All right. Good morning. Thanks everybody for joining. My name's Lloyd Walmsley. I'm the internet analyst here at UBS, and we are thrilled to be hosting a fireside chat with Dara Khosrowshahi, CEO of Uber. I don't think Dara needs much of an introduction. We all have known him over the years, and Dara, it's great to have you. Thanks for doing this.
You're making me feel old, Lloyd, but-
Yes, we are thrilled to be hosting a fireside chat with Dara Khosrowshahi, CEO of Uber. I don't think Dara needs much of an introduction. We all have known him over the years, and Dara, it's great to have you. Thanks for doing this.
You're making me feel old, Lloyd, but thank you. Happy to do it.
Well, great. Well, look, let's kick off with what seems to be one of the top questions on every Uber investor's mind as we move past this profitability milestone. You know, how do you and Nelson think about growth versus profitability? There's some perception of a shift in strategy, you know, and with an increased debate post the last earnings call, you know, maybe you can set the record straight on whether the individual segments will run profitably going forward or where you could dip back into losses for any of the segments post-profitability.
Yeah, I think that while there's been a perception, maybe, of a shift, maybe there's just been a difference in terms of what we talk about, right? Our getting to profitability is a point along a path for us, and it certainly isn't an end. Nelson and my goal is to build a company that can compound top-line rates at very attractive rates and continue to improve margins over a period of time. You've seen those long-term compounders and margin increasers and the greats of the world, the Googles, the Facebooks, the Microsofts of the world, and we aspire for no less.
I think the good news for us is that, you know, the this incredibly difficult period that we've gone through as it relates to the virus, et cetera, has been difficult for a lot of companies, but it has also set us up and allowed us to strategically move the business to be much tighter on costs, much more efficient, and that has allowed us to get to profitability. The same effects are going to allow us going forward, not just to grow, but to grow profitably. If you heard Nelson and I talk about growth, part of it is we're now thinking about growth, which is great.
Part of it is also while we have been shifting to more profitability as a company, we've also been quietly in the background investing in growth levers, new geographies, hailables, grocery, new verticals for our delivery business, et cetera, even as the business has gotten more profitable. When we look forward to 2022 and we're finalizing our plans there, as it relates to the mobility business, we talked about kind of long-term margins for the mobility business, about 10% of gross bookings. We're gonna update those margins in February.
As you look forward to 2022, we think that on an incremental basis, we will be able to grow at or around our long-term margins, as it relates to mobility, even as we invest in some of these new areas, even as we invest in hailables and low-cost products, et cetera, because that's just part of our portfolio. As it relates to our delivery business, delivery outside of grocery has already gone into a profitable space. We probably delivered incremental margins year-on-year in delivery a little bit below our long-term margins that we put forward in delivery, which was about 5% of gross bookings.
I think looking ahead to 2022, we think we can not only invest in, again, these growth areas, grocery, new verticals, direct, et cetera, but also deliver incremental margins as it relates to delivery at or above our long-term margins. And I think what's going on there is that there are some really powerful profit drivers in our delivery business that we can reinvest in growth and deliver bottom line margins to. A couple that I would go through, and there are kind of four big ones. One is as the market densifies, as the business gets bigger, the market gets denser, we get smarter, and we're really focusing on marketplace technology as it relates to routing and pricing and matching on the delivery side.
We're absolutely the best in the world in mobility, and we're really turning a bunch of those ML engineers and data scientists over to augment what was already a great delivery team. We're able to reduce cost per transaction, which essentially, you know, gets net revenue margins up, and it's essentially for free. You know, it's faster delivery times, more efficient couriers, et cetera. As the network densifies, cost per transaction comes down. Second factor for us is our ad business is well ahead of plans. Close to 100% profit margin in terms of incremental margins coming from the ad business. That is quite profitable and growing at scale now, and it's gonna continue to grow into next year.
