Uber Technologies, Inc. (UBER) Q1 2022 Earnings Report, Transcript and Summary

Good morning. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber First Quarter 2022 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. [Operator Instructions] Thank you. Mr. Balaji Krishnamurthy, Head of Investor Relations, you may begin your conference.

Thanks, Emma. Thank you for joining us today, and welcome to Uber's first quarter 2022 earnings presentation. On the call today, we have Uber CEO, Dara Khosrowshahi; and CFO, Nelson Chai. 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. As a reminder, these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call are 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, except as required by law. 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 the risks and uncertainties described in our most recent annual report on Form 10-K for the year ended December 31, 2021, and in other filings made with the SEC when available. We published a quarterly earning press release, prepared remarks and supplemental slides to our Investor Relations website about an hour ago. And we ask you to review those documents, if you haven't already. We will open the call to questions, following brief opening remarks from Dara. With that, let me hand it over to Dara.

Thanks, Balaji. We delivered a very strong quarter across the Board with record results on the top and bottom line. After two years of persistent and sometimes unpredictable impacts across our business, our Q1 results resoundingly affirm that we are on a strong path emerging out of the pandemic. Our focus on profitable growth, product innovation and operational excellence over the last two years has set us apart from the pack. Our Mobility team is demonstrating phenomenal execution, growing both demand and supply faster than competitors and rapidly innovating to rollout new accretive offerings all while delivering record margins despite the macro turbulence that we all see. Delivery is continuing to surprise us positively as demand has remained resilient in a reopening world and we expect topline growth and profitability to expand through 2022. Finally, Freight reached its first profitable quarter as well. We are keenly aware that the market is placing a high value on companies generating and expanding profits as interest rates rise. We are leading the industry in this respect. Our focus over the past two years on profitable growth has resulted in the strong top and bottom lines that we delivered in Q1. We are confident that our leadership position, our global scale and our innovation and platform advantages will allow us to deliver significant profitability and durable growth as investors rightly expect from globally scaled technology platforms. We are committed to taking all necessary actions to continue to deliver industry-leading margins and free cash flow generation, along with a disciplined capital allocation strategy. We’ve never been more optimistic about our prospects, and we are determined to execute as a team to bring that optimism to fruition. With that, let's go to questions.

Thank you. [Operator Instructions] Your first question today comes from the line of Brian Nowak with Morgan Stanley. Your line is now open.

Great. Thanks for taking the questions. I have two. The first one, sort of on users and on drivers. I was wondering, Dara, in the past, you've shared stats about some of your cross-platform adoption, 17% of users in the past, et cetera. Any updates on what you're seeing on cross-platform adoption for your users and drivers, and just some of the benefits of your multi-product offering integration you are seeing from that is the first one. And the second one, just a comment about the expected acceleration in delivery in the back half. Anything you call out there on what you're seeing on user growth cohort, or anything sort of gives you confidence in the ability to continue to accelerate the delivery business through a potentially weaker consumer? Thanks.

Yes, definitely. As far as our cross-platform usage, it remains strong and consistent really with what we went through with you at Investor Day. And what are the interesting factors that we're seeing is that as mobility is opening up, mobility of significant number of new riders are coming on to the platform. And that gives us the opportunity to then upsell those new mobility riders to Eats, to our grocery offerings, and then ultimately to our Uber One membership plan, which is the only membership plan globally that offers both mobility and delivery offerings as well. So what we're seeing is really kind of a swelling of new audience coming in that then we can essentially upsell our cross-platform products and then ultimately membership as well. So we're super optimistic about all of the platform investments that we're making and the potential there. We've already launched, obviously, Uber One in the U.S. We announced launches in Mexico and Germany. We got a number of other launches teed up for the balance of the year. And I will remind everyone that members spend 2.7x more than non-members. So as we move over, as new customers come in, we cross-sell them into the platform, we cross-sell them into membership, we can increase the spend and the lock-in that our platform provides in a way that no other monoline player can. And we already have the formula down and it's about rolling out Uber One globally, and then applying the same formula over and over again. Then on the cross-platform side, the side that's invisible to I'd say most investors is on the earner side. And we talked about how our efforts to sign-up earners now are truly cost-platform. We bring you in not to drive or to deliver, but we bring you in to earn on the Uber platform. The success there has been very, very significant. You heard I think last night, one of our competitors in the U.S. having challenges or at least looking to lean into driver supply. Our active drivers in the U.S. and Canada are up 70% on a year-on-year basis in April. New drivers were up 121% year-over-year in April. And it's because we're bringing new drivers on not as Uber Rides, not as Uber Eats, but as Uber as a platform and to earn in anyway, shape or form that they can on the platform. And that's proving to be a structural advantage from what we can see versus the competition both locally, and then we think ultimately globally.

