Uber Technologies, Inc. (UBER) Q1 2019 Earnings Report, Transcript and Summary

Good afternoon. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber Technologies Inc. Q1 2019 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. Thank you. Kent Schofield, Head of Investor Relations. You may begin your conference.

Thank you, Christine, and thank you for joining us today. Welcome to Uber Technologies Q1 2019 earnings presentation. On the call today, we have Dara Khosrowshahi, CEO; Nelson Chai, CFO; and this is Kent Schofield, Head of Investor Relations.

Kent, thank you. Welcome everyone to our first earnings conference call as a public company. We are very excited. Our IPO earlier this month was an important moment for Uber. It was a combination of nearly a decade of work to build the network, product, technology and operational excellence that power our global platform today. It’s also the result of more recent changes, including our adoption of a world-class governance standards and update to our cultural values, and a shift towards long-term partnership with cities, regulators, and the millions of people and organizations who use our technology to earn income owing to grow their business every day. While I am proud of what we have achieved at -- with our IPO, I have told our team that it is ultimately just one moment in a much longer journey. We have an even greater duty to create long-term value for investors, our customers, our employees and our many stakeholders. We will do this by making Uber the platform -- by making the Uber platform a one-stop shop for the movement of people and powering local commerce around the world at a massive scale over 700 cities and 63 countries.

Thanks, Dara. Now on to Q1 2019, which as a reminder came in at or near the high end of the financial ranges we provided last month in our perspective. Our GAAP revenue of $3.1 billion was up 20% year-over-year. Our GAAP cost of revenues excluding D&A of $1.7 billion increased to 54% from 45% of revenue in Q1 of 2018. Our GAAP EPS was a loss of $2.26 per share, compared to a gain of $1.84 in Q1 of 2018, which benefited from a $3.2 billion gain attributable to the Grab and Yandex transactions that closed during that quarter.

All right. Thank you, Nelson. Sometimes simplicity is a beautiful thing. Now while the canvas that we operate against and seen complex our story is simple. We are the global player. We are the largest player in personal mobility. Our brand, our technology, our operational platform all give a structural advantages versus the monoline players. We have a generational and demographic wave behind us and our job is to grow fast, at scale and more efficiently for a long, long time. And while the markets that we compete in are and will remain competitive, we like what we see. Our IPO was an important step in our evolution but just a step. Our teams are focused, motivated, talented and very, very determined to prove Uber’s value to our shareholders. With that, we are ready for some Q&A.

Thanks, Dara. Operator, you can open it up for questions.

Thank you. Your first question comes from line of Brian Nowak from Morgan Stanley. Your line is open.

Thanks for taking my questions. I have two, just the first one on Rideshare MAPCs, can you sort of talk to us big picture about what you think the biggest hurdle you have to overcome to continue to drive fast Rideshare MAPCs growth in some of your oldest markets in the U.S., whether it’s price density and how do you do that, what are your strategies in place to kind of continue to grow MAPCs? Then the second one, on Uber Rewards, any color on early learning there, comments on frequency of users that are using that product and how do you think about pushing that more globally over time? Thanks.

