Great write-up as always. One thing I'd love to hear your thoughts on: the mobility segment did 25% more in gross bookings YoY but only 5% more in revenue (flat in constant currency). You attribute this largely to business model changes and the reinvestment of insurance savings, but a bear would argue that Uber was forced to cut prices to sustain volume growth in an increasingly competitive mobility market - particularly with Waymo now at ~40% rideshare market share in SF and expanding into LA, Phoenix, Austin, Atlanta, and Miami.
Two specific questions:
- If the insurance savings are truly being chosen to reinvest rather than required to remain competitive, why isn't that showing up as margin expansion in mobility specifically rather than just at the consolidated level? Wouldn't a company with pricing power keep some of the savings?
- You highlight that 30% of mobility users haven't tried delivery and frame it as upside optionality. But couldn't you flip that around if cross-sell conversion hasn't happened after years of pushing it, is it really latent demand or just a segment that doesn't want delivery?
Not trying to rain on the parade. I'm genuinely curious how you'd stress-test the bull case against the pricing/take rate compression trend in mobility.
Great to hear from you. I appreciate the thoughtful response, these are exactly the right questions to ask.
You're right to flag the spread. A 25% Gross Bookings growth rate against 5% constant currency revenue growth is material. The implied take rate compression from ~31% to ~26% demands an explanation beyond simple business model changes.
Here’s where I’d push back on the bear case using the data from the earnings materials: Mobility segment operating income grew 28% YoY, while segment margins expanded from 7.5% to 7.7% of Gross Bookings. If Uber were being forced to cut prices defensively to compete with Waymo, we would expect to see margin compression, not expansion.
The fact that margins expanded while revenue take rates compressed suggests the cost structure improved faster than pricing declined. This is the insurance story playing out. With hundreds of millions in savings and favorable March renewals, the math works: lower insurance costs lead to lower consumer prices, which drive accelerating trip growth, resulting in margin expansion through operating leverage and improved cost per trip.
The 30% who haven’t tried Delivery point is a fair challenge. If cross-sell hasn’t converted after years of Uber One, Uber Eats integration, and in-app cross-promotion, maybe it never will. However, here’s the counter-evidence from Q1:
Cross-platform consumers are growing 1.5x faster than overall consumer growth. This is not stagnation, it’s accelerating conversion.
Delivery Gross Bookings generated from the Mobility app are now running at a $15 billion annualised rate, nearly $4 billion per quarter. That is real cross-sell revenue, not latent demand.
30% of first-time Delivery customers were acquired through the Mobility app. The funnel is working.
Uber One reached 50 million members, up from 30 million twelve months ago. Adding 20 million members in a year, while members spend 3x more and drive more than 50% of Gross Bookings, suggests the value proposition is resonating.
Delivery revenue accelerated to 34% YoY growth, or 28% in constant currency, the fastest growth since Q2 2022. If cross-sell had hit a wall, Delivery growth would be decelerating, not reaccelerating.
The 30% figure is probably a mix of:
Consumers who will never use Delivery, representing a true TAM limitation
Consumers who will eventually convert, representing latent demand
Consumers currently using competitors who could still be converted with the right incentives
Management is betting that categories two and three are large enough to matter. Given that Grocery & Retail, where 75% of users still haven’t tried the offering, remains in its early stages, and with new entry points like hotel bookings expanding the value proposition, I think there is more runway here than is being giving credit for.
Thank you for that comprehensive answer! Always a pleasure discussing the different cases with you. I find it hard to decide where to allocate my capital at the moment with many good opportunities, but I think Uber will be next.
Uber is executing exceptionally right now, Uber one has an incredible price/value ratio which I can personally atone to, It gives me so much back in direct cost savings and credits that for the price I couldn't imagine cancelling it. I think it has great potential and has long played an important part in my thesis considering the effect it has on increased usage as well as strengthening the moat
Hi Wolf,
Been a while!
