Earnings Call: Q2 2021

Aug 4, 2021

Good day and thank you for standing by and welcome to the Uber Q2 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Balaji Krishnamurti, Head of Investor Relations. Please go ahead. Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies' 2nd quarter 2021 earnings presentation. On the call today, we have Uber's CEO, Dara Khosrowshahi and CFO, Nelson Chey. During today's call, we will use Both GAAP and non GAAP financial measures and additional disclosures regarding these non GAAP measures, including a reconciliation of GAAP to non GAAP measures are included in the press release, supplemental slides and our filings with the SEC, each of which is posted to investor. Google.com. As a reminder, these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call are 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 except as required by law. 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 as well as risks and uncertainties described in our most recent annual report on Form 10 ks for the year ended are available. Following prepared remarks today, we will publish the prepared remarks on our Investor are in the Investor Relations website and we will open up the call to questions. For the remainder of the discussion, all second quarter growth rates reflect year over year growth are in addition to year over year trends. Lastly, we ask you to review our earnings press release for a detailed Q2 financial review are in our Q2 supplemental slide deck for a number of additional disclosures that provide context on recent business performance. With that, let me hand it over to Dara. Thanks, Balaji. On our last call with you, we said that we will lean in to reignite driver and courier growth. Have done so aggressively and we made significant progress. Matching and balancing supply and demand market by market at the right times, at the right places and at the right price is the key to our marketplace and we do that better than anyone else in the world. As a result of our driver focused investments, everything from refreshed digital marketing to more attractive incentives To good old fashioned phone calls to folks we haven't seen in a while, monthly active drivers and couriers in the U. S. Organically increased by 420,000 from February to July and we gained an additional 110,000 active couriers from our Postmates migration. In particular, the number of mobility drivers in the U. S. Ended the quarter, up 75% year on year on year. We also made several operational and product improvements to the onboarding process that led to nearly a quarter of new drivers signing up to both Drive and Deliver And we cut courier onboarding time by over 90%. We continue to see strong earner momentum early in the second half of the year And we've been able to taper our short term incentives as we hit our stride. The good news is that drivers increasingly want to get back on the road. In June, 60% of inactive drivers told us they intended to start driving again within a month. That's up from 40% in April and 90 Percent of drivers told us they expect to come back by September. We're also beginning to see marketplace metrics revert to normalcy in several markets with surge levels and wait times are back to nearly normal in Miami, Atlanta, Dallas, Houston and Phoenix. But in major cities like New York, San Francisco in L. A. Demand continues to outplay supply and prices and wait times remain above our comfort levels. Our investment in the earner experience is a are in a fundamental cross disciplinary and long term initiative for our company. From doubling down on our app quality to targeted and personalized re engagement campaigns To completely redesigning our onboarding flow to make it easier and faster than ever to earn safely, to rolling out unique programs like Free language learning from Rosetta Stone or free tuition with ASU. Our Earner Super App is unique in the depth and breadth of earnings opportunities we can offer drivers and couriers Globally. We have a lot of work to do and it's on us to ensure Uber remains the most attractive and rewarding platform for on demand work in the world. I also want to acknowledge the Delta variant. Thanks to the incredible effectiveness of the vaccines, we continue to see GD growth in our business from June to July Despite the impact of the new variants, where markets are recovering, our mobility and delivery businesses are emerging stronger together. As of last week, our total gross bookings in New York City, London and Paris are over 30% higher than July 2019 as Mobility has made a nearly full recovery. Nelson will have more specifics, but we have confidence in our ability to manage through any scenario Just as we've done over the past 500 plus days. Our ambition is to help people go anywhere and get anything, Whether they first came to Uber via rides, Eats or freight, consumers, merchants, companies alike are increasingly getting used to doing more with Uber. During the pandemic, we've shown how each of our multiple business lines can provide a hedge against the others. But more exciting is how innovation in our product and brand is driving cross pollination between our customer bases. In other words, our businesses do provide a hedge, but more importantly, strengthen one business can strengthen the others. You're well aware by now that the Rise app is acting like a free marketing engine for delivery business. What may be less obvious is that delivery is now increasingly driving consumer acquisition for mobility. That's because in many markets, especially suburbs and smaller towns, Eats is sometimes the first way consumers engage with Uber. We've launched proactive efforts to convert these Eats first customers into Uber Riders. In Q2, over 20% of mobility's first time riders in the U. S. And more than 40% of first time riders in the U. K. Were existing Delivery to consumers with this contribution rapidly growing over the last year. Over time, we expect our growing new verticals business to increasingly benefit from and contribute to our platform. Already over 3,000,000 consumers are ordering groceries, convenience items, alcohol and more on Uber's app each month And this is before we've even fully addressed the U. S. Opportunity. Notably, consumers acquired through one of our new verticals offerings spend more than twice as much as consumers acquired are in the process of delivering a strong growth in our stores. We are beginning to broadly roll out grocery powered by CornerShot in the U. S. Having doubled our have spoken to more than 400 cities in the last few weeks and expect this to be