Ladies and gentlemen, thank you for standing by, and welcome to the Uber Technologies Inc. Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there’ll be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Emily Reuter, Investor Relations. Please go ahead.

Thank you, operator. Thank you for joining us today, and welcome to Uber Technologies’ fourth quarter 2019 earnings presentation. On the call today, we have Dara Khosrowshahi and Nelson Chai. We also have Kent Schofield, and this is Emily Reuter from the Investor Relations team. 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 on filings with the SEC, each of which is posted to investor.uber.com. Please note that we have also posted our 2020 investor presentation on our investor page. I’ll remind you that these numbers are unaudited and may be subject to change. Certain statements in this presentation and on this call may be deemed to be 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. 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 included in the section under the caption Risk Factors and Management’s Discussion and Analysis of Financial Condition and Results of Operations in our prospectus filed with the SEC in connection with our IPO on May 13, 2019, as well as our third quarter Form 10-Q that was filed on November 5, 2019. Following prepared remarks today, we will open the call to questions. For the remainder of the discussion, all growth rates reflect the year-over-year growth unless otherwise noted. With that, let me hand it over to Dara.

Thanks, Emily. And thank you all for joining us today. 2019 was a major milestone year for Uber. We achieved $65 billion in gross bookings, up 35%. We crossed the $100 million mark for MAPCs reaching $111 million in the fourth quarter and we increased the number of consumers using both Rides and Eats by 68%. We grew adjusted net revenue 28% to $13 billion with growth accelerating from 18% in Q1, 43% in Q4. We improved totally quarterly adjusted EBITDA by over $200 million year-over-year or by 14 percentage points as a percentage of adjusted net revenue. In 2020, we expect to see adjusted EBITDA losses to continue to decline. To me, these results are a validation of strategy we set in 2019. We will continue to relentlessly execute our plans for each of our businesses in 2020. In Rides, we generated $742 million in Rides adjusted EBITDA on the fourth quarter covering our corporate overhead by $98 million. We exited 2019 at a $3 billion run rate for Rides adjusted EBITDA with ANR growth continuing to accelerate in Q4. We [grew] [ph] gross bookings in our high priority markets, Argentina, Germany, Italy, Japan, South Korea and Spain by four times the rate of overall Rides GB growth. We expanded in our set of products serving high value consumers and use cases including the launch of Uber Comfort which drove premium Rides growth of 55% in Q4 and Uber for Business which achieved $1.2 billion in gross bookings in Q4. We also continue pursuing low cost products such as two and three wheelers and are using our superior matching capabilities and data models to drive more efficient Shared Rides products. In Eats, we steadily delivered on a strategy to be number one or number two in every market by…

Thanks, Dara. Now on to our GAAP results for Q4 2019. Our GAAP revenue of $4.1 billion, was up 37%. GAAP costs of revenues excluding D&A of $1.9 billion decreased to 47% from 54% of revenues in Q4 2018. GAAP EPS is a loss of $0.64 and compares to a loss of a $1.97 in Q4 of 2018. For the remainder of the call unless otherwise noted, I will discuss key operational metrics as well as non-GAAP financial measures excluding pro forma adjustments such as stock-based compensation. Our total company global trips of $1.9 billion, grew 28%. Global trips are driven primarily by growth in Eats and International Rides, particularly in Latin America. Monthly active platform consumers were 111 million, up 22% year-over-year or 8% quarter-over-quarter. Our rewards program reached over 25 million members across the U.S., Latin America, and Australia. Total company gross bookings of $18.1 billion growing 28% or 30% on a constant currency basis. Adjusted net revenue or ANR was $3.7 billion, up 43% on a constant currency basis. Our ANR take rate was 20.6% of gross bookings, up 190 basis points year-over-year. Non-GAAP cost of revenue excluding D&A decreased 43% from 50% of ANR. Insurance and payments as a percentage of ANR improved quarter-over-quarter and year-over-year. Turning now to non-GAAP operating expense. Operations and support decreased year-over-year to 13% from 15% of adjusted net revenue reflecting continued Rides support efficiency improvements offset by a mix shift to Eats transactions which are seeking to automate further. Sales and marketing decreased to 33% from 35% of adjusted net revenue versus Q4 of 2018. This decrease is primarily due to optimization and performance marketing spend partially offset by an increase in promotion spent primarily related to Uber Eats. R&D decreased to 13% from 14% of ANR in Q4 2018…

Thank you. [Operator Instructions] Your first question comes from Heath Terry from Goldman Sachs. Your line is open.