Sure. And just before as a core Rideshare markets, I think, as it relates to audience or MAPCs. First of all, there is a natural expansion that is happening. You look at, one, is there’s an expansion from the city cores to the city suburbs. That is naturally happening. For example, in New York City now, over 50% of our rides don’t originate or end in Manhattan and that was very much not true three years, four years ago. So you see there’s kind of a natural expansion from the core into the suburbs. The second for us is that you have got kind of the newer millennial generation that is not particularly interested in owning a car. I think the stats are something like 26% of 16-year-olds got their licenses and that compares to double what it was just 20 years, 30 years ago. So we do have this urbanization happening on a global basis. We have got this generational wave that is just not interested in car ownership and in all of that absolutely helps us. Then I think that you look at our other businesses that we are growing in including Eats and our Scooter business, the New Mobility business, 50% of our Eats customers actually don’t use rides. So whereas the Ride business is a very strong audience creator for the Eats business, now as Eats extends especially into some out -- into some of these suburbs, Eats is finding new customers for us which first of all are going to be customers for Eats. But these are customers that then we can up-sell into the Ride business as well. And then the Scooter business for us like e-bikes and e-scooters are finding yet another generation of usually younger customers who are in the center of cities and what we are finding is that with our New Mobility products we are actually -- of the customers who use our NeMo products, they are typically under penetrated in terms of using a rides product. So it’s a whole new customer base. Sometimes they have use a rides product and we work to activate, reactivating them. Sometimes they weren’t using rides at all. So it’s reaching into yet another customer segment and it’s also reaching into a different type of trip, a trip that’s typically less than 5 miles. And then you see it’s also penetrating into transit and other areas with our marketplace strategy, which is really getting into every single use case that you would want as far as transportation and usually cheaper use cases. So this is POOL. This is a Express POOL and then these are transit partnerships that we have. They are for folks who want to spend $4 or $5 or even $1 or $2 per ride. So that’s all within a country. And then also keep in mind that we have six target countries, Germany, Argentina, Japan, South Korea, Spain and Italy. These are countries that we believe that we can open up. We think that Uber can grow service in those countries and we think that there’s a regulatory opening in those countries, so to speak. It will take some time. Those countries will represent a 20% increase in population of MAPCs potential and there are many, many other countries that either we are not in or we had to get out of, Finland, Norway, Slovakia, the Czech Republic, et cetera. So all of these kind of increases the overall population, etcetera. So I think on the MAPCs side, there are -- there isn’t one silver bullet, but there are many, many levers and we have teams working at each of these levers to continue to increase MAPCs, not just for the ride business, but the overall Uber platform as well. And the second question was about rewards is that right?

Yeah. Yeah.

Yeah. Was it about the rewards of things?

Yeah. Yeah.

I think in terms of rewards, on the consumer side, we are going pretty aggressively in the U.S. and we are seeing very good early signal and we are seeing very high consumer satisfaction. The other great thing about rewards is that it knits our various services together. You have also seen that we have a subscription product on the ride side and you can anticipate our being more aggressive in tying in our different products across our subscription products as well. So, we are very happy with the early results from rewards, but it is early and we think that that’s a product that we can optimize pretty significantly going forward. And we are certainly looking at launches outside of the U.S. although we haven’t announced anything yet.

Thanks Brian for the question. Operator, next question.

Your next question comes from line of Heath Terry from Goldman Sachs. Your line is open.

Great. Thanks. Just a couple of things, you made the point in the press release of continuing to see signs of less aggressive pricing by some of your Ridesharing competitors. Just curious to the extent that you can elaborate on that, how universal that is in terms of geography. How much of that is in the U.S. versus some of the other more important markets to you? And then on the Eats side of the business, obviously, with headlines about competitors raising more money in this space, so curious about your view on how or what type of consolidation is going to happen within the Eats category and to what degree Uber potentially takes part in that in some way?

Sure. I think on the competitive front there is no universal, everything single country is different and we would be here for half an hour if we describe the competitive position in every country. I think some important ones. In the U.S., if you listen to the Lyft conference call, for example, they talked about competing more on brand and I think that competing more on brand and product is, call it, a healthier mode of competition than just throwing money at a challenge. So we have seen that pencil out into the market, so to speak, and we are, obviously, operating independently. But I say we like what we see on the competitive front in the U.S., which is our largest market. In South America, in Brazil, Mexico, et cetera, we certainly saw competitive entry by DD and some other players and we are seeing it stabilize at this point. And so, again, will things get better or worse, we can’t predict. But I think that sitting here today versus where we were three months ago, we are always uncomfortable in our chairs, but we are less uncomfortable, so to speak, and I think, we have more of a handle on the competitive situation and I think we feel net better. Now that can get worse or better, but I’d say today, we feel better on the competitive front overall on a global basis. I think in -- as it relates to Eats and the landscape there in food delivery. Listen, there’s a lot of capital coming in because it is a huge category and there are some folks that believe that the category -- the food category can be larger than the ride category, and if that’s true, and by the way it could be true. In China, it looks like it is larger than the ride category that would be an enormous win for us. But today it does -- it is challenging and that there are many players that are well-funded, they are well operated and they are competing to win. But we are the biggest player outside our China. We love our team. We love our technology and the platform that we have and the ability of our ride business to, one, has built a brand that is very, very recognizable but also move riders from eaters is considerable and I will tell you that we are very, very early in the stages of exploring the many, many ways in which our Ride business can help continue to build our Eats business and vice versa by the way. So will there be consolidation? Yeah, I think, there will absolutely be consolidation. We are not in a hurry in that. I think that whether consolidation happened sooner or later, we will be kind of the biggest player on a global basis. We like our competitive chances. We love the advantage that we have as it relates to the platform. So we will play a consolidating part if it makes sense for shareholders from a long-term perspective. But it’s kind of a plan B, because our plan A, which is an organic plan is a great plan and we feel very strongly about it.

