Nelson Chai : No. So look at it, we’re focused on delivering the incremental margins that we laid out. We certainly have delivered way above what we’ve been talking about long term. We expect to continue to try to deliver against the 7% total company, and we’re going to continue to look for efficiencies across. And so what I try to do there is let you know that some of them were very deliberate actions that we took in terms of making sure that we are running and the marketplaces are running more efficiently regarding incentives. Some of it is just tech that we deployed. And we deployed the tech in the first half of last year, and we really saw those benefits on the cost per trip. And then again, we’ve talked about some new business things.
And so Ads is the easiest example, where we’ve seen that continue to grow. So the Ads business, we continue to — expect to continue to grow and accelerate the growth, and so we’ll see the benefits in the margins. I think we’ll continue to run an efficient marketplace. And so yeah, I think you should expect that we’ll continue to drive margins in those businesses. But remember, we also spend time trying to invest back in. So we’ve invested and we’ve talked about it. There’s some growth markets like Japan that we’ve invested in. And again, we now are number in Japan from a category position perspective. So we try to manage — we’re going to balance both the growth as well as the margin and the profitability. And I don’t want to be too prescriptive in terms of exactly how — what we’re doing.
Dara Khosrowshahi : And I think just on Ads, for folks out there, we passed $500 million in annual run rate, and that’s based on increasing the number of active advertisers that we have, like 80% on a year-on-year basis. But if you look at the merchant penetration, the percentage of merchants on our Delivery side who are advertising, only 25% of our merchants are active in the auctions that we have going on. So we think there’s substantial upside to our advertising business. We committed to $1 billion in revenue by 2024, and we are progressing very, very well against that target. So you should expect to see more upside, both, by the way, in our Delivery business, but also in our Mobility business, we’ve seen some really encouraging signal as it relates to Journey Ads on Mobility, which you see on the app, put through rates over 3%, CPMs of $45, which is pretty amazing.
And then a new class of a that we’re actually pretty excited about our car tops and tablets, where the goal of those advertisings is really to put more dollars in drivers’ pockets. We’ll run the advertising networks. We’ll sell the products, et cetera. But the goal of those products essentially is to get drivers greater earnings on a monthly basis, which then will translate into more drivers on the platform and a more dependable Uber for everyone. And that works out for the marketplace and it works out for us as well.
Doug Anmuth : Thank you both.
Dara Khosrowshahi : You bet. Next question?
Operator: Your next question comes from the line of Deepak Mathivanan with Wolfe Research.
Deepak Mathivanan : Great. Thanks for taking the question. So first, on the weekly active user penetration, it seems like in some markets like UK, you’re already above kind of the pre-COVID levels, but it’s still below in large markets like U.S. Is there any broad reason for this lag on the user side? And how should we kind of think about this in two. And then for Nelson, as we go into the kind of annual comp cycle, I had to be the guy that asked the SBC question, but how should we think about the target compensation levels in 2023? Any high-level color you can share on your thoughts there would be helpful.
Dara Khosrowshahi : Yeah. I’ll start on the user trends and then Nelson can talk SPC. The reason for the U.S. trailing is really the West Coast. So if you look at the U.S., it’s really a tale of two coasts. If you look at a Miami or a New York and an Atlanta or off the coast, in Austin, Houston, et cetera, most of the U.S. is at pre-COVID levels. Canada, for example, our neighbors in the North, are above 2019 levels as well. But it really is the San Franciscos, Seattles, Portlands, Los Angeleses of our country on the West Coast that are trailing and are off the pace that we see pretty much everywhere else in the world. So I wouldn’t generalize the U.S. Kind of non-West Coast looks great. The West Coast is recovering. And we talked about in January, we are having, on a daily basis in Mobility in the U.S., trips approach pre-COVID levels as well.
So all the trends are moving in the right direction, but the West Coast is definitely leaving the U.S. behind the recoveries on a global basis.
Nelson Chai : So regarding stock-based comp. So we are looking at all parts of our cost structure, including employee compensation. We recognize, and there is a fair amount of noise particularly on the West Coast regarding stock-based compensation. What I would say is that we expect our employment levels to be — our headcount will be relatively stable this year. We will continue to focus on performance management across all of our businesses. And so you saw that we took some action in our Freight business in January and now specific to the Freight in the marketplace. And there’ll be some other pockets of that, that will happen during the course of the year. I think you won’t see any demonstrable change in stock-based comp because it takes a long time for that to build out.
But we are certainly going to manage our headcount very judiciously. And then the only thing I would add is that, because we are trying to start focusing in on GAAP operating profit, it obviously is part of the calculation. And so we recognize that as well. And so as you think about the progress we’ve made on EBITDA and free cash flow, and now with our focus there, you can envision the amount of focus that, that line will have as we move forward.
