Lyft Inc. (NASDAQ:LYFT) announced its second-quarter 2024 earnings, marking a significant milestone with its first-ever GAAP profitability. The ride-sharing company reported a net income of $5 million and highlighted a robust increase in driver and rider engagement. Record numbers were seen in quarterly active riders, reaching 23.7 million, and the company experienced growth in both ride frequency and ride conversion. Lyft's Media division also saw a substantial revenue boost, up over 70% from the previous year. Looking ahead, Lyft expects gross bookings to be between $4 billion and $4.1 billion for the third quarter, with adjusted EBITDA projected at $90 million to $95 million.
Key Takeaways
- Lyft achieved its first profitable quarter on a GAAP basis with a net income of $5 million.
- Quarterly active riders hit a record 23.7 million, with increases in ride frequency and conversion.
- Lyft Media's revenue soared over 70% year-over-year.
- The company is optimistic about the commercialization and monetization of autonomous vehicle technology.
- Lyft provided Q3 guidance with expected gross bookings of $4 billion to $4.1 billion and adjusted EBITDA of $90 million to $95 million.
- New features like Price Lock and improved driver incentives aim to enhance user experience and driver supply.
Company Outlook
- Lyft reaffirmed its commitment to long-term profitability and sustainability.
- The company expects gross bookings of $4 billion to $4.1 billion for Q3, with adjusted EBITDA of $90 million to $95 million.
- Lyft is confident in achieving sustainable GAAP profit in the early phase of its long-term planning horizon of 2025 to 2027.
- Positive free cash flow is anticipated for the full year, with more than 90% of adjusted EBITDA expected to convert to free cash flow for 2024.
Bearish Highlights
- The company noted a decline in contra revenue and reduced sales and marketing incentive expenses compared to the same quarter in the previous year.
Bullish Highlights
- Lyft's partnership strategy, including a media partnership with Disney, is contributing to growth.
- The company's large platform and experience with AV integration position it well for the future AV market.
- Lyft's advertising business is experiencing rapid growth due to its large audience and first-party data.
Misses
- There were no specific misses reported in the earnings call.
Q&A Highlights
- Targeted advertising is driving significant growth in Lyft's revenue, with the introduction of video ads on the platform.
- Geographical expansion in Canada, particularly in Toronto, is showing promising growth.
- Partnerships with brands like Disney, Delta Airlines (NYSE:DAL), Chase, and Hilton are bolstering growth prospects.
Lyft's CEO, David Risher, emphasized the company's dedication to growth and strategic partnerships, such as those with Chase and in the healthcare sector. The company is also exploring innovative ways to work with partners to reduce costs for riders without compromising sustainability. Lyft's CFO, Erin Brewer, stressed the importance of operating competitively while maintaining a strong marketplace. Both executives expressed their gratitude to investors and the Lyft team for the achievement of GAAP profitability and the excitement for future growth opportunities.
InvestingPro Insights
Lyft Inc. (LYFT) has recently celebrated a significant milestone by achieving its first GAAP profitability in Q2 2024. As investors and analysts digest the details of Lyft's financial performance, key metrics and insights from InvestingPro provide a deeper understanding of the company's current market position and future prospects.
InvestingPro Data highlights a market capitalization of $3.66 billion, indicating the company's size and scale within the ride-sharing industry. While Lyft's P/E ratio stands at -19.83, reflecting market skepticism about its earnings potential, the company's revenue growth over the last twelve months has been a robust 10.9%, showcasing a solid top-line expansion.
InvestingPro Tips provide a nuanced perspective on Lyft's financial health and stock performance. Notably, Lyft holds more cash than debt on its balance sheet, suggesting a strong liquidity position that could support its growth initiatives and cushion against market volatility. Additionally, analysts anticipate sales growth in the current year, aligning with the company's positive outlook on gross bookings and adjusted EBITDA for Q3.
Investors should be aware that Lyft's stock has experienced significant volatility, with a notable decline over the last week, month, and three months. This reflects the market's reaction to various factors, including Lyft's operational performance and broader economic conditions.
For those interested in further insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/LYFT, which delve into Lyft's profitability, stock price movements, and analysts' predictions. These tips can help investors make more informed decisions and understand the underlying factors that may influence Lyft's stock performance and financial stability.
In summary, Lyft's recent earnings announcement and the insights from InvestingPro paint a picture of a company that is navigating its path to profitability amidst a dynamic market environment. With careful consideration of these metrics and tips, investors can better assess Lyft's potential for sustainable growth and long-term success.
Full transcript - LYFT Inc (LYFT) Q2 2024:
Operator: Good morning, and welcome to the Lyft Second Quarter 2024 Earnings Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Aurelien NOLF, VP, FP&A and Investor Relations. You may begin.
Aurelien NOLF: Thank you. Welcome to the Lyft earnings call for the second quarter of 2024. On the call today, we have our CEO, David Risher; and our CFO, Erin Brewer. We'll make forward-looking statements on today's call relating to our business strategy and performance, future financial results and guidance. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings materials and our recent SEC filings. 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. Additionally, today, we are going to discuss customers. For rideshare, there are two customers in every call. The driver is Lyft customer and the rider is the driver's customer. We care about both. Our discussion today will also include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. And with that, I'll pass the call to David.
