Why Uber is Undervalued, Twilio CEO on its Dramatic Reacceleration in Business

0:13Anita Ramaswamy:Welcome, everyone, to The Information's TITV. My name is Akash Pasricha. It is Tuesday, August 18th. Today on the show, we're going to take a look inside Uber's business and what investors might be missing about the stock's upside. I'm then sitting down with the CEO of Twilio to talk about the reacceleration in the company's business, but also where it goes from here. And we're going to close out the show with some new data on why AI infrastructure companies are the fastest growing pocket of the sector right now ahead of AI applications. It's going to be a great show, so let's get right on into it.

0:49Anita Ramaswamy:Uber shares are down 8 % this year, but the Informations Financial Analysis columnist Anita Ramaswamy put out a column this morning suggesting that investors may have it all wrong. I want to bring on Anita to walk us through her thoughts. Anita, welcome back to the show. It's great to have you here. Happy to be here. Okay, so you pointed out in your column that Uber is trading at 2.6 times revenue, which is really low for a tech company. I mean, I was shocked to see it was trading that low. What's the story here? Yeah, it's a good question. Just to put the number into perspective, really, Plika Kosh, Uber is trading at 2.6 times next year's revenue on an EB to revenue multiple.

1:31If you look at some of the rivals, the whole ride-hailing sector, if you take just Uber and Lyft, Lyft is also trading at an even lower multiple for revenue. But then if you compare this to some other players, like let's take DoorDash, for example, they're trading at a closer to five times multiple. And so some of the biggest factor behind this, which you asked about, is actually the concerns that Uber is going to become less relevant in a world where everybody's taking a robo-taxi. So a lot of it has to do with Waymo's rise and some of the concerns about how that might affect players like Uber and Lyft.

2:05Anita Ramaswamy:Let's unpack this a little bit more. I mean, so we'll talk about delivery in a second because I don't know that people are eating a whole lot more today than they were a couple years ago. But what are the concerns here with autonomous vehicles and how that's going to affect ride hailing? Because it's not like they're everywhere right now, right? They're not everywhere, but I'm reporting from San Francisco. It does feel like they're pretty ubiquitous here. I also am from Phoenix, which is a place that has had Waymos for a really long time, actually even before San Francisco. And so these autonomous vehicles are really sort of infiltrating city after city in the US.

2:43And for people who are in the markets that Waymo does operate, they're pretty commonplace. And so I think the big concern from a lot of investors and a lot of folks who have taken away Mo and maybe, you know, seen them around their neighborhood is the idea that people are just going to want that experience. They're going to want to sit in a car without a human driver, that they might feel it's safer, and that that's going to be the future of the industry. And so that begs the question, well, where does Lyft or Uber, like these kind of traditional ride-hailing companies, get a slice of the pie?

3:12Now, the challenge for Uber is that they have positioned themselves as sort of a middleman. They used to have this sort of project where they were building their own autonomous vehicles and they abandoned that effort back under their former CEO. And so they've decided to take this approach where they are taking all these other robo-taxi companies and using their platform to put supply of those cars onto Uber. So they had some partnerships with Waymo like this, and they still do have some of these partnerships, but some of the partnerships have started to fray. We heard earlier this year in March that Uber and Waymo were actually ending their partnership in Phoenix.

3:49And then in Austin and Atlanta, you used to be able to, and currently it's still the case, that if you want to call Waymo, the only place you can do that in those cities is on the Uber app. But recently we heard news that Uber has chosen to amend its partnership. And so starting in 2028 in Austin and Atlanta, you'll be able to call a Waymo not just through the Uber app, but also through potentially other apps, most likely through Waymo's own app. And so I think investors and the market broadly are just concerned that, you know, if these robo taxi companies such as Waymo that are actually building the autonomous vehicles are able to launch their own apps and get their own ridership, where does that leave Uber?

4:28So that's the big question.

4:30Anita Ramaswamy:So this is kind of interesting. and I do recall when I was in San Francisco last, I called the Waymo through the Waymo app, not through the Uber app. I don't even know that I looked really. I just wanted the full Waymo experience, okay? I was in San Francisco. I just wanted it. Well, and in SF, you can't call it through the Uber app. Oh, you can't? Oh, okay. Yeah. Okay, well, there you go. Maybe that's why. Um, so then if they're sort of, if they're walking away from, from that integration a little bit, slowly by slowly, bit by bit, what are they replacing it? I mean, tell us a little bit about their autonomous vehicle strategy then broadly.