The third is as we get more and more cohorts of repeat customers in our delivery business, and as a percentage, let's say, of repeat customers versus new customers gets higher, repeat customers are just structurally more profitable, especially repeat customers who are members, and a higher percentage of our repeat customers are members. There's a structural profitability that comes into the portfolio as the business grows. The fourth that I've talked about a couple times is essentially the free low-cost traffic that comes from our mobility business to our delivery business, this is the power of the platform. That is only getting bigger as the mobility business comes back, and again, is a very, very large and strategic low-cost channel that's available to us that isn't available to any of the competitors.
All four of those effects are compounding to drive structural profit growth that really doesn't come with a trade-off. Like, there's no trade-off of if my network gets denser and more efficient, there's no trade-off there. As I'm building the ads business, there's no real trade-off there. As cohorts get mature, there's no trade-off there. The free traffic coming from mobility is not net cannibalistic, so there's no trade-off there. Those allow me to invest in the business aggressively in grocery, and they allow me improved margins. And at the same time, if you look at both our mobility and delivery business from a Category Position basis, like in the U.S., we're in better stead than we have been for years.
That puts us in a pretty confident spot going forward, certainly as it relates to margin, while being able to lean into growth as well.
Wow, that's great to hear. Yeah, since April, we've seen kind of the share price impacted by some, you know, some combination of investor apathy, and a big selling shareholder, yet you bought stock yourself. What do you think investors are misunderstanding or overlooking?
Well, you talked about my being around for a while, so maybe I'm old-fashioned, but I believe in putting your money where your mouth is. I think as a company, operationally, we've never been in a better position as a company. You know, a little perspective for me was I was thinking about our IPO. When we IPO'd at $45 a share, our stock is, you know, probably close to 20% below those levels. And we're still not fully recovered from the pandemic, right? While at the same time, last week was our best week ever in terms of overall gross bookings as a company. Our run rate is now close to 40% above where it was at our IPO.
Mobility had its best week in terms of COVID recovery this last week. Delivery had its best week as well. All of the trends are actually quite positive. Then when you look at, you know, our top line is 40% bigger. Our delivery business is 3.5 times larger than it was at IPO. It's gone from what was a promise to a business that is truly a scaled global business as well. I think our run rate EBITDA losses when we went IPO were about $2 billion, and obviously we've hit the profitability mark, and we're in a position to drive incremental margins at or around our long-term model. So, when I put it all together, you know, it's a pretty good set of facts.
And you know, market moves aside one way or the other short-term and/or environmental moves. I think that there's zero debate that the business is in significantly better position than it was at IPO. I decided to put my money where my mouth is, and it was the best place that I could find for an investment, so I went ahead.
All right. It's a great signal. Uber holds, you know, significant stakes in non-strategic assets. You know, we've heard some investors make the case that the longer you hold the stakes, you're implicitly making the case that they are more attractive than using freed up capital to buy Uber stock, you know, already at a 15% discount where you were purchasing it. How do you and the board think about active balance sheet management, setting aside, you know, the broader questions of ongoing capital return?
I think capital management is a core part of any management's job, and Nelson and I intend to do it well. I do think that you should keep in mind that most of our stakes have gone public pretty recently. Most of those public offerings have lockups attached to them. So there is no implicit statement if we are locked up. I think over the long term, you're absolutely correct, which is we are going to ascertain the value of our equity stakes. Some of them I think we will hold for strategic value. Many of them, example is our DiDi stake. We don't believe it's strategic. They're a competitor. China is a pretty difficult environment with very little transparency.
Those kinds of stakes we'll look to monetize smartly over a period of time. I think the good news for us is we're at a point where we're profitable. We'll get to free cash flow generation. We don't need to be in a hurry. There's no question in my mind that those stakes aren't reflecting, let's say, their true value inside our balance sheet, and we will look to have them reflect their true value, whether it's monetizing them or buying back shares or some other iteration there. Nelson is the CFO, who has deep Wall Street experience and is quite connected. We'll look to monetize value there. Our interests there are aligned with our shareholders.
Assuming, you know, mobility recovers as expected and delivery can kind of fund itself internally, you know, you will soon be in a position of substantial free cash flow generation. You know, at that point, what is the capital allocation framework, you know, in that, you know, free cash flow generation mode, and how should investors view M&A versus return of capital?
