Uber Technologies, Inc.'s (UBER) CEO Dara Khosrowshahi Presents at Morgan Stanley Technology, Media and Telecom Conference (Transcript)

Uber Technologies, Inc. (NYSE:UBER) Morgan Stanley Technology, Media and Telecom Conference March 1, 2021 2:00 PM ET

Company Participants

Dara Khosrowshahi - Chief Executive Officer

Conference Call Participants

Brian Nowak - Morgan Stanley

Brian Nowak

Good afternoon, good evening, good morning, wherever you are. We are thrilled to have our next keynote at the 2021 Morgan Stanley TMT Conference. Dara Khosrowshahi is with us from Uber. And before we get started, let me get started with all the disclosures. So, for important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

Some of the statements made today by Uber may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by Dara are based on assumptions as of today and Uber undertakes no obligations to update them. Please refer to Uber's Form 10-K for a discussion of the risk factors that may affect actual results. We are thrilled to have Dara with us today, the CEO of Uber. It's an incredibly dynamic industry and company.

Dara, thank you so much for joining us.

Dara Khosrowshahi

Happy to do it. Thanks for having me.

Question-and-Answer Session

Q - Brian Nowak

So, I might as well get started. There's a lot to talk through. I wanted to sort of start with a high-level one just about the transformation of Uber. It's changed a lot since you've been there. And even over the past year as you've navigated through sheltering and COVID and streamlined the business, I just sort of wanted to do a temperature check with you. As we sit here March 1, 2021, maybe talk to us about what are one or two of the key priorities that you're most focused on for 2021 just to ensure that you're positioning the company to drive more market share through recovery and into 2022?

Dara Khosrowshahi

Yes, definitely. I think as far as our priorities, a couple of things come to mind. One is that we continue to operate in a safe way and we continue to be leaders as it relates to our community because this epidemic is an epidemic where everyone has to step up to help.

On the safety side, you've seen us lead in terms of no mask, no ride; the mask recognition technology, for example, that we have on our mobility side. And then as it relates to community early on making sure that people all had Rides to -- Rides for frontline workers, food for frontline workers.

Now, for example, our partnership with Walgreens to make sure that transportation doesn't get in the way of vaccination. So, I think we're still at a point where safety and community have to come first. And we as business people and Uber as a brand does our part to contribute to the recovery. So, I think that comes first.

Then when you get to the business because then you do have to get to the business, I'd say a couple of factors. One is for us the synergy opportunities, this is a year when our delivery business is going to continue growing and we're seeing early quite encouraging signs at the beginning of the year. But our mobility business is really going to come back continuing to drive the synergy opportunities between the two, the super-app, our membership program that really set us apart from other competitors. I think that's very important.

We -- the preparation for reopening is important as well. And what's on our mind there is really the supply side of the equation. Especially on the delivery side, we're recruiting more and more couriers into the marketplace. And I think when I look at this balance of the year, we're going to have to add hundreds of thousands if not millions of couriers into the marketplace on a global basis. But then really drivers coming back as the economies open up, as markets open up, that's something that we're quite focused on, so the reopening preparation.

And last but not least, certainly is our drive to break-even. This has been -- it's a commitment that we've made to our investors. The -- and as it relates to the company and the operations of the company, we've been driving automation. We've been driving efficiency. We took some really tough calls last year as it relates to both divestitures and as it relates to making sure our cost envelope is best-of-breed versus our competition. We've got to continue there. And obviously, break-even is a -- and profitability on an EBITDA basis is a commitment that we made to our investors and it's a commitment that we're confident we can keep.

Brian Nowak

That's great. There's a lot there. There's a few areas I want to peel back on. It's a great intro. I want to start with the ride side of the business and sort of the addressable market and how it may or may not be changing. This is a common investor discussion. Has the – is the Rides industry going to be similar to 2019, in 2022? Is it going to be stronger in 2022? How do we think about that?

So I'd be curious from your perspective, all the moving pieces around public transportation, people moving out of cities, et cetera, how are you thinking about positioning the Rides business heading into 2022, so you maximize the chances of expanding the number of people who use Rides and expanding the overall rides use cases as well?

Dara Khosrowshahi

Yes, absolutely. We're confident as to where we're positioned, knowing that there's some uncertainty as it relates to ridership, especially commute and people getting back to work. But I think one really encouraging sign that we've seen is that we've absolutely seen an influx of new riders. And that influx looks like it's coming from other modes of transportation, whether it's mass transit or taxi. Like pretty consistently across markets we see Uber come back faster than taxi, faster than other forms of transport. And we also see it with our consumer base.

