Thank you for joining us today, and welcome to Uber Technologies' second quarter 2021 earnings presentation. On the call today, we have Uber's CEO, Dara Khosrowshahi and CFO, Nelson Chai.

During today's call, we will use both GAAP and non-GAAP financial measures. And additional disclosures regarding these non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, are included in the press release, supplemental slides and our filings with the SEC, each of which is posted to investor.uber.com. As a reminder, these numbers are unaudited and may be subject to change.

Certain statements in this presentation and on this call are forward-looking statements. Such statements can be identified by terms such as believe, expect, intend and may. You should not place undue reliance on forward-looking statements. Actual results may differ materially from these forward-looking statements, and we do not undertake any obligation to update any forward-looking statements we make today, except as required by law.

For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the press release we issued today, as well as the risks and uncertainties described in our most recent annual report on Form 10-K for the year ended December 31, 2020 and in other filings made with the SEC, when available.

Following prepared remarks today, we will publish the prepared remarks on our investor relations website, and we will open up the call to questions. For the remainder of the discussion, all second quarter growth rates reflect year-over-year growth, and are on a constant currency basis, unless otherwise noted. For July trends, we will be providing comparisons with July 2019 in addition to year-over-year trends. Lastly, we ask you to review our earnings press release for detailed Q2 financial review, and our Q2 supplemental slides deck for a number of additional disclosure that provide context on recent business performance.

With that, let me hand it over to Dara.

Dara Khosrowshahi - Chief Executive Officer

Thanks, Balaji.

On our last call with you, we said that we would lean in to re-ignite driver and courier growth. We've done so aggressively, and we've made significant progress. Matching and balancing supply and demand, market by market, at the right times, at the right places, and at the right price is the key to our marketplace and what we do better than anyone else in the world.

As a result of our driver-focused investments, everything from refreshed digital marketing to more attractive incentives, to good old-fashioned phone calls to folks we haven't seen in a while, monthly active drivers and couriers in the US organically increased by 420,000 from February to July, and we gained an additional 110,000 active couriers from our Postmates migration. In particular, the number of Mobility drivers in the US ended the quarter up 75% year-on-year in June. We also made several operational and product improvements to the onboarding process that led to nearly a quarter of new drivers signing up to both drive and deliver, and we cut courier onboarding time by over 90%. We continue to see strong earner momentum early in the second half of the year and we've been able to taper our short-term incentives as we hit our stride.

The good news is that drivers increasingly want to get back on the road. In June, 60% of inactive drivers told us they intend to start driving again within a month; that's up from 40% in April. And 90% of drivers told us they expect to come back by September.

We are also beginning to see marketplace metrics revert to normalcy in several markets, with surge levels and wait times nearly back to normal in Miami, Atlanta, Dallas, Houston and Phoenix. But in major cities like New York, San Francisco and LA, demand continues to outpace supply and prices and wait times remain above our comfort levels.

Our investment in the earner experience is a fundamental, cross disciplinary, and long-term initiative for our Company. From doubling down on our app quality, to targeted and personalized re-engagement campaigns, to completely redesigning our onboarding flow to make it easier and faster than ever to earn safely, to rolling out unique programs like free language learning from Rosetta Stone or free tuition with ASU, our Earner Super App is unique in the depth and breadth of earnings opportunities we can offer drivers and couriers globally.

We have a lot of work to do and it's on us to ensure Uber remains the most attractive and rewarding platform for on-demand work in the world.

I also want to acknowledge the Delta variant. Thanks to the incredible effectiveness of the vaccines, we continued to see GB growth in our business from June to July, despite the impact of the new variants. Where markets are recovering, our Mobility and Delivery businesses are emerging stronger together. As of last week, our total Gross Bookings in New York City, London and Paris are over 30% higher than July 2019, as Mobility has made a nearly full recovery. Nelson will have more specifics, but we have confidence in our ability to manage through any scenario, just as we've done over the last 500 plus days.

Our ambition is to help people go anywhere and get anything. Whether they first came to Uber via Rides, Eats or Freight, consumers, merchants, companies alike are increasingly getting used to doing more with Uber.

During the pandemic, we've shown how each of our multiple business lines can provide a hedge against the others. But more exciting is how innovation in our product and brand is driving cross-pollination between our customer bases. In other words, our businesses do provide a hedge, but, more importantly, strength in one business can strengthen the others.

You are well aware by now that the Rides app is acting like a free marketing engine for our Delivery business. What may be less obvious is that Delivery is now increasingly driving consumer acquisition for Mobility. That's because in many markets, especially suburbs and smaller towns, Eats is sometimes the first way consumers engage with Uber. We've launched proactive efforts to convert these Eats-first consumers into Uber riders. In Q2, over 20% of Mobility's first-time riders in the US and more than 40% of first-time riders in the UK were existing Delivery consumers, with this contribution rapidly growing over the last year.

Over time, we expect our growing New Verticals business to increasingly benefit from, and contribute to, our platform. Already, over 3 million consumers are ordering groceries, convenience items, alcohol and more on Uber's apps each month, and this is before we've even fully addressed the US opportunity. Notably, consumers acquired through one of our New Verticals offerings spend more than twice as much as consumers acquired through our restaurant delivery offering. We are beginning to broadly roll out grocery powered by Cornershop in the US, having doubled our footprint to more than 400 cities in the last few weeks, and expect this to be the next pillar of growth for Uber.

Underpinning all of this is our membership program. Just a year ago we began to roll out Uber Pass in earnest. It now drives 30% of Delivery GBs in the US, and roughly 25% globally. Consumers who regularly engage with both Mobility and Delivery now account for nearly half of our total company Gross Bookings. For these consumers in particular, Pass is a no-brainer, and we see a long runway for increased adoption.

