All right. In the interest of time, we're going to get going. It's my pleasure to welcome back to Communacopia, Dara Khosrowshahi, CEO of Uber. Dara-
Thanks for having me.
Thanks so much. Always great to sit down. Always a lot to talk about.
Always.
I'm going to turn the floor over to you first because I feel like we have to start every year at the same spot. There's always a lot going on with the company.
Always.
You're always trying to move the platform and the products forward every 12 months. Bring us up to speed. What has been the top of your agenda in terms of moving this company forward and aligning strategic priorities with where the consumer-facing products are going right now?
I think the good news for us is that our strategy has stayed fairly consistent over the past couple of years, and in some sense, because it's working. Our mission is still to allow people to go anywhere, get anything, and reinvent on-demand transportation in cities. If you look at our strategy, how we execute on the strategy, there are a couple of important elements that really drive a very specific kind of growth platform for us.
Number one, I think that the interest in on-demand everything, transportation, delivery of food, now delivery of grocery and retail, et cetera, it continues to grow and be a tailwind for our growth. Within that category, we're still very focused on improving selection, having more cars, having every single restaurant available to you, improving quality, improving reliability, and reducing price as we scale.
Yeah.
All of those, we are still not, in our opinion, as good as we can be, and improving reliability, improving pricing, improving quality continues to drive a tailwind in this on-demand industry. That's table stakes that we keep focusing on. Number two for us is that we're focused on a number of growth levers, and the two that I would point out for us is, one is growth into sparse markets.
Uber has always been kind of a big city service. What we're observing with our sparse markets is that, one, they're very large, and we can grow into those markets profitably, and at scale. In the core markets in which we operate, about 50% of the eligible population already use Uber one way or the other. They either use Uber or Uber Eats. In these sparse markets, that number is 10%.
We have a huge kind of opportunity to penetrate into these sparse markets, and those sparse markets are now growing 1.5 times faster than the core markets. That is we are, I'd say, we've been focused now on sparse markets, both in mobility and delivery in every single country that we operate in, really for two years. That growth lever for us has a number of years to go. Second kind of growth lever that we're quite focused on is what we call the barbell strategy, which is we're developing a set of higher-margin products, whether it's Uber for Business or it's Uber Black or now Blacklane, which is part of our family, or priority delivery or advertising.
We are using the excess margins of those businesses to drive low-cost products, to run promotions on grocery to get more people on grocery, to drive two-wheelers and three-wheeler growth in developing markets. The low-cost products tend to bring in a number of new customers that we upsell into the higher-cost products to drive margin. Our margin strategy and our new customer strategy are quite complimentary. When you combine that with on-demand growth, when you combine that with sparse markets growth, you get a pretty powerful kind of growth formula that we have. Once we get the consumers in, we want to drive engagement, and that is membership.
Yeah
That is cross-platform membership. Members spend three times more than non-members. Cross-platform players, and that is unique to us, spend three times more than non-cross-platform players. You are getting in a bunch of new customers, and you are embedding those consumers into the ecosystem, driving frequency. Within all that, we continue to introduce new products, whether it is taxi, which continues to scale at very high levels, or again, it is grocery and retail.
Those new products are entirely new growth drivers for us. Autonomous is a huge opportunity both in mobility and delivery. Everyone is talking about the potential of AI to allow companies to grow faster, at scale, and drive both margin and quality as well. So that strategy, that operational strategy, that growth strategy, it is a playbook that we have been running for the last two to three years.
We have been able to grow our top line over 20% for the past four quarters. We have been able to do it while increasing margins as well. Hopefully we will keep it going for a while.
Okay. All right. It is my job to make sure we double-click on.
Yeah
all of that in the next 28 minutes. Let's start with the subscription offering. You've seen a lot of growth out of Uber One. You referenced the activity level difference when someone becomes Uber One subscriber. Talk to us a little bit about the growth potential in Uber One and what you're seeing in terms of different geographies of the world and how Uber One might traject in different parts of the world.
Yeah, definitely. For a bit of a baseline on Uber One, we have now over 50 million members, Uber One members. We think it is by far the best membership program out there because structurally you can get more out of Uber One, right? You've got more content as it relates to the membership because you get not only free delivery and discounts on service fees and discounts generally, but you're also getting discounts on mobility as well, upgrades, et cetera. Structurally, it is the better product out there.
