Earnings Call Transcript - UBER Q2 2025

Balaji Krishnamurthy, Vice President, Investor Relations

Thank you, operator. Thank you for joining us today, and welcome to Uber's Second Quarter 2025 Earnings Presentation. On the call today, we have Uber CEO, Dara Khosrowshahi; and CFO, Prashanth Mahendra-Rajah. During today's call, we will present both GAAP and non-GAAP financial measures and additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP and 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. Certain statements in this presentation and on this call are forward-looking statements. 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 risks and uncertainties described in our most recent Form 10-K and in other filings made with the SEC. We published our quarterly earnings press release, prepared remarks and supplemental slides to our Investor Relations website earlier today, 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.

Dara Khosrowshahi, CEO

Thanks, Balaji. Q2 was another quarter of new records for Uber as we achieved all-time highs in both audience and frequency. This powered robust growth in trips in gross bookings, both up 18%. We also reached new highs for adjusted EBITDA, GAAP operating income, and free cash flow. We're expecting more of the same strong performance in Q3 with another quarter of high teens gross bookings growth and low- to mid-30s EBITDA growth. We've already made great progress harnessing the unique power of our platform to foster deeper engagement with our consumers who visited our apps nearly 30 billion times over the past 12 months, but we're just scratching the surface of what's possible. Today, fewer than 1 in 5 of our consumers are active across both Mobility and Delivery, and we believe this can and will go much higher over time. That's one of the reasons I'm super excited that Andrew McDonald has stepped into the role of COO. One of Mac's primary focus areas will be supercharging our platform strategy and the growth that it can bring with our Mobility and Delivery leaders now reporting directly to him as well as the cross-platform efforts like advertising and autonomous. While we remain as focused as ever on our core business, we continue to push forward on building the future with AV. And Q2 was jampacked. We expanded our operating zones in Austin with Waymo and Abu Dhabi with WeRide, and we also launched exclusively with Waymo in Atlanta. And at the same time, we announced several new and expanded partnerships, including with Baidu, Lucid, Nuro, and Wayve. Our autonomous momentum continues at Uber speed and we'll be ramping those deployments significantly over the next few quarters in the U.S. and internationally. To be clear, we've never been more excited about what Uber is delivering today or the many opportunities ahead. That's why today, we announced a new $20 billion share repurchase authorization as part of our sustained focus on value creation for our shareholders. With that, let's go to questions.

Eric Sheridan, Analyst

I want to follow up on this theme you introduced around platform initiatives in the letter. When you think about the success you're unlocking on the platform initiative side, how much of this in your early learnings continues to come down to consumer knowledge, array of supply, or even affordability in terms of driving some of this cross-platform behavior? And as you're thinking as the company continues to evolve, how do you think about one single super app under the Uber brand as opposed to having multiple apps with different utility experiences for consumers?

Dara Khosrowshahi, CEO

Absolutely, Eric. It's a great question and something that, honestly, we're learning as we go. I think as it relates to platform, it's easy to talk about, but it's actually much harder to execute on the ground. A pixel that we place on the Mobility app that is, for example, promoting a delivery feature could be reducing the experience of the Mobility app itself. So we have to make sure that we are cross-promoting one service to the other, mobility to our each business or each business to grocery, grocery user to retail in a way that is targeted and adds value for the consumer. And the only way to get there is through extremely aggressive experimentation. The great news is that those who use both sides, both Mobility and Delivery, have retention rates that are 35% higher than single business consumers. They generate 3x the gross bookings and profits of single business consumers as well. And that then allows us to market more aggressively uniquely because the vast majority of our competition is only monoline in terms of the business that they run. Structurally, for a subset of consumers we can just pay more than anyone else can. And that structural advantage is going to continue to get better over time. What we're seeing now is many people talk about AI, and some of the AI applications are just larger models that can take more context from a consumer, the history of that consumer's use over longer periods and in terms of seasonality. Part of what we're seeing in terms of cross-platform promotion is that we're able to select the right time to send a promotion to you. So on your way to work, maybe you pick up a Starbucks coffee with a promotion attached to it. Those kinds of magical experiences have to be hyper-personalized and can be optimized through optimization and model tuning work. I do think that Andrew McDonald heading both Mobility and Delivery solves the structural problem because, to some extent, the teams optimizing for the mobility app only want to optimize for Mobility and for Delivery, even though they're part of one company. Now both of those organizations are under one person, allowing us to be more aggressive on the platform. Our membership program is a huge part of the platform with Uber One having 36 million members, and these members spend 3x more. We have been debating, Eric, your question on the super app internally. To some extent, when you go to the rides app, it is a super app. You’ll see a delivery tab on the rides app. We are building out our experience. If you look at our supplemental slides, it shows delivery, grocery, and a bunch of other choices on the rides app. The rides app currently drives $10 billion of bookings or delivery kinds of bookings on the Mobility app. It's about 12% of annualized delivery gross bookings. In some ways, we’re slowly moving towards a super app. What we're trying to accomplish is the best of both worlds: a highly tuned mobility app and a highly tuned delivery app, both of which talk to each other and take targeted moments to promote each other as opposed to broad promotion, which can come across as somewhat anti-consumer. This is a long journey, and I think we’re in the second inning. With our product teams and tech teams focused on it, I believe that the journey towards the later innings will be easier than the first two innings.

