentage of gross bookings was primarily due to increased consumer promotions as well as increased advertising and marketing headcount. Similar to improving incentive trends we discussed in the U.S. and LatAm in Ridesharing, we expect to de-deploy fewer consumer promotions in Q2 of 2019, resulting in sales and marketing as a percentage of gross bookings and ANR to decline in Q2 of 2019. Now on to Core Platform contribution margin.
As a reminder, our Core Platform contribution margin is a percentage of ANR and demonstrates the margin that we generate after the direct expenses related to our Ridesharing and Uber Eats businesses are deducted. What it does not include is indirect, unallocated R&D and G&A expenses, including ATG and other technology programs. During Q1 2019, we invested in our Ridesharing category leadership through product improvements and competitive pricing relative to competitors that we continue to try to use capital to mitigate our efficiency and effectiveness advantages. Due to this investment, our Core Platform contribution in Q1 was -4% as a percent of ANR, down from + 18% in Q1 of 2018.
We remain confident in the long-term model's leverage because in our top five countries, our gross bookings during Q1 2019, our Core Platform contribution margin ranged from -10% to +54%, even as Eats remains in investment mode in all these countries. Given improving competitive dynamics in U.S. Ridesharing and relative stability in LatAm, we expect contribution margins to improve sequentially in Q2 2019 and through the remainder of the year. R&D increased to 15% from 14% of ANR and decreased to 2.8% from 3.1% of gross bookings in Q1 2018. The decline year-over-year as a percentage of gross bookings was primarily due to lower ATG external engineering and equipment spend, more than offsetting continued R&D headcount additions.
G&A increased to 15% from 14% of adjusted net revenue, decreased to 2.8% from 3.2% of gross bookings in Q1 2018. The decline year-over-year as a percentage of gross bookings primarily relates to the timing of litigation spend and legal and tax reserves as we continue to invest in the systems and infrastructures needed to be a public company during the first quarter. Our Q1 2019 adjusted EBITDA loss was $869 million. We've been consistent in our communication that 2019 will be an investment year with a focus on our global platform expansion, long-term product and technology differentiation. In terms of liquidity, we ended the quarter with approximately $5.7 billion in unrestricted cash.
The net IPO proceeds will be captured in our Q2 2019 financials. We expect to receive the $1 billion in aggregate proceeds from Toyota Denso and SoftBank in July 2019. As a reminder, at the end of March, we reached an agreement to acquire Careem, a rideshare and delivery and payments company operating in Middle East, North Africa and Pakistan, for $3.1 billion, consisting of $1.4 billion in cash and $1.7 billion in convertible notes. The acquisition of Careem is subject to applicable regulatory approvals and expected to close in January 2020. We look forward to starting our regular quarterly cadence with you. Dara?
All right, thank you, Nelson. Sometimes simplicity is a beautiful thing. While the canvas that we operate against can seem complex, our story is simple. We're the global player. We are the largest player in personal mobility. Our brand, our technology, our operational platform all give us structural advantages versus the monoline players. We have a generational and demographic wave behind us, and our job is to grow fast, at scale, and more efficiently for a long, long time. While the markets that we compete in are and will remain competitive, we like what we see. Our IPO was an important step in our evolution, but just a step. Our teams are focused, motivated, talented, and very, very determined to prove Uber's value to our shareholders. With that, we're ready for some Q&A.
Thanks, Dara. Operator, you can open it up for questions.
Thank you. At this time, I would like to remind everyone, in order to ask a question, please press star, then one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brian Nowak from Morgan Stanley. Your line is open.
Thanks for taking my questions. I have two. Just the first one on rideshare MAPCs. Can you sort of talk to us big picture about what you think the biggest hurdle you have to overcome to continue to drive fast rideshare MAPC growth in some of your oldest markets in the U.S., whether it's price, density, and how do you do that? What are your strategies in place to kind of continue to grow MAPCs? The second one on Uber Rewards. Any color on early learnings there, comments on frequency of users that are using that product, and how do you think about pushing that more globally over time? Thanks.