Yeah, I think first of all, we wanna make sure that from a balance sheet standpoint and from a free cash flow generation standpoint, we're always in a very, very safe spot. You know, I remember, like, early weeks post-pandemic we were able to confidently communicate to our employees first and our investors that, hey, we're gonna be fine. Like, we can take an 80% down market as it relates to mobility, and we're gonna be fine because we have a really strong balance sheet. What's different now is the delivery business is as big as the mobility business. Even in that situation, which I don't think will be a reality, like, the business is much more balanced and the delivery business is driving incremental margins. Like, we fundamentally look different now. We're much more of an all-weather company.
That said, we wanna make sure we have a very strong balance sheet and liquidity first. Then I think as far as free cash flow generation, we will look to maximize long-term kind of long-term investor returns. Any time we take cash for an acquisition, we compare that to paying cash for a company that we know very well, which is called Uber. And right now, I think Uber is deeply undervalued. That's a personal belief, and you saw me act on that personal belief. So I think the hurdle rate for any acquisition, whether in stock or in cash, 'cause I can always use my cash to buy back my stock, at this point would have to be very, very high.
We are always looking in the market for opportunities, but right now the hurdle is unusually high and therefore, when I look ahead at 2022, all things being equal, I think there'll be less activity going forward than there was within the past couple of years.
Yeah, wanted to talk a little bit about the kind of the culture and morale. One of the things we hear from Uber skeptics is that the pace of innovation has slowed, that it's overly reliant on M&A. You know, there's this market perception that, you know, Uber's being outexecuted by focused competitors. How do you respond?
Well, I think I always prefer facts over narratives and so I tend to respond with the facts. I think a couple of things to keep in perspective. First of all, I don't think there has been any company out there, I'm happy to be misquoted or be wrong, that has organically built a business that is now literally larger than the base business that they came in on, right? Our mobility business when I first came in was 85%-90% of our gross bookings. Our delivery business, we bought Postmates, but 90% of our delivery gross bookings has been built organically, and our delivery business is literally bigger than our mobility business, all having been built organically.
You know, you have, like, Facebooks of the world make great acquisitions like Instagram and WhatsApp. Those have been acquisitions. Same thing, you know, Google, YouTube has been a huge success, but those have been acquisitions. This has been entirely organically, and I haven't seen any of our competitors in our space build actually a leader, and remember, we are the biggest delivery company outside of China, in any of the, let's say, newer fields that we're in. We've actually done it. Now, we're doing it again with Uber Freight, so we're gonna do it a second time. We're very well positioned to do it a second time. By the way, we're really well positioned to do it with new verticals and grocery as well.
Until I see someone actually build organically the way we've built organically, I'm gonna view statements like that as just narrative looking for a cause, I guess, and not based on any kind of facts. When you look at M&A, again, I just like to point you to the numbers. I think DoorDash recently announced an $8 billion acquisition in a single acquisition in the delivery space of what's a relatively small player. I think their run rate was about $2.5 billion in a bunch of small countries. All of our acquisitions in the mobility and delivery space have been about $8 billion. We brought in Careem, which is a leader in the Middle East, which has a population as big as all of Southeast Asia.
We brought in Postmates, which was, you know, a really strategic deal in the U.S. and gets us a really strong position in the West Coast as it relates to U.S., which is the biggest and most profitable market in the world. We brought in Cornershop, which is essentially the Instacart of Latin America, gets us a great team. That team is now leading grocery, et cetera, and it's gonna be the anchor for our building, you know, what we think is gonna be the biggest grocery business in the world as well. If we're guilty, we're guilty of going in early. We're guilty of going in big and strategic, and I'll take that, you know, anytime. I do think that we've organically built in a way that no one else has built.
