Q1 2024 Lyft Inc Earnings Call

Good afternoon, and welcome to the Lyft first quarter 2024 earnings call.

Operator: At this time, all participants are in listen-only mode to prevent any background noise. Later, we will conduct a question and answer session, and instructions will be given at that time. If anyone should require operator assistance, please press star then zero on your touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sonya Banerjee, Head of Investor Relations. You may begin.

At this time, all participants are in listen only mode to prevent any background noise.

Sonya Banerjee: We will conduct a question and answer session and instructions will be given at that time.

Sonya Banerjee: If anyone should require operator assistance. Please press Star then zero on your Touchtone telephone.

Sonya Banerjee: As a reminder, this conference call is being recorded.

Sonya Banerjee: I would now like to turn the conference over to Sonya Banerjea head of Investor Relations you may begin.

Sonya Banerjee: Thank you welcome to the Lyft earnings call for the first quarter of 'twenty 'twenty four on the call today, we have our CEO, David Russia, and our CFO Erin Brewer.

Sonya Banerjee: Thank you. Welcome to the LYFT earnings call for the first quarter of 2024. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. Our president, Kristen Sparecheck, is here for the Q&A session.

Sonya Banerjee: Our president Kristen spare Chuck is here for the Q&A session.

Sonya Banerjee: We'll make forward-looking statements on today's call relating to our business strategy and performance, future financial results, and guidance. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings materials and our recent SEC filing. All of the forward-looking statements that we make on today's call are based on our beliefs as of today, and we disclaim any obligation to update any forward-looking statements except as required by law.

Sonya Banerjee: We will make forward looking statements on today's call relating to our business strategy and performance future financial results and guidance.

Sonya Banerjee: The statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call.

Sonya Banerjee: Factors and risks are described in our earnings materials and our recent SEC filings.

Sonya Banerjee: All of the forward looking statements that we make on today's call are based on our beliefs as of today and we disclaim any obligation to update any forward looking statements, except as required by law.

Sonya Banerjee: Our discussion today will also include Don Gap financial measures, which are not a substitute for our GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website.

Sonya Banerjee: Our discussion today will also include non-GAAP financial measures, which are not a substitute for our GAAP results.

Sonya Banerjee: Filiation of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website.

Sonya Banerjee: Additionally, today we're going to discuss customers. For Rideshare, there are two customers in every car. The driver is LYFT's customer, and the rider is the driver's customer. We care about both. And with that, I'll pass the call to David.

Sonya Banerjee: Additionally, today, we're going to discuss customers for rideshare. There are two customers in every car. The driver is lifts customer and the writer is the drivers customer we care about both and with that I'll pass the call to David.

David Risher: Thank you, Sonya, and good afternoon, everyone. Thank you for joining us. We had a great start to 2024 with very strong first quarter results. Rides and gross bookings both grew by more than 20% year over year, and we delivered another quarter of positive free cash flow. We are on track to deliver our four-year goals, with a higher level of free cash flow than we initially shared. We're executing well, and we're demonstrating that customer obsession drives profitable growth. Since taking on the CEO role just a year ago, more than a year ago, I've really been amazed and proud of what we've accomplished.

David: Thank you Sonya and good afternoon, everyone and thank you for joining us.

David Risher: We had a great start to 2024 with very strong first quarter results.

David Risher: And gross bookings both grew by more than 20% year over year, and we delivered another quarter of positive free cash flow.

David Risher: We are on track to deliver full year goals for.

David Risher: With a higher level of free cash flow that we initially shared.

David Risher: We're executing well and we're demonstrating the customer obsession to drive profitable growth.

David Risher: Since taking on the CEO overall, just a year ago over a year ago, I've really been amazed and proud of what we've accomplished.

David Risher: On these calls, we talk a lot about progress in terms of Lyft's performance metrics, but today, I'd like to talk about that progress in terms of what customers experience and how that informs why they choose Lyft. Let's start with drivers. We are improving the ways we provide drivers with what they want, good earning opportunities, along with more transparency and more control over their time. The result is that drivers are earning more. In Q1, the median U.S. driver earned $31.10, including tips and bonuses, for every hour of driving time. And after taking into account the driver's estimated expenses, like maintenance, gas, and vehicle depreciation, that's around $24.25 per hour of driving.

Speaker Change: On these calls we talk a lot about progress in terms of this performance metrics for today I'd like to talk about that progress in terms of what customers experience and how that informs why they choose lyft.

David Risher: Let's start with drivers we are improving the ways, we provide drivers with what they want good earnings opportunities along with more transparency and more control over their time.

David Risher: The result is drivers are earning more in Q1, the median U S driver earned $31.10.

David Risher: <unk> tips and bonuses for every hour of engage time.

David Risher: And after taking into account the drivers estimated expenses like maintenance gasoline vehicle depreciation that's around $24 25 per engaged our.

David Risher: On both a gross and net basis, median driver earnings are higher than they were in the second half of 2023, as we discussed in our white paper on the topic issued a few months ago. One reason is that Lyft drivers have more information than ever when choosing their rides. This has significantly reduced ride cancellation by nearly 50% versus a year ago, and that increases the time drivers spend earning. Drivers can also plan ahead more easily with scheduled rides. You can balance other obligations using our proprietary stay within the area filter.

David Risher: On both gross and net basis medium driver earnings are higher than they were in the second half of 2023 as we discussed in our white paper on the topic issued a few months back.

David Risher: One reason is that lyft drivers have more information than ever when choosing their rides is significantly reduced rod cancellations by nearly 50% versus a year ago.

David Risher: That increases the time they spend earning.

David Risher: Drivers can also planet had more easily with scheduled rides.

David Risher: We can balance other obligations using our proprietary stay within the area of filter they can tap into priority mode to stay busy during off peak periods.

David Risher: They can tap into priority mode to stay busy during off-peak periods. And drivers now have access to a more streamlined process to appeal being deactivated, which addresses a longstanding pain point by getting them appeal results faster. Our goal is to lead the industry in making it great to drive with right, and it's resulting in a greater driver preference. For example, thanks to the new earnings commitment that we released. Lyft drivers now know they will always earn at least 70% of the rider's fare each week after external factors. Here's the punchline.

David Risher: And drivers now have access to a more streamlined process to appeal being deactivated.

David Risher: Addresses a longstanding pinpoint how about.

David Risher: By getting them appeal results faster.

David Risher: Our goal is to lead the industry on making it great to drive with rideshare, and it's resulting in great greater driver preference.

David Risher: For example, thanks to the new earnings commitment that we released Lyft drivers now know they will always earn at least 70% of the riders fair each week after external fees.

David Risher: Since the launch in February, drivers' perception of pay fairness has improved significantly, with 75% telling us they have a better understanding of their earnings. The data shows our commitment is helping us attract and retain drivers and increase driver hours. Additionally, following our nationwide rollout of Women Plus Connect in the first quarter, women and non-binary driver activations increased by nearly 24% year-over-year. This has continued to be one of LYFT's highest-rated features, and most drivers who use it tell us they feel safer when driving, which is super important, one of our key objectives.

David Risher: Here's the punchline since the launch in February drivers perception of pay fairness has improved significantly with 75% is telling us they have a better understanding of their earnings.

David Risher: The data shows our commitment is helping us attract and retain drivers and increased driver hours.

David Risher: Additionally, following out following our nationwide rollout of women plus connect in the first quarter women and nonbinary driver Activations increased by nearly 24% year over year.

David Risher: This has continued to be one of lifts highest rated features.

David Risher: Most drivers to tell us who use it tell us they feel safer when driving which is super important one of our key objectives.

David Risher: As a result of all of these moves, LYFT had more drivers use our platform in Q1 than we've had in about four years, and driver hours have returned to 2019 levels. And I can tell you, in addition, that over these past few weeks, driver hours have reached new all-time highs. That is the result of our customer obsession with driving. Now, let's talk about riders.

David Risher: As a result of all of these moves Lyft had more drivers to use our platform in Q1 than we've had in about four years and driver hours of returns 2019 levels.

David Risher: And I can tell you. In addition that over these past few weeks driver hours have reached new all time highs.

David Risher: That is the result of our customer obsession for drivers.

David Risher: Over the past few quarters, we focused on giving them a far more reliable rideshare experience with more and better products to choose from. For example, pickup times in Q1 were the fastest they have been in four years. By the way, if you're interested in more examples, please ask me about that during Q&A.

David Risher: Now, let's talk about riders over the past few quarters, we focused on giving them far more reliable a far more reliable rideshare experience with better with more and better products to choose from.

David Risher: For example pickup times in Q1, where the fastest they have been in four years.

David Risher: By the way if you're interested in more examples. Please ask me about that.

David Risher: During Q&A.

David Risher: Meanwhile, thanks to a ton of behind-the-scenes work, writers are now experiencing far less of something they really don't care for, prime time, which many people know is surge pricing. This means prices for riders have become more stable and more predictable, and that leads to greater repeat use.

David Risher: Thanks to a ton of behind the scenes work writers are now experiencing far less of something they really don't care for primetime, which many people know as surge pricing.

David Risher: This means prices for riders have become more stable and more predictable.

David Risher: And that leads to greater repeat use.

David Risher: A good example of where you can see our rider and driver obsession really working well and coming together is in Canada.

David Risher: A good example of where you can see our rider and driver obsession really working well and coming together is in Canada. Over the past year, we've brought our focus on customer obsession to this market, and it's already paying off. For context, LYFT operates in five of Canada's largest cities, as well as in about 13 smaller ones. As we have begun to apply our customer obsession to those markets, we've doubled rides and more than doubled new rider activation and driver hours in Q1 year on year. These results tell us a couple of important things.

David Risher: Over the past year, we've brought our focus on customer obsession to this market and it's already paying off for.

David Risher: For context lift operates in five of Canada's largest cities as well as in about 13 smaller ones as.

David Risher: As we have begun to apply our customer obsession to those markets.

David Risher: Doubled rides and more than doubled new rider Activations and driver hours Q1 year on year.

David Risher: These results tell us a couple of important things one drivers and riders are hungry for choice and a customer obsessed approach.

David Risher: One, drivers and riders are hungry for choice in our customer-obsessed approach. And two, there is opportunity for us outside the U.S. over the long term. Finally, I'd like to update you on LYFT Media, which offers a unique value proposition to brands as they look for new ways to connect with customers. LYFT Media had a great quarter with revenue growing by about 250% year over year. And we really like the mix we're seeing, with about half of our business coming from repeat customers like NBC University. We've also added several new customers, including Zillow and MasterCard. Here's why.

David Risher: And two there is opportunity for us outside the U S over the long term.

David Risher: Finally, I'd like to update you on Lyft media, which offers a unique value proposition to brands as they look for new ways to connect with customers.

David Risher: This media had a great quarter with revenue growing by about 250% year over year and.

David Risher: And we really like the mix, we're seeing with about half of our business coming from repeat customers like NBC Universal.

David Risher: Also added several new customers.

David Risher: LYFT is one of the largest transportation networks in the country. We support over 700 million rides a year, and millions of people rely on our platform every day. We have a captive audience engaging heavily with our app when they ride, and we can make use of our first-party data about where and when people are moving around. Here are the results.

David Risher: Including Zillow and Mastercard, Here's why lift is one of the largest transportation networks in the country, we support over 700 million rides, a year and millions of people rely on our platform every day.

David Risher: We have a captive audience engaging heavily with our app when they ride and we can make use of our first party data about where and when people are moving around.

David Risher: So here are the results. According to our third party brand measurement firm lift media AD campaigns have seven times the impact relative to the norm on brand perception and purchase intent.

David Risher: According to our third-party brand measurement firm, LYFT media ad campaigns have seven times the impact relative to the norm on brand perception and purchase. Our video ads, which were new this quarter, also generate more than 10 times the ad industry's typical click-through rate. And in Q1, we added new partners, including Nielsen and Oracle Advertising for their ad measurement and data enrichment solutions for targeting, helping us deliver even more value for our customers.

David Risher: Our video ads, which renew this quarter also generate more than 10 times. The AD industry is typical click through rate and.

David Risher: And in Q1, we added new partners, including Nielsen and Oracle advertising for their AD measurement and data enrichment.