the next pillar of growth for Uber. Underpinning all of this is our membership program. Just a year ago, we began to roll out UberPass in earnest and now drives 30% of delivery GVs in the U. S. And roughly 25% globally. Consumers who regularly engage with both mobility and delivery now account for nearly half of our total company gross bookings. For these consumers in particular, Pass is a no brainer and we see a long runway for increased adoption. We're also seeing the benefits of cross platform synergies from merchants And other businesses, Uber remains the largest global on demand delivery platform outside of China with more than 750,000 monthly have merchants on our platform and our leadership position continues to grow. We're now the category leader in 8 of our top 10 delivery markets with clear number 2 positions in the U. S. And the U. K. We're proud that Uber Eats, Postmates and Corner Shops has helped many small businesses offset Merchants have increasingly embraced their ads offerings to drive significant demand application at a reasonable cost. Our original goal was as of this year with $100,000,000 of ads run rate revenue, but we now expect to surpass that goal and to end 2022 with at least $300,000,000 in run rate revenue and high margin adds. Beyond last mile delivery, Uber is increasingly powering 1st and middle mile logistics with Uber Freight. Notably, roughly 50% of our freight volumes come from grocery and consumer staples shippers. Freight has successfully disrupted the freight brokerage market with their innovative technology is now one of the largest digital freight brokers globally excluding China. We believe there's a large opportunity to be Preferred end to end logistics partner for shippers. 80% of shipper decision makers manage both full truck loads as well as last mile shipping And almost 60% of survey customers have last mile needs. With the pending acquisition of TransPlace, we have the potential to create are the 1st end to end digital logistics platform that could one day power the movement of goods all the way from point of production to the consumer. While none of us can predict the macro future or the effects of the delta variant going forward, we continue to see Uber gaining momentum as we expand our services and footprint have become a bigger part of the daily local habits of millions of consumers, earners, merchants and shippers all over the world. We see the path to sustainable and improving EBITDA profitability in the next 6 months, but it's our growth potential over the next five will be happy to take the 10 years that has me and the team excited and hungry to be brought. Now over to Nelson. Thanks, Dara. As Dara mentioned, we are of course still seeing impacts from the virus. However, on balance, we continue to make good progress with total gross bookings growing from June to July. Mobility gross bookings were at a $39,000,000,000 run rate in July with gross bookings up 6% month over month and 83% recovered versus July 2019. U. S. And Canada Mobility gross bookings were up 7% month over month and 76% recovered versus versus July 2019, while APAC was a mixed bag with New Zealand, Hong Kong and Japan growing versus July 2019, but India, Australia and Taiwan are impacted by ongoing or new lockdowns. Delivery gross bookings were at a $51,000,000,000 run rate in July with gross bookings up 4% month over month, up are 56% year over year and up over 2 60% versus July of 2019. Delivery has remained relatively steady since March even as cities reopened. We are witnessing very healthy trend lines in major markets like Sydney, New York and London with Paris as an outlier and we will always aim to have the vast majority of our growth be organic. Indeed, our delivery business has organically grown at a greater than 100% compound growth rate over the past 4 years. At the same time, we do not hesitate to leverage M and A where appropriate, including both acquisitions and divestitures. Just as we divested several assets last year that along with cost rationalization helped improve our cost base by over $1,000,000,000 We have also made several attractive acquisitions. For instance, our acquisition of Careem has led the markets in the Middle East are turning into some of our most profitable markets operating well above our mobility long term margin target. More recently, our acquisition of Postmates has helped us establish a number one position in LA, the 2nd largest delivery market in the U. S, are allowing us to execute organically to establish category leadership in New York City at the same time. We have now largely completed the integration process and expect to deliver on our synergy targets that we laid out at the time of the acquisition. Turning to our balance sheet, the past several months have been eventful for Uber's equity investment portfolio as several of our portfolio took steps to become publicly traded entities, including Didi, Zomato, Grab, Aurora and Joby. At the end of Q2, our equity stakes portfolio was carried nearly $15,000,000,000 or over $7 per share. As As we have previously noted, some of these stakes are more strategic and others are more financial with Didi being the clearest example of the latter for us. As we emerge from our post IPO lockup restrictions, we will evaluate some of these positions as long as the market is reflecting a reasonable value for And as we have said previously, we don't intend to run an investment firm, but we have sufficient liquidity to ensure that we have the flexibility to maintain those positions with the aim of maximizing value for Uber and our shareholders. Finally, turning to outlook. We were very clear in the spring that our mobility marketplace in the U. S. Was not delivering the magical experience we have all taken for granted. As consumer demand returned faster than drivers as markets opened up, We emphasize that it was not okay and we will proactively invest to re energize supply. As expected, These efforts impacted our margins and adjusted EBITDA in Q2. At the same time, we told investors that we have the levers available to achieve total company quarterly adjusted EBITDA profitability later this year. We remain committed to it. The good news is driver supply has been growing and our marketplace dynamics are improving. Drivers on our platform are earning more than other alternatives. Our gross bookings continue to grow and in July our margins are already improving benefiting from our investment in Q2 to accelerate the flywheel. In July, new driver additions on Uber in the U. S. Grew 30% month over month. That's right, 30% month over month, Even