And then question on back half for delivery?

Yes. Of course, back half for the delivery goes, it really is about the European reopenings and comps. So some of the countries, France, for example, is reopening. It is spectacular news for mobility business. It makes the delivery comps a little bit tougher. So I think you'll see Q2 growth rates similar to Q1. And then we expect Q3 and Q4 to accelerate. And I think you've also seen for us as a team we've delivered on what we say we're going to do. So we're pretty confident of acceleration in the second half. The other factor that's going to affect the second half is that with new verticals, actually very recently, along with the Albertsons deal, we are now launching the native stack of Cornershop, essentially grocery on the Uber Eats platform. It's very, very early, but we see substantial improvements in customer experience, and we see substantial improvements in terms of conversion on the Uber Eats native stack. So we think that the U.S. growth rate that is already pretty high is going to significantly accelerate in the second half of the year, which again gives us confidence as the delivery growth rates in the second half of the year.

Great. Thanks, Dara.

Sure. Next question?

Your next question comes from the line of Doug Anmuth with JPMorgan. Your line is now open.

Thanks for taking the questions. I just wanted to ask two on the mobility product side, Dara. Just if you could talk a little bit about the efforts so far with upfront fare and destination info and some of the key benefits and the rollout timing there. And then also about around UberX Share, how that's reimagined and the key points of differentiation? Thanks.

Yes, absolutely. As far as upfront destination, one of the most significant complaints that we get from our earners and our drivers is that they don't know where the upfront destination is. And if you go back to the origins of this business and how pricing was built, pricing originally was based on time and distance. And that comes from, let's say, the taxi days. But the fact is that based on the destination, the value of a ride, which may take the same amount of time and distance for a driver maybe very different based on the destination. So if you're going from the airport into Central San Francisco and you're going to get a ride as soon as you drop the person off, that's a pretty valuable ride. If you carry a passenger, same time and distance, into the outskirts of the neighborhood and then have to drive back empty for, let's say, 30 or 40 minutes, that's not a ride that's particularly valuable to an earner. And if you're purely wasting your charges on time and distance, essentially those two rides are priced equally. We think that's a bug in our system, and it certainly does not serve the best interest of the earners. So now with our new system, we display the full information of the ride, especially what the destination is. Our algorithms are then able to take signal, let's say, the trip out to the outskirts where the drivers have to come back empty, we will then price up that trip so that the earner trip earns the fair value of that fair, and also knows exactly what they're accepting or not accepting. That also improves the consumer experience because cancellation rates, once drivers understand what the destination is go down as well. There's a huge amount of technology that has to go into developing this kind of a system because essentially the pricing systems have to get signal based on earner behavior in order to hone in the pricing to truly price kind of that trip based on the market clearing price that earners are willing to accept that trip with, so there's a huge amount of ML data work that goes into that system, but we think it's fundamentally a better way, and the feedback that we're getting from our driver partners has been quite positive. It's a big change that I'll tell you, and there's a lot of debugging going on, there's a lot of algorithmic works to make sure that the earner experience is as great as it is, but we're very, very optimistic about this fundamental change. Last thing I'll say about this is, this is one of those invisible or not so invisible benefits of the platform. This is actually how delivery has been pricing their trips for some period of time. Delivery companies show upfront where you pick something up, they show an upfront fare. It's exactly like introducing upfront fare to Uber riders and our being a multi-platform, multi-product business allows us to take learnings from one side of a business, apply it to the other, and instead of kind of starting from scratch, we've already – we're adolescence now using all open knowledge from our delivery business and passing it on to the mobility business. So lots of advantages having a single marketplace team, a single technology team, thinking about the best of both worlds and constantly applying learnings for one to the other. And then as far as UberX Share, we're super excited about the business. I think with Share, we're looking to resolve a fundamental issue that the older pool model had, which is the interest of the rider and the interest of Uber were misaligned, right, which is the rider would ask for a pool trip, hoping not to be batched and Uber obviously would want that trip to be matched in order to achieve the economics that we expect. With UberX Share, there's an upfront discount. And when you are matched with another rider, you get a higher discount on your trip. So all of a sudden interests are aligned in this kind of system and we're very, very encouraged by the early signal that we're seeing and we're looking to launch UberX Share at about 15 markets in the next quarter, and we will continue to expand from there. So both upfront fare and UberX Share are areas that we're quite excited about and areas where there's a lot of innovation going in for the teams.

