Uber Technologies, Inc. (UBER) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Record Quarter Performance: Uber experienced another record quarter with gross bookings growing 21% on a constant currency basis, audience expansion of 14%, and a 71% year-on-year growth in adjusted EBITDA.
• Strong Consumer Demand: The Uber consumer base is larger and more engaged than ever, with high usage frequency and no signs of softness across income cohorts.
• Delivery Habitual Use: Delivery has become more habitual, with the number of first-time consumers on Uber Eats in the U.S. reaching a new high over the past five quarters.
• Autonomous Vehicle (AV) Strategy: Uber is in late-stage discussions with additional global AV players, positioning itself as an indispensable partner for AV technology deployment.
• Advertising Revenue Growth: Advertising revenue has seen significant growth, with restaurant-funded offers growing 70% year-on-year.

Pessimistic Highlights

• Macro Economic Concerns: While Uber's current performance is strong, there are concerns about how a potential recession could impact the business.

Company Outlook

• Continued Growth and Profitability: Uber plans to continue driving top-line growth while expanding GAAP operating income, confident in its ability to perform well in any economic scenario.
• Expansion into EV and AV: Partnerships with BYD for EVs and ongoing discussions with AV players are expected to contribute to future growth.
• Delivery Business Profitability: With a clear path to EBITDA profit in grocery and retail, Uber is optimistic about the delivery segment's future.

Q & A Highlights

• Q: Can you provide more detail on AV rides incrementality and mobility MAPC versus frequency growth drivers? (Brian Nowak, Morgan Stanley)

  A: Utilization for AV players on Uber's network is significantly higher than their standalone operations. Mobility growth is strong, with a mid-20s growth outlook for Q3 on a constant currency basis. Uber continues to explore new demographics and areas for expansion.

• Q: How important is the BYD partnership for bringing new EVs into global markets, and what drives delivery profitability? (Doug Anmuth, JP Morgan)

  A: The BYD partnership is crucial for electrifying Uber's fleet and potentially ties into future AV initiatives. Delivery profitability is driven by scale, operational improvements, and advertising revenue, with a strong growth trajectory in grocery and retail.

• Q: What potential do you see for increased utility and frequency in the delivery network, and how does market consolidation impact Uber's delivery asset portfolio? (Eric Sheridan, Goldman Sachs)

  A: There's a long runway for growth in delivery, especially with grocery and retail expansion. Uber's strategic decision to exit markets where it couldn't be a leader has paid off, with improved category positions in top markets.

• Q: How would a consumer downturn impact mobility, and what are the implications of independent contractor deals on costs? (Justin Post, Bank of America)

  A: In a downturn, improved driver supply could lower prices and increase reliability, maintaining demand. Independent contractor deals, like in Massachusetts, are factored into operating models without significantly impacting Uber's cost structure.

• Q: How much ride share demand occurs during peak hours, and what's the backup plan if AV providers choose not to partner with Uber? (Nikhil Devnani, Bernstein)

  A: Peak hours see significant demand, and Uber's hybrid network of humans and robots can efficiently manage this. Uber is confident in acquiring AV content globally and does not foresee a need for a Plan B.

• Q: How has mobility usage progressed across cohorts, and what's the status of ride hail side advertising? (John Colatuoni, Jefferies)

  A: Mobility frequency continues to increase, supported by multi-product adoption and membership. Ride hail advertising focuses on quality over quantity, with strong ad engagement rates.

• Q: What's the potential for ride hail ads, and can you provide more details on the Instacart partnership? (Ross Sandler, Barclays)

  A: Mobility ads aim for quality engagements rather than a fixed percentage of gross bookings. The Instacart partnership shows promising early trends, with higher basket sizes and demand from suburban markets.

• Q: How high could market penetration go based on current trends, and how do you view subsidies and incentives going forward? (Mark Mahaney, Evercore)

  A: Penetration could significantly increase, as seen in the U.K. and Brazil. Supply is in a better position globally, allowing Uber to pivot incentive dollars towards driving demand and future growth products.