Q4 2024 Lyft Inc Earnings Call
Good afternoon and welcome to the list, fourth quarter, and full year 2024 earnings call. At this time, all participants are in listen-only mode to prevent any background noise later.
Later, we will conduct a question and answer session and instructions will be given at that time.
Speaker Change: 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 call over to Oralong Nolth, Vice President, FP&A and Investor Relations. You may begin.
Speaker Change: Thank you. Welcome to the Lyft earnings call for the fourth quarter and full year of 2024. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer.
Speaker Change: We make forward-looking statements on today's call relating to our business strategy and performance, partnerships, future financial and operating results, trends in our marketplace, and guidance.
Speaker Change: 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.
Speaker Change: These factors and risks are described in our earnings materials in our recent SEC filings.
Speaker Change: 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.
Speaker Change: Additionally, today we are going to discuss customers. For Rideshare, there are two customers in every car. The driver is this customer and the rider is the driver's customer. We care about both.
Speaker Change: Our discussion today will also include non-GAAP financial measures, which are not a substitute for GAAP results.
Speaker Change: Reconciliations of our historical gap to non-gap results can be found in our earnings materials which are available on our IR website.
Speaker Change: Lastly, the team will be in Boston, San Francisco, New York and Toronto over the next few weeks, so please do reach out to me if you would like to connect with us. And with that, I'll pass the call to David.
Thank you, Aurelian.
Good afternoon, everyone, and thank you for joining us.
Speaker Change: 2024 was an incredible year of reinvention and industry leadership for Lyft.
and Driver Hours, even made our service levels industry leading.
Speaker Change: Drivers are choosing Lyft at record rates. In Q4, we had the highest number of driver hours than in any quarter in Lyft history.
Speaker Change: In Q4, we also had a record number of active riders.
Speaker Change: In a huge win, a series of technical breakthroughs from our Marketplace team meant that in Q4, on average, riders were picked up almost one minute faster than the year before, and our average ETAs became the fastest in the industry.
Speaker Change: I want to repeat that. From what we can see, Lyft's average ETA in Q4 were faster than both our big legacy competitor and newer entrants.
Speaker Change: That's a massive accomplishment and underscores our commitment to offering the best service in the industry.
Speaker Change: Another Rider win we're super proud of is our continued improvement in price reliability, thanks to reductions in surge pricing, which we call prime time or PT.
Speaker Change: As I hope you know, we brought PT down significantly in 2024.
Speaker Change: In fact, even faster than we'd planned, which is great for riders.
Speaker Change: Aside from much greater price stability, that translates into real savings. In total, riders saved more than $400 million in 2024.
and more as a result of lower prime time.
Speaker Change: And we're not done. We look at primetime as a bug in the ride share system.
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
Speaker Change: a feature where riders can pay a small fee to lock in the price of their regular rides.
Speaker Change: Since launching last fall, we're seeing approximately 70% of PriceLock riders continue to purchase passes month after month.
Speaker Change: Many of them are high frequency riders who are now loyal to Lyft thanks to this feature.
Speaker Change: and last week we announced price lock around the clock and allowed riders to pause it whenever they want it. It just keeps betting getting better.
Speaker Change: between launching and improving products like PriceLock and our stress-reducing on-time pickup promise.
Speaker Change: Expanding our highly requested Women Plus Connect feature, which, by the way, has now supported over 50 million rides, and launching our Driver Earnings Commitment, 2024 was the year of innovation like never before.
This is customer obsession at work, and it's paying dividends.
Speaker Change: Go ahead and ask your Lyft driver. In a Q4 survey, driver preference for Lyft was 16 percentage points higher than our largest rideshare competitor.
Speaker Change: up from 12 the prior quarter. Or look at rider frequency, the average number of rides someone takes with Lyft, and the gold standard for rider satisfaction. It's grown on a year-on-year basis every quarter in 2024.
Speaker Change: Exiting the year, we have the most high-frequency riders in five years.
Speaker Change: Looking at our financial performance, Erin will get into the details, but our work in 2024 resulted in extraordinary milestones, including the first ever year of gap profitability and the first full year of positive free cash flow.
Speaker Change: All of this just in the initial year of our multi-year plan.
When we obsess over customers, Lyft grows profitably.
Simple as that.
Now, on to 2025.
Speaker Change: You've heard me say that our purpose is to serve and connect.
Speaker Change: And I want to talk more about what that will look like this year.
Speaker Change: Our goal is quite simply to set a new standard of service for the industry.
Speaker Change: For drivers, we're turning our attention to recognizing and rewarding the amazing service they provide riders. We'll have more to share on this soon, but it's going to be a further differentiator for us.
Speaker Change: and we'll continue to rely on great partnerships as a way to introduce and retain riders and unlock more value for them.
Speaker Change: Our DoorDash partnership is an example. As of Q4, we supported nearly 8 million DoorDash rides.
Speaker Change: This partnership also helped us reach quarterly all-time record number of scheduled rides, which tend to be longer and higher margin.
Speaker Change: So far, we are very pleased with the results we're seeing and are confident the impact of the partnership will keep growing in the quarters to come.
Speaker Change: At the same time, in 2025, we plan to continue to expand our margin in customer-obsessed ways. You'll see Lyft Media continue to grow thanks to the success we've had with our in-app ads. We've just made Map Takeover as a regular ad product. I hope you saw the latest one that's ran this past weekend with Samsung to promote their new Galaxy phones.
Also, Lyft Media will soon have full-screen vertical...
a vertical video ad capabilities that's a matter
Speaker Change: Another customer-obsessed way we're expanding margins in 2025 is by improving our higher-end offerings. Lyft Black and Lyft SUV rides grew 41% year-on-year in 2024.
Speaker Change: This was the result of three deliberate actions aimed at changing our ride mix. First, we fine-tuned vehicle eligibility to ensure a consistent and more exclusive black car experience for riders.
