Uber Technologies, Inc.

ladies and gentlemen thank you for standing by and welcome to the uber technologies inc q2 2020 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 any further assistance please press star 0. i would now like to hand the conference over to your speaker today Thank you. Emily Reuter, Investor Relations. Please go ahead, ma'am.

Thank you, Operator. Thank you for joining us today, and welcome to Uber Technologies' second quarter 2020 earnings presentation. On the call today, we have Dara Khatashahi 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. Please note that we have also posted an updated 2020 investor presentation on our investor page. I will 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, accept, extend, and may. You should not place 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 and Management's Discussion and Analysis of 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. Following prepared remarks today, we'll open up a call to questions. For the remainder of this discussion, all growth rates reflect year-over-year growth and less otherwise noted. With that, let me hand it over to Dara.

Emily, and apologies to everyone about the technical difficulties to start with. On our last earnings call in May, I said that we were planning for a nonlinear recovery that varied geographically, and that's exactly what we've got, particularly across the U.S., where the reopening has been uneven at best. And while we would have all hoped that by now we'd have a clear line of sight to the end of the pandemic, hope is not a strategy, and it's my job to ensure that Uber is well prepared for any scenario. Before I get into details on our Q2 results, I want to recap some of the actions that we've taken so far and the trends that we've seen today. In the early days of the crisis, we moved at Uber speed to stabilize our mobility business and to capitalize on the enormous tailwinds behind deliveries. More than two-thirds of our cost of revenue on OpEx, excluding stock-based comp, are not fixed. So simply, if a trip doesn't happen, most of the costs don't either. That variable cost structure, coupled with the tough decision on headcount, meant that our mobility segment still generated $50 million in positive adjusted EBITDA profit in a quarter, despite a 73% year-on-year drop in gross bookings. Meanwhile, our delivery segment saw massive acceleration, growing growth looking to 122% year-on-year, excluding exited markets, while improving margins 59 percentage points. It's become clear that we have a hugely valuable hedge across our two core segments. There's a critical advantage in any recovery scenario. When travel restrictions lift, you know that mobility trips rebound. If restrictions continue or need to be reimposed, our delivery business will compensate. And as a scale global player, we get the benefit of recovery whenever and wherever it happens, even if some cities and countries lag behind others. We've leveraged these two factors to grow total company gross bookings at constant currency from the Q2 bottom of negative 45% year-on-year to about minus 12% in the month of July, driven by mobility being down 53% year-on-year and delivery up 134% year-on-year. The bottom line is that we've taken swift action on everything that's within our control, cutting more than a billion dollars in annual fixed costs versus our Q4 plan, rapidly deploying new mobility products to meet changing needs, and expanding delivery beyond food. We did this while innovating in safety to ensure that our core rides experience is ready for a customer's second first trip. And as a side note, please, please, please wear a mask. Regardless of the ultimate shape of the recovery curve, I'm confident that the work we've done has ensured that we're well positioned. Our actions have strengthened our foundation, brought renewed focus and energy to our core business, and have seen us operating and innovating more effectively than ever before. Now, a bit more on the delivery business. At a roughly $30 billion annual gross bookings run rate at the end of Q2, our delivery business alone is now as big as our rides business was when I joined the company in 2017. He's essentially built a second Uber in under three years with an accelerating growth profile, a global footprint, and an enormous plan. And while some of the recent surge in delivery due to COVID, I believe we're witnessing a much more profound shift in consumer behavior that will last well beyond the pandemic. Consumers are quickly becoming accustomed to the magic of having anything delivered to their door in half an hour, much like the magic of having a car show up in a few minutes. is an opportunity that will be many times larger than even we expected and one that Uber is uniquely positioned to lead. We've turned our natural advantages and a disciplined capital allocation framework into the number one or number two competitive position in the vast majority of our countries. In the U.S., year-on-year GDP growth accelerated to over 110%, with order volumes growing over 80% to nearly 100 million orders in Q2. We now have a strong position in the majority of the top 10 U.S. markets, representing nearly half of the category's bookings. And I'm happy to report that we've made significant gains in New York City, with gross bookings growing 120% year-on-year in Q2 and 150% year-on-year in June. We're now number one in the outer boroughs, and we continue to narrow the gap in the end. In July, we announced our intention to acquire Postmates, which achieved a $4 billion annualized gross bookings run rate in Q2. We believe this acquisition will continue to bolster a relatively smaller position in important cities like Los Angeles and across the U.S. Southwest and offer greater restaurant selection while increasing order density, improving delivery efficiency, and reducing costs. Non-U.S. bookings account for 55% of delivery volume. We're now in the number one position in a number of strategic high-spend markets, which count for over two-thirds of our international bookings, including Australia, Canada, France, Japan, and