David Risher: Thank you, Aurelien. Good morning, everyone, and let's jump right into it. Lyft's strong results in the second quarter continue to validate our long-term strategy. Customer obsession drives profitable growth. To start, in Q2, Lyft reached GAAP profitability for the first time in our company's history. This is a testament to our team members and their hard work every day, obsessing over our riders and drivers and operating with discipline and excellence. It's an important milestone and another step along the path we laid out to you earlier this year. Erin will share our financial results in more detail shortly. Turning now to our customers. Driver and rider engagement hit all-time highs in Q2. Q2 saw the most new drivers in any quarter since 2019 on the platform, including 34% more women and nonbinary drivers compared to Q2 last year, thanks to Women+ Connect. Our 70% driver earnings commitment launched nationwide, and in those launch regions, we saw a meaningful increase in driver perception of pay fairness from the prior quarter, a leading indicator of driver preference. This quarter, driver hours hit an all-time high showing our forward progress with a number of drivers and the time they choose to spend on Lyft. In related news, two weeks ago, the California Supreme Court unanimously upheld Prop 22, protecting the independence that drivers’ value. Drivers also had huge wins in Minnesota and Massachusetts that secure their freedom to earn when, where and however they want. Drivers rely on Lyft for available and flexible earnings opportunities. Gig work like driving helps people live their lives on their terms, and that's why it's here to stay. Now when it comes to riders, in Q2, we had a record 23.7 million quarterly active riders, up over 10% year-on-year. At the same time, ride intense conversion increased and ride frequency kept growing, thanks in part to the fastest pickup time we've had in four years. We also had record rides in Q2, including the most scheduled rides in the company's history, and we saw record bike and scooter rides, especially e-bike rides in our largest market, New York City. Rides on our best-in-class e-bikes now represent over half of all bike and scooter rides this year. So, to state it simply, our focus on customer obsession and operational excellence have led to more riders choosing Lyft than ever, and they're riding more often. Before moving on, I want to give you a closer look at part of the rider experience and how we're working to radically improve it. It's what's known as Primetime or surge pricing in the industry. Many of you have probably experienced it at one time or another, and I'm willing to bet you didn't care for it one bit. It's probably rideshares most hated feature. Well, thanks to an enormous effort on the part of our team, building on the great momentum we've seen with drivers, the number of rides impacted by Primetime has decreased dramatically. In Q2, the average Primetime amount included on each ride declined by 25% versus the first quarter, and that contributes to better conversion rates. In fact, the markets where we saw the sharpest declines in Primetime in Q2, like Phoenix, Baltimore and Orlando are the markets where conversion rates are improving the most. So, we are going to do something a little crazy. We are going to open up a can of wombats on Primetime. We are starting with innovations focused on those who uses every day commuters. Reliable pricing is particularly important to them because they know what their ride should cost and hate it when prices change. For those riders, we are piloting a new feature called Price Lock, letting a rider purchase a monthly subscription that caps the price per specific route at a specific time. Primetime won't ever completely go away. It's an important way to match supply and demand when demand spec quickly. But with innovations like Price Lock, we can chip away at how often it occurs and hopefully take what I'm willing to bet is, again, rideshares, least like most hated feature and turn it into a reason to choose Lyft. Next, I want to switch gears and touch on Lyft Media, which continues to perform well, with revenue up more than 70% compared to a year ago. In Q2, we signed deals with 44 new brands, including T-Mobile and Activision and re-signed several more, including Amazon (NASDAQ:AMZN), Fidelity and NBCUniversal. Our in-app video ads continue to drive interest from brands to power this growth. To case in point, our in-app media revenue grew more than 10 times year-on-year. For all our partners, measuring return on ad spend is critical when they sign and resign and consistent with our road map, we're continuing to roll out these capabilities for our in-app video ads. This quarter, we've begun working with three major partners, including Google (NASDAQ:GOOGL) Campaign Manager, and next quarter, we'll integrate even more. We have a leading team and are building the right tools to scale this business. Finally, given recent chatter about autonomous vehicles, I want to spend a few minutes outlining how we think of them. In short, AVs represent an enormous opportunity for Lyft. We believe that the best way for autonomous vehicles to commercialize at real scale and the best way to monetize this technology is through networks where the vehicles can be put to use. Lyft has that network today. To understand why we're so bullish on AVs, you have to remember that a rideshare network is far more than the app you see. On the demand side, Lyft platform gives access to 40 million riders each year in the U.S. and Canada. And on the supply side, it includes a vast set of capabilities in onboarding individually owned vehicles to our platform, making sure every vehicle and ride are properly insured, and offering customer service when things go wrong at scale. And when it comes to fleet management, our Flexdrive subsidiary has given us deep expertise in the easy onboarding, offboarding and servicing of tens of thousands of fleet vehicles over the years. All of this is why in markets like Las Vegas, we've been able to facilitate over 130,000 AV rides so far, and we are just getting started. Bottom line, our aim is to be the easiest and best way for partners to commercialize AVs. Doing so will help us grow ever faster as AV come online in the years ahead. Okay. Back to 2024. We remain on track for the rest of the year as we continue working towards a long-term healthy business. Q3 is the heart of summer travel season and the start of back-to-school and back-to-work, which means good things for the Price Lock commute customers I just mentioned. Erin will share more on what we expect in the back half of the year in just a second. At Investor Day, we said our next phase of growth is here, and the opportunity we see is great. We are thrilled to have achieved GAAP profitability this quarter, and so I want to close by reiterating our long-term foundational thesis. Customer obsession drives profitable growth. I'm pleased with the progress we've shown and confident in the road ahead. Over to you, Erin.