Thank you, Dara.

You're welcome. Next question? Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open.

Thanks for taking the question. Maybe two, if I can. On the delivery business, you grew, as you talked about earners at a very high rate, especially the U.S. Can you talk a little bit about the competitive landscape for earners in the delivery business and where you see yourself vis-à-vis competition from a scale standpoint, especially in the markets that you think are the most important to you, where it lines up the most with the mobility business? And then on the expansion of categories, how important is it to get some of those categories right as standalone apps and standalone businesses versus them being broadly more folded into the Uber app and getting the platform experience more right than wrong if you look out over the next couple of years vertical versus platform? Thanks so much.

Sure. I think in the U.S. on the earner side, and again, we don't necessarily look at earners now as couriers or drivers because increasingly we want earners to earn, however they want to on a particular day. They may want to stay in their little neighborhood and that accrues more to delivering food because typically you stay within a certain radius or they may want to make more money and right now earnings for drivers, for example, who drive more than 20 hours on our platform in the last quarter were $39, including tips. So earnings are super, super high, which is great for earners. On the courier side, I wouldn't say that there's a huge amount of competition in that, we've got plenty of couriers and from what we can tell our competitors do as well, it's a very flexible way to earn, which our earners appreciate. So we have seen the number of active couriers globally up 34% on a year-on-year basis and in the U.S. and Canada up 79% year-on-year. So we're in very good shape there and actually a fair amount of the year-on-year increase in take rates, call it, true take rates that you're seeing in the delivery business is because we've been able to drive cost per transaction down as a result of higher efficiency in our marketplace because we have plenty of couriers. And as we get more density in our marketplace, essentially the distances that we have to carry food and go pick up food, et cetera, come reduce and our algorithms in terms of routing and batching continue to optimize and get better and better and better. That is essentially upside as it relates to net revenue. And it really doesn't cost anything. It just costs engineering time to achieve which is time that we have. And then as far as the super app versus multi app consumer experience, the way that we're doing it is on the consumer side, we're looking to get the best of both worlds. Think about it in the same way that Facebook has a family of apps. They've got Facebook and Instagram and WhatsApp, and they're kind of loosely coupled. Same thing with Google, they got Google and Google Maps and Google Mail. Again, they're coupled, you have one identity, one payments, et cetera. We're looking to achieve the same thing, multiple apps, whether it's Uber, Uber Eats or Cornershop, your identity is the same drizzly, your sign ups are same, we treat you the same way your customer experiences is consistently excellent. You've got the Uber One membership that flows across all those apps to save you on delivery fees. And at the same time within each app, we're constantly cross promoting one platform to the other. On rides, we're cross promoting each. We're actually super excited. We're starting to cross promote rides on our Eats app. And frankly, weren't sure if it's going to work. We now see signal that it's working. Actually, we're able to resurrect riders back into the reopening through the Uber Eats app, which is something that we're super excited about. So all the apps talk to each other, cross promote each other. We use machine learning algorithms to figure out what is the best promotion to put in front of the right person at the right occasion. And you can imagine, lunchtime, the promo, maybe different than drinks time, for example. On the backend, as it relates to earners, we are a single super app. And essentially you sign-up to earn on Uber and more and more, we will offer you different opportunities to earn based on what we know about your profile, based on time of day, based on where you are and based on what the opportunities are. And we think that's a very, very significant structural advantage over other players in our industry, none of which has a super app model.