There's a new set of consumers coming in typically a little bit more price-sensitive. So we've had to make sure that our pricing is sharp to bring that ridership that new rider and having them stick. And if that – we hold on to those new cohorts and we bring back the ridership, the loyal user, high-value users that we've had for some period of time. I think we're in for a pretty interesting combination as it relates to growth not just this year but really going into 2022 and 2023.

We're seeing a couple of other interesting trends. One is that the workday non-commute part of our business is – it's nearly fully recovered in a number of big markets. When you look at like a New York or São Paulo or Rio or a Melbourne or Sydney, these are major markets, where workday non-commute is actually sometimes back to normal or back to pre-pandemic or close to. And so that is a new use case again pretty consistent with new riders are coming in. And we're also seeing suburban volumes actually grow faster than urban volumes.

Is that a temporal factor, or is that a permanent factor? Remains to be seen. But I think what it signals is that, if people move, regardless of where they're moving, whether it's an urban poor or a suburb, the use cases that are borne out of Uber continue to be an important part of everyday life. And then we're complementing that with new use cases, hourly, intercity hire, for example, and a number of our markets, tax fee, et cetera.

So I think the combination of just the position that Uber is in, the investments we made in safety and trust and the transparency that we offer both our riders and our drivers and then the new use cases that we're building up. We're having a car rental use case as well. All of those allow us to expand the marketplace.

And if the way people get to work in the future is less focused on commute and you have a more even distribution of travel in either city cores or suburbs from a temporal basis, that's a good thing for us. We generally in core commute, in the city's core and in commute hours, we were undersupplied. So having a more even demand distribution both temporarily and spatially is actually would make our business more efficient not less efficient.

Brian Nowak

Interesting. That's a great point on the commute side on supply. Now one of the ways to arguably increase the probability of retaining some of these new users and use cases is through subscription. And you've given some new disclosure now. You have 5 million total members across Eats Pass and Uber Pass. I guess I just wanted to ask you about going forward, how do you see those subscription products evolving in order to continue to add more and more members and really realize that subscription opportunity?

Dara Khosrowshahi

Yes, absolutely. So I think it's important to understand that even though, we got 5 million members, we're very, very early as it relates to our membership journey. Membership, for us, became an important initiative really midyear, last year. So I do think that when we look at membership, one is just increased penetration of the markets that we're in, no different than where we were previously. There's plenty of growth as it relates to base membership.

Now what we see out of members, which is really, really encouraging is we see higher frequency. We see higher transaction or basket sizes and we see more cross-platform usage and we see increased stickiness. All of those factors fundamentally are very positive as it relates to our business, which is why we're leaning into membership as an important growth driver.

And my view is really where we want to take the membership is similar to many of the great membership businesses out there or subscription businesses out there, which is you keep improving the value base and the quality of the subscription product by continuing to invest in content.

And for us content is -- right now, the hero membership benefit is discounts on Eats deliveries. Obviously, the Rides business as it comes out having discounts as it relates to moving around and Uber Rides are going to become more of a hero value. But then we've got grocery. We've got alcohol. We'll have convenience. We've got pharmacy.

So I think we are uniquely situated to really provide the premier all things local membership program in the world and we can do it on a global basis. All of this essentially drives cross-platform, drives LTV, which then allows us to reinvest in our service and make it just better and better and better year after year after year. So that's ultimately the strategy. But I would also say that we're very early in our evolution and we've got a lot of development ahead of us here.

Brian Nowak

It's interesting. You mentioned investing in content the way you think about the subscription offering. And when I get a lot of questions from investors, I sometimes think one of the more underappreciated areas is all of your innovation on Rides. Everything you've been focusing on Rides really since 2019, whether it's segmentation, B2B offerings, higher capacity vehicles, taxi to your point earlier. I guess -- and maybe even something else I didn't even list, as you sort of sit here today, which one or two of those areas of Rides investment do you think are still most underappreciated by the market to really expand the overall addressable market for Rides?

Dara Khosrowshahi

Well, I think -- listen to some extent all of it is underappreciated because all eyes are on delivery right now and not a lot of eyes are on mobility. And the benefit that we have as it relates to our scale and our global scope is, we can keep investing in our mobility product in a real way to prepare for their reopening. And when I look at the growth vectors as it relates to our mobility business there are kind of three vectors that we think about strategically.

One is expansion markets. These are the markets the Germanys of the world, Spain, Argentina, Japan, Korea, these are markets that are -- have not been historically highly penetrated. They're big GDP markets. They are naturals as it relates to our mobility product. And now that we're doing it the right way, it's a question of when not if. And we're seeing excellent signal -- early signal from all these markets, but there's plenty of growth ahead in those markets. So first is expansion market.