Great, thanks. Dara, when you look at the things that are driving demand in particularly in the Rides business in the U.S. and globally, anything in particular that you would point to, you’ve obviously been able to improve profitability in that business significantly. What’s allowing you to keep demand at these levels even as you bring profitability – even as you bring profitability, we know pricing’s obviously been a lever there. Have you been surprised by the level of inelasticity of demand and is there anything else besides that that you would point to?

Heath, I think the most important factor that I point to is that we’re moving from a society that was dependent on transportation based on owned assets to a society that is going to depend on transportation as a service based on shared assets. So there’s a very, very consistent tailwind that we have in the U.S. and across the world and that tailwind is going to serve us well and continues to serve as well going forward. And I think people are changing the way that they live, that they’re changing certainly the way that they get around and especially the younger generation is not a generation that associates car ownership with freedom. They associate non-car ownership with freedom using our services. In addition to that, we continue to execute on the base business. We do think that we’ve got some pricing power and we are putting that pricing power in a careful way into the markets. We’re investing pretty aggressively in our premium product. When you look at comfort and the launch across the world, when you look at our enterprise business both in terms of U for B and Uber for health, they’re growing at very, very attractive rates. There are in a number of countries that I mentioned are growth countries, Argentina, Germany, Japan, Spain, et cetera where we think the regulatory framework which hasn’t been constructive in the past can be constructive in the past and we’re kind of growing in those businesses in the right way in those countries, in the right way so to speak. We think two and three wheelers are very, very big opportunities for us going forward, especially in emerging markets. And we think that once we rebase our Shared Rides segments, reprice it I think our Shared Rides business will continue to grow because we’re growing based on improving the efficacy of the matching algorithms versus just growing through pricing. So you put it all together and we’re confident that the Rides business, it will continue to be a strong top line growth company. And our ability to drive margins, which you’ve seen in 2019 is certainly going to continue in 2020 as well.

Great. Thanks, Dara.

You are welcome.

Your next question comes from Brian Nowak from Morgan Stanley. Your line is open.

Thanks for taking my question. I have two just, the first one on the full year bookings guide, the $75 billion to $80 billion is really helpful. Just talk us through how you think about the growth of the Rides bookings within that guidance. And I know there’s a lot of moving pieces in the Rides bookings between pooling in LATAM and everything else. So just sort of talk us through some of the puts and takes in Rides bookings that we should make sure we consider and how you’re thinking about that growth this year. And then on Eats, Dara, it sounds like a very healthy improvement in take rates as well as growth in the U.S. So talk to us, how you think about the keys to continuing to grow at this type of rate in the U.S. on the Eats side, is it more supply, is it discounting? What are the growth strategies in the U.S. Eats business?

I’ll start with the U.S. Eats and then Nelson can get into the Rides guide, so to speak, or the GB guide. I think the most important factor as it relates to the growth of the U.S. business, has really been about selection. We have been very focused on improving the selection and the number of restaurants that we have in our Eats segments. If you look overall, we improved. We’ve got almost 400,000 active restaurants. This is up 78% on a year-on-year basis. And we’ve added independence and we’ve added a number of big chains and big names as well. And I think that the improvement in selection combined with our technology over the top technology that allows us to essentially list restaurants whether we have a direct relationship with them or not is allowing us to improve kind of our addressable footprint. And that combined with, again, the tailwind of more and more people wanting the convenience of getting delivery in their home, I think has combined to have a pretty strong top line and a pretty solid number two position in the U.S. So we like what we see. I think that at some point the growth rates you get to the law of large numbers, but I think that the Eats team executed well in Q4. Q1, we’re going to continue to lean in. And then really the back half of 2020 is one where we want to combine growth, but also improve margins with the Eats business.