Thanks for all the color.

You bet. Next question?

Your next question comes from the line of Justin Post with Bank of America. Your line is now open.

Great. Thank you. I guess, just given the challenges at Lyft, they talked about on driver incentives. Can you talk about the mobility supply-demand dynamics and how you're going to manage what hopes to be a pretty robust opening over the next six months? And then when you look at your prepared remarks, some interesting stuff on regulatory and new use cases. Just want to see if you feel like you're kind of getting over the hump here on regulatory, if there's real progress there, and why you've kind of decided now to expand some use cases to car rentals and travel. Does that kind of signal that the core business is now kind of on a positive trajectory? Thank you.

Yes. Listen, Justin, our need to increase the number of drivers on the platform is nothing new nor is it a surprise. We were on this last year. If you remember, Q2 of last year, we were very early. We saw signal and we leaned in very aggressively initially with incentives into improving our driver supply. And then we followed up the investment incentives with tons and tons of innovation in terms of product, in terms of improving the driver sign-up flow, in terms of welcoming drivers to the Uber family and then giving them opportunities, delivery opportunities or rides opportunities. We see the sooner an earner can earn on the platform, the higher our sign-up rate to that first trip. And often we can get earners earning on the platform faster with delivery than we can with mobility because of regulations or background checks, et cetera. So we're able to engage that earner with money in their pockets really, really early. And at the same time, we've invested experiences where instead of, for example, you're having to upload your documents into our systems. We will go connect to insurance companies, DMVs, et cetera. And as we build out those APIs, essentially upload those documents automatically versus having you do the hard work and sometimes it works and sometimes it doesn't and sometimes you may get the document right or wrong. We talked about upfront destinations for earners as well. So we have pivoted the company to being earner-centric, innovating for earners, thinking about the earner experience, treating earners as you know with respect and dignity and building for them versus building just for the company. This has been an activity that we've been on for a year and we feel very, very well prepared for the future. We're constantly watching supply-demand dynamics. We're constantly watching supply hours. Earner retention is improving. Engagement on the platform is improving. So we feel as good about our driver supply in general, our earner position as we ever have. That said, we know we have to improve. We have to keep increasing the number of new drivers on the platform. We're focused on resurrecting a number of drivers as well, and we're focusing on increasing engagement on the platform because earnings levels are so high. So there's a lot of work to do ahead of us, but this is a machine that's rolling. Like this, the earner team at all levels at the operational level, at the technical level, at the engineering level with ML algorithm optimizing, for example, driver incentives, all of it is rolling. And we know all of it has to work well in order for us to hit our really aggressive targets in the balance of the year. And then as far as the regulatory process and new use cases. I'd say the new use cases are us playing offense. We have seen the cross-platform initiatives throwing from one essential service to the other from Eats to Rides, from Eats to Groceries, et cetera. We know how to cross promote use cases. There's a huge amount of trust and frequency and comfort with our products. We have your identity. We understand where you are. We have your payment details, et cetera. So adding new use cases such as car rental or travel bookings or adding new supply areas like taxi, they're just natural growth areas for us. And because we've already acquired the customer because we already have built trust with our customer, we're essentially able to continue to increase engagement with our customer. The more engage our customers are, the more we retain those customers and we're able to monetize those MAPCs as a result. So it's kind of a win, win, win on that front.

