Specialist
Former product lead at Uber Technologies Inc
Agenda
- Uber's (NYSE: UBER) operating environment – 2022 vs 2021 growth expectations, highlighting MAPCs (monthly average platform consumers), orders and AOV runway
- Competitive dynamics vs Grubhub, Doordash (NYSE: DASH) and Lyft (NASDAQ: LYFT) in the US, and international nuances
- New growth opportunity prospects – international, category expansion and advertising
- Outlook for 2022 and beyond – dark kitchen opportunity, courier supply and subscription implications
Questions
1.
What would you highlight from Uber’s February 2022 Investor Day, particularly in focus areas or the overall operating environment? What might be important in driving the business for the next few years?
2.
Does driver supply, inclusive of couriers, get easier given Uber’s earners can work on ride-share and delivery? Alternatively, does it add complexity in ensuring there’s adequate supply to fulfil demand on both sides of the business because one side has a higher earnings potential?
3.
What’s your overview of Uber’s competition, whether Lyft in the ride-share segment or DoorDash in delivery? What’s the likelihood of Uber gaining or losing category share? What might that look like on a restaurant or regional level? How is hyperlocal competition playing out and how is Uber positioned?
4.
How quickly would you expect Uber’s super app dynamic to reap benefits, particularly around regaining some suburban category share in the delivery segment? Management is guiding USD 165bn-175bn in gross bookings over the next three years. It currently has USD 90bn which is split USD 45bn on the ride-share and USD 54bn on the delivery side. It seems likely that delivery category growth might stagnate or decline, but you believe Uber can continue to grow the Eats business from some share gain largely due to the super app concept.
5.
How is the turnover in Uber’s tech leadership potentially informing the flexibility in the tech and R&D side? Obviously, profitability is important for the business, so do you think the ability to invest in the product as much as necessary isn’t a reality, and that could be a reason for some of the friction across the tech leadership?
6.
What is the likelihood of Uber achieving its gross bookings goals, given your growth assessment for the company’s two businesses? The plan is to nearly double the bookings for the business by 2024. I think it’s around a 25% CAGR at the high end of the guidance based on current bookings of USD 45bn on mobility and USD 54bn on delivery, or USD 90bn in total.
7.
Presumably growth will largely come from more users on the platform, more orders or trips per month for the average user and higher spend per order. I would argue that order sizes are relatively stable for delivery, so potential pricing power more on the ride segment, meaning more of the growth comes from frequency or on the user side. What’s your take on the core growth drivers?
8.
Were Uber’s Cornershop and Drizly acquisitions largely to get necessary retailers on the platform as quickly as possible? It seems DoorDash took a bit more of an organic approach to category expansion, whereas Uber has leaned towards acquiring into the spaces a bit more. What are the puts and takes behind that and the strategy differentiation?
9.
Do you feel optimistic about Uber trying to scale the ad business up to USD 1bn run rate, which is USD 225m now? What could impact that growth? I think it’s onboarding brand-by-brand or product-by-product within a broader brand basis, so while it seems the infrastructure is nicely in place, is it more of a matter of time to reach those levels of ad dollars, or does that feel like a decent scale run to you?
10.
Uber’s business model has been well-known to be tough to come by solid EBITDA as a percentage of gross bookings on either side of the house, whether ride-share or mobility. I think it’s at mid-single digits on ride-share and just breaking even for delivery with long-term targets of 13% and 6%. How much potential is there to attain that? Is anything worth sense-checking, whether across payments for the drivers and couriers or subscriber acquisition costings? Do those margin profiles make sense as the business continues to scale and as trips increase?
11.
Are most of the challenges in grocery order economics due to a lack of scale? How much does efficiencies via fulfilment centres or order density – allowing couriers to complete more orders per hour on average across the stack of delivery verticals – potentially raise the economics?
12.
What’s the disparity in DashPass seeming to get much better uptake vs Uber One? I think it is at 40% of its MAU [monthly active user] base representing 60% of the order mix, whereas Uber One still sits at 17% of gross bookings overall for delivery.
13.
What are the considerations around potential inflation shock? You seemed largely comfortable with Uber’s aim for 13% margins on the mobility side, but as riders ask for more wage increases, the way to maintain that margin profile probably comes through raising the rides pricing. Do you think there will be a maintenance of the EBITDA profile at the expense of a negative short-term impact to the growth from rides, as consumers might find ride prices a bit harder to swallow?