Speaker Change: Second, we significantly increased supply by adding more black car drivers onto our platform.
Speaker Change: And finally, we launched this mode to many new markets across the U.S. and Canada, making Lift Black now available in 64 total markets, with more on the way.
Speaker Change: We are thrilled to see how enthusiastically Lyft riders have responded to these improved offerings, which carry higher prices and margins. It's a win-win-win. You'll hear more later this year, but your action item right now, listen up, is to schedule your Lyft Black SUV for Valentine's Day.
Speaker Change: Finally, in 2025, you'll see the Lyft platform expand to include autonomous vehicles.
Speaker Change: This will come to life with our partner Maymobility in Atlanta, which is one of only two players providing A-B rides to the public today.
Speaker Change: Beyond that, yesterday we announced a partnership with Marobeni. They'll be the first to use Mobileye, another partner's, lift-ready AV technology with the goal of deploying their fleet to thousands of vehicles on the lift platform over time.
Speaker Change: starting in Dallas as early as 2026 with other cities to follow.
or in advanced discussions with a number of other partners.
Speaker Change: The AV future will have many players across the value chain, including several emerging from behind the scenes.
Speaker Change: They're coming to Lyft for our unique combination of fleet management expertise, drive through our FlexDrive subsidiary, and access to our network of more than 44 million active riders, annual riders.
Speaker Change: I'll share more with you soon. As I've said before, AVs will be a transformational addition to the marketplace. The more AVs, the more rideshare market expands and the better Lyft does.
Speaker Change: Now, a closing message to all you Lyft team members who are out there and listening in. You have crushed it.
Speaker Change: You introduced a crazy number of customer-obsessed products, and you've helped us reach all-time highs in riders, rides, and driver hours. And beyond that, when the devastating fires broke out in L.A., you stepped up to provide over 20,000 ride codes for those in need, the highest ever for this kind of disaster.
Speaker Change: I appreciate every second and every ounce of energy you put into Lyft.
Speaker Change: We have never been in a stronger position thanks to you, and we've got so much opportunity ahead.
I can't wait for all we accomplish together in 2025.
Over to you, Erin.
Erin Brewer: Thanks, David. Good afternoon, everyone, and thank you for joining us.
Erin Brewer: The bottom line is we are now more than ever operating from a position of strength. Our improved financial health lays the foundation for years to come. So now let's walk through some of the key financial highlights from 2024.
Erin Brewer: Growth bookings for the year was $16.1 billion, up 17% year-over-year, roughly matching our rides growth year-over-year.
ROTH's bookings is a function of three interconnected inputs.
Overall Market Pricing, Engagement with Riders, and Engagement with Drivers.
Erin Brewer: Driven by the substantial progress in the health of our marketplace, notably with drivers, prime time continued to decrease, driving real savings and more reliable pricing to our riders.
Erin Brewer: To help you put that in a bit of perspective, if primetime occurrences happened at the same rate and frequency in 2024 as in the prior year, gross bookings growth would have been 20% year over year.
Erin Brewer: As you can see from our record results, prime time decreasing did not have an impact on our margin growth given it's reinvested in the health of the marketplace.
Erin Brewer: In 2024, we also made substantial progress on efficiency and cost discipline.
Erin Brewer: We delivered 17% efficiency in the deployment of our customer incentives on a per ride basis, year over year, significantly outpacing our goal of 10%.
Erin Brewer: In addition, our focus on cost discipline delivered more than 100 basis points of fixed cost leverage for the full year.
Erin Brewer: This led to our unit economics continuing to improve even when considering the cost of insurance increasing.
Erin Brewer: And finally, we exceeded our original profit outlook with adjusted EBITDA margin as a percentage of gross bookings of 2.4%.
Erin Brewer: This was our first full year of GAP profitability, and we achieved free cash flow of $766 million.
Erin Brewer: All right, now let's get into the more recent trends in the business. We've had a record-breaking year with a very healthy lift marketplace and strong rides growth.
Erin Brewer: At the same time, we've also seen new dynamics resulting in overall lower prices in the U.S. market, which started late in the fourth quarter.
With that backdrop, I'll go over our fourth quarter results.
Erin Brewer: We delivered 15% rides growth and 10% growth in active riders, both leading indicators that underscore the durability of demand on our platform.
Erin Brewer: We deliver these strong operating results on the foundation of our exceptionally healthy marketplace.
Erin Brewer: Adjusted EBITDA grew nearly 70% year over year, and we expanded our adjusted EBITDA margin as a percentage of gross bookings from 1.8% in Q4 of the prior year to 2.6% in Q4, 2024.
Erin Brewer: We did this through the quality of our execution, our cost discipline, and our continued progress to bend the insurance cost curve through product and technology innovations, safety initiatives, and deep partnerships.
Erin Brewer: We also delivered another quarter of GAP profitability and strong free cash flow of $140 million.
Now, looking ahead to Q1 Guidance.
Erin Brewer: We're expecting the following trends and factors to inform our Q1 outlook.
Erin Brewer: First, our healthy marketplace and market-leading service levels will support year-over-year rides growth driven by strong, durable demand, growth in active riders, and growth in frequency.
Erin Brewer: We will continue to price competitively and reliably while balancing this with other seasonal dynamics.
Erin Brewer: The strength in rides growth and the health of our marketplace is balanced against some seasonal and other factors, including the Q1 is traditionally our slowest quarter as everyone is recovering from the holidays and weather across many parts of North America encourages staying in or at the very least discourages taking a bike ride.
Erin Brewer: Further, Q1 in 2025 will have one less day due to the 2024 leap year, which is a headwind of approximately one percentage point year over year to our gross bookings growth.