David Risher: For targeting helping us deliver even more value for our customers.

David Risher: When it comes to building a successful media operation, it's all about scale, targeting, and measurement. And when we look at the tools we've built and the results we're delivering, it's clear LYFT Media has a lot of headroom to grow with favorable economics in a way that leverages our customer obsession. Now, before I turn the call over to Erin, I want to share one closing observation. I get a lot of questions about how we've been able to accomplish so much in such a short period of time.

David Risher: When it comes just building a successful media operation, it's all about scale targeting and measurement and when we look at the tools, we've built and the results. We're delivering it's clear lift media has a lot of headroom to grow with favorable economics in a way that leverages our customer obsession.

Erin: Now before I turn the call over to Aaron I want to share one closing observation.

David Risher: I get a lot of questions about how we've been able to accomplish so much in such a short period of time.

David Risher: It turns out that our culture of customer obsession and our focus on rideshare are huge assets. That's what gives us the ability to be nimble, even as we drive meaningful leverage. We wake up every day ready to out-execute and out-innovate others in our sector. And the more drivers and riders love us and what we do, the more they use us to earn money and to get out and about, and the Better We All Do. Again, customer obsession drives profitable growth.

David Risher: It turns out that our culture of customer obsession and our focus on rideshare are huge assets.

David Risher: That's what gives us the ability to be nimble.

David Risher: Even as we drive meaningful leverage we wake up every day ready to out execute and out innovate others in our sector and with more drive and the more drivers and riders love Us and what we do the more they use us to earn and to get out and about the better we all do.

David Risher: Again customer obsession to drive profitable growth.

David Risher: So let me close with just a quick plug: we'll be holding our first ever Investor Day on June 6th in Manhattan, and I look forward to seeing you there in person or online. Not only will you get to hear about the next phase of our plan for customer-obsessed profitable growth, but you'll also get to meet our amazing team that's making it all happen. I am really looking forward to it.

David Risher: So let me close with just a quick plug will be holding our first ever Investor day on June 6th in Manhattan, and I look forward to seeing you there in person or online not only when you get to hear about the next phase of our plan for customer obsessed profitable growth, you'll also get to meet our amazing team, that's making it all happen.

David Risher: Looking forward to it.

Aaron: Over to you Aaron.

Erin Brewer: Thanks, David. Good afternoon, everyone, and thanks for joining us today. I'll start with my usual reminder that, unless otherwise indicated, all income statement measures are non-GAAP and exclude select items that are detailed in our earnings materials. Before I dive into our results for Q1, I want to take a moment to reflect on how far LYFT has come over the past four quarters. We've established a strong foundation for profitable growth. Our cost structure is in the right place.

Speaker Change: Thanks, David Good afternoon, everyone and thanks for joining us today I'll start with my usual reminder, that unless otherwise indicated all income statement measures are non-GAAP and excludes select items that are detailed in our earnings materials.

Erin Brewer: Before I dive into our results for Q1 I wanted to take a moment to reflect on how far lift has come over the past four quarters.

Erin Brewer: We've established established a strong foundation for profitable growth.

Erin Brewer: Our cost structure is in the right place we've.

Erin Brewer: We've delivered four quarters of positive adjusted EBITDA totaling nearly $260 million. We've better aligned our financial disclosures with our strategic priorities, and we've begun to generate positive free cash flow. All of this progress and momentum tracks with the directional guidance we've provided for the full year 2024, including an improved outlook for free cash flow conversion for the full year. And it sets the stage for our Investor Day next month.

Erin Brewer: We've delivered four quarters of positive adjusted EBITDA totaling nearly $260 million.

Erin Brewer: We better align our financial disclosures with our strategic priorities.

Erin Brewer: And we've begun to generate positive free cash flow.

Erin Brewer: All of this progress and momentum.

Erin Brewer: <unk> with the directional guidance, we've provided for the full year 2024 <unk>.

Erin Brewer: Including an improved outlook for free cash flow conversion for the full year.

Erin Brewer: And it sets the stage for our Investor Day next month.

Erin Brewer: Q1 was another solid quarter consistent with our expectations.

Erin Brewer: Q1 was another solid quarter, consistent with our expectations. We executed well, and more drivers and riders chose LYFT. The result was more rides and a better service level. In particular, driver hours increased by more than 40% year over year. And ride frequency, referring to the average number of rides per active rider, was the strongest it's been in four years. We also saw continued sequential momentum from Q4 to Q1 in driver hours, ride intents, and frequency, demonstrating that we continue to improve execution quarter by quarter. Now, let's turn to our performance for the quarter.

Erin Brewer: We executed well and more drivers and riders chose left.

Erin Brewer: The result was more rides and better service levels.

Erin Brewer: In particular driver hours increased by more than 40% year over year and ride frequency, referring to the average number of rides per active rider was the strongest it's been in four years.

Erin Brewer: We also saw continued sequential momentum from Q4 to Q1 in driver hours right intense and frequency.

Erin Brewer: Demonstrating that we continue to improve execution quarter by quarter.

Erin Brewer: We supported 188 million rides and 21.9 million active riders. Total rides grew 23% year over year, reflecting strong demand across use cases. Growth in early morning, commute, and weekend evening trips was particularly strong, which is a continuation of the trends we saw in the back half of 2023. Active riders grew 12% year over year, reflecting an improvement in rider retention, along with an increase in new riders. Gross bookings were approximately $3.7 billion, up 21% year over year.

Erin Brewer: Now, let's turn to our performance for the quarter we.

Erin Brewer: We supported 188 million rise and $21 9 million active riders.

Erin Brewer: Total rides grew 23% year over year, reflecting strong demand across use cases.

Erin Brewer: Growth in early morning, commute and weekend evening trips was particularly strong which is a continuation of the trends we saw in the back half of 2023.

Erin Brewer: Active riders grew 12% year over year, reflecting an improvement in rider retention, along with an increase in new riders.

Erin Brewer: Gross bookings were approximately $3 $7 billion up 21% year over year.

Erin Brewer: This reflects strong growth, partially offset by lower total prices year over year, reflecting lower levels of prime time given the significant improvements in the health of our market. Revenue grew to $1.3 billion, up 28% year over year, reflecting those same dynamics. As a percentage of gross bookings, revenue increased year on year and sequentially, reflecting lower incentives per ride. So, let me provide some additional color here.

Erin Brewer: This reflects strong rise growth, partially offset by lower total prices year over year, reflecting lower levels of prime time, given the significant improvements in the health of our marketplace.

Erin Brewer: Revenue grew to $1 $3 billion up 28% year over year, reflecting those same dynamics.

Erin Brewer: As a as a percentage of gross bookings revenue increased year on year and sequentially, reflecting lower incentives per ride. So let me provide some additional color here.

Erin Brewer: David talked about how lyft is leading our industry in transparency and choice for drivers and how that is translating into greater driver preference for lyft.

Erin Brewer: David talked about how LYFT is leading our industry in transparency and choice for drivers and how that is translating into greater driver preference for LYFT. We see that in the number of drivers choosing our platform and the growing number of hours they're spending engaging with our app. In Q1, the median U.S. driver hourly earnings, including tips and bonuses, increased sequentially on both a gross and net basis.

Erin Brewer: We see that in the number of drivers choosing our platform and a growing number of hours, they're spending engaging with our app.

Erin Brewer: In Q1, the median U S driver hourly earnings, including tips and bonuses increased sequentially on both a gross and net basis.

Erin Brewer: And we've talked a lot about our focus on operational excellence. Another great example of that is how we're helping drivers anticipate rider demand so they can be in the right place at the right time to be able to optimize their earnings. In our business, the combination of increasing driver preference and increasing driver visibility into rider demand is incredibly valuable. It means we can be more targeted and efficient in how incentive dollars are spent, even as drivers earn more.

Erin Brewer: And we've talked a lot about our focus on operational excellence.

Erin Brewer: Another Great example of that is how we're helping drivers anticipate rider demand. So they can be at the right place at the right time to be able to optimize their earnings.

Erin Brewer: In our business the combination of increasing driver preference and increasing drivers visibility into rider demand is incredibly valuable.

Erin Brewer: It means we can be more targeted and efficient in how incentive dollars are spent even as drivers earn more.

Erin Brewer: The result is healthy profit growth, while operating competitively with laser like focus on customer experience.

Erin Brewer: The result is healthy profit growth while operating competitively with a laser-like focus on customer experience. Now let's turn to our Q1 expenses. Cost of revenue was $747 million, up nearly 40% year-over-year, driven by higher ride volumes along with higher per-ride insurance costs, which reflect last year's third-party insurance renewal. Operating expenses were $500 million, up roughly 8% year over year.

Erin Brewer: Now, let's turn to our Q1 expense.

Erin Brewer: Cost of revenue was $747 million up nearly 40% year over year, driven by higher ride volumes, along with higher per ride insurance costs, which reflect last years third party insurance renewals.

Erin Brewer: Operating expenses were $500 million up roughly 8% year over year.

Erin Brewer: As a percentage of gross bookings, operating expenses were approximately 14%, an improvement of nearly two percentage points versus Q1 2023, driven by our lower fixed cost structure versus last year. Adjusted EBITDA was $59 million, which as a percentage of gross bookings was 1.6%. Relative to Q1 of last year, our adjusted EBITDA margin has more than doubled as we benefit from efficiencies in our marketplace and operating expense leverage. We ended Q1 of 2024 with a solid cash position, with unrestricted cash, cash equivalents, and short-term investments of approximately $1.7 billion. In the first quarter, we generated a positive free cash flow of $127 million.

Erin Brewer: As a percentage of gross bookings operating expenses were approximately 14% an improvement of nearly two percentage points versus Q1, 2023, driven by our lower fixed cost structure versus last year.

Erin Brewer: Adjusted EBITDA was $59 million, which as a percentage of gross bookings was one 6% <unk>.

Erin Brewer: Relative to Q1 of last year, our adjusted EBITA margin has more than doubled as we benefit from efficiencies in our marketplace and operating and operating expense leverage.

Erin Brewer: We ended Q1 of 2024 with a solid cash position with unrestricted cash cash equivalents and short term investments of approximately $1 $7 billion.

Erin Brewer: In the first quarter, we generated positive free cash flow of $127 million.

Erin Brewer: And we continue to take a prudent approach to managing our balance sheet. In Q1, we took advantage of favorable convertible debt market conditions to raise approximately $460 million of new convertible notes that will come due in 2029. We will use the majority of those proceeds to retire a portion of our bonds coming due in 2025. Turning to Q2, we're off to a good start. We continue to see strong demand for rideshare from drivers and from riders.

Erin Brewer: And we continue to take a prudent approach to managing our balance sheet. In Q1, we took advantage of favorable convertible debt market conditions to raise approximately $460 million of new convertible notes that will come due in 2029.

Erin Brewer: We used the majority of those proceeds to retire a portion of our bonds coming due in 2025.

Erin Brewer: Turning to Q2, we're off to a good start.

Erin Brewer: We continue to see strong demand for rideshare from drivers and from riders.

Erin Brewer: And as the weather has gotten better, we've seen more bike and scooter usage, which is additive to both rides and active riders on a sequential basis in Q2. As the quarter progresses, we'll continue to focus on great execution to connect customers with the experiences they love, from music festivals to pride celebrations and more. Additionally, with graduation season and summer travel just around the corner, we're focused on enabling a great airport experience to capture more of these rides.

Erin Brewer: And as the weather has gotten better we've seen more bike and scooter usage, which is additive to both rides and active riders on a sequential basis in Q2.

Erin Brewer: As the quarter progresses, we'll continue to focus on great execution to connect customers with the experiences they love from.

Erin Brewer: Our music festivals to pride celebrations and more.

Erin Brewer: Additionally, with graduation season and summer travel just around the corner, we're focused and we're focused on enabling a great airport experience to capture more of these rides.

Speaker Change: Now, let me review our outlook.

Erin Brewer: Now, let me review our outline. For the second quarter of 2024, we expect gross bookings of $4 to $4.1 billion, up 16 to 19% year over year. This assumes revenue growth of approximately 15% year over year.

Erin Brewer: For the second quarter of 2024, we expect gross bookings of four to $4 $1 billion up 16% to 19% year over year.

