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Quantifying The Economic Mojo Migrated to Out-of-Home Experiences & Services

Thomas Paulson
Aug 5, 2022
Quantifying The Economic Mojo Migrated to Out-of-Home Experiences & Services

  • Airbnb reported strong 2Q22 results and offered an upbeat 2H22 outlook. For 2Q22, bookings were $17B, which is $7.2B (+73%) above 2019's level. Units booked (rented) were 24% above 2019, with the remainder of the growth coming from primarily higher rates (up 27%) as well as property mix. Within the bookings, nights at high-density urban areas accelerated from 1Q22 and once again exceeded pre-pandemic levels. Booked nights in the U.S. – representing 50% of the business – were 37% above 2019. Airbnb stated that they have seen no diminution in demand.
  • Uber reported a 57% YoY increase in mobility bookings, with trips up 24% (including a 21% increase in riders) and the rest of the growth coming from longer rides and higher fares. From its $3.5B in mobility revenue, it produced $771M in EBITDA (representing an EBITDA margin of 22%).
  • Uber's U.S. region outperformed all other regions with a +150% increase in revenue. Airport gross bookings were up +140% YoY and +50% QoQ. Both rides and mobility bookings should exceed 2019’s levels in 2H22. In the U.S. recovery has been pretty broad, but cities that are doing less well include San Francisco, Los Angeles, and Seattle.
  • Uber CEO Dara Khosrowshahi said on CNBC that they are not seeing any signs of consumer fatigue, or recession, in their business, just a shift from delivery to on-the-town mobility.
  • Uber’s delivery business in the U.S. grew a solid +21% (in bookings) and its take rate increased to 19.4%. The rising take rate reflects greater advertising revenue. Advertising is effectively a pay-to-play (similar to a retailer slotting fee) and something that brands should be wary of, especially BevAlc. Uber's 2Q22 update also noted that even as the company expands its delivery profitability, they have "invested strategically in new verticals like grocery, convenience and alcohol." Khosrowshahi continued that, "[it's] really a part of the power of the platform that we're having. If you ride with us, if you eat with us, if you drink with us, if you order groceries with us, we just become an everyday part of your life. You top that off with the membership program." That program hit 10M members and is 23% of gross bookings and 32% of delivery bookings. Members spend 2.7X more than non-members.
  • We previously discussed Uber's delivery aspirations and its threat to retail and real estate. Of note, the average "earner" on the Uber platform is now making $37.50 per hour and driver sign-ups in the U.S. were up +76% YoY in 2Q22, with over 70% of drivers say inflation has played a part in their decision to come on to the platform.
  • Uber's delivery business also posted positive EBITDA of $99M, but at a modest margin (3.7%).
  • On its scale advantages and the impact of the rising cost of capital’s impact on digital disruptors that are ankle bitters for Uber, Khosrowshahi noted that, "the platform advantages that we brought, the scale advantages, the global advantages that we brought to some extent were kind of outshouted by just higher spend by competitors. In an environment where capital discipline becomes more important, I think the larger players – and we are the largest players – the most diversified players, [will outperform]. And then the players who have true platform advantages, which, again, as Uber, really start coming to the floor. When we look at the competitive environment, this is the strongest we felt competitively globally since Nelson and I have probably started here."

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Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more.

He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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