Yes. In terms of the Rides growth, I mean, you’ve heard us talk before. I mean by definition, the law of large numbers does take hold. And as you know, our business does over a $1 billion a week in terms of gross bookings. So I think you can tell in the guidance, we are trying – we recognize the fact that we’re not doing the empty calories. And I think you’ve heard that both in Dara’s comments as well as mine. But we recognize the fact that we’re going to really be focused on having profitability today. In past calls, we’ve talked about the fact that we’ve deemphasized Shared Rides and that is positive as well. We do actually look at our trip growth as well as our gross bookings growth. And so while the gross bookings growth based on the guidance we gave you, it’s suggested as below 20% the trip growth is still above it. And so we continue to look at both. But again, we’re really focused on optimizing the system right now. And if anything we probably because we are trying to take the empty calories out, we are definitely much focused on that and so I think that is reflective in the overall guidance that we’re giving.

Great. Thanks.

Next question?

Your next question comes from Justin Post from Bank of America Merrill Lynch. Your line is open. Justin Post, your line is open.

Justin, are you there?

Sorry about that. Sorry about that, I was on mute. Yes. Dara, a couple of questions for you. Pretty optimistic long-term margin targets in take rates. What are you seeing in your business that gives you confidence in those long-term margins? Is it specific markets you’re seeing or is it the broad improvement you’ve seen over the last six months? And then secondly, getting to EBITDA profitability in Q4 certainly higher than the Street numbers, do you worry at all that that kind of boxes you in and limits your flexibility? And is there any cushion in there if there’s some adverse regulatory stuff? Thank you.

Yes, I think talking about these – that the margin numbers in Q4, the assumption as it relates to Q4 and profitability is that the environment doesn’t change significantly one way or the other. So there may be short-term bumps one way or the other and we will deal with them. We are assuming a world that doesn’t change significantly and we’re challenging the team internally to get to profitability. And we think that just as we challenged the team internally, we’re going to communicate it to our investors and my take is we expect to execute and it’s not a single lever that’s going to get us there. It’s multiple levers. And is it boxing us in, it’s a boxing us into execute effectively as a team. And I’ll take on that challenge and I think we will take on that challenge. Just to give you a little bit of context as to our ability to execute. If you look at our Rides business Q4 to Q4, our Rides business grew ANR about $700 million, a little bit below $700 million in terms of revenue. And over the same period with a $700 million increase in ANR, they delivered a $550 million increase in EBITDA. So that’s an 80% flow through of incremental EBITDA from revenue growth to EBITDA growth. In order for us to hit Q4, if you look at for example, of the mid range of our revenue growth, let’s say it’s the mid range of our revenue growth. You would have about a $1 billion to $1.1 billion of additional revenue Q4 next year to versus Q4 this year. And in order to get to break even, you need to drop about 55% of that incremental ANR to the bottom line. So we’ve executed on the Rides side 80%. Our expectation is going forward, we’re going to continue to lean forward and we will invest in big time growth areas of the business. But we do think that this is a team that has shown its capability to drop 80% of the bottom line. And I think that our pushing ourselves to drop 55% of the bottom line is not asking for too much and it does provide us flexibility to invest where appropriate to really work the operating costs appropriately and then pull backward just doesn’t make sense to invest.

Got it. Thank you. And then on the long-term, are there some markets that really give you confidence in those long-term take rates and margin targets?

Yes, I think on the margin targets long-term, the Rides business we have – you’ve seen the Rides business essentially move in the right direction. So we’re pretty confident of the Rides long-term margins. When I look at Eats for example, our U.S. business, the take rates are not quite up to our 15% take rate, but they’re certainly getting much closer. And when we look at kind of the operating costs work that we’ve done on the Rides business, if we run the same play that we do in Eats, we’re confident that we can hit those kinds of long-term margins.

Thank you.

You’re welcome.

Your next comes from Ross Sandler from Barclays. Your line is open.

Hey guys. Just one on Rides and one on Eats. So you mentioned that single rider trip volume was three points higher than total, would imply that you’ve already chopped a lot of wood on UberPool in 2019. So all these low calories that you are talking about taking out in 2020 is that more share ride that you sell? Is it single ride or coupon? Any color on what’s incremental for 2020 versus what we saw in 2019 already? And then on Eats just a question how level like the Australian market is very profitable for you guys. Is that because of the density, because of something unique in terms of the fee structure, or simply because it’s far less competitive? And how can the U.S. ever look like that without consolidation? Thank you.

