LYFT - NASDAQ

Good afternoon, and welcome to the Lyft Fourth Quarter and Full Year 2024 Earnings Call. At this time, all participants are in listen-only mode to prevent any background noise. Later, we will conduct a question-and-answer session, and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to Aurelien Nolf, Vice President, FP&A and Investor Relations. You may begin.

Thank you. Welcome to the Lyft Earnings Call for the Fourth Quarter and Full Year of 2024. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. We'll make forward-looking statements on today's call relating to our business strategy and performance, partnerships, future financial and operating results, trends in our marketplace, and guidance. 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 in 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 car. 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 our GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. Lastly, the team will be in Boston, San Francisco, New York, and Toronto over the next few weeks, so please do reach out to me if you would like to connect with us. And with that, I'll pass the call to David.

Thank you, Aurelien. Good afternoon, everyone, and thank you for joining us. 2024 was an incredible year of reinvention and industry leadership for Lyft. We were executing spectacularly and we're in our strongest position ever. I am super proud to share that we've reached all-time highs in rides, in riders, in driver hours, and even made our service levels industry-leading. As a consequence, our market share at the end of January this year was the highest it's been since 2022 and our financial results are the best ever. It all goes to prove our thesis, customer recession has driven profitable growth. Drivers are choosing Lyft at record rates. In Q4, we had the highest number of driver hours than in any quarter in Lyft history. This was thanks in part due to improved driver retention and improvements to their earnings. Drivers collectively earned nearly $9 billion in 2024, the highest amount of combined driver earnings on our platform ever, and benefited from innovations like our 70% earnings commitment. In Q4, we also had a number of -- a record number of active riders. In a huge win, a series of technical breakthroughs from our marketplace team meant that in Q4, on average, riders were picked up almost one minute faster than the year before. And our average ETAs became the fastest in the industry. I want to repeat that. What we can see, Lyft's average ETA in Q4 were faster than both our big legacy competitor and newer entrants. That's a massive accomplishment and underscores our commitment to offering the best service in the industry. Another rider win we're super proud of is our continued improvement in price reliability, thanks to reductions in surge pricing, which we call Primetime or PT. As I hope you know, we brought PT down significantly in 2024, in fact, even faster than we'd planned, which is great for riders. Aside for much greater price stability, that translates into real savings. In total, riders saved more than $400 million in 2024 as a result of lower Primetime. And we're not done. We look at Primetime as a bug in the rideshare system, so much so that last year, we introduced Price Lock, a feature where riders can pay a small fee to lock in the price of their regular rides. Since launching last fall, we're seeing approximately 70% of Price Lock riders continue to purchase passes month after month. Many of them are high-frequency riders who are now loyal to Lyft, thanks to this feature. And last week, we announced Price Lock around the clock and allowed riders to pause it whenever they wanted. It just keeps getting better. Between launching and improving products like Price Lock and our stress-reducing on-time pickup promise, expanding our highly requested Women+ Connect feature, which by the way has now supported over 50 million rides, and launching our driver earnings commitment, 2024 was the year of innovation like never before. This is customer obsession at work and it's paying dividends. Go ahead and ask your Lyft driver. In a Q4 survey, driver preference for Lyft was 16 percentage points higher than our largest rideshare competitor, up from 12 the prior quarter. Or look at rider frequency, the average number of rides someone takes with Lyft, and the gold standard for rider satisfaction. It's grown on a year-on-year basis every quarter in 2024. Exiting the year, we have the most high-frequency riders in five years. Looking at our financial performance, Erin will get into the details, but our work in 2024 resulted in extraordinary milestones, including the first-ever year of GAAP profitability and the first full year of positive free cash flow. All of this just in the initial year of our multi-year plan. When we obsess over customers, Lyft grows profitably, simple as that. Now on to 2025. You've heard me say that our purpose is to serve and connect and I want to talk more about what that will look like this year. Our goal is quite simply to set a new standard of service for the industry. For drivers, we're turning our attention to recognizing and rewarding the amazing service they provide riders. We'll have more to share on this soon, but it's going to be a further differentiator for us. And for riders, we want them to expect more from every journey, whether it's by feeling special in their extra comfort or black SUV ride or by being rewarded in small but meaningful ways for their loyalty. And we'll continue to rely on great partnerships as a way to introduce and retain riders and unlock more value for them. Our DoorDash partnership is an example, as of Q4, we supported nearly 8 million DoorDash rides. This partnership also helped us reach quarterly all-time record number of scheduled rides, which tend to be longer and higher margin. So far we are very pleased with the results we're seeing and are confident the impact of the partnership will keep growing in the quarters to come. At the same time, in 2025, we plan to continue to expand our margin in customer-obsessed ways. You'll see Lyft Media continue to grow, thanks to the success we've had with our in-app ads. We've just made [map takeovers] (ph) a regular ad product. I hope you saw the latest one, that's ran this past weekend with Samsung to promote their new Galaxy phones. Also, Lyft Media will soon have full-screen vertical video ad capabilities. That's a mouthful. Riders open the Lyft app millions of times each day and we're making sure marketers can connect with them in authentic valuable ways. Another customer-obsessed way we're expanding margins in 2025 is by improving our higher-end offerings. Lyft Black and Lyft SUV rides grew 41% year-on-year in 2024. This was the result of three deliberate actions aimed at changing our ride mix. First, we fine-tuned vehicle eligibility to ensure a consistent and more exclusive black car experience for riders. Second, we significantly increased supply by adding more black car drivers onto our platform. And finally, we launched this mode to many new markets across the US and Canada, making Lyft Black now available in 64 total markets with more on the way. We are thrilled to see how enthusiastically Lyft riders have responded to these improved offerings, which carry higher prices and margins. It's a win-win-win. You'll hear more later this year, but your action item right now, listen up, it's schedule your Lyft Black SUV for Valentine's Day. Finally, in 2025, you'll see the Lyft platform expand to include autonomous vehicles. This will come to life with our partner May Mobility in Atlanta, which is one of the only two players providing AV rides to the public today. Beyond that, yesterday we announced a partnership with Marubeni. They'll be the first to use Mobileye, other partners Lyft-ready AV technology with the goal of deploying their fleet to thousands of vehicles on the Lyft platform over time, starting in Dallas as early as 2026 with other cities to follow. We're in advanced discussion with a number of other partners. The AV future will have many players across the value chain, including several emerging from behind the scenes. They're coming to Lyft for our unique combination of fleet management expertise drive-through our Flexdrive subsidiary and access to our network of more than 44 million active riders -- annual riders. I'll share more with you soon. As I've said before, AVs will be a transformational addition to the marketplace. The more AVs, the more rideshare market expands and the better Lyft does. Now, a closing message to all you Lyft team members who are out there and listening in, you have crushed it. In the past 12 months, you've dramatically improved service to riders and drivers to industry-leading levels. You've introduced a crazy number of customer-obsessed products and you've helped us reach all-time highs in riders, rides, and driver hours. And beyond that, when the devastating fires broke up -- broke out in LA, you stepped up to provide over 20,000 ride codes for those in need, the highest-ever for this kind of disaster. I appreciate every second and every ounce of energy you put into Lyft. We have never been in a stronger position, thanks to you, and we've got so much opportunity ahead. I can't wait for all we accomplish together in 2025. Over to you, Erin.