as we pulled back on incentives and improved our margins. As our investments taper, we expect mobility to show strong leverage in the back half. For context, the major markets like Australia, Canada, France and UAE, where supply has organically recovering without significant investments from Uber, Our Mobility EBITDA margin in Q2 exceeded long range targets ranging from 46% to 67% of revenue. In the U. S, our take rate in Miami, Atlanta, Dallas, Houston and Phoenix has nearly reverted to pre COVID levels in July. We expect our delivery business to continue to improve its bottom line while growing at scale. Our delivery businesses outside the U. S. And Canada was just shy of breakeven in Q2, while we are consciously leaned into the U. S. To improve our category position. We expect will start delivering on our Postmates synergy targets in Q3 and deliver additional leverage through improving network efficiencies and lower incentive spend across Pre COVID, we used to provide guidance around our expected annual gross bookings and adjusted EBITDA, which we believe provides investors with some transparency on our near term goal are without being overly focused on quarterly fluctuations. With our business emerging from the pandemic, we believe this quarter is the right time to return to providing guidance are on near term trends. However, there is still a reasonable amount of uncertainty in the world and as a result, we will provide guidance for Q3 on this call. With that context, for Q3, we expect total company gross bookings to be between $22,000,000,000 $24,000,000,000 and total company adjusted EBITDA to be better than a loss of $100,000,000 and for Q4, we expect to achieve total company EBITDA profitability. And with that, let's open it up for questions. To Nissim Ross Sandler from Barclays. Your line is open. Hey, guys. Thanks for all the color on the guidance. Just a question on 3Q for the rides business. It looks like your EBITDA is going to swing up about $300,000,000 to 3.50 million to about 500 or so. So how should we think about the take rates in rides in 3Q System wide, you mentioned a few cities that are back into the pre COVID levels, but how do we think about overall take rate? And then what level of driver incentives are baked into that EBITDA run rate? Thanks a lot. So, Ross, As you heard in my prepared comments, we did give some update about what we're seeing in July. And you heard us talk mention not only a growth, but that margins are improving. So if margins and take rates stay where they were just in July, so we just hold on and then we continue to grow our volume as we expect, will be comfortably within the ranges that we're talking about there. So we're already seeing that pullback and I think you heard my stat that We increased new drivers on Uber platform in the U. S. By 30% between July versus June and that's as we pull back on incentives. Because again, when we did this, we knew that we wanted to build long term sustainable profitability and growth. As you saw coming out of the pandemic, Our marketplace wasn't operating efficiently or functioning correctly and you heard it in my comments. So we invested on the supply side to get our marketplace healthy again and we're seeing the benefits of that today. So we are able to pull back in incentives. If you just look at where we are in July and you run that forward, we should be able to achieve that kind of range that you're talking about, Which is why you saw me put out the guidance on Q3 on the bottom line. And also in the investor deck, there's a chart on that, which hopefully can provide some simple ranges to help guide in terms of where we're getting to. Okay. Next question. Your next question is from Justin Post from Bank of America. Your line is open. Great. Thanks. I think there might be a little confusion on the investment levels at Uber versus, basically Lyft in the U. S. Could you explain why it might be a little bit different dynamics in the second quarter and why you may have had a bigger profitability pivot? And then maybe if you could if you can give us an organic update on delivery, maybe ex Postmates or some of the acquisitions, Just how you did organically in the quarter? Thank you. Yes, sure. Listen, we can't speak for Lyft, But I think on balance, we were super aggressive as it relates to driver acquisition levels. And when we compare The number of new drivers coming on to the platform quarter on quarter, month on month, the monthly drivers directly against at least the numbers that we heard from Lyft, our numbers are higher on a Direct comparable basis. So I think that if you compare our numbers to Lyft, again, we're not privy to their numbers. We invested early and aggressively and we're seeing very positive momentum as a result of that early investment. And we've been able to pull back as it relates to incentives and revenue margins in July have come up significantly over Q2 And the momentum that we see in driver and carrier growth is continuing if not strengthening. So that gives us a lot of confidence as it relates to Q4 Q3 in terms of revenue margins, take rate and in terms of EBITDA. And We think the Q2 investment that we made was the right investment and it puts us in very, very good stead as it relates to Q3 and Q4. As far as Eats goes, the vast majority of Eats' growth is organic. So broadly, we are seeing monthly active Eaters on a global basis up about 40% on a year on year basis. We are seeing basket sizes up about 10% on a yearly basis. We're seeing frequency of orders up as well. So the organic growth rates for Uber Eats It's well over 50% and most of that is really about continuing to build up audience on a year on year basis. We're obviously happy with the Postmates acquisition in terms of being able to drive synergy value and getting to a number one position in LA We're number 1 in New York as well, but it's really about the organic growth and it's about active eaters, it's about basket size and it's Orders per heater and all of those are running positive for Q2 and we think they'll continue to run positive for Q3 and Q4. Great. Thanks, Dara. You're welcome. Next question. Your next question is from Brian Nowak from Morgan Stanley. Your line is open. Great. Thanks for taking my questions. I have 2. The first one is on sort of the, Dara, the point around the investment in the drivers. I feel like we pay so much attention to these excess incentives. But when you're talking about marketing and onboard costs and background Jackson, Vaccination Promotion and Education. Can you just help us better understand a little bit how big was the