Uber Technologies, Inc. recently released its fourth-quarter and full-year 2024 earnings, marking a period of significant growth and strategic advancements. In a conference call led by CEO Dara Khosrowshahi and CFO Prashanth Mahendra-Rajah, the key takeaways revolved around exceptional performance metrics, strategic business advancements, and the company's future outlook, particularly in the context of autonomous vehicles (AVs). Here's a detailed breakdown for retail investors.
Acceleration Across the Board
Dara Khosrowshahi emphasized the theme of "acceleration" as growth extended across audience reach, trips, and gross bookings. Notably, gross bookings surpassed expectations, thanks to innovative product developments. This led multi-product usage to peak at an all-time high of 37% among Uber consumers. Additionally, the success of the Uber One membership program, which grew by 5 million members over the quarter, to a total of 30 million, is a testament to the company's expanding appeal.
Uber has surpassed its growth commitments from a year ago. The company witnessed 21% year-on-year growth in gross bookings, beating the mid-to-high teens CAGR commitment. Adjusted EBITDA rose impressively by 60%, and annual free cash flow conversion as a percentage of EBITDA stood at 106%.
Strategic Vision and Autonomous Vehicles
Khosrowshahi shared insights on Uber's strategy towards AV technology, emphasizing that while the technology is advancing, commercialization will take longer than anticipated. Uber envisions itself as an indispensable partner for AV players, showcasing this potential with upcoming launches that allow Austin residents to sign up for Waymo AV match-ups.
Brian Nowak from Morgan Stanley raised questions about the company's investments in AV-related assets and future profitability. Dara revealed Uber's commitment to investing in fleet supplies, including depots for electric charging, and expanding partnerships with AV players and OEMs. The CEO underlined that even aggressive investments in AV were unlikely to impact the company's three-year growth outlook adversely.
Mobility and Profitability Outlook
CFO Prashanth Mahendra-Rajah highlighted Uber's holistic approach to profitability, with a focus on consistent investments leading to strong returns and growth potential. The Q4 EBITDA margin was noted at 7.8% of gross bookings, a year-on-year increase attributed to supply incentives and operating cost leverage, despite rising insurance costs. The robust membership program and international expansion are expected to sustain growth.
Geographic Expansion and Delivery Dynamics
Eric Sheridan from Goldman Sachs questioned Uber's regional growth, particularly in less dense areas. Uber's strategic initiatives include improving supply penetration and extending market reach, demonstrating higher growth rates outside dense, high-penetration areas.
On the delivery side, Uber Eats is driving growth through increased merchant selection, competitive pricing, and quality service. The service witnessed a 16% year-on-year increase in active merchants, with enhanced consumer offers and promotions aimed at increasing conversion and consumer loyalty.
Navigating the AV Landscape
In response to investor questions, Khosrowshahi elaborated on the cautious yet optimistic approach towards AV commercialization. While acknowledging the complexity of regulatory and technological advancements, significant potential exists, especially in high-revenue markets like Europe and the US. Uber's strategy involves early balance sheet investment in AV vehicles, anticipating fleet partners and financial players to eventually finance these endeavors.
Addressing FX and Insurance Challenges
Despite currency fluctuations affecting over half of Uber's business situated outside the US, the company emphasizes absorbing FX impacts internally. Encouragingly, the global environment is experiencing easing insurance pressures, with innovative risk management and regulatory initiatives projected to stabilize costs.
Looking Forward
Uber's robust performance in 2024, coupled with strategic foresight in AV and geographic expansion, sets the stage for continued growth. The company remains steadfast in delivering both top and bottom-line growth, with ongoing investments propelling it towards a promising future. For retail investors, Uber's trajectory appears indicative of both resilience and a strategic pivot towards future frontiers.