Q3 2025 Lyft Inc Earnings Call

Speaker #1: Good afternoon and welcome to this third quarter , 2025 Earnings call . As a reminder , this conference call is being recorded . I'm Aurelien Nolf VP and Investor Relations on the call today .

Speaker #1: We have our CEO , David Risher , and our CFO , Erin Brewer . As a reminder , our full prepared remarks are available on the IR website and we will use this time to answer your questions .

Speaker #1: We will make forward looking statements on today's call relating to our business strategy and performance Partnership's future financial and operating results , trends in our marketplace and guidance .

Speaker #1: 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 #1: These factors and risks are described in our earnings materials and in our recent SEC filings . All of the forward looking statements that we make on today's call are based on our beliefs .

Speaker #1: As of today , and we disclaim any obligation to update any forward looking statements except as required by law . Additionally , today we are going to discuss customers for ride Share .

Speaker #1: There are two customers in every car . The driver is Lyft customer and the rider is the driver . Customer . We care about both our discussion today will also include non-GAAP financial measures , which are not a substitute for GAAP results .

Speaker #1: Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials , which are available on our air website . And with that , I will pass the call on to David .

Speaker #2: Thank you . Aurélien . Wow . Q3 was another record quarter across driver hours , active riders and gross bookings , adjusted EBITDA grew 29% year year , and our free cash flow generation for the trailing 12 months was over $1 billion .

Speaker #2: For the first time in Lyft's history . As you saw this morning , our partnership with United Airlines is now live . You can now all link your accounts to earn miles on all eligible rides .

Speaker #2: You take anywhere , not just to the airport . And even better , rides taken through your company business profile earn even more .

Speaker #2: Now that's stuff . Don't worry , I'm going to give all of you about 20s right now to link your account . I'm not kidding .

Speaker #2: I want you to be opening up your Lyft app . Go to that profile on the lower right hand side . Click that profile button , look for rewards .

Speaker #2: Hit Manage Rewards . Add United Mileageplus every single one of you that's going to be your ticket to ask a question today . Have you done that ?

Speaker #2: Give you a couple seconds to get that done . over big Okay . Additionally , we've focused on continuing to create AV partnerships that are differentiated and purposeful , with each bringing unique learnings and dynamics to Lyft .

Speaker #2: We feel further build upon our AV framework this quarter with the announcement of Waymo , as well as tensor , powered by Nvidia , and we're demonstrating how we're positioning ourselves across the entire AV value chain .

Speaker #2: Looking ahead to 2026 , we are well positioned with multiple growth catalysts converging to accelerate our momentum . I am very excited for this comeback story .

Speaker #2: And with that , let's get to your questions .

Speaker #1: Great . Thank you David . We will now open the call to questions . So if you would like to ask one , please just press star one .

Speaker #1: And if you want to withdraw your question , just do the same another time . So I think our first question is coming from Doug Anmuth from JP Morgan .

Speaker #3: Great . Thanks so much , David , maybe I'll just ask first about your very last comment . There . Just about the multiple converging catalysts in 2026 .

Speaker #3: And what makes you so excited there ? And then if you could also just comment on insurance you had talked about the savings from SB 371 .

Speaker #3: And just curious if that is still the plan to , you know , to kind of benefit from all those savings or if there's some component that gets reinvested into the business .

Speaker #3: Thanks .

Speaker #2: Sure . Hey , Doug . Two great questions . You know , I'm going to speak very briefly here . And then Aaron is going to take both of those .

Speaker #2: But I'll say very , very briefly on the catalyst side . You know , I've been in this job two and a half years now .

Speaker #2: And oh man , we have more opportunity ahead of us than we've had , you know , since since the first day . And , you know , again , we'll talk about each of , you know , the different pieces there in just a couple of seconds .

Speaker #2: But I can give you some very live data since I was just in our weekly business review. We were just looking at what happened last week.

Speaker #2: Last week was Halloween, of course, and Halloween was not only our biggest day; it was actually our biggest hour by hour.

Speaker #2: We've never had as many rides , never been able to fulfill as many rides as we have . It's our biggest day , was our biggest week , you know , and not by a little bit .

Speaker #2: Just extraordinary momentum going on here . That's allowing us to continue to grow . And I should say just to sort of say the very obvious there , that's just in the United States , that's not even the free .

Speaker #2: Now in Europe , opportunity in the TBR opportunity . So we're coming into the quarter , you know , operationally so strong . So customer obsessed and with so many opportunities next year , it's really a pretty extraordinary time .

Speaker #2: So I'll turn it over to Aaron to talk about the catalysts, and then the insurance question or the California question.

Speaker #4: Yeah . Great . Thanks , Doug . I might go on a little longer than David because I'm kind of excited about this subject .

Speaker #4: But , you know , you see our Q3 results , active rider growth at 18% year over year . All time high gross bookings up 16% year over year .

Speaker #4: Another all time high adjusted EBITDA . As David mentioned , up 29% . Another all time high . So that's our consolidated business .

Speaker #4: But take any of those metrics . Just for North America . Same all time highs . So we've got a lot of momentum .

Speaker #4: Our guide for the fourth quarter is for rides to be up mid to high teens . Gross bookings up 17 to 20% . So we see accelerating growth into the fourth quarter .

