Uber plans to offer more perks to Uber One members, such as member-only events, in an effort to earn more revenue through subscriptions.
“You’re going to see more member-exclusives coming where members have exclusive access to events and experiences, which will surprise and excite our members,” Uber CFO Prashanth Mahendra-Rajah said Wednesday morning during Uber’s first quarter earnings call.
Uber CEO Dara Khosrowshahi said Uber One’s membership fees are “exceeding $1 billion.” In other words, Uber is extrapolating current subscription revenue to estimate $1 billion in annual revenue. This is the first time Uber has shared run rate numbers on its subscription service, which launched in November 2021.
Uber One costs $9.99 per month or $99.99 per year and offers perks like $0 delivery fee on eligible food and groceries, up to 10% off select deliveries and orders, better pricing on select routes and more .
Uber said it will share more information about these experiences in the future, but some members have already received emails about exclusive deals like party with rapper Post Malone at the Fontainebleau in Las Vegas.
The ride-hail giant wouldn’t be the first to offer member events. Credit card companies like Chase, for example, give memberships in New York access to a Sapphire Lounge at South Street Seaport and VIP access to concerts at Pier 17 in the summer.
Uber in 2022 launched a pilot feature to help customers book events and restaurant reservations. It was a limited pilot program and Uber hasn’t provided any updates, but it’s possible that such features could be leveraged to give Uber One members access to events.
The introduction of member events is an effort to attract more subscribers, who tend to send more to the platform and use more of Uber’s products.
“I’ll remind people that members spend 3.4 times more than non-members per month, so it’s a great vehicle for us to drive adoption and really drive engagement with our different services,” Mahendra said. -Rajah. .
The CFO noted that members now generate 32% of gross mobility and delivery bookings and specifically over 45% of gross delivery bookings.
The increased delivery charge can be partially attributed to the use of Uber Cash. In 2023, Uber retired the 5% discount on rides it offered Uber One members in favor of a cashback system. Mahendra-Rajah said a quarter of all Uber cash earned from rides in the U.S. is redeemed upon delivery. For Uber Business riders, this penetration is even greater, with 60% of Uber Cash earned on rides redeemed upon delivery.
“We believe membership is a strong driver in terms of our overall market penetration and the frequency of growth we are seeing,” said Mahendra-Rajah.
Uber’s strategy in recent years has been to actively cross-sell customers between its offerings — food delivery to grocery, grocery to alcohol, alcohol to mobility — in order to create stability within the app. The Uber One subscription is an amalgamation of these efforts.
To increase Uber One retention, the company is also promoting its annual pass, which allows users to have a cheaper monthly option if they sign up for the year. Mahendra-Rajah said the annual pass resulted in holdings rising “nearly 200 basis points year-on-year in March”.
Instacart deal fuels suburban growth
Khosrowshahi said during Wednesday’s earnings call that the platform, specifically 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 choice, making sure we get the pricing right and making sure 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 in the US, will help Uber grow in the suburbs. Khosrowshahi also noted that penetration with Domino’s and other merchants makes Uber “well-positioned to grow in the suburbs.”
As for other growth areas to watch out for more generally, Mahendra-Rajah pointed to new products like Uber for Business, Uber Health, UberX also maintains shared routes as areas that grow 80% year-over-year. The CFO also said that 20% of new customers also come from these new products.
Uber is posting losses even as demand grows
Uber recorded revenue of $10.1 billion and gross bookings of $37.7 billion in the first quarter, up 15% and 21% year over year, respectively. But 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 full-year earnings in 2023.
Uber attributed the loss to legal settlement payments and equity investments.