Second for us is adjacencies. And adjacencies are essentially high-capacity vehicles and pool for us are adjacencies that will drive lower cost again for more price-sensitive consumers out there. We have hailables and taxi, which is a huge adjacency. And again, the taxis are going to meet demand and a much higher percentage of taxi hails are going to be e-hails versus physical hails and we've got the best e-hail product out there, so I think taxi is a very natural adjacency.

Transit services both in terms of SaaS services we think is quite promising and can help transit transition kind of into kind of next-gen transit as well. And then there's -- and then there are other areas such as rentals et cetera. So we're not really as far as adjacency goes, we're not making one bet. We're making multiple bets. And I think we're positioning ourselves to be this again one-stop shop for all areas of transportation going from point A to B. Again, I think we're uniquely situated to do so and we've uniquely invested to do so.

And then the third area for us is enterprise. Enterprise markets, I think, are being increasingly recognized by investors. And we are making big bets in the enterprise. Historically, it's been U4B. And, for example, as it relates with Uber for Business, we've been able to pivot to delivery where our delivery business grew 30x last year, off of a small base of 30x, and we expect very big delivery growth and we'll have one enterprise relationship for both mobility and delivery use cases.

But Uber Direct powering delivery for local merchants, and again, our transit services, those are all enterprise services. And Uber has been an incredibly strong consumer brand. We have not been as focused on enterprise and we're seeing more and more enterprise opportunity ahead of us both for mobility and delivery.

So when you put the expansion markets adjacencies enterprise together, these are all – every single one of them are very large opportunities that are multiyear opportunities. They're not like next year or the year after. These are five to 10-year bets for us and we intend to execute on those bets.

Brian Nowak

A lot of runway across the different layers.

Dara Khosrowshahi

Yes. I mean huge, huge runway across.

Brian Nowak

A lot of rise in runway. I have a couple of more tactical ones before we get over to the Eats side. First one is on Rides competition. I would be curious, as you look across the globe, talk to us about what you're seeing in the competitive dynamics today. And maybe if you could, just sort of break it apart a little bit for us where – talk to us about the US and then any changes or things you're seeing in Europe? I know there's been some recent press articles about European competition picking up, so maybe US versus Europe competitive environment?

Dara Khosrowshahi

Yes. I think what I would say as it relates to the competitive environment and mobility is, it remains competitive, right? Like the news that there's competition out there in mobility is old news. And we have had multiple competitors in every single market in which we operate. And I would describe the competitive environment as being relatively stable.

You've got local competition heats up. Sometimes it goes up, sometimes it goes down. But when I look globally across our portfolios, generally the competitive environment is stable. And I think a lot of players are thinking about well what does a recovery look like. And when I look at the US obviously our chief competitor there is Lyft. They're a strong competitor but a public company that is committed to being profitable just like we are. And so both of us are competing rationally based on brand, based on technology, based on service, the exact areas that you want to compete in.

Our Latin America is one of our fastest-growing markets in terms of coming back. And we've got DiDi as our chief competitor there, very tough competitor but they've been a competitor for four or five years. And our market share in Brazil is 70-plus. So we're very confident of our ability there. We take DiDi seriously but we've also proven that we can compete and we can continue to thrive. And the leadership, the market leadership that we have is quite sticky.

Middle East, obviously with the Careem deal has created a very good environment as it relates to the Middle East. And both Uber and Careem are coexisting in the Middle East. When I look at Europe, in every single country we have multiple competitors. Europe is not even like two or three but four, five competitors.

So I think if DiDi comes into those markets, they're already highly competitive. What we do see is that typically most of our competition is based on price. The competitors they've got lower quality, their network is not as strong, their ETAs are not as strong. They haven't made the kinds of investments that we made in safety. So what they've got to compete on are price.

And when you've got multiple competitors competing on price, often it creates a kind of the splitting of the low-end market and our continuing to have very significant shares. So listen in Europe, if DiDi comes in, it will be another competitor but it's one more competitor amongst four, five or six competitors.

We see it in Australia for example. In Australia, there are four or five competitors, DiDi is one of the competitors and Australia continues to be one of our most attractive markets out there. So when I look at the competitive environment constructive, generally and I think people getting back for return and I expect DiDi to be a competitor for us all over the world and that's something that we have seen for many, many years and I think we'll continue to see for many years.

Brian Nowak

Got it. Understood. That's very helpful. The last one on the more tactical side, before we get into the Eats business is – you had some comments on the fourth quarter call on sort of the slope of the recovery and what you were seeing. Another month has passed. So I'd just be curious about either Rides or Eats, what can you tell us about sort of green shoots and signs from February versus January, et cetera?

