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

Great. Thanks for joining us today for a fireside chat with Pierre-Dimitri Gore-Coty. He's head of delivery business at Uber, which is now mostly compromised of the Uber Eats business, but also includes grocery and other delivery offerings. [Operator Instructions] Secondly, while you're doing that, we are working with our partner, Procensus to do live polling of investor views for each company at the SBC. [Operator Instructions] At the conclusion of today's fireside chat, I just ask that you take a minute or 2 to complete a poll on your views of the company, and you will have access to the investment community sentiment as soon as we all have completed the poll. All right. Let's get to the discussion. Pierre, happy to have you. Hope you're keeping safe during these times. You've been at Uber since the very early days, most recently as VP of International Rides before taking over as Head of Delivery. For many investors, I know this is their first chance to really get to hear from you. So to kick us off, it will be great if you could just walk us through your time at Uber, perhaps adding some color to the brief intro that I shared and also share a bit about your own leadership philosophy.

Yes, of course. Hello, everyone, and thanks a lot, Mark, for having me here today. I'm excited to get to chat a bit about the Eats business with all of you. So as far as I'm concerned, indeed, I was lucky to join Uber back in 2012, which is literally when we were starting outside the U.S. I joined in France at the time when the company globally was doing 1,000 trips a day or something and kind of helped grow that business, that Rides business, to what it has become now, most recently being in-charge of all of the countries we have outside U.S. and Canada. There are a few things, in particular, that I want to call out as to my time on the Rides side of things. The first one has really been about the transition we made from a company and a business that was geared towards growth at all costs to now growth at scale and how we turned that Rides business into a profitable business. That's kind of the thing that's really been my key focus over the past 3, 4 years. The second thing is really around the competition side of things. As you know, the Rides business is and has been very competitive. I am very competitive myself as well as an individual. And I can tell you a lot of my focus over the years has really been around figuring out how can we differentiate ourselves, how can we deploy capital in the most effective manner. And I feel quite proud, frankly, as to where we have taken this Rides business. And finally, the last thing I'd call out as far as what my focus and DNA has been in my past role is really the international side of things. I've been an international champion from my very early days being based outside the U.S. And I think we have done a pretty good job with Rides, and frankly, with Eats as well, diversifying our business away from being a U.S.-centric business, which is something that actually has been and is very important to our success and figuring out that right balance such that we can leverage our global scale while at the same time making sure we build businesses and products that are really about locally. So that's kind of some of the things that I've really been focused on as I grew over the years into that Rides side of things. As an individual, you asked about my style and my leadership style. Two, 3 things, I would say. Number one, I am fundamentally an operator. I grew up in Uber trenches. I like to compete. I like to go fast. We are very ambitious as a company, and we have a DNA of certainly doing things beyond limits and making big, bold bets, and that's very much aligned with who I am as an individual. The other thing I'd say is I have been for the past couple of years, probably since 2017, which was a bit of a personal interesting year for me, a big champion and advocate of diversity and promoting diverse teams. And I'm really proud today to say that, out of my 6 [indiscernible] reporting into me, half of them are women. And I am, myself, involved and a champion and a sponsor of 2 of our executive working groups -- resource groups, sorry, at Uber. That's a bit about myself.

Very helpful color and context, and we'll definitely dive into some of the key areas you talked about, about growth at scale and the competition aspects in just a little bit. So taking all that background, you've been at the helm for Eats for around 3 months or so now, I believe. I'd imagine most of that time has been remote given everything else going on. But can you talk us through these first 100 days or so? What are some of those key learnings, surprises? Any similarities or differences with the Ridesharing business that surprised you?