investment To bring on more drivers in the quarter. And how do we think about that throughout the course of the year, just so we can sort of think about 2022 when hopefully Those costs are not as big of a burden. And then secondly, on UberPass, appreciate the color on the volumes. Talk to us a little bit more about areas you think you've had some in driving adoption of Uber Pass and in your mind still low hanging fruit areas to drive more adoption of that for riders as the rider recovery continues? Thanks. Yes. So in terms of driver acquisition spend, the heaviest driver acquisition spend and incentive spend that we think we will see and we saw was in Q2. We really had to take action very quickly because the marketplace was not at a place that we considered healthy And we wanted to lean in to get wait times down to get surge levels down and all of those metrics in general as far as surge and wait are moving in the right direction and in a bunch of cities, southern cities, etcetera, they're actually back to normal. And the vast majority of the spend as it relates to driver acquisition is really incentives. It's about putting dollars in front of drivers and our Top 20 cities drivers for mobility are making over $40 an active hour, Including just earnings and tips as well. So the good news is we're now in a good place where we're able pull those investments back. If you look at July, volume growth will add about $200,000,000 in EBITDA, take rate improvements will add about $150,000,000 in EBITDA, which gives us a lot of confidence as it relates to our Q3 numbers. And we're running positive and these numbers aren't theoretical. They're based on actual July numbers. So I think from that standpoint, the investments were big, the investments were well worth it and we're on the positive side of the ledger, so to speak. As far as UberPass goes, the most important factor for UberPass for us is what is the retention rate? And what we're seeing is, after some optimization, building up the product, etcetera, the retention rate For our cohorts that are with us more than 6 months is now 98% retention rate on a month on month basis. So now that we have really perfected the product, driven the savings, etcetera, we can now lean into Member growth, the vast majority of member growth is going to be organic. It's putting the product in front of Both are riders and drivers. We think the mobility business coming back is going to be a big benefit. And you heard us talk about how Users who use both mobility and delivery account for more than 50% of our gross bookings on a global basis. So now that we have the retention, We can step on the gas in terms of acquisition, but we're really going to take advantage of that 100,000,000 monthly active platform customers And pull what's a great product in front of them and we think that we'll get a significant amount of organic traction there. Great. Thanks, Zara. Sure. Next question, please. Your next question is from Mark Mahaney from ISI. Your line is open. Mark? Thanks. A question on the drivers. You mentioned those two numbers about the drivers up 75% year over year in June and up a couple of 100,000 February to July, those drivers, can you tell how many of those are absolutely new drivers to the platform versus lapsed drivers or people who didn't drive during the COVID crisis and have come back? Yes, Mark, we can. And the majority of Drivers who are coming back to the platform are what we call resurrected drivers. They've driven with us in the past. Number one reason why They had not driven is because of safety concerns, vaccines, COVID, etcetera. As vaccination rates go up, we are seeing the resurrected drivers come back. So Because of the size and scale of the business, we can reach into our database and we're getting real momentum in terms of those resurrections coming back. So I think all of the signs are quite a positive. And one quick follow-up question, please. Any comments, updated comments on The regulatory outlook and particularly on the state of Massachusetts. Yes. I think in the state of Massachusetts, listen, we think the right answer is our IC Plus model, right, which is independent contractor with benefits. Our drivers love it. Prop 22 has proven to be incredibly popular with California drivers. The vast majority of drivers prefer IC Plus over employment, full time employment. And with Massachusetts, we are I think that voters in California voted for it because they had driver support. I see no reason why voters in Massachusetts are going to be any different. We absolutely prefer a legislative come in Massachusetts, but if we can't get there, we'll take it to the vote and based on what happened in California, we're quite confident. Okay. Thank you. Sure. Next question. Your next question is from Doug Anmuth from JPMorgan. Your line is open. Thanks for taking the questions. I just wanted to clarify on driver supply. I think a few months ago, kind of your expectation was That things would kind of return to normal in the Q3. By the end of Q3, is that kind of still what you're can hear given your trajectory and the tapering that you've mentioned? And then second, on profitability, is that overall and delivery Profit in the 4th quarter, just wanted to clarify there. Thanks. On the 4th quarter, it's total company EBITDA profitability And then even and the Q3 guidance was total company as well, so that includes all aspects of the business. But if you on my prepared comments, I just talked about that, we'll continue to make progress and improvement on delivery and we'll and again, we expect our EBITDA profitability of our Mobility business continues to improve. And again, we're pretty confident in terms of how we're doing it, which is why we put out the guidance for Q3. I think if you look in the supplemental slides, you also see that our delivery business outside of the U. S. Is an inch away from EBITDA Profitability, so again this isn't a theory. We're executing on it quite effectively and we're confident in our stance overall profitability. And then lastly, you did mention something about driver supply returning. So what I would say is that you heard us both make comments in the prepared remarks that Again, we invested heavily in Q2. We're seeing the benefits even in July, which we talked about. The margins are improving. We're adding more drivers and we've pulled back on incentives. And what I would suggest is that our ability to achieve those numbers is really just based on take rates Where they are in July, playing forward for the rest of the quarter. And I do think on Trogarzo, Vadhi, the other thing