Uber Technologies, Inc. (UBER) Earnings Call Transcript & Summary

All right. Good morning, everyone. We're thrilled for our next keynote here at Day 3 at the TMT Conference. We have Dara from Uber here. So thank you so much, Dara.

Thanks for having me.

It's great. Before we get started, let me do all the disclosures and the disclaimers. All important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures. And they're also available at the registration desk. Some of the statements made today by Uber may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Uber undertakes no obligation to update them. Please refer to Uber's Form 10-K for a discussion of the risk factors that may affect actual results. We're thrilled to have Dara here. Dara is the CEO. He's on the Board of Uber. He's been there since September of 2017. Prior to 2017, Dara served as the President and CEO of Expedia from 2005 through 2017. So you've been around for a long time. We're thrilled to have you here.

Thank you.

So this is year 3. The company has transformed a lot. There's been a lot of changes in the company in the industry, et cetera. I guess as you're sitting here now, looking out to 2020 and to 2021, talk to us about 1 or 2 of the most important priorities for you and the company. And what aspects do you think is still most misunderstood by Wall Street?

Yes. So I think when -- year 3 is a good year in that we feel that the environment for us now is an environment that is relatively stable based on where we were, and it's an environment where we can really focus on innovation and execution. And when I think about that, I put it in the pockets of product, growth and profitability. On the product side, really, the focus for us is we want to be the safest transportation platform on the planet. We have made substantial investments in safety as it relates to the product, as it relates to the background checks for our drivers. We released a safety report, something that no other company has done, some of our competitors have said that they would do. They still haven't pulled through on that. So I think that the investments that we made on the safety side have been substantial. And I think as we continue to execute and innovate here relentlessly, we will be recognized as the safest transportation platform on Earth. And we think that's a great place to stand. We continue to innovate on the driver's side, on the earner's side, to make sure that we're a platform that provides complete flexibility in earnings, but we continue to be a platform that's friendly, provides lots of information and is a great place to earn as well. And then, increasingly, we're thinking about our cities. How do we share information, data with cities so that our growth is responsible growth, it's environmentally friendly, and it's also congestion friendly as well. And you see some of those efforts in transit, for example, are introducing our transit product into the app as well, which our -- the cities in which we operate transit are really, really thrilled with. So that's on the product side. And there's so much product innovation going forward that we're really excited about. Second for us is growth. Our Rides business, you see the enterprise side of the business is incredibly promising, really scaling. We love our leadership there. The segmentation of our Rides business, so that we're not just focused on bookings growth, but we're also focused on revenue growth and margin growth, you see that with our Comfort product going forward as well. And then our Eats business is growing at big scale, 70 plus percent. You've got bets that we're making on Freight and some other parts of the business that we're really excited about. And then, finally, and very importantly, the profitability side. We want to make sure that this growth is responsible not only in terms of society, but also it's responsible in terms of investors. And we have committed to a Q4 profitability on an EBITDA basis goal in 2020. And we're very confident that we're going to hit that goal.

Yes. That's helpful. There's a lot I want to drill into, but there's one other sort of high-level topic that does come up with investors in that, since the IPO, there's been some managerial changes and sort of some changes to the senior team at the company. From an external perspective, some investors say, that's a sign of uncertainty, that change in direction. Why is that happening? Maybe from your seat, talk to us about why the changes that have happened have occurred. And how have they actually impacted the way you think about the growth or the way the business is being operated?

Well, listen, I think change occurred because change was needed. So when you look at the corporate functions of the company, there has been significant change. Nelson Chai, Tony West, Nikki and some of the other folks that we have are first-rate folks who we really needed to bring in there to upscale and upsize the corporate functions of the company to the level that they deserve to be. And I think that, that executive team is second to none. On the operating side, when you look at our Rides leadership, Andrew Macdonald has been in that business for 7-plus years and is responsible for that business. Pierre, who now is running the Eats business, there's a transition from Jason Droege, who was -- who built Eats from 0 to 1 in a way that I think was second to none. And now what we're able to do is transition the Eats business to Pierre who has been at the Rides business for almost 8 years, understands everything about Uber and how you scale. And we've been pretty clear in terms of our go-forward plan, which is the Eats business is going to follow the Rides playbook. Now we have an executive running Eats who took a huge part in writing the Rides playbook. So we think the continuity that we see with our operating executives, Jill Hazelbaker, who runs comms and policies and marketing as well, these are true Uber veterans. And what you've got is a combination of new blood on the corporate side but then operating leadership who understands the Uber way and has demonstrated the capabilities to scale and innovate going forward.

