Uber Technologies, Inc.

Good afternoon, everyone, and thank you for calling today's conference call. As a reminder, during today's session, all parties will be in a listen-only mode. Later, we will conduct a live interact. At that time, if you have a phone question, please press star 1 on your telephone keypad. To withdraw your question, simply press the pound key. I will now turn the call over to our first speaker, Emily Reuter with Investor Relations. Ma'am, please go ahead.

Thank you, Operator. Thank you for joining us today, and welcome to Uber Technologies' first quarter 2020 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. 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, and under 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 this section, under the caption, Risk Factors, financial conditions, and results of operations in our annual report on Form 10-K, filed with the SEC on March 2, 2020, and in any subsequent Form 10-Qs and Form 8-Ks filed with the SEC. Today, we will open the call for questions. For the remainder of this discussion, all growth rates reflect year-over-year growth, unless otherwise noted. With that, let me hand it over to Dara.

Thanks, Emily, and thank you all for joining us today. It's been seven weeks since I updated you last on the state of our business. In that time, there have been some hopeful signs. Cities are beginning to open up, or at the very least, plan for recovery. Early but promising results in clinical trials for potential treatments and vaccines, and perhaps most inspiring of all, global solidarity and support of those on the front lines. But there remains a lot unknown. clear that the city, states, and countries will take action and there's a little consensus over the right way to do it. Given this backdrop, I want to tell you how I'm managing Uber, both through this crisis and for the long term. My objective is based on the quote, skate to where the puck is going, not to where it's been. For Uber, that means tight focus in three key areas. First, while we have a very strong balance sheet, it's my job to ensure that remains the case, regardless of how fast or slow the recovery is. Hard look at our overall cost structure and our other bets to ensure our core business of rides and eats emerges stronger than ever. We've significantly reduced our marketing incentive spend and deferred real estate CapEx for planned offices in Chicago, Dallas, and Mexico City. Our wholly owned subsidiary in the Middle East took the difficult step of reducing its workforce by 31%. Yesterday, consistent with lower trip volumes and our hiring freeze, we announced a reduction in our customer support and recruiting teams by more than 3,700 employees. And this morning, we announced that we're merging our jump unit into line. With this deal, Uber customers will still have access to bikes and scooters through our app, resulting in an annual EBITDA savings of $160 million in addition to meaningful CapEx savings. Altogether, the actions we've taken and the actions we intend to take in the near future will result in a reduction of more than $1 billion in annualized fixed costs versus our Q4 plan. Reaching profitability as soon as possible remains a strategic priority for us. We believe that disruption caused by COVID-19 will impact our timeline and by a matter of quarters and not years. Second, at a time when our ride business is down significantly due to shelter in place, our EATS business is surging. We've seen an enormous acceleration in demand since mid-March, with 89% year-over-year gross bookings growth in April, excluding India. And just last week, EATS crossed the $25 billion gross bookings annual run rate. Additionally, there's been a tremendous increase in restaurant sign-ups, leading up to rapid improvement in selection in major markets. Behavioral shifts, like the willingness on the part of fine dining establishments to sign up for delivery. We believe these trends are here to stay and will result in an expansion of the entire category. Some of the three 2019 calls to invest aggressively can establish or defend a number one or number two position. Consistent with that strategy, on Monday, we announced this move will allow us to redouble our efforts in markets with larger long-term potential and higher returns like the U.S. Improving each margin and cost structure over time, just as we did with rides, remains a key priority, and we're seeing improvements due to larger order sizes, improved career marketing, and customer acquisitions. Finally, I want to talk about what we're seeing in our rides business today, and I won't sugarcoat it. COVID-19 has had a dramatic impact on rides, with the business down globally around 80% in April. Still, there's some green shoots driving restraint. We've seen week-on-week growth globally for the past three weeks. This week is tracking to be our fourth consecutive week of growth. Last week, we saw 9% trip growth in the past three weeks, week-on-week. We believe the U.S. is off the bottom. U.S. growth bookings were up last week by 12% overall week-on-week, including New York City up 14%, San Francisco up 8%, Los Angeles up 10%, and Chicago up 11%. Perhaps more interestingly, growth bookings in large cities across Georgia and Texas significantly are up substantially from the bottom at 43% and 50% respectively. Hong Kong is back to 70% of pre-crisis gross bookings levels. And in India, we began operating again in designated green and orange zones, which account for more than 80% of the country's 733 districts. In France, before COVID, shows within a month. 