We're also seeing the benefits of cross-platform synergies for merchants and other businesses. Uber remains the largest global on-demand delivery platform outside of China, with more than 750,000 monthly active merchants on our platform. And our leadership position continues to grow. We are now the category leader in eight of our top 10 Delivery markets, with clear number two positions in the US and UK.

We're proud that Uber Eats, Postmates, and Cornershop has helped many small businesses offset the loss of in-store traffic during lockdowns. But as cities reopen, these merchants are discovering that delivery demand is additive, even as in-store traffic comes back. Merchants have increasingly embraced our ads offering to drive significant demand amplification at a reasonable cost. Our original goal was to exit this year with $100 million of ads run-rate revenue, but we now expect to surpass that goal and end 2022 with at least $300 million in run-rate revenues in high margin ads.

Beyond last-mile delivery, Uber is increasingly powering first and middle-mile logistics with Uber Freight. Notably, roughly 50% of our freight volumes come from grocery and consumer staples shippers. Freight has successfully disrupted the freight brokerage market with our innovative technology, and is now one of the largest digital freight brokers globally excluding China.

We believe there is a large opportunity to be the preferred end-to-end logistics partner for shippers. 80% of shipper decision-makers manage both full truck loads as well as last-mile shipping, and almost 60% of surveyed customers have last-mile needs. With the pending acquisition of Transplace, we have the potential to create the first end-to-end digital logistics platform that could one day power the movement of goods all the way from the point of production to the consumer.

While none of us can predict the macro future or the effects of the Delta variant going forward, we continue to see Uber gaining momentum, as we expand our services and footprint and become a bigger part of the daily local habits of millions of consumers, earners, merchants, and shippers all over the world.

We see the path to sustainable and improving EBITDA profitability in the next six months, but it's our growth potential over the next five to 10 years that has me and this team excited and hungry to Uber On.

Now over to Nelson.

Nelson Chai - Chief Financial Officer

Thanks, Dara.

As Dara mentioned, we are of course still seeing impacts from the virus. However, on balance, we continued to make good progress, with total Gross Bookings growing from June to July.

Mobility Gross Bookings were at a $39 billion run rate in July, with Gross Bookings up 6% month-over-month and 83% recovered versus July 2019. US and Canada Mobility Gross Bookings were up 7% month-over-month and 76% recovered versus July 2019, while trips were up 9% month-over-month. EMEA and LatAm were nearly fully recovered on a Gross Bookings basis versus July 2019, while APAC was a mixed bag with New Zealand, Hong Kong and Japan growing versus July 2019, but India, Australia and Taiwan impacted by ongoing or new lockdowns.

Delivery Gross Bookings were at a $51 billion run rate in July, with Gross Bookings up 4% month-over-month, up 56% year-over-year and up over 260% versus July 2019. Delivery has remained relatively steady since March, even as cities reopened. We are witnessing very healthy trendlines in major markets like Sydney, New York, and London, with Paris as an outlier where we have seen some modest pullback.

Next, a word on M&A. Our business has a huge amount of organic momentum, and we will always aim to have the vast majority of our growth be organic. Indeed, our Delivery business has organically grown at a greater than 100% compound growth rate over the past four years.

At the same time, we do not hesitate to leverage M&A where appropriate, including both acquisitions and divestitures. Just as we divested several assets last year that along with cost rationalization helped improve our cost base by over $1 billion, we have also made several attractive acquisitions. For instance, our acquisition of Careem has led to markets in the Middle East turning into some of our most profitable markets, operating well above our Mobility long-term margin targets.

More recently, our acquisition of Postmates has helped us establish a number one position in LA, the second largest Delivery market in the US, while allowing us to execute organically to establish category leadership in New York City at the same time. We have now largely completed the integration process, and expect to deliver on our synergies targets that we laid out at the time of the acquisition.

Turning to our balance sheet, the past few months have been eventful for Uber's equity investment portfolio, as several of our portfolio companies took steps to become publicly traded entities, including Didi, Zomato, Grab, Aurora, and Joby. At the end of Q2, our equity stakes portfolio was carried at nearly $15 billion, or over $7 per Uber share.

As we have previously noted, some of these stakes are more strategic and others are more financial, with Didi being the clearest example of the latter for us. As we emerge from our post-IPO lockup restrictions, we will evaluate some of these positions, as long as the market is reflecting a reasonable value for them. And as we have said previously, we don't intend to run an investment firm, but we have sufficient liquidity to ensure that we have the flexibility to maintain those positions with the aim of maximizing value for Uber and our shareholders.

Finally, turning to outlook. We were very clear in the spring that our Mobility marketplace in the US was not delivering the magical experience we have all taken for granted, as consumer demand returned faster than drivers as markets opened up. We emphasized that it was not okay, and we would proactively invest to reenergize supply. As expected, these efforts impacted our margins and adjusted EBITDA in Q2. At the same time, we told investors that we have the levers available to achieve total Company quarterly adjusted EBITDA profitability later this year. We remain committed to it.

The good news is driver supply has been growing and our marketplace dynamics are improving. Drivers on our platform are earning more than other alternatives. Our Gross Bookings continue to grow, and in July, our margins are already improving, benefiting from our investment in Q2 to accelerate the flywheel. In July, new driver additions on Uber in the US grew 30% month-over-month, that's right, 30% month-over-month, even as we pulled back on incentives and improved our margins. As our investments taper, we expect Mobility to show strong leverage in the back half. For context, in major markets like Australia, Canada, France and UAE where supply was organically recovering without significant investments from Uber, our Mobility EBITDA margin in Q2 exceeded long-range targets, ranging from 46% to 67% of revenue. In the US, our take rate in Miami, Atlanta, Dallas, Houston and Phoenix has nearly reverted to pre-COVID levels in July.

We expect our Delivery business to continue to improve its bottom line while growing at scale. Our Delivery businesses outside the US and Canada was just shy of breakeven in Q2, while we consciously leaned into the US to improve our category position. We expect to start delivering on our Postmates synergy targets in Q3, and deliver additional leverage through improving network efficiencies and lower incentive spend across our global footprint.