Dara Khosrowshahi

Yes. I think the February trends that we're seeing continue to be encouraging as well. Obviously, February was affected by the weather patterns that you saw the really, really harsh weather for example in the US. It's a shorter month. But generally, the green shoots that we see as it relates to the mobility business weather aside, they're encouraging. Latin America continues to be very strong. Australia, APAC continues to be very strong. And it looks like we may see some green shoots as it relates to US and Europe, but I think it's too early to tell.

And then with delivery, we talked about a very strong January and that momentum is -- continues into February. So whereas for delivery one of the questions is, hey, will these 100-plus percent growth rates slow down? We don't see any sign of them slowing down at this point. And from a portfolio standpoint, we're in a very, very strong spot in that we are -- we have both very significant delivery now business and a mobility business. So to some extent the opening up trade is one where we get to benefit on both sides of the coin whether or not we open up earlier or whether or not we open up a bit later.

Brian Nowak

That's helpful. On Eats, it is fascinating what a difference a year makes. When we were sitting here a year ago and the market discussion was Eats can -- Eats is not a durable business, it won't scale and never make money. It's fascinating what a difference a year makes in that.

So on Eats, very similar questions on Eats as we're having on Rides a year ago. So let's start with competition. Recently one of your competitors on Eats did a capital raise about €1 billion convert and has talked about sort of prioritizing market share over EBITDA. I guess as you look into 2021 and the 2022 on the Eats side talk to us about that competitive landscape and the steps you're making to sort of ensure on the Eats side you still get to breakeven or sort of can scale that business into 2022.

Dara Khosrowshahi

Yes. I think many of our delivery competitors have done capital raise. And listen, I think, capital is attracted to the TAM of these markets, where it's not really just about food, but it's becoming clear that it's broader than food it's grocery, it's alcohol, it's convenience, it's pharmacy, it's other forms of local commerce, which arguably has an even bigger TAM than mobility. These are $5 trillion TAM marketplaces that are significant. So, it's natural for capital to come in.

As it relates to the competitive environment in Eats, I think what's important to understand is, first of all, we've improved our own competitive position by exiting markets where we didn't think that we could win, exiting markets where we didn't think that we could be number one or number two. The business has scaled very significantly and has gotten much more efficient and has all of kind of the benefits of scale that you see.

And so as a result, I think we're kind of -- we're a leaner meaner competitor out there. And when I look at the competitive environment you've got certain players who are more focused, let's say, on share than profitability, because they've been losing a bunch of share. And you can either change your kind of the share direction either by improving operations or improving or increasing investment in capital.

Now capital investment doesn't solve all things if fundamentally you have an operational issue. And for example, when you talk about the competitor who did the convert, that's a competitor who's in the marketplace business that has not built out a fully fledged call it fulfillment type of an ecosystem. And they're competing against ourselves and other players who have built out fully fledged fulfillment systems.

So, capital at some point runs out. And once capital runs out you got your operations. Operations -- operational efficiency never runs out, right? It compounds year after year after year. And the bigger you get, the more efficient you can be, the more disciplined you can be, the more you understand what the definition of good is.

So, when we look at our competitive landscape, we got really strong competitors in the US. We got really strong competitors in Europe and in pretty much every market out there. What none of these competitors have is the global scope that we have and the platform that we've got in both mobility and delivery being on one platform.

And we talked about, for example, nearly 15% of each new customers coming from our mobility business totally free, no cannibalization. These are structural advantages that we have over other players. So at some point the capital runs out. And then, at that point, you see who runs a better business and we like where we stand.

Brian Nowak

Yes. Okay. Eats' profitability. I think investors really appreciated the disclosure in the slide deck from the fourth quarter showing the 15 profitable markets from the fourth quarter generating $100 million of EBITDA. It's really helpful I think to sort of understand the way the portfolio is being run.

A few questions on those markets. Maybe can you give us some examples of factors that may be scaled over the course of the last year to get you to profitability? And then just the durability of those factors as we go into 2021 and maybe the markets get more competitive et cetera?

Dara Khosrowshahi

Sure. I think as it relates to Eats' profitability, if there's one pattern that is the most dominant pattern as to profitable markets versus markets that are on their way to profitability but not yet there, it goes to the cohorts -- your customer cohorts and the deeper cohorts you have of customers who have been there for a long time, versus, let's say, new customers, the more profitable that business is or, let's say, the fewer losses you've got.