I think we've been strategic about our deals. I think going forward, we now have a footprint, both in terms of geography and in terms of strategy, that we're very happy and that we can continue to build organically. Then the last thing I'll tell you as far as execution goes, you know, our CP in the U.S. is higher than it's been probably in the last three years. Our CP in mobility, in delivery, we're gaining CP against our competitor, and we are adding margin, and we are investing in new businesses as well. I think the execution on the ground is something that we can be proud of, but never satisfied with.
Absolutely. So wanted to ask a little bit of questions on regulation before we dive into the segments. You know, can you lay out for us what you expect the path forward in the EU to look like post the proposal that came out last week? How should we think about incremental costs coming out of this regulation?
Yeah. I think that, as far as the EU goes, this is the beginning of essentially a process, where the EU consults with the states and there's a ton of dialogue, and we've already had dialogue with the EU before anything is finalized. These regulations usually are finalized on a state by state level. I think the good news from our standpoint is our delivery partners, you know, whether they're couriers, drivers, et cetera, overwhelmingly want to be ICs. Everyone knows about the labor shortage all over the world. They can get a job if they wanna get a job, but they want a job with flexibility, earnings opportunities with flexibility. We have been quite willing to say, we want...
We are championing the IC+ model that looks a lot like a worker model as it relates in the U.K., for example, where you retain flexibility, but then you have certain protections, whether they could be minimum earnings or they could be other benefits, pension benefits, et cetera. I think that model in the end is going to win, and I think that dialogue with regulators will make that apparent on the ground. This is a long process, multi-year process, where on the ground you talk to regulators, and ultimately it's about what couriers and drivers want, and couriers and drivers want flexibility.
Now, that said, I do think that to the extent that models flip over, let's say, to an employee model, so for example, in Spain has a fleet employment model where we work through fleet partners who employ drivers. We can still make that business work. Spain business is up, you know, close to 40% on a year-on-year basis, and Spain EBITDA margins are very close to our overall long-term margins as well. I think for us, the fight for IC +, we can essentially as an entity, we can make any model work. We really can, because our marketplace is incredibly flexible. There's a lot of demand for our technology, our service, our brand, our safety, our reliability. So any model can work economically for us.
This is about what our drivers want and what couriers want, and they want flexibility. So we would very much prefer it, because they prefer it. Ultimately, even with Spain, we've proven that a fleet employment model works, and it not only works, it grows, and it grows at margins that are close to our long-term margins.
Yeah, that makes sense. My small sample size of one, doing some driving for Uber, was so easy. It was lucrative. I could see how it would apply to a lot of people on a temporary basis who would want that independence. It really, you know, made sense to me.
The majority of drivers and couriers, you know, they're not doing this full time. They're doing it as a supplement, and every single one of them has a different story. Like, I talked to one who's caring for a grandma, who's caring for her daughter. I talked to a gentleman who's caring for his dad or a student or like Randy Clarke, who's who tweets all the time, and he's getting his degree, et cetera. Like, everyone has a different story, but what's common is they want and need flexibility as it relates to earnings. Gig work has that benefit. Earnings are really, really good now.
If, you know, countries believe that we should also include benefits like Prop 22 benefits, we're willing to lean in there because ultimately it will attract more drivers and couriers to gig work, which we think is a good thing.
Yeah. Looking at the U.K., you know, how does the recent U.K. High Court decision impact you? You know, does it change the competitive landscape for you in the U.K. or the City of London? You know, where are you guys in the HMRC process on that?
Yeah, sure. In terms of the U.K., you know, the most important thing is the High Court ruling very clearly impacts the whole industry, not just Uber, right? So, every operator in London is now going to need to make the changes that the court made clear that they need to make. We are doing the same, and we will abide by the ruling, over, you know, as quickly as possible. We think the great thing is it levels the playing field, and we are very, very confident in our competitive position in a level playing field.
Got it. Wanted to jump more into the platform and the business. You know, you've talked at length about how the subscription could be a long-term growth driver. What are you seeing on the subscription side, and how should we think about that offering growing?