Erin Brewer: And lastly, as I mentioned earlier, lower pricing dynamics that started late in the fourth quarter have persisted quarter to date.
Erin Brewer: Given that for the first quarter we expect rise growth in the mid-teens year-over-year driven by industry-leading service levels and strong rider and driver engagement.
Erin Brewer: Gross bookings growth of approximately 10 to 14 percent year-over-year or approximately $4.05 to $4.2 billion dollars.
Erin Brewer: and adjusted EBITDA of approximately 90 to 95 million dollars with an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.2 to 2.3 percent.
Erin Brewer: Separately, given the recent announcement that our partnership with Delta will end on April 7th, I want to give you further color to help put that in perspective for what that means for Lyft.
Erin Brewer: We expect this will impact our rise and gross bookings year-over-year growth by approximately one and two percentage points respectively starting in Q2 2025.
Erin Brewer: Our long-range plan assumes continued growth driven by our partnership strategy, and this announcement does not change that.
Erin Brewer: More to come, we remain confident in our plans to offset the impact in the mid and long term by further penetrating our existing partnerships and adding new ones.
Erin Brewer: We believe in the strength of our market, the durability of our growth, and our ability to run a business efficiently. We've never been better positioned to take advantage of the massive opportunity ahead.
Erin Brewer: Given our outstanding 2024 performance, our conviction in the business to continue to deliver robust free cash flow, and our commitment to maximize shareholder value, I have two updates to share.
Erin Brewer: First, our board has authorized a $500 million share buyback program.
Erin Brewer: Our objective, combined with the previously announced net share settlement, is to offset dilution from our stock-based compensation.
Erin Brewer: The pacing of the buyback will be systematic and thoughtful in consideration with our capital allocation priorities and aligned with our long-term growth strategy.
Erin Brewer: Second, we plan to reduce our overall leverage by repaying our convertible notes due in May 2025 with cash on the balance sheet.
Erin Brewer: In combination, these actions highlight the strength and flexibility of our balance sheet, providing a solid foundation to support our growth.
Erin Brewer: We're confident in our future and excited about what's in store for this next year and beyond. And with that I will conclude our prepared remarks and operator we're now ready to take questions.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: As we move into the Q&A session, we ask that you please limit your input to one question and one follow-up. At this time, I would like to remind everyone to ask a question, press star, then the number 1 on the telephone keypad. We will pause just for a moment to compile the Q&A roster.
Speaker Change: The first question comes from the line of Doug Enlis of J.P. Morgan. Please go ahead.
Speaker Change: Thanks for taking the questions. It's Brian Smiley for Doug. I guess just digging a bit deeper into the recent pricing environment. Can you just provide more factors and color just on what's weighing on the 1Q gross bookings outlook? Is it framed more as downward pressure or just more broadly monitoring and increases versus recent years? Thanks.
Speaker Change: Hey, Brian, it's David. I will maybe start with that and give you just a little perspective on pricing in general, and then Erin can talk more.
specifically about the impact.
Speaker Change: So, just so everyone knows, we have a super simple pricing strategy, and it is to price competitively and reliably.
Speaker Change: So competitive means exactly what it sounds like, and it's quite important. It's something we adopted a couple of years ago, and it's worked very well. And we're well built for it. We now have a couple of years of doing it very well, and we're quite responsive and good at it.
Speaker Change: sort of adjusting and kind of rallying with that. And then reliable is also super interesting because that's something we've also worked on a lot. You've heard us talk a lot about.
Time-time coming down.
and then we've introduced products like PriceValk.
Speaker Change: which we can talk about a little bit separately. So that's sort of the context. So when you look at that, that suggests that we're in a dynamic marketplace. You would expect sometimes prices go up a little bit, sometimes they pop down a little bit, and we're sort of dealing with that. Again, we're kind of well built for that.
Speaker Change: And so now I'll turn it over to Erin and she can talk a little bit about the more recent things we've seen.
Erin Brewer: Yeah, thanks, Brian. There was a lot in your question, so bear with me for just a minute because I'm going to provide some details and some context that I think are important in getting at some of your points.
So let me first start with some context overall.
Erin Brewer: So, generally speaking, pricing in the Lyft marketplace, if I think about, for example, 2024, has been relatively stable. You know, we see steady
Erin Brewer: We've seen steady gradual price increases that happen over time. Those are generally the result of, you know, underlying sort of structural increases in our insurance, but it's been stable. It's been pretty steady. So that's what we've seen in the recent history.
Erin Brewer: You know, I know one of the metrics that's obviously more visible is gross bookings per ride, but I think it's also important context to
Erin Brewer: remind everyone that that is a result of mix, right? We have different modes, not only in ride share, but it's inclusive of our bikes and scooters business. So that mix will impact gross bookings per ride over time.
Erin Brewer: You know, so circling then into the core question, really around ride share is what we're talking about.
Erin Brewer: You know, when we talk about base pricing, and let me define that because I'll reference it in just a moment. So base pricing is what we use when we make comparisons, competitive comparisons.
Erin Brewer: and this would exclude coupons which as you know fall into our sales and marketing line.
Speaker Change: And then, you know, we observe competitive pricing all the time across all of our markets on a daily basis, we leverage multiple sources. And our goal, as David mentioned, on average, is to price competitively in any given market. So
David Risher: As you know, our strategy is always to price competitively, so we lowered base prices. We did some additional couponing in the last few weeks of the year to keep our marketplace balance and prices competitive.
David Risher: At the same time, we're proud of our results. We delivered really good rides growth and obviously profitability that was at or above our expectations.
David Risher: So flash forward to today and around what we're communicating around Q1. Let me just give you a little real-time context on January, so
David Risher: We continue to see really strong foundational fundamental growth in the business, and how does that play out? So in January, for example, we've seen rise growth in the high teens.
David Risher: was at the lowest point it's been in the last five quarters.