that I would add is, It's not just a question of money. Listen, short term, we have to lean in as it relates to incentives and driver earnings are definitely high and obviously driving is a very are flexible way to earn, but I would also underlie the operational and the tech improvements that we have made. So for example now, We're testing the capability to bring on drivers. Usually when someone wants to drive a person, we have to do background checks, etcetera, And not just in the state that you live, in other states as well, we can onboard drivers very quickly to deliver food. And as we process all of the regulatory checks that we have to be very careful that we do on the ground in each state, We can then move them over to driving for the mobility business as well. And that has allowed The onboarding flows, the CRM campaigns that we are driving, the incentive technology Has allowed us to move from a period of heavy spend and adding drivers to much Less heavy spend, so to speak, and adding both couriers and drivers at the fastest pace that we have For the year, I mean, July looks really good. And if August September anything like July, we will be in very, very good shape. Great. That's helpful. Thank you. Sure. Your next question is from Brent Thill from Jefferies. Your line is open. Thank you. Any color just as it relates to pricing trends for the second half and how we should think about that? And Dara, on the Eats business, if you could just comment on the frequency. I know you had mentioned on the last call that there's perhaps I'll slow down in terms of frequency. How are you thinking about that now as you look forward? Yes. I'll start with the second First, which is, we actually have not seen a material decrease in frequency as it relates to our delivery business, and we think it's just because a higher portion of our delivery customers are using the So we always thought that could be an offset, but we weren't sure of the relative offset between pass because as non members become pass members may have free trials and especially if they when they graduate into paid membership and then that 6 month cohort that has a 98% retention, The number of orders per heater and riders and rides per rider goes up Materially. So the question for us was, well, is the positive momentum of membership going to Outdue, let's say, the negative of cities open up. And so far that is the case, so that orders per eater Has stayed very consistent and people are going out, which is great. But we do think that order There'll be a tailwind in terms of orders per eater as we continue to drop membership. As far as pricing trends in the second We are seeing in July early August, we are seeing pricing ease. It's still up year on year, But the pace of the price increases looks like it's easing as we get into a more normalized supply situation, which we think is a great is a real positive for the listen. Great. Thank you. You're welcome. Your next question is from Deepak Mathivanan from Wolfe Research. Your line is open. Hey, guys. Thanks for taking the questions. Just a couple of ones. So first on Eats EBITDA, given the high incremental margins on this business below the revenue margins, how much are you reinvesting into the business right now on non food and some of these other categories? And what are the trends underlying trends in terms of profitability of the core food business? And then second question, just to follow-up on the rights take rate. In addition to U. S. Growing, you also saw European markets recover during our Q2 where the impact of driver incentives is somewhat low. So is the 280 basis point sequential decline in take rate predominantly from U. S, can you give some color on kind of Quantifying it by geographical regions? Yes. As far as delivery goes, we are spending a fair amount as it relates to Grocery new verticals, etcetera. Grocery new verticals accounts for about 5% to 6% of our overall GVs and it's growing at are pretty healthy rates, but we think that we can get to delivery EBITDA profitability by the end of the year, including grocery Well, so yes, we're leading into those parts of the business. But really the delivery story for us is, As a larger percentage of our delivery customers are repeat customers, our the incentives that we have to put into the marketplace, the marketing spend that we have to spend to the marketplace comes down. Generally in the U. S. And other markets, As the marketplace becomes more efficient and we get kind of more frequency in the marketplace, were able to drive the cost per trip down because couriers can batch We can batch 2 or 3 deliveries per courier. The time that they have to be on the trip reduces as we add more restaurants into the etcetera. So the combination of marketing efficiencies that we get and cost per trip efficiencies that we get allow us to continue to invest aggressively in growing our delivery business, but at the same time improving our margins as well And investing into the grocery business. Regarding your question on the take rates, you're right. In APAC and Latin America, We are not expecting any take rate changes, if you will. So much of the investment was in the U. S. And Canada and there was actually some in Europe as well In order to get drivers back and help build supply. Got it. Okay. Thanks so much. Sure. Your next question is from John Blackledge from Cowen. Your line is open. Great, thanks. Two questions. First on the Delta variant, could you talk about mobility trends in the recent weeks in areas where Delta variant has spiked and also Delivery trends along the same lines. And then on delivery, second question, how is Uber differentiating versus other competitors In grocery and other across different geos. And what's kind of the goal in the U. S. Given that the U. S. Has several Yes. I think as it relates to Delta variant trends, where we have seen shutdowns, We see significant changes as it relates to the pattern of the business. So for example, if you look at our supplemental deck, Australia and Sydney, for example, Where city shut down, we see mobility obviously take a hit, but we see essentially The opposite happened in the delivery side of the business. That's a hedge that we talk about. And even net of the hedge, mobility and delivery tend to be up pretty significantly on a year on year basis, certainly if we compare it to 2019 volumes as well. Where we don't see where there aren't shutdowns, it's really hard to tell. It's people still want to go out And there may be slight changes in behavior, but the non material changes in behavior and kind of the underlying growth