It's a little bit like Netflix, you pay a monthly fee and they can provide the most content. We've got more content than anyone else as far as our membership program goes. 50 million members, more than 50 million members, growing 50% year on year, and now it's responsible for about 50% of our bookings.
We believe we have still significant room to run as it relates to membership growth, and there are a number of markets where membership is closer to the 60% level in terms of overall gross bookings. One lever of membership is just continuing to grow the member role, so to speak. Members, like I said, spend three times more than non-members. But membership for us is also, it's not only offensive, but it's also defensive.
What we see in markets, for example, where competitors may start a price war and it still happens. We've got a big portfolio, so we're able to take on those price wars appropriately. What we see in our category position with members is member category position stays very consistent. While non-member category position, where consumers are more price sensitive, let's say less loyal, potentially go down.
Members are kind of, they stay, they're kind of locked in to the ecosystem. The other focus that we have with membership is to just make the membership benefits richer. So that may be hooking up loyalty programs like Delta Air Lines loyalty programs or Marriott loyalty programs with our ecosystem. It might be American Express benefits, which are pretty incredible as it relates to membership as well. It also includes enriching the program, especially as it relates to mobility benefits, whether it's free upgrades or priority dispatch in airports during busy times.
We still think that the membership itself is something that we can improve on. So when we look at membership, it's like new member growth is increasing, membership retention continues to improve. Members are twice as likely to be cross-platform as non-members. So really plays into the platform strategy.
It is also kind of a defensive moat during periods when competitors want to attack our category position. It turns out that it is very solid as it relates to category position.
Okay. You introduced the concept earlier of multi-product. You continue to layer
Yeah
new experiences in front of your consumers. What have you learned as you have layered those experiences in, and how does it sort of manifest in the way in which you could continue to compound growth by continuing to find ways to partner across broader ecosystems and be a hub of bringing those experiences to your consumer?
Yeah, absolutely. First thing I would say about multi-product is that it is actually pretty hard to develop multi-product. We have been a multi-product company for some period of time, but I would say we have really scaled the platform strategy, and quite successfully in the past five years. The reason for that is that, again, multi-platform consumers spend three times more than non-multi-platform consumers.
It is a unique benefit that we have on a global basis in most of the markets in which we operate. Our competitors do not have the product. Every time you are promoting, let us say a mobility user to use delivery, you theoretically could be under-optimizing the mobility experience. If you get too aggressive about cross-platform promo, you are going to take away from the core mobility experience.
It becomes very important for us to build out occasions for cross-platform promotions that feel natural and feel value add to our consumers. It might be, Eric, if you're flying to, we know that you are going to a new city, for us to introduce, and you're going to your hotel, for us to introduce room service by Uber Eats as a benefit, and we might run a promotion there.
That is, of course, from Uber's perspective, we're upselling you into food, which is great, but from your perspective, you may be getting a deal, you may be getting a promotion, and it's kind of nice to know that there's room service available at that hotel. Those are the kinds of targeting opportunities, and I'd say that there isn't one lever that is driving the predominance of our cross-platform usage.
There are 10 to 15 different kinds of levers where we're targeting the right consumer at the right time, based on the right context, with the right offer to get them to try one of our other products. Once they try those other products, they tend to be very sticky. Spend increases, retention increases as well. With AI and the larger models, we're able to get much more context regarding the consumer.
We will be able to create much richer, more highly targeted experiences to drive cross-platform. The last thing I would say about cross-platform, and this is actually something relatively new for us, is what we're finding is that especially as it relates to variable marketing spend, we're able to increasingly bring consumers in, not based on their being a mobility consumer or a delivery consumer, Uber Eats consumer, but just being an Uber consumer, right?
Which is as a higher and higher percentage of our consumers become members, as a higher and higher percentage of our consumers shop cross-platform. That creates higher lifetime economics for us, and that allows us to spend more to go out and acquire consumers than a competitor could.
Yeah.
