Q1 2021 Lyft Inc Earnings Call
'twenty, one as long as the current uncertainty and unpredictability in our business the market and economy.
You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on assumptions and beliefs as of the date hereof and Lyft disclaims any obligation to update any forward looking statements, except as required by law.
Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results.
Information regarding our non-GAAP financial results, including a reconciliation of our historical GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC and May also be found on our Investor Relations website I would now like to turn the conference call over to Lyft co founder and Chief Executive Officer Logan Green.
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Thanks, So on yeah. Good afternoon, everyone and thank you for joining our call today.
The writer recovery continued in Q1, we exceeded our outlook across revenue contribution margin and adjusted EBITDA.
Movements, we've made over the last year are paying off.
We've built a much stronger business.
And as the recovery continues we're confident we'll be able to deliver strong organic growth and adjusted EBITDA improvements.
We expect to build a significantly larger company by attacking the trillion dollar plus market opportunity in front of us.
Turning to our financial results average daily ride volume grew each month with March showing the steepest recovery.
Revenue for the first quarter grew 7% sequentially and outperformed the high end of the outlook range for <unk>.
Called out in early February we said that Q1 revenue may decline by 3% to 4% quarter over quarter.
Active riders increased by over 940000 from Q4, representing 8% sequential growth as we welcome back riders and increased rider Activations in Q1.
The rollout of vaccines and reduced pandemic related restrictions help support greater demand for our network as the quarter progressed.
However, a stronger rider demand began to outpace driver supply at the end of February. This has been an industry wide dynamic, Brian and John will speak to the issue in detail, but we are focused on increasing driver supply and achieving a better balance on our marketplace for Q2 and beyond.
Let me turn to April.
Rideshare rides declined month over month due to typical seasonality and the impact of the holidays.
However, on a year over year basis rides grew by more than 100% as we lap that pin debit trough.
It's worth noting debt in early April the C. D C significantly reduce testing and quarantining requirements for fully vaccinated domestic travelers, which may have provided a boost.
In terms of airport rides.
Average daily Airport rides were up more than 65% in April relative to January.
Although people have started moving again, we expect there is still much more to come we continue to believe that there is significant pent up demand for mobility that will take time to play out.
Over the last year rider demand has been limited by how safe people felt going out and where they were able to go.
The vaccine rollout continues warmer weather it takes hold and pandemic related restrictions are eased, we anticipate more people wanting to go out and get together more often.
And we're working hard to get riders, whether they need to go.
We believe we are well positioned for the rebound with a focused transportation network.
We spend a few minutes talking about what this means and why it matters.
To start the transportation market opportunity is substantial and we see a long runway in front of us in the U S alone personal transportation is the second largest category of consumer spending behind housing.
It exceeds one trillion dollars annually.
Transportation captures more of the consumer wallet than food health care education, or entertainment and car ownership in particular is expensive inefficient and inconvenient in many ways.
We firmly believe that the future of transportation as a service.
One that offers the appeal of more flexibility at a lower cost than traditional car ownership.
John and I have been building towards this transition for over a decade.
We deeply understand the market opportunity and I'm confident that the differentiation and lyft approach will be more and more apparent over the next few years.
Today, we are the only transportation network in North America are focused on a full set of integrated services across rideshare.
Car rentals bikes scooters transit and vehicle service centers we.
We seek to deliver the best holistic experience to users by integrating the currently fragmented transportation ecosystem through a mix of great technology and operations.
On a rider opens for Lyft app, they know what to expect seamless access to the wide range of transportation options available through our network.
This is by design, we work hard to give people on the incredibly simple experience with access to arrive at the top of a button.
But theres a lot going on beneath the surface.
For Rideshare in particular, our transportation network takes into account a multitude of factors in real time across demand supply our marketplace on our platform.
Going a level deeper when rides are requested our systems dynamically price dispatch and route riders to their destination at scale and nearly instantaneously.
We're able to do this in a way that maximizes returns by taking into account complex inputs like conversion rate in unit economics.
Much of this is proprietary IP that is not easily replicated our systems are underpinned by the accumulated learnings from the billions of rise we've facilitated with tens of millions of riders over nearly a decade.
I want to spend a moment talking about our strategy.
We've signed a definitive agreement with woven planet a subsidiary of Toyota to acquire our level five self driving division.
Strategically the right move at the right time.
When we open their level.
For the access to affordable and reliable autonomous technology at that time, it wasn't certain that there would be multiple well funded at autonomous vehicle programs.
And just for years, we built a world class team and made remarkable progress developing a leading autonomous driving system.
<unk> differentiated approach to advancing autonomy leaning in on simulations state of the art machine learning techniques and data collected from vehicles that large scale helps speed up the development process and drove step changes in terms of capability.
Team's rapid progress in industry, leading positioning are reflected in the California DMV is most recent disengagement reports.
The market for AAV technology has grown meaningfully since we first launched level five.
This means we now don't need to develop the technology ourselves to ensure we have access to a competitive market of providers and that we achieve our vision of integrating autonomous vehicles into our network.
The level five transaction will further strengthen our financial position and enable us to continue to focus on the unique value of Lyft network.
Going forward, we are doubling down on our industry, leading lyft autonomous platform previously called open platform.
