Uber Technologies, Inc. (UBER.US) FY25Q4 conference call: The company is the most ideal platform for the implementation of autonomous driving.

Uber Technologies, Inc. (UBER.US) held its FY25Q4 financial report conference call. Executives stated that the company, through its global scale, high demand density, and advanced market matching technology, accurately matches passengers, drivers, merchants, and vehicles in real-time environments. With a strong cash flow, the company will continue to invest in expanding its consumer, Earner, and merchant base. The management reiterated that Uber is the ideal platform for the deployment of Autonomous Vehicles (AV). The addition of AV will enhance Uber's advantages in scale, density, and ground operation experience. Despite short-term market doubts about autonomous driving, Uber is more confident in the correctness of its "platformization" path through pilot experiences in multiple cities globally. Uber is not only a consumer of technology, but also a core Hub Group, Inc. Class A for the commercialization of AV. Looking ahead to 2026, the company is starting the year with strong momentum and will make targeted investments around the "six strategic priorities" proposed in the previous quarter to ensure long-term sustainable growth. (Transition from "one-time trips" to "lifetime value"/ building a "hybrid" future of autonomous driving/ substantial investment in local e-commerce/ expanding "gig" income opportunities/ becoming a growth engine for merchants/ comprehensive use of generative AI). Q&A Q: The management mentioned that 30% of bookings come from large cities. Considering that Tesla or Waymo are exerting efforts in these cities, how does Uber view the impact of this competition on market share? Especially, will profitability be affected in intense competition? A: In AV deployment cities such as San Francisco and Austin, the company's total bookings have actually accelerated growth. AV is expanding the market cake, and its value is reflected in Waymo's $110 billion valuation. Data shows that the average daily number of trips with AV on the Uber platform is 30% higher than its self-operated (1P) platform. Last year, Uber's platform added trips 50 times the total of the entire AV industry. The company expects AV partnerships to cover 15 cities by the end of this year, and because of higher utilization rates, Uber is the preferred choice for AV manufacturers to monetize assets. AV profit margins follow a new product curve: initially, liquidity is slightly lower in exchange for scale, and after scalin, it exhibits "positive economic benefits". The market has overestimated the share of profits in core cities. In fact, 75% of profits in the U.S. come from cities outside the Top 20, which have faster growth rates and are harder for AV to penetrate in the short term. Additionally, 60% of bookings in the mobile business come from overseas. This geographical diversity forms a strong competitive moat. Q: What are the strategic focus and investment direction to maintain the momentum of user growth? A: The growth core logic is divided into four dimensions: new products, new scenarios, new demographics, and new regions. For example, the low-cost product Moto (two-wheeler) significantly reduces access thresholds and successfully converts to UberX; the Reserve scenario addresses the pain points of travel to suburbs and airports, with higher gross margin and driver income; In addition, differentiated products for women, teenagers, and the elderly continue to penetrate. International markets and non-core cities (low-density areas) show strong performance, with growth usually 1.5 to 2 times that of large city centers. This growth is mainly due to the expansion strategy of "supply leading, demand following", which currently shows no signs of slowing down. Furthermore, autonomous driving (AV) will become a new customer acquisition channel in the future. Q: How will the Uber One membership system impact increasing the user lifetime value (LTV) in the next 12-18 months? A: In 2025, user growth is accelerating, with monthly active users increasing from 14% at the beginning of the year to 18% by the end of the year. Currently, there are over 202 million monthly active users and over 450 million annual active users. Through early investment, the retention rate of new users is better than the same period last year, significantly improving user quality. Uber One membership has grown by 55% year-on-year and is a key lever to increase user frequency and loyalty. The company is improving stickiness through synergies with multiple products, with 40% of users in Q4 using more than one product. In terms of investment logic, the company adheres to prudent financial discipline, closely monitoring the LTV/CAC ratio to ensure long-term return on investment in the membership business. Q: Given the high capital expenditure and safety requirements of AV technology, why won't it evolve into a situation of "winner takes all"? A: Uber is the "winner take all" in the 3P market. In the field of mobile travel and delivery, with global deployment and organic integration of multiple products, Uber has already achieved "winner take all". This barrier not only exists in the U.S., but is more pronounced in international markets. Regarding AV, we believe that the ultimate