Earnings Call Transcript - UBER Q3 2021

Operator, Operator

Hello. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber Q3 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we'll conduct a question-and-answer session. Thank you. I would now like to turn today's call over to Mr. Balaji Krishnamurthy, Head of Investor Relations. Please go ahead, sir.

Balaji Krishnamurthy, Head of Investor Relations

Thank you for joining us today. And I want to wish a very Happy Diwali to all who celebrate it. Welcome to Uber Technologies third quarter 2021 earnings presentation. On the call today, we have Uber's 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, intent and may. You should not place undue reliance on forward-looking statements. Give us a second, we have a fire alarm going on. Sorry about that, we've all survived. We've survived. Certain statements in this presentation and on this call are forward-looking statements. Such statements can be identified by terms such as believe, expect, intent 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 material - 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 Annual Report on Form 10-K for the year ended December 31, 2020, 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 the discussion, all third quarter growth rates reflect year-over-year growth and are on a constant currency basis, unless otherwise noted. For October trends, we will be providing comparisons with October 2019 in addition to year-over-year trends. Lastly, we ask you to review our earnings press release for a detailed Q3 financial review, and our Q3 Supplemental Slides deck for a number of additional disclosures that provide context on recent business performance. With that, let me hand it over to Dara.

Dara Khosrowshahi, CEO

Thanks, Balaji. Over the last few quarters, we've focused on achieving two things. First, we've worked hard to get Uber firing on all cylinders again, driving recovery for Mobility, continued growth for Delivery and scaling our momentum with Freight. Second, we've been disciplined in our execution to ensure growth is sustainably profitable, and that we live up to our commitment to shareholders. Our results this quarter demonstrate the incredible progress we've made against these objectives. Reaching total company adjusted EBITDA profitability is an important milestone. And one that's even more impressive when you consider where we were as a company just 18 months ago. In Q3, our Mobility business delivered margins consistent with 2019 highs. Meanwhile, our global Delivery business nearly reached breakeven. In the US and Canada, our multiquarter investment cycle and strong execution by our Delivery team resulted in us both gaining category share and improving profitability with adjusted EBITDA growing more than $130 million quarter-on-quarter to approach breakeven. Today's profitability milestone is an important step, but it's just a step. When it comes to delivering on our mission and building a generational company, we know that profitability is a means, not an end. We remain focused on generating positive free cash flow, while also making disciplined investments to appropriately fund growth initiatives that will carry us into the future. Uber is at the center of multiple massive opportunities in Mobility, Delivery and Logistics and our platform is stronger than ever before. I want to take a minute to update you on our driver and courier recruitment efforts before turning to demand recovery, and then a bit on our long-term growth plans. When we first saw demand beginning to outstrip supply in Q2, we made a conscious decision to invest fast and to invest aggressively in attracting drivers back to Uber with a focus on the US. The results are clear, we've seen 10 consecutive weeks of active driver growth in the US, resulting in a far better rider experience. The number of active drivers is up more than 65% since January, and more than 20% since June. As a result, the incidence of surge pricing has fallen by nearly half and wait times are now below the magic 5 minute mark on average. We did this while meaningfully reducing incentive levels and at the same time, driver earnings remained near all-time highs due to increased utilization. We've also continued to grow the number of couriers on Eats in the US with active couriers up 80% since January and 25% since June. In other words, not only are we approaching our supply and demand balance for Mobility in the US, we've done so while nearly doubling our Delivery courier base from its low in Q1. All-in-all, our monthly active driver and courier base in the US has grown by nearly 640,000 since January. Against a backdrop of historic labor shortages and an abundance of choice for workers is a strong endorsement of Uber's value and the value of independent, flexible work. In a world where flexibility has increasingly become non-negotiable for workers across the economy, we believe Uber will be an even more attractive option going forward. We've now shifted to hyper-targeted driver growth campaigns geared towards particular markets, all the way down to specific neighborhoods and times of day. We're also focused on tech improvements that increase signup rates, combining our onboarding process across Mobility and Delivery so individuals can sign up for both simultaneously and can start delivering while they're waiting to be approved to drive. This is a unique advantage available only to Uber, which has resulted in a 20% to 40% increase in courier and driver activation rates. We expect to roll out this feature as widely as possible in the coming months. In some non-US markets like the UK and Brazil, the driver base is back to roughly the same size as it was pre-COVID. But it still hasn't kept up with very strong demand which has grown past 2019 levels. That said, we're comfortable that the bulk of our recruitment spending is behind us, and that by taking learnings from the US and applying them abroad, we can be much more efficient and effective in our approach. Now, a bit on demand recovery. After a period of soft demand driven by the Delta variant, the Mobility recovery has reignited with Mobility gross