Mexico. In many other key markets, we have secured a number one position in larger anchor cities, such as London and Taipei, from which we can expand nationally. This strategy allows us to gain competitive share while improving markets. We're now adjusting EBITDA profitable in two of our top five international GB markets, and expect to make meaningful progress towards profitability, not only country by country, but for our entire delivery portfolio. In many of our international markets, much of our competition continues to come from aggregator incumbents either don't want to enter the logistics of delivery or are struggling to do so. By contrast, we offer restaurants the best of both worlds. Use your own couriers or use each courier whenever demand outstrips your in-house delivery capacity, as has increasingly been the case during lockdowns. In many markets, we've seen that restaurants with their own couriers actually end up calling Uber Eats couriers about 30% of the time, demonstrating the unique advantages that we bring and one that we believe will hasten the shift towards a delivery model. Using our existing network, we're moving quickly into new deliveries of service offerings, which we see as a very high potential opportunity. We've piloted partnerships delivering home goods, pet supplies, and pharmacy items. In other novel uses of our networks, our Uber Connect option lets consumers send small packages to friends and family via UberX drivers. It's been a huge hit to go to Latin America with 3 million trips globally since early June. And just last month, following promising launches in Europe and Australia, we've expanded grocery to the U.S., this time in partnership with Corner Shop. Corner Shop has seen incredible traction in Latin America, and we're excited to bring a strong product and execution to the U.S. The COVID crisis has moved food delivery from a luxury to utility. And as we add more use cases, our service will move from a utility to daily needs. As such, we're ramping up our subscription efforts, including nationwide rollouts of each East Pass, which combines free food and grocery delivery, and eventually Uber Pass, which combines both rides and East benefits in one monthly package. All this activity has resulted in new customer acquisition, monthly active eaters, orders per eater, basket size, and eater retention, all being up year on year and quarter on quarter, both globally ex-India and in the U.S. This translates into something simple, more loyal and delighted eaters across the globe. Finally, shifting to our mobility business, which I would describe as a tale of 10,000 cities. Our mobility recovery is clearly dependent on the public health situation in any given area. Asia and India is in the recovery lead. We've seen growth bookings of Hong Kong and New Zealand at times exceed pre-COVID highs. European trends have also been encouraging. France, Spain, and Germany, amongst others, have improved to being down 35% or less year-over-year recently. The U.S. is lagging, with GBs down around 50% to 85% in our top markets. with cities like New York leading in the recovery, and some West Coast cities like San Francisco and L.A. go further beyond. Our global geographic footprint remains a huge advantage, and we're seeing evidence that confirms what we've always believed, that when cities move again, so does Uber. We've observed that workday and commute trips bounce back sharply after lockdowns lift, but it's not clear that weekend and social hour use cases return quickly, too, confirming the critical role Uber plays in people's lives. I'm also proud of the speed in which we reacted to extraordinary circumstances. Our longstanding focus on safety let us lead the industry with our door-to-door safety standards, a combination of new technology like mass detection, shared responsibility through enforcement of our community guidelines, education from health experts, and a partnership with leading brands like Clorox, Patel, and Unilever. And thanks to our global scale, we've been able to purchase 30 million masks and other hygiene supplies for drivers with more to come. Our global scope not only provides diversification during uncertain times, it also allows us to lean in and invest more in technical innovation than our competitors. We recently focused on three areas. First, we built new products for new use cases. Our hourly option lets you book one car for several hours so that you can run errands without having to request a trip at each stop along the way. And our Uber for Business team has built a new shared ride solution, which matches only employees from the same company. Look us up if you want to get back to work safely and affordably with your coworkers. Second, we're doubling down on adding new vehicle types, like taxis. We've seen that taxi drivers have increased their time on Uber by 25% during the pandemic. And we believe we can help them find new sources of demand. We reached a big milestone with our taxi launch in Tokyo, and yesterday's acquisition of AutoCab in the UK will deepen our taxi outcomes. We're also adding auto rickshaws and motorbikes since we expect many riders in emerging markets to shift from public minibuses towards these lower-cost options. Third, we're becoming a key partner for transit agencies to help them deliver more efficient, accessible, and equitable service. In June, we announced the first-ever software deal to power on-demand transit in Marin County, California. And our acquisition of RouteMatch brings together Uber's expertise in on-demand mobility with RouteMatch's proven capabilities in the space. In sum, we're the global leader in ride-sharing. We've leveraged our brand, our platform, and our technical capabilities to organically build a food delivery business as big as ride-sharing. We're now leveraging ride-sharing to expand into every mobility category. And we're leveraging food delivery to build a real-time logistics engine for all local commerce at UberScale. And we're doing it right now in your city and across the globe. Now over to Nelson for more details on the numbers.