Ross Sandler: Great. The prepared remarks flagged a bunch of new features in the advertising business, enterprise features. So can you guys give us an update on where we are with the non-restaurant advertising as a percentage of just the total advertising ARR? And then somewhat related, with the new Instacart partnership, can we sell advertising against that engagement? And I guess just how does the Instacart partnership change your own — your kind of O&O efforts in U.S. grocery and how are the unit economics going to work in this partnership? Thank you.
Prashanth Mahendra-Rajah: Ross, it’s Prashanth. Let me start just with a couple of data points and then hand off to Dara. First, as a reminder to everyone, we hit a $900 million run rate for advertising in Q4 of 2023. We do not break that down between Delivery and Mobility. And then on the Instacart arrangement, as Dara had mentioned and we discussed yesterday, when folks click through Instacart and they come to the Uber Eats WebView app, that was our ads and those are our — that’s our space to use and monetize. So with that, let me pass off to Dara to make some more comments.
Dara Khosrowshahi: Yeah. In terms of the non-restaurant advertising, listen, it’s still really in nascent stages. So we talked about restaurant advertising getting to 2% of gross bookings. We actually think that our sponsored items, product, for example, grocery, can get the higher percentages of that. Instacart, for example, we think, is in the mid-2s in terms of advertising as a percentage of gross bookings. And we fully launched out our sponsored items in the U.S. and Canada, and now we’re scaling it in eight additional priority markets in 2024. So I’d say like sponsored items is where we were in sponsored listings for restaurants three years ago. We gave you a very clear growth map to $1 billion in terms of revenue, and we’re going to beat that this year.
And we’re quite confident we can start moving in a similar direction as it relates to non-restaurant-sponsored items in the grocery space. We’re already active with about 500 top CPG brands, and we’re seeing very strong retention as we expand. And really, it’s going to be about the growth of the underlying Grocery platform. As we increase Grocery audience, this last quarter about 15% of our monthly actives on Eats bought from Grocery. That’s up nicely on a year-on-year basis. As that audience increases, we think we can monetize that audience with the base business. But with advertising just as we’ve done with restaurants, and we think it’s — it can be an enormous opportunity, and it can be a high-margin opportunity as well. I would also point out that we’re quite bullish on a Rider ads.
We’re seeing very strong engagement from riders, a click-through rate of about 2.5%, more than 2.5% compared to an industry average of less than 1%. So video ads and tablets continue to be a very promising growth area for us, and we’re quite happy to see the progress there. All right. Operator next question.
Operator: Your next question comes from the line of Mark Mahaney with Evercore. Your line is open.
Mark Mahaney: Thanks. Two questions, please. I think in the prepared remarks, you talked about delivery, MAPC growth accelerating in markets like the U.S. Can you go into the why MAPC growth accelerated for you? And then secondly, in Delivery, Grocery and Retail Delivery, can you talk about what impact that’s having on segment margins or what the unit economics are there — are like there or yes, how much of a drag or when do you see a path to profitability? And maybe it’s already there for those two segments, but just talk about the impact of those two segments on the Delivery’s overall profitability. Thank you very much.
Dara Khosrowshahi: Yeah, Mark. So in terms of delivery growth and audience growth, this has been pretty consistent, right? We’ve accelerated the growth rate of our Delivery business. It was growing closer to 10% early last year. It’s now growing in the teens. And we think the nature of that growth is improving as well, which is most of the growth last year was on price. Now actually, price is a relatively small portion of the growth, and audience and frequency are the largest portion of the growth in Delivery. And it is about just getting the basics right. It’s about having a great service, having a significant selection, or selection. Active merchants is up 12% on a year-on-year basis. It’s about improving pricing. So for example, merchant-funded promos, these are merchants put in promos, pricing promos into the marketplace in order to drive volumes.
Those are up 100 basis points on a year-on-year basis. Again, lowering effective price to the consumer. And then it’s about quality. We continue to improve our defect rates. All that adds up to higher frequency, higher retention of audience. And we continue to spend aggressively in terms of marketing our brand. We think the Uber Eats brand is a top brand out there. And then on top of that, of course, we’ve got the unique platform benefits of our Mobility business that continues to grow audience, throwing over some of that audience to our Delivery business. So this is all part of the formula that we have and this journey that we’ve been on over the past couple of years. We’re able to do so while we’re increasing margins because of the efficiency that we are getting in our marketplace, because of the efficiency, the kind of structural benefits that the platform brings and we see no signs of that slowing down.
Prashant, do you want to talk about grocery retail?
Prashanth Mahendra-Rajah: Yeah. I’ll take the last part of that. So we remain very positive on grocery and retail. The business growth remains quite strong. GPs are up about 40% on a constant currency basis. Once again, 40%, so very strong top line there. And despite that very strong growth, we were still able to expand our Delivery EBITDA margins by about 20% sequentially, and that was partly contributed to by improvement in the profitability of the grocery business. So it is still not where we want it to be. It’s still not at a positive EBITDA margin, but it is improving both year-over-year and sequentially, and we feel very good about the path we have to getting to profitability on Grocery. It’s going to come from a couple of items.
First, the power of the platform, which we refer to quite frequently here. About 15% of our Delivery users are ordering on our own groceries, and that’s up set from where we left Q4. Continuing to see opportunities on ads, which are great margin accretive for us as we bring those CPG players into the platform for Grocery advertising. Being able to lower some of the consumer promotions we have. So overall, a number of different drivers. And we think that Grocery will eventually be a very strong part of the overall portfolio. With that, I think we have time for our final question, operator. So if we could go to that.
Operator: Thank you. Your final question comes from the line of James Lee with Mizuho. Your line is open.