Thanks, David. Good afternoon, everyone, and thank you for joining us. 2024 was a remarkable year for Lyft. It was the first year in our multi-year plan and we over-delivered on every target we provided at our Investor Day, from active riders and frequency to cost efficiencies and progress against our dilution targets. As David discussed in detail, we significantly enhanced our service, making it more reliable for drivers and riders, which directly resulted in our record financial performance for the full year. The bottom line is we are now more than ever operating from a position of strength. Our improved financial health lays the foundation for years to come. So now let's walk through some of the key financial highlights from 2024. Gross bookings for the year was $16.1 billion, up 17% year-over-year, roughly matching our rides growth year-over-year. Gross bookings is a function of three interconnected inputs, overall market pricing, engagement with riders, and engagement with drivers. Driven by the substantial progress in the health of our marketplace, notably with drivers, Primetime continued to decrease, driving real savings and more reliable pricing to our riders. To help you put that in a bit of perspective if Primetime occurrences happened at the same rate and frequency in 2024 as in the prior year, gross bookings growth would have been 20% year-over-year. As you can see from our record results, Primetime decreasing did not have an impact on our margin growth given it's reinvested in the health of the marketplace. In 2024, we also made substantial progress on efficiency and cost discipline. We delivered 17% efficiency in the deployment of our customer incentives on a per-ride basis year-over-year, significantly outpacing our goal of 10%. In addition, our focus on cost discipline delivered more than 100 basis points of fixed-cost leverage for the full year. This led to our unit economics continuing to improve even when considering the cost of insurance increasing. And finally, we exceeded our original profit outlook with adjusted EBITDA margin as a percentage of gross bookings of 2.4%. This was our first full year of GAAP profitability and we achieved free cash flow of $766 million. All right. Now let's get into the more recent trends in the business. We've had a record-breaking year with a very healthy Lyft to marketplace and strong rides growth. At the same time, we've also seen new dynamics resulting in overall lower prices in the US market, which started late in the fourth quarter. With that backdrop, I'll go over our fourth-quarter results. We delivered 15% rides growth and 10% growth in active riders, both leading indicators that underscore the durability of demand on our platform. We delivered these strong operating results on the foundation of our exceptionally healthy marketplace. In the fourth quarter, gross bookings were $4.28 billion, up 15% year-over-year. Adjusted EBITDA grew nearly 70% year-over-year and we expanded our adjusted EBITDA margin as a percentage of gross bookings from 1.8% in Q4 of the prior year to 2.6% in Q4 2024. We did this through the quality of our execution, our cost discipline, and our continued progress to bend the insurance cost curve through product and technology innovations, safety initiatives, and deep partnerships. We also delivered another quarter of GAAP profitability and strong free cash flow of $140 million. Now looking ahead to Q1 guidance, we're expecting the following trends and factors to inform our Q1 outlook. First, our healthy marketplace and market-leading service levels will support year-over-year rides growth driven by strong durable demand, growth in active riders, and growth in frequency. We will continue to price competitively and reliably while balancing this with other seasonal dynamics. The strength in rides growth and the health of our marketplace is balanced against some seasonal and other factors, including, the Q1 is traditionally our slowest quarter as everyone is recovering from the holidays and weather across many parts of North America encourages staying in or at the very least discourages taking a bike ride. And rides in general tend to be shorter in duration and more local. Further, Q1 in 2025 will have one less day due to the 2024 leap year, which is a headwind of approximately 1 percentage point year-over-year to our gross bookings growth. And lastly, as I mentioned earlier, lower pricing dynamics that started late in the fourth quarter have persisted quarter-to-date. Given that for the first quarter, we expect rides growth in the mid-teens year-over-year, driven by industry-leading service levels and strong rider and driver engagement. Gross bookings growth of approximately 10% to 14% year-over-year or approximately $4.05 billion to $4.2 billion, and adjusted EBITDA of approximately $90 million to $95 million with an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.2% to 2.3%. Separately, given the recent announcement that our partnership with Delta will end on April 7, I want to give you further color to help put that in perspective for what that means for Lyft. We expect this will impact our rides and gross bookings year-over-year growth by approximately 1 and 2 percentage points respectively, starting in Q2 2025. Our long-range plan assumes continued growth driven by our partnership strategy and this announcement does not change that. More to come, we remain confident in our plans to offset the impact in the mid and long-term by further penetrating our existing partnerships and adding new ones. We believe in the strength of our market, the durability of our growth, and our ability to run the business efficiently. We've never been better positioned to take advantage of the massive opportunity ahead. Given our outstanding 2024 performance, our conviction in the business to continue to deliver robust free cash flow, and our commitment to maximize shareholder value, I have two updates to share. First, our Board has authorized a $500 million share buyback program. Our objective, combined with the previously announced net share settlement is to offset dilution from our stock-based compensation. The pacing of the buyback will be systematic and thoughtful in consideration with our capital allocation priorities and aligned with our long-term growth strategy. Second, we plan to reduce our overall leverage by repaying our convertible notes due in May 2025 with cash on the balance sheet. In combination, these actions highlight the strength and flexibility of our balance sheet, providing a solid foundation to support our growth. We're confident in our future and excited about what's in store for this next year and beyond. And with that, I will conclude our prepared remarks. And operator, we're now ready to take questions.