Erin Brewer: Thanks, David. Good morning, everyone, and thanks for joining us today. As David mentioned, we saw strong results in the second quarter, including our first GAAP profitable quarter and we generated significant free cash flow. At our Investor Day, I highlighted how operational excellence drives growth through more driver hours, more riders on the platform and riders choosing Lyft more frequently. In short, Operational excellence underpins the health of our marketplace. And in Q2, we fired on all cylinders. In the second quarter, we had more active riders than ever on our platform, and driver hours hit a new all-time high. Service levels in the second quarter kept improving. Average ETAs were more than 10% faster than a year ago and the fastest in four years. And the average Primetime, as measured by the average surcharge added to a ride, declined by more than 25% quarter-over-quarter. Why is this important? It means we continue to perfect our ability to help drivers know when and where they can choose to drive. That's great for drivers and for riders and also for the long-term health of our platform. Now let's turn to our performance for the quarter, which is consistent with the outlook we provided on our Q1 earnings call on May 7. I'll start with my usual reminder that unless otherwise indicated, all income statement measures are non-GAAP and excludes select items that are detailed in our earnings materials. We supported 205 million rides and 23.7 million active riders. Total rides grew 15% year-over-year and active riders grew 10% year-over-year, driven by improved retention and higher frequency. Gross bookings exceeded $4 billion, up 17% year-over-year. This reflects strong rides growth, competitive prices and lower levels of Primetime given the even faster-than-expected improvements of the health of our marketplace. Revenue exceeded $1.4 billion, up more than 40% year-over-year. Cost of revenue was $812 million, up 37% year-over-year driven by higher insurance costs as compared to the prior year and higher ride volume. Operating expenses were $556 million or 13.8% of gross bookings which was slightly higher than in the first quarter of 2024, mainly driven by sales and marketing, specifically incentives tied to rider engagement. Let me take a moment here to remind you about the way we think about investments in contra revenue and sales and marketing incentives. At our Investor Day on June 6, we shared how we are delivering seamless, dependable customer experiences, which means continually helping drivers know the best time and places to drive to enable them to meet their goals. That, in turn, continues to drive preference, engagement and retention with our customers and unlocks more efficiencies in the marketplace. Part of running a dynamic marketplace means that we are constantly trading off between contra revenue and sales and marketing incentives to optimize the balance of the marketplace. Therefore, it's worth noting that on a combined basis, contra revenue and sales and marketing incentive expenses declined double-digit on a per-ride basis compared to Q2 of last year. Turning now to adjusted EBITDA. In the second quarter, adjusted EBITDA was $103 million, which as a percentage of gross bookings was 2.6%, up from 1.2% a year ago, driven by efficiencies in our marketplace and further operating expense leverage. GAAP net income in the second quarter was $5 million. This marked our first profitable quarter on a GAAP basis, reflecting our focus on operational excellence and cost discipline. This is a very important milestone for the company and consistent with our focus on long-term profitability and sustainability. On that note, as I discussed at our Investor Day in June, we are confident in our ability to achieve sustainable GAAP profit in the early phase of our long-term planning horizon of 2025 to 2027. Progress won't necessarily be linear, but the overall trajectory is moving to sustainable GAAP profit. We ended the second quarter with a solid cash position with unrestricted cash, cash equivalents and short-term investments of approximately $1.8 billion. We generated $256 million of free cash flow in the second quarter and a total of $368 million of free cash flow over the last four quarters. Turning now to Q3. We're off to a good start. The team is hard at work on supporting summer festivals and new back-to-school and commute activations, and focusing on delivering a seamless experience to drivers and riders. For the third quarter of 2024, we expect gross bookings of approximately $4 billion to $4.1 billion, up 13% to 15% year-over-year, growing slightly faster than rides. We expect adjusted EBITDA of approximately $90 million to $95 million and an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.3%. We are reiterating our expectations for the full year 2024 and continue to expect total rides growth in the mid-teens year-over-year with gross bookings to grow slightly faster than rides on a year-over-year basis. We expect an adjusted EBITDA margin as a percentage of gross bookings to be approximately 2.1%. This outlook includes our current estimate of the impact of third-party insurance contract renewals, which will mostly take effect in the fourth quarter. The final stages of the negotiations are still underway. But at this point, we have good visibility into the outcome. Consistent with our expectations, we believe that the rate of premium increase year-over-year will be slower than the prior year, reflecting the ongoing work we've done to bend the insurance cost curve through product and safety initiatives, aimed at reducing accident frequency and improving settlement outcomes, which our partners are recognizing in our renewal discussions. Turning to free cash flow. We are on track to generate positive free cash flow for the full year, and given our strong progress in the first half of 2024 and our increased visibility, we now expect that more than 90% of adjusted EBITDA will convert to free cash flow for the full year 2024. This means we will reach our long-term conversion target of more than 90%, which we articulated at our Investor Day in June, well ahead of schedule. With that, I'll bring our prepared remarks to a close. We had a solid second quarter, and we have strong momentum going into the back half of the year and beyond. We remain focused on building a long-term healthy business. Our focus on operational excellence, product innovation and partnerships and media will continue to grow preference, engagement and retention with drivers, riders and our partners. Operator, we're ready to take questions.
Operator: [Operator Instructions]. Our first question comes from the line of Doug Anmuth with JPMorgan (NYSE:JPM). Please go ahead.
Doug Anmuth: Thanks so much for taking my questions. I have two. First, can you talk more about how the economics will work on Price Lock? What kind of use cases you anticipate? And generally, what kind of -- what gives you the confidence in rolling this out? And does it play into the 3Q outlook, if at all? And then also, if you could talk a little bit about just balance on the marketplace, record high supply and driver hours. Can you talk more about the transition that you're making as you shift incentives from drivers to riders and the impact that you're seeing there? Thanks.
David Risher: Doug, it's David. Why don't -- maybe Erin and I will tag team on this one. Erin, why don't you take the second part and then I'll talk a little bit about price lock. You take the second part. Doug your question was around driver -- contra revenue versus marketing and so on and so on. Yes, I think, Erin.
Erin Brewer: Yes. Yes, sure. Happy to take that. As we mentioned in our prepared remarks, we've been extremely pleased with the progress that we've made, and it's been a concerted effort over the last four quarters. If you think about the effort around driver earnings commitment, for example, along with many other initiatives that have helped really increased driver engagement on the platform. And then also, you've seen us continue to invest on the rider side and against specific activations for product launches. And we've seen great progress there. We've seen new riders increase. We've seen retention increase. And so, we've been really pleased with the outcome of those investments, which gives us confidence as we think about investments for the future.
David Risher: Then on Price Lock, I'll get to the economics in a second, but first, what's the basic value proposition. So as Erin just said, on drivers, we've got great supply, and they really like what they see, with transparency, with consistent earnings and so forth. So, then the question becomes on the rider side, what can we do to make the product even better and the service even better. And people just don't love the variability, right? They don't love the idea. In fact, actually, I'll tell you a very specific story super briefly. So, there was a woman I picked up as a driver myself couple of months ago in and she said, like every morning, she'll wake up early and see whether the commute from Salt Slido into San Francisco is $25, $30, $35 or even more? And if it's $20 to $25, she'll definitely take a Lyft. If it's more sometimes she will, sometimes you won't, if it's too much. She'll drive and so forth. So, people really don't care for it. So, Price Lock, the idea is you pay a subscription fee. We're still trying to figure out the exact economics of it. It will definitely be under $5 segment for sure. And you lock in a price, and that price is meant to both save you money, but also maybe more importantly, give you predictability over time. And like anything else, it will be something that takes a couple of quarters to sort of work it to through the system. It's definitely in our forecast, our outlook. Of course, because we're driving down PT, that has a little bit of an impact on bookings, right, because PT shows up in bookings, but that's okay because that's how you drive growth as you get your prices to a more consistent way. And then we like the economics of it medium to long term. And stay tuned. We're super excited about it. We've been in testing mode for about a month now, but it's available to everyone right now. If you open up your Lyft app, look at it, it's right in the menu, hamburger menu and lock in your price. I think you'll like the experience.
