Earnings Call: Q1 2019

May 30, 2019

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. After the speakers' remarks, there will be question and answer session. 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 Khazarshahi, CEO Nelson Chai, CFO and this is Kent Scofield, Head of Investor Relations. During this call, we will present both GAAP and non GAAP financial measures. Additional disclosures regarding these non GAAP measures, including a reconciliation of 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 condition and result of operations and 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 1st 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 a world class governance standards and update to our cultural values and a shift towards long term partnership with cities, regulators, and the millions of people and organizations who use their technology to earn income or grow their business every day. While I'm proud of what's achieved with 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 Uber the platform 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 and 63 Countries. Today, we're pleased to report another quarter of strong growth, demonstrating the continued success of our platform strategy. Q11 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 $59,000,000,000. Our monthly active platform consumers or MAPCs grew an impressive 33% to year on year to $93,000,000, However, those 93,000,000 MAPCs represent only 2% of the population in the 63 countries where we operate our ride sharing products, an even smaller percent of the population in those countries, where they use Eats, 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 $12,000,000,000,000 total addressable market. Now, on to Q1 and currency basis and excluding some divestitures. Some ride sharing 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 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 one of the biggest inhibitors for potential drivers to earn on our platform. For riders, we've launched rewards across the U. S. To recognize and reward our most loyal consumers. Leveraging the breadth of our platform, consumers can earn points using ride sharing 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 10 times 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 plus or minus two 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 able since the beginning of the year, and we've seen a stabilization of competitive intensity as well. We continue to maintain that 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 each 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. Now, on to our Eats business, which grew 109 percent year on year during Q1, the $3,100,000,000 in gross bookings, and at 117 percent on a constant currency basis, excluding divestitures. This growth is impressive on its own, but even more so that Q1 twenty nineteen 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 at the end of 2018, and 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 strong category position in Japan, where which we think will be a spearhead for sorry, we have a strong category position in Eastern Japan, which we think will be a spearhead for a ride sharing business, and we continue to make category position gains in EMEA. Last and certainly not least, we expanded our Starbucks partnership to 7 Large U. S. Cities and now have begun international pilots. Now a bit about our Other Bets segment, which grew Q1 gross bookings by 2 30% year on year to 132,000,000. Uber Freight continued to make rapid progress in building our logistics on demand platform throughout Q1. With growth for the quarter exceeding 200 percent 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, Cisco, petco and Heineken. To better support our enterprise shippers and further integrate into their supply chains, we've announced a strategic partnership with SAT. Providing customers seamless access to the Uber Freight network, enabling real time booking and on demand freight capacity 24x7. Now on to new mobility. The quarter began with the release of a new version of the jump ebike in January featuring next generation hardware that improves connectivity is expansion across the U. S. For both bikes and scooters and our first movement into European market, a focus that has continued in Q2. We also launched our 1st 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 rod sharing products. Lastly, on our ATG group, Toyota, Enzo and SoftBank Vision Fund agreed to invest $1,000,000,000, implying a $7,250,000,000 valuation for Uber ATG on 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 Dental's expertise for next generation autonomous vehicles. The investment in agreement is great recognition of the progress that our team has made today. 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 autonomous technologies, of which Toyota and Dimer 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 twenty nineteen, which, as a reminder, came in at or near the high end of the financial ranges we provided last month in our perspective. Our GAAP revenue of $3,100,000,000 was up 20% year over year. Our GAAP cost of revenues excluding D and A of $1,700,000,000 increased to 54 percent from 45 percent 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 $3,200,000,000 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 form a adjustments unless otherwise noted. 