So first, what I'd say in terms of what my focus has been in the last 3 months, I would say a few things and then I'll touch on like observations and differences and so on. But in terms of what the actual focus and action has been, I'd say, one, refocusing and narrowing our strategies and our priorities towards 3 foundational elements, which are really selection, unit economics and growth, which are really the 3 most important success factors in this industry. As part of that, you have seen that we have rationalized our portfolio of countries. I exited 8 markets over the past few weeks, which we've announced publicly already. We have improved that cost structure across the company when it comes to head count, but also across the delivery business units. That's really been a big focus of mine. The second thing is, specifically in the U.S., we have refreshed our competitive efforts. We've pushed pretty aggressively a subscription offering that some of you might have tried. We are bridging the gap we have on selection. We added brands like Chipotle; Yum! Brands like Taco Bell, KFC; Shake Shack and others. And we have accelerated our efforts in certain high-potential geographies, and one of them in particular that I'm very passionate about is Japan where we're now a strong #1 player. And finally, we have been really focused on responding to COVID, both when it comes to kind of safety side of things and making sure we can operate in that new construct, that new world, but also ensuring that we're here to support the product community, the restaurants, the delivery partners that we work with. So that's really been some of the key focus of mine since joining about 3 months ago. In terms of the observations coming into this new role, having spent the past 8 years with the Rides side of things, a few things: one, where there are similarities with the Rides business for me is, first of all, it's a huge category. It's a daily need. Just like Rides, it is a business for delivery that has pretty high repeat and where you see very engaged set of users. So that's something that is identical in a way. And the second thing is just like we've done with Rides, I think it's pretty remarkable if you take a step back to realize how big of a business we've built in just literally 4 years and that, for me, speaks to the strength of our platform. We talked in the last earnings release about Uber Eats having crossed $25 billion GB annualized run rate, and that's for a business that's barely more than 4 years old. The business, and that's my last point around some of the similarities, the business relies -- Uber Eats relies a lot as well, just like Rides, on this core marketplace and the ability to help optimize flows at the scale of a city and do that in the most effective way. So those are some of the common traits that I've kind of observed. The way I see some differences, I'd say, the industry, from a competitive standpoint, tends to be a bit more fragmented than what I have seen with Rides. And what I mean by that is that, with the Rides business, we have mostly created the category. What you had previously were like taxis helping people move from A to B, but that was kind of regulatory-constrained market. And that industry, for a number of reasons, has really struggled to kind of embrace the new world. And that has translated into Uber, and through strong execution, doing, frankly, and capturing a big chunk of the -- or achieving strong market positions in most countries around the world. As far as Eats is concerned, what you see is that the industry, the food delivery industry, actually predated Uber. There were a number of players, what we call internally aggregators, so people that were not doing the delivery, but that were just doing the lead-generation service that have been doing that for many years before Uber came in and that have done a reasonably good job at defending their business in light of the emergence of those new delivery models. And this is something that I think has translated today in the competitive landscape that's a bit more fragmented. That's kind of something I see, and I'm sure we'll chat more about that, and I'll tell you more about why I'm not too nervous and actually excited, but that's one thing I see. The second thing is if you think about Rides, well, by nature, pretty much every driver and every car is kind of the same except for some of the premium products and so on, whereas for Uber Eats, the selection you bring in has a tremendous impact, both the quality of restaurants you have but also the breadth and -- the breadth of cuisine and restaurant types. And so that's really important. And so that's something that's fundamentally different. And finally, I would say we are right now with Uber Eats earlier in the trajectory. We're probably where Rides was 2, 3 years ago meaning that there's still a lot of work for us to do in terms of bringing the business to profitability. So that's kind of the key similarities, differences that would be top of mind for me here.

Very helpful. I think it's interesting given the time that we're in right now, it's very easy to kind of focus on the here and now. And obviously, the delivery business has kind of risen to the top given everything that's going on. But we're doing this thing across the conference, which is our unifying question and one thing that I wanted to ask you is, as you think about the longer-term story beyond the pandemic, how do you expect some of these priorities that you mentioned: the shift to retain, especially as it relates to a lot of the cost cutting and increased levels of investment?