bookings expanding 18% over the September and October period. Several markets around the world, including the UK, Brazil, Germany, Spain, Taiwan and Hong Kong are up against 2019. We hit another milestone last week, our global Mobility business posted its first few days of growth versus 2019. In fact, this year's Halloween weekend eclipsed 2019, demonstrating consumers' excitement to get out and move again. We believe volumes will return to trend line outside of holiday periods, but the underlying trend line continues to get better and better. Notably, airports are beginning to show meaningful activity with US airport trips up more than 20% and business airport trips growing nearly 60% over the past two months. We're innovating into this demand with a series of product updates geared towards airports, including the ability to book a car with Uber Reserve up to 30 days in advance with built-in flight tracking so your ride is ready for you whether you're early, delayed or hopefully on time. Meanwhile, we've continued to see sustained consumer engagement on Delivery, lending further support to our belief that increased demand for all types of fast delivery is structural and will grow for the foreseeable future. Over the past two months, Delivery gross bookings have grown 8% despite reopenings around the world. While Delivery saw some summer seasonality in parts of Europe, trends have stabilized and even returned to modest growth in those markets. Even as cities got moving again, Delivery gross bookings posted yet another best week ever last week. In fact, we set a new best week ever for weekly total company gross bookings in seven of the last eight weeks, and October was our best month in our 12-year history, thanks to the work of all of Uber team members. Looking ahead, it's our goal to grow both our top line and our bottom line at healthy, consistent and sustainable rates. That means being flawless in our execution and disciplined with our capital allocation for the large opportunities in front of us across Mobility, Delivery and Freight. Our Mobility team is raring to go. While the team has appropriately managed cost through the crisis, our Mobility team has been seeding growth opportunities in five areas: low-cost product, category expansion, hailables, enterprise and further geographic expansion. We believe that the underlying growth characteristics of on-demand Mobility and our growth bets can sustain double-digit growth for multiple years while creating more opportunities for drivers. On low-cost, we've begun to test a reimagined Shared Rides product with a focus on safety. Uber Reserve is a great expansion of our category from on-demand to advanced booking and is now live in 68 countries and is already tracking well ahead of our expectations. We're bringing more traditional street-hail modes like taxis and motorbikes onto Uber, allowing us to expand into new geographies, offer another choice to riders and generate more demand for drivers. On Enterprise, we've begun to roll out an employee shuttle product using Uber's tech that our B2B sales team can plug into our corporate discussions. It's a very cool product; it's already rolled out for Uber. And our geographic expansion continues with growth markets like Germany and Spain showing real momentum and the bookings already 40% larger than they were in October 2019. It's important to note that we've been investing in these growth opportunities for years in some cases. So we are not running here from a standing start. Our Delivery business is even less penetrated and although there will be some moderation in growth compared to the last 18 months, we expect continued strong growth in the years ahead from both our core restaurant Delivery business and our emerging New Verticals business. As cities reopen, we're seeing evidence that Delivery complements dine-in, as third-party food Delivery has continued to grow even as seated dining trends have fully recovered to 2019 levels. As the largest Food Delivery platform outside of China, with the leading position in seven of our top countries and a second position in virtually all the rest, we believe that we are best positioned to tap into this opportunity. Outside Food Delivery, we're increasingly tapping into consumers' growing appetite for the on-demand delivery of everything. Today, we're focused on addressing grocery, convenience and alcohol through our marketplace, bolstered by the addition of Cornershop and most recently Drizly to the Uber platform. In addition, with Uber Direct, we're working with retailers to fulfill demand from their own channels in a white-label product that uses our Delivery tech. All of our consumer initiatives will be underpinned by our membership program. We built a good foundation with Uber Pass and Eats Pass, and recently announced a strong partnership with Hulu and Aeroplan, while further deepening our engagement with American Express. Our team has been hard at work on the next evolution of our membership plan and stay tuned for more news on that in the coming months. Lastly, with Freight. We see a massive opportunity to disrupt the freight brokerage industry with our technology, which now connects more than 1 million carriers to shippers. This year, we've seen a record number of newly authorized carriers entering the market of 3x versus the end of 2020, as more drivers are choosing to become owner-operators. As one of the leading choices for these new carriers, Freight's total carrier base has grown almost 50% over last year. We're also looking forward to closing our acquisition of Transplace in Q4 as we move towards a vision of connecting first, mid and last-mile logistics across the Uber platform. It was a great quarter, and one that should put to rest the many questions we've gotten, not always unfairly, about whether the unit economics of this business work. The answer is a resounding yes. But as I've said to the team, now the real work begins. Looking ahead, as we've done in the past, we'll continue to make investments that will set us up to succeed in the next frontiers of opportunity and deliver exceptional value to all of our stakeholders. Now, over to Nelson.