1st, our total company global trips of $1,500,000,000 grew 36% year over year, excluding our Q1 'eighteen divestitures in Southeast Asia and Russia. Growth was driven by Eats and Eats trips growing globally in excess of 80% year over year and by strong ride sharing performance, particularly in Latin America. MAbsees grew 33 percent year over year to $93,000,000. We continue to see strong new MAPCs additions to the platform via Uber Eats and NEEMA. Total company gross bookings grew 34 percent to $14,600,000,000. On a constant currency and ex divestiture basis, bookings grew 41% year over year. As a reminder, we report our businesses as 2 segments, core platform, which includes ride sharing and Uber Eats and other bets, which includes freight, our logistics platform, new mobility, which are bikes and scooters. ATG, our autonomous driving effort is included in research and development. Adjusted net revenue or ANR of $2,800,000,000 was up 14% year over year. ANR was up 18% on a constant currency basis. Core platform ARR of $2,600,000,000 was up 10% year over year. Core platform ARR 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 were up 14% and 32% year over year, again, on a constant 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 ride sharing, 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 ride sharing driver incentives, in particular in the U. S. And Latin America, to compete with other companies in as a percentage of gross bookings to improve sequentially from Q1, due in part to increased rationality in U. S. Ride sharing 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 twenty nineteen result in ARR year over year growth rates to accelerate. Non GAAP cost of revenues, excluding D and 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 NEEMO's gross or merchant model, where freight partners payments and NEEMO's scooter hardware and fuel costs are included in cost of revenue. We continue to make progress on payments and are realizing efficiencies through our efforts. 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 percent of gross bookings versus Q1 of 2018. The decrease as a percentage of gross bookings was primarily to do to improve platform leverage, which more is offset keeps 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 ride sharing. Sales and marketing increased to 36 8% of gross bookings in Q1 twenty eighteen. This increase as a percentage of gross bookings was primarily due to increased consumer promotions well as increased advertising and marketing headcount. Similar to improving incentive trends we discussed in the U. S. And LatAm and Ride Sharing, We expect to deploy fewer consumer promotions in Q2 of 2019, resulting in sales and marketing as a percentage of gross bookings in 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 ride sharing and Uber Eats businesses are deducted. What it does not include is indirect unallocated R and D and G expenses, including ATG and other technology programs. During Q1 twenty nineteen, we invested in our Rideshore 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 negative 4% as a percent of ANR, down from positive 18% in Q1 of twenty eighteen. We remain confident in the long term models leverage, because in our top 5 countries, our gross bookings during Q1 2019, our core platform contribution margin ranged from negative 10% deposits 54%, even as Eats remains in investment mode in all these countries. Given improving competitive dynamics in U. S. Ride sharing and relative stability in LatAm, we expect contribution margins to improve sequentially in Q2 2019 and for the remainder of the year. R and D increased to 15% from 14% of ANR and decreased to 2.8% from 3.1% of gross bookings. In Q1 twenty eighteen. The decline year over year as a percentage of gross bookings was primarily due to lower ATG internal engineering and equipment spend more than offsetting continued R and D headcount additions. G and A increased to 15% 14% of adjusted net revenue and 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 in legal and tax reserves that continue to invest in the systems and infrastructure needed, to be a public company during the first quarter. Our Q1 2019 adjusted EBITDA loss was 869,000,000 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 19 financials, and we expect to receive the $1,000,000,000 in aggregate proceeds from Toyota Dental And Softbank in July of 2019. As a reminder, at the end of March, we reached an agreement to acquire Kareem, a ride sharing delivery and payments company operating in Middle East, North Africa and Pakistan. $3,100,000,000, consisting of $1,400,000,000 of cash and $1,700,000,000 in convertible notes. The acquisition cream is subject to applicable regulatory approvals and expected to close in January of 2020. We look forward to starting our regular quarterly cadence with you. Darr? All right. Thank you, Nelson. Sometimes simplicity is a beautiful thing. And 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. And 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 you can open it up Your first question comes from the line of Brian Nowak from Morgan Stanley. Your line is open. Thanks for taking my questions. I have 2. Just the first one on rideshare MAPCs. You sort of talk to us big picture about what you think the biggest hurdle you have to overcome to continue to drive fast ride share, ride share MAPCs 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 MAP seas. Then 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 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 look at when 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. And that was very much not true 3, 4 years ago. So you see there's a 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 sixteen year olds got their licenses and that compares to double what it was, just 23 years ago. So 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. Then 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. So whereas the Ride business is a very strong audience creator for the Eats business. Now as Eats extends, especially into some into some of these suburbs. Eats is finding new customers for us, which first of all are going to be customers for Eats, but these are customers that then we can up sell into the rides business as well. And then the scooter business for us, bikes and scooters, are finding yet another generation of usually younger customers who are in the center of cities and what we're finding is that with our new mobility products, we're actually up the customers who use our NEEMO products. They are typically underpenetrated in terms of using our rides products. So 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 RISE at all. So 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 5, less than five miles. And then you see us also penetrating into transit, and other areas 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. Pool. This