Earnings Call Transcript - UBER Q4 2021

Operator, Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber Q4 2021 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 provided instructions. I would now like to turn the call over to Mr. Balaji Krishnamurthy, Head of Investor Relations. Please go ahead.

Balaji Krishnamurthy, Head of Investor Relations

Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies' fourth quarter 2021 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 risks and uncertainties described in our most recent quarterly report on Form 10-Q for the quarter ended September 30, 2021, and in other filings made with the SEC when available. Following prepared remarks today, we will publish the prepared remarks on our Investor Relations website, and we will open the call to questions. For the remainder of this discussion, all fourth quarter growth rates reflect year-over-year growth and are on a constant currency basis unless otherwise noted. Lastly, we ask you to review our earnings press release for a detailed Q4 financial review and our Q4 supplemental slides deck for additional disclosures that provide context on recent business performance. With that, let me hand it over to Dara.

Dara Khosrowshahi, Chief Executive Officer

Thanks, Balaji. We had a strong quarter to close out 2021 on a high note. Our results continued to demonstrate both how eager people are to move around their cities as restrictions ease up, and how Delivery has become an important part of their daily lives. Gross bookings of $25.9 billion came in at the high end of our guidance range, with MAPCs of 118 million, reaching an all-time high. Continued strong execution by our team delivered $86 million of adjusted EBITDA, nicely above our guidance range. In Q4, we continued to see strong recovery in our Mobility business. December gross bookings nearly recovered to 2019 levels and approached a $50 billion annual run rate in the first few weeks of the month. Meanwhile, Delivery volumes stayed strong as we continue to improve the profitability profile of that business. Delivery reported its first adjusted EBITDA profit, including for the first time in the U.S., even as Uber Eats became the fastest-growing delivery player in America. Uber Freight closed the transformative acquisition with Transplace during the quarter. It's never been clearer that our supply chains are in dire need of technical innovation. And along with Transplace, Uber Freight, now at a $1 billion quarterly run rate, is well positioned to bring digital native change to the enormous logistics ecosystem. Looking back at 2021, we had a great year. I can't say when exactly as I predicted, but our teams have shown an incredible ability to remain agile and manage through change effectively. Despite COVID and all of its unpredictability, we have now reported our second adjusted EBITDA profitable quarter, and we expect to generate significant improvement in profitability in 2022. Of course, COVID remains a part of our lives. We started to see some impact of the Omicron wave late in December. The silver lining is that the impacts are becoming more muted as we learn to live with the virus. Lockdowns are less strict and vaccines are available across the world. Omicron also arrived at a time of year when we usually see seasonal declines. Total Mobility gross bookings decreased 21% from December to January; that's only about 10 points worse than what we typically see at this time of year. On a trips basis, the decline was even more muted, down just 15% month-on-month, with pricing coming down meaningfully as marketplace balance improved. It appears that the Omicron impact on our Mobility business has come and gone relatively quickly, even faster than the global case counts. We're beginning to see several major economies in Europe relaxing COVID restrictions, including the U.K., the Netherlands, Denmark and Norway, with more countries expected to take similar actions soon. In the last two weeks, the Mobility recovery has rapidly resumed with both trips and gross bookings recovering and Mobility gross bookings last week up 25% month-on-month. I'll quickly touch on driver supply, which continues to improve. We made steady progress