[Operator Instructions] Your first question comes from the line of Doug Anmuth of JPMorgan. Please go ahead.

Hi. Thanks for taking the questions. It's Bryan Smilek on for Doug. I guess, just digging a bit deeper into the recent pricing environment, can you just provide more factors and color just on what's weighing on the 1Q gross bookings outlook? Is it framed more as downward pressure or just more broadly, [monitoring] (ph) increases versus recent years? Thanks.

Hey, Bryan, it's David. I will maybe start with that and give you just a little perspective on pricing in general and then Erin can talk more specifically about the impact. So just so everyone knows, we have a super simple pricing strategy and it is to price competitively and reliably. So competitive means exactly what it sounds like and it's quite important, it's something we adopted a couple of years ago and it's worked very well. And we're well-built for it. We now have a couple of years of doing it very well and we're quite responsive and good at sort of adjusting and kind of rallying with that. And then reliable is also super interesting because that's something we've also worked on a lot. You've heard us talk a lot about Primetime coming down. And again, of course, I know this wasn't the center of your question, but just to give you a little context, these dramatic decreases in Primetime are huge -- there are tailwinds for rides, right, because that's what riders like is reliable pricing. And then we've introduced products like Price Lock, which we can talk about a little bit separately. So that's sort of the context. So when you look at that, that suggests that we're in a dynamic marketplace. You would expect sometimes prices go up a little bit, sometimes they pop down a little bit, and we're sort of dealing with that. Again we're kind of well-built for that. And so now I'll kind of turn it over to Erin, and she can talk a little bit about the more recent things we've seen.

Yeah. Thanks, Bryan. There was a lot in your questions. So, bear with me for just a minute because I'm going to provide some details and some context that I think are important in getting at some of your points. So let me first start with some context overall. So generally speaking, pricing in the Lyft marketplace, if I think about, for example, 2024 has been relatively stable. We see steady -- we've seen steady gradual price increases that happen over time. Those are generally the results of underlying sort of structural increases in our insurance, but it's been stable. It's been pretty steady. So that's what we've seen in the recent history. I know one of the metrics that's obviously more visible is gross bookings per ride, but I think it's also important context to remind everyone that is a result of mix, right? We have different modes, not only in rideshare, but it's inclusive of our bikes and scooters business. So that mix will impact gross bookings per ride over time. So, circling then into the core question really around rideshares, what we're talking about. When we talk about base pricing, and let me define that because I'll reference it in just a moment. So base pricing is what we use when we make comparisons -- competitive comparisons. And what that means is we look at the price we charge -- on a prices charged on a per mile basis and this would exclude coupons, which as you know, fall into our sales and marketing line. And then we observe competitive pricing all the time across all of our markets on a daily basis. We leverage multiple sources. And our goal, as David mentioned, on average is to price competitively in any given market. So I think that context is important. So now let me kind of move to what we've been seeing here recently. I talked about in my prepared remarks that late in the fourth quarter, we saw some new pricing dynamics, generally lower prices across the US. As you know, our strategy is always to price competitively. So we lowered base prices. We did some additional couponing in the last few weeks of the year to keep our marketplace balanced and prices competitive. At the same time, we're proud of our results. We delivered really good rides growth and obviously profitability that was at or above our expectations. So flash forward to today and around -- what we're communicating around Q1, let me just give you a little real-time context on January. So we continue to see really strong foundational fundamental growth in the business and how does that play out? So in January, for example, we've seen rides growth in the high teens. And the backbone of that is continued strength, growth in active riders, continued growth in frequency. So those foundations are really, really strong. At the same time, what I'll share with you is at the end of January, our price on a per mile basis to remain competitive was at the lowest point it's been in the last five quarters. So that gives you some sense for comparison point of the trends. So long answer to your question, but I think the context and details are important. But I think the takeaway and I'll reiterate what David started with is the foundation is incredibly strong and sitting here today operationally, financially, we're in the strongest position that we've ever been in.

Great. Thank you very much both.

Your next question comes from the line of Michael McGovern of Bank of America. Please go ahead.

