Uber plans to offer Uber One members more perks, such as member-exclusive events, to generate more revenue through subscriptions.
“More member-exclusive offers will emerge where members will have exclusive access to events and experiences, which will somehow surprise and delight our members,” Uber Chief Financial Officer Prashanth Mahendra-Rajah said on Wednesday morning during Uber’s first quarter results Call.
Uber CEO Dara Khosrowshahi said Uber One membership fees average “over $1 billion.” In other words, Uber extrapolates its current subscription revenue to an estimated $1 billion in annual revenue. This is the first time Uber has shared run rate numbers for its subscription service launched in November 2021.
Uber One costs $9.99 per month or $99.99 per year and offers perks like a $0 delivery fee on eligible groceries and groceries, up to 10% off certain delivery and pickup orders, better pricing for specific trips and more.
Uber said it will release more information about these experiences in the future, but some members have already received emails about exclusive offers, such as: Party with rapper Post Malone at the Fontainebleau in Las Vegas.
The ride-hail giant wouldn’t be the first to offer events to its members. Credit card companies like Chase, for example, grant credit to members in New York City Access to a Sapphire Lounge at the South Street Seaport and VIP access to concerts at Pier 17 in the summer.
Uber in A pilot function started in 2022 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 such features will be used to give Uber One members access to events.
The launch of member events is an attempt to attract more subscribers, who tend to broadcast more on the platform and use more Uber products.
“I would like to remind people that members spend 3.4 times as much per month as non-members. Therefore, it is a great tool for us to drive adoption and engagement with our various services,” said Mahendra-Rajah.
The CFO noted that members now generate 32% of gross bookings for mobility and deliveries and specifically over 45% of gross bookings for deliveries.
The increased delivery spend is partly due to the use of Uber Cash. In 2023 Uber has eliminated the 5% discount on rides it offered to 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 drivers, this penetration is even higher, with 60% of Uber Cash earned from rides being redeemed upon delivery.
“We believe membership is a powerful lever for the overall penetration of our market and the frequency of growth we are seeing,” said Mahendra-Rajah.
Uber’s strategy For several years, its goal has been to actively cross-sell customers between its offerings – grocery delivery to grocery, grocery to alcohol, alcohol to mobility Create in-app stickiness. The Uber One membership is a combination of these efforts.
To increase Uber One’s retention, the company is also promoting its annual pass, which offers users a cheaper monthly option when they sign up for a year. Mahendra-Rajah said the annual pass resulted in deductibles “increasing nearly 200 basis points year-on-year in March.”
Instacart deal spurs 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 choice, making sure we have the right pricing and ensuring the quality of service remains 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 U.S., will help Uber grow in the suburbs. Khosrowshahi also noted that Uber’s penetration with Domino’s and other retailers “positions it well to expand into the suburbs.”
As for other growth areas to look out for in general, Mahendra-Rajah pointed to new products like Uber for Business, About health, UberX reservations and shared rides are areas that are growing 80% year-over-year. The CFO also said that 20% of new customers also come through these new products.
Uber records losses despite increasing demand
Uber reported first-quarter revenue of $10.1 billion and gross bookings of $37.7 billion, up 15% and 21%, respectively, from a year ago. But despite increased demand, the company posted a loss of $654 million – a surprise to analysts who expected a profitable quarter after Uber reported its first full-year profit in 2023.
Uber attributed the loss to legal settlements and equity investments.