is a press pool. And then these are transit partnerships that we have, which are for our folks who want to spend $4 or $5 or even $1 or $2 per, per ride. So that's all within a country. And then also keep in mind that, we have 6 target countries, Germany, Argentina, Japan, South Korea, Spain and Italy. These are countries that we believe that we can open up We think that Uber is a sort of 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 MAPCs potential. And there are many, many other countries, that either we're not in or we had to get out of Finland, Norway, Slovakia, the Czech Republic, etcetera. So all of this kind of increases the overall population etcetera. So I think on the MAPCs side, there are 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 RISE business, but the overall Uber platform as well. And the second question was about rewards. Is that right? Was it about the rewards? Yes. I think in terms of rewards, on the consumer side, We are going pretty aggressively in the U. S. And we're seeing very good early signal and we're seeing very high consumer section. 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 right side and you can anticipate our being more aggressive in tying in our different products across our subscription products as well. So we're very happy with the early with the early results from rewards, but it is early and we think that's a product that we can optimize pretty significantly going forward. And 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 right competitors. Just curious to the extent that you can elaborate on that, how universal that is in terms of geography, how much of that is in the U. S. Versus some of the other more important markets to you? And then on the Eats side of the business, obviously, with headlines competitors raising more money in the space. Dara, curious about your view on how or what type of consolidation is going to happen within the Eats category and to what degree Uber potentially takes part in that in some way? Sure. I think on the competitive front, listen, there is no universal. Every single country is different than 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 talked about competing more on brand. And I think that competing more on brand and product is, is call it a healthier mode of competition than just throwing money at at a challenge. So we have seen that, a pencil out into the market, so to speak. And and, we are obviously operating independently. But I'd say we like what we see on the competitive front in the U. S, which is our largest market, In South America, and Brazil, Mexico, etcetera, we certainly saw competitive entry by Didi and some other players. And we're seeing it stabilize at this point. And so again, will things get better or worse. We can't predict But I think so to speak. And I think we have more of a handle on the competitive situation. And I think we feel net better. Now that can get worse or better, but I'd say today we feel better on the competitive front overall on a basis. I think in as it relates to Eats and the landscape there in food delivery, Listen, there's a lot of capital coming in, because it is a huge category. And there are some folks that believe that the category, the food category can be larger than the rise category. And if that's true, and by the way, it could be true. In China, it looks like it is larger than category, that would be an enormous win for us. But today, it does, it is challenging in there are many players that are well funded, they're well operated, and they're competing to win. But 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 eaters is considerable And I will tell you that we are very, very early in the stages of exploring the many, many ways in which our ride business can help continue to build our Eats business and vice versa by the way. So will there be consolidation? Yes, 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. So we will play a consolidating part if it makes sense for our shareholders from a long term perspective, but it's kind of a plan B because our plan A, which an organic plan is a great plan and we feel very strongly about it. Great. Thank you, Don. You're next question comes from the line of Ross Sandler from Barclays. Your line is open. Great. Two questions from you guys. So on the Ride incentives issue, so you 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 volume volumes and GB growth rates in rides to increasing prices? And are you seeing anything new in the current relative to the first quarter on rides GB growth? And then the second question is on Eats. So 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. So 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? Sure. So, hey, this is Nelson. In terms of on the Ride side, we haven't really, right. And so the only place that we are watching is in New York. And as know, they're mandated, pricing moves that have happened and we've been passing it on. So 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 category there. But our position is quite strong there. Beyond that, we haven't seen it too much. Regarding your question about Eats, Yeah, India is, is an investment market for us, right? And so there's 2 things going on there. It's going quite, it's growing very, very quickly. There are 2 competitors that are very aggressive on there, including ourselves. We are doing well on holding our own, but it is a 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 contribution or take rate, sorry, in, year over year in Uber Eats, it was is half of it. And the other half is really about increasing restaurant selection, increasing from increasing incentives for our restaurant partners. And that's the difference between how we're going there. In terms of how the business is going out, it continues to grow well. 