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Uber Technologies, Inc. (UBER) Q3 2022 Earnings Call Transcript

UBER Earnings Call - Final Transcript

Uber Technologies, Inc.  (NYSE: UBER) Q3 2022 earnings call dated Nov. 01, 2022

Corporate Participants:

Balaji Krishnamurthy — Head of Investor Relations

Dara Khosrowshahi — Chief Executive Officer

Nelson Chai — Chief Financial Officer

Analysts:

Brian Nowak — Morgan Stanley — Analyst

Eric Sheridan — Goldman Sachs — Analyst

Justin Post — Bank of America — Analyst

Doug Anmuth — J.P. Morgan — Analyst

Ross Sandler — Barclays — Analyst

Lloyd Walmsley — UBS — Analyst

Deepak Mathivanan — Wolfe Research — Analyst

Mark Mahaney — Evercore ISI — Analyst

Ronald Josey — Citi — Analyst

John Blackledge — Cowen — Analyst

Jason Helfstein — Oppenheimer — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Uber Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Thank you.

It is now my pleasure to turn today’s conference over to Mr. Balaji Krishnamurthy. Sir. Please go ahead.

Balaji Krishnamurthy — Head of Investor Relations

Thank you, operator. Thank you for joining us today and welcome to Uber’s third quarter 2022 earnings presentation. On the call today, we have Uber’s CEO, Dara Khosrowshahi; and CFO, Nelson Chai.

During today’s call, we will present both GAAP and non-GAAP financial measures. Additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures are included in the press release, supplemental slides and our filings with the SEC, each of which is posted to investor.uber.com. As a reminder, these numbers are unaudited and may be subject to change.

Certain statements in this presentation and on this call are forward-looking statements. Such statements can be identified by terms such as, believe, expect, intend, and may. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today as well as risks and uncertainties described in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 and in other filings made with the SEC when available. We published our quarterly earnings press release, prepared remarks and supplemental slides to our Investor Relations website earlier today, and we ask you to review those documents if you haven’t already. We will open the call to questions, following brief opening remarks from Dara.

With that, let me hand it over to Dara.

Dara Khosrowshahi — Chief Executive Officer

Thanks, Balaji. Uber delivered yet another strong quarter with gross bookings up 32% year-on year; EBITDA of $516 million, an all-time high and well above our guidance range; and solid free cash flow of $358 million. Despite the uncertain global economic environment and considerable foreign exchange headwinds, we again issued Q4 EBITDA guidance that shows strong incremental progression and remain confident in our ability to deliver healthy top and bottom line growth with strong free cash flow generation.

Underlying this performance are several trends that represent tailwinds for us: cities are reopening, travel is booming, and more broadly, a continued shift of consumer spending from retail back to services. We’ve seen these trends continue into the fourth quarter with October tracking to be our best month ever for Mobility and total company gross bookings. With over $1 billion in adjusted EBITDA, and $693 million in free cash flow so far this year, we’ve demonstrated how our global scale and unique advantages of our platform are combining to generate meaningful profits. And we’re confident in our ability to build on this momentum.

With that, let’s open the call to questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Brian Nowak with Morgan Stanley. Your line is open.

Brian Nowak — Morgan Stanley — Analyst

Thanks for taking my questions. I have two. The first one, Dara, you mentioned the fourth quarter bookings trend, the guidance seems really solid, particularly given the backdrop. Just kind of curious, are you seeing any changes in consumer behavior or trade down or differences in your income cohorts, how they’re acting across rides, Eats, U.S. Europe, just any sign at all of weakening within the consumer of your MAPCs? That’s the first one. And then the second one, maybe a bigger picture one. I think if we break apart the rides business a little bit between high frequency users and the lower frequency users, like, there’s still a lot of MAPCs who are pretty infrequent users, a few times a month. Could you just talk to us about sort of philosophically the next few years, the key strategies to get those lower frequency users using the platform 3, 4, 5 more times per month? Thanks.

