Uber’s $1T Autonomous Strategy

Key Takeaways

Congrats on the new job. You must be excited. >> Thank you. It's been a busy day. Uh but I'm happy we can do this. >> Great. Well, I'm excited to get into all the different things that are going on with Uber's business. I want to start with the outlook that you guys gave for bookings growth. Now, bookings grew 22% in Q4. You're expecting it to grow anywhere between 17% and 21% in the current quarter. and that does incorporate uh a little bit of a tailwind from the foreign exchange rates. And so my read on it is that the bookings are expected to decelerate in the current quarter. Why is that? So uh uh let me start with a clarification. The 17 to 21% growth rate that you referred to it is constant currency. So uh the FX tailwind would be incremental to that. We said we expect at least four points of in effect tailwind. So the reported growth rate would be 21 to 25%. That would be the way to think about that. >> Uh but but even from that just stepping back as you think about the outlook philosophy we've had in Q3 and Q4 we guided to a similar 17 to 21% range and uh for Q3 we delivered 21% growth. For Q4 we delivered 22% growth and now we our outlook is consistent. So I wouldn't read this as a big deceleration. Um if anything in Q4 we got surprised a little bit positively because the holiday season was so strong. It exceeded our expectations but otherwise the underlying business momentum is exactly unchanged from uh the second half and uh mobility and delivery both are firing on all cylinders and we're very excited about the year. I want to talk about mobility and delivery. I mean, these are two businesses that uh delivery is is growing very quickly. Dar, the CEO of the company, has talked a little bit about the long-term ambitions for these two segments and the relative sizing of how they could play out. How do you see these two businesses 3 years from now in terms of relative sizing? >> Oh, that's a great question. That's a crystal ball gazing exercise that we have done many times and come out wrong. So, I will not endeavor to go there. It's it's I'll say that both of these businesses are growing at scale 100 billion uh you know gross bookings run rate plus um and and they're both both growing 20 plus%. Right? It's very rare to be sitting with those kind of global platforms um which which can deliver that growth. So we'll uh make the appropriate investments in both of those businesses as long as those invest you know the returns on those investments meet our hurdle rates and then uh we'll see which one comes out on top. It's a friendly competition and it's >> friendly competition. Now the other side of the business that of course the company is investing a lot into is your autonomous vehicles ambitions and you talked a lot about that opportunity in your in the shareholder letter uh this this quarter and you talked about some of the misconceptions that that that you think exist around Uber and what the autonomous vehicles opportunity could mean for the company. What was the overall message that you were trying to send to investors with that? Yeah. So that's great. Uh so I would say first of all Uber is very very bullish about autonomy. We think this is a technological disruption that is absolutely playing out. It's going to be a huge portion of mobility in urban cities in the coming uh years and as we go through the next decade it's going to become a big contributor to expansion of our TAM as well. And uh you know I think the simple reality that we think about here is that there's an opportunity to get to personal car displacement over the long run and Uber stam then becomes a trillion dollar plus if we can have autonomy uh unlock in the right way. It's it's going to be incremental. Now what we see though is when investors think about autonomy and ruber's role to play here, there are a lot of misconceptions and we've heard enough of them that we thought we would take a moment to just correct the record on a lot of these issues and put the nuance that's missing in the conversations that we hear. U you know the first and and most important one that we hear about is autonomy is going to be cannibalistic uh to ride hailing. That could not be further from the truth. Where we have autonomous deployments happening in Austin and Atlanta, our business is growing at the fastest rate in the US of any markets. Even in markets like SF where we don't have autonomous on our network yet, we will by the end of this year with Nuro and Lucid. Even in a market like that, SF is growing for Uber faster than the rest of the large markets in the country and it accelerated last year. And the underlying premise behind that is supply growth is always uh in you know incremental for ride hailing demand. Another one that is commonly heard by us is Uber's profits are very concentrated in top 20 markets and all you need to do is to launch in those top 20 markets to make a great business. Um and that that is again very very uh wrong because as we think about our business, we operate in 8,000 plus markets in the US. Consumers travel around the country, right? 40% of people's trips happen outside of their home cities and they expect this utility service to be available everywhere. So I think what that has done and given our focus on driving that uh long tale of markets in in our portfolio 70% of our business now in the US comes from outside of those top 20 markets. 