Speaker #4: And as we sort of sat and reflected on where we'll end up for 2025 , you know , it was important for us to talk about how we see 2026 .

Speaker #4: So it really starts with our marketplace is stronger than ever , right ? We've got record levels of active riders . We've got record driver hours .

Speaker #4: As David mentioned , record rides . And so multiple catalysts coming together to keep driving this momentum forward . And I'll just mention a few , you know , first , David led off with the United partnership .

Speaker #4: You know , Doug , you were first . So maybe you connected your your accounts first . That's great . Congratulations . But we're excited about that .

Speaker #4: We think that's going to be a great program . Obviously great value for Lyft . Great value with our partner United . We will see full year contributions from Freenow .

Speaker #4: And we expect that business to grow year over year. We're also going to see a full year of impact from TBR Global Chauffeuring, the acquisition that we announced recently.

Speaker #4: That's only going to show up for a pretty small portion of Q4 in 2025 . Under markets remain . You know , a fantastic area for us .

Speaker #4: We had previously talked about those markets in the U.S. representing about two-thirds of that 161 billion personal vehicle trips annually that we see as our market opportunity.

Speaker #4: And in Q3 alone , about 70% of our rides growth came out of those areas in North America . And we see strong continued catalysts for growth there .

Speaker #4: I'll get to California insurance reform in a moment , but that's another area that we think has , you know , a great upside in terms of continuing driving new demand on the platform as a result of that .

Speaker #4: And we've just got strength across our our core platform . You know , as you know , we've been driving , you know , many programs over a long period of time .

Speaker #4: Now to drive driver preference . We've got a great driver rewards program . You know , that's going to underpin our platform health .

Speaker #4: We've got a fantastic business rewards program that we're continuing to promote and get out there . You know , the acquisition of TBR is a natural catalyst .

Speaker #4: A lot of those people are business travelers . So yeah , there's a lot to be excited about as we think about how we're ending 2025 and then what the setup is for 2026 .

Speaker #4: So thank you for indulging me . Hopefully you could hear the excitement in my voice as it relates to California , just to kind of bring everyone on the same page .

Speaker #4: Some people talk about this as the California Insurance reform . It's also formerly known as SB 371 . The headline here is the passage of this bill , which which is going to go into effect in 2026 , 2026 , is a true win win win .

Speaker #4: Riders win , drivers win . And the great thing is , when both of those constituents win , so does Lyft . So what does it mean rideshare is going to become more accessible to riders with a reduction in insurance .

Speaker #4: It does away with outdated , you know , $1 million required coverage for uninsured underinsured motorist requirements . It's been in place for a while and it's 16 times higher than the typical auto coverage .

Speaker #4: You know , where a vast majority of claims are settled for under $100,000 . And over time , this is increased . The cost of Lyft rides in 2025 .

Speaker #4: In California , riders have been paying an average of over $6 per ride , just in insurance costs alone , and then in in certain areas like LA , it's even higher .

Speaker #4: It's almost double than that . You know , it's just nuts . So this bill modernizes those those regulations , you know , we see passing along the vast majority of those savings to riders in the form of price reduction .

Speaker #4: That's going to stimulate demand . That's going to be great for drivers , more earnings opportunities . And then great growth opportunities for Lyft overall .

Speaker #1: Great .

Speaker #3: Thank you . Great . Thank .

Speaker #1: Thank you , Doug . Our next question comes from Eric Sheridan with Goldman Sachs .

Speaker #5: Thanks so much for taking the question , Dave . I think there's a debate going on among investors right now in the sector on how to think about the engines of growth when measured against incremental margins in the sector .

Speaker #5: Beyond just the end of this year . But out over the next couple of years . Can you just hit refresh on your philosophical view on how to think about the balance between incenting growth , driving innovation , but also delivering on continued margin trajectory over the next couple of years ?

Speaker #5: Thanks so much .

Speaker #2: Yeah , sure . Hey , Eric , good to hear from you . I mean , I think , gosh , when you hear that perspective , I think it almost immediately should make you think , you know , the people asked that question are sort of thinking a little bit small , either thinking kind of zero sum , you know , because again , just to sort of state the obvious , but as you say , kind of reground , you know , we're now doing 2.5 million rides a day .

Speaker #2: That's a big number . And , you know , by the way , when I started this job at an investor day to say 2 million rides a day , now it's 2.5 million rides a day .

Speaker #2: But we were more profitable now than when I started by a lot . And we're delivering better service . Here's a fun fact remember those Halloween stats ?

Speaker #2: I was just sort of putting out ? We actually picked people up faster this year than we did last year , even though we were doing more rides by a lot .

Speaker #2: So what that tells you is there is an enormous amount of service upside that that , that we've unlocked over the last couple of years that did not come at the expense of our economics .

Speaker #2: In fact , it was exactly the opposite . It exactly the opposite . Now , why might that be ? Well , that might be because those 2.5 million rides , which then translates to 900 million rides a year , let's call it .

Speaker #2: Plus the other guys , you know , 1.5 billion rides a year , let's call it . So two point some billion rides per year is a tiny fraction of the 161 billion rides .

Speaker #2: Just in North America . And then remember , with our free and acquisition , acquisition , we now have a Tam that's twice as big .

Speaker #2: So I so I sort of like I get this kind of conceptual trade off . But I think that conceptual trade off is sort of a scarcity mindset , sort of zero .