through product innovation, more targeted marketing and on-the-ground operational refinements to onboard more drivers and couriers faster. Nearly 325,000 people started to work on Uber in the quarter, bringing our total global active earner base to 4.4 million people, the largest it's been since the second quarter of 2020. One important call-out is that while the Omicron wave acted as a temporary deterrent to demand, supply has been much more stable. As a result, surge and wait times have improved to their lowest level in the year. Recent internal research has shown that Uber is by far the preferred choice amongst drivers, and we're confident that our marketplace will be more, not less, balanced going forward. Turning now to Delivery, which exceeded our expectations and performed better than we typically see in January, likely in part due to Omicron. This relative overperformance has moderated just as the Mobility trends have improved. Overall trends continue to be very healthy, and there's no question now that Delivery is here to stay, both in food and other verticals. Delivery reached an important milestone in Q4, generating $25 million in segment adjusted EBITDA and marking the first profitable quarter of many to come. And as I said on our last call with you, we view the turn to EBITDA profitability as a big moment, but ultimately just a step along the way. It's creating a self-sustaining and incredibly valuable business. With this milestone accomplished, Delivery is well positioned to self-fund growth in grocery, retail and local commerce, and let me underscore, we expect significant EBITDA profit generation even after those investments. Finally, it's worth spending a few minutes on a couple of our growth initiatives across the company. Our advertising business ended the year with around $225 million in run-rate revenue, well above the $100 million target we laid out earlier this year. While much of the attention has been on sponsored listings for Uber Eats, we have a roadmap to build a much broader business, including in Mobility. We also closed the acquisition of Drizly during the quarter, which will be a nice addition to our advertising efforts. Our new verticals businesses, which include grocery, alcohol, convenience and other non-restaurant efforts, grew nearly 10% quarter-on-quarter in Q4 on an organic basis, reaching a best month ever in December. We continue to make progress in improving non-restaurant merchant selection in the U.S. And as a result, the U.S. grew at three times the rate of our global new verticals business during the quarter. Internationally, we continue to have a strong lead in grocery and other verticals. We're working to build on that lead with new quick commerce offerings, and we're intentionally taking a partner-led approach here with encouraging signs of adoption. For example, in France, Carrefour Sprint stores have represented nearly 20% of new verticals orders in Paris with significantly higher per-store productivity than other new verticals merchants in market. Uber for Business also reached a milestone during the quarter with managed U4B gross bookings surpassing its previous high from 2019 with well over $1 billion in annual run-rate gross bookings. Over the next few years, U4B's enterprise offerings, which importantly span both Mobility and Delivery, will significantly outpace our consumer business and become a meaningful contributor to growth and profitability. Before I hand it over to Nelson, a plug for everyone to tune into our Investor Day tomorrow morning, which you can live stream on our website. Over the past few quarters, we've talked a lot about the power of the platform and the potential for Uber's complementary services to contribute to lower cost of acquisition and higher lifetime value. We're looking forward to discussing our strategy, our plans for each of our businesses and the growing advantage of our platform in a lot more detail tomorrow. Uber is emerging from the pandemic stronger than ever. As long as we execute on the opportunities, we're well positioned to deliver strong, profitable growth with significant expansion in profitability and cash flow generation over the coming quarters and years. Now, over to Nelson.