Great. Thank you.

Next question?

Your next question comes from the line of Mark Mahaney with Evercore. Your line is now open.

Thanks. Two questions, please. There's been a lot of focus on retail marketing, so at least across the industry. So could you just give us a little bit of an update on where you are in terms of putting together advertising revenue? I know you laid out a goal at your Investor Day, any update on that. And then secondly, on the MAPCs numbers, anyway to think about what the – what should happen to MAPC growth going into the next quarter? I think that was that sequential decline, I think was a lot of Omicron hit. So you back to a point where it's reasonable to expect MAPCs to grow through the balance of the year? Thank you.

Yes. I'll start the second one, first, which is, we're absolutely seeing MAPC growth continue to accelerate post-Omicron. So for example, while MAPC growth for the quarter was or MAPCs were $115 million, up 17% for the quarter. In March, they were up at $120 million, up 20% on a year-on-year basis. So we're seeing MAPC growth accelerate and we expect to see that acceleration build into April and the balance of Q2. We absolutely see the reopening as a very, very big MAPC driver, especially on the mobility side, so expect MAPC to continue to grow and if anything to accelerate into the second quarter. As far as our advertising business goes, continued strength there, we essentially more than tripled the business on a year-on-year basis. And we are very much on track to hit the targets that we laid out during Investor Day.

Thank you.

You're welcome. Next question?

Your next question comes from the line of Lloyd Walmsley with UBS. Your line is now open.

Thanks. Two, if I can. Just first, can you talk about the UK Mobility business and where that is on kind of the path back to profitability under the worker classification and VAT charges? Can the UK, do you think, get back to prior levels of profitability? And where are we on that journey? And then the second one, in the script, you talked about now expecting to be free cash flow positive for the full-year. Any update on how you think about the potential for capital return given your cash position and kind of where the shares are trading? Anything you could share that would be great.

So Lloyd, I'll do the second one first, and Dara will do the UK after. As you know, we're still coming out the pandemic. We were clear early on that we’re going to focus on making sure we add ample liquidity. I covered this on Investor Day to let you know that, free cash flow largely trails EBITDA by about a $1 billion a year. And so that's why we have the confidence to make the statement that we'll be free cash flow positive this year. We certainly recognize given what's going on in the market right now, and we encourage all to get towards being free cash flow positive. So we think it'll be very important as we think about this cycle. As we think about capital return down in the future, we certainly going to be open to it, right. So we recognized that we're not going to get – we don't get paid for hoarding capital. As you know, in the past, there maybe some things we want to do and we will certainly look at capital return as one of those levers. But again, I think it was important that as you think about the pragmatic walk that we've taken on capital and on liquidity importantly. And as you know, we've taken every opportunity to improve our debt in terms of the amount of both extending and reducing the debt. And so I think you'll expect to hear more about this as we go into next year, but I think it was important to get to this point where we could declare that we'll be free cash flow positive this year. And then we understand about capital return. I think if you think of our equity stakes, while they were mark-to-market down, they're very good sources of liquidity. And many of those lockup restrictions expire, if you will or come due during the course of this year. And so depending on where markets trade as well, we'll have plenty of sources to return capital.

Yes. And I think as far as the UK goes, let's say, we make tremendous progress in the UK. We move to the worker model. We're now compliant with merchant status. And we've recently been granted a private hire vehicle operator license for 30 months, which is terrific. Our relationship with the City is second to none, and we're committed to Citycon's goal of electrifying our fleet by 2025 in London, a real leader in environmental impact and something that we're firmly behind. We absolutely believe that it is a condition for every operator's license to move to merchant. We have not seen some of our competitors do so, but the TfL has been very, very clear that they will enforce those rules. So we just think a level playfield is just a matter of time. And the ones that are ignoring the law are either accruing liability, they're going to pay for it sooner or later one way or the other. We can't tell you the timing, but it is going to happen. As it relates to our business on the ground, our CIPD position is very strong. So we're very confident as it relates to our category position and our business has returned to solid profitability. Now we see profitability in the UK, healthy and improving into the balance of the year.