Hey Ross, as far as the Ride segment and shared rides, et cetera, I’d say we started chopping real wood in shared rides in Q3, Q4. So we will continue to have tougher comps on a trips basis with shared rides in Q1, Q2. And then Q3 and Q4 you’re going to get to comps that reflect the kind of long-term growth rates that we expect there. I think in Australia, as far as the business goes there, it’s just a really good market for us, the market – it looks like a Western market as far as the structures go, payment structures, et cetera. And I think we just have a team on the ground that’s executed really well. And when a team on ground executes really well, you get really great top lines and very, very healthy margin levels.

And the only thing I’ll add is we do have some cities even here in the U.S. where we have a profile that resembles what you’re suggesting in Australia.

Yes. And then remember too, that Australia, we do have three competitors. So you should assume that basically every market that we compete, that we are operating in, we have anywhere from two to four competitors. It’s the nature of this market. These are very, very large TAMs to go after. And we don’t believe that there’ll be a single winner, take it all. But we believe that we’re in a we’re in a unique position because of our global scale, and because we’re number one in most of the markets that we operate in and because we’re multi-product to have a structural margin advantage, which we can either take to the bottom line or deliver a better service with, or drive kind of stronger revenue margins than our competition.

Your next question comes from Mark Mahaney from RBC. Your line is open.

Okay. Thank you. Two things. One Dara, could you talk a little bit about synergies that you’ve seen between Rides and Eats and potential synergies you think you can generate between those two. And then secondly, spend a little time just talking about some of the products that you’ve rolled out. I don’t know if there’s any read-throughs yet from some of the driver changes that you’ve made in California. And I don’t mean in terms of complying with regulations or whatever. I mean, in terms of whether drivers are more interested in driving with Uber because of those changes. And likewise on the rider side, some of the product changes, some of the loyalty programs, what have you seen that indicated which ones, which of these product changes have worked well from a rider perspective and which haven’t worked well? Thank you.

Sure, absolutely. So in terms of the synergy goal, I’d say there’s no single magical win, it’s a combination of a number of factors that we’re putting together. So one is cross promoting our services together. We now have subscription programs that are Rides only, Eats only in Uber as well. We have a loyalty program that goes across the various products as well. All of those coming together are significantly increasing the number of consumers who use both of our services. And whereas early on if a rider was using two of our services the number of transactions per month was about 2x was a single user, now that number is closer to 3x. So the returns on higher usage of our products are actually going from a 2x to 3x, which for us is very, very encouraging. The number of loyalty program members that we have is 25 million and growing because we’re expanding that program on a global basis. And then I would never underestimate two very important factors. One is the power of Uber brands. Everyone knows that. You probably already have an account with us. You probably have a credit card with us, et cetera. It’s very, very easy to sign up. I think riders and drivers trust us across the world. And then the leverage that we’re getting on our technology spend, we can spend more than anyone else in terms of driving innovation, in terms of big data, having the most sophisticated matching and pricing algorithms out there. And at the same time, I think, your technology spend as a percentage of revenue and our G&A and our overhead costs as a percentage of revenue can be advantage versus the other players. It’s just the scale advantage that we have. So we got a customer advantage, we’ve got a brand advantage and we’ve got just a scale advantage, all of which play a part in our model going forward.

Okay.

And then as far as your questions on drivers, et cetera, in California, the changes that we made, it’s too soon to tell at this point. The drivers are reacting quite well to the increase in information that they are receiving. On average the service levels as it relates to riders has gone a little worse as far as a predictability of getting a ride. That’s something that we’re working through pretty carefully. Prices in California are up more than, let’s say the rest of the country as a result of the combination of these factors. So some of these changes are resulting in higher prices to the end customer, but it’s very early and there’s a lot of work to do going forward.

Okay. Thank you.

You’re welcome. Next question.

Your next question comes from Eric Sheridan from UBS. Your line is open.