In the profitable markets that we have, we've got very deep cohorts of loyal customers. And as a result of that promotional spend that you have to spend sometimes in order to attract new customers or in order to put on your -- in order to take down your competition, promotional spend as a percentage of gross bookings comes down.

The second factor is that, because your established members or your cohorts are higher percentage versus new users, marketing costs, just new user acquisition costs as a percentage of revenue is lower because you got this cohort that you've acquired. They're loyal; they habituated to your product and continue to use it over and over and over again.

So the combination of lower promotional spend across all of your gross bookings and lower marketing spend as a percentage of all your gross bookings, because you've got this loyal customer base, those are the two biggest factors.

Other factors then include just the ability to scale the business, so you're driving down variable spend. And just having a lower fixed cost base, although we get to amortize our fixed cost base over a huge amount of volume and we get to amortize a significant amount of our technology spend across multiple businesses.

So from a fixed cost standpoint, we not only have the structural advantage versus our competitors. But then as the business gets bigger, that fixed cost base you get to drop some efficiencies off of as well.

The last factor I would tell you is that, the profitable businesses all have a relatively high penetration of restaurants that have signed up for this service. That is availability and choice is a big, big part of this service. So we weave together promos, marketing, fixed and variable cost leverage and then restaurant choice on the platform. Those are the common factors.

All of it, we believe, is sustainable. It's structural and sustainable. And when you look over quarters and years, the vast majority of our markets are headed in the right direction. Where you get peaks and valleys depends on competitive environment. Sometimes competitors push. You got to push back.

And then there are some markets where you're leaning in. Japan is a market where less than, I think, well less than 10% of Japanese restaurants are in our service. We're already at scale levels, you could argue, on a GB basis, but it will be a very big mistake to try to drive, let's say, profits out of the Japanese market when there's so much growth ahead of us.

Brian Nowak

That's helpful. It's a very big portfolio. And the -- so to that point you talked about Eats being profitable this year. There are always jabs back and forth. The regulatory environment can change with fee caps, et cetera. Maybe talk to us about sort of your confidence at this point on Eats being profitable this year and sort of how we think about puts and takes and timing around that.

Dara Khosrowshahi

Yes. We're very comfortable. You've seen us I mean just on an execution basis on the ground, we continue to improve the profitability metrics of Eats, while we're driving outsized growth and we see it on a country-level basis. The caps that we've seen in some markets including the US, those are not new. They were put in place. We do believe that they're temporary. But we're not assuming that those caps are going to abate for the balance of the year when we put our plans together.

And then Prop 22 was also something in California that we have seen, we have included those costs. Some of those we passed on to consumers and some of those essentially we have taken in on our P&L as well. So none of those factors are new factors, as it relates to our plans. And the trends that we see in the delivery business are constructive and we're very confident that we can get to profitability with that business.

There are certain elements of the business for example grocery that we're leaning into. One, because the opportunity is big enough, we're leading into especially in the first half of the year. And some of the moves that we made last year for example with Autonomous and ATG deconsolidating allow us to incrementally invest in some of these growth areas. We think it's a healthy thing and we can be balanced about growth and hit profitability as well. It's not an either or. It's an and for us at this point.

Brian Nowak

Yes. On Eats, last one on this topic. It's sort of similar to Rides, where I feel like sometimes the market doesn't think about all your innovation kind of pieces of content to go back to what you're talking about earlier. You've been investing in bringing your own courier, Uber for Business, we mentioned earlier and then the advertising piece around Eats. So maybe talk to us about where you are in the advertising opportunity on Eats so far. And just conceptually, what are the one or two key areas you need to execute on to really keep growing that business over time?

Dara Khosrowshahi

Yes sure. I would – I'd say that, if I talked about our membership product being in the early innings, our advertising product is even earlier innings. And it is growing at very, very significant rates. This is a very natural surface for especially small and medium businesses to invest in. We give them the tools to understand what that investment is to control that investment. And the return is multiples of the ad spend is – the return that they're getting is multiples of the ad spend.

So we're actually metering the growth of our advertising business to make sure that the advertisers are making significant amount of return on their spend because what we want to do is we want to build a business that's a lasting business, that's not based on kind of supply-demand. It's not based on needs. It's actually based on building a business.

And we're seeing their SMB spend in advertising actually grow faster than our enterprise spend in advertising, which I think is terrific. But I do think that we are – when we look at some of the other players when you look at Meituan for example, who has built a real ad business, they're at two plus percent of gross bookings.

Amazon is at similar levels, if not higher. So I think this combination of marketplace, e-commerce with a very fragmented supply base, we saw it in the travel business as well, right? Expedia has an advertising business that is at those levels or more. So we think it's only a matter of time and we have fortunately very strong ad experience, as it relates internally, as it relates to Uber. We got a bunch of people from the Googles of the world, the Facebooks of the world, so we think this is very, very early in its development.