that we see in the business takes over. So certainly the July trends that we saw relative to June were pretty encouraging. But No one can predict what's going to happen with Delta going forward. But so far we're hedged and the trends that we're seeing are pretty good. As it relates to differentiating and delivery, listen, I think the differentiator that we have Is the audience and the Uber platform, right? So we actually were late in the delivery game. We were one of the latest players Buildup's delivery business, we built it based on the Uber brand, the marketplace matching technology that we have, the pricing technology, routing, etcetera, Three quarters of essentially the elements of what is a ride and what's it delivering ultimately what's going to be a grocery, three quarters of the elements that we're building in our stack are common elements that our engineers are coding. So we essentially get to have engineers working on common elements. We got bigger data sets than anyone else. We're able to train our algorithms over much larger data points, global data points versus our Competitors which allow us to build a matching, routing, incentives, marketing engine That is more personalized and just has greater capabilities than anyone else. At the same time, we have Ops teams on the ground in every single market. We understand the regulatory marketplace, the overheads that we have are much lighter than our competitors. It all translates into cost of customer acquisition is lower, lifetime value is higher because of the higher frequency counts that we have with our customers And overheads are lower. So lower cost of customer acquisition, higher lifetime value, lower overheads and greater capabilities, That's the differentiator. We built Eats is now number 1 in 8 out of the top 10 markets and we think grocery. We're off to a great start internationally. In the U. S, Instacart is a really strong competitor. I think in the U. S, are going to be practical. We're going to build out our merchant base and we're going to lean in on the RISE and Eats audience to build up grocery in the U. S, But it's a bigger audience than anyone else has, so we think that's a great asset to have. Thank you. You're welcome. Your next question is from James Lee of Mizuho. Your line is open. Great. Thanks for taking my questions. Can you give us an update on competition with BT given their issues with the regulatory base In China, are you seeing them any pullback from their perspective on the international operations? I know you guys competing within at American EMEA, any update would be helpful. Thanks. So, as you know, it's happened very recently and quickly. So we actually really haven't have seen anything material if you will. Obviously, we compete with them particularly in some parts of Latin America. We had a strong second quarter and continue to have Do well as we're into July. We actually haven't seen anything what I'd call material changes. There's always kind of fluctuations by market or city by city, but nothing that I could attach to the broader questions surrounding Didi. Next question please. Next question is from Brad Erickson from RBC Capital Markets. Your line is open. Hi, there. Thanks for taking the questions. Just one more on these driver incentives. I guess, can you just Talk about the confidence level that you can continue to taper here. I think your main competitor here in the U. S. Said they're going to keep those investment fairly high for the foreseeable future. And so I guess just wondering how conservative are your expectations there as we look at contemplated into the Q4 guide and the profit target. And then the second one is just can you remind us just what's built in also to that target regarding advertising. Thanks. So there isn't much more from a run rate standpoint On advertising, it's really coming from mobility recovery. And so if you listen to my commentary, I really did center it and the variability is really around the mobility recovery or the continued recovery. We did notice that Lyft did increase some of their incentive spend both in June, but particularly in July. And as you heard from our commentary based on the results in July, our business is quite strong and our margins have come back. And again, as I reiterated a few times on this call already, as we think about getting to the guidance that we gave you, it's really around not increasing our or take rates, if you will, between now and the end of the quarter, it's just maintaining where they were today in this point of time in Q3 And then some expected increase on the volume side. So again, obviously we can't predict the future, but we feel pretty good about what's What's going on now and it's happening today in the marketplace where they are investing. As Dara mentioned, we invested early and often to build back our marketplace And you do get the benefits of the flywheel. You did hear my comments about in July how we added 30% new drivers without really incrementalize or are spending a lot more on incentives and so we just got about the firewall going and we're getting the benefits from it. I'm not going to comment on what Lyft did and But again, we feel pretty comfortable with where our marketplaces today. And I think the other factor that I would also point out, Brad, is The incentives was the fastest lever that we could pull, but the improvements that we have made in terms of onboarding flow, the CRM Campaigns that we're sending to resurrected drivers, we've done a bunch of testing and learning in terms of what incentives work and which ones don't. All of that is resulting in greater efficiency in terms of our being able to add incremental drivers at a lower cost And are being able to hold on to drivers because earnings are really high. The other factor that I would add is that, Again, based on what we can see of our spend versus lift spend, our base, we went in more aggressively. So I think that when we say we can taper, it's off of a more aggressive base. And if they're putting in incentives, it's probably off of a lower base. So There may not be that much of a difference, but the biggest factor is we now have the machine working. And listen, in July, We pulled back incentives and to offer acquisition and courier acquisition looked really, really strong. So All we're giving you is giving you the facts and our capabilities are getting better and we're getting smarter about how we're are pending and that's what gives us a lot of confidence going into Q3 and Q4. Great. Thanks. Sure. Your next question is from Edward Yruma from KeyBanc Capital Markets. Your line