We expect Freight to continue to grow and manage its investment levels for the balance of the year and we will continue to manage our corporate overhead.

Pre-COVID, we used to provide guidance around our expected annual Gross Bookings and adjusted EBITDA, which we believe provides investors with some transparency on our near-term goal, without being overly focused on quarterly fluctuations. With our business emerging from the pandemic, we believe this quarter is the right time to return to providing guidance around near-term trends. However, there is still a reasonable amount of uncertainty in the world, and as a result, we will provide guidance for Q3 on this call.

With that context, for Q3, we expect total Company Gross Bookings to be between $22 billion and $24 billion, and total Company adjusted EBITDA to be better than a loss of $100 million. And for Q4, we expect to achieve total Company EBITDA profitability.

And with that, let's open it up for questions.

Question & Answers

Operator

Thank you. [Operator Instructions] Your first question is from Ross Sandler from Barclays. Your line is open.

Ross Sandler - Barclays - Analyst

Hey, guys, thanks for all the color on the guidance. Just a question on 3Q. For the Rides business, looks like your EBITDA is going to swing up about $300 million to $350 million to about $500 million or so. So, how should we think about the take rates in Rides in 3Q system-wide? You mentioned a few city that are back into the pre-COVID levels. But how do we think about overall take rate? And then what level of driver incentives are baked into that EBITDA run rate? Thanks a lot.

Nelson Chai - Chief Financial Officer

So, Ross, as you heard in my prepared comments, we did get some update about what we're seeing in July. And you heard us talk/mention not only growth, but the margins are improving. So if margins and take rates stay where they were just in July, so we just hold on, and then we continue to grow our volume as we expect, we'll be comfortably within the ranges that we're talking about there. So, we're already seeing that pull back. And I think you heard in my stat that we increased new drivers on Uber platform in the US by 30% between July versus June, and that's as we pulled back on incentives. Because again when we did this, we knew that we wanted to build long-term sustainable profitability and growth. As you saw coming out of the pandemic, our marketplace wasn't operating efficiently or functioning correctly, and you heard in my comments. So, we invested on the supply side to get our marketplace healthy again, and we're seeing the benefits of that today. So we are able to pull back on incentives. If you just look at where we are in July and you run that forward, we should be able to achieve that kind of range that you're talking about, which is why you saw me put out the guidance on Q3 on the bottom line, and also in the investor deck, there's a chart on that which hopefully to provide some simple ranges to help guide in terms of where we're getting to.

Dara Khosrowshahi - Chief Executive Officer

All right. Next question.

Operator

Your next question is from Justin Post from Bank of America. Your line is open.

Justin Post - Bank of America - Analyst

Great. Thanks. I think there might be a little confusion on the investment levels at Uber versus basically Lyft in the US. Can you explain why it might be a little bit different dynamics in the second quarter and why you may have a bigger profitability pivot? And then maybe if you could give us an organic update on Delivery maybe ex-Postmates or some of the acquisitions, just how you did organically in the quarter? Thank you.

Dara Khosrowshahi - Chief Executive Officer

Yeah, sure. Listen, we can't speak for Lyft, but I think on balance we were super aggressive as it relates to drive our acquisition levels and when we compare the number of new drivers coming onto the platform quarter-on-quarter, month-on-month, the monthly active drivers directly against at least the numbers that we heard from Lyft, our numbers are higher on a direct comparable basis. So, I think that if you compare our numbers to Lyft again, we're not privy to their numbers. We invested early and aggressively and we're seeing very positive momentum as a result of that early investment and we've been able to pull back as it relates to incentives and revenue margins in July have come up significantly over Q2 and the momentum that we see in driver and courier growth is continuing, if not strengthening. So, that gives us a lot of confidence as it relates to Q4 - Q3 in terms of revenue margins, take rate and in terms of EBITDA. And we think the Q2 investment that we made was the right investment. And it puts us in very, very good stead as it relates to Q3 and Q4.

As far as Eats goes, the vast majority of Eats' growth is organic. So, broadly, we are seeing monthly active eaters on a global basis up about 40% on a year-on-year basis. We are seeing basket sizes of about 10% on a yearly basis. We're seeing frequency of orders up as well. So, the organic growth rates for Uber Eats is well over 50% and most of that is really about continuing to build up audience on a year-on-year basis. We're obviously happy with the Postmates acquisition in terms of being able to drive synergy value and getting to a number one position in LA, we're number one in New York as well, but it's really about the organic growth, and it's about active eaters, it's about basket size, and it's about orders per eater, and all of those are running positive for Q2, and we think they'll continue to run positive for Q3 and Q4.

Justin Post - Bank of America - Analyst

Great. Thanks, Dara.

Dara Khosrowshahi - Chief Executive Officer

You're welcome. Next question?

Operator

Your next question is from Brian Nowak from Morgan Stanley. Your line is open.

Brian Nowak - Morgan Stanley - Analyst

Great. Thanks for taking my questions. I have two. The first one is on sort of the point around the investment in the drivers. I feel like we pay so much attention to these excess incentives. But when you're talking about marketing and on-board costs and background checks and vaccination promotion education, can you just help us better understand a little bit how big was the investment to bring on more drivers in the quarter? And how do we think about that throughout the course of the year, just if you can sort of think about 2022 and hopefully, those costs are not as big of a burden?

And then secondly on Uber Pass, I appreciate the color on the volumes. Talk to us a little bit more about the areas you think you've had some success in driving adoption of Uber Pass, and in your mind still low hanging fruit areas to drive more adoption of that for riders as the Rides recovery continues? Thanks.