Doug Anmuth: Thank you.
Operator: Our next question comes from the line of Ken Gawrelski with Wells Fargo (NYSE:WFC). Please go ahead.
Ken Gawrelski: Thank you, so much. A couple for me, please. First, I appreciate the color on insurance, although I think if the -- if I recall, 17% increase per ride that you announced for the last renewal. Could you just give a little bit more color? You said it will moderate from there. Just -- and I know the negotiations are not complete. But maybe there's a lot of room there between 17% and kind of 1% or so. So, if you could give us a sense of just the kind of magnitude of moderation there. And then maybe just a second, if you could just touch on what you're seeing on any kind of cyclical elements either through restaurants or that kind of entertainment side and from a ride case or airport rides. If you could just talk about any impacts you might be seeing there given the plethora of weaker consumer data points? Thank you.
Erin Brewer: Ken, thanks so much for the question. I'll start off with the first one around insurance. And let me just start off by saying we have a great team, and they are doing a great job with respect to our insurance portfolio. I've been really impressed to see the progress that we've made. And you heard a little bit about our road map on product and safety initiatives aimed at reducing accident frequency, both what we achieved to date and what we expect to achieve going forward as we highlighted at our Investor Day. And we also talked about the importance of our partners and how critical our partners have been to us over the years, how closely we work with them. I'm extremely pleased to see that recognition in that progress. And it's getting reflected in our renewal rates. So, I'm not going to give you a specific number, Ken, because we are in the final stages here. But if you think about it in context of last year, so last year in the fourth quarter of 2023, we talked about insurance cost increases. We talked about it on a sequential basis. We said from Q3 to Q4 last year that it was about $100 million, which if you take it sort of straight over the ride, it was about 15%. And so, we fully expect that to be lower. It is embedded in the reiteration of our full-year guidance that we outlined today. So just bottom line, really pleased, and we're on a very good path, Kudos to the team here at Lyft.
David Risher: And then, Ken, on your question on sort of consumer sentiment. So big picture, we're seeing strength across the board, right? That's the big picture. And it's interesting. I mean, we all read the same newspaper articles and so forth. I think maybe people are a little attuned to pick up bad news. But frankly, we see people go into concerts and events and so forth and so on. So, there's sort of things that people do when they're actually feeling pretty good about their prospects. Revenue the other way around. I'll give you a little bit more data on a couple of sort of subsegments. So, for example, we call party rides kind of Friday, Saturday night rides late night after, I think it's after 5:00 through midnight or maybe later depending on your definition of a party, anyway. And there we saw, I think, about 19% growth year-on-year, which obviously is a little faster than some of our other segments. Then when you sort of go a little bit deeper, you start to see some regional differences. For example, on the West Coast, there's still actually a little bit more commute action and growth than in the rest of the country because, again, it's sort of growing off of a base. It was a little bit depressed post-pandemic. So -- but these are, frankly, fairly minor variations. In the grand scheme of things, we're seeing growth across the board. I'll mention -- I will mention airports -- and again, airports they're quite interesting now. They're always seasonally higher in Q2 than in Q1, just because travel is beginning. I will see that non-airport rides grew a little bit faster than airport rides this quarter. But again, it's really nothing significant. We're seeing pretty good strength across the board and a lot of people -- they rely on rideshare and it doesn't really change too much of these from what we can tell.
Erin Brewer: And Ken, I might just jump in and out. I know your question is around use cases. But obviously, talking about our guidance for gross bookings, growth of 13% to 15% year-over-year for the third quarter. And as a reminder, we talked about gross bookings growing slightly faster than rides. I just want to highlight in our prepared remarks, we talked about Primetime coming down significantly in the second quarter, even faster than our expectations. And we see that continuing into the third quarter. Remember, that's a really good sign of the health of our marketplace and consistent with our focused efforts over the past year to drive preference with drivers. Primetime coming down will have an impact on gross bookings per ride. And so again, consistent with what we said before, we expect gross bookings will grow slightly faster than rides, probably emphasis on the slightly given that dynamic of gross bookings per ride. But really, really pleased with the dynamics and the health of the marketplace. You heard us talk about some of the all-time highs in the second quarter. So, we feel like we're in good shape there.
Operator: Our next question comes from the line of Michael McGovern with Bank of America (NYSE:BAC). Please go ahead.
Michael McGovern: Thanks for taking my questions. I was curious for Price Lock, if there might be some effect of having kind of a headwind to Wait & Save mix because of that price cap and -- are those two products kind of overlapping a little bit in that lower price point segment category? And to that end, just curious what Wait & Save mix looks like at this point and kind of the unit economics of that lower price point offering and any impact that, that's having?
David Risher: Yes, it's a good question. They don't really compete with each other. And it's -- yes. So, Wait & Save has been stable. And even during our tests and stuff, it's actually a great product. We continue to love it, and it's great when people want a deal. It turns out for commute, the variability around waiting isn't so much what people want, right? They kind of need to get to the office at a certain time. And so, I wouldn't say that to compete with each other per se. I really do believe Price Lock is sort of an unlock-out. It just takes the frustration away. And I think if you want to think about it maybe competitively -- what a lot of people do, do in the morning is they'll check multiple apps. And we want to give them, frankly, less reason to check the other guy and more reason to say, you know what, I've made an investment, and it's relatively small. And as we say, a couple to $3 to $5 on like that, and that's going to give me consistency. I think Wait & Save is more about sort of trading off time and money. This one is actually more about paying a little bit of money in subscription fee to get a very, very consistent experience day in and day out for 30 days.