Well, for us, the priorities are pretty straightforward as far as it is concerned, and that's going to be and is my focus, and frankly, will be my focus for the months and quarters to come, which is, one, taking a business that fundamentally has been geared towards growth at all costs. And that means another index on top line, on orders and how much are we growing week-to-week to a business that becomes much more focused on actually bringing a profit, on being a sustainable business that can self-fund itself. And that is certainly critical and it goes through a focus and a sharper focus on cost structure as a whole, and I touched on some of the things we've done already with some of the head count reduction, but there's many more initiatives that I can touch on around cost per delivery, optimization and basket size and so on. It comes also through the form of being very strategic around managing our capital. And so rationalization of the country footprint, which we've done to a very large degree already; being smart around how we allocate capital; and finally, pulling new monetization levers, things like ads, which we might touch on a bit later on. We have a pilot going on that I'm hopeful will eventually get traction and will expand that I think will play a key role in this shift towards a more sustainable business. So that's kind of one key and very clear focus. I'd say the second focus is really around continuing to strengthen our competitive position. And that will be even more important as an objective as we start to rationalize and as we start to be more disciplined with our investments and spend. And on that, the couple of things that -- a couple of big movers that are going to help us strengthen our competitive position, leveraging -- continuing to leverage the power of our platform. The fact that Uber is one of the few players, albeit it has a very big Rides business and a very big delivery business next to one another, we've done some stuff, but there's more to be done to really leverage that user base and create that cross-platform engagement. Operational excellence. Because of our Rides DNA and that DNA of really being around marketplace management, we are actually very strong at things like time to delivery. So the operational metrics that you -- and the experience you have when you order on a food delivery platform, time to delivery, completion ratio, defect rates, like that operational excellence is something that is very key to who we are as a company and as an Uber Eats business and that we'll continue to push hard on because we do think that it's appropriate differentiation and help us with our competitive position. We are going to push and make progress -- make further progress on selection. The number of countries where we are ahead of competition and will continue to create a gap there, but there are places where we're behind and where we are working really hard to catch up. And finally, the unit economics piece that I touched into my first point that was really around becoming a more sustainable business is also really important in the competitive context because it means that you can take away some of the costs that are not productive in terms of like top line and market position and reinvest in tactically where you feel appropriate to actually continue to strengthen your share basically. So that's kind of the second thing. And the third one, I would say, is really around adapting and evolving in the new paradigm that we now have in COVID and in the post-COVID world and that means things like continuing to push on safety. That means things like tweaking our business model with the likes of, for instance, pickup, which we think is going to be a use case that's going to be more and more critical in the food delivery and the food industry, pushing on some of the adjacent verticals. We're starting to develop around, for instance, grocery, around B2B deliveries and so on. So as a recap, and as I look ahead, I'd say bringing the business and turning the business into a sustainable, healthy business from a financial standpoint, continuing to strengthen our competitive position and adapting to this new COVID reality are really the 3 things that are top of mind for me and that drive most of my team's work at the moment.

Great. Now I'd like to touch on, especially that third one, of the new COVID reality. And obviously, the changes have been pretty drastic. I know in the earnings call, we've seen Eats bookings accelerate to around 80% plus in April. Can you share a little bit of -- has that continued into May? Or are we seeing some type of normalization there?

So you're right, what we said on our earnings is that April was up a bit more than 80% year-on-year. I can tell you that the growth in May has actually accelerated relative to April on a year-on-year basis. So I won't give you exact figures, but that means the performance has continued to improve in May relative to April on a year-on-year growth basis.

And as you look across the globe because Eats does have that global footprint, is there some consistent or predictable pattern of recovery -- or usage pattern that you're seeing?

So the macro trend we have seen globally, frankly, is one where through COVID, there has tended to be an increase in demand from users, more people opening our app, more people getting into the categories. Now our ability to capture that increased demand has very much been a function of restaurants being open to deliveries. And so if you look at the global map, you see that there are a number of places, and specifically Europe, I would say, with U.K., France, Spain, as an example, and to some degree, certain LatAm markets where we have seen a number of restaurants shutdown and that has affected our ability in those places to actually capture some of the increased demand that we typically see on the back of COVID. We are seeing progress. We are seeing a number of restaurants reopen in those countries, reopen for delivery in those countries. So I'm confident, but this is really what's been the main driver in terms of our ability to capture this increased demand. The second sort of macro trend I would point out is the fact that we have seen an increase in basket size in most places around the world, some of that being due to our own efforts, and I can touch about that, but some of that being probably more COVID related in terms of people being home more, ordering for their families. And so that has been helping out as well. So those are the main trends I would probably call out as far as your question is concerned.