Deepak Mathivanan : That’s very helpful. Thank you both.
Operator: Your next question comes from the line of Lloyd Walmsley with UBS.
Lloyd Walmsley : Thanks. Two, if I can. First, just on Uber One. You talked about a strong pickup in spend and clearly like a nice LTV that covers CAC pretty quickly. But once you’re through that kind of start-up cost, what would contributions look like for Uber One members versus like a non-member? And how much of a trade-off is the margin for the profit dollars in that plan? And then secondly, do you think the driver supply is benefiting at all yet from slower economic growth? And to the extent we’re seeing some of that or eventually see that, how do you think about pricing and take rate on the Mobility side, if you get better and better supply? Thanks.
Dara Khosrowshahi : Yeah. Look, Lloyd, I don’t want to get into too much of the particulars of Uber One on because as you can imagine, a bunch of information, the data there is proprietary. But if we get an Uber One member who sits around for a year, that Uber One on member generally will be unprofitable. It’s really in the second year where that Uber One member will be profitable, and that’s just a trade-off between frequency, order average order value and margin. And we’re actively making that trade-off and driving Uber One penetration. Another side benefit of Uber One is that our merchant base, an increasing percentage of our merchant base in our Delivery business is willing to pay to have, let’s say, advantage exposure to the most valuable members that we have as it relates to the Uber One audience.
And as you can imagine, the Uber One audience is a high-demo audience that moves, that spends on services, that gets out of house, and it’s a very, very attractive demographic, both for our merchants and for advertisers as well. In terms of driver supply, driver supply levels are very, very healthy, right? Drivers are up 35% on a year-on-year basis. New driver count is up 34% on a year-on-year basis. And we have heard from our drivers that inflation is a factor that they consider, about 70% of them that are coming on to the platform are coming on to make more money so that they can afford to live in what has been an inflationary world. So we certainly think that the economic environment could be a tailwind there. And in markets where we have seen economies get weak in the past, and Mexico has been through some recessions, Brazil has been through some recessions, we definitely see weaker economic environment helping out in terms of our driver supply that is a tailwind in terms of trip volumes.
It’s difficult to tell if that’s what we’re seeing. You’ll remember that for 24 months now, we have been very, very focused on improving Uber as a platform for our earners. Come on in quickly, make a lot of money delivering quickly. Then once we have — then we’ll upsell you to driving driver earnings are $35 per utilized hour. So they’re at very, very high levels. Driver earnings increased by 37% on a year-on-year basis in terms of constant currency. So I think just the earnings levels and the service that we are providing our drivers is a tailwind. In addition to the economic environment out there. And we put it all together, it results in a service where surge levels are coming down. So surge levels in January, for example, in the U.S. are under 20%.
ETAs are coming down. ETAs in the U.S. are about 4.5 minutes in January as well. So the marketplace itself is getting a lot more healthy and drivers are earning well at the same time, which is exactly what we want.
Lloyd Walmsley : Okay, thank you.
Dara Khosrowshahi : You’re welcome. Next question?
Operator: Next question comes from a line of Ron Josey with Citi.
Ron Josey : Great, thanks for taking the question. Dara on Delivery, we’re constantly talking about or getting questions on the demand side here, just given macro challenges. And, from what we’re hearing on growth in January for Delivery and accelerating expected growth, I guess in February-March. You mentioned habitual in the letter, how much do you think of this growth here in Delivery as category adoption, better convenience, et cetera, or Uber specific, as you mentioned, maybe competition isn’t as great and things along those lines? Thank you.
Dara Khosrowshahi : Well, I think that overall in the category, the Delivery category has been pretty resilient post-pandemic, certainly more so than a lot of other categories that that benefit from the pandemic. That said, we are growing faster than the category generally, if you look at us globally. Certainly in Europe, we are seeing many of our competitors pull back significantly from what we’re unhealthy spend levels in the past, that didn’t make any sense. They may sense in terms of top line, but they certainly didn’t make sense in terms of bottom line. And for us in Delivery, we’re benefiting from the power of the platform, very cheap audience, from our Rides business. Remember, we get more new eaters, from our rides app than we do from Google and Facebook and Instagram, combined at about a quarter of a cost.
So that is a very significant structural advantage that is assisting our Delivery business. You’ve got our membership business, that again, is adding higher frequency higher spend more retention as well. We’re the only player out there that has membership, both on Mobility with Mobility and Delivery benefits as well. And then you’ve seen our tech, which is optimization around cost per transaction, and then an ad business that we’re building that is starting to scale. So the combination of all of those four factors, I think, is allowing us to outgrow the category, which generally has been more resilient than other categories as well. And I wouldn’t expect anything to change going forward. We do think that we should continue to outgrow the category in Delivery going forward based on the environment that we’re seeing.
Ron Josey : Thank you, Dara.