David Risher: So that gives you some sense for a comparison point of the trends.
David Risher: The foundation is incredibly strong, and sitting here today, operationally, financially, we're in the strongest position that we've ever been in.
Great, thank you very much, both.
Speaker Change: Your next question comes from the line of Michael McGovern of Bank of America. Please go ahead.
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
Speaker Change: And then just going from here with the recent change in the pricing environment with lower prices, how confident are you in the trajectory of...
Thank you.
Speaker Change: Hey Michael, it's David. I'll take the first question first and maybe touch just super briefly on the second and then Erin can kind of pick up from there. So on market entrants, yeah, it's quite interesting. If you've been in San Francisco, you know,
Speaker Change: Phoenix as well, L.A. to a lesser extent, San Diego to a lesser extent. You'll see a lot of Waymo's driving around. And Waymo is pretty amazing tech. It really is.
Speaker Change: You can't deny that seeing a car driving with no drivers is pretty remarkable. Now, when you look at what it's done to our business, it's quite interesting. So in San Francisco, our share, and I said this before, it remains true, our share is roughly flat.
Speaker Change: And so what that suggests, but of course they're the open ride. So what does that suggest? That suggests that either the market is increasing or they're taking share from somebody else, but they're not taking it from us. So that's great because what that suggests...
Speaker Change: which we've been saying for a while is, on average, we would expect as self-driving cars enter the marketplace.
Speaker Change: They'll actually expand the market. Now Waymo is a little bit of a premium priced product here in San Francisco.
Speaker Change: Actually, it's quite premium. I mean, it could be maybe 20%.
20% higher.
Speaker Change: In Phoenix, we're seeing a little bit of a different dynamic. So in Phoenix, which is another market that's quite aggressively sort of patrolled by AV cars.
Speaker Change: What you're seeing is our share, well, our growth is actually faster in Phoenix. So this is very interesting. Our growth is faster in Phoenix than it is across the country. So across the country, we have mid-teens growth. In Phoenix, we're actually seeing it faster there.
Speaker Change: So that's also very interesting, right? And again, our share is fine there. So again, what that suggests is that you've got these new Waymo cars coming in. Again, maybe they're unlocking some new demand. Maybe they're taking share from
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
Speaker Change: So, you know, relatively small part of even of those cities' geographies.
Speaker Change: And you remember, you know, women's don't go on highways and so forth and so on. So it's a little bit of a smallish thing, but at the same time, the trends are very interesting because, again, it sort of suggests that people are taking them and liking them, but then continuing to take a lot of rideshare. I will say that our.
Speaker Change: churn rate is actually better than, in other words, people come back more regularly on a five day basis after they've taken a lift than after they've taken
Speaker Change: Okay, that was a very long answer. I'm sure we'll talk more about ABs separately, but that's what we're seeing there.
Speaker Change: On margins, I'll just say briefly, the answer is yes, we're confident there. And there are a lot of tools that we have.
Erin Brewer: and talk about Mix briefly early. We can talk about some of our different lines of business or different segments that give us, you know, a lot of flexibility when it comes to Mix. But maybe Erin will kind of jump in here and then we can kind of tag team a little more if we need to.
Erin Brewer: and our long-range plan which we detailed at our investor day in June remains the North Star, hands down, that's our North Star.
Erin Brewer: Why is that? The foundations of that plan, nothing has changed. And if in fact 24 is any indication, you know, give us even more confidence on the growth drivers and the levers.
Erin Brewer: First and foremost, we're in a great growing market that has a lot of opportunity ahead of it. And so that's a fantastic position to be in.
Erin Brewer: And the foundations and some core underpinnings of that long range plan, you know, are stronger today than they were when we talked about them in June. And that's around just
Erin Brewer: the progress that we have made in growing our active writer base.
Erin Brewer: in growing frequency ahead of expectations in our framework in 2024.
Erin Brewer: And then, of course, the pillars behind that around operational excellence, sort of the day-to-day execution, the way that we've innovated in the market. And David mentioned a couple of those areas in his prepared remarks.
Erin Brewer: you know, our partnership strategy, our media strategy, all of those areas.
Erin Brewer: we feel great about. And so our LRP really does remain our North Star.
Erin Brewer: You know, you you asked a little bit about 2025. I gave some color in my prepared remarks around Delta, right? That's a known change that is going to transition at the beginning of the second quarter. So I wanted to give you some framing for what that might look like.
Erin Brewer: We'll see how the year progresses if the price environment stays sustainably lower. That could be a low single-digit percentage point impact to our gross bookings.
Speaker Change: We also would probably see higher rise growth. So you know, at the end of the day, we'll see how that plays out. But as David mentioned,
Speaker Change: You know, as we think about our business model and all of the levers of profitability, we feel really, really well positioned.
Speaker Change: We are focused on continuing to expand our adjusted EBITDA margins. We will continue to achieve efficiencies in customer incentives.
will continue to get fixed cost leverage.
Speaker Change: David highlighted some of our higher margin and mode expansion. We will continue to grow our partnership base.
Speaker Change: And don't forget, we'll continue to grow our media business. You know, we exited 2024.
Speaker Change: right on track with that $50 million annualized run rate that we talked about at our investor day.
Speaker Change: And we expect to exit 2025 in the fourth quarter at an annualized run rate of around 100 million. So we feel good about our delivery across all of those areas.
Speaker Change: and that's a lot of detail, but I think it's important to understand our conviction and our LRP as our North Star.
Very helpful, thank you.
Speaker Change: Your next question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead.
Eric Sheridan: Thanks so much for taking the question. I'd love to come back to I think in the prepared remarks you talked about
Eric Sheridan: the relationship with drivers and sort of increase your supply density. Can you, maybe in two parts, talk a little bit about what you felt you accomplished in 2024 and how you're thinking about
Eric Sheridan: investments in driver supply and how the product can continue to evolve as you look for strategic priorities into 2025. Thanks so much.