Speaker #2: You know , binary kind of like , you know , we win , the other guys lose or whatever , whatever . I think there's so much innovation left .

Speaker #2: I'll give you a little tiny story there . We launched Lyft Silver whenever that was , maybe six months ago . And now we've increased ridership just in silver .

Speaker #2: So this is for older Americans . It's only available in the United States right now for older Americans , those rides have increased 50% just in the last six months to well over a million rides in total .

Speaker #2: And that's just the beginning of that program . And that's not like a low cost program or sort of a margin , you know , diluted program , whatever .

Speaker #2: So anyway , I'd go on this for a long time , but I think that the customer obsession drives profitable growth . That continues to be our mantra .

Speaker #2: Innovation is what is is that that's how you get from , you know , tiny to small to medium to large , extra large .

Speaker #2: And it's a great product and it's only going to get a better product . And I sort of I don't worry a whole heck of a lot about having to buy that growth or anything like that .

Speaker #2: I think they're much better ways to get that growth . And it's for through innovation .

Speaker #5: Great . Appreciate the perspective . Thank you .

Speaker #2: Sure .

Speaker #1: All right . Our next question is coming from Justin Post with Bank of America .

Speaker #6: Great . Thank you . Ask a couple on Avs . I'd love to hear your thoughts on on how you know nice job on the Waymo deal .

Speaker #6: But how do you think about AV economics? And if that changes anything on margins? And then second, what you're seeing in markets where Waymo is currently operating.

Speaker #6: Thank you .

Speaker #2: Yeah . Let me take it . Was Justin right . Yeah yeah yeah . Let me I'll take the last part first . I'll kind of back into it a little bit .

Speaker #2: And then maybe hand it over to Aaron to talk a little bit about the economics of what we're seeing . So the first okay , the answer to the first question is in markets where Avs operate , rideshare is growing faster than and I'm talking about comparable apples to apples markets than rideshare , than markets where Avs are not operating .

Speaker #2: So that tells you right there that the first thing that happens is Avs come on , is they expand the market . And this is what we because these are new markets , right ?

Speaker #2: I mean , let's be clear . So so that's very exciting for us as an industry . We should be very excited about about Avs .

Speaker #2: It's a good product . It works well . People like it . And they take that and then they take , you know , traditional driver driven rideshare as well .

Speaker #2: So that's that's wonderful . So then so then let's talk about the economics . So you know in the in the medium term okay .

Speaker #2: First like any new thing requires investment . You know that right . So for example in Nashville where we're , you know , hooking up with with Waymo , we're going to build a depot .

Speaker #2: Aaron will talk to you about that in a couple of seconds . But but the relationship , the reason I'm going to go into this , a little bit of depth on this , you know , we spent quite a lot of time with Waymo team really trying to work out an arrangement that was built to scale and built to scale means it's good for us and it's good for Waymo , and it's good for riders .

Speaker #2: Okay , so what does that look like ? Let's go down one click . When you when you put Avs we're talking about now in Nashville a couple hundred Avs that'll be on the ground over the next year .

Speaker #2: And that'll that'll grow over time . When you put Avs on the ground , the first thing you want to make sure is .

Speaker #2: Are you set up for them to be highly available . Doesn't do any good to have an AV sitting there . That's not charged .

Speaker #2: It's not clean . It's not repaired , it's not properly maintained , not ready to go . Okay . If you don't have that , you got nothing .

Speaker #2: So why are we good at that ? We're good at that because our flex drive subsidiary has been doing it for many , many years .

Speaker #2: We have a 90% availability rate , you know , talk to the rental car guys and they'll tell you that that is an admirable , enviable number .

Speaker #2: So we're good at that . And we're only going to get better . So that's number one . And we get paid for that .

Speaker #2: And I'll talk about that in a couple of seconds . And the second thing is you have to talk about utilization . Utilization means okay , the car is available , but is there a rider in it because that's how revenue is generated .

Speaker #2: And the answer there is we've worked very , very closely , very deeply , very technically with Waymo to set up an arrangement where regardless of whether the car is ordered on Waymo or on Lyft , we're going to be maximizing utilization .

Speaker #2: It's an integrated supply management system . It's quite technical , but and will be hard to implement . But once we've got it right , we'll be able to scale it up because both companies have ambitions to scale up .

Speaker #2: You know , both within Nashville and and beyond , over time . So so that's sort of the structure of this thing . You gotta have high availability .

Speaker #2: You got have high utilization . You got to have systems that are super tightly integrated to make sure that the physical world and the digital world all come together seamlessly .

Speaker #2: And it's a experience for riders , which is how you how you drive growth . And now we can talk about the economics broadly speaking .

Speaker #2: Of course , you got to invest in some physical infrastructure , but we like the unit economics . There are a lot in I'll turn it over to Aaron to talk about that .

Speaker #4: Yeah , sure . A couple couple of things to think about here . You know , David , just sort of described what what we call an integrated supply management partnership .

Speaker #4: Right . So that's , you know , number one on the fleet side , driving availability . And number two is we think about the sort of integrated supply piece of it .

Speaker #4: It's about driving utilization to critical things . You know , the good thing is about this construct that we have going in with Waymo is that Lyft earns regardless of platform , right ?