Understood. No, it makes -- change is needed sometimes, right?

Yes. I think change is needed. But on the operating side, like we have long-running operating executives who've been with us for a long time and who I anticipate are going to be with us for a long time going forward.

Yes. In the near term, we are going through some really unfortunate situation with the coronavirus. So just sort of wanted to ask you about that. So what type of impact have you seen on the business to date? And then I think there's sort of a debate around potential behavior change over the long term from the situation. So maybe the first question is impact to date, and then how do you think about long-term changes to the business from this?

Yes. As far as the impact to date, first of all, we are completely focused on the operational side of the business, making sure that our riders are safe, our drivers are safe, they understand what are best practices to make sure you stay safe, our employees are taken care of, our partners are taken care of. So the first focus is on the business, the product, the operations, the technology, et cetera. As it relates to the effect of corona on our business, frankly, historically, there has been very little effect. The geographies where you have seen significant effects societally from corona account for about 1% of our bookings on a global basis. So that's certainly something that is there, but it's not material for the company overall. The airport side of the business -- I think the first shock that you've heard of is travel. The airport side of the business is about 15% of gross bookings. It's a little bit higher margin than the rest of the business, but I wouldn't say significantly so. And as expected, our airports business has slowed down a little bit relative to the balance of the business overall. But again, nothing that is alarming in any way, shape or form and nothing that we can't adjust to. Keep in mind, I was in the travel sector, so I understand how shocks affect the travel sector. This is different for us, right? We are a technology company. One part of our business, our Rides business, certainly, to the extent that people stop leaving the house, will take a hit. One part of our business, Eats will probably be, actually, benefited. We've got a very diverse geographic footprint. We have an incredible balance sheet. 2/3 of our costs are variable. So we have a lot of levers to pull to adjust to areas of strength of the business that we can lean into or areas where we see some weakness as a result of corona where we can kind of lean back from. So when I look at the portfolio as a whole, I am certainly hopeful that corona does not turn to be -- turn out to be a crisis. If it does turn out to be a crisis, I think that we, as a company, are in a far better position than any other company in our space. I think we, as a management team, already have all of our hands on -- are a believer and are ready to respond. 2/3 of our costs are variable, so the response can be actually significant. And at least from what we've seen is that the bounce back can be pretty quick. And ours is not a business that depends on -- the vast majority of the business doesn't depend on supply chains, et cetera. Our ability to pull back and our ability to push forward and organize very quickly to push forward is substantial. When Vancouver brought ridesharing -- introduced ridesharing, we were ready to go the next morning 8 a.m., right? Like we mobilized. We moved very quickly as a company. It's an incredible kind of rally culture, and we're very confident of our ability to operate effectively in great environments and not so great environments.

Yes. That 2/3 of the cost being variable is helpful. And I know it's hard to predict how the situation is going to evolve. But as you sit here today, you mentioned sort of a fourth quarter breakeven target. As you sit here today, do you see this coronavirus situation potentially impacting that target? Are you still on track for 4Q?

Based on everything that we've seen, I don't believe that I sit today more comfortable about our fourth quarter target than I did when I first made that statement. The business is -- from an operational basis, the execution that we have had to make -- that we will have to make in order to hit our Q4 target in terms of revenue margins, in terms of sales and marketing efficiencies, driving incentive efficiencies, the efficiency of our operations and driving efficiencies on overhead, cost of sales, payment costs, et cetera, the team is executing really, really well. Every pattern that we've seen is that corona will -- if it hits, it hits, but then there will be a bounce back. So this point, we're quite confident of our Q4 profitability target.

Great. Great. One of the -- you mentioned how growth is one of the key vectors you're focused on. When we sort of look at the addressable market, you're so underpenetrated, 1% to 2% of the population, 1% to 2% of the miles. However you want to cut it, there's a lot of greenfield out there to go after. Yet, in some instances, the business has slowed down. The Rides business has slowed down. So maybe talk to us about 1 or 2 of the keys that you see that you need to execute on to, one, bring more riders onto the platform in the U.S. and abroad; and two, really increase that frequency of ride per rider.