Sure. Just as far as our core rideshare markets, I think as it relates to audience or MAPCs, first of all, there is the natural expansion that is happening. You know, you look at one is there's expansion from the city cores to the city suburbs. That is naturally happening. For example, in New York City now, over 50% of our rides don't originate or end in Manhattan. That was very much not true 3, 4 years ago. You see there's kind of a natural expansion from the cores into the suburbs. The second for us is that you've got kind of the newer millennial generation that is not particularly interested in owning a car.
I think the stats are something like 26% of 16-year-olds got their licenses, and that compares to double what it was just 20, 30 years ago. We do have this urbanization happening on a global basis. We've got this generational wave that is just not interested in car ownership and all of that absolutely helps us. I think that you look at our other businesses that we're growing in including Eats, and our scooter business, New Mobility business. 50% of our Eats customers actually don't use rides.
Whereas the rides business is a very strong audience creator for the Eats business, now as Eats expands, especially into some out, into some of these suburbs, Eats is finding new customers for us, which first of all are gonna, you know, be customers for Eats, but these are customers that then we can upsell into the rides business as well. The scooter business for us, bikes and e-bikes and scooters, are finding yet another generation of usually younger customers who are in the center of cities. What we're finding is that with our new mobility products, we're actually, of the customers who use our NeMo products, they are typically under-penetrated in terms of using our rides product. It's a whole new customer base.
Sometimes they have used our rides product and we're kind of reactivating them. Sometimes they weren't using rides at all. It's reaching into yet another customer segment, and it's also reaching into a different type of trip, a trip that's typically less than five miles. Then you see us also penetrating into transit and other areas with our marketplace strategy, which is really getting into every single use case. That you would want as far as transportation and usually cheaper use cases. This is Pool, this is Express Pool, and then these are transit partnerships that we have, which are for folks who want to spend $4 or $5 or even $1 or $2 per ride. That's all within a country.
Keep in mind that we have six target countries, Germany, Argentina, Japan, South Korea, Spain, and Italy. These are countries that we believe that we can open up. We think that, you know, Uber is a service in those countries, and we think that there's a regulatory opening in those countries, so to speak. It will take some time. Those countries will represent a 20% increase in population or MAPC potential.
There are many, many other countries that either we're not in or, you know, we have to get out of Finland, Norway, Slovakia, the Czech Republic, et cetera. All of this kind of increases the overall population, et cetera. I think on the MAPC side, there isn't one silver bullet, but there are many, many levers, and we have teams working at each of these levers to continue to increase MAPCs, not just for the rides business, but the overall Uber platform as well. The second question was about rewards. Is that right?
Yeah, exactly.
Yeah. Was it about the Rewards the same?
Yes.
I think in terms of rewards, on the consumer side, we are, we're going pretty aggressively in the U.S., and we're seeing very good early signal, and we're seeing very high consumer satisfaction. The other great thing about rewards is that it knits our various services together. You've also seen that we have a subscription product on the ride side, and you can anticipate our being more aggressive in tying in our different products across our subscription products as well. We're very happy with the early results from rewards. It is early, and we think that's a product that we can optimize pretty significantly going forward. We're certainly looking at launches outside of the U.S., although we haven't announced anything yet. Thanks, Brian, for the question. Operator, next question.
Your next question comes from the line of Heath Terry from Goldman Sachs. Your line is open.
Great. Thanks. Just a couple of things. You made the point in the press release of continuing to see signs of less aggressive pricing by some of your ride-sharing competitors. Just curious to the extent that you can elaborate on that and how universal that is in terms of geography, how much of that is in the U.S. versus, you know, some of the other more important markets to you? Then on the Eats side of the business, obviously, with headlines about competitors raising more money in the space, kind of curious about your, you know, your view on how or what type of consolidation is gonna happen within the Eats category and to what degree Uber potentially takes part in that in some way?
Sure. I think on the competitor front, listen, there is no universal. Every single country is different and we'd be here for half an hour if we describe the competitive position in every country. I think some important ones in the U.S., if you listen to the Lyft conference call, for example, they talk about competing more on brand. I think that competing more on brand and product is call it a healthier mode of competition than just throwing money at a challenge. We have seen that pencil out into the market, so to speak. You know, we are obviously operating independently. I'd say we like what we see on the competitor front in the U.S., which is our largest market.