Erin Brewer: This assumes rides growth of approximately 15% year over year.

Erin Brewer: We expect adjusted EBITDA of approximately 95 million to $100 million.

Erin Brewer: And an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.4%.

Erin Brewer: Turning to what we expect for full year 2024, our first quarter results and our second quarter guidance inform our perspective on a year.

Erin Brewer: We expect adjusted EBITDA of approximately $95 million to $100 million and an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.4%. Turning to what we expect for full year 2024, our first quarter results and our second quarter guidance inform our perspective on the year. We continue to expect total rides growth in the mid-teens year-over-year, with gross bookings to grow slightly faster than rides, also on a year-over-year basis. We expect an adjusted EBITDA margin as a percentage of gross bookings to be approximately 2.1%.

Erin Brewer: We continue to expect total rides growth in the mid teens year over year with gross bookings to grow slightly faster than rides also on a year over year basis.

Erin Brewer: We expect an adjusted EBITDA margin as a percentage of gross bookings to be approximately two 1%.

Erin Brewer: Turning to free cash flow, we remain on track to generate positive free cash flow for the full year.

Erin Brewer: Turning to free cash flow, we remain on track to generate positive free cash flow for the full year. Given our improved visibility into the first half of the year, we now expect at least 70% of adjusted EBITDA to convert to free cash flow for the full year 2024. As a reminder, you should expect our quarterly free cash flow conversion levels to vary, driven primarily by the timing of certain payments. To give you some perspective on the cadence of our cash flows, based on what we see right now, we expect our free cash flow for the full year will be weighted more toward the first half of 2024. As in the second half of the year, particularly in Q4, we expect to incur cash outflows related to our third-party insurance renewal.

Erin Brewer: Given our improved visibility into the first half of the year. We now expect at least 70% of adjusted EBITDA to convert to free cash flow for the full year 2024.

Erin Brewer: As a reminder, you should expect our quarterly free cash flow conversion levels will vary driven primarily by the timing of certain payments.

Erin Brewer: To give you some perspective on the cadence of our cash flows based on what we see right now we expect our free cash flow for the full year will be weighted more towards the first half of 2024.

Erin Brewer: As in the second half of the year, particularly in Q4, we expect to incur cash outflows related to our third party insurance renewals.

Erin Brewer: With that, I'll bring our prepared remarks to a close. Over the past year, we've made significant progress building a customer-obsessed and financially healthy business. The team continues to execute against high standards, and we see a lot of runway to drive profitable growth. We look forward to seeing you all at our Investor Day. And with that, Operator, we're ready to take questions.

Speaker Change: With that I'll bring our prepared remarks to a close.

Erin Brewer: Over the past year, we've made significant progress building, our customer obsessed and financially healthy business. The team continues to execute against high standards and we see a lot of runway to drive profitable growth.

Erin Brewer: We look forward to seeing you all at our Investor day.

Erin Brewer: And with that operator, we're ready to take questions.

Speaker Change: Thank you.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from Nikhil Devnani on Bernstein. Please go ahead. Hi, thanks for taking the time to answer the question.

Speaker Change: We will now begin the question and answer session.

Operator: You have dialed in and we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.

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Nikhil Vijay Devnani: Your first question comes from Nicholas <unk> with Bernstein. Please go ahead.

Erin Brewer: Yeah, Nikhil, I'll start with that. You know, I'll probably start by just kind of going back and reframing on our full year guidance for top line growth for 2024. So, starting with rides, we reaffirmed our guidance for mid-teens ride growth year over year versus 2023. And I'll just reiterate here that mid-teens is a range.

Speaker Change: Hi, Thanks for taking the question I wanted to ask about growth in your investment cadence.

Erin Brewer: For the second half of the year, we expect rides growth to be approximately 15%. And then again, on the gross booking side, no change to our outlook for the full year. We expect gross bookings to grow slightly faster than revenue. So hopefully that gives you a little bit of a sense for the first half and back half cadence.

Erin Brewer: It will be growing bookings, 19% to 20% in the first half of the year. So my question is whether there is any reason that should slow down in the second half, particularly if you're investing behind it and that's my follow on as well it looks like sales and marketing stepped up a bit in Q1 was this just a one off because you had the take rate capacity or is this.

Erin Brewer: Our new normal on the investment intensity of the business going forward just trying to put your topline into context with your marketplace investments. Thank you.

Speaker Change: Yeah, Nikhil I'll I'll start with that Oh.

Speaker Change: I'll, probably start by just kind of going back and Reframing on our full year guidance for.

Erin Brewer: For topline growth for 2024.

Erin Brewer: Starting with rides are we reaffirmed our guidance for mid teens rides growth year over year versus 2023, and I'll just reiterate here that mid teens is a range.

Erin Brewer: For the second half of the year, we expect rides growth to be approximately 15%.

Erin Brewer: And then again on the gross bookings side no change to our outlook for the full year, we expect gross bookings to grow slightly faster than rides. So hopefully that gives you a little bit of a sense for the first half back half cadence and then the second part of your question with respect to sales and marketing you know I might just.

Erin Brewer: And then the second part of your question with respect to sales and marketing, I might just start by framing this, you know, we anchor on growing our gross bookings and then growing our adjusted EBITDA as a percentage of gross bookings. And within that, as it relates to the way that we deploy total incentives, as you know, the marketplace is dynamic. So we will make trade-offs between contra revenue and sales and marketing incentives in a given period of time.

Erin Brewer: Start by framing this yeah, we've anchor on growing our gross bookings and then growing our adjusted EBITDA as a percentage of gross bookings.

Erin Brewer: And within that as it relates to the way that we deploy total incentives as you know the market places dynamic. So we will make tradeoffs between contra revenue and sales and marketing incentives in a given period of time.

Erin Brewer: And in Q1, there's a continuation of us just seeing good opportunities to invest in some of the areas of growth in the business. And so that does have an impact on our sales and marketing line in Q1. 24. Thanks, Erin. Your next question comes from Eric Sheridan with Goldman Sachs. Please go ahead. Thanks so much for tuning in.

Erin Brewer: And in Q1, there's a continuation of US just seeing good opportunities to invest behind some of the areas of growth in the business and.

Eric James Sheridan: And so that does have an impact on our sales and marketing line in Q1 24.

Eric James Sheridan: Thanks Erin.

Erin Brewer: Your next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Please go ahead. Thanks so much for taking the question.

Eric James Sheridan: Thanks, So much for taking the question I wanted to step back and ask maybe a bigger picture question of David.

Eric James Sheridan: You've talked before about realigning brand and product innovation and competing away from price maybe could you frame up some of the key initiatives, you're most focused on to move the needle inside the mobility business as you look out not only to the remainder of this year.

Speaker Change: But out towards our multiyear view about repositioning brand and product. Thank you.

Eric James Sheridan: Sure. It was Eric right, Yeah, Great Hey, great to hear from you.

David Risher: Sure, it was Eric, right? Yeah, great. Hey, great to hear from you, Eric. Yeah, let me take a big picture approach, and then I'll kind of zoom in on some of the particulars and reflect a little again on Q1 and the rest of this here. So it's so interesting to see what the growth drivers are in our business. One thing we should say is, you know, there is still some secular growth going on. Right. And we just do it, and we see it every day. Right. We see, you know, more bosses trying to get their employees to come back to work.

David Risher: Yeah, Let me take a big picture approach and then I'll kind of zoom in on some of the particulars.

David Risher: And reflect a little again on Q1 and the rest of US here at the start.

David Risher: It's always interesting to see what the growth drivers are of our of our business. One thing we should say is.

David Risher: There is some there is still some secular growth going on right and we just and we see it every day right, we see more bosses trying to get their employees to come back to work.

David Risher: We see, you know, concerts being super exciting for people. It's really interesting. When you look at some of the drivers of growth in Q1, we saw commuters obviously strong there, but we also saw what we call party time, which is basically after five on Friday and Saturday. And that was up 26 percent year on year. And so what that shows you is that people are getting up, and it's not just a post-COVID thing. It's a connecting.

David Risher: We see a call.

David Risher: <unk> being super exciting to people.

David Risher: It's really interesting when you look at some of the drivers of growth in Q1, we saw commute obviously constraint there, but we also saw what we call internally party time, which is basically after five on Friday, and Saturday night that was up 26% year on year and so what that shows you is that people are getting out and it's not just a post COVID-19 thing. It's a connecting you know I've got a whole thing I could talk about it but it's important.

David Risher: You know, I've got a whole thing I can talk about, but the importance of bringing people together and how important that is for our sort of mental health and societal well-being. So anyway, that's great. And then when you look at what LYFT actually does, there are a couple of things I think that are super important before I even get to the brand. I think the first is around operational excellence. Now, we give, we provide and sort of support about 2 million rides every single day, right?

David Risher: So bringing people together and how important that is for sort of mental health and sort of societal wellbeing. So anyway, that's that's great to see.

David Risher: So that means that even small differences in how fast pickup happens or, you know, exactly what the price is or, you know, so on and so on have an enormous, enormous impact. And so that also drives growth, primarily, by the way, in repeat business, like we're actually seeing great indications of loyalty, people, you know, who are regular Lyft users using us more often. It's actually where we see, you know, quite a lot of growth. So those shows and people that make sense, right?

David Risher: And then when you look at what lift actually does there are a couple of things I think that are super important before I, even get the brand I think first is around operational excellence now we give we provide and sort of support about 2 million rides every single day right. So that.

David Risher: That means that even small differences in how fast pickup happens or exactly what pricing, yes or.

David Risher: So on and so it has enormous enormous impact and so that also drives growth primarily by the way and repeat like we're actually seeing great indications around loyalty people, who are regular lyft users using us more often it's actually what we see quite a lot of growth. So that shows and people that makes sense right because if you've taken a lyft ride and you've gotten picked.

David Risher: Because if you've taken a Lyft ride, and you've gotten picked up, you know, our ETAs are now basically as fast as they've ever been; they're faster than they were even just about four years ago. And you know, we're down to sort of like the anyway. It's very fast. I can tell you more about that if you're interested. So operational excellence is a big, big deal because it pays dividends every single day, particularly for repeat use.

David Risher: R. R E T as an hour basically as fast as they've ever been there faster than they were just about four years ago.

David Risher: And we're down to sort of like the anyway, because it's very fast I can tell you more about that if you're interested so so that operational excellence big big deal because it pays dividends every single day, particularly for repeat usage.

David Risher: And then on top of that, you can layer real innovation for new segments or new uses. So, you know, these will be familiar because I've talked about them before, but Women Plus Connect is incredibly important to us. It is incredibly important to us. We have One of the stories I heard recently was a woman saying, I can now finally take a nap in a Lyft. Take a nap in a Lyft, something that, you know, men have enjoyed for years and women haven't so much.

David Risher: And then on top of that you can layer real innovation for new segments or new use cases. So these will be familiar because I've talked about them before but women plus connect is incredibly important to us incredibly important to us we have one of the stories I heard recently was a woman thing.

David Risher: Now finally take a nap and the lift it didn't happen to lift something that men have enjoyed for four years in women, having so much so.

David Risher: So that, and we can see what that does both on the rider's side, but also on the driver's side, something like 24 percent of our new drivers. I think we've got about 20,000 new Women Plus Connect drivers just in the last couple of months. And it's something like 24, maybe even 26 percent, a meaningful percentage of our new applicants to be drivers are women higher than we've seen in the past.

David Risher: And we can see what that does both on the rider side, but also the driver side, it's something like 24% of our new I think we've got about 20000, new women plus connected drivers just in the last couple of months.

David Risher: And it's something like 24, maybe in 26% a meaningful percentage of our new applicants to be drivers are women higher than we've seen in the past. So that's awesome and then of course, there's 70% earnings guarantee also incredibly important to drivers so those.

David Risher: So that's awesome. And then, of course, our 70 percent earnings guarantee is also incredibly important to drivers. So those sort of innovation levers really do, you know, drive incremental growth. And then we have these partnerships, right? Partnerships are an incredibly important part of our strategy. They represent around 20% of our rides right now. And it's everyone from Chase, who you can get, you know, Sapphire, 10x points on if you're a Chase Sapphire member, or Delta; we're one of only two partners that allow you to earn Delta SkyMiles on our platform.