Nelson Chai, Chief Financial Officer

Thanks, Dara. Q4 was a strong quarter in all dimensions with solid gross bookings, adjusted EBITDA and margin performance for all of our businesses. Mobility gross bookings grew 67% and the segment generated a healthy adjusted EBITDA margin of 5.1% of gross bookings, up 80 basis points year-over-year even as take rate declined 160 basis points year-over-year, primarily due to our driver supply investments. Excluding those investments, Mobility incremental margins would have approached 10% on a year-over-year basis, with marketplace balance in a much better spot than at any point in 2021. We are confident that Mobility's incremental margins will improve meaningfully in 2022. Delivery gross bookings grew 33% and reached its first adjusted EBITDA profitable quarter with a $25 million EBITDA profit in Q4 as core food delivery profitability expanded to more than cover our investments into grocery and other new initiatives. Importantly, we recorded our first adjusted EBITDA profit for Delivery in the U.S. and Canada, expanding margins 180 basis points of gross bookings year-over-year, while gaining category share in the U.S. Freight closed the previously announced transaction of Transplace during Q4, significantly expanding freight scale and the scope of our offering by combining Freight's digital freight brokerage technology with Transplace's managed transportation platform. Both Freight and Transplace are ending 2022 with strong momentum with healthy onboarding of new logos, and we are excited to demonstrate the potential of the combined asset. Looking ahead to full-year 2022, we continue to expect to deliver incremental EBITDA margins as a percentage of gross bookings of around 10% for Mobility and over 5% for Delivery. In addition, we expect Freight to generate positive adjusted EBITDA in 2022. While we continue to invest in platform R&D to ensure our products continue to be the best out there, we expect to deliver healthy leverage on that line as well. Taken together, those commitments translate to a meaningful profitability expansion for Uber in 2022. Turning to our balance sheet and liquidity position, we continue to maintain a strong liquidity position, ending the quarter with $4.3 billion of cash and cash equivalents, and our equity stakes were marked at $12.5 billion. We benefited from the change in value of Grab and Aurora as these companies reached liquidity milestones as well as gains from selling some of our interest in Yandex. These benefits were partially offset by the significant movement in DoorDash stock from September 30 to December 31 as we marked down the value of our DoorDash stake by $1.3 billion. The net effect of these moves was a $1.4 billion tailwind to our GAAP net income. As I have previously noted, our GAAP net income may continue to see swings from quarter-to-quarter from the large equity stakes on our balance sheet. While we intend to monetize some of our financial stakes at an appropriate time, we have sufficient liquidity to give us the flexibility to maintain these positions with the aim of maximizing value for Uber and our shareholders. I'll conclude my remarks with an update on recent business trends and our Q1 outlook. It's important to note that typical seasonality during Q1 is for Mobility and Delivery trips and gross bookings to be flat quarter-over-quarter. Given Omicron-related demand impact, we expect Mobility gross bookings to decline quarter-over-quarter, while Delivery is likely to be flat to up modestly. In aggregate, we estimate these demand impacts to be $1 billion to $1.2 billion of drag in Q1 gross bookings. Additionally, Q1 will represent the first full quarter of Transplace contributions, which is expected to add an incremental $600 million in Q1 to Freight gross bookings relative to Q4. Despite the meaningful gross bookings impact, we are confident that the breadth of our business will allow us to expand profitability. With that context for Q1, we expect total company gross bookings to be between $25 billion and $26 billion, representing year-over-year growth of 28% to 33%, and we expect a total company adjusted EBITDA profit between $100 million and $130 million for the quarter. With that, let's open it up to questions. Thank you.

Operator, Operator

Operator provided instructions. Your first question comes from the line of Doug Anmuth with JPMorgan. Your line is open.

Doug Anmuth, Analyst (JPMorgan)

I just wanted to ask you about drivers and couriers. I think you talked about 4.4 million, and I believe that's relative to 5 million pre-COVID. Just curious kind of what the factors are maybe if you were at a similar level in terms of overall bookings? Just what kind of efficiencies you might see relative to pre-COVID? And whether you would need a similar kind of number of drivers and couriers at that point? And then also, if you could just talk a little bit about Uber One, and what you're seeing early on here given a very compelling value proposition versus previous subscription offerings?