All right. Thanks guys.

You're welcome. Next question?

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

Hey, guys. Just two kind of big picture questions. First is on the delivery side. So on convenience and grocery, I think there's a debate whether 3P delivery or these new dark store concepts are a better business model. So how do you view that? I know most of your businesses started in 3P, but would it make sense to build out 1P grocery or convenience eventually? And then second question is on the taxi partnerships. So I think you said you want every taxi on the planet on Uber by 2025. Can you just talk about how those partnerships might impact the unit economics in rides? Thanks a lot.

Yes, absolutely. As far as grocery goes 3P versus 1P, our goal first of all – so as far as 3P versus 1P, I think our goal is to provide a great experience as it relates to our eaters and our shoppers who want their groceries and they want it fast. All of our data suggests that getting your groceries inside of an hour is a spectacular experience. I think there's lot of debates as to whether it's got to be 10 minutes or 15 minutes or half an hour. And if anything, we see a bunch of the 10 or 15 minute folks move to the half an hour area, which is more of where we are. We believe we can get a spectacular experience for our grocery shoppers through partnerships with our grocery partners. This is what they do day in and day out. And for example, we have a partnership with Carrefour, which is a huge player in France, where they are adjusting their model. They're taking everything that they've learned in their grocery space, years of experience, and essentially they're reducing the number of goods that they have and reducing the delivery times to that 20, 30 minutes, which is a delightful experience. So we believe that we're able to get the – essentially a 100% of experiential benefits of fast grocery through partnership and avoid the kind of capital investments that you have to make in terms of leases, opening up a bunch of stores all over cities. In addition, frankly, to the defocusing of the team, what we build, we are building a software layer on top of the physical world. That's what we're good at. We're good at matching demand and supply in a real time way. We do it more broadly, and with audiences that are unrivaled around the globe, and we think building a bunch of dark stores in a few cities doesn't make our network any better and we certainly have that the best real time network out there. So everything that we see right now, we're essentially partnering up on 1P and all the signal that we see is positive. We are in a very limited way running some tests in a few countries in Taiwan and Japan, just to make sure we understand that counterfactual because we want to be intellectually curious. At this point, we think the partnership way is a route to go. If we ever have to switch, we have the audience, we've got millions of members. So we think it's much easier to go vertical if we ever need to, but right now we don't see any signal that we should be going vertical, especially as it relates to the defocusing of the team. In terms of taxi, this one for us is we think a no-brainer, which is we've talked at the beginning of this call and a lot of folks have talked about, how bringing driver supply on in the U.S. and globally is an incredibly important initiative. We have about 4.5 million total Uber earners all around the world. There are 4 million taxis globally, 4 million taxis versus 4.5 million total Uber earners that we have. These taxis typically are underutilized relative to our earners. We think that the technology that serves these taxis can be better and were to help and partner with them as it relates to technology. We think that the days of you're going on the street and waving your arm to hail taxis, we think those days are over. Like, we think any entity that is dependent just on street hail is like a retailer who pretends that the Internet never happened. So this is the time and we're seeing taxi partners want the benefit of our technology. They want the benefit of our demand. They understand that we're all in it together, and this can be a benefit for us, it can be a benefit for taxi drivers, it can be a benefit for fleet owners, et cetera. So this is a win, win, win, and it's a big opportunity, 4 million taxis on a global basis. And we are now kind of going country by country, city by city. We're obviously excited about the announcements in New York City and San Francisco. But I want to make sure that our investors and analysts understand we've been at this for a while. Like, we've been signing up taxis in Spain and Japan and in Korea and we have built out an experience set as to how you build out the taxi product and how you optimize the experience for the rider as well. This is another benefit of our being a global company. We're coming to the U.S. with a confidence and experience that we built in Spain, Japan and a bunch of other markets as it relates to taxi. So we think it's a huge opportunity and the team is incredibly excited to get going on. Next question?