5:11Yeah, so Uber and Waymo, I mean, the thing is that Uber doesn't necessarily need Waymo to succeed in the robo-taxi race. Uber has dozens of partnerships with all of these other autonomous vehicle firms, and we haven't really seen them because a lot of them haven't come into fruition yet in terms of actually getting vehicles on the road. But one of the more notable arrangements that Uber has is its partnership with Amazon Zoox. So Amazon has been testing these Zoox vehicles, their own self-driving cars, all over San Francisco. they are expected to launch at some point soon. And so those vehicles are going to come onto the Uber platform.

5:44We have Uber's partnerships with Wave, which is a UK-based ride-hailing company that is working on robo-taxis. And so in all of these other markets, I think especially globally and not necessarily so much in the US, Uber has already started deploying some of these cars on the roads that are built, manufactured, and maintained by a third party, but they're available primarily through the Uber platform. And so I think that Uber ultimately is going to be a successful middleman here. There's a lot of middleman businesses that have success over

6:12Anita Ramaswamy:the years. There was also the, Nuro was another company, right? There was a, I forget the third company, but we had the Nuro CEO on the show. There was some partnership there as well, right? Right. Lucid Motors is making the actual vehicles and then Nuro is outfitting it with the autonomous driving technology. And then Uber is making them available on its platform. Right. Okay. So, but okay, just to play devil's advocate here, I mean, all these companies that Uber is partnering with, I mean, you could make the argument that those exact companies then could pose competition to Uber as well, right?

6:45Anita Ramaswamy:I mean, look, this is the thing. They tried autonomous vehicles themselves. They've gone more the partnership approach. I wonder to what extent you think it puts them at a disadvantage not owning the IP or the stack in autonomous vehicles, or I don't know, maybe this is the more profitable way to do it. I actually think that's the key, Akash. It's a huge advantage in my books because it allows Uber to be really capital light. They don't have to invest a ton of money in the sensors and the testing and, you know, sort of commercializing the vehicles in the same way that a Waymo does, we still don't even know the extent of profitability on the Waymo vehicles.

7:23And the LiDAR sensors are super expensive. The hardware in general is super expensive, which is why still today, oftentimes, if I call a Waymo, I'll see that it's a little bit more expensive than a traditional Uber. And so I think this is a cost advantage for Uber and a more profitable way to grow. You're correct to point out that Uber will probably face competition from some of the, you know, operators that decide to do their standalone apps. like Waymo. We're already seeing that. But my point is, I don't think that passengers really want to download 15 different apps for 15 different autonomous vehicle companies.

7:52And the way that this technology is developing, obviously Waymo does have a lead. But at the same time, they're not in a lot of key cities. Waymos are not on the roads in New York. Waymos are not on the roads in some of the major US cities or major cities around the world. And that's a lot of white space, frankly, for not just Uber, but for other actual robotaxi manufacturers to go and capture a slice of the pie.

8:14Anita Ramaswamy:Right. Let's talk about the delivery business. This is what you call out in the column as the biggest opportunity for Uber. Why do you think investors are underappreciating that segment of the business? So when I was looking at this, the main framework I was looking at was actually comparing Uber's valuation to that of DoorDash. And if you look at where DoorDash is trading right now, DoorDash, primarily a food delivery business, Like that is their bread and butter. That's what they do. Whereas for Uber, you have the ride hailing and then you also have the smaller sort of food delivery business that has been growing really fast and is increasingly a larger part of Uber's revenue and its profits.

8:54DoorDash is valued at around 75 times their earnings in 2025. And so if you apply that 75 times multiple to Uber, you basically get the value of their delivery business just for Uber's delivery business alone, because Uber does report separate financials. So if you apply that to Uber's EBITDA, you get a$270 billion valuation. So for context, Uber's entire market cap right now is just around$150 billion. So that's a suggestion. So the delivery business,

9:25Anita Ramaswamy:so if you just value the company on the delivery business, using DoorDash as multiple, you get a bigger business than what the market has given it right now. For all of Uber, yes, that's correct. So something is missing here, right? I mean, autonomous vehicles could easily deliver your burrito too, right? Like that could be the future. Yeah, yeah. And Uber Eats is growing really fast. I mean, the delivery business is primarily, Uber Eats is the growth engine there. they grew 28 % top line in the last quarter. They have been posting, you know, mid to high 20 % growth rates for the last several quarters.

10:01They are expanding really fast. They are seeing a lot of success across the world. And I think, you know, DoorDash has a pretty high multiple. One of the reasons I think is because it's, you know, more visible in the US. It has greater market share than Uber Eats, but Uber is the dominant market player in most of the world. And so most of these markets, you know, they're seeing a lot of success. They're also growing really fast in the United States too. And I think people often forget, you know, we think of Uber as this traditional ride-hailing business, and that's where they kind of got their start.

10:29But over the last several years, they've been really aggressive in terms of delivery. And there seems to be a lot of demand for that.

10:35Anita Ramaswamy:I mean, yeah, more what I was saying was it seems a bit unfair that investors have punished Uber alone for the autonomous vehicles threat when, And I mean, I actually think it's much easier to get burritos to people autonomously than ride-hailing people around. So I mean, you would think maybe they would apply some equivalence there. I mean, just to give DoorDash its fair due here, is that company doing something especially well, perhaps, on their financials or strategy that has afforded them that premium? I mean, DoorDash is growing super fast. They're growing faster than Uber actually overall, and they are investing in what you talked about in autonomous delivery.

11:19So I think they're staying competitive. They've been very clear in management there that, you know, we are going to be investing, we're going to be spending CapEx, but this is for the sort of autonomous future that they're building towards. So maybe they've taken a little bit more of a hands-on approach, whereas Uber has decided to take more of the middleman partnership approach. But at the end of the day, you know, both companies are sort of in a similar position, like you mentioned.

11:40Anita Ramaswamy:Right. So, Anita, I mean, if you had the opportunity to sit down with Uber's management, and I trust you asked multiple times, as we often do for these types of stories that give us some time with any executive, what would be the top of mind questions you would want to ask their management? I would want to ask about the sort of, you know, failed or, you know, abandoned attempt to build Uber's own robotaxis. And I want to better understand whether as the market starts to develop and the cost of these LiDAR sensors comes down, is this something that Uber would ever consider reopening? You know, I think there's some potential advantages in the sense that it could help Uber sort of get ahead of competition in the future.

12:21But then on the flip side, it would be super costly and expensive. So I would be really curious to know whether management sort of regrets having ditched that effort earlier under Travis Kalanick and whether it's something that they would consider reopening.

12:33Anita Ramaswamy:Great. Well, Anita, I want to thank you for coming on. That is Anita Ramswami, our financial analysis columnist here at The Information. We've talked about how AI is an inflection point for many software businesses, but one company we haven't talked about as much is Twilio. The company's business has re-accelerated dramatically over the past few years. Chances are you've probably interacted with their technology at some point. If you've ever gotten a text message from a business, I want to bring on CEO Kazuma Shipchandler for a conversation. Kazuma, welcome to the show. It's great to have you here.

13:08Anita Ramaswamy:Thanks for having me. All right. So you took the job two and a half years ago as CEO, I should say. The company was growing at around 4 % its top line at that point. It's now growing at 22%, which is a pretty impressive reacceleration here. Take us inside the business. What has accounted for that reacceleration? Yeah, I mean, a lot of it is just kind of starting to do what we said we were going to do. We put like a really, really deliberate focus on honestly, just kind of running the company better, trying to reinvigorate the innovation engine, being really financially disciplined, and then, you know, kind of running the place with a little bit more rigor.

13:49You know, to be a little bit more specific there, I think some investments that we've made, especially more recently, in particular in using our communications products, which I think probably most of your listeners are most familiar with, enriching those with data. We launched a conversation suite at our most recent Signal customer conference. I think that's really gotten a lot of attention and excitement from customers. And then as the company was originally born, I wasn't there at the time, but I think one of the things that we got a lot of credit for was being one of the original API companies, really leading with product-led growth.

14:26We've spent a lot of time investing back into the self-serve channel, really reinvigorating how a customer approaches Twilio, gets started, and then can grow from there. We made some really, really specific investments there as well, and I think those are starting to pay off too.

14:43Anita Ramaswamy:But so is, I mean, is the last two and a half years, is this just more businesses that are needing, you know, sort of these communications products, or has it more been your upselling them on more services? You know, I think it's kind of a combination of three things. So I think the first is, is that how do you continue to build great experiences with your existing customers? And so I'll give an example, right? We had had the PGA of America. This is the Professional Golfers Association for the pros, the 30 ,000 golf pros all over the US. They'd been a longtime customer of ours. And we saw an opportunity to expand our relationship, drive greater ROI for the PGA.

15:29and we were able to get their team excited about that arrangement. And so we were able to grow that customer relationship. Or take a more recent example, like a car finance 24-7. They're a company that's based in the UK. They interact with their customers through a lot of our voice AI and other AI technologies. With the advent of AI, they wanted to be able to go a little bit further, use some of our conversations tools. They were a beta customer of ours. They wanted to grow with us using existing technologies and then improving upon those.