Erin Brewer: And Michael, I'll just add on to that and emphasize that as you think about our overall mix, if you will, of our modes that, that has remained stable. We are not seeing changes there. And then all of our modes contribute to the growth in our profitability.
Operator: Our next question comes from the line of Brian Nowak with Morgan Stanley (NYSE:MS). Please go ahead.
Brian Nowak: I have a couple. The first one, if you sort of go back to the Analyst Day and the multiyear bookings guidance in the mid-teens, as you're sort of thinking through Primetime coming down and Price Lock, has anything changed about sort of your visibility and kind of the drivers of that mid-teens growth? Then the second one, Erin, this is sort of a -- it's kind of a math question on the CAGR. As we're thinking about this '24 to '27 bookings CAGR in the mid-teens, a lot of times CAGR, they started a higher number and they go on to a lower number. But the way you guys built this out, is it more sort of like you see a lot of drivers to just consistently stay in these mid-teens range each year as opposed to sort of decelerate over the course of the year and end up at a multiyear CAGR in the mid-teens? Can you just help us on kind of the trajectory that you've drawn up on that CAGR?
Erin Brewer: Yes. Sure, Brian. I'll start and then I'll turn it over to David to chat more about some of the long-term growth drivers we articulated at Investor Day. So, as it relates to the trajectory, I would say, overall, we thought about it as relatively steady. Now you have to understand that given that, there will be points along the way. For example, you heard us really talk and dig deep into partnerships. And our strong ability to partner and the runway that we felt like we had to grow partnerships, that's just one example. And so, you can imagine along that trajectory of that multiyear plan that in any given period of time, maybe as a partnership ramps up that you could see a different cadence there. So, I'm just giving you a little bit of color to emphasize that it's not always an incredibly straight line, but no, we did not envision it with a particular slope at the front or the back end. So, I would say, stepping back, you can think about it as relatively steady.
David Risher: Yes. And I'll piggyback on Erin's comments and maybe even out a little bit. I -- it's so tempting to sort of think about short-term things and so forth. But we're really thinking about this business in a long-term way. We really are, right? Remember, one of the things we said at Investor Day is there were 160 billion rides every year that people take in private vehicles in North America alone. So, we're very focused on what are the fundamental drivers that are going to get more people not using their personal vehicle because it's hard to park because it's complicated in their lives. Why not let someone else drive a good price, picking me up exactly on time, taking where we want to go and so forth. So that's really our focus. And that's why we're so excited to see our service metrics so great. Quickest pickup times we've had a long time, great pricing, great service levels and so forth. So then -- so given that context, as Erin just said, like we're not really thinking of a deceleration over time or anything like that. We're thinking, gosh, this is a gigantic market, and we are super, super well positioned for it. Then zooming in or clicking on one level, if you think of Investor Day, again, we talked a lot about customer obsession and certainly around innovation, new products like Price Lock, which really take some of the pain away and make it an even better value proposition. We think about our partnership strategy, again, as Erin just mentioned and we're seeing great, great momentum there, particularly on the media side. As a quick aside, we just signed -- re-signed with Disney, which I think it's wonderful. We're the official share provider of all Disney World Resort. And it's a great experience. And they just resigned for another bunch of years. It actually includes a media buy, which is fantastic. And they're a company that doesn't partner with companies that don't have a similar view around customer obsession and growth. So anyway, the whole kind of partnership piece is super important in our media business. So, I kind of expand a little bit beyond what you said, but we feel really good about how we're positioned. And we just keep looking a couple of years out. As Erin just said, we've got -- we're very confident in our guidance, not just for the year, but frankly, for the next -- through 2027.
Operator: Our next question comes from the line of Brad Erickson with RBC Capital Markets. Please go ahead.
Brad Erickson: I have two. First, can you just expand on that point with Primetime coming down? And I think you mentioned price lock too. But I think the -- I guess the implied guidance for Q4 aims to kind of improve off of what you just gave for Q3. Why would that be the case if that's the right inference or why wouldn't it? That's the first question. And the second, on the topic of AVs. Can you just talk about the tech that you have in place to work with maybe different partners over time? Is there anything platform-wise need to be built for that? Or is it an easier left if and as those players come to market and any partnerships we can kind of think about there? Thanks.
David Risher: Why don't I start with the AV question a little bit? We'll just do this in reverse order just for fun. So, I want to talk about AVs for just a minute because it's such a hot topic. So, to answer your question directly, there is an enormous amount of tech that we already have built, that we've already used and then we'll continue to leverage in new ways. And let's break it down for a couple of seconds. So, we have this very large platform. We do 2 million rides a day. In order to make those 2 million rides a day happen, of course, we have to bring drivers onto the platform all the time. Every one of those drivers, we have over 1 million active drivers over the course of the year, every one of those drivers as a car, every one of those cars needs to be -- and drivers need to be onboarded in various different ways, different checks and so on and so forth to make sure they qualify and then obviously, a whole bunch of support along the way. They have to get paid. They have to get insured. They've got to make sure that they've got demand 24 hours a day, 7 days a week. So, these are all sort of the things that we have built into the general Lyft platform. And then specifically, when it comes to AVs, and we've done, as we said, about 130 -- or actually over 130,000 rides in Las Vegas alone, it's all about sort of API-level integration with autonomous vehicle vendors. That sort of integration is quite technically difficult, right? It all looks simple on the app, but behind the scenes, all sort of back and forth are happening. But we have a lot of experience doing that. And as I said, we've got -- so anyway, we'll build on exactly that experience. And then the last thing I'll say is, when you look at how AVs are likely to enter these sorts of platforms, some of the will be owned by individuals, maybe putting their car on the platform after hours when they're not being used, and some of them will come in the form of fleets, right? Entire companies that will buy up AVs can be just like a rental car company might do today, buy up a bunch of cars and then need to get them utilized. And by the way, they need to get them utilized a lot, probably I don't know, 18 hours a day or something like that to make sure these things actually pay off. So -- but anyway, fleet management is its own area of expertise and specialization. Again, you've got to figure out how to keep cars serviced, when they go offline. You basically want your cars utilized all the time. But things break down, accidents happen, even with AVs, which will probably be safer, people will bump into them all the time. So fleet management is the whole thing. And we have this Flexdrive subsidiary that we've had for years and have onboarded and offboarded and serviced and worked with tens of thousands of vehicles over that course. I think we've got about 15,000 vehicles kind of online right now. So you put all these things together and you realize that we are very, very well positioned, and we're in very active conversations with all the partners you would expect, who are very interested in figuring out how can we take this tech -- I mean, everyone from the OEMs, so the ADAS guys, the people who are actually developing the tech and commercialize it, and we're their best bet.