Dara Khosrowshahi — Chief Executive Officer

Absolutely. So Brian, as you can imagine with everything going on, we have been looking very closely for any signs, both internally and so that we can communicate to our investors. And right now, frankly, we’re not seeing any signs of consumer weakness and part of it is that the consumer spending is strong and not only is consumer spending strong, but it’s shifting over from retail to services and we are the beneficiary of that. So on Mobility, we’ve looked at our Mobility consumers from an income basis to see if there’s any delta in behavior. We’re not seeing any kind of jumps one way or the other. Seasonal trends remain the same, even lower income riders continue to have higher trips per rider as things are opening up, showing absolutely no signs of slowing down. And we’ve also specifically looked at Europe with inflation with the European economies, I think leading in terms of weakness as far as the Western world. Again we’ve looked to see if there’s any weakness and we’ve not observed any weakness. Really the biggest factor that’s affecting our financials is foreign exchange and the strength of the dollar. That makes our stated gross bookings lower and obviously it hurts our profit margins. But that’s something that we’ve been able to overcome.

When we look at Delivery as well, the Delivery business, as you saw, accelerated a bit against Q2. The frequency of ordering per monthly active platform consumer remains consistent. And it remains consistent, not only in the U.S. and abroad as well. So while we have looked for signal, we’re not seeing any signal. We’re going to be cautious going forward. We’re going to be cautious on costs. We’re going to be cautious on overhead. But as far as the business goes, right now, we are seeing strength across the board.

As far as the consumers go, high frequency, low frequency consumers, it’s absolutely true that if we can move our consumer use from lower frequency to higher frequency, we will see very significant growth. Generally, if you look at our — the number of trips per monthly active platform consumer, that has increased to an average of 5.3 from, let’s say, 5.0 earlier in the year. So we are seeing higher engagement of consumers on the platform.

Actually, there are three factors there. One is our membership program, Uber One, which is now well over 10 million members, we are now launched in additional markets. I think we’re in eight markets now on a global basis and continue to launch. And Uber One has benefits that are unique in that they have both Delivery benefits and Mobility benefits as well. So Uber One is definitely a product that is driving frequency. Second for us is cross-sell. We are actively cross-selling Delivery consumers, food delivery consumers into grocery, grocery consumers into alcohol and then actually back now to Mobility as well. So all of the cross-sell that we have across the platform continues to increase, drive new customers and also drive retention as well. And then for us also, some of the growth initiatives that we have are designed to drive frequency, this is a hailables and taxi, two-wheelers, three-wheelers and lower cost product as well. When you put it all together, it drives healthy gross bookings growth and generally higher frequency per audience. So we like the tools that we’ve got. And we think there is a ton of upside for us on both frequency side. Next question?

Brian Nowak — Morgan Stanley — Analyst

Okay. Thanks, Dara.

Dara Khosrowshahi — Chief Executive Officer

Sure.

Operator

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

Eric Sheridan — Goldman Sachs — Analyst

Thanks for taking the questions. Maybe two, if I can. First, Dara, we saw a proposal from the Labor Department in the last couple of weeks and it caused a lot of volatility in the news flow around the sector. Can you give us your latest updated views on not only how that proposal might evolve, but your current state of the world in terms of the regulatory landscape with respect to the gig economy and how that might evolve in terms of a mixture of elements in your business over the next couple of years? That’s number one.

And then number two, maybe asking Brian’s question, but pivoting it towards the Delivery side of the house. I think there continues to be a lot of concern about how Delivery will grow if the consumer weakens. Are you seeing anything on the consumer front that you want to flag in terms of the Delivery cadence or the Delivery frequency? And how should we be thinking about some of the widening out of use cases in Delivery as maybe muting some of that impact in the next 12 to 18 months? Thanks.

Dara Khosrowshahi — Chief Executive Officer

Yeah, absolutely. So as it relates to the Department of Labor rulemaking, first thing, I would tell you is, it effectively returns us to the framework during Obama’s presidency which was the framework in which we grew significantly and it doesn’t reclassify any workers, it doesn’t include NADs [Phonetic] D Test. So when we look at the rulemaking, we believe that it will provide for stability going forward and really the focus that we have ourselves is working on a state-by-state level, right? Prop 22 in California passed with 58% of the votes in a very, very liberal state. I think everybody recognizes the value of the flexibility of independent contractors. Earnings levels are very robust and I think the dialog that we’re having on a state level, really our goal and we are finding that the dialog is a robust dialog on a state level about preserving flexibility, having robust earners and then also providing some protections appropriate for independent contractors is the right way forward. We continue to have dialog and I’d say the trend is in our favor at this point, but it is — the road is going to be bumpy and for us the nature of work is always going to be a big issue that we have a responsibility to shape going forward in dialog, obviously, with local governments.