winner will be Uber, which can integrate diverse assets as a 3P transaction platform. The supply side of AV technology will be diversified, with hardware and original equipment manufacturers (OEMs) fundamentally fragmented, creating many regional champions. We expect L3/L4 autonomous driving software to become standard in new vehicles within 10 years. Companies like Waymo, Baidu, Pony, WeRide, Avride, among others, are nearing the finish line. NVIDIA Corporation is developing a sensor and computing stack that will become an industry standard. As there are multiple software providers and hardware platforms, AV will not be monopolized by one or two companies but will have many suppliers, similar to the OEM industry. AV technology has been solved by multiple companies in multiple ways. For Uber, this will not pose a threat but will actually expand the share of the entire mobile travel market by reducing costs and improving the experience. As a leading 3P platform, we will be the best choice for AV manufacturers to monetize assets. Q: Will the company maintain its policy of returning 50% of free cash flow (FCF) to shareholders in 2026? A: The company's top priority is to ensure continuous reinvestment in core business opportunities. With current free cash flow of around $100 billion and a 40% year-on-year growth, the company has ample financial space. While advancing the AV strategy and evaluating selective acquisitions, it can still return significant cash to shareholders. For Uber, investment in growth and returning cash to shareholders is not a "either-or" choice but a strategy that can be pursued simultaneously. Given that the future free cash flow generation capability will continue to increase, the company has the ability to maintain a robust pace of shareholder returns while ensuring business expansion investments. The management believes that the company's stock price is still very attractive. Therefore, the company will continue to maintain an active and stable repurchase frequency, aiming to increase the value per share by continuously reducing the number of outstanding shares. For 2026, the company will adhere to this capital strategy to maximize long-term shareholder interests through a "buyback + investment" dual-track drive. Q: Why is the company confident in the "accelerated" growth of its business (number of trips and bookings) in the U.S. in 2026? A: Up until 2025, the company's U.S. business was pressured by inflation in insurance premiums, forcing cost increases on consumers and resulting in a slowdown in growth. Currently, benefiting from insurance system reforms and hundreds of millions of dollars in cost savings achieved through product optimization, insurance costs have shifted from gross profit deductions to operating leverage. The company is now able to maintain stable or even declining end prices, greatly stimulating long-term demand elasticity. Low-end (such as Wait & Save) and high-end products (such as airport shuttles) achieved a 40% high-speed growth globally (including the U.S.) last year. The growth rate in low-density markets is 1.5 times that of large city centers, but currently only accounts for 20% of global trips, indicating significant reliability improvement space and growth dividends. Q: Has the capital expenditure model of the autonomous driving business changed? Does the company plan to transition to heavy asset operations? A: The company is ensuring future supply through investments in software developers (such as Waabi). For example, as part of an investment agreement, the first 25,000 autonomous passenger vehicles produced by Waabi will be exclusively operated by Uber and have a profitable economic model. Uber has the world's largest fleet operation ecosystem, and scale effects in vehicle maintenance, charging, and repairs significantly reduce variable costs. Uber does not plan to hold a large number of vehicles directly but intends to complete fleet financing through cooperation with financial institutions such as banks and private equity firms. The future AV fleet will operate under a model similar to Marriott (not owning hotel properties but responsible for operations) or financializing data center assets, with professional financial players holding assets and Uber managing operations and obtaining asset returns to achieve high capital efficiency. Q: How will data and simulation technology accelerate the development of AV 2.0 software? Additionally, what are the key unlocking conditions and major obstacles (regulatory, manufacturing, safety, etc.) for deploying in 15 cities by the end of the year? A: Simulation capability (SIM) is significantly enhanced with large-scale models and computational power improvements, such as partner Waabi's ability to simulate thousands of rare scenarios to train models to handle extreme situations that are difficult to encounter in real life. However, real-world data (such as a major power outage in San Francisco) remains irreplaceable. Uber is collaborating with NVIDIA to build a "real-world data collection factory" to collect over 3 million hours of AV-specific scenario data (covering pick-up, complex road conditions, etc.). This aims to democratize data to eliminate the competitive disadvantage of small players and provide a faster roadmap for the entire industry's research and