Dara Khosrowshahi - Chief Executive Officer

Yeah. So, in terms of driver acquisition spend, the heaviest driver acquisition spend and incentive spend that we think we will see and we saw was in Q2. We really have to take action very quickly because the marketplace was not at a place that we considered healthy. And we wanted to lean into get wait times down to get surge levels down. And all of those metrics in general as far as surge and wait times are moving in the right direction. And in a bunch of cities, southern cities, etc., they're actually back to normal. And the vast majority of the spend as it relates to driver acquisition is really incentives. It's about putting dollars in front of drivers. And our top 20 cities drivers for Mobility are making over $40 an active hour, including just earnings and tips as well. So, the good news is, we're now in a good place, where we're able to put those - pull those investments back. If you look at July, volume growth will add about $200 million in EBITDA, take rate improvements will add about $150 million in EBITDA, which gives us a lot of confidence as it relates to our Q3 numbers. And we're running positive and these numbers aren't theoretical, they're based on actual July numbers. So, I think from that standpoint, the investments are big. The investments are well worth it and we're on the positive side of the ledger so to speak.

As far as Uber Pass goes, the most important factor for Uber Pass for us is, what is the retention rate. And what we're seeing is, after some optimization, building up the product, etc., the retention rate for our cohorts that are with us more than six months is now 98% retention rate on a month-on-month basis. So, now that we have really perfected the product, driven the savings, etc., we can now lean into member growth, the vast majority of member growth is going to be organic. It's putting the product in front of both our riders and drivers. We think the Mobility business coming back is going to be a big benefit. And you've heard us talk about how users who use both Mobility and Delivery account for more than 50% of our Gross Bookings on a global basis. So, now that we have the retention, we can step on the gas in terms of acquisition, but we're really going to take advantage of that 100 million monthly active platform customers and put what's a great product in front of them and we think that we'll get a significant amount of organic traction there.

Brian Nowak - Morgan Stanley - Analyst

Great. Thanks, Dara.

Dara Khosrowshahi - Chief Executive Officer

Sure.

Balaji Krishnamurthy - Head of Investor Relations

Next question, please.

Operator

Your next question is from Mark Mahaney from ISI. Your line is open.

Mark Mahaney - ISI - Analyst

Thanks. Question on the drivers, you mentioned those two numbers about that drivers up 75% year-over-year in June and a couple hundred thousands from February to July. Those drivers, can you tell how many of those are absolutely new drivers to the platform versus lapsed drivers or people who didn't drive during the COVID crisis and they've come back?

Dara Khosrowshahi - Chief Executive Officer

Yeah, Mark, we can. And the majority of drivers who are coming back to the platform are what we call resurrected drivers. They've driven with us in the past. The number one reason why they had not driven is because of safety concerns, vaccines, COVID, etc. As vaccination rates go up, we are seeing the resurrected drivers come back. So, because of the size and scale the business, we can reach into our database and we are getting real momentum in terms of those resurrections coming back. So, I think all of the - all the signs are quite positive.

Mark Mahaney - ISI - Analyst

And one quick follow-up question, please. Any comments - updated comments on the regulatory outlook? And particularly on the state of Massachusetts?

Dara Khosrowshahi - Chief Executive Officer

Yeah. I think in the state of Massachusetts, listen, we think the right answer is our IC Plus model, right, which is independent contractor with benefits. Our drivers love it. Prop 22 has proven to be incredibly popular with California drivers. The vast majority of drivers prefer IC Plus over employment, full-time employment. And with Massachusetts, we're - I think that voters in California voted for because they had driver support. I see no reason why voters in Massachusetts are going to be any different. We absolutely prefer a legislative outcome in Massachusetts. But if we can't get there, we'll take it to the vote, and based on what happened in California, we're quite confident.

Mark Mahaney - ISI - Analyst

Okay. Thank you.

Dara Khosrowshahi - Chief Executive Officer

Sure. Next question?

Operator

Your next question is from Doug Anmuth from J. P. Morgan. Your line is open.

Doug Anmuth - J. P. Morgan - Analyst

Thanks for taking the questions. I just wanted to clarify on driver supply. I think a few months ago, kind of your expectation was that things would kind of return to normal in the third quarter. By the end of the third quarter, is that kind of still what you're expecting here given your trajectory and the tapering that you've mentioned?

And then second, on profitability, is that overall in Delivery profit in the fourth quarter? I just wanted to clarify there. Thanks.

Nelson Chai - Chief Financial Officer

On the fourth quarter, it's total Company EBITDA profitability. And then even - and the third quarter guidance was total Company as well, so that includes all aspects of the business. But if you - on my prepared comments, I just talked the fact that we'll continue to make progress and improvement on Delivery and we'll - and again, we expect our EBITDA profitability of our Mobility business continue to improve. And again, we're pretty confident in terms of how we're doing it, which is why we put out the guidance for Q3.

Dara Khosrowshahi - Chief Executive Officer

But I think if you look in the supplemental slides you also see that our Delivery business outside of the US is an inch away from EBITDA profitability. So, again this is in a theory where we're executing on it quite effectively, and we're confident in our stance overall profitability.

And then lastly, you did mentioned something about driver supply returning. So, what I would say is that you heard us both made comments in the prepared remarks that, again, we invested heavily in Q2, we're seeing the benefit even in July, which we talked about, the margins are improving, we're adding more drivers and we've pulled back on incentives. And what I would suggest is that our ability to achieve those numbers is really just based on take rates where they are in July point forward for the rest of the quarter. And I do think on drivers so far [Phonetic], the other thing that I would add is, it's not just a question on money and less in short-term we have to lean in as it relates to incentives and driver earnings are definitely high and obviously driving is a very flexible way to earn. But I would also underlie the operational and the tech improvements that we have made. So, for example, now we're testing the capability to bring on drivers - usually when someone want to drive a person, we have to do background checks, etc., and not just in the state that you live and other states as well, we can onboard drivers very quickly to deliver food, and as we process all of the regulatory checks that we have to be very careful that we do on the ground in each state, we can then move them over to driving for the Mobility business as well. And that has allowed the on-boarding flows a CRM campaigns that we are driving, the incentive technology has allowed us to move from a period of heavy spend and adding drivers to much less-heavy spend, so to speak, and adding both couriers and drivers at the fastest pace that we have for the year. I mean, July looks really good. And if August and September or anything like July, we will be in very, very good shape.