Speaker #4: So regardless of where the car is deployed , where responsible for it being available , obviously , when a ride is deployed on Lyft , then there's economics there .

Speaker #4: So that's the piece of the arrangement . David mentioned . We're building a depot . We had previously disclosed . We thought it'd be about ten , 10 to $15 million investment .

Speaker #4: We signed a lease teams are raring to go , so we're excited about that . For for 2026 .

Speaker #6: All right. Thank you.

Speaker #1: All right. And our next question is coming from John Blackledge with TD Cowen.

Speaker #7: Oh great . Thank you . Two questions . First can you talk about the opportunity in the low scale markets as a driver of growth over the next couple of years ?

Speaker #7: And then second , I think you maybe just got through your one the annual insurance renewal . Just curious . You know , what we should expect to see in terms of impact to cost of revenue .

Speaker #7: Thank you .

Speaker #4: Sure . Hey , John , I'll start with that and then I'll turn it over to David to talk about , what we're seeing in low scale markets .

Speaker #4: So yes , we just completed our ten one renewals . What we're seeing is we expect a mid-single digit increase on a per ride basis .

Speaker #4: You know , great outcome , very competitive . Our team continues to make really strong progress in spending that insurance cost curve . All the pillars that we talked about in our Investor Day are the same things , you know , continuing on technology and approaches to make our platform to reduce accidents and reduce accident frequency on our platform critical pillar .

Speaker #4: We continue to make strong advancements . There . We've continued to build to continue to deepen our relationship with our third party insurance partners , which has a number of benefits , including the way that we share data and can quickly and efficiently resolve claims .

Speaker #4: And then , of course , on the policy front , we talked I talked a little bit about California , a little bit ago , a minute ago .

Speaker #4: But we continue to push forward with what we think are common sense reforms on the policy front . So really , really proud of our team for the outcome on our ten one renewals .

Speaker #4: And I'll turn it over to David .

Speaker #2: Sounds good . And we can even tag team on this . I mean , so for the last I'll give you just a little color .

Speaker #2: Maybe it's been 18 months or so since we've really started to focus on Under-penetrated markets and the reason is , I mean , aside from just sort of diversification , let's say you don't really want all your eggs in the sort of biggest city basket , but , you know , two thirds we look at I just mentioned 161 billion rides in North America , you know , about two thirds of those are under-penetrated markets .

Speaker #2: And we saw in Q3 about 70% of our growth came again from from those markets . So there . So I mean , it's a large part of the country , a large part of the town .

Speaker #2: And then there's , you know , we're seeing great opportunity there by doing some very , you know , clever and careful market management in those markets .

Speaker #2: I'll give you some examples so you can kind of visualize , you might think of a back to school is just kind of come and gone .

Speaker #2: And so when you think back to school you might think high school . But if you think college , you're talking about very significant communities , you know , Bloomington and East Lansing and State College and so forth and so on .

Speaker #2: And in each one of these , we deployed a specific program to really tap into that back to school market . And we saw incredible results , actually outsized results compared to the growth we've seen elsewhere .

Speaker #2: So this is one of those . And I will also say without sort of tipping our hat too much , I think AI can play an interesting role here as well .

Speaker #2: As we look to manage those markets more carefully than maybe we have in the past . So a lot of opportunity there , more to come .

Speaker #2: But but for sure , you should you should expect to see quite a bit of our growth come from there in the future .

Speaker #7: Thank you .

Speaker #1: And our next question is coming from Michael Morton from MoffettNathanson .

Speaker #8: Hi . Good evening . Thank you for the question . This one's for David . David with the free Now acquisition complete and then the TBR deal your global vision for list is starting to come into view .

Speaker #8: And you love to talk about two customers in the car . So what I would love to to learn what is the opportunity that you see outside of the US for where those two consumers are being underserved by the competition , and how Lyft can offer a better product for both of those consumers .

Speaker #8: And then maybe a very quick one for Aaron . We've had a couple of questions on this so far , but the number one question we got from investors this last 90 days and after the Waymo announcement was how can this deal be accretive when the other guys talk about that , they're losing money on Avs .

Speaker #8: So I don't know if maybe you could talk a little bit about is the take rate different because it's a hybrid network or anything around there ?

Speaker #8: I think would be really helpful for some of the investors asking those questions . Thank you so much to both of you .

Speaker #2: For sure . So , Michael , if you'll permit me , I'm going to zoom out . Just a click from your question and then zoom back in .

Speaker #2: So your the premise was , gosh , you've acquired free now and you've acquired TBR , you know , what are you going to learn particularly about service and sort of maybe underserved markets maybe for riders and drivers ?

Speaker #2: I'll come back to the second part in a second , but let's just talk about those acquisitions for just 30s each . So free .

Speaker #2: Now , you'll remember the theory of the case was fairly simple , right ? It sets us up great in the short term to become a much , much more global company .

Speaker #2: It doubles our Tam . It works with the leader in Europe across the taxi segment in particular , which is an incredibly important part of the sort of European ecosystem kind of ethos .

Speaker #2: And it sets us up very , very nicely for autonomous in the future , because fleet management and government relations turned out to be really turned out to be really important in the world of autonomous TBR , more recent , and we haven't talked about that publicly .

Speaker #2: Of course , this happened during the quiet period . You know , this is a global chauffeur network , very , very global .

