LYFT - NASDAQ

Good afternoon, and welcome to the Lyft Second Quarter 2025 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.

Thank you. Welcome to the Lyft Earnings Call for the Second Quarter 2025. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. As a reminder, our full prepared remarks are available on the IR website, and we will use this time to answer your questions. 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 and our recent SEC filing. All of the forward-looking statements that we make on today's call are based on our beliefs as of today, and we disclaim any obligation to update any forward-looking statements, except as required by law. Additionally, today, we are going to discuss customers. For rideshare, there are 2 customers in every car. The driver is Lyft's 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. And with that, I'll pass the call to David.

Thanks, Aurelien. Okay, everyone, listen up. Q2 was a record-breaking quarter for Lyft. We delivered all-time highs across gross bookings, adjusted EBITDA and free cash flows for the first time in company history. We reduced our share count -- excuse me, and for the first time in company history, we reduced our share count by repurchasing $200 million worth of stock. This strong performance positions us for an accelerated growth in Q3, and we remain on track to achieve our long-term targets. Our marketplace is thriving, setting us up for an even stronger second half of the year. Over 1 million drivers spent a record amount of hours with Lyft. That's the same number of drivers that Lyft had pre-COVID, but now on average, they're driving 40% more each. We had a record number of active riders in Q2 with new riders increasing double digits year-on-year for the second consecutive quarter. As a result, rides reached an all-time high of almost 235 million, marking our ninth consecutive quarter of double-digit growth year-over-year. A new Lyft is emerging. Not only are we consistently delivering for riders and drivers but that customer obsession is producing record results quarter after quarter, and our momentum is building. We are now a global, more diversified company, but double the TAM. We are significantly broadening options for riders from market-expanding innovations like Lyft Silver for nearly 60 million older Americans to a greater emphasis on margin expanding luxury offerings like our improved black and black SUV options. And we are uniquely positioned to benefit from the coming addition of autonomous vehicles to our platform across North America and Europe. This will be transformational for Lyft. Look, if you are getting tired of our customer obsession and operating excellence delivering quarter after quarter of record-breaking performance, well, we aren't. We are just getting started, and we're going to do it over and over again. So there's a whole lot to talk about. It's go time, bring your questions. Over to you.

[Operator Instructions] Your first question comes from Eric Sheridan with Goldman Sachs.

Maybe a 2-parter. When you think about the scaling of some of your broadening out of the array of products you bring to market with a specific focus on affordability, can you talk a little bit about what you're seeing in terms of, maybe 2 factors, one, as a stimulant of both rider growth and rider frequency? And how you think the broader competitive landscape continues to evolve when do you think about affordability becoming more a key theme across the industry looking out over the next 6 to 12 months?

I will take it and maybe, Erin, you might want to add in a little bit about the context as well. So as you've seen, our growth has never been greater. It continues to be strong. And you point to affordability, I might zoom out a little bit and put it in even a little bit broader context. So when we think about what drives our growth, we think of the fundamentals -- it was actually the fundamentals we outlined at our Investor Day years -- about a year ago. The first thing we actually think about is operational excellence, right? The better you do, the better you do, the better you do. And this is why frequency is up. This is why -- I'll give you a specific stat. I know it's different -- far away from where you asked, but just to fill all this in. When I started about 2.5 years ago, our driver cancellation rate was about 15%. Now it's sub-5%. It's about 4.7%. So dramatic increases, improvements in ETA, improvements in driver cancellations and so forth. So that's the first thing. The second thing is innovation. And here, again, you hit on innovation, talking about affordability, affordability requires innovation, right? So let's look at Price Lock as an example. Price Lock has a way for you to lock in a price. As you know, commute is our single biggest use case, as you know, and it has got incredible retention rates, Price Lock does. So I look at it not just in terms of pricing and affordability, but also in terms of reliability and like that. The third is partnerships. Now partnerships is a funny thing to talk about in affordability, but let me say why. First of all, it's a big growth mechanism for us, right? It expands our TAM. It allows us to talk to Chase customers to now United customers, to DoorDash customers and so forth and so on. But what's interesting about each one of these agreements is they tend to come with great economics, not just for both businesses, but for our riders. So if you look at Chase, for example, Chase now you get $10 off a month, that's a new offer, $120 a year. For Chase Sapphire Reserve customers and you get 5x points. With DoorDash, you get great points. With United, you'll get points on every single ride. So when you look at affordability, again, you have to think of more than just pricing, you have to think of value to customers and that's important. And then we can talk about media and global and AVs separately as part of the growth plan. But that's sort of how I think about it. It's more of a value to customer thing rather than just a pricing. Now having said that, our prices remain competitive. Our price strategy is always to remain competitive and reliable. Pricing is a little different from what we expected a year ago. And again, it's sort of a nod to your point that pricing is actually not -- hasn't grown as much as we expected. We're very focused on making sure that we deliver great values to riders through that. So I'll turn it over to Erin to talk a little bit more about that, okay, to give you some context.