David Risher: Sort of innovation levers really do.

David Risher: Drive incremental growth.

David Risher: And then we have these partnerships partnerships are incredibly important part of our strategy they represent around 20% of our rides right now than its ever been from chase.

David Risher: You can get Sapphire 10 X points on if you're a chase sapphire remember or Delta. We're one of only two partners that allow you to earn.

David Risher: Delta Skymiles on our platform. So that's also very important and then we come to brand, which is where you started which is we.

David Risher: So you know, that's also very important. And then we come to the brand, which is where you started, which is that we are very conscious that we're in a very, very nice position with our brand people. And I drive myself. And when I drive, I ask people why they choose Lyft.

David Risher: Are very conscious that we're in a very very nice position with our brand people and I drive myself when I drive I ask people why they choose lyft and a good percentage of them say every single time I just like you guys better I like you guys better now we have some work to do internally on how to crisp up the messaging around that if I'm honest. So there's more work we can do there but on the end of the day.

David Risher: And a good percentage of them say every single time, I just like you guys better. I like you guys better. Now, we have some work to do internally on how to crisp up the messaging around that, if I'm honest, so there's more work we can do there. But at the end of the day, we are in a very, very nice position there. And I'll end by saying I was in Canada a couple weeks ago, visiting our Toronto team. And I visited with a number of different people, including some drivers there and political figures and so on and so forth.

David Risher: We are we're in a very.

David Risher: Very very nice position there.

David Risher: And by saying I was in Canada, a couple of weeks ago missing our Toronto team.

David Risher: I visited with a number of different people, including some drivers there in political figures and so on and so forth and there were so enthusiastic about our arrival.

David Risher: And they were so enthusiastic about our arrival because they kind of like us, they like what we stand for, they like our values, and they like the choice they're going to get. So it's a very long answer. But it really is exactly the way we think about it. Our strategy, we really see, is working. Our strategy is working. Customer obsession drives profitable growth. And we see a lot of opportunities all across North America over the coming years. In some ways, I feel like we're really just just getting started.

David Risher: They kind of like us they like what we stand for they like our values and they like the choice they're going to get so.

David Risher: It's very long answer, but it really is exactly the way we think about our strategy. We really see is working our strategy is working customer obsession drives profitable growth and we see a lot of opportunities all across North America over the coming years in some ways I feel like were really just just just getting started there.

Speaker Change: Thank you.

David Risher: Sure.

David Risher: Your next question comes from Mark Mahaney with Evercore. Please go ahead.

Operator: Your next question comes from Mark Mahaney with Evercore. Please go ahead.

Operator: Yeah.

David Risher: Two questions. David, there's been some controversy recently about the Tesla autonomous vehicles and the impact that they could have on ride-sharing companies like you and Uber. Just your latest thoughts on how investors should think about the autonomous risk to ride-sharing companies. And then, I think you teased in your earlier prepared comments about providing more ride-sharing improvements in addition to the faster pickup times. Any others you'd roll out in terms of how the experience has gotten better for either drivers or riders? Thank you very much.

Mark Stephen F. Mahaney: Two questions David there's been some.

David Risher: Richie recently about.

David Risher: Just a lot of times vehicles and the impact that could have on ride sharing companies like you and Uber just your latest thoughts on how investors should investors should think about the autonomous risk to rideshare companies and then I think you teased in your prepared comments about providing more.

David Risher: Rideshare improvements in addition to the faster pickup times any others you would rollout in terms of how the experience has gotten better for either drivers or writers. Thank you very much.

David Risher: Yeah, sure. But on the first one, you know, I would actually characterize it a little differently. I wouldn't say, Okay, I understand why you asked the question the way you did about Tesla, but I would actually qualify it as more of an opportunity than a risk. And here's what I mean by that. So autonomous cars, let's step back. Autonomous cars are definitely coming, right? And if you're in San Francisco, you know it; you see it every day.

Speaker Change: Yes sure.

David Risher: So on the first.

David Risher: Actually characterize it a little differently I wouldn't say.

David Risher: Sometimes you see good things, sometimes you see things a little bit strange, but at the end of the day, they're clearly, you know, on the But it's one thing, and I say a very expensive one thing, to build an autonomous vehicle. Very, very expensive. It's expensive to build it, billions of dollars of R&D. It's expensive to operate it. These things are not free to operate. Absolutely not.

David Risher: Okay I understand why you asked the question the way you did around Tesla, but I would actually qualify it as more of an opportunity than a risk any here's what I mean by that so autonomous cars, let's step back with autonomous cars are definitely coming right and if you're in San Francisco you know it you see it every day.

David Risher: The times you see good things, sometimes you see things a little bit strange, but at the end of the day there clearly.

David Risher: On the same.

David Risher: But it's one thing and I say, a very expensive one thing to build a.

David Risher: And autonomous vehicle very very expensive and expensive to build it billions of dollars of R&D defensive to operate at these things are not are not free to operate.

David Risher: They break down, they have repairs, they have shadow drivers in the back. So anyway, so that's an expensive object that somebody's got to bear. And then it's also very expensive to build a rideshare platform. And I think it's maybe tempting, or maybe it's, I don't know, easy, let's say, to hear someone say, Oh, well, you know, you just build an app.

David Risher: Absolutely I think they breakdown the preparers.

David Risher: Auto drivers in the back of all sorts of things.

David Risher: So that's expense topic that somebody's got to bear.

David Risher: And then it's also very expensive to build a rideshare platform and I think it may be tempting or maybe it's oh I don't know it.

David Risher: And you think, well, that's just a ride share network. Well, no, that's not a ride share network. A ride share network involves, you know, conversations with, you know, every airport in the United States to figure out how did you pick up the drop buses, every municipality in the United States, it's pricing 2 million times a day, it's picking things up 24 seven, even in bad weather, even when it's snowing, it's figuring out how to do Supply and Demand Management. So when I look at it that way, and I look at If you think of autonomous driving, here's maybe the way I might break it down.

David Risher: Z, let's say to hear someone say Oh, well you just build an app and I think that's a rideshare network well no that's not a rideshare network a rideshare network involves.

David Risher: Conversations with every airport in the United States to figure out how did you pick up or drop off as every municipality in the United States. Its pricing 2 million times, a day, it's picking things up $24 seven even in bad weather, even when it's snowing, it's figured out how to do.

David Risher: The supply demand management, such that you get cars in the right place at the right time, and so on and so on at a quite a large scale and this is obviously expensive we spend a lot of money on it every single year.

David Risher: As you guys well know so.

David Risher: So when I look at it that way and I look at and then his we're all kind of finish on that if you think about Thomas here is maybe the way I might break it down.

David Risher: Somebody has to build that technology, right? And there are companies that are just focused on that. Somebody then has to build the cars, either bringing their own homegrown technology into the car or taking somebody else's technology. That's a second.

David Risher: If somebody has to build that technology right and there are companies that are just focused on that.

David Risher: And then has to build the cars either bring their own homegrown technology into the car or take somebody else's technology. That's the second thing.

David Risher: Then somebody's got to own these cars, right? In the Lyft business model, of course, we don't typically own the cars. That's, you know, drivers own their own car, which is great. I mean, it's very capital efficient for us; we can put 2 million rides on the road every day and not effectively own a single car asset. So that's great. It means we don't have to spend hundreds of millions of dollars on depreciating assets called cars.

David Risher: Then somebody's got to own these cars right in the Lyft business model of course, we don't typically own the car that's drivers on their own car, which is crazy means it's very capital efficient for US. We can put 2 million rides on the road every day and not effectively on a single car assets. That's great. It means we don't have to spend $100 million in.

David Risher: Depreciating assets called cars, and then someone else to build the network and operate the network and that's what we do.

David Risher: And then someone has to build the network and operate the network. And that's what we do. So if I look at it in that context, I get excited about autonomous cars because I think, great, it's going to be another way for people to get around. You know, you can sort of think of it as another car that we could, you know, run on our network. And, you know, personally, if I were sort of running the world, I would sort of think of companies as specializing, maybe in one of those areas. And companies that try to do more than one of those areas might find it very expensive and maybe not such a great use of capital resources.

David Risher: So if I look at it in that context, I get excited about autonomous cars, because I think great. It's gonna be another way for people to get around you can sort of think of it as another car that we could run into our network.

David Risher: Personally if I were sort of running the world I would sort of think of companies specializing maybe in one of those areas and it companies to try to do more than one of those areas might find it very expensive and maybe not such a great use of capital and resource focus.

David Risher: So, that's General Thoughts. And I definitely ask another question. Oh, yeah, yeah. Yeah. I mean, as a CEO, man, I love to talk about stuff coming out, and I'm just completely unable to do it.

David Risher: That's the general thought there.

David Risher: But what I can tell you is this. So frustrating. Just keeps me up at night. Anyway, but what are you gonna do?

David Risher: You definitely asking another question Oh, yeah, yeah yeah.

David Risher: I mean, so this is why has it been I love to talk about stuff coming out and I am just completely unable to but what I can tell you is this.

David Risher: Yeah, right so frustrated.

David Risher: It keeps me up anyway, but what are you gonna do so but his I can tell you. So if you look at for example, our on time pickup promise. This is another innovation that I just think we're super proud of.

David Risher: So, but here's what I can tell you. So, if you look at, for example, our on-time pickup promise, this is another innovation we're super proud of. So when we launched it last year, you remember the promise. The promise is that if we're more than 10 minutes late to pick you up for an airport ride, we will pay you up to a hundred bucks. No question.

David Risher: When we launched it last year you remember the promise the promises if were more than 10 minutes late to pick you up for an airport ride we will pay you up to 100 Bucks No question that that we've done two things. Since then that are both a pretty amazing. The first as it is now available in just about every major airport in the country. When we launched it we were in the sub sea.

David Risher: Now, we've done two things since then that are both pretty amazing. The first is it is now available in just about every major airport in the country. When we launched it, we were in a subset. Now we're in just about every major airport. Second of all, we look very closely at that remediation rate, right? What percentage of rides end up not going well? When we last talked about it, that number was about 2%. Now it is under 1.5%.

David Risher: Now we're in just about every major airports.

David Risher: Second of all we look very closely at that remediation rate right what percentage of <unk> end up not going well when we last talked about it that number was about 2% now.

David Risher: And now is sub one 5% and that shows you how operational excellence can drive so much value and by the way when we do end up paying this one 5% of the time when we do end up paying those riders end up taking another lift in the next couple of weeks more frequently than people that that hasn't happened. So it's just a I think a good example of her.

David Risher: And that shows you how operational excellence can drive so much value. And by the way, when we do end up paying, there's 1.5% of the time when we do end up paying, those riders end up taking another lift in the next couple of weeks more frequently than people that that hasn't happened to. So it's just, I think, a good example of how the innovation we're doing really does pay back for riders and drivers, in this case, giving drivers more business, and riders more reliability.

David Risher: Now the innovation, we're doing really does payback for riders and drivers in this in this case of getting drivers more business and riders more reliability. So you can expect to see more of those we mentioned in the earlier remarks, some as we go into the summer some others and interesting things with airports.

David Risher: So you can expect to see more of those. We mentioned in the early remarks some, you know, as we go into the summer, some other interesting things with airports. Yeah, this is where I just have to stop talking, otherwise I'll get myself in trouble.

Speaker Change: Yes. This is where I just have to stop talking otherwise I'll get myself in trouble, but that gives you a little flavor.

David Risher: But that, I hope, gives you a little flavor of what we're working on. That's great. Thank you very much, David. Thank you. Your next question comes from John Blackledge with TD Cowan. Please go ahead. Oh, great. Thank you. Two questions. First, specifically...

John Ryan Blackledge: That's great. Thank you very much David Thank you.

David Risher: Your next question comes from John Blackledge with TD Cowen. Please go ahead.

Operator: Your next question comes from John Blackledge with TD Cowan. Please go ahead.

John Ryan Blackledge: Great. Thank you.

John Ryan Blackledge: Two questions first you specifically mentioned, Canada strong growth just curious any other geos you would call out that drove the better than expected results and then the second question just coming back on a free cash flow conversion just any further color on what drove that uptick.

John Ryan Blackledge: 70% from initially 50% thank you.