Nelson Chai, CFO

Thanks, Dara. We've consistently noted throughout the year that H1 would be a period of investing for recovery and growth, after which, we would demonstrate strong operating leverage in H2. In Q3, we delivered on our commitment to turn adjusted EBITDA profitable for the end of 2021. Our Mobility business returned to healthy adjusted EBITDA margins despite the significant ongoing headwinds of the pandemic, while Delivery approached breakeven. Across our markets, we continue to see very healthy profitability trends that bolster our confidence in the long-term earnings potential for our business. For Mobility, 18 of our top 20 markets were adjusted EBITDA profitable. In the US and Canada, our adjusted EBITDA margins expanded to more than 6% of gross bookings. And importantly, 4 of our top 10 markets were operating above 10% EBITDA margins. For Delivery, our international and US and Canada businesses were both operating near breakeven in Q3. In addition, the core Uber Eats restaurant delivery business was adjusted EBITDA profitable during the quarter, and we reinvested all of that profitability and more to build the foundation for our New Verticals business. We expect to continue to reinvest the vast majority of Uber Eats profits into New Verticals expansion in Q4 as well. We are confident that we will see strong returns on these investments over time. It is important to emphasize the strong execution that underpins these results. Several transitory headwinds continue to impact our business, including Food Delivery commission caps in the US and Canada, incremental costs of worker classification in the UK, and higher than normal driver incentives spend in some markets. For context, Food Delivery commission caps and UK worker costs together represented $150 million to $200 million drag to Q3 EBITDA. Turning to our balance sheet and liquidity position, we continue to maintain a strong liquidity position ending the quarter with $6.5 billion in cash and cash equivalents and our equity stakes were marked at $13.1 billion. Given the significant movement of Didi's stock from June 30 to September 30, we marked down the value of our Didi stake by $3.2 billion. Conversely, we benefited from the monetization of our Yandex Taxi stake and we marked the value of our stakes in Zomato, Aurora and Joby as these companies reached liquidity milestones. The net effect of these moves was a $2 billion headwind to our GAAP net income. It's the nature of holding large equity stakes on our balance sheet that our GAAP net income may continue to see swings from quarter-to-quarter. As we have said previously, we are not a fund manager, and we will monetize the purely financial stakes at the appropriate time while continuing to hold more strategic stakes for the long run. 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 Q4 outlook. After a relatively soft summer, we began to make strong progress in the fall as markets around the world began to open again. Mobility gross bookings crossed a $44 billion annual run rate in October with gross bookings up 14% month-over-month and over 85% recovered versus October of 2019. EMEA and LatAm remained near full recovery on the gross bookings basis versus October 2019, while US, Canada and APAC posted solid improvements through the month. Delivery gross bookings crossed the $53 billion annual run rate in October, with gross bookings up 9% month-over-month, up 44% year-over-year and up over 220% versus October of 2019. We continue to expect moderation in Delivery year-over-year growth rates from the reopening, although Delivery continues to demonstrate healthy trend lines across most markets and retention for our consumer cohorts remained strong. With that context for Q4, we expect total company gross bookings to be between $25 billion and $26 billion, representing a year-over-year growth of 46% to 52%. And we expect total company adjusted EBITDA to be a profit between $25 million and $75 million. Note that this guidance includes contributions from Drizly and projected contributions from Transplace which we expect to close in Q4, and headwinds from FX and the net effect of a relatively immaterial impact to total company gross bookings and adjusted EBITDA. With that, let's open it up for questions.