Great. Thank you, Dara.

You are welcome.

Your next question comes from the line of Ross Sandler from Barclays. Your line is open.

Great. Two questions from me guys. So, on the Ride incentives issues, so you mentioned that they have come down a little bit. I guess the question is, as those come down on the rider side and as prices or fares increase, how sensitive are GV volumes and GV growth rates in rides to increasing prices and are you seeing anything new in the current quarter relative to the first quarter on ride’s GV growth? And then the second question is on Eads. So I think there’s a perception out there that Eats’ take rate is coming down, because of your larger QSR deals but Nelson you mentioned India. So can you parse the Eats take rate compression between India and maybe other factors like building out selection and any update on the Eats business post the pricing changes in March? Thanks.

Sure. So, Heath this is Nelson. In terms on the Ride side, we haven’t really right, and so, the only the place that we are watching is New York. And as you know they are mandated pricing moves that have happened and we have been passing it on. So we have seen that increase. It’s been less about a category position story for us but pricing has increased and I think it probably does have ultimately some impact in terms of how gross bookings grow in the category there, but our position is quite strong there. Beyond that we haven’t seen that too much. Regarding your question about Eats. Yeah, India is an investment market for us, right? And so, there’s two things going on there. It’s going quite -- it’s growing very, very quickly. There two competitors that are very aggressive on it including ourselves. We are doing well on holding our own but it is a net market in that we are funding both the eater, the courier, as well as the restaurant in terms of building the business. As I mentioned in my prepared remarks if you think about a 400-basis-point difference in terms of our contribution or take rates, sorry, in year-over-year in Uber Eats it was half of it and the other half is really about increasing restaurant selection, increasing incentives for our restaurant partners and that’s the difference between how we are going there. But in terms of how the business is going out it continues to grow well. As Dara mentioned it’s more of a market by market situation. It’s growing very, very quick fast as you saw from our results and we continue to do well. But I would say that, there are certain markets where there are well-funded competitors that are growing and you see in the U.S. where we had a competitor that’s well funded and growing quite quickly and we are going fast as well, but they are growing their category position faster than us.

We should also expect, Nelson, correct me if I am wrong, which is our take rate for Eats on the way up…

Correct.

…for the balance of the year versus the other way, so we have -- this should be the low watermark and then you should see the take rate for Eats increase over the balance of the year.

And then your last question was on the new service fees and so they just saw it. But they have been well received. We haven’t seen any impact on the business. As Dara said, you will see the take rates improve through the balance of the year and you should see the ANR increase as well, as you think through the balance of the year in terms of the growth rates.

And, Ross, just to your first question around on rationalization in a competitive environment, you alluded to this, but just to clear, it impacts take rate. It impacts sales and marketing as you think about driver and rider side, and all that. I just want to be clear on that side. Thank you for the question, Ross. Operator, next question.

Your next question comes from the line of Mark May from Citi. Your line is open. Mark May, your line is open. If you are on mute please unmute.

Okay. Can you hear me? Okay. You touched on this a minute ago, but I think New York City is the top five market I believe for you and there had been some very recent changes there. So just curious if you could comment on how, if at all, the recent changes in New York City including the new fees and the limits on growing supply. If that’s impacted the market, the growth in the market at all recently and if so, how we should think about that. And then, secondly, more of a housekeeping question, regarding the guidance on sales and marketing leverage for Q2. Is that on a bookings or an ANR basis and would you expect that to persist in the second half? Thanks.