is open. Hey, guys. Thanks for taking the question. I wanted to ask a question about rewards. I know you guys continue to innovate the program. I guess, how How successful have you been in terms of driving incremental usage either on the Eats side or on the ride side? It may be more important like getting a consumer should use both sides of the app. Yes. So, on average, the Past customer is the number of trips, rides and food orders per customer on a monthly basis increases more than 50% on pre pass, post pass. So That incrementality is pretty significant. We see a lot more crossover. And if you look at our supplemental slides, The percentage of our total gross bookings now come from mobility and delivery cross platform users is close to 50% in the U. S. And the U. K. As well. So the path is really working and the most important factor on the path is that 98% Retention rate. It's a really strong product that's sticky and that gives us the confidence to be able to lean in and grow the number of past members that we've got. Got it. And do you think that that helps keep the customer loyal to your platform versus shopping or other platforms from a price perspective? It certainly shows up in the orders per month. It's our belief that it's not purely price. We really invest in the customer service. There's certainly savings. But listen, this is a well warm path. Amazon Prime, I think, touched talk a bunch of players after the value of high frequency type of interactions and we're not inventing anything The good news for us is our pass structurally because of the delivery benefits, because of the RISE benefits, now because of the grocery benefits, Just structurally, our pass can offer more than any other pass out there and the upside that we can see from frequency is just are structurally higher than any other player out there. So we think Air Pass is the upside from it in terms of our business and the retention Just to structure a different place versus any of our competitors. Great. Thank you. You're welcome. Your next question is from Tom White of D. A. Davidson, your line is open. Hi, Tom. Great. Hi. Thanks guys for taking my question. I just hope you could comment maybe on your expectation for staying EBITDA profitable after the Q4 and maybe Whether you really think you should, and I guess specifically I'm talking about your growing businesses in grocery and other delivery categories. How are you thinking about weighing and investing in those long term very large opportunities versus are trying to cater to public equity investors who would like to see some near term profitability. So, Tom, when we talk about getting the EBITDA profitability in Q4, our expectation is that we'll continue and it'll be sustainable and growing As we continue to move forward into 2022. So we believe we'll have enough to invest along some of those other new verticals and other areas and reinvest back in, but we recognize the fact that one of the things we did, if you think about the approach we took this quarter, We have invested ahead to build up our healthy marketplace, so we can both get our margins back, have our businesses healthy and growing are profitable as we move towards EBITDA profitability. It's pretty important for the company and for Dara, for myself That we just sustainably build our business and continue to grow our bottom line as well. Yes. I think Tom, just mathematically, the other factor that I would I will point to is, our mobility business is a $50 plus 1,000,000,000 run rate without COVID and we're seeing a number of markets Back above 100% of 2019 levels. At $50,000,000,000 the mobility margins as a percentage Gross bookings can be 10 plus percent and already is 10 plus percent at a bunch of markets. So the earning power today without kind of growth on that mobility business is really it's a $5,000,000,000 earnings power today. Delivery business, we have markets that are 5% of gross bookings today. So the earnings power of that business is another $2,500,000,000 running overheads of call it $2,000,000,000 on a run rate basis. So the earnings power of this company is very, very significant. That allows us to invest in new businesses. It allows us to invest in new verticals, high capacity vehicles, pool, rental, Reserve, it allows us to invest in grocery, etcetera. And because of the scale of our business And because of the membership program, etcetera, that I talked about, we can invest aggressively and we can be EBITDA profitable And we expect to increase margins for the foreseeable future. And in a Tough way. COVID kind of prepared us for this. We had to sharpen our kind of operating muscles. But this is not a race to profitability and then, oh my god, what are we going to do? This is race to profitability and just keep growing and growing and growing. That is are our goal and I think we got the earnings power to do it. Great. Thank you. You're welcome. Your next question is from Steven Fox from Fox Advisors, your line is open. Hi, thanks. Good afternoon. I was just wondering if you can follow-up on a couple of comments, that one in particular as well as Comment about being practical when considering category expansion in the U. S. It seems like category expansion has better return on your investment and you can be aggressive while still projecting profits. So any longer term thoughts on how to think of not just Groceries, but also the Drizly acquisition coming in other categories as you invest into next year? Thank you. Yes. I think On the long term, I'd just point to Uber Eats. Listen, this is not made up series, right? We built we were late in the delivery game. We built up Uber Eats Using the engineering platform that we built on Mobility, putting a bunch of our great product people, engineers against it. We built up freight organically. We're making a big acquisition, but that's another business that we built. Grocery and Drizly are very, very close to our delivery business in terms of use cases. They cover the fast and frequent. People want their liquor fast. They They want grocery fast and they're also frequent use cases as well. So we are going to use the family of apps that we have to essentially cross promote one service to the other at the right time targeted to the right person using ML algorithms. They all have the same identity. They all have the same payment characteristics. We'll have fraud engines, routing engines, pricing engines, all of them running Against a bigger data set than anyone else can. So just if this is a play that we've run a bunch of times and we're very, very confident that can do the same for grocery