Yeah. I think as it relates to the platform, I do wanna talk a little bit about the platform strategically, and that subscription isn't the only thing, right? With platform, the way we think about platform is customer acquisition, customer retention, and costs in general. Those are the three big sections as it relates to platform. On the customer acquisition side, we talked about this, but I'll highlight it again, which is the platform allows us to acquire customers at much lower rates, and we're now acquiring, you know, our Uber Eats business is acquiring customers, first-time eaters at multiples of the number of customers that we bring in from Google and Facebook and Snapchat and Pinterest, et cetera. Multiples of the numbers of those customers at far lower costs.
It's a structural advantage that our Eats business has that no other delivery business in the world has, whether they're a local competitor or a global competitor. Now our Eats business is starting to move traffic to our Rides business, and we're running the same playbook as it relates to Uber Eats for grocery and new verticals as well. We know how to do it. It takes iteration. This is not something that you launch in day one. It has taken significant iteration and tuning to in order to not cannibalize your base business, but then provide this very big scale, kind of, free traffic generator for the growth set. That's learnings that we're gonna take to other verticals as well. The same applies for CRM channels, et cetera.
It's not just the app surfaces. But it's also CRM channels that we're using to communicate to our users, cross-promote, et cetera, and share users. That's about acquisition. That's a very significant structural advantage of that we have over other players. On the retention front, what we found is that users who use multiple services tend to retain at longer rates. We wanna lock in that retention essentially with the membership product. Over 20% of our Eats or gross bookings come from members. Member frequency in terms of buying is 50%+ higher, and that number is increasing over non-members. You start driving lock-in and frequency. Basket sizes are 10% higher. There's an early cost to bringing in a member because of the benefits, but then the retention and lifetime value is significant.
Our membership, we think, has better content than any other membership program with now Uber One, which includes discounts, as it relates to the mobility business as well. It's very early, but we're seeing really good signal as it relates to Uber One because people are like, "Oh my God, this is awesome." The timing is perfect because the world is finally opening up again as well. Then on the cost side, 75% of our engineers work on common components. You know, a common area now where we are making really, really good progress, people talk about super app as it relates to riders. We are building the super app now as it relates to earners.
If you look at our earner onboarding flow, it's gone from what you would say would match competitors, which is, do you want to drive someone? Do you want to deliver? You know, do you want to be a shopper, et cetera. Now to what we call modular onboarding, which is start giving us your information, identity, license, et cetera, vehicle information. Do you have a bike? Do you have a car, et cetera. And as you give us more information, we will qualify you for jobs in essentially a serial manner, which usually means you'll be able to deliver Eats first, and then you will, as we qualify you more in terms of background checks and other factors, insurance, et cetera, we will qualify you to drive as well.
That has very significantly increased driver onboarding success and courier onboarding success, which has allowed us to be able to lean into supply in a way that doesn't penalize margins, because we're able to bring in supply at a much stronger flow than we ever have before. Membership is a part of our platform strategy, but I do wanna make sure that you realize that the platform strategy is much, much bigger than membership.
Yeah. We've seen companies like DiDi and Grab expand into finance and payments as part of their super app strategy. You know, do you think there's you know, an appetite for that outside of Asia? You know, where do you see some opportunity?
I do think that we see opportunity on the payments front, I'd say first as it's earner facing. You know, we're at, you know, call it $100 billion run rate in terms of bookings. The vast majority of those dollars are gonna go be paid to earners. And essentially, those dollars are in the app, the earner app, and we believe that we can offer, I think, through partners, 'cause there's plenty of fintech companies out there that are building all kinds of wonderful functionality, more benefits for earners as it relates to how far their dollars can go. Right now, earnings, let's say revenue for earners, are quite high, which is great, but we actually want to improve their profit statement. Can they get discounts on gas?
Can they have a break and get discounts on coffee? Can they get discounts on car repair? Can we give them the ability to go from a combustion car to an electric car? Can we give them discounts on leases, as we are with the Hertz, Tesla, partnership, et cetera. Really, for us, financial services are going to be aimed at deepening our relationship with earners and also allowing earners to not just have a really great revenue statement, but improve their P&L through discounts and alliances that we're building because we bring so much volume to these various service providers. I think on the consumer side, you know, consumer fintech, et cetera, I don't see us doing that near term.