Speaker #2: I'd say that in the sense that it operates in some 3000 cities around the world . And and we're talking about , you know , Paris and London and Frankfurt and Manchester and Zurich and Hong Kong and Singapore and Dubai , you know , so , you know , world capitals .

Speaker #2: Why ? Because it focuses on executives , people doing , for example , Non-deal road shows the bankers on the call are very familiar with big events like the Super Bowl or F1 .

Speaker #2: Those sorts of things . And so , so and it offers a very , very high level of service . It's part of a $54 billion market .

Speaker #2: This is a different market from the on demand , you know , sort of even the on demand high value mode , like like black , for example , you know , this is a thing way up above that much , much higher service level .

Speaker #2: Okay . So if you then look at those assets now have , then the question becomes , right , how can you deploy them best ?

Speaker #2: And also how can you take what you've learned in the United States and bring it globally ? And just maybe a little bit of editorialization here ?

Speaker #2: I think . You know , taking taking a North American company , making a global company is no small thing . But we're going to do it .

Speaker #2: We're going to do it because the great companies are truly global . They're the ones that are not just thinking of the US as center of the universe and everywhere else is kind of being less them .

Speaker #2: They're that we the ones that learn from what you see overseas and bring it back to the United States and then take it all around the world .

Speaker #2: And so , for example , if you look at TBR , their service , excellent excellence is unmatched . They're very much a global company .

Speaker #2: They're actually headquartered in Glasgow . They have their global operations center , Center of Excellence in Dubai . You know , extraordinary , extraordinary skill set .

Speaker #2: There to level up the service that Lyft can provide all up and down the stack . And then free . Now , of course , has been , you know , a high service group forever .

Speaker #2: Okay . So what are then the opportunities ? I think the opportunities are , you know , I'd say that ride hailing in Europe in particular has been a little bit of a degraded experience .

Speaker #2: If you spent time overseas , you know , it's maybe not even to the quality here in the States . And I'm not satisfied with where we are in the United States either .

Speaker #2: So and I don't tip my hand too much , but I would say a lot of the value we're going to add from , you know , quote unquote , Lyft is bringing some of our marketplace , you know , skills like priority pickup and wait and Save and some other modes to Europe , bringing our driver obsession , I think , in particular Europe .

Speaker #2: And then from Europe, it brings some of the service excellence that we're seeing, particularly at TBR, but also from FREE NOW, and bringing that all around the world.

Speaker #2: So a bit of a long answer , but I hope that gives you at least a flavor of how we're thinking about it .

Speaker #4: Yeah , a couple things , maybe that I would add to that . And then I'll come back to your question . Michael , on the Waymo deal is , you know , also , as you think about free now , you know , think about the skill set that we have around the way that we drive value and volume through partnerships .

Speaker #4: And our partnerships . You know , the partners that we are aligned with are global . Right . There's a great opportunity there .

Speaker #4: We've talked about David , talked about Avs . Just a minute ago . You know , another great opportunity there . I think I mentioned earlier TBR obviously David highlighted that a lot of those are business rides .

Speaker #4: You know we've been investing across our high value modes . Now for some time . And and just organically seeing some very strong success in Q3 alone , our high value modes were grew 50% year over year .

Speaker #4: And so TBR is a great addition to that overall strategy sort of back to your Waymo question . You know , I talk about a couple of things .

Speaker #4: I articulated this as being about driving availability and driving utilization . So the availability side leverages flex drive . And I think the unique thing here and maybe a bit of the advantage we have is this is something we know .

Speaker #4: We know how to keep a car available . You know , with very high quality , very high uptime . So to speak .

Speaker #4: And so we feel great about our ability to drive value to the partnership through that in-house expertise , where again , we're bringing skill and experience to the table .

Speaker #4: The second piece of this is all about utilization , right ? And these these two words are kind of the I think the magic ingredients here , high availability and then high utilization .

Speaker #4: And if you think about this fairly differentiated way that this integrated supply management partnership is constructed , it's really designed for high utilization .

Speaker #4: Whether the car is , you know , deployed across Waymo one , dispatched across Lyft , you're going to get maximum utilization . It's really sort of the our vision of a hybrid network over time .

Speaker #4: So that's the framework with which I would leave you to think about this .

Speaker #2: If you don't mind , I want to underscore exactly what Aaron said and point out that in the flex drive side , not only are we best of breed in terms of availability , but as Aaron said , it's an owned asset of ours .

Speaker #2: That means we don't have to pay someone else for that . So you can you can partner with other fleet management , but that's going to cost you money , right ?

Speaker #2: So so we've got a we've got a very , very nice cost . Both high expertise and very nice cost position on that side .

Speaker #2: And then on utilization side . Yeah . We think we've worked out a scheme that allows whether you get the car from Waymo or the car from Lyft , it's going to be the same pool dynamically , sort of dispatched , you know , depending on the kind of algorithmic work we do .

Speaker #2: And that'll lead to higher utilization , which then improves the economics for both of us .

Speaker #8: Thank you .

Speaker #1: Oh , next question is coming from Brad Erickson with RBC .

Speaker #3: Hi . Thanks . Two for me . So first , I think last quarter , Aaron , you've given us some nice insight on how free now might layer into the model both on bookings and then on on the margins .