Yeah. Sure. In terms of -- I will take the first question. Nelson will take the second question. In terms of New York City, listen, our business is pretty darn resilient. And the changes made in New York City, while we don’t think that they are consumer-friendly and the caps, et cetera, we certainly don’t think that they are driver partner friendly, our business has proven out to be pretty resilient. So it has translated into pretty substantial price increases to the consumer, to the rider. We have seen that effect trip volumes definitely because there is some price sensitivity as it relates to any product and ours is not accepted. But, overall, if you look at the dollar growth rate in New York, it’s still a healthy city for us. We do think we are still proponents of comprehensive reform in terms of congestion pricing, kind of more market-based regulation. We do want to be constructive here and a city with too much traffic and lots of cars standing still doesn’t serve us, doesn’t serve our riders, doesn’t serve our drivers as well. So our service has certainly shown its resilience. We think the environment can get better. But New York continues to grow for us and continues to grow at a healthy pace on a dollar volume standpoint.

And then Mark this is Nelson. On your second part of the question, yes, we expect that our core platform ANR as a percent of gross bookings to improve sequentially. And then we do expect that as we think through the back half of ‘19, we are going to see those benefits continue, as well as an acceleration year-over-year of our adjusted net revenue.

Sorry. I was referring to sales and marketing leverage.

Yes. So that leverage was against -- it will be against both, but really -- but the point was about our gross book.

And Mark I will add a little bit to the prior question in that, as you think about sales and marketing, you think about promotions to the rider and you think about rationalization, generally, that has an impact there as well.

Thank you.

Thank you, Mark. Operator next question?

Your next question comes from the line of Mark Mahaney from RBC. Your line is open.

Great. Thanks. Two questions from my side. Just briefly on our synergies between Ridesharing and Eats? Can you talk a little bit more about the strategy to try to generate more of those synergies over time? And then, Nelson, could you talk about any new insights you have from beginning leverage against insurance costs, which seems to be material components of COGS, any new insights there? Thank you very much

Sure, Mark. I don’t want to give away too much in terms of competitive strategy going forward. But suffice it to say that we are starting to experiment in ways in which we can up-sell our ride customers to Eats deal in a way that to be plainspoken isn’t annoying in a way that is beneficial to our riders. And we are seeing some very, very encouraging early signal. Usually, if you -- if you have got a core product, and obviously, you can imagine that our app has a relatively limited space to promote other things to do other than get a ride. Usually they are plus or minus to your putting in a promotion to do something else. And what we found is that with Rides and Eats, we have got very talented tech and product team, and we are seeing early signal where essentially you can have very little if any cannibalization of a Ride and throw a significant amount of potential demand onto the Eats side. And these are very early experimentation results, and again, are very much could be won, but are showing a signal that creates a good amount of excitement for us in-house. There are also ways for us to tie the businesses together as it relates to loyalty program, which we are pretty early on in, as it relates to subscriptions, as it relates to promotions, et cetera on the backend, which again we are fairly early in the experimentation stage. So, I think, that -- I don’t want to give away too much, but there’s a whole host of activity that the teams are focused on. And really what we are looking to do is significantly increase the percentage of our MAPCs that use those products and when we see customers using more than one product, their engagement with the platform more than doubles. So not only does engagement with Uber increase, but the engagement with our individual products increases as well, so it’s kind of a win, win, win.

And then, Mark, on insurance there’s not a step function improvement, I would say, it’s more grinding now. And so what we have done over time is the team has built a great actuary book and so what that enables us to do is a couple of things. Now, first of all, you shouldn’t see quarter to quarter noise in our accruals and that’s actually pretty important. It allows us also to go in and work with a lot of the national carriers in our Transit business, so that is helpful. You heard in my prepared comments how we are leveraging technology and data to help in terms of instant response times. And so a great way to also help outcome is make sure you have really good fast in terms of response which we are doing. And then the one thing I would tell you is that over time, insurance, while there is a little bit of a service in the U.S. to offset, it’s largely impacting the U.S. Rideshare business. So it will continue to become a smaller part of the overall P&L as other parts of the business continue to grow quickly. So that would be my takeaway and so I think you will see us continue to grind out productivity out of insurance.