In South America, and, you know, Brazil, Mexico, et cetera, we certainly saw competitive entry by DiDi and some other players. We're seeing it stabilize at this point. You know, will things get better or worse? We can't predict. I think that sitting here today versus where we were three months ago, we're always uncomfortable in our chairs, but we're, you know, less uncomfortable, so to speak. I think we have more of a handle on the competitive situation, and I think we feel net better. That can get worse or better. I'd say today we feel better on the competitor front overall on a global basis.
I think as it relates to Eats and the, and the landscape there and food delivery, listen, there's a lot of capital coming in because it is a huge category. There are some folks that believe that the category, the food category, can be larger than the rides category. If that's true, and by the way, it could be true. In China, it looks like it is larger than the rides category. That would be an enormous win for us. Today it does, it is challenging in that there are many players that are well-funded, they're well-operated, and they're competing to win. You know, we're the biggest player outside of China.
We love our team, we love our technology, and the platform that we have and the ability of our Rides business to, one, has built a brand that is very, very recognizable, but also move riders from Eats is considerable. I will tell you that we are very, very early in the stages of exploring the many, many ways in which our Rides business can help continue to build our Eats business and vice versa, by the way. You know, will there be consolidation? Yeah, I think there will absolutely be consolidation.
We are not in a hurry in that, I think that whether consolidation happens sooner or later, we will be kind of the biggest player on a global basis. We like our competitive chances. We love the advantage that we have as it relates to the platform. We will play a consolidating part, if it makes sense for our shareholders from a long-term perspective. It's kind of a plan B because our plan A, which is an organic plan, is a great plan, and we feel very strongly about it.
Thank you, Dara.
You're welcome.
Your next question comes from the line of Ross Sandler from Barclays. Your line is open.
Great. Two questions from you guys. On the rides incentives issue, you've mentioned that they've come down a little bit. I guess the question is, as those come down on the rider side and as prices or fares increase, how sensitive are GB volumes and GB growth rates in rides to increasing prices? Are you seeing anything new in the current quarter relative to the first quarter on rides GB growth? The second question's on Eats. I think there's a perception out there that the Eats take rate is coming down because some of your larger QSR deals with Nelson, you mentioned India. Can you parse the Eats take rate compression between India and maybe other factors like building out selection and any update on the Eats business post the pricing changes in March? Thanks.
Sure. Hey, this is Nelson. In terms of on the ride side, we haven't really, right? The only place that we are watching is in New York. As you know, there are mandated pricing moves that have happened, and we've been passing it on. We have seen that increase. It's been less about a category position story for us, but pricing has increased, and I think it probably does have, ultimately, some impact in terms of how gross bookings grow in the category there. But, you know, our position is quite strong there. Beyond that, we haven't seen it too much. Regarding your question about Eats, yeah, India is an investment market for us, right? There's two things going on there.
It's growing very, very quickly. There are two competitors that are very aggressive on there, including ourselves. We are doing well and holding our own, but it is a net market in that we are funding both the eater, the courier, as well as the restaurant in terms of building the business. As I mentioned in my prepared remarks, if you think about a 400 basis point difference in terms of our take rate, sorry, in year-over-year in Uber Eats, it was half of it. The other half is really about increasing restaurant selection, increasing incentives for our restaurant partners. That was the difference between the, you know, how we're going there.
In terms of how the business is going now, it continues to grow well. It, as Dara mentioned, it's more of a market-by-market situation. It's growing very, very quick, fast, as you saw from our results. We continue to do well, but I would say that there are certain markets where there are well-funded competitors that are growing. You know, you see in the U.S., where, you know, we have a competitor that's well-funded and growing quite quickly. We are growing fast as well, but they are growing their category position faster than us.
We should also expect, Nelson.
Yeah.
correct me if I'm wrong, which is our take rate for Eats is on the way up.
Correct.
For the balance of the year versus the other way. this should be the low water mark, and then you should see take rate for Eats increase for over the balance of the year.
Your last question was on the new service fees. They've just started, but they've been well received. We haven't seen any impact on the business. As Dara said, you'll see the take rates improve through the balance of the year, and you should see the ANR increase as well, as you think through the balance of the year in terms of the growth rates.
Ross, just to your first question around rationalization in the competitive environment. You alluded to this, but just to be clear, it impacts take rate, it impacts sales and marketing as you think about driver and rider side and all of that. Just wanted to be clear on that side. Thank you for the question, Ross. Operator, next question.