John Ryan Blackledge: Yeah, let's talk to you about this one on the first really nothing to report, we're still saying the west coast is still kind of growing.

Operator: Yeah, let's tag team on this one. On the first, really nothing to report. We're still seeing, you know, the West Coast is still kind of, you know, growing nicely, just because, in a sense, it was held back a little more than some of the rest of the country. But no, we're really actually seeing, you know, nice growth kind of across the board, nothing, nothing significant.

Operator: So you're just because in a sense. It was held back a little more than some of the rest of the country.

Operator: But no we're really actually seeing nice growth kind of across the board nothing nothing significant there.

Speaker Change: I'll talk.

Erin Brewer: I'll talk about free cash flow and sort of what drove the update to our outlook. Fundamentally, as we went through Q1, and here at the start of Q2, we began to get better visibility into the expected payments that we'll make related to our legacy book of insurance, and that came in a little bit better than we had initially anticipated in our original plan when we talked about full year free cash flow conversion. So that's what's really behind the change and our improved outlook for the year. A little bit better visibility into Q1 and Q2.

Operator: Talk about free cash flow and sort of what drove the update to our outlook.

Erin Brewer: So fundamentally as we went through Q1 and here at the start of Q2, we began to get better visibility into the expected payments that will make related to our legacy book of insurance.

Erin Brewer: That coming in a little bit better than we had initially anticipated in our original plan when we talked about full year free cash flow conversion.

Erin Brewer: So that's what's really behind the change in our improved outlook for the year, a little bit better visibility into Q1 and Q2.

Operator: Okay. Thank you very much.

Speaker Change: Okay. Thank you very much.

Speaker Change: You bet.

Operator: Your next question comes from Ken <unk> with Wells Fargo. Please go ahead.

Operator: Your next question comes from Ken Gawrelski with Wells Fargo. Please go ahead.

David Risher: Thank you so much. I want to touch on pricing and industry pricing. First, could you reiterate your strategy with respect to overall pricing and how you view that? And David, maybe you could just talk about any changes there may have been in the pricing environment, you know, in 1Q into 2Q. There's been some speculation that one of your competitors may have raised prices in conjunction with the annual insurance renewal at the end of 1Q. And then maybe, on that same point, more broadly, could you talk about the elasticity that you see? And maybe you could see this in your various modalities. Investors often debate the elasticity of this industry.

Kenneth James Gawrelski: Thank you so much.

David Risher: I wanted to touch on on pricing and industry pricing for clearer reiterate your strategy with respect to overall pricing and how you view that.

David Risher: And David maybe could you just talk about.

David Risher: Any changes there may have been in the pricing environment in <unk> into <unk>, there's been some speculation that one of your that your competitor may have raised prices in conjunction with with the annual insurance renewal at the end of <unk> and then maybe on that same point more broadly.

David Risher: Could you talk about the elasticity that you see as maybe you could see this in your various modalities.

David Risher: Investors often debate.

David Risher: <unk>.

David Risher: In this industry and we would love to hear you.

Erin Brewer: And we would love to hear any highlights or key anecdotes that you could provide. Thank you so much.

Erin Brewer: Highlights are our key anecdotes that you could provide thank you so much.

David Risher: Thanks, Ken.

David Risher: Thanks, Ken. You know, I'll start off here and sort of talk about pricing and what we're seeing. You know, you started your question just by wanting us to reiterate our philosophy or approaches around pricing, and that's really that our goal is to operate in a healthy and competitive way. That's how we think about it, bottom line.

David Risher: I'll start off here and sort of talk about pricing and what what we're seeing.

David Risher: So you asked you started your question just by wanting us to reiterate what our philosophy or approaches.

David Risher: Around pricing and that's really that our goal is to operate in a healthy and competitive way. That's how we think about it bottomline.

Erin Brewer: In Q1, we did see some higher pricing in the back half of the quarter. However, I think what's important to understand is that it was partially offset by lower prime time. David talked about it in his prepared remarks quite a bit, really driven by the health that we're seeing in the marketplace. So when you net the two of those together in Q1, the impact of pricing was really quite modest. You know, it's important to remember that the price a rider experiences is the combination of many factors, right?

Speaker Change: In Q1, we did see some higher pricing in the back half of the quarter. However, you know I think whats important to understand is that was partially offset by lower primetime David talked about it in his prepared remarks quite a bit really driven by the health that we're seeing in the <unk>.

Erin Brewer: Market place. So when you net the two of those together in Q1 the impact of pricing was was really quite modest.

Erin Brewer: It's mode, it's mix, it's distance. It can also include prime time, depending on the supply conditions and a certain geography or at a certain time. And I think it's important to remember that prime time coming down is a good thing.

Erin Brewer: It is important to remember that the price of writer experiences is the combination of many factors right.

Erin Brewer: Mode. It's mix it's distance. It can also include prime time, depending on the supply conditions in a certain geography or at a certain time.

Erin Brewer: And I think it's important to remember that primetime coming down is a good thing. It means that you know there is more stable more predictable price to the rider and that translates into more rides.

Erin Brewer: It means that, you know, there's a more stable, more predictable price for the rider. And that translates into more rides. Um, you know, so on a full-year basis, again, we talked about gross bookings growing slightly faster than rides. Nothing has changed there. Nothing has changed in terms of the way we contemplate what informs that assumption. It's a number of variables, including ride type, ride mix, the growing mix of non-ride share businesses, and then competitive pricing, which is, you know, the foundation of our philosophy. And David, do you want to try the second part? Oh, just a little bit. I mean, that's...

David Risher: So on a full year basis again, you know we talked about gross bookings growing slightly faster than rides nothing has changed there nothing has changed in terms of the way we contemplate what what informs that assumption, it's a number of variables, including ride type ride mix.

David Risher: Growing mix of non rideshare businesses, and then competitive pricing, which as you know the foundation of our philosophy.

Erin Brewer: And David do you want to.

David Risher: In part just a little bit I mean.

David Risher: I'll add just a little bit. I mean, that is for sure 90% of it right there. You know, one strategy we have is that anytime a rider opens the app, they can find a ride that works for them, right? And so it could be a standard ride. Of course, that's the majority of the business.

David Risher: It's for sure 90% of it right there.

David Risher: One I.

David Risher: I would say strategy, we have is that anytime a rider opens the app.

David Risher: They can find a ride that works for them right and so it could be a standard right now of course, that's the majority of the business it could be a wait and say, Brian which I think is just a.

David Risher: It could be a wait and save ride, which I think is just a great idea because it allows people who want to price shop to sort of price shop right within our app and to save a little bit of money by, you know, giving up a little bit of time. And that actually works really well for a lot of people. It's, you know, a lot of people; some people are busy all the time; some people have got a little bit more flexibility, and they, and they trade that for a little extra money. So that's great.

David Risher: I love it because it allows people who want to price shop to sort of pre shop, right within our app and to save a little bit of money by.

David Risher: Giving up a little bit of time and that actually works really well for a lot of people a lot of people. Some people are busy all the time some people who've got a little bit more flexibility.

David Risher: They trade that for them for a little extra money. So that's great.

David Risher: And then we have various other modes that are sort of higher value extra comfort, which is actually relatively new mode and then we have.

David Risher: And then we have, you know, various other modes that are sort of higher values for extra comfort, which is actually a relatively new mode. And then we have what we call the high value modes, the kind of the black side. Interesting, this is a little bit of a side point, but you might find it interesting.

David Risher: What we call the high value most of that kind of the black side of things.

David Risher: Interesting this is a little bit of a five point, but you might find it interesting it's actually our high value modes, they've grown slightly faster than the rest of this quarter, which I think is just sort of interesting commentary on I don't know what how people want to spend there.

David Risher: It's actually our high-value modes have grown slightly faster than the rest this quarter, which I think is just sort of interesting commentary on how people want to spend their money. But the real point here is our price, sort of strategy, you know, has is just like any, any, any retailer, let's say with multiple or maybe a manufacturer with sort of multiple product lines. We want to have something that, you know, kind of works for everybody.

David Risher: Their money, but the real point here is our price.

David Risher: Sort of strategy.

David Risher: And so we worked out the whole mix. And then at the end, where Aaron ended, you know, in some cases, our job is to try to bring prices down, right, most notably around prime Prime time. Anytime we have prime Time, it's a defect, right? It's a defect, it means that we didn't have exactly the right number of drivers where we needed them exactly at the right time.

David Risher: Just like any any any retailer, let's say with multiple or maybe a manufacturer with multiple product lines. We want to have something that works for everybody and so we work the whole mix and then the end where we're Aaron ended.

David Risher: In some cases, our job is to try to bring prices down like most notably around prime primetime anytime anytime we have primetime it's a defect. It's a defect that means that we didn't have exactly right number of drivers, where we needed them exactly right time some of them are unavoidable right, it's very hard to predict.

David Risher: Some of them are unavoidable, right? It's very hard to predict, you know; a flash storm, for example; that's quite hard. But there are other things that are not so hard to predict. And so as we improve our forecasting internally, which is actually an enormous effort, we don't talk too much about it externally, but an enormous effort, we do it so that we can actually bring prices down in a funny way. Because what we want, of course, is riders and drivers to match at the highest volume they can, and that clearing price tends to be, you know, sort of our standard, our standard price at every moment.

David Risher: A flash storm for example, that's quite right, but there are other things that are that are not so hard to predict and so as we improve our forecasting internally, which is actually an enormous effort you don't talk too much about it externally, but enormous effort. We do it so that we can actually bring prices down in a funny way because what we want of course is riders and drivers to match at the highest volume they can and that clearing price turns.

David Risher: To be sort of our standard our standard price at every mode.

Operator: Very comprehensive, thank you.

Speaker Change: Very comprehensive thank you.

Operator: Yeah.

Operator: Your next question comes from Michael Morton with Moffitt Nathanson. Please go ahead.

Operator: Your next question comes from Michael Martin with Moffett Nathan said. Please go ahead.

Erin Brewer: Hi, thank you for the question. Could you talk a little bit about the opportunities around take rate and then maybe do a deeper dive into the drivers behind it? You've spoken in the past about the health and efficiency of the marketplace being one driver, but I would love if you could potentially quantify or maybe impact the contribution of the advertising business currently or going forward. And then I could sneak in one just like an accounting one.

Michael Paul Morton: Hi, Thank you for the question.

Erin Brewer: Could you talk a little bit about the opportunities around take rate and then maybe a deeper dive into the drivers behind that you've spoken in the past about the health and efficiency of the marketplace being one driver, but would love if you could potentially quantify or maybe impact the contribution of the advertising business. Currently are going forward and then if I.

Erin Brewer: Could sneak in one just quick accounting one four for G&A. It was just a tad higher than expected and would love to hear if there was any onetime in nature related maybe legal contingencies or insurance accruals or is this a reasonable run rate for the year. Thank you so much.

Erin Brewer: For G&A, it was just a tad higher than expected, and I would love to hear if there was any one-time nature related, maybe legal contingencies or insurance accruals, or is this a reasonable run rate for the year? Thank you so much.

Erin Brewer: Hi, Michael This is Erin I'll I'll talk a little bit about revenue margin and then your question on G&A and I'll have I'll.

Erin Brewer: Hi Michael. This is Erin.

Erin Brewer: I'll talk a little bit about revenue margin and then your question about GNA. And I'll ask David to join me and talk a little bit about the media business. So as it relates to revenue margin, you know, again, this is really the healthy outcome of operating competitively with a focus on customer experience. So on the call, we talked about how we're working to increase drivers' preference for Lyft and then help them maximize their earnings by helping them identify, you know, when and where rider demand is going to be.

Erin Brewer: Ask David to join me and talk a little bit about the media business. So.

Erin Brewer: As it relates to revenue margin again. This is really the the healthy outcome of operating competitively with a focus on customer experience. So on the call. We talked about how we're working to increase drivers preference for Lyft, and then help them maximize their earnings by helping them identify you know.

Erin Brewer: When and where rider demand is going to be and this is why drivers are earning more.

Erin Brewer: And this is why drivers are earning more, and that is really driving why we're able to be more efficient with riders with sorry contra revenue incentives per ride even as drivers earn more. You know, to give you a little flavor of how we see this playing out in Q2, we think that revenue margin will be reasonably similar. As I talked a little bit about in my prepared remarks, we are entering the quarter continuing to see healthy marketplace trends.

