Uber (UBER.US) held its FY25 Q2 earnings call. Uber achieved record highs in user volume and usage frequency in the second quarter, with consumers accessing the Uber app nearly 30 billion times over the past 12 months. Both trips and gross bookings achieved strong 18% growth, with the company reaching record highs in both user volume and usage frequency. Currently, less than one-fifth of consumers are active on both Mobility and Delivery businesses, and the company believes this proportion will significantly increase in the future. Adjusted EBITDA reached a record high. Free cash flow hit a record high. Management stated that Uber achieved fruitful autonomous vehicle (AV) future-building results in the second quarter. The company expanded operational areas with Waymo in Austin and with WeRide in Abu Dhabi. Meanwhile, Uber also exclusively launched services with Waymo in Atlanta. Additionally, the company announced multiple new and expanded partnerships, including collaborations with Baidu, Lucid, Nuro, and Wave. These autonomous vehicle deployments will significantly increase in the US and internationally over the coming quarters. The company will continue to focus on its core business as always, while continuously advancing AV future-building, and plans to significantly increase these deployments in the US and internationally over the coming quarters. The company is confident about current performance and numerous future opportunities. The company expects to continue strong performance in the third quarter. Gross bookings are expected to achieve 17%-21% growth, with adjusted EBITDA growth reaching low-to-mid thirty digits.

Q&A Session

Q: When your company thinks about cross-platform business success, how much still comes down to consumer awareness, broad supply, or even affordability that drives cross-platform behavior? A: We learn by doing through aggressive experimentation. We discovered that when cross-promoting services to consumers, we must be targeted and add value, avoiding degradation of user experience. The good news is that users who use both mobility and delivery services have 35% higher retention rates than single-business consumers, generating 3 times the gross bookings and profits of single-business consumers. This allows us to conduct more aggressive marketing because most competitors operate single-business models. We also leverage AI applications to achieve ultra-personalized promotions by obtaining more consumer context information. Additionally, Andrew Macdonald leads both mobility and delivery businesses simultaneously, resolving internal optimization conflicts and making platform strategy more aggressive. The Uber One membership program has 36 million members who spend 3 times more than regular users, making them an important component of the platform.

Q: How does your company view having a single super app under the Uber brand, rather than having multiple apps with different consumer utility experiences? A: In a sense, when you open the Uber app, it's already a super app. Currently, the mobility app generates $10 billion in delivery bookings annually, accounting for about 12% of annual total delivery bookings. We're working to achieve the best of both worlds: a highly optimized mobility app and a highly optimized delivery app that are interconnected and cross-promote each other at targeted moments. We avoid broad-range promotion that might appear anti-consumer. This is a long journey, and we believe we're currently only in the "second inning," with the journey to the "fourth and fifth innings" becoming smoother with the focus of product and technology teams and COO leadership.

Q: Were there any changes this quarter that led to faster growth in Monthly Active Platform Consumers (MAPC) and Uber One members? How does your company view the sustainability of this faster growth in the future? A: User growth rate maintains a healthy 15%. MAPC grew by 10 million quarter-over-quarter and Uber One members grew by 6 million quarter-over-quarter. We expand our user base through various means, including launching low-cost products like Moto (gross bookings exceeding $1.5 billion, growing 40%). Meanwhile, premium business also performs strongly, with gross bookings exceeding $10 billion, growing 35%. The company strategy is to build products targeting different consumer groups (such as teenagers, elderly users) to attract new users to the platform. Once these new users enter the platform, they use multiple products. Although many believe Uber is already ubiquitous, only about 20% of consumers aged 18 and above in the top 10 markets use our services monthly, showing enormous growth potential. Currently, there are no signs of user growth deceleration.

Q: Regarding Uber One member growth, what new products or strategies have driven member growth, particularly for mobility users? A: Uber One has 36 million members, and we're very satisfied with its growth. This membership program is widely popular in delivery, but introducing mobility users has faced challenges. Incremental usage in delivery business is evident from day one, but mobility requires effort. We're very excited about a new product called "surge savings," which is the most requested product by mobility consumers. Surge pricing is necessary for improving network reliability, but users generally dislike it. "Surge savings" allows members to save costs during peak hours, paying prices closer to what they're accustomed to. We believe this can also drive member growth. Membership services are highly optimized in delivery but still in early stages for mobility, with enormous potential.