Thanks, Nelson. Thanks, Dara.

Thanks.

Your next question comes from the line of Lloyd Walmsley from Deutsche Bank. Your line is open.

Hi. Thanks for taking the question. This is Kunal on for Lloyd. Two if I may. One, what are the nuances associated with the markets that are currently generating over 50% contribution margins? And if you are already in -- if you are already getting more than 50% contribution margins in one market, how do you see that kind of -- how do you see contribution margins in the future in other markets? And second, with regard to lower costs that will open up the TAM. How do you -- what are the key elements to getting pricing lower absent a shift to autonomous? Is all really growing in the right mix enough to lower the price meaningfully or are there other pathways to lowering the pricing? Thank you.

Sure. Absolutely. On contribution margin?

Yeah. So I will start on the contribution margins. So I think in the markets where we have high contribution margins. We are -- we have very strong category positions. We have good take rates. And so what I mean by that is the adjusted net revenue percent of gross billing that tends to be higher. And then in those markets, believe it or not, there are -- there is competition, but we have done a good job in terms of how the market has evolved and so we have very, very strong position from that standpoint. What you will see over time as we -- as the markets continue to evolve, you will see us continue, particularly in the rideshare side, focus more on contribution and you will see us get more efficient. And so we will get the scale benefits of just the -- our global scale versus everyone else is to deploy technology and operations. And you will see its continued to grind out some of the productivity metrics we are going to work on and things like insurance and things like payments and other things. And then, as Dara and I mentioned, the one wildcard is going to be market by market what happens from a competitive position. And so, while we feel comfortable sitting here today and looking into the next couple of quarters, those things can change, but as we see through those things that will happen. And then the last part of it, because again, this is a core contribution metric is, how Eats continues to evolve. In that -- what in the specific market where you mentioned that we have a very strong market position, we have a strong -- we have a good Eats business as well. And again, while we are not going to disclose where that place is, there are markets where we, again, we have good core contribution margins across the globe and you will see us continue to give you more highlights as we have the quarters continue here.

And I guess the other way that I’d put it is that, the markets with high contribution margins, we don’t consider it to be outliers. The outliers were the U.S. where our company went through some very, very significant challenges as it related to brand and what has frankly been a strong competitor and lift. And so, the U.S. is an outlier as far as the scale business that hasn’t yet achieved very strong contribution margins. There are markets like Latin America where we have got our competitor come in more recently, but from a structural standpoint, actually this is a business that we believe can be a very significant contribution margin positive and the one outlier is in the U.S., and in the U.S. we suffer some brand damage. That’s very unusual. That’s going to take some time to repair. And now, I think in the U.S. we are in a competitive position with the other player where competition is going to be more health. It’s going to be based on brand and products and technology, which we think is the right place to compete versus throwing money of the problem. I think on the quarter is to low cost, et cetera. Listen, I think, that there are many different ways in which we take on low cost. First of all, as it relates to the POOL products. What we are really focused on is being more efficient and increasing the match rates as it relates to each trip, and it means being smarter about which trips we match. And then also the introduction of Express POOL that essentially adds waiting and then adds walking to the equation in order to increase the match rates as well. Historically, we have price POOL quite aggressively in order to create liquidity in the marketplace in order to create the opportunity to match. Now, actually I pay the majority of the work is and in improving our matching capabilities versus using pricing thing to increase liquidity. Beyond POOL and Express POOL, we are investing in high-capacity vehicles either we call it Uber Shuttle or Uber Buff that we have launched in that number of markets. This is about taking matching to the next level,10 riders in a single vehicle, 15 riders in a single vehicle. We think we will do these ourselves, over a long-term and then they also partner up with governments, do kind of public private partnerships to be a part of the transportation solutions of the cities in which we operate. Beyond that are having public transport, we talked about the integration in Denver. We have integrated London public transit into our app as well. And while that’s not strictly our product that we will be marketing, it’s another essentially search or another occasion by which users will come to our app to learn what’s the best way to get from point A to B. And as every user every day in every city is opening up our app in the morning when they want to get to some place then good things are going to happen over a period of time. So we don’t think there’s any kind of magic lever here, but we are putting more against these different modes of transportation. And then you add to that, e-bikes, scooters, bolster our own products and through partnership with LINE and we are looking at partnering with other players as well. You just have a whole transportation ecosystem on one app, all your information, fully integrated with the loyalty building. So we think that’s a very, very powerful product, but it will take time for all of it to come together.