No. Very helpful. And you mentioned one thing, a couple of answers I thought was interesting. And a lot of the investment proposition around Uber is this platform concept where you can leverage some efficiencies, either on the supply side, but also on the demand side. And so you talked a little bit about that. Can you talk a bit more about how you characterize that growth between kind of net new users coming on to Eats versus Rides users coming over and now adopting the Eats product as well?

Yes, of course. So I would say, broadly speaking, that it's been a bit of both. So what we've seen -- what I can disclose is that we have seen an increase in both the new eaters coming to the platform, which in April were at record levels as far as we're concerned. So an increase in new people coming to the Uber Eats app, some of them coming from Rides and being Rides users, especially in geographies where we are big on Rides, but some of them, frankly, being new to the Uber ecosystem as a whole. So that's definitely been a trend we have observed. Now the second trend as well, and I don't want to quantify how they compare with the second trend, is also an increase in the frequency of the -- of how much people use the products, an increase in kind of the trips per user. That has actually gone up as well in April basically.

Very helpful. And then on the supply side, with the new restaurants, you mentioned at the top with Chipotle, some of the Yum! Brands coming on, how has the experience been for them? Have you heard back from them in terms of -- are they seeing that same demand? Is that kind of in a relationship with the supply that's actually kind of a flywheel that's driving more usage?

Yes. So a few things. Well, if you hear, for instance, like you heard Chipotle's earning call, as an example, they called out Uber Eats specifically and they called out some of the really solid traction that they have seen since bringing the restaurants onto our platform. So -- and I would say that feedback they shared publicly is something that we see from a lot of those new brands and partners we're adding to our platform. So we feel quite good about that. The other thing I'd say is on the back, and maybe that's a macro trend I should actually have called out when you asked me about, hey, what are you seeing. The other thing we see is a big increase in restaurant inbounds, which means that you have a lot of restaurants that typically wouldn't really have considered food delivery for a variety of reasons that are now getting actually onto the platform. And so that's something that we're working hard to make sure we can cope with in terms of the inflow in demand, but it's kind of a really good news and has helped offset, to some degree, the places and the geographies where, as I mentioned, some restaurants shutting down altogether.

Great. All right. Let's jump into the difference between, obviously, growth at all costs versus the growth at scale that you're referring to. And obviously, it's a bit of a unique moment right now where, typically, you sacrifice some growth when you're growing at scale. But clearly, it seems like that's accelerating. Can you talk us through some of the growth levers? I think Eats is a $25 billion run rate business today. Clearly, the addressable market seems like it's growing by the day. What are those 2 to 3 levers that you're going to focus in on in the next couple of years as it relates to the growth side of things?

So on growth, specifically, and then I can touch about more of the profitability and the sustainable growth side of things. But as far as growth is concerned, I would say short to medium term, i.e., if I just look at the category and the business as it is today, the most obvious growth drivers are continuing to push really hard on selection. And that means things like tapping and expanding our offering from both a geographic standpoint, but also from the type of restaurants that we work with. It's very clear that we started with a model that was a delivery model, as you know, which means we're working with restaurants, in most cases, that don't have their own delivery network, whereas you have some companies that are doing kind of the opposite. I think there's a bit of a convergence where while some of those companies are moving to the delivery model, on our side, we have developed what we call bring your own courier, BYOC offering, which allow us to tap into really a new set of restaurants. So I'd say that's an example of how we're broadening our selection besides the just geographic element to it. We are trying to expand the use cases and trying to tap, in particular, into things like breakfast and lunch, for instance, which today are mostly under-penetrated and those are going to be big growth drivers; tapping into families more than we do today from single person to family is something we're trying to do; and finally, pushing really hard on some of those horizontal levers we have that help us create some glue across our different business lines. And by that, I mean, things like Uber Rewards, which is a subscription program, which brings together Rides, Eats and others. Our subscriptions offering, we have an Eats-specific subscriptions, but we also have a pass that actually spans across the different BUs. So those are, I'd say, those are the most obvious levers to continue and drive growth. And my conviction is there's really a lot and really a lot more to tap into there. The category is still far from really being mature, especially if you take a step back and you look at geographies like Japan or a number of the markets out there in the international world that don't have as mature of a category. That's kind of as far as food is concerned. Then if you kind of project yourself for a bit, there are things to be done beyond the pure restaurant food delivery side of things, an example being the grocery aspects. We are in the process of acquiring a company, which is called Cornershop, which we've announced publicly. We expect that transaction to close in the next few months. And that's really going to allow us to have a strong foot into this new adjacent business that I think makes a lot of sense. Another example is, and you probably have heard us talk publicly about that, but some of the delivery use cases whereby, through COVID, a lot of people and a lot of companies are reaching out to us, asking if they can use our network of delivery people to move things from A to B. And so that's also something we are starting to organize around, which is making sure that we can offer a delivery-as-a-service offering outside our typical consumer-facing marketplace. So those are some of the examples as far as growth levers are concerned.