Hey guys, thanks for taking my question. I think your largest competitor in the US kind of talked about their volume or bookings growth in areas that had new entrants in the market at Waymo in particular. So I was curious if you would give us anything along those lines, just what you're seeing like in San Francisco, for example? And then just going from here with the recent change in the pricing environment with lower prices, how confident are you in the trajectory of take rates and gross margins, which seem to still be trending positively in the fourth quarter at least? How confident are you in the trend for 2025 to be able to continue to deliver improvement despite lower pricing? Thank you.

Sure. Hey, Michael, it's David. Let me -- I'll take the first question first and maybe touch just super briefly on the second and then Erin can kind of pick up from there. So on the market entrance, yeah, it's quite interesting. If you've been in San Francisco, Phoenix as well, LA to a little lesser extent, San Diego to a little lesser extent, you'll see a lot of Waymo's driving around. And so -- and Waymo is pretty amazing tech. It really is. No, you can't deny that seeing a car driving with no drivers is pretty remarkable. Now when you look at what it's done to our business is quite interesting. So in San Francisco, our share -- and I said this before, it remains true. Our share is roughly flat. And so what that suggests, but of course, they're developing right. So what does that suggest? That suggests that either the market is increasing or they're taking share from somebody else, but they're not taking it from us. So that's great because what that suggests, which we've been saying for a while is on average, we would expect as self-driving cars enter the marketplace, they'll actually expand the market. Now Waymo is a little bit of a premium-priced product here in San Francisco. Actually, it's quite premium. I mean, it could be maybe 20% higher. In Phoenix, we're seeing a little bit of a different dynamic. So in Phoenix, which is another market that's quite aggressively sort of patrolled by AV cars, what you're seeing is our share -- well, our growth is actually faster in Phoenix. So this is ranging -- our growth is faster in Phoenix than it is across the country. So across the country, we have mid-teens growth, in Phoenix, we're actually seeing it faster there. So that's also very interesting, right? And again, so that -- I mean, our share is fine there. So again, what that suggests is that you've got these new Waymo cars coming in, again maybe they're unlocking some new demand, maybe they're taking share from somebody else. So we kind of like what we see there. These are relatively small. Here we're talking about just what we're called ODD, so the operating sort of districts that are -- so relatively small part of even of those cities geographies. And you remember Waymos don’t go on highways and so forth and so on. So it's a little bit of a smallish thing. But at the same time, the trends are very interesting because again it sort of suggests that people are taking them and liking them, but then continuing to take a lot of rideshare. I will say that our churn rate is actually better than -- in other words, people come back more regularly on a five-day basis after they've taken a lift than after they've taken Waymo's. So that's kind of interesting. It's suggesting and maybe there are a lot of people who are checking it out and then doing something else. Okay. That was a very long answer. I'm sure we'll talk more about AVs separately, but that's what we're seeing there. On margins, I'll just say briefly, the answer is yes. We're confident there. And there are a lot of tools that we have. And -- talked about mix briefly early. We can talk about some of our different lines of business or different segments that give us a lot of flexibility when it comes to mix. But maybe Erin will kind of jump in here and then we can kind of tag team a little more if we need to.

Yeah. Sure. Happy to. What I would say the bottom line is, our platform has never been healthier, both from an execution standpoint and the financial standpoint. And our long-range plan, which we detailed at our Investor Day in June remains the North Star, hands down, that's our North Star. Why is that? The foundations of that plan, nothing has changed. And if in fact, '24 is any indication, give us even more confidence on the growth drivers and the levers. First and foremost, we're in a great growing market that has a lot of opportunity ahead of it. And so that's a fantastic position to be in. And the foundations and some core underpinnings of that long-range plan are stronger today than they were when we talked about them in June. And that's around just the progress that we have made in growing our active rider base, in growing frequency ahead of expectations in our framework in 2024. And then, of course, the pillars of behind that around operational excellence, sort of the day-to-day execution, the way that we've innovated in the market and David mentioned a couple of the -- a couple of those areas in his prepared remarks. Our partnership strategy, our media strategy, all of those areas we feel great about. And so our LRP really does remain our North Star. You asked a little bit about 2025, I gave some color in my prepared remarks around Delta, right? That's a known change that is going to transition at the beginning of the second quarter, so wanted to give you some framing for what that might look like. We'll see how the year progresses if price environment stays sustainably lower. That could be a low single-digit percentage point impact to our gross bookings. We also would probably see higher rides growth. So at the end of the day, we'll see how that plays out. But as David mentioned, as we think about our business model and all of the levers of profitability, we feel really, really well positioned. We will -- we are focused on continuing to expand our adjusted EBITDA margins. We will continue to achieve efficiencies in customer incentives. We'll continue to get fixed cost leverage. David highlighted some of our higher margin and mode expansion, we will continue to grow our partnership base. And don't forget, we'll continue to grow our media business. We exited 2024 right on track with that $50 million annualized run rate that we talked about at our Investor Day. And we expect to exit 2025 in the fourth quarter at an annualized run rate of around $100 million. So we feel good about our delivery across all of those areas. And that's a lot of detail, but I think it's important to understand our conviction in our LRP as our North Star.

Very helpful. Thank you.

Your next question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead.

Thanks so much for taking the question. I'd love to come back to -- I think in the prepared remarks, you talked about the state of driver supply and preferences for Lyft as a platform. I know this has been an issue you've worked on over the last 12 to eight years to approve the relationship with drivers and sort of increase your supply density. Can you maybe in two parts, talk a little bit about what you felt you accomplished in 2024? And how you're thinking about investments in driver supply and how the product can continue to evolve as you look for strategic priorities into 2025? Thanks so much.