Q: Regarding autonomous vehicle (AV) deployment, does your company have updated data or quantification methods for Waymo's utilization on the Uber network? A: AV is still in very early development stages, and commercialization takes time. Austin deployment continues to perform well in terms of utilization, and Atlanta deployment is also performing excellently. In both cities, each Waymo completes more trips daily on average than 99% of our drivers. Integrating Waymo into our product seems to have generated a positive "halo effect" on the entire system, with consumers excited about using AV. Beyond Waymo, the external ecosystem has many participants, such as May Mobility, AvRide, Volkswagen, Nuro, Lucid, WeRide, Pony, Baidu, Wave, and Momenta. The current focus is how to bring this product to market as quickly as possible because it's popular from both consumer and safety perspectives.

Q: Investors are concerned about partnerships with Lucid and Nuro, particularly regarding capital investment involved. Is this the best framework for viewing such partnerships? A: We're very excited about partnerships with Nuro and Lucid. Nuro is a leading software company, and Lucid is a leading electric vehicle manufacturer with excellent technology. We are a supply-driven company - the more drivers (including robots and autonomous drivers) integrated into the platform, the better our service. We're investing in software and hardware companies to drive their development. From our cash flow and capital allocation perspective, we have the ability to invest aggressively in autonomous driving while returning substantial capital to shareholders - this isn't an either-or choice. You'll see more such deals during early validation of market economics in autonomous driving. Waymo achieving 99% utilization levels with daily trips is very good news.

Q: How does your company envision owning autonomous vehicle (AV) assets and spinning them off to fleet operators, and how should investors view this development over the coming years? A: Once we validate the revenue model - how much revenue these cars can generate daily - there will be substantial third-party financing. We've already engaged with private equity companies, banks, etc., and believe autonomous ride-hailing assets can obtain financing. We can leverage a relatively small portion of cash flow to fund AV technology development for competitive advantage. When investing in AV, we aim to use capital to acquire equity in software companies or ecosystem companies, help them start development, and enhance their credibility using Uber. We'll continue to fund these investments as minority stakes. We'll also use a portion of cash flow in a more capital-structured manner, investing in real estate, facilities, or vehicles to build learning foundations and accumulate sufficient information to cooperate with financing partners. AV is currently unprofitable, which aligns with Uber's consistent investment approach of initial losses when launching new products, achieving profitability as scale expands. We announced a $20 billion stock buyback authorization today, clearly indicating that returning cash to shareholders remains top priority, with AV investments pale in comparison.

Q: Your company mentioned in the letter "increasing focus on expanding OEM partnerships." Can you discuss this specifically and the partner pipeline for the next six months or so? A: AV software development has greatly accelerated due to large AI models, with time-to-market accelerating. We believe the more challenging part of commercialization will be hardware - launching hardware partners that can build these platforms at scale and cost-effectively, as currently large-scale deployed AV vehicles are quite expensive. We've announced partnerships with Lucid and are in discussions with all major OEMs in this field. We believe we'll have OEM partners within the coming years. Given that we bring enormous demand and have a strong balance sheet to invest in validating financing feasibility, we're in an advantageous position. Stay tuned - you'll see more announcements with OEMs. Additionally, companies like Baidu have mature software platforms and cost-effective hardware platforms, such as Apollo Go.

Q: How does your company view Tesla's autonomous driving expansion? Can you update us on your market share and growth in San Francisco and Los Angeles markets? A: We do see Tesla vehicles on the streets. The deployment scale we observe is very small, so we haven't measured any trend changes in the Austin or San Francisco areas. This is a very, very large market that won't be winner-take-all. Early on, there will be many experiments with different models, such as Waymo cooperating with us and Waymo operating directly. We believe that based on our platform and ability to balance supply and demand peaks and valleys, we'll be the leading third-party platform. Given that AV is expected to grow and expand the market this way, we believe we'll be winners, but not the only winners.

Q: Regarding mobility, how have consumers responded to pricing growth deceleration due to insurance pressure relief? What's the source of your company's confidence in accelerated US mobility trip growth in Q3? A: Consumer response to pricing has been very positive. There's pricing sensitivity at the session level, but users who see lower-priced trips are more likely to use us again days or weeks later - there's a delayed reaction. The good news is we're only passing insurance savings to consumers, so our profit per trip in the US is growing year-over-year. This was absolutely reflected in July, with transaction growth significantly accelerating compared to Q2. We expect this trend to manifest throughout the remainder of this quarter, with overall trends improving as the quarter progresses, making us confident about Q3 and potentially extending into Q4.