Yes. So I think when we look at the growth of the Rides business, first of all, you should have the perspective that this is a business where if I compare Q4 this last year to the year before, this is a business that has almost tripled its segment EBITDA margins, right? We're almost at 24%. We were 1/3 of that a year ago. So anytime a company significantly increases margins on that basis, you are going to have to make trade-offs on what we consider unhealthy growth. Kind of empty calories, but those calories, they're still calories, right? So I think some perspective as far as the growth rate of the Rides business, we're going to continue increasing our Rides business EBITDA margins pretty significantly going into Q4 of 2020 as well. But then after that, I think that the margin increases can be a little more kind of modulated, which will allow us to take kind of the next incremental investment into a balance of efficiency but also growth. Again, for perspective, between Q4 of this last year and Q4 of the year before, our incremental EBITDA margins were close to 80%. We're dropping $0.80 for every dollar of growth. That's really significant. And there's always a growth trade-off. Anyone who tells you there's 0 trade-off between profitability and growth probably doesn't know their business well enough, all right? That said, on the growth side of our Rides business, there are a number of vectors that we look at. One is there are still countries where the regulatory framework has not been healthy or approach has not been healthy historically, and we're changing that. These are Germany, Spain, Argentina, Japan, et cetera. These are big markets with huge potential that we're just getting started with and can be very significant growth vectors for us going forward. Second for us is enterprise business. We still believe that we are underpenetrated in enterprise, our Uber for Business business. Our Uber for Health (sic) [ Uber Health ] business is growing significantly faster than it was 2 years ago, and it's just scaling, and we actually are adding salespeople because the core product is getting much better than it was. We think there's a significant amount of growth to come from segmentation, and you've seen some examples of that in Uber Comfort, for example, where instead of treating everyone the same through segmentation as far as product goes and rewards programs, Uber Cash, et cetera, we are customizing our product and personalizing our product because we have so much liquidity in the market. It's something that we're capable of doing, and our competitors are not because they just don't have the liquidity to segment the way that we're doing. That can be both top line growth and can be margin growth as well. And then, certainly, last but not least is the low-cost product. 2-wheelers and 3-wheelers are growing in triple digits around the world. They're not as big a deal in the U.S., but they certainly are outside the U.S., and a big part of our business is outside of the U.S. as well. And then our pool business and high-capacity vehicle business, these are businesses where we can bring our matching and routing technology to bear and match more efficiently than anyone else. But the way that we want to grow in those businesses is not through pricing, but actually by building a better product and through efficiency. And so what you're going to see is an annualization factor where we bring pricing to match the efficiency that we're creating. That's going to create a negative in terms of unit growth for that business generally, but then once we get through that, which will be Q3, Q4, that business is going to continue to grow, but in the right way based on increasing matching efficiency. And we think our matching technology is better than anyone else's out there.

That's helpful because you've talked about in the past how you're trying to have fewer empty calories when it comes to the growth. And there's a lot of moving pieces behind that, that Rides bookings number, in a given quarter, in a given year. We've done work trying to break apart the rides of pooling and privates and business in Careem. We still get to an outcome where it looks like the Rides business can still grow high teens, maybe even low 20s this year from a bookings perspective. One, just your reaction to that. And then two, are there any other factors that we should all think about from an external perspective that really impact the Rides trips and/or bookings?

Yes. I think we're -- we believe that the Rides business can grow at those rates and have margins that are increasingly constructive going forward. That's certainly the goal of the business, and we believe it's a goal that's attainable. And I do think that when you take the mix shift that we're seeing in terms of our shared ride business into account, you have a UberX, a single ride business, that's being increasingly segmented that's growing at a really, really healthy rate similar to what you talked about.

Okay. That's helpful. On the Rides profitability point, you -- the profitability is improving. You've laid out some nice long-term margin targets for each of the 2 segments now, which is always helpful. Just as we sort of think about getting to that long-term margin target of 45% on the Rides, walk us down the P&L maybe of a high level of sort of the biggest sources of leverage between price or each of the individual OpEx pieces. And then I guess, is there a difference geographically between the U.S. and the international business from a margin perspective now or long term?