Operator, Operator

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

Brian Nowak, Analyst, Morgan Stanley

Thanks for taking my questions. I have two. The first one, Dara curious just to hear about what you learned about pricing elasticity on rideshare sort of throughout the pandemic and the recovery and pricing and how should we think about the rides' incremental margin potential as we sort of go forward and you sort of balance profitability with those five key areas of investment? Then the second one, sounds like there's an update to Uber Pass coming, did any numbers at all, you can help us sort of understand where you are now within size, what type of uptick do you see in volume or frequency or stickiness as any stats on Uber Pass right now? Thanks.

Dara Khosrowshahi, CEO

Yeah, absolutely, Brian. So I think as far as pricing goes, this has been, to some extent, a giant pricing experiment that no one wanted to get into. But we're seeing the value of our products show through and even with prices being on average in the US, for example, 20% up year-on-year, we're seeing that as cities reopen, people start to use the product, and they use the product a lot. In terms of use cases, weekend is actually now greater than what it was pre-pandemic. And airports, obviously, because travel there is coming back fast. But every single use case is coming back as expected, there are no surprises. And I think it shows the pricing power of our service and the fact that it's an everyday need and part of both urban and suburban life as well. We do think that based on the supply trends that we've seen—and supply trends are definitely getting better—that pricing will ease a bit from the up 20% in Q4. But I think that'll result in even healthier trip volume as well.

Nelson Chai, CFO

And Brian, the only thing I want to jump in there is that, as you know, because we get a commission on that as pricing increases, it's been beneficial. But I think over time the long-term thing is just making sure we have health in our marketplace.

Dara Khosrowshahi, CEO

And I think as far as Uber Pass goes, I don't want to take the thunder away from the team who's done a bunch of work. Membership now we have over 6 million members globally, it accounts for more than 20% of our gross bookings, we think all of those numbers can increase pretty significantly. We continue to see really good engagement from members on the Eats side—Eats members, their trips per month increased by over 50% compared to non-members. Even basket sizes are higher; basket sizes are up versus non-members by an average of 10%. When you look at the potential of membership, because we are launching in tons of markets all over, I would point to one market, Taiwan, where members account for greater than 50% of gross bookings. So we absolutely believe we can get there. Members now in Taiwan are eating with us 15 times per month, which is 3x non-members. So that's the kind of engagement that you can start getting with a service that becomes an everyday part of your use case. We're just scratching the surface here. We're very, very early in our development. Remember that we have the best membership content than anyone has, because our membership will offer not only food, not only grocery and alcohol, but also Mobility as well. It's a structural advantage that others just don't have access to and one that we're going to press.

Brian Nowak, Analyst, Morgan Stanley

Great. Thanks, Dara. Thanks, Nelson.

Operator, Operator

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

Eric Sheridan, Analyst, Goldman Sachs

Thanks so much for taking the question. Maybe following up on the point you made answering Brian's question. Can we just get a better sense of what you're seeing early days in terms of the opportunity set versus the addressable market in non-Food Delivery in the US and how we should be thinking about the sizing and cadence of those investments going forward when you measure them against the opportunity? Thanks so much.

Dara Khosrowshahi, CEO

Yeah, absolutely. So I think as far as non-food goes, online grocery delivery clearly has been a very, very growth area and industry. Certainly the pandemic took it a very big jump. But when you look at online grocery penetration, it's still less than 5% of the overall grocery market versus food which often is more than 10% penetrated. So the penetration of grocery is very low relative to food. I'd say our opportunity is actually—you know, we have a big incumbent in the US that is a tough competitor and we are adding content in the US at a really strong pace in terms of partnerships. But outside of the US, there isn't an incumbent out there. We think that we have a very good chance of being the non-food leader outside of the US and in the US because of the power of the platform, we can over a long period of time flip our members from eating with us and moving with us to getting grocery delivered with us as well. So we think it's a huge opportunity; these are multibillion/trillion dollar TAMs and because of our brand, our ubiquitous presence around the globe, and our membership product, we think we can penetrate this opportunity with much less capital than anyone else.