Very helpful. And so it sounds like you talked about the selection, you talked about finding new use cases, increasing the engagement for getting users to use it more, and so it sounds to me like we should expect to see some decrease in a cost of acquisition, which is a good segue into a cost-based discussion. We know that the Eats side has kind of got there -- I'm sorry, it's in the process of getting there. There's a long-term target that we've heard that's about 30% adjusted EBITDA. But from where we are today, can you walk us through the waterfall of the bucket that's going to get us to that 30% long-term target?

Yes. Of course. So I think it starts, frankly, with the take rate. And as you know, we reported in Q1 a take rate of 11.6% relative to our aspiration, which we spoke about publicly, which is a 15% aspiration. And so I tell you a lot of the improvement in actions that need to happen about increasing this take rate. What I can do, if I may, is maybe chat a bit -- in a bit more detail about some of the take rate improvement we've seen in Q1. And as I touch through that, you'll see that I'll naturally get to a lot of the levers that we have started to action and where there's more to do. The first thing is, when you think about the take rate, it's really the courier cost per trip, which we obviously want to take down as possible. On that, to put things in context, the Q1 cost of delivery per trip -- courier cost per trip was actually down 18% year-on-year, so pretty substantial reduction. And a few things that allow for this. Fundamentally, it's really around how can we become more efficient with the management of our marketplace and the number of things that play into that, for instance, batching, i.e., starting to get multiple orders for multiple people delivered by the same courier as an example of that. But there's also some benefits that come naturally as you start to densify your business by nature of couriers being closer to restaurants and by nature of how you can start to optimize the dispatch radius for consumers without affecting the selection. So I'd say courier cost per trip is a big focus. We've seen improvement, but we continue to push hard on that. The second thing that is really important as a lever that has helped us a lot in Q1 is actually the basket size. By nature, given the courier cost is a fixed item per trip, the higher the basket, the more you amortize that cost and so the better your P&L and your take rate looks like. And on that, there's a combination of 2 things: some of the positive impact we've seen is COVID related, I touched on that a bit with some of the group orders and things like that; and some of that is also about our own efforts. And we're doing -- and you can see, if you use the app, we're doing way more to actually create some bundles across food to make sure we push you to add a dessert and do a lot of optimization that were not necessarily a focus before as well as being much more thoughtful around the ranking and how we show you different restaurant offering to make sure that, that sort of ranking has in mind and accounts for some of the unit economics that exists for different type of partners. So that's kind of the basket size. If I can share some numbers so you have a bit of context there. Q1 basket size was up 7% year-on-year in the U.S. And so that was kind of a reasonably strong improvement, and that was on the back of some of the levers I described, but also the mix with an SMB -- mix being more favorable towards SMB tending to have higher baskets. In April, the basket size was actually up 14% relative to February, so April '20, relative to February '20 in the U.S. So while we improved year-on-year in Q1, you see that there's been some improvement since then and this is something that is important, naturally helps the overall unit economics. And that is a big focus. So those are -- courier cost per trip and basket size are really 2 huge levers when it comes to the profitability as a whole. In the first quarter of 2020, we have divested India, which was -- which has helped us. And as you know, since then, we have divested another 8 countries, which accounted for about 4% of our EBITDA losses and 1% of our GBs, of our Eats GBs. We'll continue to be opportunistic and thoughtful, but I typically feel quite good about the portfolio as it is today post those reduction. And finally, I would call out some changes we have made in certain countries with our business model, that those are more like corporate tax changes that can create efficiencies and tax efficiencies. And on that, to give you some numbers, the impact in Q1 of those changes was about 40 bps out of the 2.1% improvement in NAR -- ANR, the -- sorry, the 2.1 percentage point improvement in ANR that we have seen in Q1 on a year-on-year basis, basically. So those are, I'd say, examples of some of the key levers. Besides that and below that take rate line, there's a ton of work on cost lines. And frankly, my focus is very much aligned with what I've been doing on the Rides front, which is you take every single cost line item of the P&L and you try to grind efficiency being thoughtful with things like support costs, appeasements, sales and marketing, cost of like photography of onboarding restaurants, a lot of things to optimize levers to pull. So this is really something that is a key and an important focus for us. To share some numbers there, I think we said in Q4 that we had about 100 cities that were profitable at the EBITDA level globally. That number was over 150 cities in Q1 '20, so this last quarter, basically.