A competitor who's mobility-only or is delivery-only structurally can't pay as much as we can, and at the same time, we'll still have the same ROI as it relates to advertising as well. That's actually what we call platform acquisition as opposed to mobility acquisition, delivery acquisition, is something that is relatively new in our skill set, and it's turned out to be quite promising.
Okay, understood. You always have a unique view of what's going on in the consumer landscape. There's been a bit of a debate both about the current state of the consumer and the future state of the consumer at this Communacopia over the last two and a half days. What are you seeing in your own products, in your own ecosystem about consumer demand, and are you seeing any differences between U.S. versus other markets globally?
Yeah, honestly, it's a little bit boring, which is more the same for us.
Yeah.
We obviously have a very broad audience of consumers. We track very closely consumer behavior. Frequency continues to increase for us, especially membership continues to drive frequency for us, but we don't see consumers trading down. Growth for lower-income consumer cohorts is just as strong as growth for us in higher consumer income cohorts. Mobility business in the U.S. has accelerated since late last year. At this point, the consumer for us remains robust, and we don't see any signal of that changing.
Okay. You announced a restructuring recently.
Yep.
Not just about the restructuring, but talk a little bit about the dynamic inside the company to both create operating efficiencies, but also find ways in which to invest in growth initiatives for the long term and striking the right balance between those two frameworks.
Yeah. We announced a restructuring about 10% of our full-time staff. It is always honestly difficult internally, but it is a discipline that all companies have to make sure that they retain. For us, it was about organizational structure, organizational discipline, and speed. We look to reduce the layers between myself and the doers at the company. We look to reduce the number of what I would call micro teams.
You want experienced managers who are running teams of 7 to 15 people usually. The number of micro teams that we had in the and a micro team might be a manager who is managing one or two or three people, had increased, we think, inappropriately. We wanted to really drive faster decision-making, so generally have more doers versus managers. So we undertook this restructuring.
I always believe that the right time to do these is from a position of strength versus weakness. Some companies wait. We do not believe in waiting. Then obviously there are real tailwinds as it relates to productivity, whether it is AI or general productivity technology as well, which we thought was an opportunity. So we decided to drive discipline and efficiency as it related to our organization, and we are going to take the savings there and essentially reinvest it back in the business, lowering prices, improving selection, and continuing to invest in our growth program, so to speak, using some of the savings that we are funding.
Understood. Let us turn to the mobility business. You saw an acceleration in that business-
Yeah
in the last quarter.
Very happy about it.
Talk a little bit about the building blocks that's creating that type of outcome for mobility. As you look longer term, affordability is one thing we've talked on earnings calls, some of the key initiatives you want to put in place that can continue to grow the pie broadly in the mobility business and drive that sort of compounded growth.
Definitely. So I'd say one, as it relates to mobility, especially in the U.S., is insurance savings and improved safety of the platform. We have invested very significantly as it relates to, for example, app navigation technologies. For example, the ability to have both audio and video recording in the car, whether it's late at night or if you have a teen in the car, et cetera. We continue to drive safety as a very important initiative for the company.
We want to be the safest mobility transportation network on Earth. That has a benefit as it relates to insurance costs. We're also paying safer drivers more. You combine that with an insurance environment where commercial insurance was growing substantially faster than inflation. That has now kind of turned upside down.
We do think that. We know there are fairly significant insurance tailwinds for us as it relates to cost that we're taking, reinvesting back into price, and reducing pricing for consumers, which helps as it relates to continuing to drive nice volumes in the U.S.
You combine that with the two initiatives that I talked a little bit about, which is the barbell strategy, which is getting higher margin product like Uber Black, like Elite, like Uber for Business, and then using those excess margins to invest in lower growth products, whether that's two-wheelers or three-wheelers outside of the U.S. Or for example, Wait & Save in the U.S., where instead of getting a five-minute pickup, if you're willing to wait 20 minutes we'll give you a substantial discount as well.
You're reinvesting those margins back into lower cost product, bringing in new customers, which feeds the flywheel as well. The third element that I talked about is growth in sparse markets.
Yeah.
The growth continues both in mobility and delivery, and I think we're very early in our penetration into the sparse markets. All of that is coming together to show nice healthy volumes in the U.S., which obviously is our largest market.