Thank you so much. Maybe two if I can. Dara when you think about the ride business long-term, how are you thinking about the parts of the penetration curve that can be unlocked from either product innovation or pricing dynamic moves over time? I think one of the biggest questions we get is just sort of how the industry continues to evolve towards disrupting car ownership, mass transit, things that can push the S curve penetration higher over the next sort of five to 10 years. And then on the Eats side of the business may be using the U.S. as an example, curious how you see the supply dynamics, the relationships with the food industry developing over the next couple of years and how wide a skew there might be in some of the economics of the partnerships you see that evolved in that side of the business. Thanks so much.

Yes, absolutely. So I think that when we look at the Rides business there are four broad growth vectors. One is geographic growth we talked about markets that were not as penetrated in, that we will drive penetration in the Germany’s, Argentina’s, the Spain’s of the world. Second for us is using technology and improved matching algorithms to improve the efficiency of the marketplace. And that is we think we’re just in a much better place than anyone else, we’ve got higher market density, we’ve got more data than anyone else. That efficiency we can either deliver it to the driver or we can deliver it to the rider depending on what we think the best kind of growth driver is. Third area for us is to drive low costs. And low cost for us is two wheelers, three wheelers, shared rides, once we re-priced those shared rides and then introducing new products like transit, bikes, scooters into our portfolio as well. So it’s a combination of low cost and marketplace that introduces, we think very, very significant TAM to us. And then last but not least, is the enterprise segment. This is Uber for Business, this is segmenting our customer base, our premium customer base, both in terms of service levels and the kind of product that we have out there. It’s less of a factor in terms of bookings growth, but it’s a very significant factor in terms of margin growth. You put it all together and we think we have a very balanced kind of growth profile both top and bottom line going forward. As far as the Eats business goes, we think there’s plenty of room to run. We’ve been really focused on improving selection. I would say that we made big moves in selection in the second half of the year. So I do think that there’s some year-over-year comping on the Eats side, especially in the first half of the year. And we still think we’re in the very early innings. We talked a little bit about, for example, in Australia, where Eats business on a top line basis is comparable to our Rides business. Right now it’s not even close to that on a global basis. So we think that our Eats business has a long way to go.

Thanks Dara.

You’re welcome.

Your next question comes from Doug Anmuth from JP Morgan. Your line is open.

Thanks for taking the questions. Just had two. First on Eats you talked about leaning in more and more in 1Q and getting more leverage in the back half of the year. Can you just talk Dara about how far behind you think Eats is on the rationalization path relative to the ride-sharing industry? And then second, can you just talk about your early kind of findings around subscriptions and how that’s working across both Rides and Eats? Thanks.

Yes, as far as the rationalization goes it’s very tough to predict how markets are going to move. But if we kind of step back the same time last year, you’ll remember that in our Rides segment we leaned in pretty aggressively Q4 and Q1. And then you’ve seen what happened in the second half as it related to Rides margin improvement. It was quite substantial. It’s difficult to predict what’s going to happen in the Eats segment. We do see signs of rationalization in the marketplace. You see it with IPOs coming in. You just see it everywhere. So while it’s impossible for us to predict short-term timing, I think, the long-term rationalization trends are there. And I think we, as a team, have demonstrated a track record of being able to drive rationalization internally and really being able to drive margins internally on with the Rides side. And the Eats team is running the same exact play. They’re just about a year behind the Rides side and appropriately so because we want it to lean into growth on the Eats side. As far as subscription goes, it’s very early, but the results on subscription Rides have been promising for a long time. We really just launched Eats Subs in a few markets pretty recently. And there are markets where it accounts for more than 10% of volume. So we’re pretty encouraged by what we see with Eats Subs. And then really the other area that we’re very, very early in the optimization of is buying kind of an across Uber subscription product as well. So I think really 2020 is going to be the year of subscriptions at Uber.

Great. Thank you, Dara.

You are welcome.

Your next question comes from Mark Shmulik from Bernstein. Your line is open.

Yes, hi. Thank you for taking the question. Just to follow-on, on market rationalization and some of the recent investments and divestments that have happened, where are we on that journey in terms of further kind of rationalization from an investment divestment point of view? And as we think about some of that guidance that was shared, does that include or expect to include additional kind of movements in that space? And then we’ve talked a little bit about how it’s behind, but there’s quite aggressive, both take rate and EBITDA targets coming up. How does it get there? Is this a little bit of just flexing kind of pricing, is there a scale up of the ad product or how do we think about the different components that will drive that? Thank you.