Very helpful. And I appreciate all the incremental data points and looks like it's moving in the right direction. And I want to touch on batching for a second, and I'm going to share a terrible anecdote. But I think when my dad was growing up, one of his part-time jobs was a pizza deliveryman and I always asked him, what was your record for the number of pizzas you can deliver in a single order. How do you think about that batching number? What's that right level that you could expect in terms of the number of orders a single courier can take?

So let me maybe take a bit of a step back, if I may, and explain exactly how a courier delivery works and where we can expect to see efficiencies and why. In a simple way, the way to break this out is you have to count 3 steps. You have -- once an order is being made by yourself, you have a courier that needs to go from wherever he or she is to the restaurants. That's step 1. Then you have a courier or the same courier that needs to wait for the food to be ready, step 2. And then you have a courier that needs to go from the restaurant to where the consumer is. The first piece is going to be optimized really by densifying the network of couriers. And that means as the business becomes bigger, naturally, you have a dense network of couriers. And it means on balance, you have couriers being closer and closer to the restaurants that you, Mark, ordered from. The second thing is once I'm at the restaurant, I'm waiting. This is really about the technology, about being able to predict better and better how much or how long is it going to take to produce a particular dish to ensure that the courier has arrived as close as possible to the time when it's ready. So that's kind of the second piece. The third piece is more around not so much how dense the network of couriers is. It's a bit more about how close or how far are you as an individual from that particular restaurant. And this is a decision we control because we control how many restaurants we want to show you in your app when you open that app. And what happens there is, as you make progress in selection and on scale, we have such a breadth of cuisine and restaurants that we don't need to go as far. We don't need to have restaurants that are 3 miles away. If we think that we can get to already 12 burger places and 10 pizzas and 5 Thais in a radius that is shorter. So I'd say that those are the -- I think it's important to understand those 3 segments. So we understand where the efficiency comes with scale. Then on top of that, what you add on top of all this is the concept of what we mean at Uber when we say batching, which is the fact that what I described is effectively about 1 order being delivered by one courier to serve one eater. Now what you can have is if you have dense enough of a network, so if that equation is kind of dense enough, then it starts to make sense and you start to have enough volume to say, well, actually, Mark and Pierre are not living too far apart and they're ordering from 2 restaurants that are not too far apart as well. And so we're going to be able to batch those orders and put them in the same car or on the same scooter or bike. And that's kind of the batching. I'd say, as far as batching is concerned, so if you look at the percentage of orders that are actually being mutualized, this is increasing. This has been increasing gradually over time. I expect that to continue. It's a matter of scale. And we are being very thoughtful because you don't want to push that too hard if you don't really have the scale because that's when you have a degradation in the experience for consumers. It means you have a cold pizza. It means you're creating support cost. It means you're creating restaurant churn and so on. That's why we are being very mindful about not trying to just over-batch for the sake of economics and short-term economics, but you can structurally expect to see an improvement. On the numbers -- on the number you asked myself about like pizza per hours and things like that, it's not a number I can share. It obviously depends on a number of factors, but I can certainly agree that it's something we track and something we definitely want to maximize given the implications it has for the overall unit economics.