Erin Brewer: And Brad, I'll take your question on Q4 and the full year. I'll start with the full year. Just as a reminder, our full year directional commentary, we talked about rides in the mid-teens. And obviously, that's a range. And then we talked about gross bookings to grow slightly faster than rides. And I provided some commentary on what that means for Q3, given the dynamics that we're seeing in Primetime. But also, as a reminder, the third quarter is a big season for bike rides. And so that has an impact as well. As you think about the Q4, the dynamics, I think you asked specifically about rides, I think it's reasonable to expect a slight increase in rides in Q4 and because we also, again, have the dynamic of that being a lower seasonal period for bike rides given weather, and then that implies just a slight uptick on the rideshare side of things. So hopefully, that gives you some color to your question.
Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs (NYSE:GS). Please go ahead.
Eric Sheridan: Thanks so much for taking my question. I guess we've talked a lot about the operations of the business. I want to ask a quick one on capital allocation. At Investor Day, we talked about trying to limit dilution from stock-based comp over time and then potentially maybe looking at your balance sheet as another tool for driving equity value. Would love to get any updated thoughts you have on either to make sure of finding the right balance between growth investments for the long term and potentially using assets on the balance sheet to be aimed more at equity creation. Thank you, so much.
Erin Brewer: Yes. Thanks for the question, Eric. You asked about stock-based comp. And so, we remain on track with our target for 2024 of $340 million related to that. So, we feel good about that. No change there. And as it relates to overall capital deployment thoughts, we are investing in areas that drive profitable growth. And at the same time, we're very focused on taking a prudent approach to managing our balance sheet. Nothing specific to announce today, Eric. As we generate higher levels of free cash flow in future periods, it certainly gives us more optionality. So again, hopefully, that gives you some color on our thoughts, not a lot of updates from what we articulated at Investor Day.
Operator: Our next question comes from the line of Stephen Ju with UBS. Please go ahead.
Stephen Ju: Okay. Great. Thank you, so much, David, frequency of usage and getting your customers to come back again and again is something that's been on your mind. So, it looks like on the latest results and I think so far this year, we're looking at monthly rides, that's probably about 15% to 16% below where Lyft was in 2019? I know there's a lot that goes into this between day-to-day execution as well as new product rollouts. So, can you tell us where the majority of Lyft's engineering resources are being placed to drive that greater utilization? I mean not that we need explicit disclosure on what products you may be making, but rather some perspective on, hey, we're planning these many releases in the first half of '25, second half of '25, so we get a better sense of the road map from here? Thank you.
David Risher: Yes. Thanks, Stephen. About how best to answer that. I mean, I guess, again, maybe I'll start sort of big picture for a second then zoom in. When we look at overall allocation of resources, we're always looking at quite specifically on the rider side -- well, okay, first on the driver side, how do we make sure we've got great driver supply. And there's almost no such thing as too good drivers supply. So, it's always something we're looking on because we want to make sure as many drivers are driving as possible for pass pickup times and so forth. And so there, maybe I'll stick on that for a couple of seconds. If you look at our cadence, we did a very large release earlier this year, the 70% earnings guarantee, which, as we said before, has been very, very well received and really sets us apart. I actually literally had a Lyft driver last night who commented on how much he appreciated that. So anyway -- and you can expect even now, we're actually rolling out some additional features around giving drivers additional visibility into how much they're going to make every time they accept a ride and so forth. So that's sort of a rolling thing, but you can expect sort of another kind of release to come on the driver side to give drivers even better ways to earn and so forth. We actually just launched as a quick aside, in called Lyft Direct, a new version of a kind of a co-branded or a credit card -- debit card actually that allows drivers to have a high-yield savings account and get paid immediately and so forth. So that's kind of a continuous thing. We're always working on the driver side, but there are kind of a couple of chunky things that happen every year. On the rider side, we're coming into the -- coming through summer, of course. But then -- and so things like the on-time pickup promise for airports is quite important. That's a very feature. But then you can expect again something in the fall really focused on commute. Now in this case, we've really already talked about that, that's going to be Price Lock, and it's a huge focus for people who are commuting. So, I don't know -- so I guess maybe zooming out then on the rider side, we're always looking at a combination of how do we get new riders on the platform and then how do we increase their frequency. And in both cases, we have all-time highs on the new rider side for sure. And the frequency we've kind of gone up as well. So, I don't know. I know it's maybe a little bit vague, but it's kind of a -- customer obsession sort of means having some big chunky things, but also just continuous improvements every day to make the service better. And we feel like we've got a pretty good -- we've got a good road map ahead and good balance between all that.
Erin Brewer: I might just add on to that a little bit, Stephen. To give some context, growth in active riders has been greater than 10%. And every quarter over the last -- over the last four quarters, excuse me, while frequency has also been growing sequentially every quarter, and we touched on retention as well going up. And so, I know your question was largely around engineering, but -- we continue to see opportunities to make really smart investments that drive rider preference, retention and engagement. And I think some of that trajectory and the stuff that I just listed off gives us a lot of confidence in our framework for those investments going forward.
Operator: Our next question comes from the line of Tom Champion with Piper Sandler. Please go ahead.
Unidentified Analyst: This is Jim on for Tom. Thanks so much for taking my question. Just one on advertising. So, we saw the 10x increase for the in-app revenue. Can you just talk about what's driving that? And how we can think about the scale of that revenue? I'd assume that's off a lower base. Thank you.
David Risher: Sorry, just to clarify, Jim, off a lower base, lower than what?
Unidentified Analyst: Yes. I mean just kind of explaining like what's driving the 10x increase? And how to think about the scale of that revenue?