To deploy and scale with partners on our network.
This team will continue to focus on the autonomous user experience marketplace and fleet management services that ensure lyft riders have access to the safest most advanced autonomous technology on the market and then our Avi partners have access to the full power of.
Lyft Transportation network.
John will talk more about our strategy and provide a few business updates, but before he does I'll turn the call over to Brian to review, our financial performance and provide details on our path to profitability.
Thanks, Logan and good afternoon, everyone.
In the first quarter, while average daily ride volume grew each month.
March showed the steepest growth inflection demand outstrip supply, which led to elevated prices for ridesharing based on third party data at this dynamic appear to be industry wide and it led to record earnings for drivers in most U S cities, we've been increasing investments for growth driver supply.
<unk> on boarding new drivers and welcoming back drivers, who may have stopped driving during the pandemic.
Now while driver incentive significantly increased we had an extremely strong quarter. So let me explain how.
For the industry appears to have been generally rational in the design and structure of driver supply investments.
Second writers have been relatively less sensitive to the price increase was triggered by the higher demand, especially since they were industry wide for.
Conversion decreased right volume grew and the pricing surplus from the elevated demand helped offset driver supply investments.
Rideshare revenue per ride increased even net of driver incentives in Q1.
Given certain costs are fixed for red.
<unk> fixed per ride this drove increased contribution and contribution margin, especially in March again, while drivers enjoyed record earnings.
Finally, given the strong organic demand, we reduced marketing spend.
Non-GAAP sales and marketing declined 15% quarter over quarter and reached an all time low as a percentage of revenue.
The net impact of these market conditions and business decisions led to an exceptionally strong quarter and enabled us to greatly exceed our outlook across revenue.
Contribution margin and adjusted EBITDA.
While many factors in Q1 were unique and are not expected to recur to the same magnitude. We are optimistic about our ability to further reduce our adjusted EBITDA loss in the second quarter ill share more thoughts shortly on Q2, let's start with a detailed review of the first quarter and begin with top line metrics.
In Q1, the number of active riders increased by 942000 quarter over quarter to $13 5 million as.
As the economy began to reopen in select geographies you benefited from a return of writers from prior quarters as well as new rider Activations, especially in March.
Revenue per active rider declined by 27 quarter over quarter to $45 13.
March was the strongest month from the first quarter for new rider Activations remember additions to our rider count near the end of any quarter are normally dilutive to revenue per active rider. Since there is only limited time for these new riders to help generate revenue.
The combination of these trends, especially the nearly million incremental active riders lyft with a $39 million quarterly sequential increase in first quarter revenue was $609 million.
Q1 revenue was nearly $60 million above the midpoint of our revenue outlook of $545 million to $555 million.
Now before I move on I want to note that unless otherwise indicated all income statement measures that follow are non-GAAP and exclude stock based compensation and other select items.
A reconciliation of historical GAAP to non-GAAP results is available on our Investor Relations website and may be found on our earnings release, which was furnished with our form 8-K filed today with the SEC.
Let me remind everyone that elevated ride share revenue per ride on the first quarter had a beneficial impact on profitability metrics, including contribution contribution margin and adjusted EBITDA.
Contribution margin in the first quarter was 55, 4%, which far exceeded our original outlook of 51 to 51, 5%.
The outperformance on revenue and contribution margin relative to our original outlook helped drive strong Q1 contribution of $337 million.
We exceeded the midpoint of our original contribution outlook by $55 million or 20%.
As a reminder contribution excludes changes for the liabilities for insurance required by regulatory agencies attributable to historical periods.
In the first quarter, there was $128 million of adverse development, which we attribute to the continued impact of COVID-19 on legacy insurance liabilities more specifically the severity of claims from our legacy book as injury costs continue to decline.
On April 22nd we executed an agreement to reinsure, our captive insurance entity for $183 million of coverage above the insurance liabilities recorded as of March 31, 2021 for policies underwritten during the period of October one 2018 October one 2020.
We expect the transaction to close in mid May the net cost of this transaction will be approximately $20 million.
Unlike when we did the novation agreement last year, the legacy insurance liabilities will remain on our balance sheet. After the transaction closes, but we will recognize on offsetting reinsurance recoverable.
From an economic perspective, when the claims where reinsurers are ultimately resolved to.
To the extent the ultimate value exceeds the liabilities as of March 31, 2021 Liberal received dollar for dollar coverage for up to a $183 million.
To the extent the ultimate insurance liabilities is below the March 31, 2021 balance sheet.
Benefit will accrue to the reinsurer.
No unrestricted cash will be used for debt transaction.
We will exclude the net cost of the reinsurance transaction from Q2 adjusted EBITDA.
As part of our go forward auto insurance strategy, we will continue to seek opportunities to transfer additional risk to partners to help reduce future volatility.
Let's move to operating expenses.
Operations and support expense for Q1 was $83 million down 35% year over year.
Operations and support expense as a percentage of revenue declined to 13, 7% in Q1 down from 16, 4% in Q4.
Q1, R&D expense was $132 million a slight increase from Q4 as we funded growth initiatives as a percentage of revenue R&D expense declined to 21, 7% in Q1 down from 22, 8% in Q4.