Perfect. And then you mentioned also the below-the-line items and the one we circled is obviously the support costs and that's one that you've agreed is a -- what you would agree is a priority. And if so, what are you doing on that front? And how much efficiencies do you think could be gained?

Yes. So it is something we look at really closely. I was literally 2 days ago in my monthly [indiscernible] specifically focused on like support costs and how they move. And what I can tell you, first of all, is in the last 2 months alone, so April and March, basically, we have driven an improvement as a percentage of GB of support cost by more than 100 bps. So that's a concrete example of how we're taking support costs down, at least of the magnitude we're seeing and the progress we're making. That is a factor of a few things. It's a factor of, frankly, automations, trying to be smarter with what sort of support interactions actually need a human being. And just like Rides, there are a lot of things where you figure out that it's actually cheaper and more effective to automate the resolution as opposed to have manually a support agent trying to figure out whether the itinerary taken by the courier was optimal or not, a bunch of things that the computer can easily find. So that's an example. There's also some work that is happening on the what we call the appeasement, which means it's not just about the contact itself, the fact that you contacted a support agent, but it's also how -- what is the policy we have to address your concern, how do we become more thoughtful whereby we can stop fraud if we see you are asking literally 9 out of 10 orders saying your food is cold. We're double-clicking into that, understanding how accurate that sounds to be and we're making sure not to spend appeasement money if we don't think it's actually warranted, needed or if it doesn't create longer-term stickiness, engagement, loyalty from the users. By harmonizing some of those policies, and it's still work in process, but by harmonizing that, we're already seeing some improvements. There's been $10 million or more of annualized savings that's already been crystallized recently as we go through those policies one by one.

Very helpful. And you mentioned the other side of how we get to this growth at scale, and improving the cost base is obviously a bit on market rationalization, exiting some underperforming markets. Now I wouldn't be doing my job if obviously I didn't ask about the GRUB rumors that have been circulating. Any comments you can share there?

I wouldn't be doing my job if I was commenting on that. It's something we don't comment. And you probably -- everyone probably knows that from our past as well, but we don't typically comment on the sort of press rumors.

Got it. And I think adjacent to that is this other side of the market rationalization is either investing or exiting markets similar to the [indiscernible]. I imagine there's probably no standard framework for how you go about evaluating each market. You have to look at them, I guess, individually. But can you walk us through a little bit about what your own decision tree looks like when you're evaluating some of these markets?

Yes. Of course. And you look at them individually, but also collectively because at the end of the day, they form a portfolio and you have to be thoughtful about how you allocate capital across that finite set of resources. I'd say the primary question you ask yourself is, what is the opportunity in terms of profits, long-term opportunity, if I get into a leadership position in that particular market? It's like a pretty much a TAM-type approach that allows you very quickly to draw distinction between, whatever, Italy and whatever other country that is much smaller. Then the question becomes, once you have a sense for that opportunity, what is your market position today, and how likely is it that you can actually get to a leadership position and to a strong #2 position? And there are situations where actually the market dynamics are such that the position you have, even though it might be a third position, is not that far off in relative terms to the first 2 players, for instance, if you have 3 players that are like 30-30-30, for instance. There are situations where you see there's a bigger gap. And so -- and obviously, from a strategic standpoint, you need to understand and ask yourself what will it take to get to that leadership position. And can I do that in a way that is sustainable and in a way that means I'm not going to throw away all of the potential upside by just having to buy my way into that scale and into that country. So that's kind of really how you approach this. And then you look at the global portfolio and you try to understand whether you have the right mix of places where you think you can actually extract the profit, have a really strong market position, places that you know are going to be hard that will need big investments, but where you expect eventually some good return. You can have 90% of your markets in that category. And so you have to kind of make sure you think about it as a collective pool of market and having that, I mean, this kind of portfolio management approach of your -- of the country businesses is definitely something that flex quite hard with the Rides side of things, of seeing your portfolio of like 60 countries at the time on that business and something that I'm starting to push on quite a lot with Eats as well.