So on the first point in terms of the guidance that is basically our internal plan. So we don’t really build in a lot of M&A divestiture. That being said, we do have a capital allocation process that we go through both for Rides and Eats. And we are working closely with the team in terms of making capital choices. And so you should expect that we’ll continue to make choices. You should expect us to continue to be active in that as we go through it. There may be situations where we’re in two marketplaces when we have to pick, right. But we are committed to being one or two or taking action against that. And you should also expect that if there’s an opportunity for us to lean in, to win a market that we think we want to be that you should expect that action as well. So, when I gave you the guidance it was really our internal plans based on organically where we are today with the same set of businesses. But that being said, we know we have a lot of levers at our disposal, and you should expect that it’s incumbent upon the management team to deliver against the guidance.

And then as far as the second question as to our confidence in long-term margins, we have big markets in the Eats business that are pretty close to the long-term revenue margin. So that gives us confidence. We do think that there’s opportunity with media, et cetera, that could actually help attain margins above our long-term guidance, but we don’t want to count on it. And then on the EBITDA side, you can imagine just – the cost side of the business is much more predictable and we already have over a 100 U.S. and international cities that are segment EBITDA positive in Eats today. And seeing that roadmap, our Rides roadmap, these cities that are positive today gives us a lot of confidence as it relates to long-term Eats margins.

Great. Thank you.

You’re welcome.

Your next question comes from Itay Michaeli from Citi. Your line is open.

Great. Thank you. Good afternoon. Just a two-part question on ATG, one financial and one strategic. On the financial I was hoping you could dimension what you’re assuming in terms of ATG spend both this year as well as in the longer term? And the strategic question just around timing of when you expect to enter the kind of hybrid market of human drivers and AVs and your thoughts on potential partnerships? And also just the overall competitive environment in AV, just with one of your competitors in San Francisco suggesting that they might be ready to actually deploy Level 4 in the next couple of years, just an update there would be helpful. Thank you.

Yes, so in terms of – from a modeling standpoint, I wouldn’t expect a demonstrable difference over the next year or two regarding ATG. There may be some increase, but it won’t be significant. And so I don’t think you’re going to see a big step up there. And as you know, and Dara mentioned in the script, we did raise funds last summer, which effectively pre-funded about 18 months of the ATG development. And so, I think, you should expect us to continue to lean in there on ATG. That being said, I’ll let Dara kind of talk more competitively what we were seeing out there.

Yes I think the comment that I will make is we don’t think Level 4 for a autonomous service that’s also trying to develop a network is actually commercially viable. Now we need to have what we’ve experienced as you need to have 99 plus percent availability essentially for a daily use case for folks to use you over and over again. So Level 4 doesn’t cut it unless you own a network, and unless you operate a network, or unless you partner with a network. That is actually the key of why we think that ATG isn’t a unique place to succeed and why we’re very much up for partnering players, who may deploy Level 4 and can take advantage of our networks to do so. So I think that’s kind of definitionally to what we’ve been talking about. Level 4 is coming. It’s coming in the next couple of years. We will be a part of that, but Level 4 and a network together we believe is the only commercially viable product out there. And we’re uniquely situated to play a very important part in that game.

That’s helpful. Thank you.

You are welcome. Next question.

Your next question comes from Lloyd Walmsley from Deutsche Bank. Your line is open.

Thanks. Two if I can. Just first, can you talk broadly about just trends in the competitive environment in the Rideshare segment? Are there any markets where you’re seeing competition pick back up or is it continuing to move in the right direction in the U.S. and globally? And then a second question, just on the 150 basis point take rate improvement in guidance, can you give us a sense for how much of that is going to come from Food Delivery versus Rideshare? And is that a function at all of like price increases or just simply rolling back existing driver incentives? Any anything you can share there?