I think it's a really interesting opportunity, but I think, you know, great companies say no to really good opportunities just because there are better opportunities out there. For now, I think consumer fintech is gonna wait. It's really earner fintech designed to drive loyalty and designed to drive their P&L that we're gonna lean into.
Hopping into mobility, you know, starting with some near-term questions. You know, markets have been pretty volatile on the Omicron concerns. You know, what sort of impact have you all seen across your business from that?
We see, we've seen some local impacts, but from a global basis, our overall mobility business continues to get closer to pre-pandemic levels. We're starting to inch up to call it like the 90% mark. We're not quite there. Last week was our best week, you know, post-pandemic as it relates to mobility. I think the good news is, again, we are a global business. That comes with some complexity, but it really means that we have a very, very diversified portfolio. If you step back and think, is the world getting better at handling COVID? Is the world getting better at, you know, even in an Omicron situation? I think the answer is yes. You know, the science that we have, the meds that we have, et cetera, are pretty remarkable.
If the world is getting better, Uber is going to get better. Then I would again point to the delivery business as well. The good news is the mobility business is getting better even in what is, you know, a variable environment right now or uncertain environment. Our mobility business continues to get better, but also our delivery business is at scale and it's driving margins of scale too. I think from a portfolio standpoint, we're very, very comfortable with where we stand.
On the third quarter call, you mentioned that in the U.S. for 4Q, you'll see take rate improvements due to the tapering off of driver incentives. You also said we'll see take rate dilution at the total company level as you lean into supply internationally on top of kind of the seasonally lower 4Q take rate. Do you still see this as the case, or does Omicron have to kind of result in more incentives?
Yeah, I think we're pretty late in the quarter, and again, based on the trends that we've seen, we're constructive as it relates to margins in general. And you know, if anything, we talked about the volumes. The volume trends are quite constructive. And I think if anything, as it relates to our Q4 guidance, we're pretty confident that we're gonna come in the kind of top half of that guidance versus the middle in terms of all the activity that we've taken and in terms of all the trends that we're seeing.
Looking beyond 4Q, you know, there's been a lot of commentary on mobility being even more profitable post-pandemic at a lower run rate on gross bookings versus pre-pandemic. How should we think of margins going forward, given Nelson's recent comment on tilting back to growth, some noise around driver supply and kind of this risk that regulatory overhang could structurally increase costs?
Yeah, I think that the point that I'll make is, first of all, regulations have been a part of our business before I joined Uber, right? It's been a constant as it relates to the business. We have. I think a lot of the regulatory changes have been constructive. We've, you know, Prop 22, constructive, huge win for us and obviously we're hoping that that kind of a driver-forward regulation, you know, stands in the U.S. Drivers love Prop 22. Workers in the U.K., it's similar. It's an IC+ kind of model. We have adjusted our model essentially and improved margins even with these kinds of regulatory changes. I don't see that changing going forward.
I think I mentioned at the beginning of the call that we think actually incremental margins as it relates to the mobility business in 2022 are gonna be closer to our long-term growth rate, which if you do a bit of math, means that there's upside on the margin going forward. I think the point that I've made and Nelson has made is we're also able to lean into growth drivers, and these include newer countries where we continue to penetrate into. This is Germany and Spain and hopefully Italy or Argentina, Turkey, et cetera, Japan, South Korea. Those are growth drivers that we're gonna lean into. Hailables is another growth driver. And you know, wiring up the taxis of the world. Low cost and share is another growth driver.
Then some newer products like Reserve, et cetera, are more segmentation drivers that actually deliver higher service levels and consumer satisfaction, but are positive on a margin basis that then we can deliver to the bottom line. I think the tilt to growth is we're finally past, you know, almost past the coronavirus, and we're looking not only to drive incremental margins, but also incremental growth. We have been investing in these areas. Again, another one I call is low cost and high capacity vehicles. We've been working on high capacity vehicles for the last three to four years and are looking forward for investors to see some of that, as we highlight not just profits, but a long-term growth.