Your next question comes from the line of Mark May from Citi. Your line is open. Mark May, your line is open. If you're on mute, please unmute.
Can you hear me? Okay. You touched on this a minute ago, I think New York City is a top five market, I believe, for you, and there have been some very recent changes there. Just curious if you could comment on how, if at all, the recent changes in New York City, including the new fees and the limits on growing supply, you know, if that's impacted the market, the growth in the market at all recently, and if so, how we should think about that. Secondly, more of a housekeeping question. Regarding the guidance on sales and marketing leverage for Q2, is that on a bookings or an ANR basis, and would you expect that to persist in the second half? Thanks.
Yeah, sure. I'll take the first question, Nelson will take the second question. In terms of New York City, listen, our business is pretty darn resilient. The changes made in New York City, while we don't think that they are consumer-friendly, and the caps, et cetera, you know, we certainly don't think that they're driver partner friendly. Our business has proven out to be pretty resilient, it has translated into pretty substantial price increases to the consumer, to the rider. We have seen that affect trip volumes, definitely, because there is some price sensitivity as it relates to any product, and ours is not excepted.
Overall, if you look at the dollar growth rate in New York, it's still a healthy city for us. We do think, you know, we're still proponents of comprehensive reform in terms of congestion pricing, kind of more market based regulation. We do wanna be constructive here, and, you know, a city with too much traffic and lots of cars standing still doesn't serve us, doesn't serve our riders, doesn't serve our drivers as well. Our service has certainly shown us resilience. We think the environment can get better, but New York continues to grow for us and continues to grow at a healthy pace on a dollar volume standpoint.
Mark, its Nelson, on your second part of the question, yes, we expect that our core platform ANR as a percent of gross bookings to improve sequentially. We do expect and as we think through the back half of 2019, we're gonna see those benefits continue as well as an acceleration year-over-year of our adjusted net revenue.
Sorry, I was referring to sales and marketing leverage.
Yes, that leverage was against. Well, it'll be against both, but really, the point was about gross bookings.
Mark, that was a little bit to the prior question in that as you think about sales and marketing, you think about promotions to the rider, and you think about rationalization, you know, generally that has an impact there as well.
Thank you.
Thank you, Mark.
Your next question comes from the line of Mark Mahaney from RBC. Your line is open.
Great, thanks. Two questions. One, Dara, could you, I think you touched briefly on synergies between ride-sharing and Eats. Could you talk a little bit more about the strategy to try to generate more of those synergies over time? Nelson, could you talk about any new insights you have in terms of getting leverage against insurance costs, which seem to be a material component of COGS? Any new insights there? Thank you very much.
Sure, Mark. I don't wanna give away too much in terms of competitive strategy going forward. Suffice it to say that we are starting to experiment in ways in which we can upsell our rides customers to Eats deals in a way that, you know, to be plain spoken, isn't annoying, in a way that is beneficial to our riders. We are seeing some very encouraging early signal. Usually, if you've got a core product, obviously you can imagine that our app has a relatively limited space to promote other things to do other than get a ride. Usually, there's a plus or minus to your putting in a promo-promotion to do something else.
What we found is that with rides and Eats, we've got, you know, very talented tech and product team, and we're seeing early signal where essentially you can have very little, if any, cannibalization of a ride and throw a significant amount of potential demand onto the Eats side. These are very early experimentation results and again, are very much V1, but are showing a signal that creates, you know, a good amount of excitement for us in-house. There are also ways for us to tie the businesses together as it relates to loyalty program, which we're pretty early on in, as it relates to subscriptions, as it relates to promotions, et cetera, on the back end, which again, we're fairly early in the experimentation stage.
I think that, I don't want to give away too much, but there's a whole host of activity that the teams are focused on. Really what we're looking to do is significantly increase the percentage of our MAPCs that use both products. When we see customers using more than one product, their engagement with the platform more than doubles. Not only does the engagement with Uber increase, but the engagement with our individual products increases as well. It's kind of a win-win-win.
Mark, on insurance, there's not a step function improvement. I would say it's more grind them out. What we've done over time is the team has built a great actuary book. What that enables us to do is a couple things. First of all, you shouldn't see quarter-to-quarter noise in our accruals. That's actually pretty important. It allows us also to go in and, you know, work with a lot of the national carriers now who are trying to bid business. That is helpful. You heard in my prepared comments, how we're leveraging technology and data to help in terms of incident response times.