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, and we continue to do well. But I would say that there are certain markets where they're funded competitors that are growing. And you see in the U. S, where we have a competitor that's well funded and growing quite quickly. We are going fast as well, but they are growing their category position faster than us. But we should also expect, Nelson correct me if I'm wrong, which is our take rate for Eats is on the way up or the balance of the year versus the other way. So we've this should be the low watermark and then you should see take rate for Eats. Increased over the balance of the year. And then your last question was on the new service fees. And so they've 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. And 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, but 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. 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, but I think New York City is a top five market, I believe, for you and there had been some very recent changes there. So 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. If that's impacted, the market growth in the market at all recently? And if so, how we should think about that? And then secondly, more of a keeping 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. Yes, sure. In terms of I'll take the first question, Nelson, I'll take the second question. In terms of New York City, listen, the our business is pretty darn resilient. And the change is made in New York city, while we don't think that they are consumer friendly, and the caps, etcetera, we certainly don't think that they're driver partner friendly. Our business has proven out to be pretty resilient. So it has translated into pretty substantial price increases to the consumer, to the rider. We have seen that effect trip volumes definitely because there is some price sensitivity as it relates to any product and ours is not accepted. But overall, if you look at the dollar growth rate in New York, it's still a healthy city for us. We do think we're still proponents of, comprehensive reform in terms of congestion pricing, kind of more market based regulation. We do want to be constructive here and a city with too much traffic and long car standing still doesn't serve us, doesn't serve our riders, doesn't serve our drivers as well. So the Our service is certainly shown as 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. And then, Marcus 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. And then we do expect as we think through the back half of 'nineteen, we're going to see those benefits continue as well as an accelerate year over year of our adjusted net revenue. Yes. So that leverage was against it'll be against both, but really, but the point was our gross bookings. And Mark, that was a little bit to the prior question. And that as you think about sales and marketing, you think about promotions to the rider, and you think about rationalization, generally that has an impact there as well. Thank you. Your next question comes from the line of Mark Mahaney from RBC. Your line is open. Great, thanks. Two questions. One, sorry. Could you, can you touch briefly on our synergies between ride sharing and Eats? Can you talk a little bit more about the strategy try to generate more of those synergies over time? And then 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 in ways in which we spoken isn't annoying in a way that is beneficial to our riders. And we are seeing some very, very encouraging early signal. Usually, if you, if you got a core product, then obviously you can, you can imagine that our app has a relatively limited space to promote other things to do other than to get a ride. Usually, there's a plus or minus to your putting in a promotion to do something else. And what we found is that with Ryzen Eats, we we've got 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 east side. And these are very early experimentation results. And again, very much V1, but are showing a signal that creates a good amount of excitement for us in house. There are also ways for us to tie the businesses together as it relates to the loyalty program, which we're pretty early on in. As it relates to subscriptions, as it relates to promotions, etcetera, on the back end, which again, we're fairly early in the experimentation stage. So 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. And really what we're looking to do is significantly increase the percentage of our MAPCs that use both products. And when we see customers using more than one product, their engagement with a platform more than doubles. So not only does the engagement with Uber increase, but the engagement with our individual products increases as well. So it's kind of a win, win, win. And then, Mark, on insurance, there's not a step function improvement. I would say it's more grind than that. And so what we've done over time is the team has built a great actuary book. So what that enables us to do is a couple of things. First of all, you shouldn't see quarter to quarter noise, in our accruals. And that's actually pretty important. It allows us also to go in and work with a lot of the national carriers now are trying to bid business. So that is helpful. You heard in my my prepared comments how we're leveraging technology and data, to help in terms of incident response times. And so a great way to also help outcomes is make sure you have really good fast incident response, which we're doing. And then, 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. So it'll continue to become a smaller part of the overall P and L, as other parts of the business continue to grow quickly. So that would be my takeaway. And so I think you'll see us continue grind out, productivity out of insurance. 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 Pinal for Lloyd. 