Your next question comes from the line of Deepak Mathivanan with Wolfe Research. Your line is now open.

Great. Thanks for taking the questions. So first, Dara, given that you have a meaningful competitive advantage on the rideshare side with your driver supply position versus competitors. Now how do you think about the opportunities to gain share? I mean, it feels like you can manage consumer prices at better levels versus competition. Can you talk about opportunity to gain share? And then second on Eats, one of the fears investors have on the space, is that every product category that's our benefit from the pandemic is now seeing some form of accelerated reversal maybe due to churn or retention issues. Food delivery has been very resilient. Can you talk about what you're seeing in terms of frequency and usage underlying the bookings growth? Thanks so much.

Yes, absolutely. As far as gaining share versus our competition, I'll tell you gaining share isn't a priority for us right now. It's happening naturally in some of the reopenings and it could be because of a mixed shift, for example, travel, the travel category is growing at very, very significant rates, and we tend to skew high on the travel category or the Uber for business category. So we are observing some share gain in the U.S. and frankly, in most countries around the world, we're observing these kinds of share gains. And it maybe that the kind of consumer that's an Uber consumer is higher end, travels a lot, travels for business, et cetera, is coming to the platform pretty quickly, and obviously we're a beneficiary of that. Our focus is on profitable growth and I think we're able to achieve profitable, call it, durable growth while gaining share versus our competitors because of the power of the platform. And so it's kind of naturally happening. It's not something that we have to lean into, and we're a lot less focused on, let's say, our competitors or competitors share as we are the opportunity to grow the business durably to add on new segments, such as taxi or hail-ables, two-wheelers, three-wheelers or lower cost product, whether it's high capacity vehicles, et cetera, that's really the focus and the share will take care of itself, although it has been taken care of itself. And we're quite constructive in terms of share gains. As far as the delivery reopening impact and frequency, listen, when you look at our delivery business, MAPCs were up 4% year-on-year, basket sizes were up 3% year-on-year, frequency was up 4% year-on-year. So all of the core metrics that drive the business are positive and because of our innovation, as it relates to bringing more earners on to the platform and then the density of the network driving cost for transaction down, we're able to improve the margins of the delivery business. So we're happy with the trends that we see, and we think that our frequency is going to also be assisted by our cross-platform usage and a higher penetration of Uber One members into our gross booking space. We are the penetration of Uber One members is still low generally for us and low compared to some of our competitors. And we see higher frequency with Uber One members. So we think that's a natural tailwind that can maybe combat some of the headwinds that some folks are seeing in the reopening.

Got it. Thank you so much.

Well, by the way, one note, I didn't answer, and I want to answer all questions. I didn't answer the question on taxi margins. So as it relates to taxi margins, first of all, margins differ by geography. So for example, in the U.S., the deals that we've done with the taxi companies should be at quite attractive margins that are consistent with the rest of our business. In some markets, let's say, in Japan or some developing markets, our taxi margins are lower, but we've consistently seen – we're able to start at lower margins and then increase margins over a period of time. So when we think about the growth of our mobility business and the 10% incremental EBITDA margins that we are looking to deliver, our core products, let's say, Uber Eats, X, or Reserve or Black, those will tend to deliver higher than 10% incremental margins. We'll use some of those, the incremental above 10% to invest in products such as taxi, three-wheelers, two-wheelers, et cetera in order to drive what I would call durable growth, MAPC growth, et cetera. And we're constantly balancing the two and hopefully you've seen as it relates to our execution over the past couple quarters and years that we have our hands on all the different levers in order to deliver very, very healthy topline growth and the kind of profitability that investors are especially looking for nowadays. All right. Next question?