Great. Very helpful. I've got one more question and then we're going to take some from the Pigeonhole. So I guess my last question here to try to pull this together, it sounds like there's a lot of levers that you're pulling and actively considering to drive towards that, call it, 30% target. Is it fair that 30% target is still kind of the right number to think about? And as you think about the time lines to get there, any commentary you can make on if those time lines have been accelerated or roughly what you're picturing in terms of getting to that end state?

So the target is the same, it's the right one. That's the target we put out there. We don't see any reason to change that longer-term aspiration, quite frankly, both on take rate and on EBITDA margin. So no change there. As far as the time line is concerned, not something I can comment on at this stage. So I won't just change some of the guidance that we've provided out there. And I know that guidance for Eats has been focused on the Q2 EBITDA so far.

Great. Very helpful. So let me pull a couple of these top-loaded questions. First question is DoorDash [indiscernible] that suburban unit economics can prove better than expected. Can you walk us through the structural puts and takes between suburban and urban unit economics?

Yes, of course. So there are a few things that play when you think about unit economics and how suburb might compare to urban areas, for instance. There's one, the type of orders in terms of the type of the profile of eaters, and you tend to see a slightly over-index on families in suburbs relative to urban. And so that translates in order sizes that tends to be a bit bigger. This is positive. But then you also have an impact on selection, which means that you have a different mix of enterprise, SMBs, and that can also affect the unit economics you get in the suburbs. I don't know globally and in the U.S. that there's necessarily a set trend where you have a specific mix that means it's either more or less profitable, but that would be another parameter. So you need to look into that. And then you have aspects that have more to do with the demand density and that potentially affecting the courier cost. And usually, you would probably see things being a bit less dense, and that's translating into courier costs that are a bit less efficient. But -- so when you bundle all that, which is larger orders, but then the SMB, enterprise mix can vary a bit and depend on kind of a country basis and then the cost of delivery, it's just -- it's not like there's a super straightforward answer, which is, a, suburbs are either always above or always below unit economics. It kind of does vary a bit. But you're right that there's nuances between the 2 profiles here. And we tend to look at our business and retrack and stuff at urban, suburban, so one level, just so we can appreciate, understand those nuances.

Great. And then the other, I guess, comp one that's come through the question queue is, obviously, Meituan achieved breakeven on their food delivery business early last year. Any structural differences between U.S. and China to comment on puts and takes as you think about your own business?

So what I'd say is Meituan is definitely a company that I'm looking at closely. I think they're probably ahead of the curve when it comes to what they've achieved, and monetization is a good example and their ability to actually monetize the restaurant user base with products like advertising and others. So that's certainly something we're looking at. I do think that a lot of what they've built and a lot of the innovations they came up with in China would and are going to make sense outside China as well. And as I mentioned as an example, we have, and we are piloting right now an ads platform in Miami. Too early to be sharing much results just yet, but I'm quite optimistic as to what we'll achieve with this.

Great. I think we've got time for just one last question here. It seems, for the first time, the Eats business is now in the regulatory crosshairs through a lot of different things. And I know you've lived through that on the rideshare side. How do you -- and you mentioned take rate is obviously a big lever to drive there. How do you think about how that evolves or what the pressure might be from some of those commissions in the regulatory overhang?

So I would say on commission cap specifically, it is obviously something that we're watching very closely. At this point, pretty much all the commission caps that have come through in the U.S. are actually temporary in nature and they all more or less have to do with the emergency order or emergency order plus 30 days and things like that. So that is something we are watching closely. If it was to be longer term, well, I think there are a few ways to make the business work despite lower MPF. And some of it is actually, of course, passing some of that to eaters, which is a decision one could make, but also thinking through how you actually construct -- thinking through your monetization strategy. And so what I just touched on around advertising, for instance, is a good example of a way to monetize your business without having to blend that into an MPF, a marketplace fee. So I'm confident that there'll be ways for us in how we construct and think about monetizing our services to avoid being penalized substantially by those caps basically.

Perfect. Pierre, thank you for taking the time with us today. Really appreciated having you and having this conversation. As a reminder, we're doing our live polling with our partner, Procensus. [Operator Instructions] And you will benefit from real-time tracking of investor sentiment. So once again, Pierre, thank you for joining us.

Thank you, everyone. Bye-bye.