As I mentioned, given the strong organic demand, we reduced sales and marketing in Q1.
Sales and marketing was only $69 $5 million in Q1 down by over $120 million or 64% from $191 million in Q1 of 2020.
Q1 sales and marketing declined by 15% or $12 million quarter over quarter on.
As a percentage of revenue sales and marketing reached an all time low of 11, 4% within sales and marketing incentives declined by 87% in Q1 on a year over year basis from 100 million for $13 million or just two 2% of revenue.
G&A expense in Q1 was $156 million down 17% from the year ago period.
Relative to Q4, G&A expense declined by $36 million or 19% driven by a decline in policy spend remember policy spend was elevated in Q3 and Q4 of last year related to <unk> 22.
In Q2, we expect G&A expense to increase in absolute dollars, but decreased as a percentage of revenue.
In summary, total operating expenses below cost of revenue declined by $56 million between Q4 and Q1 Rep.
Representing an 11% quarter on quarter reduction on.
On a year over year basis operating expenses below cost of revenue decreased by $220 million in the first quarter.
In terms of the bottom line, our Q1 adjusted EBITDA loss of $73 million was 46% for $62 million better on our latest loss outlook of $135 million on a sequential basis, our adjusted EBITDA loss improved by $77 million, meaning for each dollar of incremental.
<unk> growth between Q4 and Q1, our adjusted EBITDA loss improved by 197 and.
In fact, the adjusted EBITDA loss in Q1 was the smallest since going public and bolsters, our confidence and we can achieve adjusted EBITDA profitability in Q3.
We ended the quarter with unrestricted cash cash equivalents and short term investments of $2 2 billion down just $14 million from the end of Q4.
We're disciplined on Capex, which came in at $11 million.
Looking forward, while we are optimistic about the potential economic recovery in our operating footprint given the current fluidity associated with COVID-19 related government orders and health care recommendations as well as the variability in vaccination rates and reopening amongst cities. It is impossible for us to predict our results for the second quarter with any <unk>.
Certainty.
Let me share what I can and April rideshare rides showed strong growth on a year over year basis, as we lap the COVID-19 trough, but April ride volume declined month over month, given seasonality and the impact of higher prices. However from a revenue standpoint, the elevated pricing in April contributed to increased revenue per ride relative to.
Q1, and helped offset the negative sequential rate growth and similar to Q1, we are using the surplus from the elevated pricing to fund additional driver supply investments to better balance the marketplace.
We are hopeful that as the vaccine rollout continues we will attract more new drivers and welcome back drivers who may have stopped driving during COVID-19.
And as driver supply increases, we expect to see improving rideshare rides growth in May and June versus April.
In terms of our informal outlook, which is subject to change given the uncertainty with COVID-19. We expect Q2 revenue of between 680 $700 million.
This would represent growth of between 100% to 106% year over year as we lap the bottom of COVID-19.
This implies revenue growth of 12% to 15% quarter on quarter, which is an acceleration from the 7% realized in Q1.
Again this outlook assumes we see improved sequential monthly rideshare rides growth in May and June. It also assumes revenue from bikes and scooters doubled quarter over quarter given seasonality.
We expect Q2 contribution margin will be between approximately 56, 5% and 57, 5%.
As ride volume grows and we benefit from increased utilization across bikes scooters and car rentals for high end of this outlook represents an all time high contribution margin for each dollar of incremental revenue growth in Q2, we expect contribution to increase by approximately 70.
Finally, we expect that we can limit our Q2 adjusted EBITDA loss between 35 and $45 million.
This outlook assumes the operating environment improves in May and June relative to April given the continued rollout of vaccines.
The loss outlook for Q2 still includes approximately $25 million of net expenses related to our level five self driving program.
Expenses will be eliminated and the transaction with Toyota is woven planet closes which is expected in Q3.
Let me provide an update on on our path to profitability and I want to start with some historical context.
Last August after implementing a major business restructuring, we announced that we could be adjusted EBITDA profitable with rideshare ride volume only 5% to 10% above the level achieved in Q4 of 2019 and just to remind everyone. In Q4 of 2019, we lost $131 million of adjusted.
EBITDA.
Given the additional cost reductions in Q4, just three months ago, we share that we could be adjusted EBITDA profitable with rideshare ride volume, 15% to 20% below the level in Q4 of 2019.
Last week, we announced that with the sale of level five and the associated cost savings. We are confident that we can achieve adjusted EBITDA profitability with rideshare ride volume, 33% below the level achieved in Q4 of 2019 and today, we shared our Q2 adjusted EBITDA outlook, which implies continued progress towards breakeven.
While we do not expect the current elevated pricing environment for the increased revenue per ride to persist in Q3, given the higher volume of rides expected in the second half of 2021, we have strong conviction on our ability to achieve adjusted EBITDA profitability in Q3, especially with the $25 million of quarterly net expense savings from the pending.
Sales level of five.
Finally, once we become adjusted EBITDA profitable, we expect to remain so even as we reinvest in future growth opportunities and Tam expansion.
So in closing I want to emphasize three key points first we built a much better business over the last year and we expect to deliver strong financial results as we progress through the recovery.
In Q1, we narrowed our adjusted EBITDA loss to the lowest level since going public even with revenue down 36% year over year we.