We got SMB in. We've got enterprise in. The next step for us is to get some CPG advertising in. And we think we will – and we're testing kind of CPG advertising in a number of our larger markets. And this is a model that's going to work for restaurants. It's working for grocery. It will absolutely work for alcohol as well. So it's kind of a horizontal business that we're just getting started with. And obviously the profit margins in the advertising market are pretty substantial. So I think we've got substantial size and we've got substantial profits in front of us.

Brian Nowak

It would seem like in the last mile and the grocery opportunity, the CPG advertising opportunity to pay for that space in the checkout card, if you're a peanut butter that goes well with toast, it seems like it could be a very high-value advertising buy for CPG companies.

Dara Khosrowshahi

Yes. This is M cap advertising and our goal is to build the biggest M caps in the world. And we think as we build audience – and listen, the audience to our delivery services, now what's interesting about us is, when you combine delivery and mobility, what people are getting and where they're going and often if they're going they might be going to a restaurant or they might be going to a grocery store or they might be going to a pharmacy these are what -- we're in the early years right now.

So for the next year or two, it's just going to be go grab, grab business, bring the dollars in, make sure that your advertisers are building their business profitably. Then in the next two to three years, the advantages that we have as it relates to mobility advertising and delivery advertising across different areas whether it's food, grocery, et cetera it becomes pretty interesting.

Brian Nowak

Now take two on what a difference a year makes. Take one being Eats now regulatory. Last year in my mind was a pretty big year for drivers and Prop 22, a very impactful year. So talk to us about where you are now from a regulatory perspective and how do you think about this evolving in the U.S. and in Europe for both Ride -- drivers on the Rides side as well as couriers on the Eats side?

Dara Khosrowshahi

Sure. So I think that for us Prop 22, obviously, was a very, very important moment in time. And I think that we won Prop 22 because ultimately the voters listened to drivers and drivers overwhelmingly whether they are drivers and couriers in the U.S. or Europe or any place that we operate in value flexibility as number one. That is why they come to our platforms. The flexibility is unbeatable. Earnings et cetera we have to make sure are in place. And I think with Prop 22 and for example with a white paper that we released in Europe calling for a better deal for platform workers what's become very clear to us is that we want to -- drivers and couriers want to retain flexibility. But I think from a societal basis, we also want to bring obviously earnings opportunities that are fair and transparent and as consistent as they can be along with other benefits whether it's time off or health care et cetera.

These I think when you put these factors together ultimately long-term, short-term it may hurt our profits. But long-term it creates an environment that -- where we can really build a business in an environment where our drivers and couriers are satisfied and happy with the various benefits that are getting number one being flexible. So I do think that the path forward for us is clear. We're going to keep pushing this.

I do think it's important to have a level playing field where all of the various platforms, the gig platforms essentially have to operate by the same rules, so that the changes that we're making are lasting. And I think it's entirely appropriate for regulators to be a big part of what the solution is going forward. So we're leaning in. We've been a leader in the field and hopefully California is just the beginning.

Brian Nowak

The last business I want to talk about is last mile. There's been a lot -- you've been very busy here. I've seen it with grocery. You've entered the business through acquisitions like Cornershop and Drizly partnerships like Nimble and then just your own organic business with Uber Grocery. It's about a $1.5 billion run rate business now as of the fourth quarter. And I guess we say it out loud. This year we're going to enable last mile and help brick-and-mortar connect. But I guess for everyone zoomed in today, maybe give us some examples of what you've learned in these early integrations onto the platform that really excite you about where this business could go over the long-term from a volume perspective.

Dara Khosrowshahi

Sure absolutely. I think the first thing that I'll point you to is the ability that we've demonstrated as it relates to our super-app our mobility business to drug delivery. And you could argue that actually delivery of food and delivery of let's say grocery, pharmacy, et cetera are much closer adjacencies than Rides to Eats. So I think as a company we have, kind of, solved the code as to getting a certain percentage of our monthly active platform consumers engage not just in one vertical, but in multiple verticals without cannibalization of a vertical that had the original engagement.

So I would posit and we're very, very confident that if we, as a company, have figured out Rides to Eats, we can absolutely figure out Eats to grocery, to pharmacy, to alcohol, etcetera. And by the way, maybe it will be Rides to the grocery as well. We are going to -- we're very data-oriented there. We're going to test and learn.

