Uber Technologies, Inc. (NYSE:UBER) Q4 2023 Earnings Call Transcript

Uber Technologies, Inc. (NYSE:UBER) Q4 2023 Earnings Call Transcript February 7, 2024

Uber Technologies, Inc. beats earnings expectations. Reported EPS is $0.673, expectations were $0.15. 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: Good morning. My name is Krista, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Uber Fourth Quarter 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] Thank you. I would now like to turn the conference over to Alex Wang, Head of Investor Relations. Alex, you may begin your conference.

Alax Wang: Thank you, Krista. Thank you for joining us today, and welcome to Uber’s Fourth Quarter and Full Year 2023 Earnings Presentation. On the call today we have Uber CEO, Dara Khosrowshahi; and CFO, Prashanth Mahendra-Rajah. During today’s call, we’ll 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 risks and uncertainties described in our most recent Form 10-K and 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 and Prashanth. With that, let me hand it over to Dara.

Dara Khosrowshahi: Thanks, Alex. Q4 was a standout quarter to cap off a standout year. Trip growth of 24% year-on-year outpaced gross bookings growth for the fourth quarter in a row, powered by strong audience trends and record engagement as consumer activity remained healthy all-around the world. At the same time adjusted EBITDA of $1.3 billion exceeded our Q4 outlook with GAAP operating income of $652 million. Looking back, 2023 was an inflection point for Uber providing — proving that we can continue to generate strong profitable growth at scale. These results in our Q1 outlook demonstrate that we’re starting 2024 with tremendous momentum and reliable execution. I’m energized by the pace of innovation I’m seeing across the company and I’m looking forward to another exciting year ahead. And now here’s Prashanth.

Prashanth Mahendra-Rajah: Thank you, Dara. And let me add my welcome to our Q4 earnings call. As a reminder, we will be hosting an Investor Update next week on Wednesday, February 14th to present an updated view of our strategy and capital allocation plans. As such, we kindly ask that you keep your questions today, focused on our fourth quarter and full year 2023 results. And with that, let’s open the call to questions.

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Q&A Session

Operator: [Operator Instructions] Your first question comes from the line of Doug Anmuth from JP Morgan. Please go ahead.

Douglas Anmuth: Thanks so much for taking the question. As you come off of 2023, we have grown bookings 20% and achieved positive GAAP operating income and net income and driven meaningful free cash flow. Can you just talk more about your top priorities as you enter 2024? How you shift Uber to become more of an everyday product and what are some of the key strategic investment areas that you’re most focused on? Thanks.

Dara Khosrowshahi: Yes, great question, Doug. So, I think for us, the good news is that, the strategy remains largely the same. If I were to broaden in terms of Mobility, first and foremost, it’s about making certain that our supply position, the number of drivers that we have on the road and engagement of those drivers continues to be healthy because that is what drives overall marketplace health. And you can never forget about the basics. The number of drivers we have on the platform was up 30% year-on-year. With engagement, average — engagement also being up 10%. So we still drivers of the heart of the business. And as long as we’ve got drivers who are earning as they are, for example, in the US $33 per utilized hour and staying on the platform for longer that platform stays healthy.

We have more people coming in. At the same time we’re augmenting that base platform with a number of new initiatives that we’ve got in place, newer products. This thesis are you for be enterprise business that’s actually showing nice strength early in the year. Reserve for folks who are willing to pay more for better reliability for those travel locations. For example, low cost product as well and then taxis and two-wheelers and three-wheelers. So you’ve got a base business that’s growing at fast rates. Typically, gaining category position against many competitors. And then, augmented by some of these faster-growing products. In delivery it’s very similar, which is, adding more restaurants, making sure the reliability of services is excellent.

You’ve seen that business actually accelerate its growth from 16% topline to 17%, while significantly increasing margins as well. And that’s augmented by new services such as grocery, which is now $7 billion run-rate and growing at very healthy rates. And then advertising, which we told you would be a $1 billion run-rate business next year, which is going to surpass that. We’re already at a $900 million plus run-rate just in Q4 of this year. So again, strong base business, augmented by these new exciting businesses that add both top-line and margin as well. And then all of it is going to be undergirded by the power of the platform. First and foremost that their technology platform, all of the algos we have that are matching drivers to riders or matching couriers to go pick up something at a grocery store and deliver to home on time.

So it’s a technical platform that’s doing all the matching, routing driven by AI. And then other factors like our membership program, which is up to 19 million members. And then, of course, cross-selling across the platform, which continues to increase Uber users who buy across platform, let’s say, if they are taking UberX and order on Uber Eats will on average order three times more than those who don’t. So I think as we look forward, it’s more of the same and increasing the scale of each of these efforts, because as you can see we’re growing faster than competition on a global basis. We continue to improve margins. And now that we’re profitable, that creates other possibilities as well. So I think that’s what we’re, kind of, if next year is the same as this year just with bigger numbers, I’ll be happy.

Douglas Anmuth: Great. Thank you. Dara.

Dara Khosrowshahi: You’re welcome.

Operator: Your next question comes from the line of Eric Sheridan from Goldman Sachs. Please go ahead.

Eric Sheridan: Thanks so much for taking the question. Maybe following up on Doug’s broader question and spreading it out around the globe. Curious if there were any geographic areas, you wanted to call out exiting 2024 and looking into 2024, where you see elements of either improved market share position or elements of driving the utility around Uber One and linking more Mobility activity with more delivery activity that we should keep an eye on as we move deeper into 2024. Thanks so much.

Dara Khosrowshahi: Yes, Eric, what I’ll start with is actually Delivery, and what we’re quite happy to see is that, for example, our Delivery business, which, again, accelerate our gross bookings growth this year grew category position in 10 out of its top 10 markets. So the growth that you see from us and with Delivery is substantially in excess of the category. It’s partially and mostly the great execution of the team in terms of the basics, which is adding more selection, bringing in more consumers, bringing in more carriers, making sure that the reliability of the service improves, and making sure that errors improve as well. You don’t get your food late, but then again it is that power of the platform, right? Which is, our Uber Eats business is getting significant free traffic from rides or close to free traffic from rides.