Doug Anmuth - J. P. Morgan - Analyst

Great. That's helpful. Thank you.

Dara Khosrowshahi - Chief Executive Officer

Sure.

Operator

Your next question is from Brent Thill from Jefferies. Your line is open.

Brent Thill - Jefferies - Analyst

Thank you. Any color just as it relates to pricing trends for the second half and how we should think about that? And Dara, on the Eats business, if you could just comment on the frequency? I know you had mentioned on the last call that there's perhaps a slowdown in terms of frequency. How are you thinking about right now as you look forward?

Dara Khosrowshahi - Chief Executive Officer

Yeah. I'll start with the second first, which is we actually have not seen a material decrease in frequency as it relates to our Delivery business. And we think it's just because a higher portion of our Delivery customers are using the Pass. So, we always thought that could be an offset, but we weren't sure of the relative offset between Pass. Because as non-members become Pass members and they have free trials and especially if they - when they graduate into paid membership and then that six-month cohort that has a 98% retention, the number of orders per eater and riders and rides per rider goes up materially. So, the question for us was well if the positive momentum of membership going to outdo, let's say, the negative of cities open up, and so far that is the case, so that orders per eater has stayed very consistent and people were going out, which is great. But we do think that order per eater, there'll be a tailwind in terms of orders per eater as we continue to drive membership.

As far as pricing trends in the second half, we are seeing - in July and early August, we are seeing pricing ease. It's still up year-on-year, but the pace of the price increases looks like it's easing as we get into a more normalized supply situation, which we think is a great - is a real positive for the marketplace.

Brent Thill - Jefferies - Analyst

Great. Thank you.

Dara Khosrowshahi - Chief Executive Officer

You're welcome.

Operator

Your next question is from Deepak Mathivanan from Wolfe Research. Your line is open.

Deepak Mathivanan - Wolfe Research - Analyst

Hey, guys. Thanks for taking the questions. Just a couple of ones. So, first on Eats EBITDA. Given the high incremental margins on this business below the revenue margins, how much are you reinvesting into the business right now on non-food and some of these other categories? And what are the trends - underlying trends in terms of profitability of the core of our food business?

And then second question, just a follow-up on the Rides' take rate. In addition to US growing, you also saw European markets recover during second quarter where the impact of driver incentives is somewhat low. So, is the 280 basis point sequential decline in take rate predominantly from US? Can you give some color on kind of quantifying it by geographical regions?

Dara Khosrowshahi - Chief Executive Officer

Yeah. As far as Delivery goes, we are spending a fair amount as it relates to Grocery and New Verticals, etc. Grocery and New Verticals accounts for about 5% to 6% of our overall GBs and it's growing at pretty healthy rates. But we think that we can get to Delivery EBITDA profitability by the end of the year, including Grocery as well. So, yeah, we're leading into those parts of the business. But really the Delivery story for us is, as a larger percentage of our Delivery customers are repeat customers, our - the incentives that we have to put into the marketplace, the marketing spend that we have to spend to the marketplace comes down, generally, in the U.S. and other markets as the marketplace becomes more efficient. And we get kind of more frequency in the marketplace, we're able to drive the cost per trip down, because couriers can batch - we can batch two or three deliveries per courier at the time that they have to be on the trip reduces as we add more restaurants into the marketplace, etc. So, the combination of marketing efficiencies that we get and cost per trip efficiencies that we get allow us to continue to invest aggressively in growing our Delivery business. But at the same time improving our margins as well and investing into the Grocery business.

Nelson Chai - Chief Financial Officer

Regarding your question on the take rates, you're right, in APAC and Latin America, we are not expecting any take rate changes, if you will. So, much of the investment was in the US and Canada, and there was actually some in Europe as well, in order to get drivers back and help build supply.

Deepak Mathivanan - Wolfe Research - Analyst

Got it. Okay. Thank you so much.

Dara Khosrowshahi - Chief Executive Officer

Sure.

Operator

Your next question is from John Blackledge from Cowen. Your line is open.

John Blackledge - Cowen - Analyst

Great. Thanks. Two questions. First on the Delta variant, can you talk about Mobility trends in the recent weeks in areas where Delta variant has spiked in? And also, Delivery trends along the same lines? And then on Delivery, second question, how is Uber differentiating versus other competitors in Grocery and other across different geos? And what's kind of the goal on the US, given the US has several scaled players in that market? Thank you.

Dara Khosrowshahi - Chief Executive Officer

Yeah. I think as it relates to Delta variant trends, where we have seen shutdowns, we see significant changes as it relates to the power end of the business. So, for example, if you look at our supplemental deck, Australia and Sydney, for example, where city shut down, we see Mobility obviously take a hit. But we see essentially the opposite happen in the Delivery side of the business, that's a hedge that we talked about. And even net of the hedge, Mobility and Delivery tend to be up pretty significantly on a year-on-year basis, certainly, if we compare to 2019 volumes as well. Where - we don't see where there aren't shutdowns, it's really hard to tell. It's - people still want to go out and there may be slight changes in behavior, but the non-material changes in behavior and kind of the underlying growth that we see in the business takes over. So, certainly the July trends that we saw relative to June were pretty encouraging, but no one can predict what's going to happen with Delta going forward. But so far we're hedged, and the trends that we're seeing are pretty good.