Operator, Operator

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

Ross Sandler, Analyst, Barclays

Only two questions here. Hey, guys. The Halloween comment's pretty interesting. That's historically one of the biggest, if not the biggest Friday weekend of the year. So, I guess, where do you stand on the rides MAPCs versus 2019? And is it just the frequency lower for some of these work and commute day parts? Could you talk about how far off those day parts or those trips are from 2019 peak levels? And then the second question is, if we step back and kind of look at the original bull case for ride hailing, it was that prices would come down to low enough level where consumers start to shift trips over to ride hail and away from public transportation or car ownership. And right now these prices are playing out in a way that's harder to see that happening. So how do we get back to that? And if we do see much lower prices a few years out, how confident are you that you can maintain the strong level of unit economics you're seeing right now? Thanks a lot.

Dara Khosrowshahi, CEO

Yeah, absolutely. So I think generally MAPCs now in the US are up over 60% on a year-on-year basis. MAPCs are definitely coming back, frequencies are coming back and volume is coming back year-on-year. You are correct that if you look at our trends versus pre-pandemic, gross bookings are recovered at a higher level than trips. The MAPC trends mirror more our trip trends than our gross bookings trends. In terms of pricing and the shift over from other forms of transportation, one point I'll make is that we have come back from the pandemic faster than almost any other mode of transportation, despite higher pricing, which supports the earlier comment about the utility of our product and our pricing power. Now, we don't necessarily want higher pricing to be a permanent fixture, but with the increased cost of labor and inflation and the increased cost of everything, I do think that prices are going to be up on a year-on-year basis. As a marketplace, we get to take up that. So our unit economics you could argue will be improved. We are then actively investing in other products that are structurally lower cost. We are launching an Uber Shared Pool product. We have been investing for years in a high capacity product, which is looking more and more attractive on a unit economic basis where that can bring the price significantly lower. We think that's a product we can sell to enterprise as well. On a global basis, we're making investments in two-wheelers and three-wheelers; for example, in Brazil, two-wheelers are a homerun hit because they provide an alternative at a lower cost and they don't require a car purchase. So I think the push to lower cost is going to be more of a structural product push, including our offering transit in our app. Inflation is hitting every product and transportation is one of those products.

Nelson Chai, CFO

The only thing I want to add is, because you did ask about the times of day. On a global basis, as you heard in our comments, we're about 85% recovered in October. During the workday we're over 95% recovered. On commute we're over 90% recovered but we really haven't seen a comeback yet for some commute patterns. Airports continue to lag at about 67% recovered. We are seeing the recovery, but certain times of day and party and fun times are under 80% recovered as well.

Ross Sandler, Analyst, Barclays

Thank you.

Operator, Operator

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

Michael McGovern, Analyst, Bank of America (on for Justin Post)

Hey, thanks for taking our question. This is Mike on for Justin. We want to ask about the category share trends that you're seeing in Delivery, especially in the US, maybe in October and your willingness to potentially invest in gaining category share. And then quick second question, we want to ask about the advertising business and the impact that that's had on the Delivery take rate. I think you called out 400 basis point benefit in certain Delivery markets for the take rates. I was wondering does that include advertising or could you dig into that metric a little bit? Thank you.

Dara Khosrowshahi, CEO

Yeah, I'll talk category trends, and then Nelson can talk about ads. As far as category trends go, we're much more focused internally on building our business in the US. It's a great output that we're able to improve profitability significantly in the US and globally. We gained category in the US, which is terrific; we're seeing strong signals in New York, for example, where we're actually calling in front. Q4 opportunity for us is, now that we have much better supply both on Mobility and Delivery in the US, we may lean in a little bit to build up better demand in Q4. So that's contemplated in the guidance that we gave already and will be opportunistic. This is a big category; there are going to be multiple winners. We're happy about our share progress; it's pretty constructive and hopefully will continue into Q4. It's about building a big business, not just stealing share from another player.

Nelson Chai, CFO

In terms of ads, in Q2 we talked about the fact that our original goal was to exit this year at about a $100 million run rate and be in 2022 at $300 million. Our run rate in Q3 is well over that, so we're very confident we'll exceed both of those targets; the business continues to grow. On your comment about take rates, there's also a change in some fees that now come out and become part of revenue versus below the line, and that does have some impact. It is spelled out in our release.