How important is it to bring prices to the consumer back down to pre-pandemic levels, you know, even if not all the way down, given cost inflation with like cars, gas? You know, are there use cases that aren't addressable at current price points? You know, what is the revenue maximizing trade-off between volume and price?
Yeah. I think that, first of all, the most important factor that we're looking at is service levels and price. And a lot of, you know, consumers actually, there's a very interesting trade-off between time and price that they make, and it's a different trade-off in time and price depending on individuals. Generally, surge levels across the country are now coming down. They're significantly lower than they were previously. From that standpoint, unexpected higher prices is getting much better as supply continues to improve. ETAs nationwide are now down below the magic five-minute mark now, which is great. We're gonna keep driving them lower. In New York, they're like less than three minutes, for example, as well. ETAs are coming down as well. That said, there's no question we're in an inflationary environment.
I think the inflationary environment is true of transportation, right? It's like you can't buy cars, you can't buy used cars, gas is more expensive, et cetera. I do think the base price of anything transportation is going to increase, and that includes Uber. What we've seen is there's still lots and lots of demand for Uber because of the convenience, because of the safety, because of our always-on nature, et cetera. At the same time, I do think it's important for us to invest in lower cost product, which is why we have brought back shared rides. We continue to invest in two-wheelers and three-wheelers, and we're looking to improve our supply in terms of, say, wiring up every single taxi in the world as well.
Anyone can get from point A to point B, including transit, including e-scooters, et cetera. Most of those growth areas, whether it's scooters or transit or hailables or Share or high-capacity vehicles, tend to be structurally lower cost than call it me and mine, UberX. We're working on both. Gotta make sure surge comes down, gotta make sure ETAs come down as it relates to X. It'll move up with inflation and consumers are willing to pay. By the way, higher prices generally are structurally better for our profit margins, even though we're actively making sure that prices are no higher than they should be. Then we're working on a portfolio of strategic lower-priced products, I think in a way that at least I don't see any of our competitors doing. I think we should have an advantage there.
Can all of these new products drive growth faster, say in the second half of 2022 and then 2023? Can you grow faster than kind of where bookings were growing pre-pandemic? I think it was 24% ex FX.
Oh, yeah. I think these, the new products are growing at multiples, those kinds of rates. You know, another one that I'll give an example for that is a very large factor for us is enterprise, Uber for Business. We have a structural advantage in that we can sell both food services and mobility services now into enterprise is unique. Some enterprises, if employees wanna stay home, wanna give them free lunches, et cetera, we can do that for you. Again, it's one account and it's Uber and it's one identity, one payment system, et cetera. It's incredibly convenient. You know, we are looking to increase our enterprise business, for example, multiples of where it is now over the next couple of years.
Hailables, taxis, enterprise, low cost, these are all efforts that are going to grow, you know, 50%+ over the next couple of years, as we first innovate into them and then lean into them as well.
Shifting over to the delivery side, you know, with so much capital flowing into fast fulfillment, grocery, convenience, you know, the competitive landscape's changing pretty quickly. You know, how long do you think it takes for competitive intensity to normalize, and what gives Uber the right to win here?
I think on fast convenience, listen, it's a super interesting product and we're engaged in fast convenience through partnership with a lot of players, the Gopuff of the world, Carrefour in France, many other retailers. We're engaged in fast convenience because they see the convenience factor as well. Then in certain markets like Taiwan, we're setting up our own stores just to understand the experience and optimize experience and help our partners build an experience which we think is best of breed. We have not elected kind of globally to go put our own stores out there. We don't think it's the best use of capital, and we think we can achieve what's really important, which is that customer delight through fast convenience, through partnership.
We will bring what we're really good at, which is mass audience, global audience, great brand, great service, and very fast service, along with partners who will plug into us as it relates to their inventory APIs and delivery APIs. We think it can be a win-win through partnership, it's certainly something that we're looking for. It's my personal belief that the capital flowing in right now is getting to the point of being uneconomical, which is why we're not, you know, putting in huge amounts of capital there. We prefer to partner. You know, these markets always I think you're seeing it now, which is the high revenue promises in 10 years, I think markets are valuing at relatively lower multiples than they were. When is it all going to kinda flush out? Who knows?
