Uber Technologies, Inc. (NYSE:UBER) Q4 2022 Earnings Call Transcript

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Balaji Krishnamurthy : Thanks, next question?

Operator: Next question comes from the line of John Colantuoni with Jefferies.

John Colantuoni: Hi, thanks for taking my questions. So Mobility continues to deliver impressive bookings growth. Maybe if you could just help give us a sense for how shared gains are playing into that versus broader recovery in category usage as you have moved further past the pandemic. And assuming you are seeing some share shifts, are you starting to see evidence that the investments you’ve made in driver supply technology and Uber One are allowing you to leverage your network effect and in driving sort of a permanent competitive advantage that could drive ongoing share shifts in certain markets? And then second question about freight. Bookings in EBITDA for freight were a bit behind our expectations, but you could just discuss how it compared to your own expectations in the fourth quarter, and some puts and takes of what drove could have driven that delta relative to your own expectations. Thanks.

Dara Khosrowshahi : Yeah, the first thing I’d say, John is that I’ve never seen a permanent competitive advantage in my life, and we don’t expect to. So the advantages that we have in terms of a business and Mobility, we are gaining category position, and we’re getting category positions certainly in the U.S. We are in Europe and in the UK, and Australia, et cetera. We’re seeing one of our competitors in France, spent a ton of money which doesn’t seem to make any sense whatsoever, but they’ve done it before and we push them back. And we don’t consider spending more money a strategy. It just like that’s maybe that’s a strategy when the only thing that counted was how much money you could raise. And while we see some of our competitors kind of trapped in the spend more money strategy if you want to call, it we are driving.

We’re using efficiency we’re using technology like upfront fares and destinations, and we’re using the power of our platform with membership to win category position the right way. And the right way for us is grow strong top-line faster than the category and leverage a bottom line so that you’re profitable, and you continue to increase profit margins as well. So right now, we are seeing kind of the positive feedback loop of more driver supply leading to more demand, leading to more data so that we can target that demand so that we can match the right driver to the right rider, whether it’s reserved or on-demand. That feedback loop is happening. But we are going to have to stay on our toes to continue to gain category position while improving margins.

And we don’t take a minute of that for granted. We’ll continue to our best the results in the last year, year and a half have been really, really good. And the trends that we’re seeing for now are really good. But the minute we take our foot off the gas, is the first minute that a competitor starts to get an advantage over us. So we don’t take any of it for granted. Nelson, if you want to go?

Nelson Chai : Sure, regarding the freight. So yes, we’re watching the same trends you are. Yes, we wish the freight numbers were better in the fourth quarter. But as you know, there’s a little bit of a cyclical nature to what’s going on more broadly in the industry. The business continues to do well, and so as we bought the Transplace business in December of 2021. We spent a fair amount of last year integrating the business and Transplace Tupelo business continues to be resilient with everything going on. And what we’ve seen as our Uber Freight — historically Uber Freight business has done a very good job using the brand and our tech, our shared tech to really drive out and build out its presence, particularly with what I’d call national brands, where we need to spend some more time is really focused on some of the small and midsized shippers.

And so we’re doing that right now. And we’ve made some organizational tweaks. We do expect that you’ll see us getting some traction there, but the overwhelming cycle that’s going on right now more broadly on the freight industry is going to continue to impact our business. And so that business will continue to lag likely versus where we would have hoped. And certainly versus a year ago where it was a much different dynamic more broadly in freight business in this country.

Balaji Krishnamurthy : Operator, we will take our last question now. Thank you.

Operator: Your last question comes from the line of Nikhil Devnani with Bernstein.

Nikhil Devnani : Hi, thanks for taking my questions. Just a couple please. Looks like the leverage on promotional spending has been quite good. I think it’s the third quarter in a row of sales and marketing dollars stepping down. How much more efficient can that line get? And as a follow on to that when you think about your ambition, so on gross bookings growth? I mean, do you expect to ramp promotional spending down the road? Or do you feel comfortable about growing the business while continuing to get leverage against that that item? Thank you.

Nelson Chai : So I’ll start on the first one and Dara can handle the second half of it. So again, we’re focused on really delivering and balancing our growth and our efficiency. So that’s been our path. And I talked about when we took our big call to action in 2020. So as a company, we’ve been focused on growth and efficiency. We recognize that we put out targets last year. And our goal is to make sure we achieve or overachieve against them, which I believe we have, if you think about the last six quarters. And so there are times when we might take some incremental dollars and spend back in a specific marketplace. And that would there’d be strategic reasons why we would do it. There might be some situations where we pull back and so we have a capital allocation framework that we’ve had now for the past few years.

And it’s what’s working well is what I would say. And so I don’t want to say, could we actually get very, superefficient in the quarter? Maybe. Would we likely not? We still think there’s a lot of growth. And so our goal is to really think about as our set kind of where the path’s is going and making sure that we are investing behind those growth levers, so we can deliver the kind of top line growth we’re doing. And delivering — over delivering against the bottom line which we have been doing.

Dara Khosrowshahi : And Nikhil, in terms of ramping S&M to drive top-line, the way I described our activities is, it’s exactly like Nelson said. Generally, we want to leverage all of our cost lines the cost of sales, marketing cost. Certainly, we want to leverage operating costs and make sure that we stay lean as a company, it’s just much more fun to win as a small team versus big teams. And that allows us then to lean into different segments of the business that we want to specifically grow, whether that’s a specific geo, or that’s a specific product. You see us with our Superbowl ad, with Uber One, that’s an expensive ad that is leading into Uber One to drive growth in a very, very strategic product of ours. So strategically overall, our efficiency or drives efficiency, profit business then allows us to strategically invest in various geos or various areas.

And yes, that will include investments and marketing. It’ll include investments in tech as well so that we can strategically grow where we can build an advantage over our competitors. And as long as we keep on driving this efficiency every single day, every single week, every single month, every single year, that opens up avenues for us to invest and deliver the bottom line that investors are looking for long term.

Nikhil Devnani : Appreciate the color. Thanks.

Dara Khosrowshahi : All right. I think that’s it. Yeah, you bet. Thank you, everyone, for joining us. Huge thank you for the Uber team, delivering another great quarter and big thank you to our earners who without them, none of this would be possible. 2022 was a really, really good year for the company. And we’re looking for 2023 to be an even better year. Thank you, everyone.

Operator: Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.

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