Yes, see as far as the competitive environment in the U.S. from a long-term standpoint the competitive environment has been constructive, has rationalized. In the past month or so we’ve seen Lyft, our competitor, probably be on balance more aggressive in terms of discounting and incentives. We’ll see where that leads. We think from our standpoint, we’ve spoken about margins and making sure that our investment in marketing, incentives, et cetera, is an investment that makes sense from a return on invested capital basis and are being constructive as it relates to margins going forward. On a global basis, we have multiple competitors in every single city. We have sometimes competition ebbs. Sometimes, it flows. I’d say it’s largely constructive. And we believe that kind of our future is in our hands because we’re the ones, as the largest player around the globe, who’s kind of setting the standards, so to speak. Nelson you want to answer the second question?

Yes, in regard to take rate, I mean, I think it’s going to happen both on Rides and Eats. Just as an example, and you heard me in my comments, our Eats take rate in the fourth quarter was 9.5%. But if you exclude India, and as you know, we sold our Indian Eats business, that increased to the 10.1%. So I think as we think about how we continue to work through, as we think about our capital allocation strategy, we are highly confident we’ll be able to increase our Eats take rate. The Rides will just be continuing to play out what we’ve already been doing. And so we do expect that, that will increase as well. And it’s really not one big thing. It’s the combination of both and just getting more efficiency In terms of how we’re spending.

All right, thank you.

Welcome, next question.

Your next question comes from Ron Josey from JMP Securities. Your line is open.

Great, thanks for taking the question. Dara, I wanted to ask a little bit more about Eats and contribution margin as take rates get to that 15% level. And I ask only because over today, Grab talked about relatively low margins on QSR and non-partner orders and the comment earlier today that you’ve added a lot of non partners to the business within Eats. So just can you talk a little bit about maybe contribution margins on partners and non-partners on the network? And really, how would those margins expand over time as we get to that profitability? Thank you.

Yes, Ron, our non-partner volume for Eats is very, very small as a percentage of our overall volume. This is a new feature that the team built out really in Q4. We’re being careful in rolling out the feature because we want to make sure that the delivery times, the delivery qualities continue to be at the levels of excellence that we insist on. So I would not assume that non-partner revenues are a significant percentage of our volume certainly in Q4. Next year, we are going to build up our non-partner volume, but we’ll make sure that we do it in a way that makes sense both for the top line and the bottom line.

Got it, thank you.

Next question.

Your next question comes from Jason Helfstein from Oppenheimer. Your line is open

Thanks. Maybe I’ll ask about California. What have you learned since making product changes in California? What’s driver feedback, rider feedback? And how has it changed usage in spending? Thanks.

Hey Jason again I would stress that it’s very, very early. Driver feedback has been positive in terms of the information, the empowerment that I think our driver partners feel. I think that the service itself, prices have increased more than they have nationally. So I think from a rider standpoint, the service on balance has gotten more expensive. But it’s very, very early. And I would comment, too, that 85 in general for a number of contractors, et cetera, has created a huge amount of uncertainty. We rolled out these changes to be very clear about our position as a platform and to make sure that our drivers have the freedom to choose when and if they want to work. We’re going to be working through – we want this to be a win-win for our drivers and for the riders on our platform. And we’re going to be iterating to get there. Short term, it’s been, I’d say, net negative for riders, and it’s possibly a net positive for drivers. Hopefully, we can get to a win-win situation.

Thanks.

You are welcome. Next question.

Your next question comes from Youssef Squali from SunTrust. Your line open.

Great, thank you very much. Dara, on Careem in the Middle East or North Africa, could you please tell us a bit more about that business? How big is the growth rate profitability? And anything either from a technology or a product standpoint that they have that you can leverage or vice versa. And on the Eats business, I think you said earlier that you are number one or number two in every market in roughly half of the countries in which you operate, which means roughly half of the countries in where you operate, you’re not number one, number two. What does that mix look like in your base case projection of breaking even by Q4? Thank you.

This is Nelson. So on Careem we’re actually not breaking that out. As you know, the deal just closed. And I think over time, we’ll probably give some more disclosure around it. But right now, we’re not going to break that out. We know that it will be positive in terms of its impact on the business. And the team has actually done a very good job in terms of building out their marketplace. There are some things we can learn from there that the teams are working on right now, but it’s really too early to tell, because remember, the deal just closed a few weeks ago.