We anticipate further progress in Q2, and then in Q3, we expect to achieve adjusted EBITDA profitability. Ultimately, we expect Lyft will emerge on the other side of the pandemic structurally more profitable per ride and we were going in.
Second we are well positioned to generate strong organic revenue growth as a transportation focused pure play.
We have a tam in access of one trillion, which provides a long growth runway as.
As Logan shared we expect to build a significantly larger company as we attack the market opportunity in front of us.
We expect recovery tailwind to drive compelling growth over the coming quarters fueled by the long term secular and structural trends that have underpinned our growth from day one.
Further as John will share in more detail, where on a unique strategic position to capture significant benefits from the commercialization of <unk>.
This is a key way, we will serve even more of our trillion plus Tam.
Finally, we are continuing to invest in growth initiatives to build on our core competencies and monetize assets that are part of where underpinned the lyft ecosystem.
These strategic investments are expected to increase our already substantial tam and contribute to our long term free cash flow growth.
There are also guided by our financial North star to maximize long term free cash flow growth per share. We believe this is the metric most aligned with how to generate long term shareholder value.
So with that let me turn it over to John to provide a few key updates on the business and our strategy.
Thanks, Brian we've built a much stronger business 2020 was a reset and we are now leaner more efficient and even more focused on the big market opportunity in front of us.
I'm going to build on Logan earlier comments about autonomous vehicles.
Most importantly, it is clear to us that the best way to commercialize Avi will be through an existing transportation network.
We are already leading the industry in terms of paid Avi rides and partnerships.
And with our focus on Lyft economists, we are uniquely positioned to win the Avi transition.
This is based on three distinct elements.
One our hybrid network to our marketplace engine and three our capabilities and fleet management.
I'd like to touch on each point.
Our hybrid network brings together the combination of human drivers and autonomous vehicles to unlock the highest utilization and bullies available rights.
Our marketplace engine drives the highest revenue per mile with real time demand prediction vehicle positioning routing and pricing.
And last our Tac for managing fleet and our operations delivered the lowest cost per mile.
Collectively these foundational pillars will allow us to create the most value for our riders by driving the highest revenue and lowest cost per mile for each economists vehicle.
Additionally, unlike competitors and highlighted by our level five transaction Lyft is aligned with our <unk> partners.
We will not have significant ownership in a competing IV program and we are focused on being a trusted partner that can be relied on to improve their success.
Switching gears, let me talk about what we're doing to position ourselves to deliver strong growth throughout the recovery.
Demand is improving rapidly so I'm going to focus my remarks on what we are doing to bring balance to the marketplace with supply.
We expect to see organic tailwind to driver supply in the coming months for several reasons.
To start in many markets average hourly driver earnings have been up meaningfully relative to pre COVID-19 levels.
In some markets they've been at all time highs.
During the month of April drivers in our top 25 markets, we're earning more than $30 per hour on average, which is up more than 85% relative to pre COVID-19.
And some of our busiest market drivers had been earning around $35 per hour on average.
We believe more drivers may return to the platform or sign up to drive for the first time based on these dynamics.
Second we believe that individuals who have been doing other forms of App based work over the last year as we will transition to rideshare.
Take food delivery for example, while exact comparisons are difficult historically studies have shown that rideshare represents a higher earnings opportunity in food delivery.
<unk> also offers a fundamentally different experience with social interactions that are largely absent from food delivery.
This is important after a year of social distancing drivers are telling us they crave these interest in conversations.
Missed that commodity and meaningful interactions they have while using them and.
And we believe this brand preference bolsters our competitive positioning.
Third.
Pandemic conditions continued to improve and how safety concerns debate, we see more drivers feeling more comfortable getting back behind the wheel.
As the vaccine rollout continues driver availability should naturally improve.
While we expect to invest in incentives to improve supply. We're also leaning into the driver experience.
We are focused on making sure we're driving with Lyft is as easy and rewarding as possible whether the driver is returning to the platform for opening the app for the first time.
This includes proactively flagging potential roadblocks.
<unk> per vehicle inspection to qualify for the platform.
We are also continuing to enhance the app to help drivers more easily identify opportunities to maximize earnings.
The bottom line is we've seen versions of the supply demand imbalance play on multiple times in our history and we are confident we will steer on marketplace back to balance.
I also want to take a moment to address the regulatory backdrop.
Over the last several months, we've had productive conversations with policymakers on every level.
We continue to believe the win on prop 22 in California passed by nearly 10 million voters across the political spectrum.
Shifted the policy conversation towards protecting independence, while also providing important benefits drivers want.
We remain ready to work with policymakers labor leaders and all interested parties, who want to move forward and build a stronger safety net for App based workers.
I look forward to sharing more progress on these efforts in the months to come.
Before we move to Q&A I want to provide a quick update on the work we are doing to help communities get back on their feet.
In Q1, we officially launched our vaccine access program.
Partnership campaign that is focused on ensuring that every American who needs to get to a vaccination appointment has a way to get there.
Since the program's inception, we have established more than 100 partnerships and we are actively facilitating access to rides nationwide.
With that operator, we'll now open it up for questions.