Erin Brewer: And and that is really driving why we're able to be more efficient with Ryder with sorry, Contra revenue incentives per ride even as drivers earn more.

Erin Brewer: To give you a little flavor of how we see this playing out in Q2, we think that revenue margin will be reasonably similar as I talked a little bit about in my prepared remarks, we are entering the quarter continuing to see healthy marketplace trends and then of course in the second quarter in <unk>.

Erin Brewer: And then, of course, in the second quarter and into the third, we see an increase in bike and scooter usage, building in Q2 and then really peaking in Q3. And that brings along with it a higher revenue margin. So hopefully, that reemphasizes a little bit of our prepared remarks and gives you some color for what we see here in Q2. As it relates to the G&A line, there's a good portion of that G&A line that's fixed.

Erin Brewer: The third we see an increase in bike and scooter usage.

Erin Brewer: Building in Q2 in Q2, and then really peaking in Q3 and that brings along with it a higher revenue margin.

Erin Brewer: That you know reemphasize is a little bit of our prepared remarks and gives you gives you some color for what we see here in Q2.

Erin Brewer: As it relates to the G&A line, there's a good portion of that G&A line. That's fixed there is a portion are where there are some corporate expenses are and can be some accruals. For example that can occasionally results in some lumpy behavior and that's really what you're seeing between Q4 and Q.

Erin Brewer: There is a portion where there are some corporate expenses and can be some accruals, for example, that can occasionally result in some lumpy behavior. And that's really what you're seeing between Q4 and Q1. The change in the tax accrual, in particular, is fundamentally what's driving that. And then we'll turn it over to David to address the third part of your question around media.

David Risher: One the change in the tax accrual in particular is fundamentally what's driving that and then.

Erin Brewer: I'll turn it over to David to address year. The third part of your question around media.

David Risher: Yeah, and I'll take it, um, it was Michael, right? Yeah. So I'll, yeah, let's really talk about two things kind of as they intersect. One is media, and then, and then we'll go back to drivers, because I think that's a great place to just sort of settle on. So on the media side, it's, it's, so it's such an interesting business. And the reason is because, you know, there are only so many meta ads and, you know, and Google AdWords and so forth that you can buy before you've sort of saturated that channel.

David Risher: Yeah and I'll take.

David Risher: As Michael right, Yes, so yeah.

David Risher: Yes.

David Risher: About two things kind of as they as they intersect one is media and then and then we'll go back to the drivers because I think that's a great place to just to sort of settle out so on the media side, it's such an interesting business and the reason is because.

David Risher: And so brands who are increasing and, you know, and tick-tock appearance and so on. So your brands are so interested in trying to figure out new ways to connect with their consumers, their own customers, in different ways, right? Because, you know, again, the same old, same old, everyone starts to get a little tired of that.

David Risher: There are only so many meta ads and Google Adwords and so forth that you can buy before you sort of saturated that channel and so brands, who increasing in <unk> and <unk>.

David Risher: Tick tock appearances and so on so.

David Risher: <unk> are so interested in trying to figure out new ways to connect with their with their consumers their own customers.

David Risher: And in different ways right, because again same old same old everyone starts to get a little tired of that.

David Risher: So what's so interesting to us is looking at the ways that the brands who have come to us are seeing results over fairly short periods of time, such that they're already returning, even though, you know, this business is still relatively new. And I'll give you just a little bit of color, and then we'll tie back to the driver in a second. But a little bit of color. So we serve, you know, there are multiple ways you could be served up an ad in a Lyft experience. It might be on a tablet that's in the car, but most likely it's on the app.

David Risher: So what was so interesting to us is looking at the ways that the brands who have come to us are being results over a fairly short periods of time such that they are already returning even though you know this business is still relatively new and I'll give you just a little bit of color and then we'll tie back the driver in a second but a little bit of color. So we served.

David Risher: There are multiple ways you can be served up in AD and a lift experience it might be on the tablets in the car.

David Risher: Most likely it's on the App.

David Risher: And typically, you know, a 15 minute ride, people actually check their app about nine times, right? Sort of the, you know, I guess it's the adult equivalent of, "Are we there yet?" kind of thing. So anyway, you're looking, and then the question is, well, what are you doing?

David Risher: Typically you're you know what.

David Risher: A 15 minute ride people actually check their app about nine times right sort of that I.

David Risher: I guess, it's the adult equivalent are we there yet kind of thing so anyway Youre looking and then the question is well what are you doing and the answer increasingly as well if we can serve you in interesting relevant AD and it has to be both of those things then you'll actually tend to watch it which is why our and then often you'll you'll act as a result of our click through rate I think I'm getting this right is about 10.

David Risher: And the answer increasingly is, well, if we can serve you an interesting, relevant ad, and it has to be both of those things, then you'll actually tend to watch it, which is why, and then often you'll act as a result. So our click-through rate, I think I'm getting this right, is about 10 times the average. We just introduced video ads, too, and those are particularly interesting to people because short form video, when well done, turns out to be incredibly engaging.

David Risher: Times the average we just introduced.

David Risher: Video adds to and those are particularly interesting to people short form video and well done turns out to be incredibly engaging so oh, that's a long way of saying I think theres a lot of up and then of course, we have first party data right. We know where you're going is a writer and so you may have seen some of the tests we're doing now.

David Risher: So, oh, that's a long way of saying, I think there are a lot of opportunities. And then, of course, we have first-party data, right? We know where you're going as a writer. And so, you know, you may have seen some of the tests we're doing now. And that's simply one of many ways an owl flips drivers and stops. You know, we're so focused

David Risher: The number of tests, we're doing in the background that kind of know either where you're going or where the type of place you might want to go and maybe it will give you a a coupon to go there so as long as I'm, saying I think theres a lot of opportunity here I think it's quite accretive.

David Risher: Good customer experience.

David Risher: Good partner experience for sure they're getting the value and then to drive a point, we pay our drivers when advertising happens, particularly when it's on a tablet, but more generally it allows us to have more margin to sort of play back to drivers and so.

David Risher: And that's simply one of many ways and I'll flip to drivers and stop.

David Risher: And I think this really is sort of a manifestation of our customer-obsessed strategy of saying, how can drivers earn more? How can drivers earn more, right? There, there is a ceiling, right? The ceiling is called the fare that a rider pays, right? Well, I guess, plus media if you want to go crazy, but we have to take a little bit of money to operate the platform, you know; we got to pay insurance and so forth.

David Risher: We're so focused now and I think this really is sort of a manifestation of our customer obsessed strategy of saying how can drivers earn more how can drivers earn more right. There. There is a ceiling right. The ceiling is called the fair that rider pays right well I guess plus media if you're if you want to go crazy, but but we have to take a little bit of money to operate the platts.

David Risher: We got to pay insurance and so forth. So then the question is how can drivers are more on the answers. They can get more rides. This rise can be more profitable for them because maybe.

David Risher: So then the question is, well, how can drivers earn more? And the answer is, they can get more rides; those rides can be more profitable for them because, maybe, they are. The better experience they have, the more they'll come back.

David Risher: Media or other sorts of things that can be positioned closer to riders as opposed to long pickups, because they pay tends to favor them a little bit that way, we can negotiate on their behalf for better gas prices. We actually do this we've got a program that gives you a 25 up to 30, I think off a gallon gas for certain things. So they're all sort of things we can do that increased drivers.

David Risher: Gross and net earnings and we are really taking that sort of whole of company approach to make sure that we can do that because we know the more drivers we have in the happier. They are the bread preference. They have memorial come back. So I know, we covered a whole lot there, but I hope that gives you some insight.

Speaker Change: Thank you so much.

David Risher: Sure.

David Risher: Your next question comes from Doug Anmuth with Jpmorgan. Please go ahead.

Operator: Your next question comes from Doug Anmuth with J.P. Morgan. Please go ahead.

David Risher: So I know we covered a whole lot there, but I hope that gives you some insight. Thank you so much. Sure. Your next question comes from Doug Anmuth with J.P. Morgan. Please go ahead. Thanks for taking the questions. Just given the strong supply in the marketplace, can you just talk about how you think about

Doug Anmuth: Thanks for taking the questions just given the strong supply in the marketplace can you just talk about how you think about the efforts to drive the $40 million annual users higher versus increasing frequency among the quarterly active rider base, that's roughly half of that number and then separately, you've often highlighted partnerships and I know that.

Doug Anmuth: A key priority for 24, we've seen some industry activity on that front, just curious how youre thinking about opportunities in adjacent categories. Thanks.

Speaker Change: Yeah, maybe I'll take that one and then Eric and I can tag team on that if we are if we want to so.

Operator: Yeah, maybe I'll take that one. And then Erin and I can tag team on that if we want to.

Doug Anmuth: I remember the partner so Oh, yeah, yeah. So we so a couple of data points. So on active riders. So you're absolutely right, Doug a course to sort of distinguish between a new rider and existing rider and kind of what that what that looks like and just to emphasize one a quick point.

Speaker Change: Briefly our active riders.

Doug Anmuth: Total active riders were up about 12% year on year, which is the strongest growth rate we've had in six quarters.

Operator: <unk>.

David Risher: So, okay, I remember the partners that Oh, yeah. So we got a couple of data points. So on active riders, so you're absolutely right, Doug, of course, to sort of distinguish between a new rider and an existing rider and kind of what that looks like. And just to emphasize one quick point, we've mentioned briefly, our total active riders were up about 12% year on year, which is the strongest growth rate we've had in six quarters. So That's great news, right? Because that shows that we're an attractive proposition to people, you know, day in and day out. That's awesome!

Doug Anmuth: So that's great news right because that shows that we're an attractive proposition to people day in India. That's awesome now, where we have actually seen more so in both matter right, so new and existing they both matter.

David Risher: You can't you don't get to choose just one or two.

David Risher: Now, where we have actually seen more, and both matter, right? So, new and existing, they both matter. You can't; you don't get to choose just one or two.

David Risher: Our focus strategically over the last year has actually been more on driving frequency and the reason that is true is because.

David Risher: Our focus strategically over the last year has actually been more on driving frequency. And the reason that is true is because, you know, this is something Scott Cook at Intuit said years ago. He said, first you have to, first you have to work on the right things, and then you have to do them right.

David Risher: This is something actually Scott Cook at Intuit said years ago. He said first you have to <unk>.

David Risher: First you have to work on to do the right things and then you have to do it right. So doing the right thing meant getting driver pay rate getting pricing right getting EPA is down to a great a great point and so forth.

David Risher: So, doing the right thing meant getting driver pay, right? Getting pricing, right. Getting ETAs down to a great point and so forth. Because if you don't get that right, then you're going to bring a bunch of new people onto the platform, and they're just going to churn out. So we've done exactly the right thing. We've really focused on operational excellence to get to the point where we are providing a very, very good experience. I'd say objectively that it is significantly better if you look at ETA times and so forth than a year ago.

David Risher: Because if you don't get that right, then youre going to bring a bunch of new people on the platform and they are just going to turn out. So we've done exactly the right thing we've really focused on that operational excellence to get to the point, where we are providing a very very good experience I would say objectively significantly better if you look at EPA times, and so forth and then a year ago.

David Risher: So, and we've seen the results, our frequency is actually increasing quite significantly, which is wonderful. It's a really good, early indicator that when your heaviest users are using you even more, that you're doing something right. And they're the ones that have the most exposure to what you're doing. And so then, over time, you know, the focus can kind of broaden to how can we start to attract new people to the platform. And there are many ways to do that. Some of them are very familiar to all of us, such as the referral bonus and so on and so forth.

David Risher: So and we've seen the results of our frequency is actually increasing quite significantly which is wonderful. It's a really good indicator early indicator. When your heaviest users are using your even more that you're doing something right and they are the ones that have the most exposure to what youre doing and so then over time the focus can kind of broadened to how can we start to attract new people to the platform.

David Risher: And there are many ways to do that some of them are very familiar to all of us referral bonus and so on so forth others or maybe even more innovative.