Yes. Sure. If I look at the long-term margins, there are 3 factors: one is our take rate; one is sales and marketing efficiency; and the last is OpEx and OpEx costs as a percentage of revenue. We do believe we have some take rate room in the business both in terms of incentive optimization and maximization as well as just pricing, and we have been pulling that lever to some extent, and we think we'll have the capability of pulling that lever going forward. We think -- we believe that there is substantial efficiency to be had on the marketing side and the efficiency side, both in terms of the markets themselves getting more healthy and the markets rationalizing and ourselves in terms of the technology that we built. The technology for us, historically, has been more about driving top line growth at scale and big volumes and driving liquidity in the marketplace. As we tune that technology to drive growth, but more revenue growth and billings growth versus just trip growth, with efficiency in mind, we think we have significant opportunities on the sales and marketing side to decrease sales and marketing costs as a percentage of revenue as well. And then on the OpEx side, cost of sales or contact rates for our Rides business or Eats business are coming down, and the outcomes are better, right? You -- and it's about going to the source of understanding what went wrong and fixing what went wrong at the source instead of having someone call and are making it right after the fact. So contact rates are consistently coming down. Our data center costs, we're optimizing. Our payment fee costs with initiatives like Uber Cash, payment costs are coming down as a percentage of revenue. And then OpEx as well is coming down, insurance cost as a percentage of revenue. So across the P&L on almost every single operating expense line, we have teams that are executing on this, and this is not new. They've been executing for 12 to 18 months. We have a track record. We're very confident. We don't need to do anything new here. It's just continuing to execute on a path that we've been executing on for a while. And using the power of our technology and our platform to automate tasks that were unautomated, we'll do it better, and we'll do it cheaper.

And then in the U.S. versus the non-U.S., is there anything structurally that should make the margin...

No. I think this is a business that works everywhere. With the Rides business, we are #1 in every market that we operate in. There are some markets -- listen, the India margins are lower than our margins elsewhere, but the margins that we see in the U.S. are pretty similar to the margins that we see outside of the U.S. And we've got a leadership position at every market that we compete with, and we think our capabilities are better. Our tech is better. Our matching technology is better. And ultimately, that creates an environment where we can continue to grow the business. We can build technology to go after the low-cost segment, and we can improve margins and have superior margins and returns than any of the competitors that we see out there.

On the competitors, a couple on sort of the competition in U.S. and abroad. So first, in the U.S., I think on the most earnings conference call -- the most recent earnings conference call, you talked about how the -- your main competitor in the U.S. was using some more discounts and incentives to grow the business. Maybe talk about what you're seeing now in the U.S. from a competitive standpoint.

Yes. I mean we've got a competitor who's not profitable. And so at some point, that needs to change. And we're seeing a continuation. And again, this is not a surprise. Markets are rationalizing. We are part of that rationalization. And we see our competitors in the U.S. and abroad generally moving on the same path. So there's nothing that we see that worries us other than being on our toes and competing against a competitive set that is strong, that's innovative, that moves fast and are trying to beat us every day. But we love our position. Like, we are global. We've got scale. We're bigger than everyone else. We're the #1. We've got the Uber platform. We're moving customers from Rides to Eats and from Eats to bikes and scooters. We've got a loyalty program that has over 25 million customers. We've got a P&L that's just structurally more efficient than all of our competitors. And so when you put it all together, this is -- we are a business that's half Internet and half in the physical world. I think our operations in the physical world are second to none. And as it relates to the Internet, the global multiline platform players are the ones that win, and I think our business is going to be no exception.

Yes. A couple of questions on regulatory. When I first started doing work, I remember telling my boss that I'm going to need a lawyer on my team and there's no shortage of regulatory headlines...

If you want to borrow a lawyer, we've got some.

Let's get started in the U.S. and even kind of specifically in California. You made a series of product changes in California as well. And so maybe just from your 80-20 point of view, how do you think about sort of the 1, 2, 3 most likely scenarios for AB5 as we go over the course of the year? And how do each of those impact Uber's business?