Thank you at this time I would like to inform everyone in order to ask a question. Please press star one on your telephone keypad again that is star one to ask a question.
And if he would like to remove yourself from the queue. Please press the pound key.
We have on your first question from Doug Anmuth with Jpmorgan. Your line is open.
Great. Thank you I just wanted to follow up on some of the drivers supply comments.
Particularly just trying to understand what people with the month over month decline.
How to think about the driver supply dynamics relative to seasonality.
Thing else that was going on in the month, there and then.
How do you envision any any kind of thoughts just on timing for when supply will kind of normalize and you'll get back to equilibrium.
Thanks.
Yeah. This is Logan I'll weigh in on a couple of things and then turn it over to Brian.
In terms of how we see this developing.
We think that on Q3 and beyond we will start to see some a few trends that.
And that should give us real real total wins on the driver side.
One is just as more and more drivers are getting their second dose and feeling.
Safer driving and as overall case rates come down I think that's really going to change a lot of the kind of feelings of health and safety.
Around driving.
Two is the federal unemployment benefits are sunsetting in Q3.
And that's clearly been having an impact I think on the whole ridesharing industry, but on the broader economy beyond ride sharing so I think there'll be a change we expect to see there.
And the third.
Nobody knows exactly what the delivery market will look like but if delivery does slow down as the economy reopens.
And then we would expect to see a number of delivery drivers move back to ride sharing.
And it's.
It's hard to get kind of perfect data on this but there've been some studies that have shown that historically ridesharing pays substantially more than delivery.
So we think that that could provide a tailwind.
So we don't know exactly what the timing looks like but we expect Q3 to be a kind of notable.
Frame, where this changes.
Brian did you want to.
Cover some of the driver incentive piece share.
Absolutely and maybe Doug just to take.
Taken at the top I think in terms of April demand was damaged as prices were elevated and I just wanted to sort of walk through and I want to actually provide more details around the about on driver incentives and just how this all impacts the P&L.
Relative to our initial outlook.
We invested significantly more but again our outlook was made assuming that wouldn't be this near term rapid demand acceleration and as you can tell despite the increase for Q1 financial results significantly exceeded.
Our outlook for revenue for contribution margin and adjusted EBITDA.
So the elevated pricing debt that Logan was referencing related to prime time and again, it's there's plenty of third party data to share.
This is industry wide and win primetime increases that youre seeing we collected an extra $4 on a ride.
We invest three of that netted to a driver incentive on.
All of the driver incentives will show up on our in our disclosure.
Line items.
But net net if we collected an extra for and we paid out three net net we actually.
Income from a dollar of revenue so in terms of specifics from Q1.
On incentives classified as Contra revenue increased roughly $100 million quarter on quarter and led to record driver earnings net.
And again for the reasons I just described rideshare revenue per line actually increased 7% quarter over quarter and again net net driver incentives and then in terms of our P&L certain parts of cost to revenue more fixed such as depreciation for a relatively fixed per ride on insurance is typically based on the miles.
Well the naphtha price from Ryan for the elevated revenue from higher prices drove increased margin relative to our outlook and help fund the incentives and then looking forward towards Q2.
Constantly making dynamic adjustments to balance the marketplace.
Don't have an ability to forecast driver incentives in Q2 with any certainty on our revenue outlook incorporates our best view for you in Q2 and that would be obviously net.
Driver incentives so we're on.
Assuming that elevated pricing will persist in Q2, and we plan to use debt to help fund the.
To bring back drivers.
And if you're going to our outlook.
Our Q2 outlook balance of 35 to 45 billion interest adjusted EBITDA loss, no big improvement relative to Q1, even with those investments.
Great. Thank you both.
Your next question from Stephen Ju with Credit Suisse. Your line is open.
Okay. Thank you so much so John I think caught off your prepared remarks earlier, the 30 to $35 per hour, that's sponsored by higher prices to the consumer so that's probably on tenable, but so is there anything close to minimum wage on an R&D basis. So.
What do you think will be the optimal sort of already waged at the drivers make yet when you have supply and demand balance and I guess there is.
The bigger question here.
Do you think the consumer desire for cheaper right. So ultimately at odds with the driver desire for more already earnings.
What can do to sort of post close on our stakeholders.
And I guess up also on longer term question. Despite the putting the cart before the horse a little bit, but one of your focus items prior to the pandemic.
For us to generate incremental demand for lyft from universities healthcare organizations, etcetera, I mean, I guess for enterprise usage.
What do you think that looks like on the other side of recovery are you having more conversations last conversations started up for greater desire.
To use lyft at an enterprise level. Thanks.
Thanks, Stephen this is John.
So just to start up in the first piece, yes, we are seeing driver earnings at all time high as you mentioned.
That can get to the 30 to $40 range.
What we saw historically within the 20% to $30 range, which is.
In many places far above minimum wage.
And you know we got to remember we are coming out of the pandemic. So in terms of market balance or imbalance. Both the beginning of the pandemic, where demand went down and now the end of the pandemic where demand is rising rapidly.
It's a good problem to have and and one that.
We will fix itself over time.
And the 20 to $30 range.
Which is more normal that also depends on the hour and so at peak times drivers.
Even in a more balanced environment well it.