A great way to also help outcomes is make sure you have really good, fast incident response, which we're doing. The one thing I would tell you is that over time, insurance, while there is a little bit of a service fee in the U.S. to offset, it's largely impacting the U.S. rideshare business. It'll continue to become a smaller part of the overall P&L, as other parts of the business continue to grow quickly. That, that would be my takeaway. I think you'll see us continue to grind out productivity out of insurance.
Thanks, Nelson. Thanks, Dara.
Your next question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open.
Hi. Thanks for taking the question. This is Kunal for Lloyd. Two, if I may. One, what are the nuances associated with the markets that are currently generating over 50% contribution margins? If you're already in, you know, if you're already getting more than 50% contribution margins in one market, how do you see that kind of, how do you see contribution margins in the future in other markets? Second, with regard to lower costs that'll open up the TAM, what are the key elements to getting pricing lower absent a shift to autonomous? Is Pool really growing in the right mix enough to lower the price meaningfully, or are there other pathways to lowering the pricing? Thank you.
Sure, absolutely. On contribution margin.
Yeah. I'll start on the contribution margin. I think in the markets where we have high contribution margin, we have very strong category position. We have good take rates. What I mean by that is the adjusted net revenue percent of gross bookings tends to be higher. Then in those markets, believe it or not, there is competition, but we've done a good job in terms of how the market has evolved. We have very strong position from that standpoint.
What you'll see over time is, as the markets continue to evolve, you'll see us continue, particularly on the rideshare side, focus more on contribution, and you'll see us get more efficient. We'll get the scale benefits of just our global scale versus everyone else's to deploy technology and operations. You'll see us continue to grind out some of the productivity metrics we're gonna work on things like insurance, and things like payments and other things. You know, as Dara and I mentioned, you know, the one wild card is gonna be market by market, what happens from a competitive position. While we feel comfortable sitting here today and looking into the next couple of quarters, those things can change.
As we see through those things, that'll happen. The last part of it, because again, this is a core contribution metric, is the how Eats continues to evolve. In the specific market where you mentioned it, we have a very strong market position. We have a strong, we have a good Eats business as well. Again, while we're not gonna disclose where that place is, there are markets where we, again, we have good core contribution margins across the globe. You'll see us continue to give you more highlights as the quarters continue here.
I guess the other way that I'd put it is the markets with high contribution margins, we don't consider to be outliers. You know, the outliers was the U.S., where, you know, our company went through some very, very significant challenges as it related to brand, and what has frankly been a strong competitor in Lyft. The U.S. is an outlier as far as a scale business that hasn't yet achieved very strong contribution margins. There are markets like Latin America, where we've got a competitor come in more recently. From a structural standpoint, actually, this is a business that we believe can be very significantly contribution margin positive, and the one outlier is in the U.S. In the U.S., we suffered, you know, some brand damage that's very unusual. That's gonna take some time to repair.
Now, I think in the U.S., we're in a competitive position with the other player, where the competition's gonna be more healthy. It's gonna be based on brand and product and technology, which we think is the right place to compete versus, you know, throwing money at the problem. I think on the other question as to low cost, et cetera, listen, I think that there are many different ways in which we take on low cost. First of all, as it relates to the Pool product, what we're really focused on is being more efficient and increasing the match rates as it relates to each trip, and it means being smarter about which trips we match.
Also the introduction of Express Pool, that essentially adds waiting and then adds walking to the equation in order to increase the match rates as well. Historically, we have priced Pool quite aggressively in order to create liquidity in the marketplace, in order to create the opportunity to match. Now, actually, I'd say the majority of the work is in improving our matching capabilities versus using pricing to increase liquidity. Beyond Pool and Express Pool, we're investing in high-capacity vehicles, you know, either we call it Uber Shuttle or Uber Bus, that we've launched in a number of markets. This is about taking matching to the next level. 10 riders in a single vehicle, 15 riders in a single vehicle. We think we will do this ourselves over a long term.