Speaker Change: Sure, I'll take that one to start. Hey, Eric, great to hear your voice. So, yeah, I mean, let's maybe take a tiny victory lap on that one, because it's so foundational. I mentioned this, as you said, in my Prepare Blue Box brief, but I'll say it again. We now have a 16 point, 16 point preference gap.
Speaker Change: between us and our biggest competitor. And the question is a very simple question, you know, basically, who do you prefer driving for or driving with?
Speaker Change: So that's great, right? So how did that happen? And then what does it mean? Well, so how it happened is, man, did we make a lot of investments in really showing the world that we have two customers in every car, a rider and a driver, and they both matter.
Speaker Change: So what do we do? We did things like the 70% earnings guarantee. We've talked quite a lot about that. We've, I would say, fixed some problems. There's a technical thing called a breakout, which basically means the driver gets promised one price, but then one
Earnings
Speaker Change: We commit to earnings up front, but then something strange happens, you know, traffic gets in the way or different things.
Speaker Change: And so the ride takes longer than it was forecast to, but we now make up for that if it's more than a couple of minutes.
Speaker Change: You know, and on and on. We pay, you know, as soon as, for scheduled rides, as soon as you arrive, the wait time, you know, all these different things.
Speaker Change: Some of them are quite small. Some of them are quite big. Some of them actually have very little to do with the day-to-day driving. We've put a lot of investment into a partnership with Merit America, which allows drivers to earn
Speaker Change: kind of take classes effectively and sort of do some skill building so that they can, you know, go on to take other jobs. You know, gosh, there's something else I wanted to mention sort of along the same lines.
Speaker Change: Anyway, oh yeah, even when a driver has, here's the cool thing. So we've been testing now a lot of AI on how to respond to driver's problems. Remember when a driver has a problem.
Speaker Change: That's time they have to spend resolving that problem. That time is money, right? That time is time they're not spending in the middle of a fund.
Speaker Change: And we're driving, and so we're working on a bunch of AI features, and we just did an analysis the other day, just based on one test that we did in...
Speaker Change: January which will roll out more broadly we estimate the drivers saved about 28,000 hours.
Speaker Change: and support time because of some AI we're using now to handle some of their questions. So anyway, it's a whole bunch of things, but it comes down to a very simple thing, which is we want drivers to succeed. When drivers succeed, our platforms succeed.
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
We are putting in place a driver
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
Speaker Change: So the financial impact of this over time will be very large. I mean, we spend an enormous amount of money. Drivers make a lot of money on the platform, you know, billions of dollars.
Speaker Change: And so even small improvements there have huge impact. And I'll finish up just by saying the thing that everyone knows, but you just have to say it again, which is.
Speaker Change: It's much less expensive to retain than to acquire. And while drivers are not our employees, they are independent contractors, we can put a lot of energy, and we do, into making sure they've got such a great experience, that they like driving for Lyft, they provide great service, they keep coming back, and that's our strategy.
Speaker Change: Your next question comes from the line of Benjamin Black of Deutsche Bank. Please go ahead.
Wonderful. Thank you for taking my question.
Benjamin Black: David, can you dig in a little bit deeper into your Mubeni and Mobileye partnership? How did it come together? Is it exclusive? What type of economic models are you thinking about? How should we think about your expansion plans beyond Dallas in terms of timing, respectively?
Benjamin Black: And then just quickly, you also mentioned the technical breakthrough that drove your ETAs to industry highs. Can you talk about what you did there and where else you see the potential for other technical breakthroughs? Thank you.
Benjamin Black: Sure. Yeah, two cool questions, Benjamin. Thanks for the question. So, yeah, let's do A-B's first. And, you know, forgive me, like Erin, I'm going to go on a little bit expansively.
Benjamin Black: I'm going a little bit because I think it's the framework matters. So, you know, A-B is gosh, it's so easy, I think, and sort of.
Benjamin Black: You did not do this, by the way, but I'm responding a little narrowly on this thing. They kind of say, oh, look at the AB tech of company A and look how amazing it is. And the AB tech, there's a whole bunch of really interesting AB tech out there.
there, right? There's what?
Benjamin Black: You know, Waymo does, they have a certain approach. Very successful, obviously. Yeah, expensive. I mean, it's got its own things to it, but it's working super well, very safe, very reliable, and so forth.
You have Mobile Eye?
Benjamin Black: Mobileye is, as you know, and maybe we mentioned this last time, around one of the world's leader in sort of driver assist technology.
Benjamin Black: and they've been an early innovator in AV tech and they're trying to get to level 3, 4, and ultimately 5. And as you know, we signed a deal with them last year.
Benjamin Black: to start using their technology, you know, in a number of different ways, under an umbrella that we're calling lift ready to make as many cars lift ready autonomously as
Benjamin Black: sort of support structure into this kind of house we're building, right? And that's financing, and to a certain extent, fleet operation. So again, stepping back for a second, you've got AB Tech.
Benjamin Black: At one end of the value spectrum, very important, you've got the OEMs, right, the different companies, the car manufacturers of the world. We're using, for example, Toyota's.
I'm in Atlanta with me Mobility, that's nothing.
Benjamin Black: And then you got financing, someone's gonna buy these things and own them. And they're expensive assets, and they have certain, you know, value characteristics, you know, most cars get less valuable over time. And so you've got to be very expert in, in the financing of these things. And in Marubeni, which is a very, very large, about $50 billion
Benjamin Black: Japanese trading company, has been in the business for some number of years. They're a conglomerate. I mean, they do many things, but one of the things they've been investing in recently is leasing, auto leasing. And
Benjamin Black: in particular, and they do that in a couple of countries around the world. And they're looking at AVs as a potential huge new market for them. And so the way this deal came together is we have been looking for partners who are willing to take on the financial commitment of owning these cars.