Great write-up as always. One thing I'd love to hear your thoughts on: the mobility segment did 25% more in gross bookings YoY but only 5% more in revenue (flat in constant currency). You attribute this largely to business model changes and the reinvestment of insurance savings, but a bear would argue that Uber was forced to cut prices to sustain volume growth in an increasingly competitive mobility market - particularly with Waymo now at ~40% rideshare market share in SF and expanding into LA, Phoenix, Austin, Atlanta, and Miami.
Two specific questions:
- If the insurance savings are truly being chosen to reinvest rather than required to remain competitive, why isn't that showing up as margin expansion in mobility specifically rather than just at the consolidated level? Wouldn't a company with pricing power keep some of the savings?
- You highlight that 30% of mobility users haven't tried delivery and frame it as upside optionality. But couldn't you flip that around if cross-sell conversion hasn't happened after years of pushing it, is it really latent demand or just a segment that doesn't want delivery?
Not trying to rain on the parade. I'm genuinely curious how you'd stress-test the bull case against the pricing/take rate compression trend in mobility.
Hi Silas,
Great to hear from you. I appreciate the thoughtful response, these are exactly the right questions to ask.
You're right to flag the spread. A 25% Gross Bookings growth rate against 5% constant currency revenue growth is material. The implied take rate compression from ~31% to ~26% demands an explanation beyond simple business model changes.
Here’s where I’d push back on the bear case using the data from the earnings materials: Mobility segment operating income grew 28% YoY, while segment margins expanded from 7.5% to 7.7% of Gross Bookings. If Uber were being forced to cut prices defensively to compete with Waymo, we would expect to see margin compression, not expansion.
The fact that margins expanded while revenue take rates compressed suggests the cost structure improved faster than pricing declined. This is the insurance story playing out. With hundreds of millions in savings and favorable March renewals, the math works: lower insurance costs lead to lower consumer prices, which drive accelerating trip growth, resulting in margin expansion through operating leverage and improved cost per trip.
The 30% who haven’t tried Delivery point is a fair challenge. If cross-sell hasn’t converted after years of Uber One, Uber Eats integration, and in-app cross-promotion, maybe it never will. However, here’s the counter-evidence from Q1:
Cross-platform consumers are growing 1.5x faster than overall consumer growth. This is not stagnation, it’s accelerating conversion.
Delivery Gross Bookings generated from the Mobility app are now running at a $15 billion annualised rate, nearly $4 billion per quarter. That is real cross-sell revenue, not latent demand.
30% of first-time Delivery customers were acquired through the Mobility app. The funnel is working.
Uber One reached 50 million members, up from 30 million twelve months ago. Adding 20 million members in a year, while members spend 3x more and drive more than 50% of Gross Bookings, suggests the value proposition is resonating.
Delivery revenue accelerated to 34% YoY growth, or 28% in constant currency, the fastest growth since Q2 2022. If cross-sell had hit a wall, Delivery growth would be decelerating, not reaccelerating.
The 30% figure is probably a mix of:
Consumers who will never use Delivery, representing a true TAM limitation
Consumers who will eventually convert, representing latent demand
Consumers currently using competitors who could still be converted with the right incentives
Management is betting that categories two and three are large enough to matter. Given that Grocery & Retail, where 75% of users still haven’t tried the offering, remains in its early stages, and with new entry points like hotel bookings expanding the value proposition, I think there is more runway here than is being giving credit for.
Thank you for that comprehensive answer! Always a pleasure discussing the different cases with you. I find it hard to decide where to allocate my capital at the moment with many good opportunities, but I think Uber will be next.
So many opportunities out there at the moment, that’s for sure.
Uber is executing exceptionally right now, Uber one has an incredible price/value ratio which I can personally atone to, It gives me so much back in direct cost savings and credits that for the price I couldn't imagine cancelling it. I think it has great potential and has long played an important part in my thesis considering the effect it has on increased usage as well as strengthening the moat