David Risher: Others are maybe a little more innovative. And those are some things we're sort of cooking up in the back. But that leads me very naturally, I think, to your second point about partnerships. I think, you know, here's another. I'm full of chestnuts today.

David Risher: And those are some things, where we're sort of cooking up in the background, but that leaves me very natural I think to your second <unk>.

David Risher: Around partnerships I think here.

David Risher: Here's another cause film Chesnut is today, so I used to spend a lot of time in Africa and Africa, a lot of the countries that had this little thing that says if you want to go fast to go alone, but if you want to go far you go together.

David Risher: So I used to spend a lot of time in Africa. In Africa, a lot of the countries there have this little saying that says, if you want to go fast, you go alone. But if you want to go far, you go together. And so in order for us to go far in our customers' lives, riders' lives in particular, I would say, you know, partnerships really matter, right? Because people have complicated lives.

David Risher: And so in order for us to go far in our customers' lives riders lives in particular I would say.

David Risher: Partnerships really matter right because people have complicated lives they take airplanes. They do all sorts of other things and so.

David Risher: They take airplanes, they do all sorts of other things. And so we will continue to invest in our partnership strategy. It's been one that we've been working on for years, and you'll see a lot more. I don't have anything particular to announce there, but I will certainly say, again, just sort of, almost schematically, partnering with someone who is a values-aligned and kind of customer-obsessed partner can be really helpful because it can mean that we can get new riders that way. Thank you, David.

David Risher: So we will continue to invest in our partnership strategy. It's been one that we've been working on for years and you'll see a lot more I don't have anything particular to announce there, but I will certainly say again, just sort of almost schematically.

David Risher: Partnering with someone who is a values aligned and kind of customer obsessed aligned partner can be really helpful. Because it could mean that we can get new writers that way.

Speaker Change: Thank you David.

David Risher: Yeah.

Operator: Your next question comes from Benjamin Black with Deutsche Bank. Please go ahead.

David Risher: Your next question comes from Benjamin Black with Deutsche Bank. Please go ahead.

Operator: Great. Thank you for taking my question. You know, obviously, there have been quite a few moving pieces related to sort of the regulatory backdrop. You know, you have the ballot proposal in Massachusetts, the Minneapolis issue, and then, obviously, the looming Supreme Court decision on Prop 22 in California. So, I guess the question is, you know, how do you feel positioned for these upcoming challenges, and sort of what's your strategy if, you know, potential reclassification is required? And then just one on mix and mode.

Benjamin Thomas Black: Great. Thank you for taking my.

Operator: Question.

Operator: Obviously, there's been quite a few moving pieces as it relates to sort of the regulatory backdrop. The ballot proposal in Massachusetts, Minneapolis issue and then obviously the looming Supreme Court decision on top 22 in California. So I guess the question is how do you feel positioned for these upcoming upcoming challenges and sort of what's your strategy.

Operator: You know potential reclassification is required and then and then just one on mix them mode. I think you mentioned this is one of the potential.

David Risher: I think you've mentioned this as one of the potential drivers of improvements to your gross margin profile over time. Just can you give us a little bit of the progress there? Can you give us some examples of some of the strategies that are showing sort of notable progress? Thank you.

David Risher: Potential drivers of improvements to your gross margin profile over time, and just dig into a little bit of progress. There can you give us. Some examples of some of the strategies that are showing sort of notable progress. Thank you.

Speaker Change: Yeah, why don't Christopher Christensen, our president and I'll start with the first and then will tackle the second separately.

Kristen Sparecheck: Sure. Hey there, this is Kristen.

Kristen Sparecheck: Yeah, why don't Kristen, our president. We'll start with the first, and then we'll tackle the second separately. Sure, hey there, this is Chris.

David Risher: Hey, there this is kristen.

Chris: Happy to answer your question in and I'll take each of those in turn, Massachusetts, Minnesota, and California, because we really have a particular strategy designed specifically for each market.

Kristen Sparecheck: I'm happy to answer your question, and I'll take each of those in turn, Massachusetts, Minnesota, and then California, because we really have a particular strategy designed specifically for each market. You know, in Massachusetts, we'll have a trial starting with the Massachusetts Attorney General in another week. But in parallel, we have two potential paths that we're driving, a legislative proposal and a ballot initiative as well. And so we really think that we have multiple options to continue operating in that market because we both have the legislative path and we have the ballot initiative.

Chris: In Massachusetts, we don't have a trial, starting with the Massachusetts Attorney General and another week, but in parallel we have two potential paths that we're driving a legislative proposal and the ballot initiative as well.

Kristen Sparecheck: So we really think that we have multiple options to continue operating in that market because we both have the legislative path and we have the ballot initiative and so in that market, we really want to focus on.

Kristen Sparecheck: And so in that market, we really want to focus on drivers' voices being heard and supporting drivers who tell us that they prefer independence and flexibility to traditional employment. In Minnesota, we're working closely with city officials and state officials to find a solution. We're optimistic that we'll be able to do this. If we can't do this, we will be forced to stop offering ride share services on July 1st, but that would only be because we wouldn't be able to deliver the customer experience that drivers and riders want and expect with respect to the current rates proposed. However, we will still keep looking to work toward a new rate structure.

Kristen Sparecheck: Drivers voices being heard and supporting drivers voices, who tell us that they prefer independents and flexibility to traditional employment.

Kristen Sparecheck: In Minnesota, we're working closely with city officials and state officials to find a solution. We're optimistic that we'll be able to do this if we can't do this we will be forced to stop offering rideshare services on July 1st but that would only be because we wouldn't be able to deliver the customer experience that drivers and riders.

Kristen Sparecheck: And expect with respect to the current rates proposed however, we will still keep looking to work toward a new rate structure.

Kristen Sparecheck: And then in California, just a reminder to those of you in California, the California Supreme Court is hearing oral argument in a couple of weeks on the very narrow issue of whether Proposition 22 is consistent with the California Constitution. So that initiative itself is not about reclassification. It's just about whether the ballot that was passed overwhelmingly a few years ago is constitutional. And so, in that case, we don't have any immediate change to drivers' independent contractor status, and we will just continue to listen to customer voices. We know that drivers value Prop 22 deeply, and we also heard from the California people in 2020 that they value driver independence with respect to passing Prop 22 by a wide majority. Thanks, Kristen.

Kristen Sparecheck: And then in California, just a reminder, there in California, the California Supreme Court is hearing oral arguments in a couple of weeks on the very narrow issue of whether proposition 22 is consistent with the California Constitution.

Kristen Sparecheck: So that initiative itself is not about reclassification, it's just about whether the ballot that was passed a few years ago overwhelmingly is constitutional.

Kristen Sparecheck: And so in that case, we don't have any immediate change to drivers independent contractor status and we will just continue again to listen to customer voices, we know that drivers value prop 20, too deeply and we also heard from the California people and in 2020 that they value driver independence with respect to passing prop 22 by.

Kristen Sparecheck: A wide majority.

Kristin Sverchek: Thanks Christopher.

Erin Brewer: And then on your second question, Benjamin, about Modemix, I guess what I would say, because I think you may be looking for specific, um, examples. I think one of the ones that...

Kristen Sparecheck: And then on your second question Benjamin about our mode mix.

Erin Brewer: I guess, what I would say because I think there were maybe looking for specific examples.

Erin Brewer: Examples.

Erin Brewer: One of the ones that.

David Risher: I'll mention two very briefly, a wait and save I've mentioned before; nothing really new to add there. But it's a significant and important part of our business. And I, as I said before, I like it because I think it gives people a way to save a little bit of money, which, you know, who doesn't like that? On sort of the exact flip side, we have actually a new mode that we launched a couple of months ago and are still kind of fine-tuning called Extra Comfort.

Erin Brewer: I mentioned, two very briefly a wait and see if I've mentioned before nothing really new to add there, but it's a it's a significant and important part of our business and as I said before I like it because I think it gives people.

David Risher: A way to to save.

David Risher: They have a little bit of money, which you know who doesn't like that.

David Risher: On sort of the exact flip side, we have actually a new mode.

David Risher: We launched a couple of months ago, and there's still kind of fine tuning called extra comfort.

David Risher: I think what's so interesting about extra comfort, so it's a nicer, you know, slightly newer car, slightly nicer car, www.pbs.org luggage and so forth. So I think it's an area again when I talk sometimes about, let's say, innovation being a little bit stale in this category, I'm not saying this is the most innovative thing that we're working on. But I think it gives you a sense that there are new customer use cases that we can develop for the new modes, and I think extra comfort is a good example. So I recommend anyone on this call download LYFT immediately and add extra comfort for your next ride.

David Risher: It was interesting that extra comfort so it's a nicer slightly newer cars slightly nicer to car.

David Risher: With a more experienced driver.

David Risher: Thank you can you sort of by analogy you can think of it as a kind of a comfort plus.

David Risher: Kind of upgrade on an airplane and between the business class in the economy.

David Risher: And if you've looked at what airlines have done is actually quite successful for them and it's because customers like it right. They like they like the extra leg room in that case and.

David Risher: Prior to boarding in these sorts of things and so we're thinking along the same lines. How can we create something that has that kind of value.

David Risher: For our riders every day and we've seen nice kind of early adoption of it it's still a relatively small mode in the Grand scheme of things, but I think it's one we can build out as a sort of affordable everyday luxury I'll tell you interestingly enough one of the highest use cases is actually go into the airport because it's a time, where you've already got a lot of stress in your life.

David Risher: And so you sort of want that kind of quiet or big arrived a little bit more space for luggage and so forth. So I think it is an area again, when I talk sometimes about let's say innovation being a little bit sale in this category I'm not saying this is the most innovative things that we're working on but I think it gives you a sense that there is their new customer use cases that we can develop for our new.

David Risher: Modes and extra comfort is a good example, so I recommend anyone on this call download lift immediately and extra comfort for your next trial.

David Risher: Okay.

Speaker Change: Thank you for that.

David Risher: Sure.

David Risher: Your next question comes from Stephen Ju with UBS. Please go ahead.

Operator: Your next question comes from Stephen Ju with UBS. Please go ahead.

Operator: Okay, thank you so much. So, David, and Erin, I wanted to tie your comments about use cases to your prior comments about frequency. So, you know, just doing a simple math of, I guess, rides divided by active users, it seems like folks took about eight and a half rides during the quarter. I think prior to the pandemic, it was probably nine and a half or so ballpark. So, you know, can we talk about the use cases like shared rides that are probably no longer in the picture and how much that has impacted frequency?

Stephen D. Ju: Okay. Thank you so much so David Erin.

Operator: I wanted to tie your comments about use cases are to your prior comments about frequency. So just.

Operator: Just doing the simple math of I guess rides divided by active users. It seems like folks took about eight and a half rides during the quarter.

Operator: I think prior to the pandemic it was probably not in a half or so ballpark so can.

Operator: Can we talk about the use cases like shared rides that are probably no longer in the picture and how much that impacted frequency.

Operator: There might be some lingering regional considerations we may have to think about, but I guess more importantly, looking forward, how some of the existing use cases can perhaps now grow faster or what new use cases you may be looking at.

Operator: There might be some lingering regional considerations. When you may have to think about but I guess more importantly, looking forward how some of the existing use cases can perhaps now grow faster or what new use cases, you may be looking to add.

David Risher: So, I'm looking for reasons why I should believe the frequency that we're seeing, you know, prior to the pandemic, should that be a ceiling, or should we be thinking that it should be much higher than that? Thank you. Oh, yeah, no; it's no ceiling.

Operator: So im looking for reasons to why you should believe the frequency that we're seeing you know prior to the pandemic should that be a ceiling or should we be thinking that it should be much higher than that thank you.

David Risher: Oh, yeah, no, it's no ceiling. It's it and because it's No, no, the whole thing about our, you know, I keep saying our strategy is working. And what I really mean by that is, you know, the more we understand what it is that our riders and drivers want, the better we can, you know, every single day, get them that even ahead of their own, you know, recognizing it. So let's take the data you were just using. So right now, you're right.

Speaker Change: Oh, Yeah, no it's no ceiling [laughter].

Speaker Change: Yeah. It's.

David Risher: No no the whole the thing about our.

David Risher: I keep saying our strategy is working and what I really mean by that is you know.