When we look at Delivery, again we don’t see any signs, one way or the other, of consumer weakness at this point. It’s something that we’re watching out for us. Basket sizes are up, frequency is stable, about 10% of our eaters on a monthly basis now are using our grocery products as well. So we are driving higher engagement there. And Uber One membership continues to penetrate at higher rates within our Delivery segment. So you’ve seen the growth rate of Delivery, it continues to be stable or accelerate a little bit this quarter and I think for Q4, we expect it to be stable to up a little bit as well. At this point, we’re not seeing weakness. We’re definitely watching out for it. Next question, please?

Operator

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

Justin Post — Bank of America — Analyst

Great. Thanks. I guess you’ve done a good job breaking down the Mobility drivers in three categories. Can you help us think about Delivery growth from here to get to your plan in ’24? That would be the first thing. And then we did see corporate overhead go up a bit quarter-over-quarter, I think. Could you just go through some of the drivers there and if you can kind of keep that cost contained over the next, couple of years? Thank you.

Dara Khosrowshahi — Chief Executive Officer

Yeah. So I think if you look at Delivery growth, our growth accelerated a little bit this last quarter. North America volumes remained very healthy. So North America gross bookings grew 19%. And then in Europe, actually, we saw slight acceleration in terms of gross bookings on a constant currency basis as well. And so I think on Delivery, it’s all steady on the front. The growth rate is driven based on adding in new eaters and obviously we have a significant source of new eaters coming in from the Mobility side. Our Mobility business provides as many new eaters to our Eats service as Google, Facebook, TikTok combined, at about a quarter of costs.

And it’s also about merchant adds. So we are now at an all-time high in terms of the number of merchants on the platform and the number of merchants are — it’s about 870,000 merchants on the platform, up about 11% year-on-year. So again, that number of merchants, that growth of merchants mirrors our gross bookings growth as well, gross bookings growth being a little bit higher. So with Eats, it’s about demand and supply and we’re adding new eaters and we’re adding new merchants which is really driving the growth of the business along with the frequency that we see with Uber One. Nelson, you want to talk about overheads?

Nelson Chai — Chief Financial Officer

So on the corporate overhead, yes, it did increase a little bit in the quarter. We obviously continue to monitor quite closely. And so on a year-on-year basis, we actually did deliver about 20 basis points of leverage as a percentage of gross bookings. Internally, what we’re doing is we really are trying to focus on managing our costs, if you will, because we do recognize that the environment is a little bit more uncertain despite the fact that our businesses are operating quite well. So you should expect us to continue to be disciplined and we’re going to continue to deliver the operating leverage. As you know, for us, the north star right now is making sure that we deliver the 7% incremental margins that we talk about at a total company level. And as you know, we’re ahead of that and expect to be way ahead of that as we think about full year 2022.

Justin Post — Bank of America — Analyst

Great. Thanks, Dara. Thanks, Nelson.

Nelson Chai — Chief Financial Officer

Thank you.

Dara Khosrowshahi — Chief Executive Officer

Sure. Next question?

Operator

Your next question is from the line of Doug Anmuth with J.P. Morgan. Your line is open.

Doug Anmuth — J.P. Morgan — Analyst

Thanks for taking the questions. I just have two on the Mobility side. I was hoping we could get just the early read on Upfront Fares and Destination functionality for drivers. And then second, if you could just talk about the higher Mobility take rate of 27.9%, which was up about 130 bps sequentially, the key drivers there. Thanks.

Dara Khosrowshahi — Chief Executive Officer

Yeah, I’ll take the first and Nelson will take the second. Listen Upfront Fares are a — Upfront Fares and Destinations are a big positive as it relates to driver satisfaction. Drivers now, on a global basis, were at 2019 highs. If you look at the U.S., the number of drivers that we have is now about 80% recovered versus 2019, but the number of drivers we have is up 37%. And what we’re seeing is that driver churn is down almost 20% versus where it was historically. So drivers are much more engaged on the platform. We’ve talked about driver earnings being $36 an hour on average in the U.S. as well. And the driver engagement, in other words, how many hours are our drivers driving on average is up 16% on a year-on-year basis. So the robust earnings, the continued flexibility and the additional information that you get in terms of upfront destinations, that is combining for very, very healthy supply trends. We can still add more drivers into the marketplace and we’re busy doing so.