Can be earning over that $30 an hour.
Obviously that depends on the specific cities.
But I think as we've demonstrated over the last several years and the fact that Logan and I have been working on this specific business for close to a decade, we know how to balance the market and we know there is a lot of not only demand for rides, but theres a lot of demand for this type of work, which allows you to drive that hours.
Are most convenient for you.
And make above minimum wage and in many cases far above that if you.
During the right hours so.
Balance is the name of the game with our business.
If not at odds.
With with.
If anything it's just that again were coming out of the pandemic where supply and demand are.
Spiking in different ways than they do on a more normal basis for the second part of your question about the enterprise business, we're having a lot of great conversations we invested a lot throughout the pandemic obviously in.
The health care industry.
We launched Lyft.
Let me pass on more recently Lyft past for health care.
We announced the chase partnership.
I think just prior to the pandemic and so this is going to be a really exciting opportunity for cash card members.
Coming out of the pandemic when people will be more likely to travel to really take advantage of that relationship.
In 2020, we extended that program with some five X points promotion for cases co branded cards.
So a lot of exciting things you mentioned universities as well I was just talking with our team earlier this week about a specific university deal debt.
Debt theyre likely to get so I think with the pandemic a lot of people questioned or normal behavior and are looking for ways to.
Like many people have said build back better which is allowing us to have some really fruitful conversations.
Thank you.
Thank you.
We have your next question from Alex Potter with Piper Sandler Your line is open.
Great. Thanks.
I guess on question.
Wondered about and maybe you now have some of the ammo to start answering it I know that during the pandemic people wonder the extent to which consumer travel patterns might change.
Pre pandemic versus post pandemic now that were starting to come out I guess of the pandemic do you have any trends that you would maybe.
Like to highlight to the extent that travel patterns actually are changing is there more activity in the suburbs.
Are you seeing can you come back airport rides anything that you can provide there would be helpful.
Sure.
I'll provide a little bit of color there.
I think we're starting to see some real recovery in cities.
Cities are clearly starting to come back to life.
And we think I think we've talked about this probably before but.
We don't imagine there'd been a steady march of the population to move into cities in sensors.
Denser suburbs, and we don't imagine that trend changing.
Post COVID-19.
On the commute business I think it's too early to tell we are seeing that tick back up a little bit.
On the <unk> business has historically been supply limited so during during rush hour.
Demand is off the charts one of the time during the day.
Both morning, and evening on the Spike is much higher.
Then we're able to serve.
And so if the commute sort of demand softens.
And it's spread out a little more evenly throughout the day.
I'll take that.
Good thing and I don't know that that impacts our broader volume.
We are seeing travel and airport volume pick up.
I think theres, clearly, some pent up demand and the <unk>.
The Roaring twenties kickoff I think will play.
Overall on that.
So so broadly broadly speaking I think.
There will be a handful of adjustments here and there.
But I don't think it's going to change the kind of the broader shift from car ownership to transportation as a service.
And I think ridesharing has been the the first real incarnation of the shift.
But over the next decade as <unk>.
Come to market.
And we are incredibly well positioned to be the primary platform for deploying avs I think we're going to see one of the largest <unk>.
Markets.
And the world shift from on ownership.
Based on market to transportation as a service and Thats.
Trillion plus shift that's coming down the line.
And we don't see that substantially altered.
Ryan I don't know if theres any.
On any particular numbers that you want to.
Yes.
Just to provide a couple of data points I think in your prepared remarks, you share that if you go back a year ago.
Eric will rise as a percentage of total rides.
April 2020 dropped from one six percentage of total rise.
Just to give you a sense in January of this year. So just a few months ago, we arent for 5% of total rise in April.
Comparable 7% a rise were fair for rise and this is a rideshare rides and peak at least I can see and certainly last year and a half with Q4 of 2019 at nine 4% of rides. So again, we'll definitely.
Moving in the right direction, there and I agree with Logan remarks, I think there is there are a lot of people who couldnt take.
Family vacation last year or a couple for.
Theres, so many different events that got postponed and I think more and more people get that second vaccination.
This is lightning a whole lot of leisure travel that I think we expect to see we're starting to see a little of it but I think youre really going to see it ramp up in.
<unk> Q2 and into Q3 and Q4.
Okay, Great and then maybe one last question on I guess lobbying campaign spending I can appreciate outlet on too is over and done with spending on that particular initiative has sort of dropped off the radar any visibility on some of the other states that have active campaigns are you planning on banding together.
From the other platforms.
And replicate the success on popcorn too that you had in California, and if so.
Can you quantify.
Yes, I can give a high level kind of regulatory overview.
And then Brian.
I don't know if you're on a comment anything on this.
On the net dollars there.
And on high level, yes, we're talking to policymakers across the country, having very good conversations about that.
What drivers one of which was made clear in <unk> 'twenty two.
We're on independence as well as benefits and so I would expect more models.
That to come forward over the coming quarters.
Hey.
We were successful pop 22 was working together.
And creating a coalition of the industry and that's how we will do that going forward. So overall.
I'm optimistic we will have a few more success stories on bringing this model to more states this calendar year and.
But don't don't expect.
The type of dollar impact that we saw last year, Brian anything you want to add.