A company like Marubeni, of course.
Benjamin Black: Japan, I think their interest rate is 0.5%. They are, as I say, a trading company, they have different lines of business they can use to sort of move money around. So anyway, this is what they do, and they do it at very big scale. So their commitment... Oh, and then just finishing up the value chain, then I'll call it.
Benjamin Black: Then you have the whole fleet management side of things. Again, incredibly important and
Benjamin Black: all these different things. It's quite complex. We do a very, very good job of that with our FlexDrive subsidiary.
Benjamin Black: you know, well over 10,000 cars under management at any one point.
Benjamin Black: It's been tens of thousands over the years. Anyway, that's a separate thing. And then the whole marketplace piece, obviously, you know, pricing and ETA and...
Benjamin Black: you know, all the different, you know, customer facing stuff, marketing, obviously.
Benjamin Black: and all the things we do 24 hours a day, seven days a week. Okay, so that's the whole value chain. Now, back to Marabani for just one more second. They are part of the mix now, which is wonderful. We announced that we're gonna start with them in Dallas, kind of the 1,000 car-ish type level. That's great. They have the financial capacity to do that.
and Mobilize the Technology.
Benjamin Black: We'll separately talk about which OEM will be part of that. That'll be for another day. And then we do expect to scale that up to other markets. This is the part where we get a little less satisfying for you because we're not gonna talk about what those other markets are, the timeline just yet. But certainly the goal as we sign these partnerships is that these are long-term relationships. You know, it's not sort of a speed dating thing.
Thank you.
you know, you would sort of
Benjamin Black: As a starting point, expect that you would have difficulty providing service that is faster. But that's what we accomplished. So break it down for just a couple of seconds.
and others.
Benjamin Black: and the highest driver hours we've ever had. But it's not just that, right? The drivers have to be in the right place. There has to be the right incentive system for them to move around, for them to pre-position. We do all kinds of interesting bonus zones and all kinds of different things that we've gotten very good at. And a lot of that comes down to very, very smart demand prediction.
Benjamin Black: And a quick aside, things like price lock also help us there. Obviously the scale of that, I think we've done maybe 1.6 million price lock rides so far. So that's not gigantic in the grand scheme of things, but it's up from zero a couple of months ago. And every time a person does that, that also gives us some more predictability. So that's super cool.
Benjamin Black: And then, you know, you just sort of build on top of that, you know, more and more and more, right? So for example, and I promise I'll stop, you know, sometimes you might have seen in the past that you'll open up your app
Benjamin Black: and you'll get assigned a match, you know, a driver will be matched to you, and then maybe that driver will cancel, and another driver will get matched to you. Well, so that's infuriating as a rider, but it's not just infuriating, it also increases ETAs, because when that happens, typically, the new driver is farther away. Rarely is that new driver
Benjamin Black: So, okay, what have we done? We have done many things to reduce driver cancellations.
Benjamin Black: I won't give you the exact number, but I can tell you over the two years I've been here, we used to be in the double digits, and now we are much, much, much, much lower. So it's not one thing with these marketplaces that we do 800 million rides a year, 2 million plus rides a day. You know, there's...
Benjamin Black: You've got to do a lot of small things to make these things really kind of meaningful. But you do all these small things, and then you've got an amazing team, and really, I think the best team and the best tech in the industry. And that's what allows us to say with some confidence from what we can see, we're actually picking up faster than the bigger guys.
Speaker Change: Hi, thanks for taking my question. Let me try two, please. Any commentary in terms of the magnitude of contribution you expect from price lock this year? And then second is on advertising revenue. If you could please help us quantify the impact in 2024 and how you're thinking about 2025. Thanks a lot.
Speaker Change: Sure, I'll take that. Let's see, I'll start with the second one first and then we'll go from there.
Speaker Change: So for the media business, I mentioned just a few moments ago that in Q4 of 2024, we exited the year consistent with our goal, which is on an annualized basis.
to be at approximately 50 million dollars in gross bookings.
So hopefully that's helpful as it relates to media overall.
Speaker Change: PriceWalk, we probably won't give you much financial data here, but I'll just give you a tiny bit more color. So PriceWalk, we probably won't give you much financial data here, but I'll just give you
We launched the product
Speaker Change: that Rideshare has kind of carried along almost as an assumption that it just has to be that way for years until I think we came in and maybe showed it a different way.
Speaker Change: We've given, as I mentioned very briefly, we've given about 1.6 million rides so far, which is a great number. We have just expanded it last week to now cover 24 hours a day, seven days a week, which is great. That's actually still in testing. It's rolling out over the next couple of weeks.
Speaker Change: But it's great. What it means is that it can, you know, help people who are going on the night shift. It's really interesting, you know, you tend to think quickly, you know, people work from 9 to 5 or 8 to 6 or something, but that's not, that's not right. We have people, actually, it's extraordinary, you know, people go to healthcare in the, in the middle of the night or the
Early morning.
ROTH MKM, David Risher, PBSC, CarPlay, Sonya Banerjee
Okay. Thanks, David. Thanks, Erin.
Speaker Change: Your next question comes from the line of Stephen G., QBS. Please go ahead.
Stephen G.: Okay, thank you. So, David, I think this might be from the time when you first became CEO. And I think you were hoping that over time with, you know, product development and innovation, you will start opening up a wedge relative to your competitor in terms of what list will mean to riders.
Speaker Change: So, you know, where do you think you are in terms of helping consumers no longer view Lyft versus Uber as being a commoditized service than a coin flip, but hopefully driving greater preference over them? I do understand that you'll take the coin flip every day of the week, but you get the point.
Speaker Change: Yeah, for sure. Yeah, I love that question. Thanks. Was that Steve? I missed the name.