But the trends that we see are very healthy and the competitive trends that we see in terms of driver engagement on our platform and driver preference for our platform remain very, very high. So the product team has really worked to improve the driver experience from onboarding to the upfront destinations to our customer service to a bunch of safety innovations that we’re driving as well. So there’s a lot of innovation going on, on the driver front and it’s definitely showing in terms of their preference for our platform.

Nelson Chai — Chief Financial Officer

So first of all, regarding take rate of Mobility, as we’ve talked about in the last quarter, it gets a little bit more challenging because of a business model change in the U.K. that occurred in March. So our reported Mobility take rate was 27.9%. If you adjusted out the impact of the U.K. merchant model change, the underlying take rate would have been about 20.2%. On an underlying basis, the take rate did increase about 100 basis points quarter-on-quarter. And again the underlying take rate would have been closer to 22%, because the fuel charge impact was relatively constant quarter-over-quarter. As we’ve been trying to guide you, we actually view take rate as just one of the levers of the P&L. We really are focused on demonstrating both growth at the top line but more importantly in continuing improving margins which we’re getting. The segment EBITDA margin for Mobility in Q3 was 6.6%, and continuing to improve. And so we’re really focused across a number of different dimensions and again we feel like we have a lot of levers to make sure we deliver against our top and bottom line targets.

Doug Anmuth — J.P. Morgan — Analyst

Excellent. Thank you, both.

Operator

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

Ross Sandler — Barclays — Analyst

Hey, Nelson, I just wanted to follow up on that last comment about the rides EBITDA flow-through, so the 6.6%. At Analyst Day you guys showed that some of the Top 20 markets that are performing above the long-term target already, back in February, and you’ve seen this EBITDA margin go up several 100 basis points this year. So could you just talk about like what’s pulling up the overall? Is it that those top markets that are in the Top 20 are going up even further than 13% or is it the ones that are kind of below the average closer to breakeven moving towards that long-term goal? Like, any color on what’s driving the EBITDA margin improvement in rides, and do you guys think it’s still 11% in the long-term or could it be potentially higher? Thanks a lot.

Nelson Chai — Chief Financial Officer

So we talked about 10% and that’s the number we’ve kind of talked as a guide. I would say it’s across the board. So what we’re seeing is we are getting leverage because, A, we’re managing our cost base, B, we’ve talked a lot about some of the investment we made last year in terms of bringing the supply on. So we’re able to be more efficient in terms of adding that supply and so it’s really across the board. Those top markets that I kind of highlighted continue to do extremely well and I’d say [Phonetic] that we have a number of countries that are above that 10% number. And the ones that are below continue to improve. And so we’re just seeing an overall improvement in our marketplace.

Our business is actually going quite strongly across all of our key geographies right now. And again it’s a lot of the confidence we have if we actually think about our ability to put out our quarterly targets and then overachieve against that, particularly on the bottom line as you’ve seen this year. And again, if anything, as we think about our ’24 targets, we’re three quarters into laying out those numbers in February, we’ve largely hit them on the top line, we have over exceeded them on the bottom line. The business is operating quite well and so we probably are more confident in terms of hitting that bottom line number if you think about three years out. But it’s not just because of the folks below the 10% or above the 10%, it’s actually the overall marketplace and how the business is operating right now.

Dara Khosrowshahi — Chief Executive Officer

And Ross, I’d just add that we’re able to drive this kind of incremental margins, the healthy incremental margin while we continue to invest in some of the newer products in the Mobility portfolio, as we invest in Taxi, as we invest in Reserve, as we invest in U4B, high-capacity vehicle, shared rides, etc. So we are actively reinvesting in growth levers, but the base business is inflecting and is showing very, very strong leverage that allows us to invest in new products, while we’re delivering higher profitability as Nelson said.

All right. Next question, please?

Operator

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

Lloyd Walmsley — UBS — Analyst

Thanks. Two, if I can. First, just given all the questions around macro, are there enough levers in the business on the cost side and kind of rationalizing competition such that you’re confident in the 2024 EBITDA targets, kind of, regardless of macro? And then second one, somewhat related, Lyft recently retired their energy surcharge and added a new charge to pass along higher insurance costs. Do you think that similar course of action might make sense for Uber and what could that mean for the P&L? Thanks.