David Risher: Yes, for sure. So, I won't give you too much specifics on the on the particulars there. What I can tell you is this, so we're super optimistic about this business. And here -- and that growth is kind of the reason why brands are always looking, and this is like a forever statement, always looking for new ways to get to their customers, right? And the world changes, right? 100 years ago, maybe billboards on the road and then it was radio advertising and then TV advertising sort of click-type advertising early Internet days and now much more sophisticated. So that's just a sort of for everything. But the most important thing for targeted advertising is the targeting and the data. You've got to figure out because everyone always knows, like John want to make her famously said, I know half my advertising works, I just never know which half. So increasingly, it's all about the data, and we have an enormous amount of data, right? Every time a rider gets in the car, they're literally telling us where they're going. Are they going to the drug store? Are they going in the supermarket they? Go into 7-Eleven, McDonald's (NYSE:MCD). They are going to an airport; what airline are they taking because we know where there getting dropped off. So, all of these things give us an enormous amount of first-party data that then we can then go and turn around and say to marketers, is this data of interest to you? Either as a brand play or as a sort of more almost kind of called action transactional play, right? When the person gets out at the drug store, maybe you prefer they buy Colgate over Crest or whatever it might be. So anyway, long way of saying, if you've got a big audience, and we do, obviously, 40 million riders, if you've got a way to get data. And then if you've got a way to measure the effectiveness, and again, we do and we're signing up platforms every month now to give additional visibility into the effectiveness. And then if you have engagement, you're going to get growth. And our engagement scores are super high. I've seen there are different ways to measure engagement versus industry benchmarks, but we compare really, really well to a lot of others, and you can kind of imagine why, you literally have maybe a 15-minute trip on average in a trip, you might check your app, 6 times or 7 times. So, we have really -- and these new video ads that we've just sort of put on the platform and now getting to some of the things that are really driving growth, you have new partners, plus you have a new ad unit, in this case, the video ad unit and its performance, you start to see growth. And we're seeing not only growth from existing partners, but even existing partners are signing on again, and I'm talking about ad partners and the new ad partners are coming on as well. So, it's kind of an all of the above thing. We've talked about this as a very, very large business. As I forget the sometimes I say one number sometimes they differed numbers, we're not going to get myself and that will shop this time. But it -- we expect it to be a very, very large business, and we're investing behind it and really liking literally quarter by quarter, what we're seeing.
Operator: Our next question comes from the line of John Colantuoni with Jefferies. Please go ahead.
John Colantuoni: Great. Thanks for taking my questions. So, Canada trips doubled. If we sort of just make a simple assumption that Canada was, let's say, 5% of trips last year. That math would imply that U.S. trips grew closer to 10% in the second quarter. So, it looks like growth is decoupling from Uber (NYSE:UBER) a bit more in the second quarter than in the prior three quarters. Any details you can provide on supply, pricing or timing of the product road map that could help explain that moderation in market share? And maybe on the flip side, can you just talk to what drove the strong performance in Canada? And if there's any learnings that you can bring over to the U.S. market? Thank you.
Erin Brewer: John, I'll take the first part of that question and then turn it over to David to chat more about our efforts in Canada. As a reminder, we don't break out the different geographies. So, I wouldn't comment, but I think your estimates around Canada might be a little bit high. Maybe the broader point is we don't see any change in our share. So, we feel good about where we are there.
David Risher: Yes, 100%. Yes. No, there's no I think the math isn't quite right there. But what I will say -- but we're definitely seeing growth in Canada. I think it's just maybe a bit smaller than what you're thinking in total. And what's driving that -- so I was actually just in Toronto a couple -- I guess it was a couple of months ago now. And what we're seeing is that riders and drivers are loving our customer-obsessed approach. Canada has really been kind of a one-player market there. And it's really great when a second player comes in and starts to innovate around all kinds of areas and frankly, give people a choice in a new option. So, seeing super good growth. I think we mentioned this already, but if we haven't, Toronto, I think, is now our eighth-largest market, so that's great. It's only a single city, let's be clear, and there's a lot more to go in Canada. But the fact that we've gotten to such a strong position in a fairly short period of time gives us a lot of hope. But again, to be clear, there's not really sort of a -- you wouldn't see this in the big picture and certainly not in a way that would suggest that our domestic growth is growing any more slowly than what we've said for -- yes.
Operator: Our next question comes from the line of Nikhil Devnani with Bernstein. Please go ahead.
Nikhil Devnani: Thanks for taking my question. I wanted to follow up on the Investor Day growth targets. Is there any incremental commentary you can provide on faster-growing modes or markets that might help you sustain the 15%? Whether it's smaller cities or suburbs however you want to put it. But I think the challenge investors are having is that the bigger you get; the assumption is that it's harder to sustain the growth unless you have a product cycle or expansion markets to point to. And so, you've kind of alluded to this, see, with Canada, Wait & Save in the past as well. But could you maybe contextualize how big some of these faster-growing verticals or submarkets can be and are for you? And then my second question is around insurance. Erin, it looks like accruals have started to increase a bit. So, has there been a change in strategy to self-insure some more? Thank you.
Erin Brewer: I can start with the insurance question, and then I'll turn it over to David to lead the first part of your question. So, Nikhil, in our most recent renewal cycle, I would say there was a slight mix shift as it relates to our mix of third-party versus self-insurance. It wasn't significant, but a slight shift. And we are always looking at that mix to optimize our overall portfolio and making choices accordingly. So, a slight shift.