Speaker #3: I see the 42,000 rides in the letter , but just curious if you can update us on anything there . What you wind up seeing in Q3 and then what you're embedding into the Q4 outlook , and then secondarily , you know , when you're calling for the bookings acceleration next year , I guess in both North America and globally .

Speaker #3: Just curious if you're embedding any anything additional partnerships wise that you that you have in the pipeline or if that's just based on everything you've announced as of today , thanks .

Speaker #4: Yeah , I'll work my way backwards . The the the 2026 , sort of , you know , building blocks that articulated right out of the set are , you know , feel notice is just all of the things that , you know , you know about today announced partnerships announced acquisitions , etc.

Speaker #4: . So that's what's embedded overall in that , in that outlook . And then as it relates to free now , you know , I don't I don't have a big update for you here for the back half of the year .

Speaker #4: We sort of talked about the incoming run rate . You know , we expect free now to accelerate in 2026 . We're expecting about €1 billion on the top line overall .

Speaker #4: So hopefully that's helpful . We gave some additional guidance about the dynamics of how free now flows into our PNL . Talked about the impact on revenue margin , etc.

Speaker #4: , but happy to go into any more detail . Brad , if you have anything else .

Speaker #3: I guess , yeah , you had talked about those gross margin effects last quarter . Just curious if those were playing out as expected .

Speaker #3: Sounds like they are .

Speaker #4: Yeah , they are , yes .

Speaker #3: Great . Thanks , Brad .

Speaker #2: I might add , just because we're now talking about the international world outside of the US , Canada also turns out to be a nice growth driver for us .

Speaker #2: We've talked about the growth there in the past . I think we delivered about 11.5 million rides in the quarter there as well .

Speaker #2: So again, I know your customer was about free now, but just to sort of fill out the international story just a bit more.

Speaker #3: That's great . Thanks .

Speaker #1: Next question is coming from Nikhil Devnani with Bernstein .

Speaker #9: Hi there . Thanks for taking the question . If I could please follow up on the Waymo partnership . How does the algorithm kind of balance demand between your funnel and their funnel ?

Speaker #9: Presumably you're going to have a lot more demand on day one than they are . So so what is that balance look like ?

Speaker #9: And do you fully expect to be facilitating rides during peak times of day as well ? Or is there platform the first one of choice when ride requests come in , it be helpful to understand that and then maybe a follow up for Aaron on insurance following California .

Speaker #9: Are you expecting any movement in other any other major markets ? As you think about 20 , 26 and 2027 ? Thank you .

Speaker #9: .

Speaker #4: Hey Nikhil , I'll start with that . And then turn it over to to David . So , you know , as I mentioned when I talked about our ten one renewal , you know , working toward common sense , what we view as common sense policy and insurance reform has long been a pillar .

Speaker #4: You know , I think in the past we've talked about changes to reform in Florida , changes in Georgia . So this is something that's that's not new .

Speaker #4: We will continue to work on it . Progress is difficult to predict . There's nothing inherently in any of the remarks that we've talked about for 2026 necessarily assumed .

Speaker #4: I mean , these these things are difficult overall to forecast , but , you know , I would say that we we are certainly optimistic that as perhaps other states see how some of the reforms in California , we believe will lead to much better ride accessibility , better earnings , opportunities for drivers that they'll think that's pretty interesting .

Speaker #2: Yeah . Well put . And then Nikhil , I'm not going to give you too much detail , but I'll but I'll say a little bit I think maybe so that everyone kind of understands the complexity that you're , that you're referring to .

Speaker #2: So yeah . So imagine a world as , as , as will be the world we exist in , you know , next year where there are hundreds of Avs in a market .

Speaker #2: But but there's no way that all of those Avs can satisfy all the ride requests , you know , not even not even close .

Speaker #2: So , okay , so then and then imagine you don't have to use your imagination . This is the future where you know , there's ride requests for Avs are well , those ride requests in general , but specifically for this course are coming in from two different platforms .

Speaker #2: They're coming in from Waymo platform , and they're coming up the platform . So so you get quite a complex situation there that you have to manage .

Speaker #2: If you want not to do goofy things like saying , okay , well , you Waymo get 100 of those and Lyft you get 300 , which is never a good idea because it means inevitably there'll be some stranded on one side .

Speaker #2: They don't get to the other and get stranded on the silly stuff like that . So anyway , to your point then . So then your first thought is , well , maybe you're just gonna come up with some other very basic heuristics , you know ?

Speaker #2: But it turns out those heuristics are not the way the world works . The real world is very , very quote , our head of marketplace , stochastic .

Speaker #2: It changes very quickly , very dynamic . You have some peak times , you've got some load times , you know , neither one of us wants to be stuck with .

Speaker #2: Anyway . So , so go into diesel . But this maybe another time . But the point is it's not going to be straightforward .

Speaker #2: It's not going to be like , okay , you know , so and so gets the first ten and then you get the next ten or whatever it is .

Speaker #2: Literally every single time a ride request comes in , the work that we've done and will continue to do will be to figure out what is the absolute best way to fulfill that ride , and that will be many , many dimensions of that .

Speaker #2: Some of it is ETA , you know , and so forth . ETA meaning how fast it is to pick you up . Some of it might be time of day , it might make all the sense in the world to start picking people up .

Speaker #2: You know , at certain times of day , using only Avs , you know , certain certain reasons . So anyway , it's sort of a non-answer .