Yes. So I think, first of all, if you step back from the law, because usually laws are based on desired improvements in society. And we think the better way -- listen, there's this old model, which is you're part-time and you have no protections or you're full-time and you have full protections. We think there's a better way. And technology is changing how people work, and it's less about the company that you work for than it is about the work. And so the solution that we're going after is a solution that gives our drivers the flexibility that they absolutely want. And 92% of drivers in the U.S. work less than 40 hours. So this is a pool of folks who does not want full-time work. So it provides them the flexibility but also gives them protections, minimum earnings, protections if something goes wrong, some health care, et cetera, that is expected in society and, frankly, we think, is the right thing. That is essentially the model that we're going after. It's a model that we're operating in, in a lot of countries other than the U.S. So we're hoping to get to achieve that model. We have changed our operating model in California to be compliant with the law to be very clear about our being a platform, and we think that's a good change. It is difficult operationally, but we -- and it has been difficult to pull off technologically. I don't think there's company that could have shifted the way that we did at the speed that we did, at the scale that we did. And I think the teams who did it are incredible, first of all. So we think we're in a good position from a legal standpoint. We are going out there. There's a ballot initiative in November where we think that the -- our voters can vote for the desired outcome, and we think our desired outcome makes a lot of sense. So we're quite confident of the ballot initiative and what the end will be there. And in the meantime, we continue to have dialogue with regulators with states so that we get to this better solution rather than law of being put in place based on how people work 10, 15 years ago.

Yes. Yes. That's helpful. And I think the follow-up on regulatory is always another market. And I guess in the last 24 hours, there's been some regulatory news or a ruling out of France. So first, I just wanted to ask you about how we should think about the French ruling. And then maybe just a bigger picture of it, as you look across the globe, is there any sort of commonality in what you're seeing in the pushback against Uber or against the business model where you're sort of able to say this is what we're encountering, and this is how we're addressing that main pushback?

Yes. I think if you step back, I'll answer the second question first, which is we are a hyper local business, not only in terms of the countries that we operate in but in the cities that we operate in. And we've been working with regulators for 7, 8 years, right, ever since we've been in existence. And it's a continued dialogue. And if there is a pattern, the pattern is that regulators, over a long period of time, are recognizing that Uber has a place in every single market that is bringing work, flexible work, to that market. And in general, we are becoming more and more regulated in a positive manner. We're being recognized, legalized, et cetera, in more and more countries. And if I have a map of the world, more reds are going to yellows and more yellows are going to green. Now that said, in every single market, different things are going to happen. So in France, for example, there was a ruling. It's a nonbinding ruling as far as precedent goes. It related to a single driver who drove on our platform in the past. I don't think that this driver has driven since 2017. And we believe that, actually, the driver would have earned more money had the driver been a full-time employee than driving on the platform as well. So the damages are questionable as well. So it's not a good thing, but it is a decision based on a single driver who's not on our platform, and we don't think it sets precedent the way that could be worrisome. And there's no class action out there. So we will deal with it. I do think that we are in constructive dialogue with the French government about this better way, which is providing drivers with an opportunity to earn flexibly with the protections that society expects and the protections that actually will make driving more attractive and hopefully will attract more drivers to the platform going forward.

That's helpful. I think the -- one of the topics, before I move over to Eats, has been there is a growing focus on ESG and the climate. And we did some work around London and the clean air fee where it looks like, by our math, because of arguments you made, you could convert almost all of the London fleet to EV with that fee within 4 years, which would be great for PR, my view. So I guess the 2 questions are: One, how often is climate coming up with each of these individual municipalities? And two, how do you think about sort of pushing climate to be a bigger part of Uber's initiative the next 3 to 4 years?

Yes. So climate is a part of every discussion. And it's both climate and it's also traffic and congestion and making sure that we're growing our business in a way that's climate friendly and congestion friendly as well. In London, for folks who are not aware, we've introduced a surcharge that goes into essentially a pool of capital that we then use to allow our drivers to upgrade from traditional cars to electric vehicles. We announced the deal with Nissan to provide those electric vehicles as well and essentially create that opportunity to convert the fleet in an affordable way because EV is still more expensive than gas-powered cars as well. We think that kind of a program -- and it matches exactly with what the London Mayor, Sadiq, wants to accomplish. We have committed to change over our fleet in 5 years in London. And we think that kind of a program is something that we can have a dialogue with other cities around the world. And as long as the category is essentially treated consistently, we think we're in a better position because we have actually made these kinds of investments and are having these dialogues because we are the leader in every market. Our fleet is -- has, we estimate, about 4 to 5x more hybrid or electric cars than the owned fleet around the world. So fleet is substantially more environmentally friendly. It is our job to make it from 5x more environmentally friendly to 10x to 15x. We think shared cars are incredibly, from an ESG standpoint, much more desirable than owned vehicles as well. And this is a dialogue that we'll continue to have. And then our investments in electric bikes and electric scooters, for example, are another way for you to get around the city, along with mass transit, that are environmentally friendly and congestion friendly as well. So we haven't done enough, and we're going to do a heck of a lot more.