Dara Khosrowshahi, CEO

I think just the other really cool thing about our ad platform is that we're also building an ad product in our Mobility app. It's a very big audience—our Mobility MAPCs are actually bigger than our Delivery MAPCs—and it's a differentiated offering we can provide to partners who want both delivery and store traffic. We have a premium, targeted audience to offer advertisers in a differentiated product.

Operator, Operator

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

Mark Mahaney, Analyst, Evercore ISI

Okay, thanks. Two things. One, comment on the synergies between the two businesses Delivery and Mobility both on the driver side and on the consumer side, any update there? And then just on the driver incentives, I think that peak quarter was Q2—just talk about where those driver incentives were Q2 to Q3? And is the outlook that you're at a point now where those will steadily continue to decline under most market circumstances? Thanks a lot.

Nelson Chai, CFO

Let me take the second question first. This is really about take rate. As you think about the US, we did lean in, which was evident in Q2. In Q4 you'll actually see take rate improve in the US, because we will be able to continue to taper some driver incentives. That being said, outside the US, international take rates are seasonally lower in Q4 due to weather and we are leaning in a bit more in driver supply, particularly in places like India as markets recover. The net of all that will be a mix shift and you might see some degradation at the total company level on the top line. But in the US you should see improvement in our US take rate.

Dara Khosrowshahi, CEO

In terms of synergy, there's user-side and earner-side synergy, and the synergy continues to improve. It's not a one-time thing; we're constantly optimizing. About 50% of, for example, US and UK gross bookings come from cross-platform users; that number is closer to 45% globally and generally increasing. In the US, Mobility continues to be a significant customer acquisition tool for Eats. A quarter of US first-time eaters are coming from our rides business, which is more new users than we get from major paid channels combined. For prospective users that's significant—it's free. The numbers are increasing. On the other side, 20% of US Mobility first trips are coming from Eaters; in the UK that number is 40%. So we have powerful cross-pollination of users. On the driver side, about a third of our new driver signups now are driving both people and food. Overall about 25% of our drivers in the US drive both people and food; that number was in the teens pre-pandemic. New drivers are electing to do both at a higher rate. This iteration of product improvements is pushing both services, on both demand and supply sides. We will see improved results compounding on top and improved results which will differentiate us over time.

Mark Mahaney, Analyst, Evercore ISI

Thanks, Dara. Thanks, Nelson.

Operator, Operator

Your next question comes from the line of Brent Thill with Jefferies. Your line is open.

John Byun, Analyst, Jefferies (on for Brent Thill)

Hi, great, thanks very much. I had two questions. One is could you maybe give an update on the operational integration of Drizly, Postmates, Cornershop—acquisitions and partnerships, geographic availability, how far along you are? And second, Delivery bookings were flat to down a little bit quarter-on-quarter; there was some commentary in the release, but is there anything else you could share as to why they might be seasonal or impacted by reopening? Thank you.

Dara Khosrowshahi, CEO

I think Delivery was a combination of seasonality and reopening. For example, in France we did see Delivery bookings come down as people ate out more during the summer reopening. In October Delivery bookings were up month-on-month and we think the momentum in October will continue into Q4. As far as integrations, every integration is different. Postmates is now fully integrated into the Uber stack. On the front end it's a distinctive brand and product; on the back end it's running on the same machinery, which has allowed us to get some great synergies—Postmates for the quarter was EBITDA positive as a result. Cornershop has a huge presence in Latin America; it's like the Instacart of LatAm. We're going to keep innovating on the Cornershop app itself and continue to build grocery features in the Eats app and in the Delivery ecosystem and over time bring Eats and Cornershop together. Cornershop standalone is a great business and we want to keep growing it. Drizly will remain relatively standalone; Drizly is in the very early stages of development and has a ton of growth ahead. That team will operate largely standalone but will benefit from front-end cross-promotion in our Eats app.

Nelson Chai, CFO

When we made the Postmates acquisition, we talked about synergies, and we've actually realized the synergies we mentioned at the time of acquisition.

Dara Khosrowshahi, CEO

Great job to the team on the integration side.

Nelson Chai, CFO

We can take the next question.

Operator, Operator

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

Edward Yruma, Analyst, KeyBanc Capital

Hey, guys, thanks for taking the question. You indicated some context behind the headwinds due to fee caps and the UK worker rules. In the medium term, do you need to seek regulatory relief to improve those? Or do you think there are pricing mechanisms or other ways for you to alleviate some of the pressure from those changes? Thank you.