Okay. Let's pivot to AVs. Against the demand that you've aggregated on this platform, how are you thinking about investing and scaling on the supply side to grow AVs as a percentage of the mix relative to where the industry might go over the next three to five years?
Well, we want to be the most important commercialization and scale partner for AV. We think AV is an incredible opportunity. We are a supply-led business. The more supply we put into the marketplace, whether that is selection as it relates to our food business or our grocery business, or it is cars as it relates to our mobility business.
The more selection we put into the marketplace, prices come down, reliability improves, and volumes improve. AVs represent for us a new type of supply that our consumers love, that can be yet another growth driver for our products. We are investing in AV in, I'd say, three different ways. One is we want to partner with every single AV provider, technology provider out there. We are working with Waymo, Zoox, many players.
WeRide, for example, outside of the U.S., is a top partner that we have invested in and continues to scale very quickly with us. We just announced a partnership with them in Madrid. We continue to partner with and invest in some of our strategic AV providers, whether that is a WeRide or a Pony.ai, or an Avride and many other players. We want to help them develop the technology. That is number 1. Along with those investments, we get commercial deals.
Yeah.
Right? Usually advantaged access to supply, and obviously we know the market very well, so we are able to identify the very best partners in the marketplace. The second area where we are investing is working with OEMs, and working with manufacturers. Sometimes we will invest in a manufacturer, but the goal here is to make sure we have access to vehicles that are AV ready. These vehicles require redundancy, they require compute, they require sensor stacks, et cetera.
We have secured access to over 120,000 vehicles, and we think we will continue to increase that. What we are seeing is the opportunity to finance those vehicles through finance partners. Just like you see all the data center financing showing up, we think the same thing will happen as it relates to vehicle partnerships as well. The third area where we are investing in AV is in fleet management and depots and infrastructure.
AVs require a significant amount of infrastructure, obviously, in the cities in which we operate. We are going out and building out depots for repair, for recharging based on where we think markets are going to open up. What we bring uniquely to this is that with the amount of demand that we have coming into these AVs, we are able to drive, we think, much higher utilization of these AV fleets and much higher utilization of the infrastructure investments that we are making to improve the unit economics of the AV industry. We are still very early.
Yeah
as it relates to the playbook. We are operating now in markets with nine partners. We think we will get to 15 by the end of the year. Next year, we will demonstrate no vehicle operator partnerships with a number of players in the U.S. So next year is about continuing to establish the technical capability to go NVO, and then 2028, 2029 is all about scaling for us.
Okay. That is very clear. And you have actually talked about being the largest facilitator by 2029. You have talked about the amount of vehicles you think your partner ecosystem will deliver in the next couple of years, and those will be some of the benchmarks, I guess
we will be watching for as we continue to have this conversation in the years ahead. Just to double-click on one of the points you made, Dara. Talk to us about the unit economics of
Yeah
AVs relative to the supply that already exists on your marketplace today in terms of delivering mobility solutions.
Absolutely. So the unit economics today have a long way to go. When we look at AVs, we have a number of partners that have clear line of sight to a $50,000, $60,000 cost as it relates to these AVs, including compute, including sensors as well. What is different about AVs than the business that we have now is the majority of our costs today are variable. We pay drivers, our drivers or couriers, when we use them.
That model is changing pretty significantly as it relates to AVs, because you go from a higher variable cost market model to a higher fixed cost model. That is, you are buying the car, it is a relatively expensive car. Obviously, the expense is going to get more reasonable, but you have got the overhead of the vehicle. You are paying for the vehicle, whether or not you are utilizing that vehicle or not.
Obviously, you have got the infrastructure costs, these depots, repairs, et cetera, that you have to amortize over the volume that you are driving. So the importance of driving utilization, maximizing utilization of the vehicles themselves, making sure that you have got as many trips per vehicle per day, and maximizing the utilization of the infrastructure becomes incredibly important.
What we are seeing with our partners in markets is because we already have enormous amounts of demand, because we have high amounts of liquidity, the average kind of signal of demand is closer to supply. Where there is a human really close, we will dispatch a human, but where there is demand for an AV really close, we will dispatch an AV as well. We are able to drive significantly higher utilization that is possible for, let us say, a 1P player. We estimate by 30%.