Our next question comes from the line of James Lee with Mizuho. Your line is now open.

Great. Thanks for taking my questions. Just a follow-up on regulatory update here. And maybe, Dara, can you talk about maybe the ongoing conversation with the New York State, given your recent wins in Washington and also pretty strong ongoing support from drivers in Massachusetts. Did these victory can help you move the conversation along? And also what are the key friction you're looking to resolve? Thanks.

Hi, James, and thanks for the question. The most important factor that is helping these conversations move forward is that drivers want to be independent contractors. Drivers prize flexibility above anything. That's the reason why they earn on our platform. I think everybody knows in the U.S., if you want a job, you can have a job. If you want a full-time job, it's not a problem getting a job, but our opportunity, flexible work opportunities and healthy work opportunities is unique. You can work for us, you can work for competitors, you can work when you want, you can work where you want, et cetera. It's pretty powerful. And I think that, fortunately or unfortunately, in our Zoom world where white collar workers now have a lot more flexibility, maybe they also appreciate the value of flexibility in a way that they couldn't appreciate previously. So as it relates to New York or any other state, the good news is regulators are more and more aware that of what drivers want and drivers overwhelmingly want flexibility, and they want other protections and benefits, whether it's minimum earnings or other benefits which may change state to state to state. So I don't want to comment on New York specifically, we're having promising discussions there, but you never know when kind of the regulatory wins move one way or the other. But generally, I would say that the regulatory momentum is positive. You see that in Washington, in Massachusetts, we have a ballot initiative out there. We are very confident of our prospects in Massachusetts. And essentially, we like to see a negotiated settlement in these cities. Certainly, we'll look to have a negotiated settlement in Massachusetts, but we're confident if we have to go to the ballot, and hopefully, New York will get there, but we can't predict the time.

Thanks so much.

Welcome.

Take the last question, operator.

All right. Last question.

Our last question today comes from the line of John Blackledge with Cowen. Your line is now open.

Great. Thanks. Two questions. What were the mobility rides volumes in the first quarter versus pre-COVID levels? And what are the kind of the key use cases where there is headroom to close the gap, particularly as we look toward reopening in the second quarter and the back half of the year? And then just on grocery and other delivery, what was that as a percent of delivery gross bookings in the first quarter and just discuss any progress that you saw in the quarter and as we round through the year? Thank you.

So our rides business has actually fully recovered versus where we were in pre-pandemic levels. And in fact, even on a trip basis, we're more than 95% recovery globally. We still have some room in the U.S. We're still in the high-70s in terms of recovery there, but we've really seen all use cases come back, including airport travel, pretty much in line with pre-pandemic levels. So we were seeing a very, very strong reopening on the mobility side.

And on delivery side?

As far as delivery goes, new verticals ARRs were continued to be higher than $4 billion. And we're seeing very, very strong growth there. We're also integrating the new verticals experience in a native way on Uber Eats, and we're seeing really, really promising early signal there. And when you look as of March, less than 10% of users who completed a delivery trip on Uber in the last month ordered new verticals. So there's huge opportunity there. That number is up 400 basis points year-on-year, but we think that the potential of essentially upselling new verticals opportunities to our eaters is very, very young, and there's a ton of upside left there.

Thank you.

All right. Great. We can wrap up there.

All right. Thank you, everyone, for joining us on the call and great work to the Uber team. Q1 was a super, super strong quarter. We're expecting more of that in Q2. I think this is a quarter where we're starting to show separation against our competitors in terms of execution and that execution showing up in the financials in terms of a healthy growth profile that we expect to see for some period, and also profit generation and free cash flow generation coming up this year that we're very, very excited about. So thanks everyone for joining and we'll talk to you next quarter.

This concludes today's conference call. Thank you for attending. You may now disconnect.