David Risher: And Nikhil, I'll say a couple of things about overall growth. I guess -- so again, just remember, the 160 billion rides, like that's a real number. So, there's a lot of up-space to grow even within that, even before we talk about expanding beyond the sort of existing TAM. So maybe I think about it in a couple of ways. So, there's certainly geographical expansion, as you say, and that's part of what we're seeing in Canada and why we're excited about it. And of course, that could potentially open up opportunities in the future. We won't comment on that, but it certainly gives us some interesting data, let's say, it's to use. Then there is -- then there are new segments, right, even within the existing markets. And some of these are going to take a while to really explore. I mean, I can even look back at what we launched last year, for example, Women+ Connect, which we talk about quite often. When I look today at our driver supply, right, so Women+ Connect is a product that allows women riders and drivers to choose each other. And when I look at our driver supply, our women driver supply is actually growing quite nicely, right? We're now up to about -- I think it's about 29% of new applicants are women. And remember, women drive about 23% of the platform. So that's obviously is growth. So, what that allows you to do over time is it allows you to unlock a very potentially very, very large market. People, women who feel maybe a little less comfortable driving with rideshare right or riding with rideshare right now, driving or on either side. And this opens it up. Now consumer behavior takes a long time to change. This is not the sort of stuff that you flip a switch to you see gigantic numbers. But you're talking about half the population here. So that's optimal. So, we look segment by segment by segment and see a lot of opportunities. We talked about leaders as well today. Where commuters were really underpenetrated compared to the value prop, right? I mean people might take these 2 times or 3 times a week, but the us there is sort of a us. They might take rideshare 2 times or 3 times a week, and we want frankly a bigger share of that, and we think we've got a better product. And then we think of our partnerships. So -- and again, we talked about this at Investor Day. Partnerships is -- it's just an incredible sort of DNA level expertise that we've developed over the years. And you've heard some of the same names over and over again, and that's not an accident. It's because the Disneys of the world; the Delta Airlines of the world, the Chases of the world, the Hiltons of the world. These are some of the world's biggest and best brands. And but Delta is having a little bit of a tough day right now. But at the end of the day, it's the U.S.'s biggest carrier, and we've got one of the very small number of relationships they have with their SkyMiles partnership, and that's something that, over time, will be growing even more. Same with Chase. Chase Sapphire, incredibly important part of Chase's portfolio, their credit card portfolio, and they're making huge investments there. And as they invest in that, that helps us as well because we get riders that get points on Chase. So, I think each of these -- it might sound a little bit like more of the same, but what it's really meant to say is when we see something that's working, we double down on it, we go deeper, we try to go bigger, try to really figure out kind of where the growth is coming from. And we just don't see any particular limits to the sort of market size that we're kind of addressing. And so, we feel pretty confident about our targets.
Erin Brewer: Yes. I would say at Investor Day, David, one of the things that at least folks shared comments with me was a new appreciation for the depth of our partnerships, and we emphasized, obviously, our existing partnerships and just the opportunity to continue to penetrate those. And that's not even mentioning partnerships that may come in the future. I think the only other area, Nikhil, that I would point to is health care, and our business there is a market leader in the nonemergency medical transportation space. We continue to see incredible growth there and unlocking new states and new partnerships and continue to remain bullish on the opportunity there.
Operator: Our final question comes from Bernie McTernan with Needham & Company. Please go ahead.
Bernie McTernan: Great. Thanks for taking my question. David, solving for pricing has certainly been a focus for the company. First, the price cuts now lower Primetime. And so, if you look out over the next couple of years, do you think we're at the peak drag from pricing right now? Or is that still in the future? And then how to think about those positive offsets like things from higher conversion, how long does it take for higher volume to outweigh the pricing headwind? And maybe what you're seeing in your best markets right now like Baltimore, Phoenix and Orlando, is that seeing headwind being offset by volume already? Thank you.
David Risher: Yes, it's a great question. I mean people are certainly price-sensitive, right? We all know that. We see it every single day, literally millions of times, I think. And so, we put a lot of energy into figure out how to -- and it's two things. It's lowering pricing when we can, and it's reducing variability when we can. And those things are both very important in the pricing equation. The lower price, of course, everybody likes that. The lower variability, again, people really dislike variability. One of the best -- so we have a couple -- let me just talk about this for a second. I know it's our last question, but it's a really good and important one. We have a couple of strategies there. So, we have some products like Wait & Save, which give us some additional flexibility to match rider and driver in a way that improves -- even though it's a good discount for the rider, it also allows us to work the economics of it such that we can choose them on different drivers and who’s the costly to serve the rider and so forth. So, we're very -- we need to make sure that as we -- as Erin said, every none of our modes needs to contribute to profitability here. So, we're very focused on that. Same with Price Lock, right? There's obviously an offset where you're going to pay a little upfront fee, you're going to pay a little bit less, and we have to make it up in volume, and that's exactly what we're seeing in our early markets, but there's a lot more to go there. We're super early. And then I'll come back to the partnership side. There are so many ways where I think our partners can help us offset costs such that the rider ends up paying less. And this happens today. We have a lot of various different offers from different partners that we kind of cycle through the platform. Maybe you'll have seen some of them. Sometimes it will be extra points on your credit card. But sometimes it will literally be a discount that the partner funds because it really helps drive traffic to their site. And I think that last area is -- and again, to Erin's point, we have real expertise in partnerships. That's an area where I think you'll see us continue to invest. Lowering prices across -- we like where our pricing is. And frankly, our riders generally do too. It's giving us really good growth, all-time high, as we've said all that before. So that's maybe not the biggest focus. The biggest focus now is, what are some other innovations we can do like with partners, have maybe partners pick up some of the cost to provide in a way that will reduce the price for a rider but keep the economics and not enter into some crazy unsustainable thing that sometimes businesses do that just doesn't work.
Erin Brewer: And remember, Bernie, the price of rider experience is a combination of many factors: mode, mix, distance, we talked about Primetime and the impact here on Q2 and Q3. But remember, that's a great thing for the health of our marketplace over the long term. At the end of the day, market prices are dynamic, just as David described and our goal and what we're doing is operating in a healthy and competitive way.
Operator: This will conclude our question-and-answer session. I will now turn the call back to Lyft's CEO, David Risher for closing remarks.
David Risher: Thank you, all. I want to say thanks to two folks -- to two groups. Thank you for being our investors over the long term. We've reached GAAP profitability. I'm super excited about that, but we've got a lot more to go, and we're just as excited about that. And so, for that, I'll thank the team. I mean the team just worked crazy hard to get us where we are, but also to set us up for the long term. We really love how strong our marketplace is. We love how our riders and drivers are responding to our customer obsession. And so that's that. So, each of you, I recommend checkout Lyft, open up your app, sign up for Price Lock, let us know how it works for you. And we're super excited to see you all next time. Thanks for your interest and following us on our progress.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.