Dara Khosrowshahi, Chief Executive Officer

Yes, absolutely, Doug. So as it relates to drivers and couriers, the first factor that we're seeing that's really encouraging is that the onboarding rate and onboarding conversion rates are happening much more successfully. This is because we essentially onboard earners and then we give them work opportunities rather than onboarding them either as a driver or as a courier. As a result, earners can start earning much faster on our platform. So we're seeing a lot of positive input into the platform. It's also great because earners are going to earn during a period when everyone is trying to get back on their feet without as much government help as we have previously. So it works out for everyone, and it definitely helps out our marketplace. While we haven't done the specific analysis of like how many earners do we need on a gross bookings basis, it's my strong instinct that our marketplace has gotten more efficient. This is because we are now across dispatching between driving people and driving things; that creates higher utilization for earners and makes for a more efficient marketplace. We're also seeing, on the Delivery side, as the marketplace grows and densifies — we got more restaurants on the marketplace, we have more consumers ordering — and as a result, the average length of delivery is coming down so that delivering is becoming more efficient from a network perspective. So network efficiency is up. The efficiency results in earners being busy a higher percentage of the time when they're looking for opportunities. As you can see, marketplace metrics are coming down in terms of surge, in terms of ETAs, and delivery times are strong. So the efficiency trends that we're seeing are quite encouraging. As far as Uber One goes, it's very early. Last quarter, we talked about members around the world. The early signal that we're seeing for Uber One is very encouraging. It's a consumer value proposition that's quite compelling because pricing is equal to the pricing of our competition but our content is better. It's a content advantage in terms of free delivery and discounts on rides, and the discounts on rides in a world that is increasingly opening is going to become more and more valuable. So we believe we have a content advantage over competition that is going to show up over time and is going to compound upon itself.

Operator, Operator

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan, Analyst (Goldman Sachs)

I know we're going to talk more longer term tomorrow, but just maybe taking a step back on some of the shorter-term dynamics. In terms of the Mobility business, we talked with one of your competitors last night about the dynamic of product mix and geo mix in the U.S. Can you give us a little bit of color on what you're seeing globally from geo mix and open versus closed environment or product mix like airport rides versus business rides or elements of that in terms of how that might be driving elements of December into January? And how should we think about that as the quarter evolves?

Dara Khosrowshahi, Chief Executive Officer

Yes, absolutely. I think generally, the trends that Lyft talked about during their call are fairly consistent with our trips. For example, we saw airport gross bookings up about 200% year-on-year, about 175% in the U.S. In December, rides tend to get longer due to holiday rides, etc. So we saw similar trends in terms of length of trip, which certainly is encouraging. I'd say nothing significant there, one way or the other.

Operator, Operator

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

Justin Post, Analyst (Bank of America)

Wonder if you could talk a little bit more about the driver incentives in the quarter? And how you see kind of the take rates evolving? Is there some big upside there as you look forward to the next couple of years? And how that flows through the margins?

Nelson Chai, Chief Financial Officer

So first of all, I think if you remember, Justin, when we did the Q3 call, we actually highlighted that it was going to be a factor, and a lot of it just had to do with marketplaces opening and closing because of the pandemic. We knew when we talked to you that places like Australia were going to open, and then we were going to lean in. As I mentioned in my prepared remarks, if you actually back out some of that, we would have seen the incremental margins that we've talked about, and there is a little bit of seasonality. But again, our goal is to make sure that we continue to overachieve both on the top line and on the bottom line and the profitability, expanding the margins. And so we did that, and we knew we did that. Because of that, we will take opportunities at some point to continue to build supply. We are entering this year, as you heard in our comments, in probably our best supply situation we've had since the pandemic started and certainly since 2020. So again, we think that will be beneficial as we go into 2022. You'll hear us talk a little bit more about it. But yes, I think that you should expect to see good margin expansion as we think about 2022.

Dara Khosrowshahi, Chief Executive Officer

And Justin, I'd also remind you that we manage to EBITDA dollars and margins and free cash flow dollars and margins as a percentage of gross bookings, and revenue margin is an input as part of it. There are algorithms that are constantly balancing between pricing in order to maximize getting the next ride and/or driver-side pricing that is optimal as well. So the revenue margin that you see is more of an output. At the end of the month or at the end of the quarter, we look at our revenue margins, but we're managing the business. We're trying to maximize gross bookings, trips, and throughput. Frankly, we're trying to maximize earnings to the earners on our marketplace because it means it becomes a much more attractive marketplace for earners to participate in. One area of upside I would tell you is that you have seen in our Delivery margins, which is: Delivery growth was great, we were able to gain share and margins increased because we're optimizing cost per trip as the network is densifying. Cost per trip is coming down pretty substantially, especially in the U.S., and we think there's more to come. That's pure positive because carriers are busy, deliveries are faster, it's a revenue margin upside, and we can reinvest that revenue margin to gain share.