Nelson Chai — Chief Financial Officer

So first of all, in terms of levers, yeah, we’ve been telling you this and if you think about the levers that we’re able to pull, as Dara said, we’re able to continue to improve and deliver or overdeliver against the 7% incremental margins at the company level, while we’re investing in some growth sets [Phonetic]. And so we are — and frankly, we’re probably more confident in terms of delivering the ’24 EBITDA number as we sit here today in November versus even February because again we have three quarters of data behind us. And including the part of the macroenvironment, there’s also the competitive environment and so we are operating quite well right now. So yeah, we think we’re going to — we are very confident in terms of delivery the ’24 EBITDA number.

In terms of the Lyft surcharge, what I would tell you is, we obviously know what they’re doing. We pay close attention. We are not making any changes at this time. It’s not that we wouldn’t, at some point. That obviously would have a beneficial effect, but again we are trying to balance our marketplace [Technical Issues] sure that we continue to drive an efficient marketplace. And as you can tell by our results, we are delivering very, very strong bottom line as well as top line. And again, we’ll continue to evaluate, but again we’re not going to make a change based on something that they’re doing.

Dara Khosrowshahi — Chief Executive Officer

And Lloyd, I’d just add that, right now, the focus of the business is really to improve our supply situation. And that’s kind of where we’re weighting some of our investments. Earnings from our earners on a global basis were $10.8 billion, up 25% [Technical Issues] on a global basis. And our job is to run a lean operation where we can deliver as much earnings as possible to our drivers and couriers on a global basis and also, obviously, be responsible to our sponsors. So right now, exactly as Nelson said, we like where we are and we’re going to focus on our own strategy versus competitive — some of our competitive strategy.

Lloyd Walmsley — UBS — Analyst

Okay, thank you.

Dara Khosrowshahi — Chief Executive Officer

You’re welcome. Next question?

Operator

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

Deepak Mathivanan — Wolfe Research — Analyst

Great. Thanks for taking the questions. So, couple of ones. First, can you unpack the Eats incremental margins in 3Q? It’s continuing to be very strong even as you kind of come through the investment period last year. Can you elaborate the factors driving cost per trip down? Is it more sort of like a batching and training with scale that’s happening on the platform? Or are there any other underlying factors? And then second question, Dara, maybe can you talk about some of the kind of countercyclical elements potentially helping drivers supply with macro becoming weaker across the world in certain countries? Are you starting to see sort of like the driver supply and hours being helped by weakening macro in certain regions?

Nelson Chai — Chief Financial Officer

Okay. So first of all, Deepak, I’ll take the first part. So as you know, we made a very conscious pivot towards expanding Delivery profitability faster than we previously planned. And if you look at what we’ve delivered this year as well as what the guidance is into Q4, that will play true. We benefited both from the work that our tech team has done in terms of improving our courier efficiency and so that is probably the single biggest driver in terms of operating, in terms of driving our incremental Delivery margins. And then secondarily, there’s — we still have a fair amount on the incentive line. The competitive environment has gone more constructive, if you will, as lot of our competitors were also trying to follow our lead and trying to drive profitability, and then the ones that are not public, as you know, the funding markets have changed. So we really are competing much more on platform. And so you’re seeing the benefits of that as you think about both our growth, but importantly our EBITDA margin progression. And so you should expect us to continue to drive that because, as Dara said, internally, we are committed to managing our cost base and really making sure we get leverage off of our scale platform.

Dara Khosrowshahi — Chief Executive Officer

And Deepak, in terms of driver supply, that is getting healthier across the board on a global basis. I think there are — there’s couple of factors. One is we lean into driver supply. So driver incentives, while they are easing, continue to be at higher levels. We are investing billions of dollars in driver incentives to bring drivers on board. Second is, we have invested significantly in our onboarding flows, auto-fetching documents as opposed to you’re having to take pictures of your documents, improving the conversion of driver sign-ups to actually drivers getting onboarded and making that first trip as well. There is a ton of tech work that has gone into those onboarding flows. And then I do think the macroenvironment does seem to be helping, combined with the solid earnings that we’re seeing, right? Average driver in the U.S. is making $36 per engaged hour. Those are very, very healthy earnings levels. And in the U.S. at least over 70% of our drivers who are coming on board now said that inflation did play a role in their decision to sign up, right? It helps them afford their groceries, be more comfortable in an environment where real wages are fairly weak as it relates to the inflationary environment. So we do think the macroenvironment is helping, although, I do think that the investments that we’ve made both in technology and behind driver incentives are also pretty important factor as well.