No I think that was spot on.
Great.
Thanks, guys. Thank.
Thank you.
We have for your next question from Mark Mahaney from ISI. Your line is open.
Okay, Let me try.
Hi.
On the new active riders that you had sounded like there was a mix of rejoins and maybe new riders do you have any.
Do you have any more detail on that but what was the mix.
And then I want to make sure I understand about that.
Driver incentives in.
On the back half of the year and it sounds like Theres, some organic factors that will drive.
Pardon me, we will drive drivers back to lift those hourly wages that you talked about.
Sure.
Coming out of that.
Pandemic et cetera, but how much do you think that you need to fuel that recovery of debt.
Do you think you need to spend on how much how much effort do you think you're going to have to make financially to incentivize.
Drivers to come back Thats, what I want to get it thanks a lot.
Thanks, Brian any color, we can share on that share. So let's start with active rider. So again, we were very pleased to see the nearly $1 billion.
On a increase in active riders grew 942000.
Definitely.
The increases in Activations and these would be new new writers for Lyft.
And so if you look in the month of March they jumped 43% month over month, and then again that on a little pressure on revenue per active rider because a few activate at last month's interest as last time.
On to take ride, but even if you look on a quarterly basis.
On Activations of new riders jumped 21% quarter over quarter and again I think it just goes back to we're still on the early days I mean, there is just long term secular and structural trends that underpin our growth I believe business that is there is 4 million people each year from 2018.
These digital natives, who really don't want to own things really lean into.
On the surface service experience for the reasons that Logan outline.
On driver incentives I think Logan outline three potential tailwind that we expect as more drivers get that second vaccine I believe you're going to see some supply shift because again it's.
Historically drivers.
A lot more doing rideshare versus delivery.
Second.
I think again, the federal unemployment benefits.
Our expected too.
That expire within Q3, so I think that also provides a little tailwind and then I think one thing that is worth calling out in.
In Q2.
We expect to increase sales and marketing.
Roughly probably $12 billion or so with a lot of that spend focus on marketing for new drivers and so I think that as we bring in more drivers because again as Jon pointed out like the earnings right now on an all time highs.
It's a really great time to bring new drivers into the system.
And then again I think we will get some.
On some organic supply help just in terms of drivers who come back who maybe just didn't feel super safe. The earlier parts of the pandemic before they got their vaccines could you give it rides on the platform.
Okay. Thanks, Brian.
We have for your next question from Brent Thill with Jefferies. Your line is open.
Yeah. Thanks, just on the supply of drivers on I'm. Just curious if you can just update update us and how that is coming back I think we've all noticed.
Little longer wait times, and clearly Youre you are constrained on some of the drivers although you get hot.
How are you seeing that for growth.
Right now are you getting the type of flow that you need or is there more work basketball on there.
Yes.
Share much more than we have already but I would say.
<unk> in terms of when we look at our funnel.
Seeing growth in the number of leads coming into the funnel and that is generally on obviously you fill in the final revenue.
Drive Activations of new driver. So we do expect more new drivers coming into the platform as well as bringing back drivers who may have stopped driving during the pandemic.
Okay.
Okay, that's great.
Profitability goal I guess the question is that you've obviously as you said, Brian last quarter I believe you brought the expense structure to the studs.
There is some concern.
But on the opposite side of level of innovation and the things that Youre doing.
Now that you have the expense structure that to grow beyond the recovery of interest can you talk to.
How you are setting aside.
The right investments to think creatively about the next chapter of this understanding.
And on your comment last quarter, and bringing net active subs.
Sure Let me, let me maybe kick us off on I'll hand, it off to Logan.
Just to be Super clean on our restructurings are behind us.
As you know we took on significant cost for the business.
$360 million run rate annualized in Q4 relative to original original outlook and then even in Q1, we took down on.
Opex below cost revenue by $56 million.
Yeah.
Profitability is now all about growth and the leveraging on Opex and we're really excited about a number on different revenue streams and new initiatives.
I think this deal sort of Logan to where we expect to build a significantly larger company as we attack the market opportunity in front of us So maybe I'll handoff to Logan to talk about some of the day.
The investments we are making.
Sure. So so even as we made significant cuts across the business, we continue to place new bets and to invest.
On substantially in innovation so in the last year, we've rolled out some of the.
Most significant fundamental innovations.
Our marketplace engine, so when it comes to.
One of the one of the kind of effects that we haven't talked about.
In terms of the supply side is.
Is that drivers make more money when they operated at higher utilization and we've had some real breakthroughs in terms of how we operate our marketplace to be able.
To help drivers do more rides per hour and operate more efficiently and every inch of waste that gets knocked out of the system unlocks huge amounts of value.
That goes to drivers for riders and to the bottom line.
And we've had similar breakthroughs on the rider side. So we have not been sitting idle.
A lot of this is under the Hood.
Some of it we can't get into detail for competitive reasons.
But we have continued to innovate.
Through the last year and.
We are looking forward to placing significant new bets as we go forward.
Another another a couple of areas, where we've continued to invest.
<unk> has been in our fleet management capabilities, we've done some quite exciting things on that side of the house.
And then we've talked about it a little bit, but our b to b.
Delivery initiatives. So we are we are very much.