Operator, Operator

Your next question comes from the line of Brian Nowak with Morgan Stanley. Your line is open.

Brian Nowak, Analyst (Morgan Stanley)

Two, just a — the first one I wanted to ask about the category share gains in the U.S. food delivery. Any specific sort of adjustments you've made or strategic developments that you've done that have really sort of driven that? And how do you think about still existing learnings to further improve the food delivery market share? And then, Dara, just curious to hear kind of qualitatively, how you think about some of the key drivers of the multiyear consumer rideshare side of the business and you're thinking through one and other pricing mechanisms, etc.?

Dara Khosrowshahi, Chief Executive Officer

Sure. As far as the first question in the U.S. goes, I'd say it's just core execution. None of this is wizardry. Our selection in the U.S. is improving. Our selection in suburbs is getting much better — still not where it needs to be, but it's getting much better. I talked about cost per trip coming down, which allows us to reinvest in the top line, whether it's in marketing or incentives. Membership as a percentage of our gross bookings is increasing, so we're getting more frequency coming through the system. And something that we'll talk more about tomorrow is that the cross-platform activity across both Mobility and Delivery continues to increase. That is currently benefiting the Delivery business. It's an attribute that is unique to Uber and it is becoming more of a factor. New eaters as a percentage of our total gross bookings every quarter is actually pretty small because we have a really big base of eaters who are loyal to us and keep coming back. But when you have new eaters quarter after quarter after quarter, it starts compounding. We believe that we're starting to see the effects of that compounding happen last quarter and certainly this quarter, and we hope that it will continue. If it doesn't, we're not doing our jobs.

Nelson Chai, Chief Financial Officer

And the only point I'd add is we made a change in terms of our leadership in the U.S. at the beginning of the year. He and his team deserve kudos because it really was a focus, and they have come in and done a terrific job. So again, we have a lot of confidence going into next year. It wasn't just that we continued to gain competitive positioning versus our competitors, but we did it in a way where we are now going to be profitable doing it. So again, a lot of it goes to him and the team — we have a big team of folks and they operated well. Your second point is on Mobility. Tomorrow, you'll get a very good overview of our long-term strategy and then how it impacts our medium- to long-term views, both in terms of compounding revenue as well as profitability. One easy data point for you: we added 20 million new riders just in Q4 in our Mobility business. If you think about the network effect and our ability to operate across our 10,000 cities in our leadership position, you can think about that leverage that we have globally that nobody else has. As the world is coming back, we'll spend a lot of time tomorrow; Mac will spend a lot of time talking about how we're going to continue to grow at scale and a lot of the untapped areas that we're driving.

Operator, Operator

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

Ross Sandler, Analyst (Barclays)

I wanted to talk about the ads uplift. So you're running well ahead of plan with the $225 million annualized. Just your overall outlook on advertising, how big that could be and maybe how Drizly might be helping with that plan?

Balaji Krishnamurthy, Head of Investor Relations

Ross, you're coming through very muffled. But if you don't mind repeating the question, we'll try and get your response.

Ross Sandler, Analyst (Barclays)

Just from the ads business and how Drizly might be helping with that plan.

Dara Khosrowshahi, Chief Executive Officer

Ross, so the ad business we talked about hitting a $225 million run rate in Q4, well above our targets. The momentum in the business is great. Keep in mind that the vast majority of that is Delivery, and we are building out ad products that run across Mobility, Delivery and grocery. Drizly is going to be a part of our ad operations. For example, Drizly advertising as a percentage of gross bookings is about 8%, which is pretty significant. That's not fully reflected in the numbers we reported because Drizly was only partially included in Q4. But with the mix of higher grocery and higher alcohol, you should expect that to be upside in terms of our advertising revenue and growth ahead.