All right. Moving to Eats and sort of some of the things that I imagine that Pierre is working on now. Your messaging on Eats the last couple of quarters has been very clear, focusing on the markets where you see a path for being #1 or #2. So I guess my couple of questions are: Number one, help us understand, how many markets are you currently #1 or #2 in? And then, two, when you're sort of working with Pierre now and making the decision to either pull back on a market or exit a market or double down and press to make sure that you lock in that position, what are sort of the individual KPIs or the factors you're evaluating internally?

Yes. So we are now #1 or #2 in the majority of the countries in which we operate and a significant majority of gross bookings in the portfolio, so to speak. So we like where we're going, and those trends are only improving. The trends in Uber Eats, to some extent, you've had private companies that have had infinite access to cheap capital, and that's changing. We have all the capital that we need. And we're confident in the way that Uber Eats is executing and the power of the platform essentially to allow Uber Eats to acquire customers and retain customers more effectively than any of the competitors out there. And you've seen us make some tough decisions. We pulled out of India, and we decide to merge with Zomato because we didn't think that the ROI needed to get to a #2 or #1 position in India was the kind of ROI that we could get in other parts of our business. So we will -- I think that as a company, we have already displayed the capital discipline in the Rides business, in the Eats business. And I think you will -- we -- you should continue to demand that of us, and we will deliver. And after the strategy of getting to #1 or #2 with our Eats business in essentially every single market that we operate in within 18 months, we're on track, and we're confident based on what we see.

And does that 4Q '20 breakeven target, does that incorporate already some potential exits of any Eats markets? Or is that not part of the...

The 4Q target is based on the portfolio that we had last year, essentially continuing the portfolio going forward. So it doesn't require any exits. Any exits that we make or any acquisitions that we make are going to be based on what's the right thing to do tomorrow. And will it be consistent with our Q4 targets? And again, everything is on track at this point.

Everyone should order Uber Eats for lunch. There's a stand out there.

Yes. Definitely. Anything you want.

That's right. But the U.S. food delivery industry, it's competitive.

It is. Very.

And it's as fast than anything that we've done work on where you have a long runway, penetration low, 4 big players. And it looks like, outside of a couple of markets, no one is really making a whole lot of money. That's what we think. And so we've seen rationalization happen in other markets from China to Korea to India to even kind of Europe, U.K. now. As you look at the U.S., do we need consolidation and really just rationalization down to fewer players to make this a profitable country?

So I guess if you see rationalization happen in every single other market, why would the U.S. be any different? The rationalization, we think, is going to happen. Every market rationalizes once capital discipline comes in. There's no question that capital discipline have come to the category, including ourselves, and we expect the U.S. to follow suit, economic supply here just as they do any place else in the world. So we think rationalization is happening, and we like our position. We're the #2 in the U.S. Our Rides business is incredibly strong. And I think we are just getting started in terms of using the power of the platform, the incredible user base that we have on the Rides side with our loyalty program, with our points program, subscriptions, et cetera, to continue to grow our Eats business, not only in the U.S. but outside the U.S., but do so in a rational manner and an ROI-positive manner.

You've mentioned the loyalty program and rewards. It's growing pretty fast. 25 million users...

Yes. It's not bad.

Yes. 25 million users in 8 months, it's like 25% of the global MAPCs that you report. And you and I have talked about this how in travel I'm almost an addict for my Starwood points, my United loyalty. So why would ride share be any different? That's some quick adoption. Talk to us about, one, how are people who are part of the Rewards program, how does their frequency or their overall profitability compare to non-Rewards users? And then, secondly, what are the keys to kind of take that from 25% of the user base to 50% the next couple of years?