As it relates to differentiating in Delivery, listen, I think the differentiator that we have is the audience and the Uber platform, right? So, we actually were late in the Delivery game. We were one of the latest players to build up Delivery business. We built it based on the Uber brand, the marketplace matching technology that we have, the pricing technology, routing etc., three quarters of accentuated elements of what is a ride, and what's a delivery and ultimately what's going to be a grocery, three quarters of the elements that we're building in our stack are common elements that our engineers are coding. So, we essentially get to have engineers working on common elements. We got bigger datasets than anyone else. We're able to train our algorithms over much larger data points - global data points versus our competitors, which allow us to build a matching, routing, incentives and marketing engine that is more personalized and just has greater capabilities than anyone else.

At the same time, we have ops teams on the ground in every single market. We understand the regulatory marketplace, the overheads that we have are much lighter than our competitors. It all translates into cost of customer acquisition is lower, lifetime value is higher because of the higher frequency counts that we have with our customers and overheads are low. So, lower cost of customer acquisition, higher lifetime value, lower overheads and greater tech capabilities, that's the differentiator. We built - Eats is now number one in eight out of top 10 markets. And we think Grocery, we're off to a great start internationally, in the US, Instacart is a really strong competitor. I think in the US, we're going to be practical. We're going to build out our merchant base, and we're going to lean in on the Rides and Eats audience to build up Grocer in the US. But it's a bigger audience than anyone else has. So, we think that's a great asset to have.

John Blackledge - Cowen - Analyst

Thank you.

Dara Khosrowshahi - Chief Executive Officer

You're welcome.

Operator

Your next question is from James Lee of Mizuho. Your line is open.

James Lee - Mizuho - Analyst

Great. Thanks for taking my question. Can you give us an update on competition with Didi given their issues with the regulatory bodies in China? Are you seeing them any pullback from their perspective on the international operations? I know you guys competing within South America and EMEA. Any update would be helpful. Thanks.

Dara Khosrowshahi - Chief Executive Officer

So, as you know, it's happened very recently and quickly. So, we actually really haven't seen anything material, if you will. Obviously, we compete with them particularly in some parts of Latin America. We had a strong second quarter and continue to have - do well as we entered July and we actually haven't seen anything, what I'd call, material changes. There's always kind of fluctuations market-by-market or city-by-city, but nothing that I could attach to the broader question surrounding Didi.

Balaji Krishnamurthy - Head of Investor Relations

Next question, please.

Operator

Next question is from Brad Erickson from RBC Capital Markets. Your line is open.

Brad Erickson - RBC Capital Markets - Analyst

Hi, there. Thanks for taking the questions. Just one more on the driver incentives. Can you just talk about the confidence level that you can continue to taper here? I think your main competitor here in the U.S., they're going to keep those investment levels fairly high for the foreseeable future. So, I guess, just wondering how conservative your expectations there as we look at what's contemplated into the Q4 guide and the profit target? And then the second one is just, can you remind us just what's built-in also for that profit target regarding advertising? Thanks.

Nelson Chai - Chief Financial Officer

So, there isn't much more from a run rate standpoint on advertising. It's really coming from Mobility recovery. And so, if you listen to my commentary, I really did center it and the variability is really around the Mobility recovery or the continued recovery. We did notice the listed increase, some of their incentive spend both in June but particularly in July, and as you heard from our commentary based on the results in July, our business is quite strong and our margins have come back. And again as I reiterated a few times on this call already, as we think about getting to the guidance that we gave you, it's really around not increasing our take rates if you will, between now and the end of the quarter, it's just maintaining where they were today in this - at this point of time in Q3 and then some expected increase on the volume side.

So, again, obviously, we can't predict the future, but we feel pretty good about what's going on now and it's happening today in the marketplace where they are investing. As Dara mentioned, we invested early and often to build back our marketplace. And you do get the benefits of the flywheel. You did hear my comments about in July how we added 30% new drivers without really incremental - spent incremental [Indecipherable] spending a lot more incentive. And so we just got about the flywheel going and we're getting the benefits from it. I'm not going to comment on what listed and what we're not going to do, but again, we feel pretty comfortable for our marketplaces today.

Dara Khosrowshahi - Chief Executive Officer

And I think the other factor that I would also point out, Brad, is the incentives was the fastest lever that we could pull, but the improvements that we have made in terms of onboarding flow, the CRM campaigns that we're sending to resurrected drivers, we've done a bunch of testing and learning in terms of what incentives work and which ones don't. All of that is resulting in greater efficiency in terms of our being able to add incremental drivers at a lower cost and being able to hold onto drivers because earnings are really high.

The other factor that I would add is that, again, based on what we can see our spend versus Lyft spend, our base we went in more aggressively. So, I think that when we say we can taper, it's off of a more aggressive base. And if they're putting in incentives, it's probably off of a lower base. So, there may not be that much of a difference, but the biggest factor is, we now have the machine working - and listen, in July, we pulled back incentives and driver acquisition and courier acquisition looked really, really strong. So, all we're giving you is the facts and our capabilities are getting better, and we're getting smarter about how we're spending and that's what gives us a lot of confidence going into Q3 and Q4.

Brad Erickson - RBC Capital Markets - Analyst

Great. Thanks.

Dara Khosrowshahi - Chief Executive Officer

Sure.

Operator

Your next question is from Edward Yruma from KeyBanc Capital Markets. Your line is open.

Edward Yruma - KeyBanc Capital Markets - Analyst

Hey, guys. Thanks for taking the question. I wanted to ask a question about reward. I know you guys continue to innovate the program. I guess how successful have you been in terms of driving incremental usage either on the Eats side or on the Ride side, more importantly, getting a consumer to use both sides to be app?

Dara Khosrowshahi - Chief Executive Officer

Yes. So, on average, the past customer is the number of trips, rides and food orders per customer on a monthly basis increases more than 50% on pre-Pass, post-Pass. So, that incrementality is pretty significant. We see a lot more crossover. And if you look at our supplemental slides, the percentage of our total Gross Bookings now coming from Mobility and Delivery cross-platform users is close to 50% in the US and the UK as well. So, the Pass is really working. And the most important factor on the Pass is that 98% retention rate. It's a really strong product that's sticky and that gives us the confidence to be able to lean in and grow the number of Pass members that we got.