and other categories as well. Great. And just to clarify, you said these new categories of 5% to 6% Of delivery booking bookings or total company bookings? I wasn't clear on that. Thanks. Delivery bookings. Thanks very much. You're welcome. Next question is from Jason Helfstein from Oppenheimer. Your line is open. Thanks. Just two quick ones. 1, just how are you thinking if unemployment benefits are extended, would that change your 3rd quarter outlook? And then number 2, I think Kind of SoftBank's position on your stock has been causing headache for many. Any thoughts about how that could get resolved? Thanks. Well, so first of all, in terms of our guidance is really just based on What we think is going to happen, to the extent benefits are extended, we will manage it. As you know, we've made really good strides Right now in the current environment with the current plans in place, so now we don't see any changes irrespective of benefits get extended or not. We do see benefits in terms of folks coming back to DRiV when the benefits do expire, but that's more of an upside, if you will. In terms of SoftBank, it's hard for me to comment on SoftBank. They're we have a good relationship with them. They're an investor. There's lots of stuff you read about what they're doing regarding some of their holdings, particularly given what's going on in China. I think much is done already, but again, they don't really call us for advice on how they're going to trade and what they're going to go do. But again, I think We're fine with whatever they end up doing. Thanks. Your next question is from Mikhail Divnani from Bernstein, your line is open. Hi. Thanks for taking my question. A couple, if I may. First, in the markets where you've where you've invested aggressively and you've seen driver supply improve. Can you see market share gains follow against either competitors or are alternatives in those regions. And then secondly, in terms of the users that you're adding, any way to dimension how many of these are immune to Uber altogether or just older users reactivating? Thank you. Yes. So in terms of the supply question, again, yes, there's a My question again. Yes, there's nothing in terms of are we gaining what I would say is our We call it category position, you guys call it market share. It's very healthy in actually every region of our mobility businesses. And it's either been stable to where it was in Q1 or has improved slightly in every major market. And again, Whether it has to do with investment on bringing drivers back or just the competitive nature of the marketplaces or other factors, it is what it is. I can't are conclusion between different marketplaces. The team is actually doing quite well with executing given the pandemic and then people coming back. What was your second question? I'm sorry, I missed it. No worries. The second question was just on the users, the MAP fee growth. Any way did I mention how many of these are new users to Uber altogether? How many are just reactivating older users? Yes. I'd say that the majority of both our driver growth and new user growth tends come from resurrections. Again, we've got the deepest database that any company has. So we can reach into that database and we reach into that database with essentially CRM are on campaigns. So it's very, very cheap to bring back those resurrected drivers. The second most significant area of growth is essentially The rides business thrown to Eats and then now the Eats business actually thrown to rides and mixing new customers essentially that don't use the other product. And then the 3rd channel is essentially new customers to the platform itself. So it's in that order. And listen, We have active initiatives in all three and we can always do better, but certainly the momentum we're seeing is positive in all three. Operator, we have time to take it. Thank you. Sure. Thank you. Your last question is from Youssef Squali from Chivas Securities. Your line is open. Great. Thank you very much. I have one question for Dara and one question for And, Barrick, can you maybe speak to the driver supply and incentives in states that have ended federal employment benefits recently versus those that did not, how much of maybe the pullback that you're seeing maybe at least partially driven by that? And then Nelson, with profitability couple of quarters away now, literally around the corner, can you maybe revisit long term margins of the business across both rides and eats that you've shared with us pre COVID arguably, obviously, you're in a much, much better financial situation with all the cost savings, etcetera. So obviously ex grocery and ex freight, two areas still of investment. If you can maybe just provide some color on that, that would be great. Will be answered. So I'll go first. So we aren't updating any of our long term margins today. We want to get through the pandemic come out and then we understand that it's something that investors want and so we will address that shortly after. Well, I think Dara gave you at a very high level the math as he went through it and he used as a percentage GBs and he used 10% of gross bookings for mobility and 5% for delivery. And so I can't suggest that's not a good guidepost. But again, we will formally take a look at it as we get through the pandemic. All we wanted to do is just make sure we navigate the recovery that's going on, Particularly in terms of creating equilibrium on our marketplace, which is what we've been able to do through Q2 and starting to see the benefits in Q3. Yes. I think Youssef, I'd ask your question on driver incentives. We have been leaning into driver incentives broadly in Q2. We have been able to pull back from driver incentives broadly in Q3 and we have been able to continue to Acquire and or resurrect new drivers broadly in July even as we pull back incentives just because the machinery and the targeting is working so much better. In states that have ended UI, our marketplace balance in general is in a much healthier condition than states that have not ended UI. There's additional factor that's coming in, in the Delta variant now, which may throw things off, but it does seem to be a positive to us. We don't know if it's because of UI or other factors, but it seems positive. And Our driving kind of driver incentive efficiency improvements has happened in states where UI has ended as well as states where UI continues. Okay. Thank you both. You bet. We can tap it up, Ben. All right. Thank you everyone for joining us And a lot of hard work from the team in Q2 and we see some pretty positive signals as it relates