Brian Nowak, Analyst

I have two. The first one on the core platform. So the MAPC growth up $10 million quarter-over-quarter and the Uber One member growth of $6 million quarter-over-quarter, both really good numbers, really good results. So the question is, are there any changes that sort of came through this quarter that drove that faster growth? And how do we think about the durability and the faster growth going forward? And then secondly, on autonomous, could you provide an update on how large the AV rides deployed across the network are at $1.5 million last quarter or ways we can think about quantifying the Waymo utilization on Uber's network?

Dara Khosrowshahi, CEO

Sure, absolutely. So Brian, in terms of audience growth, which was super healthy at 15%. There are many ways in which we're expanding audience. But I would say one of the ways that I'll talk about is through lower-cost products that we're introducing. For example, Moto, which are 2-wheelers coming in a bunch of our developing markets, has now hit over $1.5 billion in gross bookings growing 40%. On the premium side, our premium business is now over $10 billion, growing 35%, and our reserve business continues to grow 60%. The strategy that you're seeing from us aims to target consumers across different demographics, whether demographic in terms of income or age, like building a teens product, or creating a product for an elder audience. These are new consumers coming onto our platform. And when they join our platform, we find that they use multiple products. We’ll get someone in on Moto, but if it's date night or if it's raining, they’ll use UberX, which introduces them to the broader platform as well. So we are very pleased with audience growth. While many may think everyone they know uses Uber, in our top 10 markets, for consumers who are 18 years and older, only about 20% come to us monthly. There's a ton of audience we can keep expanding into. At this point, we’re not seeing any signals that growth is slowing. Regarding Uber One, we've been thrilled about our 60% growth, reaching 36 million members. Historically, Uber One has been a huge hit with delivery, but it has been more challenging to introduce it to the Mobility audience. The incremental use on delivery showed up quickly, but the mobility incrementality from Uber One has been a focus. One new product that we’re excited about is search savings, which is the number one product our Mobility consumers have asked for. Surge is necessary for improving reliability across the network, but many users dislike it. Surge savings allows members to save during surges and pay prices closer to what they are accustomed to, which we believe can drive membership growth as well. Therefore, membership is growing quickly, and while it’s highly optimized for Delivery, it’s still early days in terms of optimizing Mobility. We think that execution will continue as we launch great products like surge savings. Regarding AV, it’s very early in its development. Commercialization will take time, but we aim to lead in this space. The Austin launch continues to go well in terms of utilization. The Atlanta launch is still early but has been promising. In both cases, the average Waymo is busier than 99% of our drivers in terms of completed trips per day. We also see a positive halo effect from Waymos in terms of consumer excitement, which is showing up in Austin. It’s early to say in Atlanta, but it’s something we are monitoring closely. Beyond Waymo, there’s a significant ecosystem of players, including Mamability, Avride, Volkswagen, Nuro, Lucid, and many others worldwide like WeRide, Pony, Baidu, Wayve, and Momenta. We have numerous partnerships here, and our focus now is bringing this product to market quickly, as it looks to be a hit from both consumer and safety perspectives.

Michael Morton, Analyst

Dara, maybe a great time to follow up on those AV comments you just made. I wanted to dig in a little bit on the Lucid and Nuro partnership that was announced. There were some investor concerns that this partnership, in particular, with the capital around it was a negative read-through for the relationship with Waymo and also just capital intensity, a little surprising for the marketplaces. Could you maybe speak to why this might not be the best framework for thinking about that partnership? And then some high-level thoughts on how you're envisioning owning some of the AV assets versus divesting them to fleet operators and how investors could expect to see this play out over the next several years?