We may also partner up with governments, do kind of public-private partnerships to be a part of the transportation solutions of the cities in which we operate. Beyond that are having public transport. We talked about integration in Denver. We've integrated London public transit into our app as well. While that's not strictly our product that we will be marketing, it's another, essentially search or another occasion by which users will come to our app to learn what the best way to get from point A to B. If every user, every day, in every city is opening up our app in the morning when they wanna get someplace, then good things are going to happen over a period of time.
We don't think there's any kinda magic lever here, but we are putting more against these different modes of transportation. You add to that, e-bikes, scooters, both through our own products and through partnership with Lime, and we're looking at partnering with other players as well. You just have the whole transportation ecosystem on one app, all your information, fully integrated with a loyalty program beneath it. We think that's a very, very powerful product, but it will take time for all this to come together. Thank you, Kunal. operator, next question.
You're welcome.
Your next question comes from the line of Masha Kahn from HSBC. Your line is open.
Hi. I'm interested in your payment strategy. You mentioned you're introducing payments wallet in emerging markets. Are these cash products, you know, you mentioned going to be used only for Uber ecosystem, or can they be used for ride instances and outside Uber platform? Can you please talk a little bit about that?
Sure. The start of our payments is really on productivity right now. You know, 87% of the transactions that happen on Uber are done with a swipe. What we're doing right now is the team is really focused on trying to drive down some of the costs, and you're gonna see those benefits. Those are both in terms of core process improvements. We've improved some of our cash collections and the arrears, fraud prevention. There's all sorts of different operating things as we continue to focus on productivity. That's going on right now, and we're seeing the benefits now, and you'll continue to see the benefits throughout the year and moving forward. The second thing we did launch is, and which I mentioned, is a closed loop wallet. This is really to help in certain markets like Brazil, which is really a cash market for us.
It really helps in terms of a lot of cases because in the U.S., we really worry about riders. In Brazil, we have to really focus on driver safety. Because drivers there are incidents with drivers that are getting robbed or they're getting carjacked. The more and more you can move away from cash and is beneficial. Additionally, we do see that if you have Uber Cash credit on your account, you will use the service additionally. The last thing is really just we are evaluating how open we go in terms of a wallet, which I think was your question. I would say that's an opportunity we're looking at now.
You did notice that PayPal invested as part of our IPO. We are talking to a number of different partners, and we are going through that own process internally now of how to open we wanna be. You can envision that a company that is growing, as Dara said now, the run rate of the business is, you know, approaching $60 billion a year in terms of billings this year. There's a lot of opportunity that we see ahead on it. We're just working through that now. The real takeaway right now is just the focus on the productivity side, which we're getting. You'll see in our results.
Thank you, Colin, for the question. Operator, next question.
Your next question comes from the line of Youssef Squali from SunTrust. Your line is open. Youssef, if you're on mute, please unmute. Your line is open.
Yep, sorry, apologies for that. Dara, you mentioned 2x now that competition is more gonna be focused on brand and products. Maybe you can flesh that out a little bit. Brand competition could also be pretty expensive proposition. Maybe if you can just help us understand what you mean exactly by that would be helpful. If maybe you can just give us an update on the six markets where it's been more difficult to do business in, particularly in Germany. I think last time you mentioned that you had started making some headway there, so any help there would be helpful. Thanks.
Sure. It, you know, when I talk about brand and product, really it's shorthand for talking about the quality of the service. You know, what are your average ETAs? What are your ETAs, kind of P90 ETAs? How do you make sure that every single customer interaction is a great interaction? What's the quality of the vehicles and your driver partners? Are they happy? Are they hospitable? How's your pricing? How consistent is your pricing? How are your match rates, et cetera? Really kind of when you think about our services, there's a cost to customer acquisition. How are you bringing customers into the funnel? We think we have an advantage because we essentially are acquiring customers across multiple verticals. Second is, how long are your customers staying with you? How loyal are they?
We think that with our loyalty programs, with subscriptions, with payments, with wallets, we have now all the tools, again, against a multitude of different products that we can offer, one consumer that we think that we've got kind of a structural loyalty advantage over the other players. We're constantly iterating and improving our experience and our technology in order to make sure that it's best of breed in terms of your ETAs, your pricing, your routing, how quickly do you get from point A to B, and all the different choices that we offer you as well. We think that's a, you know, that's a great area for us to compete in.