Thank you, Kunal Madhukar. Operator, next question.

You are welcome.

Your next question comes from line of Kahn Masha from HSBC. Your line is open.

Oh! Hi. I am interested in your payments strategy. You mentioned you are introducing payments wallet in emerging markets. Are these cash products you mentioned going to be used only for Uber ecosystem or can it be used for remittances and outside Uber platform? Can you please talk a little bit about that?

Sure. So the start of our payments is really on productivity right now and so 87% of the transactions that happen on Uber are done with a swipe. And so what we are doing right now is really focus -- the team is really focused on trying to drive down some of the costs and we are going to -- you are going to see those benefits. And those are both in terms of core process improvement. We have improved some of our cash collections and arrears, fraud prevention. There’s all sorts of different operating things as we continue to focus on productivity. And so that’s going on right now and we are seeing the benefits now and you will continue to see the benefits throughout the year moving forward. The second thing we did launch and which I mentioned is a closed-loop wallet. And it’s just really to help in certain markets like, Brazil, which is really a cash market for us, and it really helps in terms of a lot of cases because in the U.S., we really worry about riders. In Brazil, we have to really focus on drivers’ safety and so because drivers -- there are incidents with drivers, they are getting robbed or they are getting carjacked. And so, the more and more you can move away from cash and it’s beneficial, additionally, we do see that if you have Uber cash credit on your account, you will use our service additionally. The last thing is really just we are evaluating how open we own in terms of the wallet, which I think was your question. And I would say that’s an opportunity we are looking at now. You did notice that PayPal invested as part of IPO and so we are talking to a number of different partners and we are going to those own just that own process internally now upon opening want to be. You can envision that with a company that is growing as Dara said now, the runway to the business is over -- is approaching $60 billion a year in terms of our billings this year. There’s a lot of opportunity that we see ahead on it. So we are just working through that now. The real takeaway right now is just to focus on the productivity side, which we are getting and you will see in our results.

Thank you, Kahn, for the question. Operator, next question.

Your next question comes from the line of Youssef Squali from SunTrust. Your line is open. Youssef, if you are on mute, please unmute. Your line is open.

Yeah. Sorry, apologies for that. Dara, you mentioned a couple of times now that competition is more going to be focused on brand and products. Maybe you can flesh that out a little bit. Brand competition could also be pretty expensive proposition. So, maybe if you can just help us understand what you mean exactly by that that will be helpful. And also, if maybe you can just give us an update on the -- those six markets where it’s been more difficult to do business in particular in Germany. I think the last time you mentioned that, you had started making headway there. So any help there would be helpful? Thanks.

Sure. When I talk about brand and product, really, it’s shorthand for talking about the quality of the service. What are your average GTAs? What are your ETAs kind of P90 ETAs? How do you make sure that every single customer interaction is a great interaction? What’s the quality of the vehicle and your driver partners? Are they happy? Are they hospitable? How is your pricing? How consistent is your pricing? How are your match rates, et cetera. So really kind of when you think about our services. There’s a cost to customer acquisition. How are you bringing customers into the funnel? We think we have an advantage because we essentially are acquiring customers across multiple verticals. Second is how long are your customers staying with you? How loyal are they? We think that with our loyalty programs, with subscriptions, with payments, with wallets, we have now all the tools again against a multitude of different products that we can offer on one consumer, so that we think that we have got kind of structural loyalty advantage over the other players. And then we are constantly iterating and improving our experience and our technology in order to make sure that it’s best of breed in terms of your ETAs, your pricing, your routing, how quickly do you get from point A to B and all the different choices that we offer you as well. So we think that’s a great area for us to compete in. And listen, the Uber brand is a brand that everybody knows all around the world and we have already built two multibillion dollar services on the Uber brand and we think Freight will be a third. So, we like competition as it relates to kind of brand product technology and we think that over the long term, our being the bigger player, our being the global player and our being the multi-product player is going to put us in a very good position where competition is not just about dollars. Now, if it is about dollars, we are going to push back as hard as anyone pushes us as well.