2 I may. 1, what are the nuances associated with the markets that are currently generating over 50% contribution margins? And if you're already in 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? And second, with regard to lower costs that will open up the TAM. How do you 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? Yes, so I'll start on the contribution margin. So I think in the markets where we have, high contribution margin, We are we have very strong category position. We have high good take rates. And so what I mean by that is the adjusted net revenue percent of gross billings tends to be higher. And then in those markets, Believe it or not, there are there are competition, but we've done a good job in terms of how the market has evolved. And so we have very, very strong position, from that standpoint. What you'll see over time is as we 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. And so we'll get the scale benefits just the 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 going to work on on things like insurance and things like payments and other things. And then, as Dara and I mentioned, the one wildcard is going to be market by market what happens from a competitive position. And so while we feel comfortable sitting here today and looking into the next couple of quarters, those things can change. But as we see through those things, that'll happen. And then the last part of it, because again, this is a core contribution metric is the how Eats continues to evolve. In that one in the specific market where you mentioned that we have a very strong market position. We have a strong we have a good Eats business as well. And again, while we're not going to disclose where that place is, there markets where we, again, we have good core contribution margins across the globe. And you'll see us continue to give you more highlights as we head as the quarters continue here. With high contribution margins, we don't consider it to be outliers. The outliers was the U. S. Where our went through some very, very significant challenges as it related to brand, and what has frankly been a strong competitor in Lyft. And so the U. S. Is an outlier as far as a scale business that hasn't yet achieved very strong contribution margins. Markets like Latin America where we've got a competitor come in more recently. But 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. And in the U. S, we suffer, some brand damage. That's very unusual. That's going to take some time to repair. And now I think in the U. S, we're in a competitive position with the other player. Where the competition is going to be more healthy. It's going to be based on brand and product and technology, which we think is the right place to compete versus versus throwing money at the problem. I think on the other question as to low cost, etcetera, listen, I think that there are many different ways in which we take combo costs. First of all, as it relates to the pool products, What we're really focused on is being more efficient and increasing the match rates as it relates to each trip it means being smarter about which trips we match. And then also the introduction express pool that essentially adds weighting and then adds walking to the equation in order to increase the match rates as well. Historically we have price pool quite aggressively in order to create liquidity in the marketplace in order create the opportunity to match. Now actually, I'd say the majority of the work is and in improving our matching capabilities versus using pricing to increase liquidity. Beyond pool and express pool, we're investing in high capacity vehicles, either we call Uber Shuttle or Uber Bus that we've launched in a number of markets. This is about taking matching to the next level 10, 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 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. And 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. And if every user every day in every city is opening up our app in the morning when they get someplace, then good things are going to happen over a period of time. So we don't think there's any kind of magic lever here, but we are putting more against these different modes of transportation. And then you add to that, e bikes scooters both through our own ecosystem on one app, all your information fully integrated with the loyalty program beneath it. We think that's a very, very powerful product. But it will take time for Your next question comes from the line of Khan Michelle from HSBC. Your line is open. Oh, hi, I'm interested in your payment strategy. You mentioned you're introducing payments wallet in emerging markets. Are these cash products you mentioned going to be used on your Uber ecosystem? Or can it be used for redundancies and outside over platform? Can you please talk a little bit about that? Sure. So, the start of our payments is really on productivity right now. And so, 87% of the transactions that happen on Uber are done with the swipe. And so what we're doing right now is really focused the team is really focused on trying to drive down some of the costs and we're going to you're going to see those benefits. And those are both in terms of core process improvements. We've improved some of our cash collections in arrears fraud prevention. There's all sorts of different operating things as we continue to focus on productivity. And so 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 in which I mentioned is a closed loop wallet. And this is really to help in certain markets like Brazil, which is really a cash market for us. And 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. And so, because drivers, there are incidents with drivers there getting robbed or they're getting carjacked. And so 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 our the service additionally. The last thing is really just, we are evaluating how open we go in terms of the wallet, which I think was your question. And I would say that's an opportunity we're looking at now You did notice that PayPal invested as part of IPO. And so we are talking to a number of different partners, and we are going through those own that own process internally now of how to open we want to be. You can envision that with a company that is growing, as Dara said, now the run rate of the business is over approaching $60,000,000,000 a year in terms of our billings this year. There's a lot of opportunity that we see ahead on it. And so we're just working through that now. The real takeaway right now is just the focus on the productivity side, which we're getting, and you'll see in our results. Thank you, Khan, for the questions. Operator, next question. Your next question comes from the line of Youssef Squal from SunTrust. Your line is open. You said, if you're on mute, please unmute. Your line is open. Yep. Sorry, apologies for that. Dara, you mentioned a couple of times now that competition is more, going to be focused on brand and products. Maybe you can flesh that out a little bit. Brand competition could also be pretty expensive proposition. So maybe can just help us understand what you mean exactly by that, that will be helpful. And also if maybe you can just give us an update on the those 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. When I talk about brand and product, really it's shorthand for talking about the quality of the service. 