Yes, I’d say on the Careem side, we’ve talked about the steps that we made as it relates to the power of the platform and the Super App strategy. The Careem team is absolutely looking to drive the Super App strategy in the Middle East. I think some of these developing markets, that particular strategy has great potential. We see incredible innovation from that local team across the number of services, including payments as well. So I think that we’re going to be learning from the Careem team, and they’re going to be learning from us. They’ve made real investments in their driver relations, captains in Careem-speak, so to speak. And again, that’s something that we can learn from. We really want to deepen our relationship with our earners around the world, and we’ve seen really interesting activity from the Careem team that we can all learn from. As far as our Eats business, number one and number two, we’ve been really encouraged by our trends that we saw in Q4. We definitely leaned in to get to more ones and number twos. And I think next year, we continue – we expect more of the same. We’ve been gaining category position in most of the countries in which we operate. And we’re pretty confident that by the end of next year, we end of next year, we’re going to be number one and number two with a vast majority of our volume. Most of it will be organic and some of it will be inorganic, both on the buy and sell side.

Thank you.

You are welcome. Next question.

Your next question comes from John Blackledge from Cowen. Your line is open.

Hi, John.

Great. Thanks. On Uber for Business, the growth was stellar. It was about 9% of the Rides growth bookings. Could you just discuss how that mix might change over time? Kind of any differences in penetration, U.S. versus non-U.S. markets and the margin profile for Uber for Business kind of relative to the overall Rides segment margin? Thank you.

Yes, I think the trend for Uber for Business is pretty simple, which is it’s going to be a higher percentage of our bookings going forward and certainly a higher percentage of revenue. On average, the Uber for Business has a higher premium share. And our premium business is higher margin than, let’s say, our X or other products. We are going to be investing relatively heavily in growing the U for B sales force. We have a more mature and larger sales force in the U.S. versus, let’s say, Europe and some of the other countries. So expect us to lean in on the sales force. Usually, when you expand a sales force upfront, that’s probably negative margins or, call it, breakeven margins. But then the lifetime value that our sales teams bring in over three, four, five years make a lot of sense. And then when we do look at the retention of U for B customers, the retention rates are substantially higher than, call it, leisure customers or non U for B customers. So long term, as U for B becomes a higher percentage of our business, expect our marketing efficiencies to improve.

Thank you.

You are welcome. Next question.

Your next question comes from James Lee from Mizuho. Your line is open.

Yes, thanks for taking my questions. Dara, I was wondering if you can give more color on the competition LATAM. You talked about that market being more stable since 2019. We heard that DiDi recently entered into some new markets? Any new learnings there? Are you doing well because your competitor is now more disciplined? Or are you responding faster to their marketing initiatives? And also, Dara, can you give an update on your status on UK regulatory situation there, how you expect that to play out? Thanks.

Sure, absolutely. So in terms of our LATAM markets, I think, it’s a combination. I think, generally, the competitive environment is – remains quite competitive, but more stable on a year-on-year basis. DiDi is a competitor that we do not take for granted. They’re very good at what they do. But if you look at our numbers, for example, our ANR growth rate in LATAM was pretty significant on a year-on-year basis, and it turned positive and very nicely positive. So we like the trends that we see in the LATAM markets. We think that we are more effective in our response. And we think that just year-on-year, the market is much more predictable. Our LATAM market is – or LATAM represents our fastest-growing mega region. And from a trips basis, it is the largest region that we have on the Rides side as well. So we’re quite optimistic there. And then in London, as far as regulatory goes, we’re going to have our day in court. We respectfully disagree with TFL’s conclusions. I’ll remind you that two years ago, in court, we won the right to operate in London. And I think that our safety levels, our service levels are across the board, significantly, significantly improved versus where they were two years ago. The team is very focused on executing on safety around the world. And I think London – the London team especially is focused on it. So we expect that our day in court will be positive, but we know that we’ve got to make the case. In the meantime, we operate in London as we have, as always, and where we continue to optimize our business. And it’s like any other day in London as far as our operations go.

Well, thank you very much everyone for joining. We really appreciate your being here. I think 2019 was a big, big year for us. We know that we’ve got a lot to deliver on 2020, but the team is confident, and the team is psyched to execute, and to also build a great company and provide a great service for all of our users. Thanks very much for joining us.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect.