This piece contains detailed Uber and Shopify reviews. It also contains part 1 of the DraftKings and Duolingo reviews (with a bit more information in the Duolingo piece). Full reviews for both quarters will be published tomorrow with Trade Desk. This is my third 14+ hour day in a row. I’m a bit tired, so I apologize if there’s an extra typo in here. My editor does not work this late at night, but I wanted to get all of this information to you guys tonight.

In case you missed it:

DraftKings reiterated all annual guidance. Revenue met estimates, EBITDA beat estimates by 1%; 46% GPM beat estimates by 150 basis points (bps; 1 basis point = 0.01%); $750M FCF beat estimates by 4%.

DKNG trades for 26x forward FCF. FCF is expected to grow by 85% this year and by 75% next year. It also trades for 29x forward EPS. EPS is expected to grow by 465% this year (inflecting) and by 60% next year.

There were several references to product releases announced at the May Go Get event. We included the coverage of that event below. If you read that article in May, this section will sound familiar.

Uber Go Get 2025 – Controlling Mobility Pricing:

Uber debuted Commute Alerts. Customers using Uber to get to work struggle with variable ride times that rapidly fluctuate from day-to-day. This product sends push notifications, based on expected driver supply, traffic and everything else, to nudge when to schedule a ride. It will also tell you if pricing is rising or falling, so you have a better idea of how long you can wait out booking that ride to seek a lower price… or when you should book before that price rises. Through iOS Live Activity and Android Live Update integrations, these push notifications will pop up right on a home screen.

Next is Price Lock. This is another product for the daily commuter and solves for unpredictable day-to-day pricing changes for rides. With this product, a consumer can plug in their pickup location, destination and an hour window for their commute. They can then pay $2.99 to lock in a more favorable rate for the workweek. They save up to $50 and Uber enjoys wonderfully predictable and stable demand from these consumers, without them shopping for cheaper options. If the price is even lower than the locked-in fee, customers get the lowest of the two. This launched in some U.S. and Brazilian cities this week.

It also debuted Prepaid Passes. This is essentially a bulk discount where riders can buy bundles of 5-20 monthly rides at lower rates. Just like with Price Lock, this creates a massive revenue visibility and quality advantage for Uber with those who opt in.

Additionally, Uber introduced Route Share. Unlike rideshare, which picks up multiple riders from different locations and drops them off at respective destinations, there’s one pre-set route for everyone. This allows folks willing to walk a little more or wait a little longer for a ride to save up to 50% vs. UberX rides. Rides for routes happen every 20 minutes and it’s working with employers to add this to commuter benefits. This would mean users pay for rides on a pre-tax basis for more savings.

Uber will debut a streamlined commute hub later this year to neatly organize all of these new options in a non-cluttered manner.

Uber Go Get 2025 – Controlling Delivery Pricing:

Introducing Savings Slider. This lets customers with pre-built shopping lists for every occasion automatically deal hunt. The product scrapes offers and cheaper substitutes from grocery partners to offer ways to save. This is routinely delivering 15%-20% savings in testing.

Its new OpenTable partnership is also creating some cool new product collaborations. Uber is offering a new Dine Out option. This offers customers a local map of restaurants, eligible deals and an ability to book tables and rides without ever leaving the app. Uber One members will get priority access to some restaurants and this will debut in Sydney this summer. As part of the relationship, OpenTable will offer its loyalty members 6 months of Uber One for free and will offer Uber rides right from within their app as customers book. Booking.com (owns OpenTable) + Uber is a powerful duo.

New Uber One Perks:

CC growth is arguably more important for Uber than any other company we talk about. It hedges out all upside and downside risk pertaining to profits. So? CC revenue growth is what is correlated with profit growth. Not GAAP revenue growth.

Uber trades for 26x GAAP EBIT. EBIT is expected to grow by 118% this year and by 35% next year. It also trades for 22x FCF, with 23% 2-year FCF compounding expected.

Platform-Level Focus:

This quarter, Uber dedicated more time to platform-level innovation to drive more cross-selling and leverage the power of its broad product suite. As part of this, Andrew Macdonald has been named as the new Present, COO and head of Mobility and Delivery. Dara thinks uniting the reporting structure for both business categories under one person will drive better inter-category collaboration and innovation. They’re already great at fostering multi-product usage, which is why their retention metrics, revenue quality, margin profile and engagement are best-in-class. They just want to get better, and want the pace of improvement to accelerate. That’s how they create larger differentiation, larger economies of scale and superior operating vs. the competition. Most of its peers are mono-line competitors that can’t match this formula, which, in turn, means Uber can outspend on customer acquisition (thanks to higher lifetime value). It’s a compelling spot to be in, and should support profitable scaling for a long time.

To turbo-charge this formula, it’s investing in larger AI models to create better cross-platform product recommendations for users. Nudges like ordering groceries to arrive when you get to an Airbnb could drive seamless product adoption.

Another key enabler of cross-platform adoption is Uber One. Membership growth continues to be rapid, as the product expanded 60% Y/Y to 36 million people. Its Member Days event for Uber One to access exclusive deals added 500,000 of its 6 million net new members. Uber One vastly boosts multi-product usage and thus supports all of the aforementioned positives that come along with it. For Q2, 40% of bookings came from this product, while retention levels remain strong and stable. To build already stellar momentum, it added surge savings as a new perk for members to avoid steep price hikes during peak demand hours. Going forward, Uber will use mobility perks like this one (and those mentioned in section a) to drive incremental usage through Uber One membership like it enjoys on the delivery side. That’s a priority.

Uber was thankfully asked about combining the Uber Eats and Uber apps into a superapp. That would be a great way to drive cross-selling, but Uber isn’t currently interested. They reminded us that the main Uber app basically offers that full product suite. I personally use food delivery a little too much during peak earnings season, and do so through Uber, not Uber Eats, every time. People who order food in that way are now 12% of total delivery bookings. They plan to keep pushing Uber as a super-app, but view Uber Eats as incremental and a valuable complement at this point in time. That surprises me, but I’m sure they have internal data telling them that’s the right decision.

Autonomous Vehicles – 3 Business Models & Partnership Updates:

Uber plans to deploy 3 business models as it builds out its autonomous business. First, is the merchant model. This, to me, is the most exciting option and the one I hope becomes most frequent in the long-term. Under this approach, Uber will pay a fixed daily fee for access to autonomous fleets from vendors. This way, owners of the expensive hardware remove massive financial risk of these cars being underutilized cash incinerators. They can simply collect a reliable revenue stream and focus on what they do best. Uber can unleash the power of its unmatched audience scale to make sure these cars are far more utilized than they’d be elsewhere. And considering this, they will be able to pay these fleets more than anyone else rationally can. That provides a true layer of differentiation stemming from their consumer network effect. 

Second, the agency model emulates Uber’s current business model while swapping drivers for autonomous car owners. It functions as a revenue-sharing agreement.

The last model is the most controversial for investors. It’s when Uber will actually commit to buying these fleets with their own cash. The commitment to purchase 20,000+ Lucid units as part of the new Lucid/Uber/Nuro arrangement is a good example; management said to expect more announcements like this one (Uber + manufacturer + autonomous software leader with Uber car ownership) in the coming quarters.

While I do prefer that Uber remain asset-light, there are two important things to keep in mind here. First, this is temporary. Uber is using its balance sheet to help manufacturers and software providers accelerate deployments and reach needed economies of scale. Investing will directly support this market’s maturation, which Uber thinks is very good for its business. It will also help drive fragmentation – key for Uber’s demand aggregation value proposition – as more companies will be able to afford deployments with Uber’s support.

This also ensures Uber’s platform has a larger base of AVs available as consumer preferences shift. Data-driven evidence is the only way unit economics and viability can be proven out. At that point, Uber is exceedingly confident that 3rd party financing options will be there for it to offload some of these investments. Next, investments in cars, storage/charging infrastructure and more software companies like Nuro will be a modest portion of overall cash flow. Furthermore, they plan to fund a lot of this with equity investment sales – simply swapping one asset for another rather than draining the cash pile. All of this is why they expect to return 50% of cash flow to shareholders via buybacks and how they just announced the massive buyback program. That timing wasn’t a coincidence. It was a signal of confidence in their sustainably growing cash generation.

In terms of partnerships, Uber reviewed the announcements made during the quarter. It expanded in Abu Dhabi with WeRide to cover half of the densely populated areas. This includes some highway rides. It plans to expand to Dubai with WeRide this year. Next, it expanded its Wayve partnership to 2026 AV testing in London. The most exciting announcement this quarter was probably partnering with Baidu’s Apollo Go offering. This has already done 11M rides in 2025 and is now joining the Uber platform. The two companies will “deploy thousands” of these cars across Asia and the Middle East – starting in 2025. They’re also launching with AVRide in Dallas and with May Mobility in Arlington this year.

Now for a Waymo partnership update. Austin utilization continues to trend very nicely, while Atlanta has “exceeded their expectations.” In both cities, 99% of the Waymo cars have utilization rates above Uber drivers. Uber continues to expect Waymo to experiment with and use many different business models. Not all of those will include Uber, but it’s optimistic that many of them will and that Uber will be the biggest 3rd party provider of autonomous transportations.

Tesla remains committed to doing everything on their own, rather than through Uber.

Delivery:

Delivery enjoyed its 9th straight quarter of accelerating active user growth, including notable momentum in high LTV countries like the U.S. and Australia. Selection growth accelerated, revenue growth was faster than it has been in a year, EBITDA margin expanded by more than 3-points and it took share across its footprint. Simply put, things are going very well, as they’re now #1 or #2 in most of their 30 markets.

Matching this great user growth with rising frequency is a key focus area. Just 35% of annual active users are monthly active users (MAUs) for the segment, and in its best market, that’s 45%. There’s a lot of room for progress here.

Grocery and retail accelerated selection growth to the fastest pace since 2023. They added several bellwether brick-and-mortar merchants, including DICK’s, Five Below, Pet Food Express and Mexican giant Oxxo. Uber also expanded the Costco partnership to Latin America and Asia-Pacific, as that’s clearly going well.

Mobility:

Mobility is getting a big boost from lower pricing. Uber continues to enjoy significant insurance cost deflation, which it is entirely passing onto customers. In the USA, this led to an acceleration in trip growth. And there’s more insurance cost relief coming, which will merely amplify this current engagement tailwind. This is the luxury of having a much better margin profile and balance sheet than the competition. You can use incremental savings to extend your service leads, rather than relying on every ounce of relief for operating leverage. Uber has plenty of other sources to keep powering its own leverage.

Solid quarter from a great company. Durable top-line compounding with expanding margins, ramping cash flow, massive scale, long runway, structural competitive differentiation and a buyback worth 12% of the company is a good recipe. Its highly compelling multiple is just icing on the cake.

While some remain skeptical about its positioning in AVs, I remain confident in its unmatched ability to optimize utilization rates for partners and to make these expensive pieces of hardware scalably profitable. The debate will likely continue raging on for several more quarters, while Uber just continues to quietly execute and position itself for the next wave of growth. That remains my viewpoint on how this will evolve… with a hardware monopoly from Waymo or Tesla the main risk to the opinion and a tanking probability of that monopoly happening. I’m happy with what I own and don’t plan on selling any shares.

My Shopify Deep Dive can be found here. Most of that is still current, except for the financials, which are updated in this review. A review of its most recent Investor Day can also be found here (section 4).

The tariff-related weakness Shopify baked into guidance “did not materialize.” There’s also no evidence of any demand pull-forwards in buying patterns, so this outperformance was structural. Merchants and consumer spending have not been affected. More payments adoption, merchant solutions partnership expansions with PayPal and Klarna, global expansion, offline commerce, B2B proliferation, tax tools and credit products were the demand highlights this quarter.

For subscription solutions, they’re still comping over moving from 1-month paid trials to 3-month trials, which will slow down growth (as expected) until comps normalize. This was the first full quarter of the change being in place, which means normalization will happen next summer. This is also a monthly recurring revenue (MRR) growth headwind for now. The team remains highly confident that this will be positive for structural subscription growth once the comps are lapped. It’s granting merchants more time to explore the product suite and set their operations up for success and longevity.

Subscription GPM fell Y/Y due to more infrastructure costs and the aforementioned paid trial timeline change. Shopify expects subscription GPM to stay right around 80% going forward. Merchant solutions GPM was pressured by the expanded PayPal partnership (one more quarter until that is lapped), lower noncash partnership revenue and more payments proliferation as a percent of total revenue.

Operating expenses were 38% of revenue vs. 39% Y/Y. Last year, OpEx intensity got 3 points of help from a reversal of a $55M legal accrual. Without this, Shopify would have delivered 4 points of Y/Y OpEx leverage, and 2 points of GAAP EBIT margin leverage (instead of 1 point of deleveraging seen below).

Transaction loss growth was entirely related to credit product growth. Transaction loss rates are stable.

The company expects to settle its $920M in convertible notes in cash, rather than creating more dilution. They call this a signal of confidence in their great cash flow trends continuing and their desire to control share count growth. Maybe a formal buyback is coming soon?

They are focused on pursuing all of the large growth opportunities ahead. The team is not currently looking to optimize margins, which provides significantly leverage opportunities down the road to extend the profit growth runway. And furthermore… margins are in a good place regardless of this.

“Momentum has carried into Q3, with core trends across our merchant base remaining stable.”

CFO Jeff Hoffmeister

Shopify trades for 82x forward FCF. FCF is expected to compound at a 24% clip for the next two years. It also trades for 100x EPS. EPs is set to grow by 10% this year and by 30% next year. Those estimates should rise following this report, offsetting some of the multiple expansion.

Promises Made, Promises Kept:

Finkelstein walked us through a series of promises made and promises kept by Shopify over the last 18 months that provide a synecdoche for what investors have come to expect for a decade. He committed to much better offline and B2B growth, and it came. B2B rose by 101% Y/Y vs. 109% last quarter and offline rose by 29% Y/Y vs. 23% last quarter. He promised responsible top-line expansion, with a sharper focus on margins, and that happened. He pledged that Shopify would turbo-charge existing product expansion to new markets to accelerate international growth, and he did. “Promises made… promises kept.” In the world of public markets, we are utterly reliant on leadership being candid and trustworthy. The best way to build that trust is through several years of building it through results. They’ve done that.

AI-Inspired Product Innovation:

Most of the product announcements during Q2 were AI-inspired. It knows shopping habits are evolving from browsing through a maze of websites in a Google search feed. Discovery is getting far more data-driven, targeted and automated through the proliferation of chatbots; customers are shifting accordingly.

Shopify wants its merchants to have access to all of the agentic tools they want. But it also wants these products to be as slick and easy-to-use as everything else it offers. That’s where its suite of agentic tools called ShopLite comes into play. It's a slew of apps and integrations with model and data providers to give merchants the ability to seamlessly plug their product catalogs right into chatbot responses.

It can also actively check customers out right from the response, thus minimizing clicks and pages to order completion and inevitably raising overall conversion rates. That conversion boost is in addition to the gains that will come from more granular and powerful product discovery. The connector between merchants products and AI partners id called catalog. It’s poised to drive more merchant reach, better customer experiences and incremental Shopify GMV. This release also includes another interesting service called Universal Cart. This allows chatbots and AI partners to store several different products in a cart across several different merchants for a single, native checkout. Checkout Kit (not brand new but relevant to this discussion) builds on this agentic access by enabling merchants to add their checkout page right into chatbot responses. Microsoft Copilot is an early user. The kit allows participants to customize the design of these checkout flows, ensuring their brand is more present on AI partner offerings. Again… easier checkout always means more volume. All of these launches will routinely lower the number of checkouts per average basket of goods.

Shopify is determined to rapidly innovate in AI to make sure it remains an excellent merchant partner if agentic commerce truly does gain significant popularity. This is its way of insulating itself from that competitive threat, while creating new potential business opportunities. The team isn’t sure if agentic will be incremental to overall volume or cannibalize it, but it knows it must let merchants seamlessly tap into whatever channels are gaining popularity. And if agentic commerce does gain popularity (I think very likely), they are an ideal partner for companies like OpenAI. Rather than piecing together access to merchants, these companies can immediately add massive product growth to their commerce experiences by integrating with Shopify (where all of these merchants are).

Shopify Payments:

The recent expansion markets for Shopify Payments are performing very well, as it enjoys immediate material traction across Europe. And to build more international momentum, it launched multi-entity support. This means businesses with demand in several countries can run one single Shopify Payments operation -- rather than one per country. It will reduce inventory management complexity and lead to more interoperable work. This has been a large ask for a while and the team was noticeably excited to fulfill the request.

For cross-border transaction support, it launched support for the USDC stablecoin. This adds consumer choice flexibility with payment options, and could eventually be a big help to lowering transaction fees down the road.

Its consumer-facing Shop Pay checkout accelerator enjoyed 65% Y/Y volume growth as it added brands like Michael Kors to its roster. The à la carte purchasing style for commerce components by Shopify (CCS) is lowering friction associated with adding this product, which is turning it into a better top-of-funnel tool for new merchant acquisition.

Winning the Big Boys:

Between its enterprise subscription (Shopify Plus), CCS and headless commerce (front-end and back-end separation to enable more store customization), their enterprise business is flourishing. They added Starbucks (love that for both companies), Canada Goose, Burton Snowboards, Amazon’s daily deal site called Woot, Beachbody, Signet Jewelers and many more brands during Q2. Canada Goose will immediately use Shopify for their online operations and 50 brick-and-mortar locations, which represents an increasingly frequent theme of Shopify landing omni-channel contracts. They also signed a mining drilling service company called Boart Longyear. They were very careful to call this deal out, as it points to the company expanding its value proposition to cater to sectors it previously had no presence in.

Consumer Facing Shopping App (the Shop App):

Shop App enjoyed 140% GMV growth, with 46% traffic growth immediately following assortment and user interface improvements. This gives merchants yet another channel to sell to, and it’s a channel that is unique to Shopify’s ecosystem, thus driving more differentiation. Their abilities to let merchants seamlessly build custom stores, manage working capital, and reduce sign-in friction are all working.

Offline:

The upgraded point-of-sale (POS) app is improving usability and amplifying product adoption. This helped the product be named a leader in IDC’s newest research report. It now offers faster checkout time and a shorter learning curve. They listened to merchants and added exactly what they wanted – customized staff permissions, store credit programs and more.

Going Global:

Fantastic EU traction drove 42% CC international GMV growth and strong market share gains. Introducing more of its product suite to these countries is helping a lot. And there’s a lot more of that left to do. Its Shopify Capital (loans and working capital help) tool is now in Germany and the Netherlands, while payment installments debuted in Canada, driving 38% Y/Y growth for that category. The aforementioned multi-entity support will also help a lot here and, this past quarter, allowed the owner of Wedgewood and Waterford (Fiskars Group) to move their 5 e-commerce entities to Shopify at once.

Macro and Tariffs:

It’s great to hear that the tariff impact has been immaterial thus far. Cross-border is stable at 15% of volume and overall GMV trends look great. At the same time, there’s concern about the de minimis exemption for low-priced goods being cut in more countries besides China. We got two pieces of good news here. First, only 4% of its GMV will be exposed to the updated rules. Secondly, and more importantly, the elimination of this exemption in China has not impacted their business at all. One would think the same will be true elsewhere.

I’ve already commented on valuation and position sizing in the portfolio update sent earlier today. 