David Risher: The more we understand what it is that our riders and drivers of the better. We can every single day, you don't get them that even ahead of their own.

David Risher: Recognizing it so let's take the data you were just using so right now you're right actually.

David Risher: Actually, a person who uses rideshare 10 times a month is actually quite a heavy user already, right? So let's just start from the fact that a lot of people, because with any distribution, you know, obviously, you've got tails on both sides. A lot of people who may be using it once a month, you know, maybe they only use it to go to the airport. So gosh, there are a whole lot of other parts of their lives that we can reach without really much creativity at all, simply by, you know, reminding them of our existence, we can grow into, and that'll just increase, you know, frequency, just mathematics.

David Risher: Person, who uses rideshare 10 times a month, that's actually quite a heavy user already right. So let's just start from the fact that a lot of people because with any distribution, obviously, you've got tails on both sides a lot of people who may be using it once a month, maybe they only use it to go to the airport for example.

David Risher: There are a whole lot of other parts of their life that we can without really much creativity at all simply by reminding them of our existence, we can grow into and that will just increase the frequency just mathematically.

David Risher: And then, on the other end, right, if you look at people who are already heavy users, you know, with a typical heavy user, which might be someone who commutes to the office, you know, Well, today, maybe they switched between us and the other guys. So maybe there are things we can do to make it easier for them to take more rides on LYFT versus doing something else, like, for example, driving, right? And, you know, of course, then there's the secular thing, right?

David Risher: And then if you look at the other end right. If you look at people who are already heavy users.

David Risher: With a typical heavy user of what might be someone who commutes to the office you know a couple of times a week well today, maybe the switch between us and the other guys. So maybe there are things we can do to make it easier for them to take more rides on lift versus versus doing something else as an example, right and.

David Risher: Of course, then there is a secular thing right as more and more offices I think come to realize that there's real value in having people in the office at least a couple of days a week. If you look at the distribution there there's still quite a few people and maybe some people on this call fall in this category, who are only going to the office once a week or maybe even less than that.

David Risher: More and more offices, I think, have come to realize that there's real value in having people in the office at least a couple of days a week. But if you look at the distribution there, there are still quite a few people, and maybe some people on this call fall in this category, who are only going to the office once a week, or maybe even less than that. And I think there's a lot we can do, both to work with companies to make it easier for them to partner with us, as we do with LinkedIn, for example, or, you know, Starbucks, for example, Delta Airlines, for example.

David Risher: And I think there's a lot we can do.

David Risher: Both to work with companies to make it easier for them to partner with US as we do with Linkedin for example, or Starbucks example, Delta Airlines example, these are all companies in various different ways Amazon that we work with on part of their kind of commute strategy to help their employees come back to the office in a way that's more productive than sitting in.

David Risher: These are all companies in various different ways. Amazon, for example, that we work with as part of their kind of commute strategy to help their employees come back to the office in a way that's more productive than sitting, you know, in traffic driving for 45 minutes. So that's just a very long way of saying I think there are a lot of use cases that we're sort of just scratching the surface of. And honestly, I would be very, very disappointed in us as a company if we couldn't come up with other ways to get people using Rochester in a new way.

David Risher: Traffic driving for for 45 minutes. So that's what's available I'm, saying I think there are a lot of use cases that we're sort of just scratching the surface hub and honestly I'd be very very disappointed in us as a company if we over the next.

David Risher: Weeks months years can't come up with other ways to get people using Roger in new ways.

Speaker Change: Okay. Thank you.

David Risher: Yes.

Operator: Your next question comes from John Colantuoni with Jeffreys. Please go ahead.

David Risher: Your next question comes from Jon Cohen, Tony with Jefferies. Please go ahead.

Operator: Thanks for taking my questions. I wanted to start with a strategic one.

John Robert Colantuoni: Thanks for taking my questions I wanted to start with the strategic one as autonomous Robo taxi initiatives continue to move forward and talk about how lyft is considering approaching balancing autonomous partnerships, while maintaining its focus on maximizing maximizing driver.

David Risher: As autonomous and robo-taxi initiatives continue to move forward, talk about how LYFT is considering approaching balancing autonomous partnerships while maintaining its focus on maximizing driver satisfaction and earnings. And second question, I believe Erin mentioned second quarter guidance assumes 15% rides growth during the prepared remarks, which is a few hundred basis points below the expectations for bookings growth. Can you talk about what's driving the gap between bookings and rides growth in the second quarter? And also walk through how that slowdown in trips growth versus the first quarter breaks down between market share versus broader industry trends? Thanks.

David Risher: Modest fashion and earnings.

David Risher: And second question I.

David Risher: Believe Aaron mentioned.

David Risher: Second quarter guidance assumes 15% rides growth.

David Risher: During the prepared remarks, which is a few hundred basis points below the expectations for bookings growth can you talk about what's driving the gap between bookings and rides growth in the second quarter and also walk through sort of how that slowdown in trips growth versus the first quarter breaks down between markets.

David Risher: Share versus broader industry trends.

David Risher: Hey, John, it's David. Let me take the first part of your question. And then, and then Aaron will tackle the second.

David Risher: Hey, John It's David Let me I'll take the first part of your question and then and then Eric will tackle the second so.

David Risher: So I think maybe the first thing to say is, again, as I mentioned before, autonomous vehicles are going to happen, right? So this is not one of these things where you can sort of decide whether or not they're gonna be part of the future; they will. There are too many, just say forces, you know, going in that direction for them not to. So then the question for us becomes, how do we incorporate them into our network? And the nice thing is that we are going to continue to grow, as we've been talking about for a long, long time.

David Risher: I think maybe the first thing to say is again as I mentioned before autonomous vehicles are going to happen right. So this is not one of these things where you can sort of decide whether or not they're going to be part of the future. They will if they're there there are too many.

David Risher: Just a forces.

David Risher: Going in that direction for them not to happen.

David Risher: So then the question for US becomes how do we incorporate them into our network and the nice thing is that we're going to continue to grow for us where we've been talking about for a long long time. So you know there will be all caught and and so it's I think 100% easy to predict that our network will turn in overtime and now here we are absolutely we're talking.

David Risher: So, you know, there will be all kinds, and, and, and, and, and, so it's, I think, 100% easy to predict that our network will turn, over time, and now we are absolutely talking about years, into a hybrid network, right, where we'll have some driver-driven cars and some autonomous. So I think there's every reason to believe that this will be sort of a coexistence. And then the question is, well, will it be a peaceful coexistence or sort of an angry coexistence? I think it will be a peaceful coexistence.

David Risher: Eight years into a hybrid network right, where we'll have some driver driven cars and autonomous cars.

David Risher: I think that's actually a very stable for a long long long long time far beyond the sort of event horizon, we can easily see.

David Risher: Because there'll.

David Risher: There'll be riders, who only.

David Risher: Prefer one or the other there'll be parts of the country or even parts of the cities that are well suited for autonomous airport being sort of an obvious example, right. After a concert those are those are very difficult times. There may be seasons of autonomous works better worse, you know autonomous in the snow is quite improvement and so forth.

David Risher: I think there's.

David Risher: Every reason to believe that that this would be sort of Ah Ah Ah Ah.

David Risher: Coexistence.

David Risher: And then the question is what will it be a peaceful coexistence with sort of an angry co existence I think it will be a peaceful coexistence I think drivers will say great theres still a lot of demand for my services.

David Risher: I think drivers will say, great, there's still a lot of demand for my services. You know, I think there'll be others, and now I'll get a little weird to say, like, you know, who knows what happens in a couple of years? Maybe there are autonomous cars that, in the front seat, instead of a driver, is, you know, I always like this example, a car tender. Someone's literally making you a drink as you go to your party one night or whatever it is.

David Risher: I think there'll be other than and now I'll get a little weird to say like who knows what happens in a couple of years, maybe there are autonomous cars that in the front seat instead of a driver is I always like this example of a car tender someone's literally making you a drink as you go to your party one night or whatever it is so I think there are all kinds of interesting.

David Risher: So I think there are all kinds of interesting things. I think human beings are quite good at coming up with new, fun things to do, to, you know, employ themselves, keep themselves busy, you know, entertain themselves, and so forth. So I don't, even when I talk to drivers today, I honestly don't feel a lot of anxiety about, you know, these robots are going to take my job. Part of them say, well, gosh, they've got pretty good sensors on them.

David Risher: Human beings are quite good at coming up with new fun things tissue to employ themselves keep themselves busy entertainers valves and so forth. So I don't even when I talk to drivers today I honestly don't feel a lot of anxiety.

David Risher: These robots are going to take my job part of them say well gosh, if they've got pretty good sensors on them. So my eyes are 60 years old there's a quote in there they're pretty good driver so.

David Risher: So, you know, my eyes are 60 years old, and there's a quote and they're pretty good drivers. So, you know, by the time they're around, I'm going to be long gone, and, you know, I'm glad someone's going to be driving me around. So, you know, I don't know. I think this is going to be fun. I really do.

David Risher: By the time, they're around I'm gonna be long gone and glad someone's gonna be driving me around so I don't know I think this is I think it's gonna be fine I really don't.

David Risher: And, and we're going to continue to focus on drivers in making sure it's the best driving experience possible. Absolutely possible. Absolutely possible.

David Risher: We're going to continue to focus for drivers and making sure. It's the best driving expense absolutely possible absolutely possible. How you earn the most how you have the most satisfying experience and I think that's a that's a great strategy, it's going to be very durable for many many years.

David Risher: How do you earn the most? How do you have the most satisfying experience? And I think that's a great strategy. It's going to be very durable for many, many people. And John, this is Erin. It's hard.

Erin Brewer: And on a quarter over quarter basis, that's 8 to 11% growth. So hopefully, that sort of clarifies that dynamic both on a year over year basis and quarter over quarter for ride growth and gross bookings growth that we expect in the second quarter.

Erin Brewer: And John, this is Erin. It's hard to follow the visual of a car tender, but let me attempt to do that and just go over our Q2 guidance for rides and bookings. So starting with RISE in Q2, we expect RISE growth of approximately 15% year over year. That implies about 9% quarter over quarter. And then for bookings, our guidance is for $4 billion to $4.1 billion year over year. That implies growth of 16% to 19% on a year over year basis.

Erin Brewer: And John this is Aaron its a its hard to follow the visual of a car tender.

John: Yeah, Let me attempt to do that and then and just go over our Q2 guidance for rides and bookings.

Erin Brewer: Just starting with rides in Q2, we expect rides growth of approximately 15% year over year.

Erin Brewer: That implies about 9% quarter over quarter.

Erin Brewer: And then for bookings our guidance is for 4 billion to $4 $1 billion year over year that implies growth of 16% to 19% on a year over year basis.

Speaker Change: And on a quarter over quarter basis, that's 8% to 11% growth.

Speaker Change: Awfully that sort of clarifies that a dynamic both on a year over year basis and quarter over quarter for rides growth and gross bookings growth that we expect in the second quarter.

John: Thank you.

Operator: This will end our Q&A session. I will now turn the call back over to LYFT CEO David Risher for closing remarks.

Erin Brewer: This will end our Q&A session I will now turn the call back over to left CEO, David <unk> for closing remarks.

David Risher: You all thank you so much I really appreciate your questions your AR and your support over the years. They look this is just about my first year.

David Risher: Y'all, thank you so much. I really appreciate your questions and your support over the years. Look, this is just about my first year. You know this.

David Risher: It's really quite an extraordinary opportunity, and I just want to mostly end by saying, you know, thank you for your patience with us as we, you know, clarify and articulate our strategy. And a huge, huge, huge thanks to LYFT team members. We have 3,000 people who wake up every single day obsessing over drivers and riders.

David Risher: Really just quite an extraordinary opportunity and I just want to mostly end by saying. Thank you for your patience with us as we go.

David Risher: Clarify and articulate our strategy and a huge huge huge thanks to the team members. We have 3000 people wake up every single day obsessing over drivers and riders and I just couldn't be prouder of all we've accomplished so.

David Risher: And I just couldn't be prouder of all we've accomplished. So, thanks to all. And we hope to see everyone who can at Investor Day, either virtually or physically.

David Risher: And and we hope to see everyone, who Ken at Investor day, either virtually or physically. Thank you all.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Operator: Okay.

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