Speaker Change: Okay, I'll take that as a yes. Oh, cool. I'm getting thumbs up around the room. Um, so, um, I don't know, I'm not quite sure how to quantify it. But I can I can maybe touch more. So your memory is good. Uh huh. And I would say that we
Speaker Change: Maybe say it this way. I think there was a fair amount at the beginning of kind of getting some basics right. You know, pricing right, paying right, and so forth and so on. That's, you know, for sure, it's job one. You don't have permission to do, you know, jobs two and three until you get job one done. Then you move into sort of job two, which is you start to really innovate on top of the platform, and we've done a fair amount of that. I've mentioned Women Plus Connect, very proud of that, PlayStock, and so forth and so on.
Speaker Change: So that's super good. But customers, you know, are, you know, inertia. I'm starting to really understand something now, which is our biggest competitor right now is not, you know, another company. It's not another company. It's inertia.
Speaker Change: It's inertia. It's waking up in the morning and saying, I'm going to do the same thing I did yesterday.
Speaker Change: And that is hard to get into people's brains, that they actually have a better choice right now. They have a better choice, a faster choice, a choice that's more innovative. If they're a woman, for example, and they want a woman driver, there's only one choice. But that takes a while for people to see.
Speaker Change: I would say that we have been, I'd say very, I'm very pleased with the success we've had there so far.
Speaker Change: I think the next thing you're going to start to see is we start to be a little bit more vocal about it in different ways, because this is the thing. People have to be reminded of these things, and so we've got to show up in some new ways. And so you'll see us doing a little of that as well. But I don't quite know how to quantify it. I think we're still...
Speaker Change: I don't know, relatively early in that journey. I think a lot of people, you know, I drive for
and see some of what I...
Speaker Change: say on LinkedIn sometimes after I drive, I post these things. And one of the things that's interesting is to talk to riders and ask them why they chose Lyft. And they have all sorts of different reasons, including, and I'm very pleased to say this, often, I like you guys better. I think you treat your drivers better. I think that we have a better experience in your cars and so forth. But it's not as often as I want to, and it's not as often... I don't hear that as often as I want, and I don't hear it...
Speaker Change: as often a clear message about why they chose them. So you'll expect more on that coming soon. But again, I like where we are. And I like the fact that when we do things like brand surveys and so forth, people, you know, they use the other guys, but they like us. So we're going to build on that really and let people know they've got a real choice.
Thank you.
Speaker Change: Your next question comes from the line of Michael Morrison, Mark Nathanson. Please go ahead.
Speaker Change: Hey there, good evening and thanks for the question. Just, too, I think for Erin, we'd love to hear what drove...
Speaker Change: the outperformance in cost of revenue relative to your guide, and then any details you can provide on the decrease in GNA quarter over quarter would be great as well. Thank you so much.
Speaker Change: Yeah, thanks Michael for the question. Cost of revenue, you're right, we give a very specific sort of sequential guide on that when we renewed our third-party insurance agreements, sort of Q3 to Q4, and it came in a bit better. You know, I don't know that there's a big headline there, you know, trip distance impacts.
Speaker Change: that cost of revenue. So if it was, you know, on average trips were a little bit shorter, that's going to impact that. So that's really primarily the the delta there on cost of revenue.
Speaker Change: And then in DNA, you know, don't forget, we've talked about this a couple of times. You know, DNA can be a little bit lumpy. There's things in there like...
tax accruals and releases, legal accruals and releases.
Speaker Change: our excess insurance, not our primary auto, but insurance beyond that.
Speaker Change: flows through GNA. So really less than half of that line is fixed. So from time to time, there will be changes there. Not a specific one or two items that I would call out for the quarter overall, but hopefully that gives you a little bit of context.
Thank you. Yep.
Speaker Change: Your next question comes from the line of Rohit Kulkarni, ROTH Capital. Please go ahead.
Thank you. Just a big picture, three-year outlook question, given...
you're seeing, perhaps...
Speaker Change: What's your latest thinking with regards to the three-year outlook of...
Speaker Change: 15% booking growth that you felt you would achieve or exceed. And then just a quick one on market share, higher since 22, that's very encouraging. Perhaps you could comment on how does that compare to pre-pandemic? If you were to ask, where is your market share versus 2019 levels? Thanks.
Erin Brewer: Yeah, let me see if I can address, I think actually Erin and I will address maybe both of those in different ways.
Erin Brewer: On the, so 2027, so we're laser focused on that and very confident. And, you know.
Speaker Change: It's uh, I look I know I'll just speak, you know, maybe a little more personally for a second Like I don't people are gonna be a little bit worried They're like, oh gosh, look at this booking thing and what's going on there. You know, here's the here's the reality reality is, you know price goes up Rides go down
Speaker Change: Price goes down, rides go up. This is sort of a little bit of a seesaw thing that happens. And quarter by quarter, that's going to happen. It's a very dynamic marketplace, all sorts of different trends. We're seeing great demand. The fundamentals are great. We're seeing great service. That's why
Speaker Change: It's hard for me to stress too much about this sort of thing. It's sort of what comes with the territory. It's what, again, what we're built for. It'd be a strange business to try. Anyway, so we're built for this. Now, you have to watch your margins, right? But again, as Erin said, and as I've said, we have everything from the
Speaker Change: black and kind of higher margin products that we're really getting behind that our customers are really liking.
Speaker Change: And some other things we haven't even talked that much about. Our healthcare business, where we're an industry leader with non-emergency medical transportation, that's a higher margin business, that's a business that's grown, you know, 40% year on year, as an example. And then some other things we maybe haven't talked as much about and won't just yet. But when you look at all those things together, there's a lot of things that are going on. And I think, you know, we've got a lot of things going on. We've got a lot of things going on. We've got a lot of
Speaker Change: That gives us a lot of confidence, both the top line and the bottom line, and allows us maybe, I hope, and maybe you, I hope, to look a little bit beyond what happens quarter by quarter in any one of those, and look at the results we have and look at what we've been able to produce.