Sure. I'll take that one to start here. Hey, Eric, great to hear your voice. So yeah, I mean, let's maybe take a tiny victory lap on that one because it's so foundational. I mentioned this, as you said in my prepared remarks brief, but I'll say it again. We now have a 16 point preference gap between us and our biggest competitor. And the question is a very simple question, basically who do you prefer driving for or driving with? So that's great, right? So how did that happen? And then what does it mean? Well, so how it happened is, man, did we make a lot of investments in really showing the world that we have two customers in every car, a rider, and a driver, and they both matter. So what do we do? We did things like the 70% earnings guarantee. We've talked quite a lot about that. We've -- I would say, fixed some problems. There's a technical thing called a breakout, which basically means the driver gets promised one price, but then --one earnings. We commit to earnings upfront, but then something strange happens, traffic gets in the way or different things. And so the ride takes longer than it was forecast to, but we now make up for that if it's more than a couple of minutes. And on and on we pay as soon as for scheduled rides, as soon as you arrive, the wait time, all these different things. Some of them are quite small, some of them are quite big. Some of them actually have very little to do with the day-to-day driving. We put a lot of investment into a partnership with Merit America, which allows drivers to earn kind of take classes effectively and sort of do some skill-building so that they can go on to take other jobs. Gosh, there's something else I wanted to mention sort of along the same lines. Anyway, oh yeah, even when a driver has -- here's a cool thing. So we've been testing now a lot of AI on how to respond to drivers' problems. Remember when a driver has a problem, that's time they have to spend resolving that problem. That time is money, right, that times -- that time they're not spending in the middle of them, in the middle of driving. And so we're working on a bunch of AI features and we just did analysis the other day, just based on one test that we did in January, which we'll roll out more broadly. We estimate that drivers saved about 28,000 hours in support time because of some AI we're using now to handle some of their questions. So anyway, it's a whole bunch of things, but it comes down to a very simple thing, which is we want drivers to succeed. When drivers succeed, our platform succeeds and we want drivers to understand that we're behind them. Okay, now so what does that mean? What it means is two things. And some of this is -- you can never exactly predict the future, but here is what we could expect. We can expect to maybe have to spend a little less money on driver acquisition. We can expect to spend maybe a little bit less money on driver retention. We are putting in place a driver kind of a rewards program. I kind of alluded to that to reward them for being great drivers on the platform. So the financial impact of this over time will be very large. I mean, we spend an enormous amount of money. Drivers make a lot of money on the platform, billions of dollars. And so even small improvements there are -- have a huge impact. And I'll finish up just by saying the thing that everyone knows, but you just have to say it again, which is it's much less expensive to retain than to acquire. And while drivers are not our employees, they are independent contractors, we can put a lot of energy and we do into making sure they've got such a great experience that they like driving for Lyft, they provide great service, they keep coming back and that's our strategy.

Great. Thank you.

Sure.

Your next question comes from the line of Benjamin Black of Deutsche Bank. Please go ahead.

Wonderful. Thank you for taking my question. David, could you please dig in a little bit deeper into your Marubeni and Mobileye partnership? How does it come together? Is it exclusive? What type of economic models are you thinking about? And how should we think about your expansion plans beyond Dallas in terms of timing, respectively? And then just quickly, you also mentioned the technical breakthrough that drove your ETAs to industry highs. Can you talk about what you did there and where else you see the potential for other technical breakthroughs? Thank you.

Sure. Yeah, two cool questions, Benjamin. Thanks for the questions. So, yeah, let's do AVs first. And forgive me, I -- like Erin, I'm going to go on a little bit expansively on this. Erin thinks I'm casting shade, but no, that was a compliment. But anyway, I'm going a little bit because I think it's the framework matters. So AV is gosh, it's so easy, I think, and sort of maybe a little bit -- you did not do this by the way, but I'm responding a little narrowly on the thing. They kind of say, look at the AV tech of company A, and look how amazing it is. And the AV tech, there's a whole bunch of really interesting AV tech out there, right? There's what Waymo does, they have a certain approach. They're very successful, obviously, yeah, expensive. I mean, it's got its own things to it, but it's working super well, very safe, very reliable, and so forth. You have Mobileye. Mobileye is, as you know, and maybe we mentioned this last time around, we're the world's leader in sort of driver assist technology and they've been an early innovator in AV tech and they're trying to get to level three, four and ultimately five. And as you know, we signed a deal with them last year to start using their technology in a number of different ways under an umbrella that we're calling Lyft-ready to make as many cars Lyft-ready autonomously as possible. Okay. So that's sort of the background. Now what happened yesterday? What happened yesterday is we made an announcement that sort of puts another sort of support structure into this kind of house we're building, right? And that's financing and to a certain extent fleet operations. So again, stepping back for a second, you've got AV tech at one end of the value spectrum, very important. You've got the OEMs, right, the different companies -- the car manufacturers of the world. We're using, for example, Toyotas in Atlanta with May Mobility, so that's another thing. And then you got financing, someone's going to buy these things and own them. And they're expensive assets and they have certain value characteristics. Most cars get less valuable over time. And so you've got to be very expert in the financing of these things. And Marubeni which is a very, very large, it's about a $50 billion Japanese trading company has been in the business for some number of years. They're a conglomerate. I mean, they do many things, but one of the things they've been investing in recently is leasing -- auto leasing, and in particular, they do that in a couple of countries around the world. And they're looking at AVs as a potential huge new market for them. And so the way this deal came together is we have been looking for partners who are willing to take on the financial commitment of owning these cars. A company like Marubeni, of course, Japan, I think their interest rate is 0.5%. There is to say a trading company, they have different lines of business they can use to sort of move money around. So anyway, this is what they do and they do it at very big scale. So their commitment, oh, and then just finishing up the value chain, then I'll come back. Then you have the whole fleet management side of things, again incredibly important and so underappreciated. You've got to onboard these things. You've got to ensure these vehicles. You've got to make sure they get maintained and repaired and cleaned and charged and off-boarded when they're done and all these different things. That's quite complex. We do a very, very good job of that with our Flexdrive subsidiary, well over 10,000 cars under management at any one point. It's been tens of thousands over the years. Anyway, that's a separate thing. And then the whole marketplace piece, obviously, pricing and ETA and all the different customer-facing stuff, marketing, obviously, and all the things you do 24 hours, seven days a week. Okay. So that's the whole value chain. Now back to Marubeni for just one more second. They are part of the mix now. It's wonderful. We announced that we're going to start with them in Dallas, kind of the 1,000 car-ish type level. That's great. They have the financial capacity to do that and mobilize the technology. We'll separately talk about which OEM will be part of that will be for another day. And then we do expect to scale that up to other markets. This is the part where probably get a little less satisfying for you because we're not going to talk about what those other markets are -- the timeline just yet. But certainly, the goal as we sign these partnerships is that these are long-term relationships. It's not sort of a speed dating thing. So that's that. I think maybe you had another question, but I completely forgot what it was.