It’s fun when every analyst question in the Q&A begins with “congrats on a great quarter.” Shopify’s financial turnaround over the last two years has been breathtaking. This was more of the same. Growth is back to setting multi-year highs, FCF margin has expanded by 10 points and GAAP EBIT margin is up by nearly 30. They’ve effectively trimmed the fat, cut unproductive costs and sacrificed zero growth in the process. It has been very fun to watch, and a testament to their superior value proposition in the massive omni-channel commerce category. It is not normal for companies to sell business units, slash considerable cost and see no disruption to demand. But Shopify… in the best of ways… is not normal. This is an elite company rapidly taking market share in arguably the best structural growth category in the world. To say I’m pleased with the results would be an understatement – they’re killing it.

I ran out of hours in the day to get to the entire Duolingo review. I wanted to send Uber and Shopify at a semi-reasonable hour. Still, there was considerable drama about Duolingo daily active user (DAU) growth during the quarter, and it did modestly miss on that metric. I read the transcript to get the reasoning for this, and have included that added detail in this part 1 review piece. After reading everything, My concerns about this position heading into this earnings season have greatly diminished. I’m very pleased with the report and plan to simply keep holding what I already own. Here’s part 1 of the review.

Duolingo is a leader in language learning. It’s now expanding into music and math. While this is a learning-based platform, the learning is meant to be fun, competitive, social and engaging. This is a proven formula to keep users coming back. The foundation driving this compelling reality is in rapid, obsessive iteration of every single piece of its product to ensure it’s always getting better. Constantly split-testing every single variable is in its DNA. It leads with product, rather than advertising and relies on word-of-mouth growth to power the vast majority of its success. It then supplements that with efficient marketing (from social media to the Super Bowl) to create viral moments and demand accelerants.

The reasoning for the DAU miss is exactly what I was hoping for. It’s not because AI is suddenly ruining the business. This technological boom actually continues to greatly support its content generation, premium subscriber growth and overall success. AI is how it rationally debuted video FaceTime with characters and is how bookings and revenue beat by such a wide margin despite the user miss. That shows you Duolingo’s product is becoming more compelling, more engaging and more popular among its most important user cohort. That’s driving fantastic monetization. But still, I’d love to see DAU strength too.

So why didn’t we get it? Leadership directly and bluntly blamed it on themselves. Co-founder/CEO Luis von Ahn basically said his mid-period comments on being an AI-first company weren’t well worded or well received by DUOL’s user base. That led to the negative social media sentiment and the “boycott” that some users were promoting. To improve sentiment, they had to back off of their typically edgy content that goes more viral and generates more traffic. That needed progress has since come. The combination temporarily negative sentiment and less social virality led to the very modest miss vs. consensus results and guidance. This has nothing to do with more competition, a worsening value proposition or being displaced by AI. I expect this to be a blip on the radar and for fantastic execution to endure. I expect the sentiment normalization to be permanent and the social media king to rediscover its groove going forward. And again… if this is what Duolingo “struggling” looks like, that’s a testament to how impressive this firm truly is. Other firms would dream about “struggling” like Duolingo did this quarter. It ~only~ grew revenue and users by 40% Y/Y, delivered 4 more points of operating leverage and materially raised guidance. Terrible! Hopefully you can hear the sarcasm oozing out of my voice.

Specifically, leadership guided to maintaining elite ~40% Y/Y DAU growth next year. As an aside, chess is already materially contributing, as it got to 1M DAUs faster than any product launch in its history. 

On falling Q/Q monthly active users (MAUs), Duolingo is not focused on this metric. These are not the users who are likely to pay for subscriptions. Furthermore, they got a massive boost from their “Dead Duo” campaign in Q1, which drew in casual users and drove that specific metric. The Q/Q decline is that temporary spike reverting; they’re “not worried” about this.

Duolingo traded for 40x forward FCF entering this report. FCF is expected to compound at a 32% clip for the next two years. It also trades for 55x forward EPS. EPS is expected to compound at a 40% clip for the next two years. The multiples could rise by 5-10 turns depending on the stock reaction tomorrow, but estimates will materially rise to offset much of that multiple expansion.