I think the…

Just talk about the six countries.

Yeah. The six countries. I’d highlight, listen, each of these countries is unique in its own way. Germany for us has been a country that has been a significant investment. I have been to Germany already three times. We are kind of growing in Germany the right way. It takes longer to build a service, to some extent based on the regulations there. But we are very happy with the growth rates in Germany, we are very happy with the quality of the service there. And we think that the regulations are headed in the right direction, so that we can build a larger service and in a way that ultimately is better for the cities. Germany has regulations, for example, of return to base where if a private hire driver takes you out to the airport he or she has to come back to base empty. That doesn’t make any sense, especially in a country like Germany that is such a leader in all the environmental issues that they play in. So, hopefully, over a period of time, they will recognize that. In Japan, which is the largest Taxi market in the world, we are launching in partnership with Taxi and we are building out our product suite as it relates to Taxi Partners. We are going out and having really good discussions with Taxi Partners and we are signing up Taxi Partners and kind of building of service the organic way and we are optimistic about the potential of Japan as the market and the potential of Taxi as a partner there. There’s some kind of creative ways in which we are working with Taxi which we think can result in pretty good, a pretty good thought services there as well. The Olympics are clearly a consideration for the government, and again, I think that we can play a constructive part and in building out a great business there. Argentina is another market for us that is showing us very, very strong signal and I think is one of the absolute bright lights in South America, and it’s mostly a cash market at this point, but we think has a ton of potential. There are some markets. Italy is very slow in developing. Spain, Barcelona for example has taken a step back. So all of these markets have their positives and negatives, but I think that, overall, they are going to be a net positive and when I look at five years forward, I think, that they will be real contributors into our ecosystem.

Thanks, Dara.

You are welcome.

Your next question comes from line is David Dillon from SMBC Nikko. Your line is open to you.

Thank you. Really nice improvement on this freight side, the 200% growth, can you share the number of trips there? I know you gave some information on the carriers and the drivers and the shippers, but is there any additional metrics you can provide there if possible?

Actually, no, we are actually not -- we are not giving that kind of information out. But we look at that we have seen good signal there. We were pretty confident terms of the ability to grow out there. We are seeing it just because we see all the same store sales that we are getting with these national shippers. We continue to build out our routes. And as you know, the key to building a good Freight business is building kind of supply-demand across routes which we are building. We are not optimized yet. We are not big enough yet, but we are seeing very, very good traction there. And then, we will look forward to talking more about Freight. Again, we have been in the business a little over a year and a half or so. And again, we think that we will continue to grow -- the growth will continue to exceed 200% for the year.

I will just to add a little bit of color. In general, if you look at last year Freight was probably the overall Logistics business was in an undersupply position. This year there’s more supply out there. There are more trucks out there. So pricing has come down. So the real focus of the Freight team now is to really focus on bringing in demand and going out and signing up the enterprise shippers. And that sale team is just really, really knocking it out of park. They are bringing in a lot of names. And usually, well, not usually, almost without exception, when we bring in a new name, we service them very well. We have won a bunch of Kona Shipper of the Year awards, et cetera, and then we build the business. So you are going to see our sales team out there. They are knocking on doors and fortunately the doors are opening at this point.

Yeah. The only I will add -- one of the real win points for us is just it’s a very manual business if you know the Freight business and so we are able to automate it. And so are the enterprise shipper is like that. So whether the shipping creation like 87% of the time, it’s done electronically. The pricing is done almost 80% electronically and even the booking is done almost 80% electronically and so that wins. And so where we are seeing those benefits out there, and as Dara mentioned, the sales team has been going after it and so we are seeing good signal right now.

Great. Thank you, everyone.

Okay. Thank you.

Great. Thank you for the question today and thank you everyone for joining us, and we look forward to catching up with you soon. Thank you.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.