development. The core of landing in 15 cities by the end of the year lies in establishing operational loops: including finalizing partner agreements, preparing vehicle capital, building depots, securing sites and charging infrastructure. Meanwhile, the government relations team is concurrently resolving regulatory access in each location. On the safety front, the company adheres to a progressive strategy: safety personnel are usually retained in the initial stage, and full autonomous driving is adopted only after the model matures (as in the Abu Dhabi model). The key to transitioning from "landing" to "scalability" is to avoid capacity bottlenecks. The company has already secured the capacity for tens of thousands of vehicles with some partners and will introduce more OEM deep collaborations in the future. In terms of capital model, although the long-term goal is to achieve a light-asset financialization similar to REITs, in the first few years, Uber will make upfront investments in vehicle procurement to ensure certainty in initial supply lock-in. Q: AV is a long-term topic, how are the different stages of its development divided? A: The current focus is on utilizing AV to provide capacity during the "valley" of demand curves (such as from Monday to Wednesday). As AV is currently constrained by technology and scale, the current target is to ensure high utilization of vehicles even during periods of low demand. As hardware costs decrease, AV will shift from filling the demand gap to covering "daily demand". At this point, cost advantages will be passed on to consumers, significantly expanding the total addressable market (TAM). Achieving AV supply representing over half in specific cities. However, this depends on OEM production ramp-up, which is still far in the future. Q: How will the transition from pilot to a scale of "tens of thousands" of vehicles be achieved in the coming years? A: Whether reaching a scale of tens of thousands of vehicles depends primarily on the production speed of OEMs (original equipment manufacturers). For OEMs accustomed to producing millions of vehicles, AV is a new low-capacity (tens of thousands) use case that requires overcoming challenges of switching production lines. Uber is locking in supply through purchase agreements and driving the financialization of these assets to address funding issues in large-scale deployments. Uber has a unique multi-business logistics ecosystem (travel + food delivery + freight). During periods of "demand valleys" in travel, vehicles on other platforms may be idle, but Uber can deploy AV into food delivery or last-mile freight. This cross-category scheduling capability gives Uber a better cost structure and higher structured utilization rate than any single personal travel platform, thereby having a superior cost structure during the scaling process. Q: The advertising business has surpassed the previous target of 2% penetration rate on the delivery side, how does the company view its long-term space and growth opportunities? A: 2% is no longer the ceiling, with many scenes still in early stages. In the past, we considered 2% as the penetration rate ceiling, but now it appears that the opportunity space far exceeds expectations. Currently, the advertising penetration rate for small and medium-sized businesses (SMBs) has significantly exceeded 2%; and the year-on-year growth rate for Enterprise customers is currently outperforming SMBs significantly and is in a rapid catch-up stage, with a huge runway for growth. Additionally, advertising products for supermarkets, retail, and mobility scenes are still in their early stages and present significant incremental growth opportunities in the future. Q: The growth rate in the delivery business has reached new highs in many years, what are the key factors behind the core DRIVE and the sustainability of growth? A: Expansion on the supply side: in many countries, our coverage is only 30%-40% of the potential market. The company is leveraging AI to empower sales teams to improve efficiency, with the speed of merchant onboardings accelerating, directly driving conversion rates and new user growth. Breakthrough in low-density markets (suburbs): Currently, the company's market share in suburban areas is still lower than in core cities, but the growth rate in low-density markets has significantly outperformed that of large city centers, indicating substantial penetration space. Horizontal expansion of categories: The retail and supermarket business represents a "trillion-dollar" opportunity. We have covered 5 out of the top 10 supermarkets in the U.S. and continue to sign large exclusivity agreements (such as with Kohl's, Australia's largest supermarket group). Stickiness of the membership system (Uber One): Currently with 46 million members, growing over 50% year-on-year. Membership bookings account for nearly 50%. Members demonstrate strong cross-category usage habits between dining, supermarkets, retail, and taxi, contributing to a high LTV. International layout and synergy effects: The penetration rate of the delivery business in international markets is still lower than that in mobility. With the structured advantage of dual-service synergy, the company has become the market leader in share in the UK and Japan and is in a leading position in Germany as well.