Uber promises member exclusives as Uber One surpasses $1 billion

Uber plans to offer more benefits to Uber One members, such as members-only events, in an effort to generate more revenue from subscriptions.

“You will see more member exclusives emerge, where members will have exclusive access to events and experiences, which will surprise and delight our members,” Uber CFO Prashanth Mahendra-Rajah said Wednesday Morning. Uber first quarter results call.

Uber CEO Dara Khosrowshahi said Uber One’s dues are “over $1 billion.” In other words, Uber extrapolates its current subscription revenue to estimate its annual revenue at $1 billion. This is the first time Uber has shared fare numbers on its subscription service, introduced in November 2021.

Uber One costs $9.99 per month or $99.99 per year and offers perks like $0 delivery fees on eligible food and groceries, up to 10% off select deliveries and orders pickup, better prices on certain routes and more.

Uber said it would share more information about these experiences in the future, but some members have already received emails about exclusive offers, like a party with rapper Post Malone at the Fontainebleau in Las Vegas.

The carpooling giant would not be the first to offer events to its members. Credit card companies like Chase, for example, offer their members in New York access to a Sapphire lounge at South Street Seaport and VIP access to concerts at Pier 17 during the summer.

Uber in 2022 launched a pilot feature to help customers book events and restaurant reservations. This was a limited pilot and Uber has not provided any updates, but it is possible that these features will be leveraged to allow Uber One members to access events.

The introduction of member events aims to attract more subscribers, who tend to send more to the platform and use Uber products more.

“I remind people that members spend 3.4 times more than non-members per month, so this is a great way for us to drive adoption and actually drive attachment to our different services also,” said Mahendra-Rajah. .

The CFO noted that members now generate 32% of mobility and delivery gross bookings, and more than 45% of delivery gross bookings specifically.

The increase in delivery spending can be partially attributed to the use of Uber Cash. In 2023, Uber has abandoned the 5% discounts on rides it offered to Uber One members in favor of a cash-back system. Mahendra-Rajah said a quarter of all Uber Cash earned from rides in the United States is redeemed on delivery. For Uber Business riders, this penetration is even higher, with 60% of Uber Cash earned on rides being redeemed for delivery.

“We think membership is a powerful lever in terms of the overall penetration in our market and the frequency of growth we see,” Mahendra-Rajah said.

Uber’s strategy in recent years has been to actively cross-sell its offerings – food delivery to grocery, grocery to alcohol, alcohol to mobility – in order to create rigidity in the application. Uber One membership is an amalgamation of these efforts.

To increase Uber One retention, the company also offers its annual subscription, which allows users to get a cheaper monthly option if they sign up for the year. Mahendra-Rajah said the annual pass resulted in an increase in retention of “nearly 200 basis points on an annual basis in March”.

Instacart deal fuels growth in suburbs

Khosrowshahi said during Wednesday’s conference call that the platform, particularly Uber Eats, is growing faster in the suburbs than in urban areas where Uber has higher penetration.

“It’s about getting the basics right: building an audience and a brand, increasing selection, making sure we have the prices right and ensuring the quality of service continues to be high,” the CEO said.

He said Uber’s recent deal with Instacart, which allows Instacart customers to use the app to order from Uber Eats restaurants across the United States, will help Uber expand into the suburbs. Khosrowshahi also noted that the penetration of Domino’s and other retailers puts Uber “well positioned to expand into the suburbs.”

As for other growth areas to watch more generally, Mahendra-Rajah highlighted new products like Uber for Business, Uber Health, UberX bookings and shared rides are areas that are seeing 80% year-over-year growth. The CFO also said that 20% of new customers also come from these new products.

Uber posts losses even as demand rises

Uber reported revenue of $10.1 billion and gross bookings of $37.7 billion in the first quarter, a year-over-year increase of 15% and 21%, respectively. Yet despite increased demand, the company posted a loss of $654 million – a surprise to analysts who had expected a profitable quarter after Uber reported its first annual profit in 2023.

Uber attributed the loss to legal settlement payments and stock investments.