Dara Khosrowshahi, CEO

Yes, absolutely, Michael. Listen, we're very excited about the partnership with Nuro and Lucid. Nuro is a leading software player, obviously with excellent management, and Lucid is one of the leading EV manufacturers out there with great technology. We think it's terrific. I've said it before, we are a supply-led company. The more drivers there are in the ecosystem that we can amalgamate with our platform, the better our service becomes, and that applies to both human and autonomous drivers as well. So we are absolutely investing in software and hardware players to bring that to fruition, and the fact that we can work with Nuro and Lucid speaks well to AV supply going forward. The more supply there is, both human drivers and AVs, the better our platform will be. The good news is that, as you can see from our cash flow and capital allocation, we can afford to invest aggressively in the autonomous space and at the same time, return plenty of capital to our shareholders. So it’s not either/or. You will see us pursue more deals like Nuro and Lucid as we prove out the economics of the marketplace. This includes understanding how much one of these cars can make. The signal we see with Waymo is based on the trip per day data being in the 99th percentile in terms of utilization, which is promising. After we prove out the revenue model, detailing how much these cars can generate daily, we'll find financing available for it. We’ve spoken with private equity players, banks, etc. While it will take some time, we are confident these assets will be financeable. We believe it's an advantage for us to use a relatively modest part of our cash flow to fund the impetus needed to begin this. This reflects the catalytic potential we can bring to the market.

Prashanth Mahendra-Rajah, CFO

Maybe just to remind folks, as we've said in the past, that as we think about our investments in AV, you want to think about them in terms of where we will use capital to take equity positions in some of the software players or ecosystem players to help them kick-start their development and where Uber being part of their capital table sort of adds to their credibility. We're going to continue to recycle some of the proceeds from the minority stakes that we have to fund some of those investments. You've seen us do that already and expect us to continue doing more over the coming quarters. We will also use some of our cash flow in a more capital-structured manner as we may need to invest either in real estate, facilities, or as we announced with Lucid, actually in vehicles. Exactly as Dara said, this is really to help us build our learning base and to gather enough information to engage more credibly with financing partners by running them at scale ourselves and bringing them into the fold with real data on how they can earn a return in this space. Lastly, AVs today are not profitable. This has been a consistent investment approach for Uber as we enter markets and products starting at a loss, then building scale and experience. Over time, we know the levers necessary to turn for profitability. You've seen us do that in multiple growth bets as well as in the delivery business. I would like to call back to our recently announced $20 billion share repurchase to reinforce that returning cash generated from our enterprise to shareholders remains our top priority.

Justin Post, Analyst

A couple more questions on AVs. In the letter, you talked about we are increasingly focused on broadening OEM partnerships. So could you elaborate on that and your partnership pipeline here for the next six months or so? And secondly, with the recent news about Tesla expanding, how do you think about that? Could you provide an update on your share and growth in the San Francisco and L.A. markets?

Dara Khosrowshahi, CEO

Yes, absolutely. In terms of OEMs, we're seeing that the development of AV software has really accelerated thanks to these larger AI models. Various approaches are being used, like perception models interpreting the world and prediction models that decide on actions. Some players, like Tesla and Wayve, are using single models, and whatever the approach, the sharing of resources is truly accelerating the timeline to market. We believe the more challenging part of commercialization will be hardware—bringing on hardware platforms and partners able to build these systems at scale and at affordable prices. Today, the AV vehicles that can be deployed at scale are quite expensive. We've made the Lucid announcement and are in discussions with major OEMs in the space. We’re confident that over the coming years, we’ll have suitable OEM partners. Additionally, we bring considerable demand and have a strong balance sheet that allows us to invest to finance these models, so stay tuned for more announcements. Regarding Tesla, we notice that their street deployment is very small at this time, and we haven’t noticed any changes in trends in both Austin and San Francisco. It is something we'll continue to monitor, but we believe it’s a very large market, and we are not under the assumption that there will be a winner-takes-all situation. We anticipate numerous experiments with various models. Waymo is working with us, and is also collaborating with several other participants. You will see a range of models, and we are confident in our position as the leading third-party platform, as we navigate a market that promises substantial growth.