Edward Yruma - KeyBanc Capital Markets - Analyst

Got it. And do you think that that helps keep the customer loyal to your platform versus shopping on other platforms from a price perspective?

Dara Khosrowshahi - Chief Executive Officer

It's certainly shows up in the orders per month. It's our belief that it's not purely priced. We really invest in the customer service. They're certainly savings. But listen, this is a well-worn path. Amazon Prime, I think, touched - talked a bunch of players after the value of high-frequency type of interactions. And we're not inventing anything here. The good news for us is our Pass structurally - because of the Delivery benefits, because of the Ride benefits, now because of the Grocery benefits, just structurally our Pass can offer more than any other Pass out there and the upside that we can see from frequency is just structurally higher than any other player out there. So, we think our Pass is the upside from it in terms of our business and the retention just a structurally different place versus any of our competitors.

Edward Yruma - KeyBanc Capital Markets - Analyst

Great. Thank you.

Dara Khosrowshahi - Chief Executive Officer

You're welcome.

Operator

Your next question is from Tom White of DA Davidson. Your line is open.

Tom White - D.A. Davidson - Analyst

Great. Thanks guys for taking my question. Just hoping you could comment maybe on your expectation for staying EBITDA profitable after the fourth quarter? And maybe whether you really think you should, and I guess specifically, I'm talking about growing businesses and Grocery and other Delivery categories, how you're thinking about when you're investing in those long-term very large opportunities versus kind of catered to public equity investors who would like to see some near-term profitability?

Nelson Chai - Chief Financial Officer

So, Tom, when we talk about getting the EBITDA profitability in Q4, our expectation is that we'll continue and they'll be sustainable and growing, as we continue to move forward into 2022. So, we believe we'll have enough to invest along some of those other new verticals in other areas and reinvest back in. But we recognize the fact that one of the things we did, if you think about the approach like [Phonetic] this quarter, we invested ahead up [Technical Issues] our healthy marketplace. So, we can though get our margins back, have our businesses healthy and growing and profitable as we move towards EBITDA profitability, it's pretty important for the Company and for Dara, for myself, that we just sustainably build our business and continue to grow our bottom line as well.

Dara Khosrowshahi - Chief Executive Officer

Yeah. I think, Tom, just mathematically, the other factor that I would point to is our Mobility business is a $50 plus billion run rate without COVID. And we're seeing a number of markets back above a 100% of '19 levels. At $50 billion, the Mobility margins as a percentage of Gross Bookings can be 10% plus and already is 10% plus at a bunch of market. So, the earning power today with our kind of growth on our Mobility business is really, it's a $5 billion earnings power today. Delivery business, we have markets that are 5% of Gross Bookings today. So, the earnings power of that business is another $2.5 billion. Our earning overheads, call it, $2 billion on a run rate basis. So, the earnings power of this Company is very, very significant, that allows us to invest in new businesses, it allows us to invest in New Verticals, high capacity vehicles, tool, rental, reserve, it allows us to invest in Grocery, etc., and because of the scale of our business and because of the membership program etc. that I talked about, we can invest aggressively, and we can be EBITDA profitable, and we expect to increase margins for the foreseeable future. And in a tough way, COVID kind of prepared us for this. We have to sharpen our kind of operating muscles. But this is not raise to profitability, and then Oh my God, what are going to do. This is the race to profitability and just keep growing and growing and growing. That is absolutely our goal. And I think we got the earnings power to do it.

Tom White - D.A. Davidson - Analyst

Great. Thank you.

Dara Khosrowshahi - Chief Executive Officer

You're welcome.

Operator

Your next question is from Steven Fox from Fox Advisors. Your line is open

Steven Fox - Fox Advisors - Analyst

Hi, thanks, good afternoon. I was just wondering if I can follow up on a couple of comments that one in particular, as well as the comment about being practical when considering category expansion in the US. It seems like category expansion has a better return on your investment and you could be aggressive while still protecting profit. So, any longer-term thoughts on how to think of not just Groceries, but also the Drizly acquisition coming in other categories as you invest in the next year? Thank you.

Dara Khosrowshahi - Chief Executive Officer

Yeah. I think on the long-term, I just point to Uber Eats. Listen, this is not made up theories right. We built - we were late in the Delivery game. We built up Uber Eats using the engineering platform that we built on Mobility, putting a bunch of our great product people, engineers against that. We've built up Freight organically. We're making a big acquisition, but that's another business that we built. Grocery and Drizly are very, very close to our Delivery business in terms of use cases. They cover the fast and frequent. People want there liquor fast. They want grocery fast. And they're also frequent use cases as well. So we are going to use the family of apps that we have to essentially cross promote one service to the other at the right time targeted to the right person using ML algorithms. They'll all have the same identity, they'll all have the same payment characteristics, will have fraud engines, routing engines, pricing engines, all of them running against the bigger dataset than anyone else can. So, just if this is a play that we've run a bunch of times and we're very, very confident that we can do the same for Grocery and other categories as well.

Steven Fox - Fox Advisors - Analyst

Great. And just to clarify, you said these new categories are 5% to 6% of Delivery bookings or total Company bookings? I wasn't clear on that. Thanks.

Dara Khosrowshahi - Chief Executive Officer

Delivery bookings.

Steven Fox - Fox Advisors - Analyst

Thanks very much.

Dara Khosrowshahi - Chief Executive Officer

You're welcome.

Operator

Next question is from Jason Helfstein from Oppenheimer. Your line is open.

Jason Helfstein - Oppenheimer - Analyst

Thanks. Just two quick ones. One, just how are you thinking if unemployment benefits are extended, would that change your third quarter outlook? And then number two, I think kind of SoftBank's position on your stock has been causing headache for many. Any thoughts about how that could get resolved? Thanks.