Speaker #2: Non-answer , I grant you that . But the this is the reason why this partnership , you know , frankly , took quite a while for us to , to work out .

Speaker #2: But we're very confident both companies are very confident , having run , you know , a bajillion models across this thing that we have something that is going to be effectively accretive for both and keep these assets , you best utilized .

Speaker #2: The last thing I'll say is , I think in a sense , this is really the argument for for the big thing , which is a hybrid network .

Speaker #2: It's really , really hard to satisfy demand just with Avs anytime in the near future . You just there's just not enough supply in the world .

Speaker #2: And so but drivers , you know , they own their own cars . So that's nice . There's no asset ownership . You have to have .

Speaker #2: And they come on and off quite dynamically . Again depending on pricing . So that's a third dimension . Put it all together and we think we're going to create something where the whole is greater than the sum of the parts .

Speaker #2: Maybe someday down the road we'll tell you a little bit more about how we do that . But that's that's the big picture .

Speaker #9: Thank you both .

Speaker #1: Yeah . All right . Well next question is coming from Ben Black with Deutsche Bank .

Speaker #7: Hi .

Speaker #10: Thanks for taking the question . This is Kunal for Ben . A couple of follow . Follow ups on on the on the Avi and the Waymo opportunity .

Speaker #10: One would be in terms of building out these the the centers the service centers in each market . Is that something that you're going to do ahead of time , like planning for the next few markets ?

Speaker #10: Or is that going to be on a market by market basis based on partnerships that you have already entered into ? And then second , what level of availability and utilization do you need to be ?

Speaker #10: You know , breakeven or contribution profit neutral for for the network to kind of pay off . So like in a , in a 24 hour day , how many hours do you need the vehicle to be available and how many hours of usage does it need to have ?

Speaker #4: So Kunal , I'll start there and then maybe David , do you want to talk about how we think about , you know , over the over a much longer period of time , how you how you scale Avs across a broader set of partners ?

Speaker #4: Sure . You know , short answer here , Kunal , is I'm not going to go into the details . Obviously , you know , as we ramp up this partnership , as we gain experience together , we have a lot of optimism .

Speaker #4: Obviously , you know , both the teams will have more to say down the road . But I'm going to stop it at that .

Speaker #2: Yeah . I you know , this is gonna be an where we're gonna have to be a little bit a little vague . The thing .

Speaker #2: So . Yeah . Gosh , let me just let me talk about utilization for one more second and then zoom out . So you might think to yourself , well , it's not that hard to keep an AV utilized because you don't have that many of them .

Speaker #2: And you have a lot of demand . Well , it turns out that's not the way riders think about things . Riders think about things .

Speaker #2: Is this close enough ? So I need to get someplace . And is this car close enough to pick me up on time ?

Speaker #2: And if it is , then I'll take it . If it's priced right and if it's not , then I won't . And so this is where our history comes in , right ?

Speaker #2: I mean , we've been operating in Nashville for a decade now . So we have an enormous amount of data about what time you would expect supply to be needed , where the demand is going to be specifically , I mean , down to the block by block level .

Speaker #2: So , you know , so it is this sort of the inputs here are everything from , you know , geography to history to weather to , you know , special events , you know , you know , is it a is it a big event weekend and so on and so forth .

Speaker #2: And that's something we've been doing for many , many years . And that's expertise that we can bring , even in a relatively in a new city , like it's a new city for , for Waymo , it's not new city for us .

Speaker #2: So that's kind of good news . And then you got to make sure that it I say the car is available to drive and that it's priced right .

Speaker #2: And so forth and so on . You know , again , I'm not going to talk about exactly those break even points , but I will say that , you know , we look at the economics of this and we don't we're not scared by the opposite .

Speaker #2: You know , the unit economics , you would expect would favor Avs over time . You would expect because the variable cost obviously to running an AV is relatively low , not zero .

Speaker #2: To be clear , there are cloud costs . Or electricity costs or maintenance costs and so forth . But but you know , it's you know , there's certain costs .

Speaker #2: You don't have to pay . And then you would expect insurance to be lower as well . So those are sort of some of the inputs that we put in our model when we try to model these things out , but we we like the economics of APIs a lot and think that we've set up something that from the start is going to be accretive .

Speaker #2: And then we'll get better from there .

Speaker #10: Great . Thank you .

Speaker #1: Right . So our next question is coming from Ward from Lightshed . What .

Speaker #11: Thanks . Yeah . Can you hear me now ? Just David , I just wanted to go back to the the earlier question in terms of Nashville , and I think you said expand beyond Nashville .

Speaker #11: I think you meant maybe downtown Nashville , but can you just update us on how you see that relationship going over time ? If you execute with this kind of shared inventory that you have with Waymo , that obviously is different than how Uber is structured it in Phoenix , is there opportunity to get additional markets and what timeline do you think would have to occur before that relationship ?

Speaker #11: Could expand , not just beyond , you know , downtown Nashville , but into new markets ?

Speaker #2: Yeah . Good . Question . And good clarification , Walt . So we have structured this partnership . I'll say it this way .

Speaker #2: Both companies have ambitions to scale beyond just Nashville . And we we built this partnership with the belief that that that's that's the that's the goal .