We think our strategy is a sound one, certainly compared to everything else that we can be doing and the focus that we wanna put in terms of building on mobility, the opportunity we have in freight, and then building the platform on top of it all.
You know, TAM in last mile delivery, particularly ex the U.S., has been something investors have grappled with. You know, in countries where Eats is the dominant food delivery service, can these new verticals be meaningful contributors?
The grocery TAM is higher than food TAM generally, if you look country by country. I think the ultimate TAM is for grocery and new verticals is larger than food TAM. The penetration of grocery now globally versus food is about 50% of food penetration. So we think the opportunity is, you know, we built a delivery business that's as big as the mobility business. Our goal is to build a grocery and new vertical business that's as big as our food business over the next few years. We think we have the best team in the business, and we have a team that's, you know, with Cornershop, obsessed over the details here, and the details as it relates to grocery are myriad.
You know, how do you make the picking and packing replacements of products predictions in terms of whether a retailer is carrying a product or not because sometimes some of these retailers don't have live inventory, shopper assistance, et cetera. These are all features and customer delight features that Cornershop has already built that then we can put on top of the Uber stack, which we think allows us to get to that TAM on a global basis faster than any of our competitors with a service that truly is a delightful service as it relates to platform engagement. We're pretty bullish on it.
I do think that as it relates to grocery and new verticals, what you'll find us doing is net be more aggressive outside of the U.S. to some extent, and then in the U.S., really focus our strategies on some anchor retailers like the Albertsons of the world or Costco and Tesco, et cetera. We're really gonna be retail partner focused in the U.S.
If we look back at 2020, it looked like delivery had OPEX of about $4.8 billion. That's expected to be about $8.5 billion this year, 78% growth. The Street's modeling a sharp decline in OPEX for the next year, but by the sounds of it sounds like you're tilting towards growth, which could mean incremental OPEX.
I think he was asking about incremental margins for mobility. I just want to answer that question before we say goodbye, which is one of the confusing circumstances as it relates to mobility when you look at the numbers, is that we are changing accounting methods in some countries where essentially we're the merchant of record. When we're the merchant of record, essentially we recognize bookings as revenue. Hey, Lloyd, I was answering your delivery question.
Great. Sorry about this.
As it relates to delivery, what's actually happening is accounting, which is as we change our model to become a local player in certain markets, we become merchant of record in that market, which means we recognize gross bookings as revenue. It's partially responsible for some of our revenue margin take rate increases on a year-on-year basis, and we recognize courier costs as operating costs. The majority of the operating cost increase that you see is actually because of our recognition of courier costs as costs instead of contra revenue. If you normalize for all that on a year-on-year basis, with bookings up about 90%, operating costs are up about 65%, which is 200+ basis points of margin improvement. You should continue to expect those trends to continue.
The four kind of, I'd say, big mega trends that you're seeing in terms of delivery is better CPT as a result of kind of our marketplace efficiency and our logistics capabilities getting better and densifying the network. Our ads business adding pure margin to the business. The cohorts of repeat customers getting bigger, along with membership as a percentage of new customers, and then continued free low-cost customers coming in from the mobility side. All of those are margin kind of increasers. We're reinvesting some of that to grow. We're reinvesting some of that to gain CT like we are in the U.S. now in the second half of the year.
That because of those four entities, we have room to improve margins, and as it relates to next year, continue investing in grocery while delivering incremental margins at or above our long-term margins. We think we're in a really, really good place. The delivery business is at a particularly good place, both in terms of growth and bottom line at this point.
Well, Dara, sorry for the technical difficulties. This has been great. I think we're out of time. Thank you for doing this. Sounds like things are in a much better place than I think a lot of investors had feared. It's great to have you air all this out. Thanks a lot for being here.
Thank you very much for having me. Appreciate it.
All right. Thanks everyone for joining.