Uber Technologies, Inc. (NYSE:UBER) Q1 2024 Earnings Call Transcript

Uber Technologies, Inc. (NYSE:UBER) Q1 2024 Earnings Call Transcript May 8, 2024

Uber Technologies, Inc. misses on earnings expectations. Reported EPS is $-0.32 EPS, expectations were $0.2203. UBER isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Thank you for standing by. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber Q1 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Deepa Subramanian, VP of Investor Relations and Corporate Finance. You may begin.

Deepa Subramanian: Thank you, operator. Good morning, and thank you for joining us today and welcome to Uber’s first quarter 2024 earnings presentation. On the call today, we have Uber’s CEO, Dara Khosrowshahi; and CFO, Prashanth Mahendra-Rajah. During today’s call, we will present both GAAP and non-GAAP financial measures. 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.uber.com. Certain statements in this presentation and on this call are forward-looking statements. 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 well as the risks and uncertainties described in our most recent Form 10-K and in other filings made with the SEC. We published our quarterly earnings press release, prepared remarks and supplemental slides to our investor relations website earlier today and we ask you to review those documents if you haven’t already. We will open the call to questions following brief opening remarks from Dara. With that, let me hand it over to Dara.

Dara Khosrowshahi: Thanks, Deepa. Our results this quarter once again demonstrate our ability to deliver consistent profitable growth at scale. Uber is also at solid start in 2024 with trips up 21% year-on-year consistent with our gross bookings growth rate on a constant currency basis. Our audience expanded by 15%, while frequency grew 6% underpinned by 7.1 million drivers and couriers on our platform. At the same time, record adjusted EBITDA of $1.4 billion grew 82% year-over-year and we generated $4.2 billion of free cash flow over the last trailing — over the trailing 12 months. We’re making good progress on many of the initiatives we laid out for 2024 in our last earnings call. Demand for Uber remains strong and just last week, we hit another best week ever for gross bookings, and we expect to deliver another quarter of over 20% year-on-year growth on a custom currency basis in Q2. With that, operator, can you open up for questions?

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Q&A Session

Operator: Thank you. We will now conduct a question-and-answer session. [Operator Instructions] Your first question comes from the line of Justin Post with Bank of America. Your line is open.

Justin Post: Thank you for taking my question. I guess, Dara, a lot of press on Tesla and robo taxi efforts lately. How are you thinking about AV impact on Uber and potential for new competition? And then maybe Prashanth, it looks like stable bookings growth outlook in the low-20s in the second quarter excluding FX. Anything to call out on headwinds or tailwinds and any changes to your outlook mid to high-teens growth as you think about bookings in the second quarter? Thank you.

Dara Khosrowshahi: Prashanth, you want to talk the second question first?

Prashanth Mahendra-Rajah: Yeah. Let me get that one out of the way, Justin. Thank you for the question. So just to recap for how we’d like folks to think about our gross bookings. Remember, the growth algorithm is audience, which is a measure of how many users of the product frequency, how often are they using the product and then, of course, pricing. Dara just mentioned that for the first quarter, we had very strong audience growth, up 15%, great growth in frequency as well, up 6% and pricing relatively flattish. So we see similar trends expected for the second quarter and that’s what’s implied in the guide in terms of the composition of that growth algorithm. Demand for the products remain strong. I think, we’re expecting another quarter a pretty consistent scale top line growth of over 20%.

Actually, if you think of the guide that we gave for Q2, it’s almost identical, not — both at the midpoint and at the range to what we gave for Q1, so very consistent performance and we’re exactly where we want to be with respect to the three year CAGR outlook that we gave you in February. Maybe just a little bit of color on the Q2 guide. We included in the press release some notes on FX headwind. So I did want to call that out. We’ve got about 5 percentage points of headwind to mobilities year-over-year gross booking growth, primarily coming from the Argentine peso. So said another way, we still expect mobility to grow in the mid-20s range at a constant currency basis. I’ll also highlight that in the prepared remarks, I made a comment about this.

We expect mobilities adjusted EBITDA margins to be down slightly quarter-over-quarter, given that we did hold back some investments in Q1 and we would not do the same here for Q2. So with that, let me pass to Dara and he can take the AV question.

Dara Khosrowshahi: Yeah, Justin. In terms of AVs and our strategy, it really remains the same. First thing I would say is that we think that the AV technology at maturity is going to be very good for the industry. It’ll be great for Uber. It holds a promise of safer rides. It holds a promise of expanding the marketplace by lowering prices and making mobility delivery available for a wider swap of the population. And usually when we see kind of lower prices for any service, you see higher adoption for a service and that really is the promise of AV. At the same time, we think that the technology is going to take a lot of time to develop. Obviously, there has to be regulatory framework to put in place. And as the technology develops, we think that actually you’re not going to make a jump from one tech human drivers fully to AV.

There’s going to be a relatively long period, a transition period that happens where, for example, on Uber, you see it now. You have a combination of human drivers fulfilling certain rides or deliveries or even loads on the trucking side along with AVs as well. And over a period of time, you’ll see kind of the penetration of AVs increase. I think it’s very difficult to predict that period of time, but really what we bring is the systems that we put in place, the pricing, matching, routing, algorithms, the payments systems that we have on a global basis, as well as the demand that we bring that enables us to partner with these AV providers to really drive utilization of their assets. This is very expensive tech that’s been developed over a long time.

And if you are an AV fleet owner or you are an individual owner of a car, whether that’s a Tesla or another kind of car, you’re just going to make more money and make a higher kind of return on your investment if you plug in your AVs into the Uber ecosystem and into Uber demand. So we think we bring a lot to the table. We’re looking to partner with the AV industry. I do think that there’s a good amount of excitement over some of the newer technologies and kind of the imitation models that we see in terms of AV. And you see that promise with Tesla at FSD. It looks like a great product and also you see that same promise in a lot of smaller players, whether that’s a wave in the U.K. who got funded for $1 billion a lobby that, for example, we have investments in.

These imitation learning models have a lot of promise over kind of the more classic heuristic based development that you saw with AV and we think it’s going to allow more players into the marketplace. We think it’s going to reduce the amount of capital required to develop these systems over a long period of time. And we’re looking to partner with big players and small players. And again, as this technology develops, we think we will be a big partner in it and we think ultimately it will benefit AV players and it’ll benefit ourselves and riders and eaters as well.

Justin Post: Thank you.

Dara Khosrowshahi: You’re welcome. Next question?

Operator: Your next question comes from the line of Brian Nowak with Morgan Stanley. Your line is open.

Brian Nowak: Thanks for taking my questions. Good morning. I have two. The first one, Prashanth, I wanted to go back to the comment in the prepared remarks that you just referenced about intentionally holding back some investments with lower ROI. Can you just sort of help us impact it a little bit? What areas of investments did you hold back on and sort of how do we think about the driver versus rider incentives or investment strategies if you go throughout the course of the year to drive durable growth? And then the second one sort of wanted to hone in a little bit on Latin America. There’s been some comments from one of your competitors in Latin America about potentially pulling back investment there. One, I’d be curious to hear about what you’re seeing in Latin America and just remind us what was the base case outlook for Latin America in the Analyst Day guidance that we got in February. Thanks.