Yes. So our Rewards program now, we -- some of that information's competitive, but you can expect that our Rewards program members are significantly more sticky. Higher retention, higher revenue, usually from a segmentation standpoint, use our premium products more than other users. So we're very, very happy about our Rewards program, and we want to continue to increase the number of users on that program. And at the same time, remember, this Rewards program, it's only 8 months old. So we are very, very early in the optimization of that program. And you'll see programs like early on when we launch a program, it was -- basically, the only benefit was $5 off. If you look at the benefits now, you have a 3-month subscription to Apple News now. We have a great relationship with Apple and the Apple credit card, for example, which has been a dynamite credit card. The second choice is to donate $5 to our driver education fund, like, actually, improve the world, et cetera. We may be doing something on COVID and helping corona going forward. So the optimization of the program is there. So the program is getting more and more effective. And we're finding that now signing up more loyalty program members is one of the most efficient marketing uses of capital that we have, and expect us to lean into this program pretty heavily.

Probably, I'll leave time for one question in the audience, but I wanted to hit you with one more before the mic runners start running. A little bit of a jump ball for you. There's so many pieces going on at the business. You talked about Uber Cash. You talked about -- we didn't talk about the ad business at all, the ads on top of the Ubers. And then there's also Cornershop and grocery and sort of delivering B2B. So maybe of those 3, which of those 3 sort of excite you most that you think could really have a material impact on the P&L in the next 2 years?

You've just asked me to give you a favorite with my children. That's not fair.

Like if your a parent, I know.

Listen, all of them are excited. I will tell you that Cornershop is something that I'm really excited about. Oskar and team are an incredible executive team, and they have built and optimized this grocery business in a very low-cost market. So they've run this business incredibly efficiently, which is exciting to us. And the capabilities that they've built are significant. They've got Walmart as a big customer. So they are working with the best in the world. And essentially, it's like you see Salesforce or some of these other companies buy great products and just put them in their sales force. We have an enormous set of brands and 100 million MAPCs around the world. We're building a highly optimized product run by a second-to-none team. And essentially, we're going to pump it through our sales channels, hopefully, on a global basis. We're going to be careful, but hopefully, on a global basis. That just has the makings of a huge win, which is something I'm very excited about.

All right. Time for one question in the audience. Mic's over there.

We haven't talked about ATG today. And I was wondering if you could just walk through the rationale for it. It's a pretty meaningful cash burn each year. I think if you talk to experts, the sort of production of rides through autonomous is probably much further out for the majority of rides at least in the urban quarters. So it seems like it's an area you could look at to rationalize, also seems like you're probably not in a #1 or #2 position there. So maybe just talk about how you're thinking about the expense and what we should expect over the next few years.

Yes. I think I would take exception to your characterization of the position. And I think fundamentally, what we're building with ATG is fundamentally different from the other players. Other players who are trying to build autonomous technology and build the network essentially have to build for 100% of the use cases out there, Level 5 kind of autonomy, which is incredibly difficult, years and years and years out. And if they're not building for Level 5, then they're going to have a network that is limited that cannot compete with our network. We are able to build autonomous technology, and I think ours is second to none. The deep machine learning that we have now embedded into our perception, prediction and planning software is the best in the world, we believe. And we're solving a problem that's substantially simpler than our competitors are because we essentially have the data today, which is what skills do you need to fulfill, let's say, the 20% simplest routes that have the most revenue associated with them in the markets that we're going after. So you -- we've got competitors who have to build for every single use case in San Francisco. We have to build for the 5% simplest routes in San Francisco. And then based on being in market, we can go 6%, 10%, 15%. So this is not a science experiment for us. This is a commercialization strategy. And if you're running a commercialization strategy, we think we have very significant structural advantages. And the ability for autonomous to be safer and to be substantially lower cost when you think about 5, 10, 15 years from now and the potential of market expansion is enormous. So we like the science. We like our team. We think we're solving a much simpler problem, and we've got a commercialization strategy in a way that I don't yet see our competitors have. That said, if any of those competitors want to put their tech on our platform, we would absolutely be open as long as their tech is safe enough and has the skill set needed to get our passengers safely from A to B, and we are talking to third parties as well as making internal bets. We would not be making this bet unless we thought that we would have substantial returns as a result of this bet.

Great. Dara, thank you so much.

Thank you very much.

Great. Thank you.