Balaji Krishnamurthy, Head of Investor Relations

Any questions?

Operator, Operator

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

Lloyd Walmsley, Analyst (UBS)

So I guess the first one, following up on Justin's question. Do you feel that you're largely done having to invest in driver supply? And I guess, as more drivers come back into the marketplace and pricing comes down, do you see any of them kind of turning back off? Like is there more sensitivity from drivers to maintaining that higher prices? Or is it mostly just you stimulate to get them back on and then they stay on. And then the second one is, it sounds like a big effort on improving the driver onboarding flow to get them on the road faster. I guess beyond that beginning period where maybe a driver can only drive for Delivery, are you seeing a big uptick in the percent of drivers that drive for both Delivery and Mobility on an ongoing basis? That can kind of help drive that efficiency or sustain that efficiency?

Dara Khosrowshahi, Chief Executive Officer

Yes, absolutely. We watch driver retention trends very closely. In January, with the Omicron wave, we watched the number of drivers on the platform and the number of suppliers, etc. What we've seen are pretty encouraging signs that drivers have stayed on the platform. In general, demand on the platform, both in terms of Mobility and Delivery, is a fast-twitch muscle; it moves much faster. Earner supply on a platform is a slow-twitch muscle; it responds more slowly than demand. Now that we're seeing the Omicron bounce back, we're pretty confident that our supply situation is looking good right now, and it should look good for the balance of the year, but it's always something we're watching. Generally, retention rates are quite good. We are actively looking to sign up a higher percentage of drivers to work across the platform. Whereas our algorithms previously were more highly tuned toward Mobility-only or Delivery-only, our algorithms are now being tuned to the Uber marketplace. Our cross-dispatching is much more fluid and elegant, and that's only going to improve. These are relatively early iterations, and you should expect to see more cross-platform activity, both on the consumer side and on the earner side. We'll have a lot more to say about that tomorrow at Investor Day.

Balaji Krishnamurthy, Head of Investor Relations

Next question?

Operator, Operator

Your next question comes from the line of Brad Erickson with RBC Capital Markets. Your line is open.

Brad Erickson, Analyst (RBC Capital Markets)

Nelson, I think you mentioned that you expect now over 5% of incremental Delivery bookings to drop to EBITDA. So it sounds like there's maybe a bit of a discretionary component there. I was just wondering what the philosophy is to allow that upside or any potential upside to flow through? Or will it be reinvested? And if so, how?

Nelson Chai, Chief Financial Officer

Again, the 5% is incremental margins as we continue to grow the business. We're not optimizing for that number; we're optimizing to grow our gross bookings and to grow our bottom line — adjusted EBITDA — and that is really just an output. Obviously, one we watch and you guys spend a lot of time watching it. We'll address a little bit more of the mid- to medium-term modeling tomorrow. But again, we do expect that the incremental margin will be around 5% for our Delivery business.

Dara Khosrowshahi, Chief Executive Officer

We do think that the 5% represents a balanced viewpoint. It allows us to reinvest where we see growth ahead of us and to be competitive. We have the platform advantage versus our competition, which is a structural advantage. It is also responsible to our shareholders because ultimately, we want to be a growth business and a profitable growth business and improve margins going forward.

Operator, Operator

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

Deepak Mathivanan, Analyst (Wolfe Research)

Great. Two quick ones. First, following up on the driver incentives and incremental margins, you noted that you expect incremental margins on the Mobility business to be around 10% for 2022. How should we generally think about the sensitivity of driver incentives through the year to that? Is that something that you can achieve even if markets come back in elevated strength globally, and then driver shortages kind of are more widespread geographically? And secondly, on the Eats side, it seems like MAPCs, frequency, basket size were all stable quarter-to-quarter. Can you talk about whether there were any geographical discrepancies maybe in some countries where we've been reopened for a while, compared to other markets?