75% of our profits come from outside of those top 20 markets and those markets are un going to be unressible by ABS for a long time to come. I would encourage everyone to read everything else we said. I wouldn't go into everything here though. So let me go back to you know the uh you talked about San Francisco as sort of a a case study and you talked about you know people thinking about the competition that comes from platforms like Whimo and I know that Dar has talked a lot about this idea that look you take a um something like Starbucks has a direct to consumer relationship they also use Uber Eats to deliver uh food and stuff like that and so there's sort of this this hybrid system but you know I do want to get your read a little bit on Tesla as sort of the wild card here. I mean, Whimo has set themsself up. Do you think that Tesla will uh really come into the fold here as a as a as a do you think they'll pull it off is my question? >> Sure. >> Uh it's a good it's a good question. So I I would start with the premise of camera only uh AV deployments, right? And today the jury is still out on that uh question and Tesla is making a big bet that camera only a vision only can uh can work on autonomy. Um so we'll see whether it works or not. We would never bet against Elon. Um and and and we need to watch that. >> But I mean let's let's say they put the sensors on. I mean he he has the model of the whole you know the the you can you can rent your Tesla out right if you uh as part of the fleet model. So I mean you know as a competitive threat I mean what do you think of it? Look I think if they if they changed their approach to this and uh moved in that direction um I think there is some time that they will take to make that adjustment. I would just come back to where they are today which is based on their publicly reported data their incident rate is effectively whereos incident rates were in Q1 of 2023. So on that basis uh it looks like they're about 3 years behind and you know we're not saying that Tesla is not going to get there. It's it's uh entirely likely and possible that they would be there but in that time there are going to be other players who will also deliver autonomous commercially deployable autonomous solutions and we have the broadest set of partnerships right we have 20 partners we are looking forward to bringing them to the 15 markets we've talked about this year and that will that number is only going to go up in the coming years and on our platform the utilization and revenue generation capacity is going to be higher than any anyone else's. So we'll compete on that. Now, one of the interesting parts about Uber strategy that that you've talked about is the idea that in the near term, while the company has never been in the business of owning fleets and and and operating it and really sticking to this asset light model, you know, you've talked about how in the near term with partnerships like with Lucid, I mean, you may own some amount of vehicles in the short term as you look to test out the uh you know, the the economics of having autonomous vehicles. And I'm wondering as the incoming CFO, the first question is how expensive is that and what is sort of the upper bound of what you're willing to invest in owning those fleets and how do you think about a return on investment on that over time? >> Yeah, as you think about the context of our scale and what we are looking to build here, we have nearly 10 million human drivers around the world. Um when you think about the autonomous deployments today, the largest deployment whether in the US or in China is in the 2 to 3,000 vehicle uh range, what we will need for autonomy to really work at scale is tens of thousands or hundreds of thousands of cars deployed on Uber's network over the coming years. And to get there, the first step is for us to get OEMs excited about producing these vehicles, right? and and they need to know that if they're producing these vehicles, they are going to be consumed by somebody and and the first step for that is we are working with uh our OEM partners on offtake commitment. So we may go to a Lucid and say build us cars we will guarantee that at least 20,000 of the cars you're building over the coming years will be off moving off of your assembly lines and we'll ensure uh some of our partners buy those cars, right? But in the early years, we may buy uh some of those cars ourselves just because we want to learn what this model looks like. We want to demonstrate the economics of these models and then our partners can get third party financing to uh deploy it at a much m more massive scale. Um and then the last point on this topic as you think through that is again we are so early in this deployment ramp that we want to be flexible and we want to think through what evolution these these models take and it it behooves us to remain uh nimble and uh we will do so with discipline. We are not looking to uh expose a lot of our balance sheet but to some extent we can do that and at our 15 billion trip scale this is going to be pretty small. >> Do you do you have a budget for for buying these these fleets? >> I'm not going to set set a number there. I I would still say that if you think through the capital allocation priorities we set out today, I would say we have the ability to do um to make investments in our core business, to make investments in AVs, to potentially look at uh bolt-on acquisitions and still buy back a ton of our own stock, which remains very very cheap and today the highest return on investment for us is to buy our stock, right? So we will be able to do all of those things in parallel. I want to come back to the the the core operations of of the business today. I mean recruiting drivers is one of the biggest success factors to having a network like Uber does. Even today in 2026, what is the biggest challenge for Uber in recruiting drivers and keeping that growth going? >> Yeah, I think uh it is the fundamental uh motion that we need to have. We are a supplyled business. As we bring on drivers, uh we have to make sure that we are uh doing so in a way where driver onboarding is streamlined. Drivers can come onto our platform with as little friction as possible. So there's a lot of tech investment we have had to make in improving that onboarding funnel. The second thing we have to ensure is that earnings are predictable and they remain high relative to their alternatives. And we have done a very good job of growing our top line, our profitability while delivering really healthy outcomes to our driver partners. And then finally, I think there's uh incremental pain points that drivers have always surfaced up to us such as they want to see uh trip transparency which we addressed a few years ago on uh where they're going, how much they would earn. They want to be able to uh you know there's a long list of things that our product team has to go through to ensure that we are meeting drivers expectations because this is a competitive labor market and and uh if we don't meet those expectations they can go elsewhere. >> Great. Well, I want to thank you for coming on the show and congrats on the new role again. That is Bology Christian Murthy the incoming CFO for Uber here on TIV.