Q: Regarding stock buybacks, can you provide more details, such as how you roughly view the overall timeframe? A: As business grows and generates substantial cash flow, returning cash to shareholders is our top priority. We've executed over 60% of the buyback authorization initially authorized last spring. Today's $20 billion is an additional authorization, beyond the approximately $3 billion not yet executed, so the total buyback amount executable over future periods is about $23 billion. This represents about 12% of our market cap, truly reflecting our good feelings about future cash flow generation. We've allocated about 50% of free cash flow to buybacks. This should be viewed as a multi-year plan, and we'll act aggressively each quarter. We're committed to turning things around and starting to reduce share count - we reduced share count by 1% in Q2, and expect this trend to continue.

Q: Can you quantify vehicle commitment amounts in future OEM partnership deals over the coming years, or how does your company view its investment framework? For example, how much of the 20,000 vehicles in the Lucid deal do you think Uber will bear? A: We're committed to using at least half of future cash flow for stock buybacks over the coming years, which sends a clear message through the $20 billion stock buyback authorization. We'll recycle minority equity gains based on opportunities to fund our equity investments in autonomous driving companies. For us, modestly redeploying free cash flow means a lot to partners. I can't give specific numbers, but rest assured that most of our cash will continue to flow back to shareholders. We'll also continue to consider inorganic growth initiatives that make sense for us, such as the Trindle Go transaction completed last quarter. Additionally, purchasing vehicles (such as Nuro and Lucid deals) might actually bring better economic benefits because it's an integrated deal that can achieve efficiency from owning vehicles and software integration.

Q: The Waymo partnership seems like a more asset-light version, so how important is expanding with Waymo to new cities beyond the two announced cities? A: Regarding Waymo, we're really focused on ensuring deployments in Austin and Atlanta execute very well, and both are progressing smoothly. We very much want more Waymo vehicles on our platform, whether in Austin, Atlanta, or other cities. Waymo on the Uber network is very busy and generating economic value. There are generally three different business models, depending on who we partner with: 1. "Merchant model": We pay partners a dollar amount per trip or per day, partners get predictable revenue, we bear network monetization risk. 2. "Agency model": Revenue sharing, similar to our partnership model with driver partners, both parties share risk based on market performance. 3. Asset ownership and licensing model: We or financing partners own assets, with software-related licensing models, such as monthly licensing fees or per-mile licensing fees. We expect all three models to appear in the market over the next five years, depending on partner needs.

Q: Your company mentioned a "barbell strategy" for US Mobility. Looking at the entire opportunity, where is the biggest incremental opportunity for US Mobility? Is this more in low-cost products, or is there still growth space for premium products? A: The "barbell strategy" encompasses both low-cost and premium. Premium products are easier to execute - consumers are willing to pay more for higher reliability (such as scheduled products) or better vehicles (premium products). Our Uber for business is also growing steadily, with over 30% year-over-year growth. Premium products have higher potential in terms of near-term profitability, arguably over the next three years. Low-cost products are more challenging for us because they require improving entire network efficiency, such as "wait-and-save" and Uber Share. Low-end products ultimately have greater opportunities in terms of trip volume and total addressable market (TAM), and we're investing for the future. A similar barbell strategy is also applied to our delivery business.

Q: Can your company delve deeper into externalizing technology capabilities mentioned in the letter? Does this refer to data licensing opportunities in the autonomous vehicle (AV) field? If so, how large can this develop? A: Externalizing technology capabilities is something we're very excited about. A simple example is our advertising business and direct delivery business. Uber Eats value is divided into advertising business (healthy growth, high profit margins) and direct delivery business (providing on-demand delivery services to customers). Collecting data for AV is work we're doing, but we expect this isn't a profit project but helps AV enter the market faster. Another exciting area is Uber as a work platform. We have nearly 9 million people on our platform earning money in various ways. Uber AI Solutions is an exciting, fast-growing part of our business, though currently small in scale. This team works on data annotation, translation, map annotation, algorithm adjustment, etc. These workers are sometimes our platform drivers, sometimes experts we bring in, leveraging Uber's core capability of allocating tasks to earners worldwide. We expect different types of earners to emerge, working for global AI development. We're exploring with technology teams what else we can do leveraging global platform capabilities.