And for us, what's really encouraging is that, over the past six months, we've actually seen a 60-plus percent increase in monthly active eaters who are also ordering from one of our new verticals. And when these eaters order from new verticals, we see a 2.5 time -- or the eaters who order from new verticals are 2.5 times more engaged with our platform generally back to food. So not only is it a new opportunity, but it essentially drives a deeper relationship with the Eats brand, with the Uber brand and drives greater stickiness and greater LTV as well.

Now, so from that standpoint, it's a great opportunity for us as a platform. Some of these verticals though are highly idiosyncratic. It may seem that ordering food might be a close cousin to groceries. And for a consumer, a consumer who might want it to be absolutely kind of clean and easy, I want to go to one place, you've got my identity; you've got my payments, et cetera.

But actually, when you get down to the nitty-gritty and these are as a percentage of gross bookings low-margin businesses. As a percentage of revenue, we think our margins to be very healthy in the 30-plus percent. But as a percentage of bookings, you really need to drive scale and efficiency on a global level. And you got to make sure that you respect the idiosyncrasies of each of these businesses.

So we think that kind of posits the ideal environment being one where we have a mobility super-app. We have a delivery super-app. This is Uber and its Uber Eats. And we have these verticals, Cornershop and Drizly, as it relates to verticals that are very different and verticals that are growing at incredible rates and will continue to grow at incredible rates over the next three to five years. So we think we have a little bit of best of both worlds here. And again very, very early in the development of these new verticals for us.

Brian Nowak

Very similar to last year, when the discussion was, Eats can't scale. I think part of the discussion this year is last mile can't scale. So, yes, well, next year I'm sure we'd up and down last mile.

Dara Khosrowshahi

Yes, I think -- I just think, hopefully -- I think you're absolutely right. And hopefully people understand like, hey, we have a very deep operational DNA within this business. And what we also have is -- it's interesting is that, the product and technology DNA that we have are very aligned as well.

You need different product leads. You need different tech leads who are driving these hyper-heavy operational businesses. It requires a level of discipline and it requires a level of rigor. It requires deep personalization at a very, very strong, like deep learning AI on a global scale. And these are muscles that we built.

So when we look at -- when we say, hey, we're very confident of delivery hitting to breakeven, these are not casual statements. And they are serious statements based on experience and we proved that on the mobility side. And certainly, our intent is to prove it out, not just on the delivery side, but the different delivery verticals that we've got.

Brian Nowak

And the 30% margin you mentioned as a percentage of revenue is that just for last mile, or is that Eats plus last mile total?

Dara Khosrowshahi

That's in total, obviously.

Brian Nowak

Okay. Next one about autonomous. Over the last year, the autonomous position has pivoted somewhat. You've made some strategic changes around selling ATG, et cetera. So one of the topics that comes up is, what steps is Uber taking just to ensure that you're completely solidified in the rideshare industry, even as autonomous becomes a bigger part of the narrative the next 3, 5, 10 years?

Dara Khosrowshahi

Yes. Listen, I think, autonomous is going to be a bigger part of, not just the narrative, but the reality of the business. Now what's clear for us is, autonomous is not going to be a significant part of the business, as it relates to volume, call it, in the next two to four years, right?

And if we posit that, what we were trying to solve for is, we want the best team in autonomous mobility to be building for Uber. And we think that the combination of ATG and Aurora, Aurora is led by Chris Urmson who was one of the founders of Waymo, we just think like that is the best if not one of the best teams in the autonomous space. And so we want the best team thinking about Uber a lot. And so the merger made a lot of sense.

We are -- I'm on the Board of Aurora and I think if we have a team that has the kind of firepower that now ATG and Aurora do together we can rest assured that that combined with the global scale that Uber has the data sharing not personal data sharing but certainly kind of macro-level market data sharing as to what are the best routes what are the best places to introduce autonomous as a part of the rideshare ecosystem we just think that combination is a spectacular combination.

So, we are very, very happy as it relates to the combination of ATG and Aurora. And I think I am more confident than ever that the best players in tech and autonomous tech are building and/or building for Uber.

Brian Nowak

One more. And then for any investors who are dialed in if you do have questions you can submit them to the webcast and I can try to make sure we touch on all the topics that are most important to you all.

Last one I had is actually on climate. It's a bigger and bigger focus globally. We've written about some of the great steps you guys have taken in London with the clean air fee. Just pointing out even that small fee could do a lot to convert the London fleet.

So, I guess, talk to us about sort of that -- the opportunity to do that larger around the globe. How do you think about the right steps you can put in place to make a bigger climate pledge even a larger competitive moat against other players?

Dara Khosrowshahi

Yes, absolutely. And listen I think we think about it as it relates to a competitive moat I guess but for us stepping back strategically we wanted to lead on work which is IC plus and we've absolutely been leaders as it relates to IC plus.