Is around industry ETA highs and the breakthroughs there.

Yeah. For sure. Thanks. So, yeah, this was an amazing accomplishment. We're -- look, our market share is less than the other guys. So if you have a smaller market share, that you would sort of as a starting point expect that you would have difficulty providing service that is faster, but that's what we accomplish. So I’ll break it down for just a couple of seconds. We -- if you look on a year-on-year basis, basically will pick you up about a minute faster than a year ago. And that's not one thing, that's so many things. That's so many things. That's being smart. That's obviously having -- it helps to have a lot of drivers. And to Eric's question before, obviously, if you've got a good relationship with your drivers, they show up for you and that's why we have the highest driver hours we've ever had. But it's not just that, right? The drivers have to be in the right place. There has to be the right incentive system for them to move around from the preposition. We do all kinds of interesting bonus zones and all kinds of different things that we've gotten very good at. And a lot of that comes down to very, very smart demand projection. And that quick aside, things like Price Lock also help us there. Obviously, the scale of that, I think we've done maybe 1.6 million Price Lock rides so far. So that's not gigantic in the grand scheme of things, but it's up from zero a couple of months ago. And every time a person does that, that also gives us some more predictability. So that's super cool. And then you just sort of build on top of that, more and more and more, right? So for example, and I promise I'll stop. Sometimes you might have seen in the past that you'll open up your app and you'll get assigned a match, a driver will be matched to you. And then maybe that driver will cancel and another driver will get matched to you. Well, so that's infuriating as a rider, but it's not just infuriating, it also increases ETAs because when that happens, typically the new driver is farther away, rarely is that new driver closer. So okay, what we don't -- we have done many things to reduce driver cancellations. I won't give you the exact number, but I can tell you over the two years I've been here, we used to be in the double-digits and now we are much, much, much, much lower. So it's not one thing with these marketplaces that we do 800 million rides a year, 2 million-plus rides a day. There's -- so you got to do a lot of small things to make these things really kind of meaningful. But you do all these small things and then you've got an amazing team and really I think the best team and the best tech in the industry and that's what allows us to stay with some confidence from what we can see, we're actually just picking-up faster than the bigger guys.

Thank you for all that detail. Appreciate it.

Sure.

Your next question comes from the line of Shweta Khajuria, Wolfe Research. Please go ahead.

Hi. Thanks for taking my question. Let me try two, please. Any commentary in terms of the magnitude of contribution you expect from Price Lock this year? And then second is on advertising revenue. If you could please help us quantify the impact in 2024 and how you're thinking about 2025? Thanks a lot.

Sure. I'll take that. Let's see. I'll start with the second one first and then we'll go from there. So for the media business, I mentioned just a few moments ago that in Q4 of 2024 on an -- we exited the year consistent with our goal, which is on an annualized basis to be approximately $50 million in gross bookings. And that our expectation for the media business in 2025, again thinking about a Q4 exit rate would be an annualized bookings run rate of approximately $100 million. So hopefully, that's helpful as it relates to media overall.

Now, on Price Lock, we probably won't give you much financial data here, but I'll just give you a tiny bit more color. So we launched the product, what was it three or four months ago now, something like that. And the thing we like the most about -- well, the thing we like the most about -- well, the thing we like the most about is the customers like it. I mean, it's that simple. And so as I've said many times before, customers really dislike the sort of fluctuating prices of that rideshare has kind of carried along almost as an assumption that it just has to be that way for years. And so I think we came in and maybe showed it a different way. We've given, as I mentioned very briefly, we've given about 1.6 million rides so far, which is a great number. We have just expanded it last week to now cover 24 hours a day, seven days a week, which is great. That's actually still in testing. It's rolling out over the next couple of weeks. But it's great. What it means is that it can help people who are going on the night shift. It's really interesting. You tend to think quickly, people work from nine to five or eight to six or something, but that's not right. We have people -- actually an extraordinary number of people go to healthcare in the middle of the night or the early morning. And so -- and by the way, I should say that these 1.6 million rides, we think they are largely incremental, right, largely incremental, those are rides that people would not have taken otherwise were not for this feature. So when you look at the sort of totality of that, you can understand why we want to expand it. By the way, we also now give you the ability to deposit when you're maybe on a couple of weeks' vacation or something. So really trying to lean into this to give riders as many ways to choose as possible. And maybe someday we'll give some financials on it, but not just yet.