That 30% utilization advantage creates economics that we think are very, or advantage economics that are very significant as it relates to this fixed AV cost and as it relates to the fixed infrastructure cost. We have an additional benefit, which is we work with multiple partners. For example, you can have multiple partners in a single repair depot, recharging depot, so we can amortize that more effectively than, let us say, a player who only has one brand in a particular depot as well. So we think we are in a very strong position to drive strong economics as it relates to AV.
You combine that with the ability for us to optimize the size of our fleets based on a hybrid fleet structure, which is having a base load of a certain percentage of AVs that kind of serve a marketplace, but then having humans and people available to work during peak periods so that you are able to continue to have these AVs very high utilization during the base loads, but then you have got the ability to serve your customers during rush hour, during a Taylor Swift concert, et cetera, kind of adding human demand to AV demand.
Understood. Okay. We've got a few minutes left. The delivery business has been equally on a bit of a journey over the last couple of years, and the array of what you deliver now is very different than five years ago. Talk to us a little bit about how the supply side and what you deliver has changed in the delivery business, and how that feeds into your view about the opportunity set for compounded growth in delivery in the years ahead.
Yeah, absolutely. We obviously started with the food business, started with mobility. The food business started scaling. Our Eats is now getting close to Rides as it relates to gross bookings. Ultimately, we think that our Eats business could be even larger than our Rides business. What we're seeing is that we thought that grocery would be a natural extension from food, and we're absolutely seeing good evidence of that.
We're seeing more and more is just all of retail is also an extension that frankly, I didn't anticipate five years ago. People want on-demand everything. They want to be able to push a button, and in 20 minutes, get whatever they want, whether that is dinner or that's a charging cord that you might have forgotten in your hotel as well. The grocery and retail category for us now is a $15 billion category.
It's growing over 40%. We're still very early in the development of that category in terms of developing selection, in terms of developing a supply base that is trained on shopping and not just delivering as well to make sure that we drive quality. Selection, quality, reliability of that product are very early in its development. Right now, a de minimis percentage of retail is delivered on demand, but we continue to see increasing demand for, again, every single retail category.
You see the Walmarts of the world coming into it. You see the Amazons of the world coming into it, and I don't think it's going to be a winner-take-all. The retail category is a trillion-dollar-plus category, and ultimately, we think grocery and retail can be bigger than our core online food delivery business, and we're very early in that development phase, so to speak.
If I could squeeze one last one in. With that as a jumping-off point, though, you made the decision to acquire Delivery Hero.
Yes.
Against your broader capital allocation strategy, because you have a lot of decisions to make about where you allocate capital incrementally in the business. Talk to us a little bit about why that was the right deal for you guys, and if it closes, I think next year at some point, how you're thinking about that fits into the broader strategy longer term.
Yeah, absolutely. The hurdle rate for us to buy any other company is very high because the opportunity for us to grow organically, the AV investment opportunity that we just talked about, and then we think our stock is really cheap. Any time we look at a deal like Delivery Hero, the assets have to be absolutely spectacular, and the opportunity needs to be a great opportunity.
Delivery Hero matches both, which is Delivery Hero is a leader in the vast majority of the markets in which it operates. It operates in a number of highly strategic markets for us in mobility. The Middle East, for example, being we have a very, very strong position in the Middle East. Being able to drive our platform strategy in an increasing number of countries is very important for us because we know the platform strategy works.
Delivery Hero actually almost doubles the audience of consumers that we can introduce to our platform strategy, which allows us to have unique synergies for that particular deal that very few people do.
Then obviously you have the typical M&A synergies that you do in terms of cost base and consolidating your technology platform into a global technology platform, which we've demonstrated over and over again. So we think it's a great growth opportunity. We think platform is kind of a unique advantage that we bring, and we think that the Delivery Hero brands and kind of operational capability that they have demonstrated, along with the technical capability that we bring to bear, are just a great combination.
All right. Well, look, Dara, I always appreciate the opportunity to talk. Thank you for making the time to come to the conference. Please join me in thanking Uber for being part of the event today.
Thank you very much.