Leaning into growth and continuing to invest in innovation.
We are not.
We're not looking to cut down to the studs in terms of.
Reducing the cadence on the velocity that we can move out when it comes to innovation.
I do think we are at the very beginning.
Of this gigantic shift and we are determined to be in the best possible position to capture and to help drive that forward.
Thank you.
We have your next question from AD revenue.
Keybanc capital markets. Your line is open.
Hey, good afternoon, thanks for taking the question.
Just on that line of innovation. It seems like you can continue to rollout new initiatives like priority kick up and wait and just trying to understand kind of what uptake has been there and kind of opportunities there and then second.
Clear, maybe with some apprehension on public transportation you may have an opportunity with bikes. So just trying to help us understand kind of where the bike business.
And how you would characterize the growth opportunity. Thank you.
Yeah. So I don't know that we can share any specific numbers, but but we've seen some.
Great customer feedback.
Around priority pickup around weight and save.
The whole idea.
A variety of being able to.
Trade off time and money I think it's really kind of at the foundation of what we do so as we provide better options for paying paying a little bit more money to get a faster pickup.
Saving a few dollars to wait a few minutes.
There's a lot of value to be unlocked there.
And we're really able to serve our customers better.
Similarly, like like you mentioned.
On the in the bikes and scooters business.
Absolutely as more people have wanted to.
Stay outside when they traveled bikes and scooters have been phenomenal options. So we've seen a lot of uptake there.
And we're quite excited about.
The level of future growth, we're seeing cities at the same time also lean into growing their programs as you know.
We run the largest network of Citi exclusive programs.
So I think there is a an exciting horizon on that yes that could add a little more detail on.
The bikes and scooters as Logan mentioned, we operate the largest share in micro mobility network in the U S and as of 2021 of the largest bike share system in the world outside of China, and this add depth to our network, allowing us to offer a full set of transportation services on.
On Citi bike alone in 2019 riders took almost $21 million right.
That's comparable to the pre COVID-19 annual ridership, San Francisco Bay area Cal train.
And in 2020, we had more than one 8 million new riders tried.
Our micro mobility systems and going back to the strategy, we set by having these.
Single, operator frameworks with a deep partnership for the city a lot of others, we're going after the Doc Lyft craze and I think by sticking to our strategy.
Approach those investments are really paying off.
So as Bryan said with warmer weather, we expect even more growth from bikes and scooters in the months ahead.
Yes, I would just kind of sitting back here in Hoboken, So I'm excited to use it. Thanks so much.
And Joanne.
We have your next question from <unk> <unk> with Citi. Your line is open.
Great. Thanks, everybody just had one question on avian another actually on EV on it.
Just curious now that you've had.
But on a number of partnerships, whether you think you might need to have additional AAV partnerships and if so what the rest of activity is from from AEP players given that some of them seem to be angling for potentially become future competitors, just wondering kind of what your thoughts on there and hoping for an update on what the plan is to bring electric vehicles on the platform.
And in terms of.
Kind of staying asset light within that and how do you view kind of the <unk>.
<unk> of Evs on the Lyft platform in terms of your driver.
For your own kind of potential earnings.
Sure. Thanks Heath.
I'll try to kind of hit both of those so on a Z as we discussed last week, we feel like we are in the best position to win the cognitive transition for three distinct and main reasons. One is the hybrid network. So this goes to the point you asked about.
If others want to go and do it themselves without without human drivers and autonomous vehicles.
Near impossible to manage.
On the demand curve demand is not a static line and so if you were to ask NAV.
The only operator would you buy 100000 vehicles that need a noon.
Peak demand on 1 million vehicles that meet a Saturday night peak demand.
Maybe they pick something in the middle and then that would really their utilization would suffer on <unk> their prices would suffer and so having that hybrid network is critical.
Operating in a navy environment. The second piece is the marketplace engine some of the pieces Logan discussed on the call and.
All of the data science and tech sales over the last nearly decade.
To get really good at Eth dispatch routing specific to this use case.
Yes.
Depending on the market 10, 20, 30% advantage inefficiency and something that we do that no one else does.
Is.
For the operations and technology.
That is essential to maximize revenue per mile and minimize cost per mile and so those three pieces together are specific and unique to our approach.
We we are excited to work with multiple partners in this space.
Could you live in a best safest.
Readily available over the coming years.
We're having great conversations and I think more and more people are understanding the power of the network and the important now that we're focused on what.
What we do best.
Partnering on what they do best on Evs, just quickly as we're coming up on time.
We're excited about <unk> when you think about utilization again.
For the battery.
Oftentimes a big part of.
<unk> are more expensive and when you have driver for utilizing a vehicle much more than.
Then a kind of personally on vehicle you can make that payback equation work more quickly.
I think we're still hopeful to get more mass market Evs, which are starting to come out over the next couple of years and then using our fleet business, which we've talked about to help drivers get access to them. So I think we're in a great spot as evs become more accessible.
That's all very helpful. Thanks, so much.
Yes.
Alright, thank you so much everybody.
Great catching up with everybody and we will talk with you next quarter have a good one.
Thanks.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Okay.
Sure.
Sure.
Okay.
[music], Inc.
Sure.
[music] from that.