Okay. Thanks, David. Thanks, Erin.

Your next question comes from the line of Stephen Ju with UBS. Please go ahead.

Okay. Thank you. So, David, I think this might be from the time when you first became CEO. And I think you were hoping that over time with product development and innovation, you will start opening up a wedge relative to your competitor in terms of what Lyft will mean to riders. So where do you think you are in terms of helping consumers no longer view Lyft versus Uber as being a commoditized service than a coinflip, but hopefully driving greater preference over time? I do understand that you'll take a coinflip every day of the week, but you get the point.

Yeah, for sure. Yeah, I love that question. Thanks. That’s Steve? I missed the name. Okay. I'll take that as a yes. Okay, I'm getting thumbs-up around the room. So I don't know, I'm not quite sure how to quantify it, but I can maybe touch more. So your memory is good. And I would say that we -- let me say it this way. I think there was a fair amount at the beginning of kind of getting some basics right, pricing right, paying right, and so forth and so on. That's for sure, it's job one. You don't have permission to do jobs two and three until you get job one done. Then you move into sort of job two, which is you start to really innovate on top of the platform, and we've done a fair amount of that. I mentioned Women+ Connect, very proud of that, Price Lock, and so on. So that's super good. But customers -- our inertia, I'm starting to really understand something now, which is our biggest competitor right now is not another company, it's not another company, it's inertia, it's inertia. It's waking up in the morning and saying, I'm going to do the same thing I did yesterday and that is hard to get into people's brains that there's -- they actually have a better choice right now. They have a better choice, a faster choice, a choice is more innovative. If they're a woman, for example, and they want a woman driver, there's only one choice, but that takes a while to -- for people to see. I would say that we have been -- I'd say very -- I'm very pleased with the success we've had there so far. I think the next thing you're going to start to see is we start to be a little bit more vocal about it in different ways because this is the thing. People have to be reminded of these things. And so we've got to show up in some new ways. And so you'll see us doing a little of that as well. But I don't quite know how to quantify it. I think we're still, I don't know, relatively early in that journey. I think a lot of people -- I drive for Lyft, you can see some of what I say on LinkedIn sometimes after I drive, I post these things. And one of the things that's interesting is to talk to riders and ask them why they chose Lyft and they have all sorts of different reasons, including and I'm very pleased to say this, often, I like you guys better. I think you treat your drivers better, I think that we have better experience in your cars and so forth. But it's not as often as I want to and it's not as often -- I don't hear that as often as I want. And I don't hear as often a clear message about why they chose them. So you'll expect more on that coming soon. But again, I like where we are. And I like the fact that when we do things like brand surveys and so forth, people -- they use the other guys, but they like us. So we're going to build on that really and the people know they've got a real choice.

Thank you.

The next question comes from the line of Michael Morton, MoffettNathanson. Please go ahead.

Hey there. Good evening and thanks for the question. Just two, I think, for Erin. I would love to hear what drove the outperformance in cost of revenue relative to your guide. And then any details you can provide on the decrease in G&A quarter-over-quarter would be great as well. Thank you so much.

Yeah. Thanks, Michael, for the question. Your cost of revenue, you're right, we gave a very specific sort of sequential guide on that when we renewed our third-party insurance agreements sort of Q3 to Q4, and it came in a bit better. I don't know that there's a big headline there of trip distance impacts that cost of revenue. So if it was on average, trips were a little bit shorter, that's going to impact that. So that's really primarily the delta there on cost of revenue. And then in G&A, don't forget, we've talked about this a couple of times. G&A can be a little bit lumpy, there is things in there like tax accruals and releases, legal accruals and releases, our excess insurance, not our primary auto, but insurance beyond that flows through G&A. So really less than half of that line is fixed. So from time to time, there will be changes there, not a specific one or two items that I would call out for the quarter, overall, but hopefully, that gives you a little bit of context.

Thank you.

Yeah.

Your next question comes from the line of Rohit Kulkarni, ROTH Capital. Please go ahead.

Hey, thank you. Just a big-picture three-year outlook question, given '24 and first-half '25 trends that we are seeing, perhaps, what's your latest thinking with regards to the three-year outlook of 15% bookings growth that you felt you would achieve or exceed? And then just a quick one on market share, highest since '22, that's very encouraging. Perhaps you could comment on how does that compare to pre-pandemic? If you were to ask where is your market share versus, say, 2019 levels? Thanks.

Yeah, let me see if I can address -- I think actually Erin and I will address maybe both of those in different ways. On the -- so 2027, so we're laser-focused on that and very confident. And it's -- look, I know I'll just speak maybe a little more personally for a second. Like I know people are going to be a little bit worried. They're like, gosh, look at this bookings thing and what's going on there. Here is the reality. The reality is, price goes up rides go down, price goes down rides go up, this is sort of a little bit of a seesaw thing that happens. And quarter-by-quarter like that's going to happen. Like it's a very dynamic marketplace, all sorts of different trends. We're seeing great demand. The fundamentals are great. We're seeing great service. So that's why I don't -- it's hard for me to stress too much about this sort of thing. It's sort of what comes with the territory. Again, what we're built for. It would be a strange business to try to -- anyway, so we're built for this. Now you have to watch your margins, right? But again, as Erin said, and as I've said, we have everything from [indiscernible] and kind of higher-margin products that we're really getting behind that our customers are really liking. Media business, Erin just mentioned a $100 million run rate that we're confident of at the end of this year. And some other things we haven't even talked that much about, our healthcare business where we're an industry leader with non-emergency medical transportation, that's a higher-margin business and that's a business that's grown 40% year-on-year as an example. And then some other things we maybe haven't talked as much about and won't just yet. But when you look at all those things together, that gives us a lot of confidence both the top-line and the bottom-line and allows us maybe, I hope and maybe you, I hope to look a little bit beyond what happens quarter-by-quarter in any one of those and look at the results we have and look at what we've been able to produce. So that's sort of our view. Maybe, Erin, on the '27 on the long-term plan, then we can talk a little bit about market share.