Erin Brewer: So that's sort of our view. Maybe Erin on the 27 or the long-term plan and then we can talk a little bit more.
Erin Brewer: Yeah, you know, I guess the only thing that I would add to that is, you know, as we said about the framework for our long range plan, you know, as I mentioned a little bit previously, the foundation of that plan is grounded in really, at the end of the day, a few very simple things.
Erin Brewer: One, that we're in a growth market and there's tons of opportunity and runway ahead of us.
Erin Brewer: and that we are laser focused on ride share. We believe we can act quickly, we can innovate against this very large market opportunity. Nothing has changed there, nothing has changed.
Erin Brewer: And then, you know, the other kind of key piece of the foundation is our belief that through continuing to operate the platform in an exceptionally excellent way.
Erin Brewer: continuing to innovate, continuing to expand our partnership base that we would be able to drive active rider growth, frequency growth.
consistently.
Erin Brewer: And we've seen that in 2024. And that muscle, David, you often sometimes say, you know, the muscle that we built, that muscle that we built, as we look at 2025, and even beyond, we feel great about. And then I, I've mentioned a couple times about, you know, the trajectory of our media growth and how we're how we're right on track.
Erin Brewer: So those foundations again, nothing has changed, you know, obviously as we you said about any longer range planners We said about it speak for us
Erin Brewer: you know, and maybe stepping back 10,000 feet, it's reasonable to assume, you know, sort of a stable, you know, overall steady pricing environment. And I still think as you look on a multi-year basis, that's probably a reasonable assumption overall. So that's, that's what I'd add to that. Yeah, wonderful.
Erin Brewer: and then on Cher, you know, I don't know, first just a bit of context for everyone. Typically Cher is something we see as a very sort of trailing indicator, you know, it's kind of the thing that you you look at at the end to kind of see did all these things you worked on, you know, what was the overall impact.
Speaker Change: And again, we like our position right now. In fact, Erin mentioned, I think earlier, that we're seeing rides up sort of in mid-teens. I think last week we saw rides up 18% a year.
Speaker Change: are on here. So that's a good feeling, right? Because that suggests that the work that we're doing, I don't know how the other guys are doing. So it's hard for me to know what that means to share. But I know it means that what we're doing is working.
Speaker Change: I don't know how to compare, to be honest, we haven't looked at the data back from 2019, so I'm not so sure about that. But certainly it's the highest share we've seen, certainly since I've joined, probably since COVID.
Speaker Change: Your next call to action comes from the woman of Nicola Livnani, Bernstein. Please go ahead.
Nicola Livnani: Hi there. Thank you for taking my question and apologies if this is a bit repetitive, a few prints tonight.
Speaker Change: Is the priority here to retain some market share? Just trying to get a sense of how front-footed you want to be versus letting some of these rights go in favor of better margins.
Speaker Change: And it seems like right now there's some flexibility in the model because supply side incentives have been improving. But if that changes or moderates, does your decision making around consumer incentives change at all? Or do you see it as most important here to retain share and drive volume growth? Thank you.
Speaker Change: Hey, Nicole. Let me, again, Erin and I will tag team on this one.
Speaker Change: I think, let's see, I wouldn't put our, okay, so first to kind of maybe start almost in the middle, it is absolutely true that with the driver supply we're seeing, you know, that gives us a little bit of flexibility for sure. That is true.
Speaker Change: that our first order, so we say customer succession drives profitable growth. We have to be profitable, of course, and we will be and we'll do that.
Speaker Change: But, gosh, is it a good thing for us to get more rides.
Speaker Change: It's just this. Everything's better. You get picked up faster the more rides. Drivers are happier because they've got more to do and they tend to make more money and high utilization time.
All of those things, I think...
Speaker Change: Again, I don't so much think of it as a kind of share thing. I think of it as a, we've got the best service platform we've ever had. We're picking up people faster. We're delivering great in-car experience because drivers like driving on the Lyft platform and so on and so forth.
Speaker Change: So it's in our best interest within the sort of envelope that we can operate to, you know, frankly, get as many as many rides as we want.
Erin Brewer: Let me turn it over to Erin. Yeah, Nikita, I guess the only thing that I would add to that is, you know, I think it's important to understand we run this business for the long term, right? And fundamentally maintaining over the long term the health of that marketplace balance is incredibly important.
Erin Brewer: We talked on the call about our strategy of pricing competitively, reliably, nothing has changed there.
Erin Brewer: And in terms of incentives, as you know, we will trade those off to balance the marketplace.
Erin Brewer: And we do those in thoughtful ways, you know, in consideration of what's happening in real time, but also to maintain that balance over time.
Erin Brewer: And, you know, if you look at the guide we provided in Q1, you know, that's about 40% margin growth year over year. So doing that in the context of still having our eye on our margin expansion goals.
Thank you both.
Erin Brewer: Sure, thank you. And good note on AB, I liked it.
Speaker Change: There are no further questions at this time. With that, I will now turn the call back over to David Risher, Chief Executive Officer for final voting remarks, so please go ahead.
David Risher: For sure. Yeah. So thank you all. 2024, I think you hear it. It was a pretty amazing year for us. And as a result, we've never been in a stronger position.
David Risher: I'm super excited about what lies ahead, and I sure hope you are too. The whole team does, as we continue serving and connecting millions of drivers and riders every single day. Thanks, you guys. Thanks, everyone, for being on this ride with us, and we will connect with you very soon again.
Speaker Change: Ladies and gentlemen, that concludes our conference call. We thank you for participating and ask that you please disconnect your lines.