Nelson Chai - Chief Financial Officer

Well, so first of all, in terms of - our guidance is really just based on what we think is going to happen. To the extent benefits are extended, we will manage it. But as you know we've made really good strides right now in the current environment and with the current plans in place. So now, we don't see any changes irrespective of benefits get extended or not. We do see benefits in terms of folks coming back to drive when the benefits do expire. But that's more of an upside, if you will.

In terms of SoftBank, it's hard for me to comment on SoftBank. There - we have good relationship with them. They're an investor. There's lots of stuff you read about what they're doing regarding some of their holdings, particularly given what's going on in China. I think much of it is done already. But again they don't really call us for advice on how they're going to trade, and what they're going to go do. But again I think we're fine with whatever they end up doing so.

Jason Helfstein - Oppenheimer - Analyst

Thanks.

Operator

Your next question is from Nikhil Devnani from Bernstein. Your line is open.

Nikhil Devnani - Bernstein - Analyst

Hi, thanks for taking my question. A couple if I may. First in the markets where you've invested aggressively and you've seen driver supply improve, could you see market share gains follow against either competitors or alternatives in those regions?

And then secondly, in terms of the users that you're adding, anyway to dimension how many of these are new to Uber altogether or just older users reactivating? Thank you.

Nelson Chai - Chief Financial Officer

Just so in terms of the supply question, again, yeah, there is nothing in terms of are we gaining our - what I would say is our category - we call it category position, you guys call it, market share, it's very healthy in actually ever region of our Mobility businesses. And it's either been stable to where it was in Q1 or has improved slightly in every major market. And again, whether it has to do with investment on bringing drivers back or just the competitive nature of the marketplaces or other factors that it's, it is what it is. I can't draw a conclusion between different marketplaces. The team is actually doing quite well, executing given the pandemic and people coming back.

Dara Khosrowshahi - Chief Executive Officer

What was your second question? I'm sorry, I missed it.

Nikhil Devnani - Bernstein - Analyst

No worries. Second question is just on the users in app fee growth, any way to dimension, how many of these are new users to Uber altogether, how many are just reactivating old users?

Dara Khosrowshahi - Chief Executive Officer

Yeah, I think think the majority of both our driver growth and and new user growth tends to come from resurrection, again, we got the deepest database that any company has, so we can reach into that database and we reach into that database with essentially CRM campaigns. So it's a very, very cheap to bring back those resurrected drivers. The second most significant area of growth is essentially the Rides business thrown to Eats, and then now the Eats business actually throw to Rides, and mixing new customers, essentially that don't use the other product. And then the third channel is essentially new customers to the platform itself, so it's in that order. And listen, we have active initiatives in all three and we can always do better, but certainly the momentum that we're seeing is as positive in all three.

Balaji Krishnamurthy - Head of Investor Relations

Operator, we have time for one more question.

Nikhil Devnani - Bernstein - Analyst

Got it. Thank you.

Dara Khosrowshahi - Chief Executive Officer

Sure.

Balaji Krishnamurthy - Head of Investor Relations

Let's take the last.

Operator

Thank you. Your last question is from Youssef Squali from Truist Securities. Your line is open.

Youssef Squali - Truist Securities - Analyst

Great. Thank you very much. I have one question for Dara and one question for Nelson. Dara, can you maybe speak to the driver supply driver supply and incentives in states that have ended federal unemployment benefits recently versus those that did not? How much of maybe the pullback that you're seeing maybe at least partially driven by that?

And then, Nelson, with profitability, couple of quarters away now literally around the corner, can you maybe revisit long-term margins of the business across both Rides and Eats that you've shared with us pre-COVID? Arguably, obviously, you're in a much, much better financial situation with all the cost savings etc. So obviously ex-Grocery and ex-Freight, two areas still of investment. If you can maybe just provide some color on that, that'd be great. Thank you.

Nelson Chai - Chief Financial Officer

So I'll go first. We aren't updating any of our long-term margins today. We want to get through the pandemic and come out and then we understand that it is something that investors want, and so we will address that in near - shortly after. And I think Dara gave you at a very high level the math as he went through and he used as a percent of GB's, and you see 10% of Gross Bookings for Mobility and 5% for Delivery. And so I can't suggest that's not a good guidepost. But again, we will formally take a look at it as we get through the pandemic. We wanted to do is just make sure we navigate as the recovery is going on, particularly in terms of creating equilibrium on our marketplace, which is what we've been able to do [Indecipherable] through Q2 and starting to see the benefits in Q3.

Dara Khosrowshahi - Chief Executive Officer

Yeah. And then, Youssef, back to your question on driver incentives, we have been leaning into driver incentives broadly in Q2. We have been able to pull back from driver incentives broadly in Q3. And we have been able to continue to acquire and/or resurrect new drivers broadly in July, even as we pulled back incentives just because the machinery and the targeting is working so much better. In states that have ended UI, our marketplace balance, in general, is in a much healthier condition than states that have not ended the UI. There is additional factor that's coming in the Delta variant now which may throw things off, but it does seem to be a positive to us, we don't know if it's because the UI or other factors. But it seems positive and our driving - kind of driver incentive efficiency improvement has happened in states where UI has ended as well as states where UI continues.

Youssef Squali - Truist Securities - Analyst

Okay. Thank you, both.

Dara Khosrowshahi - Chief Executive Officer

You bet.

Balaji Krishnamurthy - Head of Investor Relations

We can wrap it up guys.

Dara Khosrowshahi - Chief Executive Officer

All right. Thank you everyone for joining us, and lot of hard work from the team in Q2 and we see some pretty positive signals as it relates to Q3 and Q4. So thanks very much for joining us.

Operator

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UBER TECHNOLOGIES INC

Q2 2021

Earnings Transcript

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