Uber plans to offer more benefits to Uber One members, including member-only events, in order to earn more revenue through subscriptions.
“We're going to see more members-only events where members have exclusive access to events and experiences,” Prashanth Mahendra Raja, Uber's chief financial officer, said Wednesday morning during Uber's first-quarter earnings conference. It will surprise and delight.”
Uber CEO Dara Khosrowshahi said Uber One membership fees are “in excess of $1 billion” at run rate. In other words, Uber estimates its current subscription revenue at what he estimates to be $1 billion in annual revenue. This is the first time Uber has shared uptime figures for its subscription service, which it introduced in November 2021.
Uber One costs $9.99 per month or $99.99 per year and includes $0 delivery fees on eligible food and groceries, up to 10% off select delivery and pickup orders, discounted pricing on select rides, and more. benefits are provided.
Uber said it would share more information about these experiences in the future, but some members have already received emails about exclusive deals, such as a party with rapper Post Malone at Fontainebleau in Las Vegas.
This isn't the first time the ride-hailing giant has offered events to its members. For example, credit card companies like Chase offer members in New York City access to the Sapphire Lounge at the South Street Seaport and VIP access to concerts at Pier 17 during the summer.
In 2022, Uber launched a pilot feature that will allow customers to make event and restaurant reservations. Although this is a limited pilot and Uber has not provided any updates, it is likely that such a feature will be leveraged to provide access to the event for her Uber One members.
The introduction of member events is an attempt to attract more subscribers, who are more likely to submit more information on the platform and use more Uber products.
“We would like to remind everyone that members spend 3.4 times more per month than non-members, so this is an opportunity for us to drive adoption and attachment to our various services. It is a great tool,” said Mahendra Raja. .
The CFO noted that members currently generate 32% of total bookings for mobility and delivery, and more than 45% of total bookings for delivery specifically.
The increase in delivery costs may be partially due to the use of Uber Cash. In 2023, Uber abolished the 5% discount on rides that Uber One members had been offered and introduced a cashback system. Mahendra-Raja said a quarter of the Uber cash earned from rides in the U.S. is redeemed at the time of delivery. For Uber Business riders, the adoption rate is even higher, with his 60% of his Uber Cash earned on the ride redeemed upon delivery.
“We believe membership is a powerful tool in terms of general penetration into our market and the frequency of growth we are seeing,” said Mahendra Raja. Ta.
Uber's strategy in recent years has been to aggressively cross-sell customers across its services, from food delivery to grocery, grocery to alcohol, and alcohol to mobility, to create in-app stickiness. did. Uber One membership is the culmination of these efforts.
To increase Uber One retention, the company is also promoting annual passes that offer cheaper monthly options if users sign on for a year. Mahendra-Raja said annual passes have increased retention by “nearly 200 basis points on a year-over-year basis in March.”
Deal with Instacart fuels suburban growth
Khosrowshahi said on Wednesday's earnings call that the platform, and Uber Eats in particular, is growing faster in suburban areas than in urban areas, where Uber has higher penetration.
“The key is to get the basics right: build your audience and brand, increase choice, ensure good pricing, and keep the quality of service consistently high,” the CEO said.
He said Uber's recent deal with Instacart, which will allow Instacart customers to use the app to order from Uber Eats restaurants across the U.S., will help Uber grow in the suburbs. Khosrowshahi also said that with its penetration into Domino's Pizza and other franchisees, Uber is “well positioned to grow into the suburbs.”
In terms of other growth areas to focus on more generally, Mahendra-Raja cited new products such as Uber for Business, Uber Health, UberX Reserve and carpooling as areas that are growing 80% year over year. The CFO also said that 20% of new customers are also coming from these new products.
Despite growing demand, Uber records losses
Uber posted $10.1 billion in revenue and $37.7 billion in gross bookings in the first quarter, up 15% and 21% year-over-year, respectively. However, despite the increase in demand, the company posted a loss of $654 million. This came as a surprise to analysts who had expected Uber to turn profitable after reporting its first full-year profit in 2023.
Uber attributed the loss to legal settlement payments and equity investments.