Doug Anmuth, Analyst

I have two, one for Dara and one for Prashanth. Dara, regarding Mobility, how are consumers responding to the pricing growth deceleration tied to the moderating insurance pressures? And what gives you the confidence in U.S. Mobility trips accelerating in Q3? Prashanth, could you add any further detail regarding the buyback and your overall time frame, given that the $7 billion from a couple of years ago started somewhat slowly but has ramped more now?

Dara Khosrowshahi, CEO

Yes, Doug, in terms of consumers' responses to pricing, it's been really positive. There is sensitivity to pricing on a session level. For instance, if someone sees a ride for $20 and then sees a ride for $17, the conversion on those sessions will differ. However, the person who sees the $17 ride tends to return to us two days later or three weeks later, etc. This shows a delayed reaction to pricing which data scientists are now capable of measuring. That's what we are witnessing in the U.S.; when prices decline, we observe session benefits, and we've passed on these insurance savings smoothly. Thus, our profit per ride in the U.S. is up year-over-year due to these savings being returned directly to consumers. What we’re experiencing in the U.S. indicates some session benefits, but there’s also an evident delayed benefit in app usage, which is reflected in our growth in transactions in July compared to Q2. Our expectations, based on our continuous passing on of insurance savings, is that we’ll see these trends reflected in the upcoming quarters. Overall trends are improving as the quarter progresses, providing confidence for Q3 and into Q4.

Prashanth Mahendra-Rajah, CFO

Yes, thank you. To clarify regarding the buyback, as this business has inflected and we’ve begun generating meaningful cash flow, returning this cash to shareholders is a key priority. We’ve executed over 60% of our authorization from last spring, when it was originally authorized. Today's $20 billion is in addition to the roughly $3 billion that is yet to be executed. So think of it as $23 billion to execute over the next few periods. This represents about 12% of our market cap and reflects our optimism regarding our future cash flow generation. Historically, we have allocated around 50% of our free cash flow to buybacks, which is a fair way for you to consider executing capital return over the coming years. We will be active every quarter but always reserve the opportunity to be opportunistic during meaningful market dislocations. Additionally, we made a commitment last year in our Investor Day to reduce share count, and in the second quarter, we actually decreased share count by 1%, which is a trend we expect to continue for the next few years.

Ross Sandler, Analyst

Could we place a dollar amount on the vehicle commitment from these OEM partnership deals over the next few years? Is there a framework you could provide? Is it hundreds or thousands of vehicles per partnership? I know the Lucid deal included a commitment for 20,000 vehicles. How much do you think Uber will be taking on of that 20,000? Also, it seems the Waymo partnership is a more asset-light version of this. How crucial is it to expand with Waymo in new cities beyond the two that have been announced?

Prashanth Mahendra-Rajah, CFO

Thanks, Ross. It’s best to think about the investments in relation to our capital return priority outlined earlier. In this context, we will be recycling proceeds from minority stakes to support our investments, allowing us to fund equity investments in AV players. The best way to gauge the vehicle commitments would be through their broader impact rather than specific dollar numbers. Ensuring a modest redeployment of our free cash flow can disproportionately affect the partnerships we work with. We’ll continue focusing on capital generation for shareholder returns while remaining active in building our AV ecosystem so the investments made to be financially efficient now and in the long run.

Dara Khosrowshahi, CEO

For your point on Waymo, our immediate focus is executing well on our current deployments in Austin and Atlanta, which are going well. We certainly wish to have more Waymos on our platform in these cities and beyond. However, I cannot comment on timing or future expansions. Nevertheless, we know consumers love the Waymos, and they contribute significantly in terms of capacity and economic value on our network. We hope to provide more information about expansion in the future. Regarding business models, I’ll refrain from specifics, but structurally, we see three approaches forming in the marketplace. What I label the merchant model essentially pays partners a fixed fee for per trip or day, ensuring predictable revenue streams for them. We will assume the risk of monetization on our network. The agency model operates on a revenue-sharing basis similar to how we engage with drivers now. Finally, in certain instances, we might have or partners might own the assets, and we’ll handle them under licensing agreements for the technology. Such models might include monthly or per-mile licensing. These frameworks will help shape the AV marketplace over the next five years, reflecting the varying needs of our partners. We believe we can create the most robust economic and operational ecosystem for AV within our network. All right, everyone. Thank you very much for joining us. We really appreciate your taking the time, and a big thank you to the Uber teams. While we highlighted our results, it’s the teams on the ground who deliver day in and day out. So a heartfelt thank you to all the teams for achieving another great quarter for us. Thanks to everyone, and we’ll talk to you next quarter.

Operator, Operator

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