Dara Khosrowshahi, CEO

So I think on the regulatory front, we're certainly not counting on the regulatory environment changing in our go-forward numbers for Q4 or next year. We think that fee caps are poor regulation; they force us to increase costs to eaters and don't make sense from a regulatory standpoint. We will challenge them appropriately, but as far as our plans go, we're not counting on regulatory relief.

Operator, Operator

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

Deepak Mathivanan, Analyst, Wolfe Research

Great, thanks for taking the question. You noted that EMEA and LatAm have almost fully recovered on Mobility business in October. Can you give some color on the marketplace dynamics in these regions between pricing and volumes? Also, not all the use cases in these regions have probably fully recovered, but where do you see the incremental usage up in these regions? And second, can you give some additional color on what we should expect on EBITDA trends between the two businesses separately like rideshare in 4Q, noting some seasonality in Q4 take rates? How should we think about EBITDA? Thank you.

Nelson Chai, CFO

I'll handle the EBITDA question first and Dara can cover the regional marketplace dynamics. In terms of EBITDA, the Mobility business had a great quarter from a bottom-line perspective. You heard in my remarks that in places like the US and Canada we achieved over 6% EBITDA as a percent of gross bookings and 4 of our top 10 marketplaces are above 10%. Delivery went from a significant loss in Q2 to almost close to breakeven in Q3. Our core Uber Eats restaurant delivery business was profitable in Q3 and we reinvested that profitability into New Verticals, which will continue. In Q4 you should expect that to continue. We try to be prudent as the pandemic can be hard to predict, but the guidance we provided and the October momentum are reflected in our outlook.

Dara Khosrowshahi, CEO

As far as differences between Europe and LatAm versus the US: Europe’s reopening pace depends on vaccinations; generally Europe has opened up faster than the US. In Europe driver supply is more inelastic and a higher percentage of drivers tend to drive more hours—during the pandemic supply didn't drop as much, so when demand came back there was more existing supply. Growing supply beyond pre-pandemic levels in Europe will take more time because markets tend to be more regulated. Airports haven't come back as fast in Europe as in the US; we expect normalization over time. In LatAm, markets have been very strong; the lows haven't been as low and highs haven't been as high compared to some Western markets. Mexico's reopening has been a bit slower than elsewhere. Airport trips in LatAm have been coming back at decent rates and demand in LatAm markets is very strong. We will look to grow supply and driver activations in a constructive way.

Balaji Krishnamurthy, Head of Investor Relations

Operator, we can take the final question.

Operator, Operator

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

John Blackledge, Analyst, Cowen

Great, thanks. Two questions. First, given the improvements in driver supply in the quarter, when do you think Uber will be at appropriate driver supply to meet the rising Mobility demand? And what about the driver utilization gains that you discussed earlier—will you expect to hold on to those high utilization levels as things return to normal? And then just a quick one on the New Delivery Verticals as a percentage of Delivery GBs in 3Q? And how should that mix trend over time? Thank you.

Dara Khosrowshahi, CEO

I don't think we're ever going to have enough drivers; we want to keep growing our driver supply base. Growing our relationship with drivers and making Uber a great flexible platform to earn on is a strategic imperative. As we grow use cases—Pool, high-capacity products, enterprise products, two-wheelers and three-wheelers—we'll attract a broader segment of earners along with Delivery. We're learning through experimentation and data what situations encourage drivers to deliver food and when couriers can move people as well. We'll see more earners on the platform for years to come. We are getting better at promoting cross-platform usage, which will lead to higher yield realization by time of day and driver utilization—structural advantages versus other players. We want to be the one-stop shop for earners who keep returning. New Verticals as a percentage of Delivery bookings is in the 6% to 7% range at this point. We want to break into double-digits next year and in the years beyond. We are very early in the growth curve and in investment mode, but prudent. We have the advantage of audience and cross-promotion from Rides to Eats and Eats to New Verticals.

John Blackledge, Analyst, Cowen

Thank you.

Dara Khosrowshahi, CEO

I think that is it. Thank you, everyone for joining us on the call. Huge thank you to Team Uber in getting to EBITDA profitability and I'm addressing the team: you've heard it from me many, many times. This is just one step in the growth and development of our company, but a big thank you to the team.

Operator, Operator

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