Yeah. I guess, the only thing that I would add to that is, as we said about the framework for our long-range plan, as I mentioned a little bit previously, the foundation of that plan is grounded in really at the end of the day, a few very simple things. One, that we're in a growth market and there is tons of opportunity and runway ahead of us, and that we're -- we are laser-focused on rideshare. We believe we can act quickly, we can innovate against this very large market opportunity, nothing has changed there. Nothing has changed. And then the other kind of key piece of the foundation is our belief that through continuing to operate the platform in an exceptionally excellent way, continuing to innovate, continuing to expand our partnership base that we would be able to drive active rider growth, frequency growth consistently. And we've seen that in 2024 and that muscle -- David, you often sometimes say the muscle that we built, that muscle that we built as we look at 2025 and even beyond, we feel great about. And then I've mentioned a couple of times about the trajectory of our media growth and how we're right on track. So those foundations, again nothing has changed. Obviously, as we -- you said about any longer-range planners we said about it, speak for us, and maybe stepping back 10,000 feet, it's reasonable to assume sort of a stable overall steady pricing environment. And I still think as you look on a multi-year basis, that's probably a reasonable assumption overall. So that's what I'd add to that.

Yeah. Wonderful. And then on share, I don't know, first just a bit of context for everyone. Typically share is something we see as a very sort of trailing indicator. It's kind of the thing that you look at the end to kind of see did all these things you worked on, what was the overall impact. And again, we like our position right now. In fact, Erin mentioned, I think earlier that we're seeing rides up sort of in mid-teens. I think last week we saw rides up 18% year-on-year. So that's a good feeling, right, because that suggests that the work that we're doing, I don't know how the other guys are doing. So it's hard for me to know what that means to share, but I know it means that what we're doing is working. I don't know how to compare -- to be honest, we haven't looked at the data back from 2019, so not so sure about that. But certainly, it's the highest share we've seen, certainly since I've joined, probably since COVID.

The next question comes from the line of Nikhil Devnani, Bernstein. Please go ahead.

Hi, there. Thank you for taking my question. And apologies if this is a bit repetitive, a few prints tonight. But could you just elaborate a bit more on the pricing decisions you're taking into Q1? Is the priority here to retain some market share? Just trying to get a sense of how front-footed you want to be versus letting some of these rights go in favor of better margins. And it seems like right now there is some flexibility in the model because supply-side incentives have been improving. But if that changes or moderates, does your decision-making around consumer incentives change at all? Or do you see it as most important here to retain share and drive volume growth? Thank you.

Hey, Nikhil. Let me -- again, Erin and I'll tag team on this one. I think -- let's see, I wouldn't put our -- okay, so first to kind of maybe start almost in the middle. It is absolutely true that with the driver supply we're seeing, that gives us a little bit of flexibility for sure. That is true. I wouldn't say the frame we look at it is share retention versus not. That's not kind of how we make the decisions. It's -- look, this is a scale business, and scale businesses tend to do very well. And as Erin said, I mean, remember 160 -- we shouldn't use the number, but let's just frame it again, 161 billion rides a year in total across rideshare's tiny, I mean, rideshare's 3 billion maybe out of 161 billion in North America private car rides. So it's a scale business and the scale is so gigantic that our first order -- so we say customer recession drives profitable growth. We have to be profitable, of course, and we will be -- we'll do that. But gosh, is it a good thing for us to get more rides? It just is everything is better. You get picked up faster, the more rides, drivers are happier because they've got more to do and they tend to make money and high utilization time. So all of those things, I think, again, I don't so much think of it as a kind of share thing. I think of it as a -- we've got the best service platform we've ever had. We're picking up people faster. We're delivering great in-car experience because drivers like driving on the Lyft platform and so on and so forth. So it's in our best interest within the sort of envelope that we can operate to, frankly, get as many as many rides as we want. Let me turn it over to Erin.

Yeah, Nikhil, I guess, the only thing that I would add to that is, I think it's important to understand we run this business for the long term, right? And fundamentally maintaining over the long term, the health of that marketplace balance is incredibly important. We talked on the call about our strategy of pricing competitively, reliably, nothing has changed there. And in terms of incentives, as you know, we will trade those off to balance the marketplace and we do those in thoughtful ways in consideration of what's happening in real-time, but also to maintain that balance over time. And if you look at the guide we provided in Q1, that's about 40% margin growth year-over-year. So doing that in the context of still having our eye on our margin expansion goals.

Thank you, both.

Sure. Thank you. And a good note on AV. I like it.

There are no further questions at this time. With that, I will now turn the call back over to David Risher, Chief Executive Officer for final closing remarks. Please go ahead.

For sure. Yeah. So, thank you all. So, 2024, I think you hear it, it was a pretty amazing year for us. And as a result, we've never been in a stronger position. I'm super excited about what lies ahead and I sure hope you are too, the whole team does as we continue serving, connecting -- serving and connecting millions of drivers and riders every single day. Thank you, guys. Thanks, everyone for being on this ride with us, and we will connect with you very soon again. Thank you.