Next question, please?

Operator

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

Mark Mahaney — Evercore ISI — Analyst

Thanks. I wanted to ask two productivity questions. The Uber One, what do you — what else can you do to make the Uber One value proposition more compelling such that you go from 10 million customers — members to 20 million or 30 million? Like, what are the big unlocks ahead on Uber One? And then secondly, you talked about driver supply is now back on par with — the active drivers is back on par with September ’19 levels, and that you’ve seen improvement in things like surge and ETA’s. Are surge and ETA’s, are those metrics back to where they were back then? And if not, what still needs to be done to kind of continue to improve the performance, the productivity of Mobility, to get it back to where it was and to get it improved from today? Thanks.

Dara Khosrowshahi — Chief Executive Officer

Sure. Absolutely. So Mark, the one thing that I would stress is, we think Uber One is already there. Like we’re always trying to improve the product as well but remember, this is a very young product, we are still launching in markets, so we’re now in eight markets and it is the only product out there. We price competitively with other players who are offering delivery-only benefits. And we are offering delivery benefits that are just as strong as our competition and discounts ranging from 5% to 10% on the Mobility side, which is a far superior proposition, especially as markets are opening up as well. So we’re confident with the product as we have it to be able to go from 10 million to 20 million to the 30 million that you put out there. The product is already there.

Now we are going to invest in experiential benefits. Do you get priority pickup in airports? Do you get priority matching, for example, during an event? Those are definitely benefits that we are going to experiment with. But Uber One, as is, is the best membership product out there on a global basis. And obviously, with the audience that we have, we have a Mobility audience and a Delivery audience and a grocery audience that we can put — that we can push Uber One in terms of the marketing audience. We think that 20 million, 30 million are a matter of time.

In terms of surge and ETA’s, they are coming down. Generally, I’ll say, surge levels now are running at a high-20s to 30% range. We’re more comfortable with a range, call it, in the teens. ETA’s, on average, are running, call it, six minutes and we are more comfortable in the five-minute range. What it takes to get to those levels is simply continued investment in supply. And we are seeing our supply improve and generally supply hours are growing at very healthy rates, which is a function of new drivers onboarding but then the average driver who’s onboarded being engaged at a higher level than they were last year. So as we improve the supply-demand balance of the marketplaces, and we’re well on our way, we think we’ll get the surge levels below 20%, and ETA’s closer to five minutes. Directionally, we’re confident where we’re going.

Mark Mahaney — Evercore ISI — Analyst

Okay, thank you, Dara.

Dara Khosrowshahi — Chief Executive Officer

You’re welcome. Next question, please?

Operator

Your next question is from the line of Ron Josey with Citi. Your line is open.

Ronald Josey — Citi — Analyst

Great. Thanks for taking the question. Maybe, Dara, I wanted to follow up on a question earlier on Upfront Fares and Destinations. And I think in the past or recently, you talked about just variables that go into pricing more so than just time and distance. So can you talk just a little more about just the variables on the algorithm besides time and distance on Upfront Fares? And then, we haven’t talked much about advertising here, but $350 million run rate, targeting $1 billion by ’24, a bunch of launches this quarter. Talk to us about what’s needed from a tools and maybe verticals or sales force perspective to get to that $1 billion? Thank you.

Dara Khosrowshahi — Chief Executive Officer

Yeah, sure Ron. So time and distance are definitely variables. One variable is the supply of drivers in that location, right? If there are lot of drivers in that location, you can price the trip a little lower or if the supply of drivers is low in that location, then you’re going to have to price up as well. We will also predict the chances of there being another ride at the destination as well. So is the driver going to have a large amount of deadhead miles, call it, in which case we would price up. It’s highly likely that the driver will have another ride so the utilization is high, then we will price that ride lower. And then also some of the basics, right? How far does a driver need to drive for the pick-up? If it’s half a mile, then price might be lower. If it’s, call it, five or six miles, then the price will be higher as well. And then also our ability to show the upfront fare and our looking at what the access rate is for those upfront fares give a signal into our pricing algorithm that wasn’t possible with time and distance previously. When we are [Phonetic] time and distance, it is what it is. Drivers will accept or they won’t, actually in that case, they will cancel if they didn’t like the destination. Now we see light signal as to, is our pricing working or not based on driver acceptance rates. And that goes into the algorithm that determine pricing as well. All of this is combining to a higher throughput marketplace with higher satisfaction on the driver side as well. So we’re pretty happy about the signals and it’s clearly something that drivers watch.