We wanted to be the leaders in safety and you see that the work that we've made on investments that we made our safety report still no other company is -- has been as transparent as it relates to safety on the platform and we continue to drive technology to make our platform safer. And then on climate we realize that we've got a lead on climate as well. And it's not just some very like not only do we have to put a position and a strategy in place but then we've got to execute behind it.

So, the position that we took is that by 2040 we are going to be essentially zero-emission on a global basis. But we're also going to be fully electric by 2030 in the U.S. Canada and Europe which we think really aligns us with the goals of the mayors of the great cities of the world and where they're trying to take that product.

And for us honestly, London was a real learning. There we partnered with London we partnered with the Mayor Sadiq Khan there. This is something that he's incredibly passionate about. And we decided hey let's actually lean into London and London for us was a learning area for all over the world.

And now what you see is we have expanded UberGREEN to thousands of cities to provide hybrid and EV options an economic reason for essentially drivers to make the change from gas-powered vehicles to hybrids or EVs. We're directing $800 million in resources that help hundreds of thousands of drivers hopefully get electric by 2025. And we're also thinking not in terms of just mobility using cars, but we're also thinking about micro-mobility with our partnership of Lime and in transit as well.

And we're going to be just as we have with safety transparent about it all and report on this so that we can hold ourselves accountable first. But also cities of the world can also hold their -- hold us accountable for our execution here. We think it's just the right thing to do. It makes long-term business decision. But as Uber we wanted to be leaders as it relates to work as it relates to safety and now climate. And that was just about making sure that we execute behind our commitments and are part of the solution on a global basis.

Brian Nowak

Great. I mean a couple here from the audience. The first one Dara it actually goes back to your comment on the suburbs with Rides. We talked about sort of seeing some positive suburb traction. I guess the question is talk to us about the investments you need to make to ensure that people continue to use Rides coming out of the recovery. And does this pricing need to be adjusted to keep the new users on the platform?

Dara Khosrowshahi

Yeah, absolutely. So the investments that we made in Rides, we've made those investments. And for perspective in general for example, if you look at our Manhattan business, we were growing faster in the Bronxes, the Queens, the outside of Manhattan than we were in Manhattan for some period of time. So for us naturally we've been expanding outside of city cores. This has just been an exogenous circumstance that has essentially accelerated growth beyond the city cores. And I'd say the biggest investment that we need to make as things open up is to make sure that we have -- we're properly positioned as it relates to drivers and couriers because we're going to need many, many more drivers both in city cores and in suburbs for the second half of the year than we do now. We -- but we think we're prepared. This is part of the plan. And generally we are shifting over incentives from riders to drivers in order to make sure that we're properly positioned going forward. So the investment plan is in there. Now it's just about execution for us.

Brian Morgan

Okay. The other one it's on company-wide profitability. It sort of relates to coming out of 4Q earnings. The question is you talked about being breakeven this year. As the Eats environment continues to evolve and now you're making investments in new areas like delivery, any thoughts or updates on timing of breakeven? And how much of these investments are offensive versus defensive?

Dara Khosrowshahi

Yeah. I think the -- certainly we think the breakeven will happen sometime in the second half of the year as cities open up. And we have multiple levers to get there. Not everything has to go right to get there. Obviously, Nelson Chai, my CFO has had lots of experience and you don't want to assume everything goes right in order to get there. So we think we have multiple levers in order to hit profitability. And as far as investments that we're making those are offensive investments. Those are opportunistic investments in spaces and opportunities like grocery where we see huge amounts of greenfield. And again, what's different about us is that our opportunity is not in the US. Our opportunity is truly global and our grocery business is already a multibillion-dollar business. The team there, the Cornershop team has already optimized the economics of the business. This is not -- we don't have to make the unit economics work. The unit economics already work. Now it's about going after audience, going after footprint, building relationships with merchants. So I absolutely see the investment that we're making as aggressive investment, it's not defensive. Investment is offensive. And I think because of the work that we did last year both in terms of M&A and in terms of costs, we can lean in and get to profitability. Again, it doesn't have to be an either or it can be an and for us.

Brian Nowak

Great. That's perfect. Well those are all the questions we have. Dara, thank you so much for your time. It's always a pleasure to sit down with you. I'm sure we will sit down next year and we will see how everything has changed. But there's a lot going on. It's a very exciting time. Thank you as always.

Dara Khosrowshahi

Looking forward to doing it in person one of these days.

Brian Nowak

Fly to the palace. So all right. Thanks, Dara.

Dara Khosrowshahi

Take care.