16:05Anita Ramaswamy:So this is like customer service conversations over text message or through voice? What exactly does that mean? A bit of both. So depending on the customer that we're talking about, it could be text. It could be voice. In this particular case, it's voice. Okay. It's also what happens is what gets lost in kind of the AI conversation sometimes is like, As cool as these tools are, to really be able to get them to work appropriately, you've got to capture context. If you don't know a lot about the consumer that you're interacting with, if you can't drive down model cost by also just getting to that specific consumer record versus scouring the entire history of the internet, it's not a great ROI.

16:47And so what we've spent a lot of our time on is making sure that our customers are able to get intelligent during the course of an interaction. It could be text, could be voice. And then also be able to capture aspects of that conversation to turn it into memory so that our customers can then create a lifetime conversation with their customers. And so I would say some of our more context-rich products have gotten a lot of traction, and that's been really exciting. And then I would say, you know, AI more recently. It's kind of a smaller part of the story, to be frank. I mean, certainly there's some tailwind there, but in terms of revenue contribution, pretty early days.

17:29But we're certainly excited about what that could become.

17:31Anita Ramaswamy:Meaning like, you know, this is like the whole trend that, oh, is an agent going to communicate with you by text message or something like that? Exactly. I mean, you can think probably in your last 12 months, like the number of interactions in which you've actually interacted with a truly virtual agent in a sales call or customer service call. My guess is for you, it'd be less than five times. I know it certainly is for me. So we haven't really seen that stuff take off. It will. And I think that's going to create some tailwind, too. Why not? Why not though? Why don't you think it's taken off? I mean, should we should we have?

18:07Anita Ramaswamy:I don't know. Maybe we should have expected it to go faster. faster. I think it's just like anything. I mean, the technology adoption cycle, like start slow, go super fast, and then kind of, you know, asymptotic at some stage. I think what we see in our own business is that if you're in retail, e-commerce, rideshare, food service, those kinds of industries, like you're prepared to experiment pretty fast. You know, I think the stakes are a little bit lower if something goes slightly awry. I mean, never want something to go wrong, obviously, but stakes are a little bit lower, but the ROI is tremendous.

18:43And I'm not just on the cost side. I'm talking about our customers' ability to revenue uplift is pretty profound. I think if you start talking about regulated verticals, things like healthcare, financial services, insurance, it's pretty slow, very, very heavy experimentation. These are super sophisticated users, but they cannot have something go wrong. I mean, that's a bad day if they have a hallucination of some kind in those kinds of environments.

19:11Anita Ramaswamy:So here's the big strategic point that I'm trying to wrap my head around with you guys. I mean, you've accelerated the business nicely in this communications software segment. There's a lot of discussion, even on the earnings call. I mean, the analysts admit AI could be a tailwind here if agents take off in the way that they do. You're expanding the business into this customer intelligence vertical. I mean, communications, I imagine it's hard to work with telecom companies to get phone numbers. I mean, this seems like a pretty arduous process that has a bit of a higher barrier to entry. In communication, in customer intelligence, I should say, I mean, that's a pretty crowded area, at least as far as software goes.

19:56Anita Ramaswamy:And so it sort of feels to me like you're expanding into what is a more crowded segment. why why expand there at all i mean why not just double down on communications and i don't know where you take the product but i'm just help me sort of rectify these these two realities i don't think they're in conflict i'm not i would say you know maybe why not do both right like i think we can win in communications already expand our existing footprint as you said or suggested a second ago, this is a problem that's been solved that is very, very difficult to AI your way to. It's physical. It's regulated. It takes an enormous amount of compliance work.

20:39It's phone number by phone number, use case by use case. And so I think that creates just a heck of a moat. We have an existing customer data platform product that we use. The focus in some ways is less on winning in context per se, but instead enriching every one of those conversations with context and then combining it with AI capabilities on the other side. I think the most important thing for Twilio, honestly, is to operate as a sort of Switzerland, right? So in other words, if you've already selected your LLM, if you've already selected a voice AI product, like that's okay. I mean, you're still going to end up utilizing Twilio's Rails.

21:20And so we're going to be able to grow off of the success of your business in that way. There are going to be many other instances in which, and we see those today where customers want a full stack solution built by Twilio. And we're going to offer that also. And then there are going to be some tweeners, right? So I think what we want to be able to do is basically meet a customer where they are. And in many cases, they have made decisions already about their technology stack. And we just want to be able to make it easy for them to integrate Twilio. We know that they need communications infrastructure to be able to reach their customers on the other side.