Uber Technologies, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Uber Q3 2019 Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require further assistance, press star 0. I would now like to hand the conference over to Emily Reuter, Investor Relations. Please go ahead.

Thank you, Operator. Thank you for joining us today. Welcome to Uber Technologies' third quarter 2019 earnings presentation. On the call today, we have Dara Khosrowshahi and Nelson Che. We also have Kent Schofield, and this is Emily Reuter from the Investor Relations Team. During today's call, we will 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. I'll remind you that these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call may be deemed to be forward-looking statements. Such statements can be identified by terms such as believe, expect, intend, and may. 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. 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 included in the section under the caption, Risk Factors, and management's discussion and analysis of financial conditions and results of operations in our prospectus filed with the SEC in connection with our IPO on May 13, 2019, as well as our second quarter Form 10-Q that was filed on August 9, 2019. Following prepared remarks today, we will open the call to questions. With that, let me hand it over to Dara.

Thanks, Emily, and thank you all for joining today. I'm pleased about our continued progress towards unlocking value from our platform and fulfilling our vision of becoming the operating system for consumers' everyday lives in cities around the world. First, I'll discuss our rides business, which reached two very significant milestones in Q3. We achieved $1 billion in weekly gross bookings, And we generated rides adjusted EBITDA of $631 million, up 52% year-on-year. Importantly, rides adjusted EBITDA now more than covers our corporate overhead, which consists of $623 million in corporate G&A and platform R&D spend. We continue to be the rides leader in every region in which we operate, growing or maintaining category position in our most important markets, including the U.S., LATAM, and the U.K., while significantly improving our rides adjusted EBITDA margins from 17.8% of A&R in Q3 2018 to 22% in this quarter. Moving forward, we expect to drive continued top line and margin growth by investing in our marketplace, doubling down on our premium product offerings, as well as continued financial discipline. For example, investment in our enterprise product has driven Uber for Business growth exceeding 70%, while the expansion of our premium comfort product to more than 150 cities globally has been a win for riders and drivers. Additionally, we've made meaningful progress on a number of our high-priority markets, such as Germany, Japan, and Argentina. Our teams are confident that they can drive strong top- and bottom-line growth over the next several years. Second, our Eats business continues to expand globally, with growth bookings growing 77%, and A&R growing 109% year-on-year on a constant currency basis as a result of continued improvement on our take rate, which grew to 10.7% from 9% this quarter last year. Our strategy for ETH is simple. Invest aggressively into markets where we're confident we can establish or defend a number one or number two position over the next 18 months. We believe that the scale and strength of our global brand, our planned expansion into new local economies, new local commerce categories like grocery, and the power of our platform to cross-promote and drive loyalty within our product lines, all afford us superior acquisition and per-transaction economics compared to monoline local players. Many of the startups in the food category have been trying to use cheap capital to buy their way to growth. But we've seen that capital is getting more expensive and can run dry, whereas platform leadership is both far cheaper and more permanent when coupled with excellent execution. We believe that the online food delivery category could undergo the same move to more favorable market conditions that we've observed in rides as companies contend with public market investors. A few weeks ago, we announced a majority investment in Corner Shop, a leading provider of online grocery delivery in Mexico and Chile. Given the tremendous synergies between restaurant delivery and grocery, We see significant value in adding an already established and highly successful grocery app to our platform, further solidifying Uber as the operating system for everyday life in Latin America and potentially beyond. Our recent announcement that we'll begin showing rides, eats, and other services side-by-side in one app demonstrates the clear advantages of our platform approach. We can more quickly and efficiently attract and retain customers, as well as deepen their engagement by linking and cross-promoting all of our offerings. It's early days, but we've already launched products like Uber Pass, a subscription that provides all-in-one savings like ride protection, $0 delivery fee on Uber Eats orders, and more for customers in 10 cities. Similarly, Uber Rewards, which reached 18 million subscribers in the U.S. in just six months since launch, should drive increased loyalty as consumers accumulate and use Uber Rewards across our platforms. Finally, we're focused on turning our rides users into ETH users. And as part of the changes we made to our marketing organization, have structured teams around seizing high potential opportunities like this. Lastly, a word on regulations. To ensure the best outcome for riders, drivers, and the cities in which we operate, we continue to be focused on positive, productive engagement with regulators all around the world. It's important to remember where we came from. When we launched peer-to-peer ride sharing in 2013, California was the only place in the world with regulations on the books. Fast forward to today, just six years later, nearly every major market in the world has recognized and licensed our service. Nonetheless, regulations in California have generated a lot of interest over the past few months, so I want to briefly address our situation there. For context, California represents 9% of our global Rise and Eats gross bookings, but a negligible amount of our rides and eats adjusted EBITDA, respectively. We continue to focus on a path that we believe provides a very attractive option for drivers and couriers, where they retain flexibility but gain important new protections like health care subsidies and minimum earning standards. Together with Lyft and DoorDash, we're putting a ballot measure to California voters in November 2020 that proposes just such a model. I also want to highlight the significant progress we've made on policy across the world this year, positive independent contractor rulings from both the U.S. via Department of Labor letter in April and Brazilian federal governments, the passage of a mobility law in France which includes a reaffirmation of independent classification, and a return to Vancouver after seven years away. Generally speaking, our priorities remain the same, secure regulations that allow the business to grow, and enable individuals to find flexible earnings opportunities on our platform. Before I turn it over to Nelson for details on the numbers, I want to speak to the excellent progress we've made on rides since our IPO, as this was our best quarter ever, and the first in which we've disclosed our second-level EBITDA. In just two quarters since our IPO, we've made a lot of progress. Since Q1, we've doubled Q3 rides A&R to 24%, on a constant currency basis. That's ANR growth, 24% on a constant currency basis. We improved our ride take rate by 200 basis points to 22.8%, producing an incremental 300 million in Q3 2019 ANR. Our transaction growth, along with a better take rate, has improved ANR by 500 million, 400 of which flowed through to rides adjusted EBITDA. This represents an 80% incremental EBITDA flow-through, increasing adjusted EBITDA margins from 8% to 22% in just two quarters. We've achieved this with an improved framework on capital allocation, efficiency, capability, and cost control. As an example, we again reduced insurance and payments, the two biggest components of our cost of revenue, quarter on quarter and year on year as a percentage of gross bookings. We did all of this and achieved the same quarter-on-quarter top-line growth rate this Q3 as Q3 of last year, despite a $2 billion increase in gross bookings for the quarter. To be clear, we're not done by a long shot in our ride segment, and we are, as we speak, applying the same level of rigor to all of our other segments, including EATS. We've already made some tough decisions regarding our headcount and resource allocation to make sure we've got the very best teams working against the highest return projects and will continue to be disciplined and efficient with our capital. Our current target, with a ton of hard work from all of our teams, is to get to total company EBITDA profitability for the full year 2021, as we see the benefits of global scale and efficiency and the best tech talent out there. The world's magical companies are the ones that can compound top-line growth at massive scale, improve margins, allocate capital efficiency, and do the right thing for all of their constituencies. We're working hard to be one of those magical companies. And now to Nelson for more details on the numbers.