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 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, etcetera? So really kind of when you think about our services, there's a cost of customer acquisition. How are you bringing customers into the funnel? We think we have an advantage because we say actually are acquiring customers across multiple verticals. 2nd 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 we can offer a one consumer so that we think that we've got kind of a structural loyalty advantage over the other players. And then we're constantly iterating and improving our experience and our technology, in order to make sure that it's best to 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. So we think that's a that's a great area for us to compete in, and listen, the Uber brand is a brand that everybody knows all around the world. And we've already built, 2 multibillion dollar services on the Uber brand, and we think freight will be a third. So We like competition as it relates to kind of brand product technology. And we think, you know, we think that over the long term, are being the bigger player, are being the global player and are being the multi product player is going to put us in a very good position where competition is not just about dollars. Now if it is about dollars, we're going to push back as hard as anyone pushes us as well? I think the 6 countries. Yes. The 6 countries, I'd highlight, listen, each of these countries is unique in its own way. Germany, for us, has been a significant investment I've been to Germany already 3 times. 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, but we are very happy with the growth rates in Germany. We're very happy with the quality of the service there. We think that the regulations are headed in the right direction so that we can build, a larger service in a way that ultimately is better for, better for the cities. 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, in all the environmental issues that they play in. So 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, and we are, we're building out our product suite as it relates to tasty partners. We're going out and having really good discussions with Tasty partners and we're signing up Tasty partners and kind of building a service the organic way. And we are optimistic about the potential of Japan as a market and the potential of taxis as a partner there. There's some kind of creative ways in which we're we're working with Taxi, which we think, can result in pretty good, a pretty good soft services there as well. The Olympics are clearly a consideration for the government. And again, I think that we can play a constructive part in building out a great business there. Argentina is another market for us that is showing us a very, very strong signal. And I think is one of the absolute bright lights in South America, and it's mostly a cash market at this point. But we think has a ton of potential. There are some markets, Italy is very slow in developing, Spain, Barcelona, for example, has taken a step back. So all of these markets have their positives and negatives, but I think that overall, they're going to be a net positive And when I look out 5 years forward, I think that they will be real contributors into our ecosystem. Thanks, Dara. You're welcome. Thanks, Dara. Your next question comes from the 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, but we, you know, look, we're seeing good signal there. We were 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. And as you know, the key to building the 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, very good traction there. And then, look, we'll look forward to talking more about freight. Again, it's we've been in the business a little over a year and a half or so. And again, we think that, we'll continue to grow the growth will continue to exceed 200% for the year. Yes, I'd say just to add a little bit of color. In general, if you look last year, freight was probably, the overall logistics business was in an under supply position. This year, there's more supply out there. There are more trucks out there. So pricing has come down. So the real focus of the freight team now is to really focus on bringing in demand and going out and signing up the enterprise shippers. And that sales team is just really, really knocking it out of the park. They are bringing in a lot of names And usually, well, not usually, almost without exception, when we bring in a new name, we service them very well We've won a bunch of Kona shipper of the year of course, etcetera, and then we build a business. So you're going to see our sales team out there. They're knocking on doors and the doors are opening at this point. Yes. And 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 the freight business. And so we're able to automate it. And so our the enterprise shippers like that. So whether the shipment creation staff like 87% of the time where it's done electronically. The pricing is done almost 80% electronically. And even the booking is done almost 80% electronically. And so that wins. And so we're seeing those benefits out there. And as Dara mentioned, the sales team has been, going after it. And so 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. And we look forward to catching up with you soon. Thank you. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.