90% expected to do the same in less than three months. And 98% of all riders say they will take a trip again, suggesting pre-COVID usage, will build back steadily. Nevertheless, it's very early days. Our expectation is that the recovery will vary geographically and will be nonlinear, meaning we'll see some markets in recovery while others temporarily retreat. As the only truly scaled global player, we think this represents an advantage, both in terms of revenue coming in as well as operational insights we can apply across markets. Today, we've seen that the rebound is led by weekday 9 to 5 trips, including commute use cases. For reference, in 2019, 80% of our gross bookings were delivered from trips in a user's home city, meaning people traveled around their own commute percent from trips in a user's home country. We expect that a recovery led primarily by commute trips will open up exciting new prospects for Uber for Business. as companies look to move their employees to and from offices, as well as partnership opportunities with transit agencies to move essential workers. We're aggressively pursuing both and already working with MTA in New York to do the latter. Now, a bit more on our Q1 performance. Our rides business experienced strong momentum through February, with year-over-year gross bookings growth of nearly 20% for the two-month period of 2019. As the lockdown began to affect our business in mid-March, we experienced trip and gross bookings declines of nearly 40%. And despite this sudden deterioration, we're able to maintain strong Q1 take rate of 22.8% and rides adjusted EBITDA margin of 23.5% of adjusted net revenue, clearly demonstrating the variable cost structure of our rides business. Our rides focus has now turned to recovery, specifically on providing safe experience for drivers and riders and as they start to move around their communities again. And as we publicly confirmed several days ago, we're working through plans to require drivers and riders to wear masks or face coverings when using Uber in certain countries, including the U.S. We intend to continue to set the standard. As the rides business recovers, we've been hit for a number of reasons. Rides-only players have been disproportionately impacted. While our rides bookings were down 80% in April, our total company is only significantly by EATS. EATS has also allowed us to maintain and to bring in new customers onto our platform and faster recovery than rides-only players. We also have a profitable ride business globally with many non-U.S. markets that are higher margin, allowing us to cross-subsidize as necessary and to recovery from a position of strength since we have a larger rider and driver base. Reportedly, many drivers have spent their time on Uber during this period because we've been able to offer them an alternative source of work in food delivery. Less important in the near term, this was historically a sweet spot for a primary competitor in the U.S. with around a 50%. Now, turning to Eats, which performed extremely well in Q1, generating 4.7 billion gross bookings, up 54%, growth year-on-year, while expanding take rate to 11.3% loss to $313 million. In addition to our core Eats product, we're seeing strong demand for grocery and convenience items, launching partnerships with supermarket chains, allowing them to sell a limited menu of everyday essentials via our restaurant platform. From early March levels, grocery and convenience gross bookings increased 117% over the same period and increased 34%, including Care4, one of Europe's largest supermarket chains. Finally, in the next few months, we expect to close our acquisition of Corner Shop, one of the largest grocery delivery platforms in Latin America, with operations in Chile, Mexico, Brazil, expected stickiness of grocery post-COVID, and our footprint in LATAM, we look forward to closing this transaction soon and creating an integrated product across the Cornership, Uber, and Uber Eats apps. While no one could have predicted the swift and intense impact that COVID would have had on our lives and our business, I'm incredibly proud of the quick and decisive action our team has taken to respond to the ever-changing environment. And now, over to Nelson for more details on the numbers.