Speaker #2: You know , talking about timelines is , is is premature . But but I would say that certainly the constructs we're using here are constructs that both companies believe can be the basis of something that expands to , to other markets .

Speaker #2: And I'll just leave it at that .

Speaker #11: And do you think just a quick follow up , do you think the structure of of how you've done this deal with Waymo , because it obviously is different when you're sharing that fleet , right .

Speaker #11: As opposed to separate fleets ? Yeah . And flex drive , you know , make it a stickier relationship . Obviously if you execute on both it becomes maybe harder for Waymo to at least in those markets that you that you launch to , to try and execute on something different .

Speaker #2: I mean , I don't want to comment exactly on how they view it , but I would certainly say that our goal , and I'm speaking just from a perspective here , is to provide such a great level of service that that no one has any reason to look anywhere else but yeah .

Speaker #2: And I think it's also fair to say that the deeper partnership , you know , the more likely it is that that that neither one wants to , you know , do too many other things beyond that .

Speaker #2: You know, but here I'm just speaking sort of generically.

Speaker #11: Okay . Thank you .

Speaker #1: And our next question is coming from Stephen Ju with UBS .

Speaker #6: Okay . Great . Thank you .

Speaker #10: Hi .

Speaker #6: David . Aaron , I don't think I've seen you guys talk about the university programs in a while . And I suppose the opportunity is as attractive as it's ever been as you get to onboard these users who get hopefully very accustomed to using Lyft on other people's money .

Speaker #6: But I also recall there were all kinds of other directions where these partnerships between getting folks to doctor's appointments , etc. so , you know , can we talk about the resources that you might be putting together to maybe accelerate the signing of these ?

Speaker #6: I suppose the enterprise customers , it seems like such a win win development for everybody involved . Thanks .

Speaker #2: Yeah , Stephen , I appreciate the question . I guess maybe I don't know my habit today . I'll zoom out of touch before kind of zooming in .

Speaker #2: So , you know , business to business opportunity . And there and there are different types , right . You mentioned universities as a particular , you know , area of interest .

Speaker #2: And we have specific relationships with certain universities to provide transportation on campus . Very interesting . We have healthcare , Lyft , healthcare , you know , remains a leader in the field .

Speaker #2: It's called non-emergency medical transportation . And it's getting , you know , quite a lot of additional focus now , you know , versus the past .

Speaker #2: We've got a new buck who continues to lead that it's the same . But then over him Susie now brings kind of new perspective and new new energy to that .

Speaker #2: And then and then B2B , when you're thinking about kind of corporate transportation of various different types , of course , TBR is a very high end thing .

Speaker #2: We talked about that already , but , you know , many companies have preferred travel partners and so forth . So I think each of these areas is getting , you know , renewed focus .

Speaker #2: One of the nice things about really focusing on rideshare is , you know , there are a lot of like , we're not distracted by , you know , food delivery and all kinds of other things .

Speaker #2: We can really , really focus on rideshare and look at all the different segments and how we're treating each one of them . You know , in the highest quality way .

Speaker #2: So maybe what I'll do , if you don't mind , I'll pivot just a tiny bit towards the business rewards or the business side of things , rather than just the university and the and the healthcare side .

Speaker #2: You know , we for a number of years , you know , if I'm honest , we haven't had a great offering for business travel managers who want to give their companies , excuse me , their employees , a reason to choose to choose Lyft .

Speaker #2: Now we have one . We rolled one out at the beginning of September . You get 6% back . You just mentioned this idea of , you know , other people's money .

Speaker #2: So yeah , so often at a company , it's the company that's paying . We're giving you 6% back . You can then use that on your personal rides as well .

Speaker #2: That's literally Lyft cash back . You can use it in personal rides . We've seen great uptake there . And by the way , how much does it cost ?

Speaker #2: Zero . It costs zero , which is different from the other guys . It costs not zero . So that's an area where we so I would say just generally again , you know , business to business has become an increased area of focus for us .

Speaker #2: We're seeing really good traction in some of these early programs . We've put out . Healthcare has been a strength of ours for a long , long time .

Speaker #2: And then universities . I'm glad you bring it up . You know , maybe stay tuned for more on that one . Thank you .

Speaker #1: All right . Thank you Stephen . Thank you David . David , any closing remarks ?

Speaker #2: I think if that's it , my main closing remark is , you know , you damn well better be hooking up your United Mileage Plus to lift because that's a that's a great program .

Speaker #2: And up to four miles back for every dollar you spend . Look , we've had a great quarter . And the reason we've had a great quarter is not just because of what we've done in the last three months , it's because we've been doing over the last at least two and a half years since I've been here obsessing over customers .

Speaker #2: That's what drives profitable growth . I think when Aaron and I started , I think the first quarter , I think we had we had consumed $329 million of cash , if I'm not mistaken .

Speaker #2: Now we're producing $1 billion of cash . It's $1.3 billion swing . And the reason that's that's happened is because we've been obsessed with our customers , and we have an incredible team every single day that wakes up and just crushes it .

Speaker #2: And they're the ones that get all the credit . So we get to talk about it . They're the ones that do the work .

Speaker #2: And thank you all very much , investors , for traveling along with us . And we're looking forward to keeping you up to date .

Speaker #1: Great . Thank you David . Thank you Erin . This concludes today's conference . Thank you for joining . And you may now disconnect .