Nelson Chai, Chief Financial Officer

In terms of the drivers question, that 10% is an annual number. There may be some quarter-to-quarter fluctuations because, as you noted, COVID has shown us we should expect the unexpected. We are highly confident we'll be able to manage that on an annual basis. There may be a quarter here or there. We optimize our marketplace every single day across our 10,000 markets. As you can tell from what we achieved in Q4, we've gotten pretty good at it, particularly as Mobility has come back post-pandemic. We feel good about where we sit today. We're highly confident based on the past couple of quarters in our ability to generate the 10% incremental margin on the Mobility side.

Dara Khosrowshahi, Chief Executive Officer

On the MAPC side, we saw strength across the board. A call-out is U.S. Mobility MAPC on a year-over-year basis was super strong because the U.S. had closed down more on a comparable basis than other geographies. Even on a quarter-on-quarter basis, audience in Q4 for our Mobility business grew versus Q3. Growth in both Mobility and Delivery has been global. The diversification within our portfolio of Mobility and Delivery and geographic diversification allows us, when something is weak, to lean in and help things out. When one geography is particularly strong, we can take some of that strength and reinvest it in other areas. The diversification of our portfolio is really coming into play and helped our resilience in January, which is why in Q1 you can see our guidance is stronger than Q4. That speaks to the portfolio approach coming through.

Deepak Mathivanan, Analyst (Wolfe Research)

Yes, I think that was a lot. Thank you so much.

Operator, Operator

Your next question comes from the line of James Lee with The Mizuho Group. Your line is open.

James Lee, Analyst (Mizuho)

I just want to get some regulatory updates here. I think in the U.K., your license is up for renewal this quarter. Maybe how should we think about financial implications on the reclassification to worker status? And also moving to a merchant model? And also in the U.S., any update from the California appeal and the developments in key states like New York and Massachusetts?

Dara Khosrowshahi, Chief Executive Officer

Yes, absolutely. On the U.K. license, we're in constructive dialogue with Transport for London. I'd say our relationship with the City of London is better than it's ever been. About 10% of our kilometers now in London are EV or clean, and we're looking to drive that up very actively in partnership with the city. So that relationship has really changed, and we're hopeful that we get the license renewal, but we never take anything for granted. The worker reclassification that we underwent in the U.K. was the right thing to do. There isn't a level playing field yet; we believe there should be. We're paying for it financially now because our earners in the U.K. are classified as workers and are getting benefits that competition doesn't have to pay. Sometimes the right thing to do is expensive. In this case, in the U.K., it's expensive. But we think with time there will be a level playing field; the only question is when. Long term, being a good citizen and being a good company on the ground sometimes hurts financially in the short term. The long term, you get gains. We want to be in the U.K. and in London for the next 10, 15, 20 years and that means doing the right thing, and I think we are. As far as California goes, it's running through the process. We're very confident in our position, but I don't have anything to share one way or the other at this time.

Operator, Operator

Your next question comes from the line of Jason Helfstein with Oppenheimer. Your line is open.

Jason Helfstein, Analyst (Oppenheimer)

I'm just going to ask one. Just when you think about Uber One and specifically restaurants and delivery, are there any deficits in capabilities or coverage in major markets versus your largest competitors and kind of how you think about that?

Dara Khosrowshahi, Chief Executive Officer

Yes, Jason, it's Uber One now; we still have to rebrand it. As far as coverage goes, our selection in urban markets is excellent and is on par or better than our competition, although it can always get better. In the suburbs, our selection still trails DoorDash. We are seeing our selection improve. We have reorganized our sales team to be much more local and on the ground to understand neighborhood restaurants. The vast majority of restaurant partners want to work with more than one partner. We are the second player but by far the biggest second player in the U.S. We have a great sales team now and our systems are much improved in partnering with those restaurants. So in the suburbs today, we do have certain gaps, and we're going to work really hard to make up for those gaps certainly by the end of 2022.