In terms of advertising, we’re very confident. The targets that we put in terms of getting to $1 billion were based on what we think are conservative assumptions. We see competitors out in the marketplace with advertising dollars as a percentage of gross bookings of 2%, $1 billion by 2024 implies numbers that are short of that 2% number. So we think even if we get to $1 billion, we think we will have growth in advertising beyond that. We are now excited to open up new surfaces on the advertising front. Our Journey Ads that we have launched, that opens up the Mobility surface. We are getting very, very excellent engagement as far as Mobility consumers with those Ads. And we’re attracting some pretty premium advertisers on to that surface as well because of the unique surface that attracts a very high demo as well. So we are well on our way to that $1 billion and I think again the $1 billion is not the high point of that business. The $1 billion is just one step along the way to building a multibillion dollar business for us.

Ronald Josey — Citi — Analyst

Thank you, Dara.

Dara Khosrowshahi — Chief Executive Officer

You’re welcome. Next question?

Operator

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

John Blackledge — Cowen — Analyst

Great. Thank you. Two questions. First, to start, could you discuss Uber’s market share position in both Mobility and Delivery? And then on Mobility, could you talk about the volumes compared to the highs, pre-pandemic? Thank you.

Dara Khosrowshahi — Chief Executive Officer

Sure. In terms of our category position in Mobility and Delivery, we operate all around the world. But if I were to generalize, on Mobility, our category position is very strong. We are at [Technical Issues] if not at all-time highs. And U.S. Australia and the U.K. particularly is very, very strong with us — strong for us as far as category position goes. And then on the Delivery side, we have improved our category position quarter-on-quarter. And either we’ve been stable or improving our category position across 75-plus-percent of our gross booking space and in the last month we believe that’s only improved. So we are in a position now because of the scale of the business, because of the global nature of the business and the power of the platform where Mobility is pushing — is sending consumers to Delivery and vice-versa, we’re able to gain category position and improve margins pretty significantly which is great. Second question?

Nelson Chai — Chief Financial Officer

So in terms of recovery. So we’re more than 100% recovered versus pre-pandemic levels globally on Mobility and we’re about 94% recovered on a trip basis globally. So again the business has come back nicely and again we see pretty good runway ahead of us.

John Blackledge — Cowen — Analyst

Thank you.

Balaji Krishnamurthy — Head of Investor Relations

We’ll take one last question, please.

Operator

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

Jason Helfstein — Oppenheimer — Analyst

Thank you. So our work suggests that Delivery-only users in Europe, and we use the U.K. as a proxy but, are multiples higher than Mobility-only users. I guess can you elaborate what do you think you need to do to convert the Delivery-only users to Mobility users or you think there are structural differences in transportation in Europe versus the U.S.? Thanks.

Dara Khosrowshahi — Chief Executive Officer

Yeah, so I think in terms of those users, it’s really the platform. So we are now offering Mobility promos, for example, to Delivery users to either have churn or Mobility users who’ve never used Mobility before and we’re seeing really great promise in terms of Delivery actually being able to cross-promote and drive Mobility use cases as well. And then Uber One is the other product that we have. Obviously, the lead benefit for Uber One is free Delivery discounts on your delivery as well, but the Mobility benefits are benefits that we can promote in Europe and other markets. And when you look at the U.K., for example, a much higher percentage of our Mobility business is what’s in London, while the Delivery business is not just in London but is in a number of other cities, the Manchesters, Liverpools, Newcastles, etc. of the world as well.

So we seek the power of cross-promotion. We started with the Mobility really promoting Delivery, but we think Delivery promoting Mobility back is absolutely a potential that we have that we’re very early in terms of developing.

Jason Helfstein — Oppenheimer — Analyst

Thanks, Dara.

Dara Khosrowshahi — Chief Executive Officer

All right. Well, thank you everyone for joining. We are very, very happy to deliver another healthy quarter of strong top line growth and strong bottom line growth as well. Nelson, Balaji and I get to talk about it, but there are thousands of Uber employees who are doing the hard work on the ground. So special thank you to them and then of course our earners, without [Phonetic] whom, we wouldn’t be here talking to you. I look forward to talking — see you next quarter.

Operator

[Operator Closing Remarks]

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