Listen, the Uber brand is a brand that everybody knows all around the world, and we've already built two multi-billion dollar services on the Uber brand, and we think Freight will be a third. We like competition as it relates to kind of brand, product, technology, and we think, you know, we think that over the long term, our being the bigger player, our being the global player, and our being the multi-product player is gonna put us in a very good position where competition is not just about dollars. If it is about dollars, we're gonna push back as hard as anyone pushes us as well.
I think. Yeah, you know, the six countries, I'd highlight, listen, each of these countries is unique in its own way. Germany for us has been a country that has been a significant investment. I've been to Germany already 3x . We are kind of growing in Germany the right way. It takes longer to build a service to some extent based on the regulations there. We are very happy with the growth rates in Germany. We're very happy with the quality of the service there, and we think that the regulations are headed in the right direction so that we can build a larger service and in a way that ultimately is better for better for the cities.
You know, Germany has regulations, for example, of return to base, where if a private hire driver takes you out to the airport, he or she has to come back to base, you know, empty. That doesn't make any sense, especially in a country like Germany, that is such a leader in all the environmental issues that they play in. Hopefully over a period of time, they will recognize that. In Japan, which is the largest taxi market in the world.
We are launching in partnership with Taxi. We are building out our product suite as it relates to taxi partners. We're going out and having really good discussions with taxi partners, and we're signing up taxi partners and kinda building a service the organic way. We are optimistic about the potential of Japan as a market and the potential of Taxi as a partner there. There are some kinda creative ways in which we're working with Taxi, which we think can result in pretty good SaaS services there as well. The Olympics are clearly a consideration for the government. Again, I think that we can play a constructive part in building out a great business there.
Argentina's another market for us that is showing us very, very strong signal. You know, I think is one of the absolute bright lights in South America. It's mostly a cash market at this point, but we think has a ton of potential. There are some markets, you know, Italy is very slow in developing. Spain, Barcelona, for example, has taken a step back. All of these markets have their positives and negatives, but I think that overall, they're gonna be a net positive. When I look out five years forward, I think that they will be real contributors into our ecosystem.
Thanks, Dara.
You're welcome.
Next question.
Your next question comes from line of David Dillon from SMBC Nikko. Your line is open.
Thank you. Really nice improvement on the freight side, the 200% growth. Can you share the number of trips there? I know you gave some information on the carriers and the drivers and the shippers, but is there any additional metrics you can provide there, if possible?
Actually, no. We're actually not, we're not giving that kind of information out. We, you know, look, we're seeing good signal there. We're pretty confident in terms of the ability to grow out there. We're seeing it just because we see all the same store sales that we're getting with these national shippers. We continue to build out our routes. As you know, the key to building a good freight business is building kind of supply-demand across routes, which we're building. We're not optimized yet, we're not big enough yet, but we're seeing very good traction there. You know, look, we'll look forward to talking more about freight. You know, again, it's, we've been in the business a little over 1.5 years or so. Again, we think that, you know, we'll continue to grow. You know, the growth will continue to exceed 200% for the year.
You know, I'd say just to add a little bit of color. In general, if you looked last year, Uber Freight was probably the overall logistics business was in a undersupply position. This year there's more supply out there. There are more trucks out there. Pricing has come down. The real focus of the Uber Freight team now is to really focus on bringing in demand and going out and signing up the enterprise shippers.
You know, that sales team is just really, really knocking it out of the park. They are bringing in a lot of names. Almost without exception, when we bring in a new name, we service them very well. We've won a bunch of kinda Shipper of the Year awards, et cetera, we build a business. You're gonna see our sales team out there. They're knocking on doors, and fortunately, the doors are opening at this point.
Yeah. The only thing I'd add is that one of the real win points for us is just, it's a very manual business if you know the freight business, so we're able to automate it. Our, the enterprise shippers like that. Whether the shipment creation stats like 87% of the time we're it's done electronically, the pricing is done almost 80% electronically, even the booking is done almost 80% electronically. That wins. We're seeing those benefits out there. As Dara mentioned, the sales team's been going after it. We're, you know, we're seeing good signal right now.
Great. Thank you, everyone.
Great. Thank you for the questions today, and thank you everyone for joining us. We look forward to catching up with you soon. Thank you.