Operator, Operator

Your next question comes from the line of Edward Yruma with KeyBanc Capital Markets. Your line is open.

Edward Yruma, Analyst (KeyBanc Capital Markets)

It seems like a lot of private capital is pushing into ultrafast delivery. I know you're even partnering with Gopuff in the space. How do you view the space right now? And what do you partner versus what do you do on your own?

Nelson Chai, Chief Financial Officer

We are primarily doing partnerships in this space. We have a strong partnership with Carrefour in France and a partnership with Gopuff in the U.S. We are doing a little bit of testing on our own in a couple of places like Taiwan and Japan to understand the whole value proposition and different parts of the value chain. Our view is that we want to make sure we have a good product delivered to our consumers. There is a lot of private capital in ultrafast delivery. Over time, there will be some normalization between private and public markets. You'll hear tomorrow that we are going after this new vertical space with primarily a partnership approach. We are leveraging our capabilities while maintaining more of an asset-light model, which we believe will be beneficial.

Dara Khosrowshahi, Chief Executive Officer

I would add that we have an enormous global footprint, which is unique among many other players. We're in 32 delivery markets and every market has different regulatory issues and city-level differences. The partner approach allows us to penetrate many geographies and cities faster in a capital-light way. Our goal with quick commerce is to get to as many eaters in the world as possible, as quickly as possible. We think we can move faster because we have partners who are on the ground, who understand their cities and have a long history. Early signals are encouraging and we are confident in the partner-led approach, though we'll continue to evaluate and adapt.

Balaji Krishnamurthy, Head of Investor Relations

Operator, we'll take one last question.

Operator, Operator

Your final question comes from the line of John Blackledge with Cowen. Your line is open.

John Blackledge, Analyst (Cowen)

Two questions. First, what were other delivery verticals outside of Eats as a percent of delivery gross bookings in the fourth quarter? And then second, with the Car Next Door acquisition, could you discuss the rationale? And do you expect to enter additional markets with that type of offering?

Dara Khosrowshahi, Chief Executive Officer

Yes, absolutely. I'll start with Car Next Door. You'll hear more about this at Investor Day tomorrow. We want Uber Rides to be a complete mobility solution. That means being there for occasions where you need a car and ultimately helping replace a second car or even car ownership over time. Car Next Door allows us to have relevancy for situations where you need a car for a weekend, etc. We have partnerships with Avis, Hertz, etc. Part of the magic of Uber is peer-to-peer: managing supply and demand in a two-sided marketplace. Car Next Door is a two-sided rental marketplace, a great business in Australia. Australia is a strong market for us in both Mobility and Delivery. So it fits well. Yes, our ambition is to go global. We have traction here; this is the playbook we run with new verticals. We went global with Eats, and we plan to take a similar approach with peer-to-peer car rentals — we'll go global and ensure we do it the right way. Nelson, do you want to talk about new verticals as a percentage of gross bookings?

Nelson Chai, Chief Financial Officer

Yes. In Q4, new verticals approached about a $4 billion run rate. If you think about it, in Q4, we were a $54 billion run rate for the total Delivery marketplace, so that's the relative scale.

Dara Khosrowshahi, Chief Executive Officer

One of the cool metrics we track is what percentage of our monthly active platform customers ordered from new verticals. In Q4, about 12% of our monthly actives had a new vertical order in our focus markets because we're not yet deep in every market. As that MAPC number goes up, gross bookings will go up as well. All right. That's it everyone. Thank you very much for joining us on the call and shout out to the Uber team. It's been a long year. I think the team really turned around in the second half. We delivered a great Q4, and I'm more confident than ever in our prospects for 2022 because of the work that the team has done. So thanks, everyone.

Operator, Operator

Ladies and gentlemen, thank you for your participation. This concludes today's conference call. You may now disconnect.