Yes. Happy to add on. Eric, I guess the few things that I would add is, as you think about affordability, and I think I've said this on the previous earnings call, this is not new to lift, right? We've got a wide array of products to offer the consumer overall. And so affordability and having that be part of our portfolio is not new to Lyft. Our growth algorithm is really centered, as David mentioned, on active riders and frequency. In Q2, we saw active riders up 10%. Frequency increased mid-single digits. This has been a pretty consistent trend now for 18 months. So we're super proud of that. And then David talked a bit about pricing. What I would say is there's not much to highlight there, right? So in Q2, I would say prices were roughly flat quarter-over-quarter, up a little bit year-over-year as we think about Q3 and what's embedded in our guidance, kind of the same, assuming roughly flat sequentially and up year-over-year. And yet, we've continued to drive great profitability, right? Record in Q2, our adjusted EBITDA was up 26%, so I think we're positioned well. And again, I just end with this concept of affordability and having that as part of our toolkit, I guess, if you will say, is not new to Lyft. So we feel like we're positioned well.

The next question comes from John Blackledge with TD Cowen.

Two questions. First on the third quarter gross bookings guide, the range is 13% to 17%. Just curious if you can talk about the expected contribution from FREENOW or maybe frame the gross bookings guide range excluding FREENOW. And then second question, kind of a follow-up on the partnership deals. Could you provide an update on some of the more impactful partnership deals that are driving the business. And as we think looking into the second half in 2026, what are some of the key existing deals that could be growth drivers?

John, I'll start, and then I'll turn it over to David. So I'll start a little bit with where I left off on the last question. It really centers around our algorithm around continuing to grow active riders and frequency, right? So I mentioned our performance in Q2. That has been a very consistent drumbeat over a long period of time, and we expect that to continue. And that's what really leads into our expectation in Q3 around ride growth in the mid-teens. We expect that continued strong rider and driver engagement, continued industry-leading service levels. We're going to continue to grow exceptionally well across our markets. And in particular, last quarter, we highlighted some of the outsized growth we see in places like underserved markets or -- in Canada, et cetera, et cetera. Now the thing to highlight with FREENOW, remember, we closed 1 week ago. I think it's really important to note a couple of things. Our Q3 guidance includes 2 months of FREENOW in it. Another, I think, important thing to think about as you think about that business, which is a taxi business across 9 European markets. Taxi tends to be a little bit more of an elevated experience. They have a heavy business travel population. So this is all getting to that Q3 is generally a seasonally lower quarter for them, and in our guide, it only includes 2 months of activity. So hopefully, that color is helpful. David?

Sure. So partnerships, yes, a lot to talk about there. And let's sort of go maybe new to older, that might be helpful. So on the new side, of course, United is the big news today. United, as we all know, first or second largest global airline depending on how you count it. Super excited about that partnership. We'll talk more about the specific later this year when we launch it to consumers. But the headline there is we expect it to be industry-leading. You'll get points on every single ride, not just drive to the airport, and that's super exciting. And we think it's -- we're super flattered to be chosen by United. They've never had a rideshare partner before. This will be their first and they're taking it very seriously. So that will provide a lot of growth. MileagePlus, of course, is an enormous program. Then on sort of the newer side, let's go back to Chase. So Chase, of course, we've had as a partner for many years, Chase Sapphire Reserve and the JPMorgan card. But the refresh has been extraordinary in driving growth, particularly among kind of higher-value riders. So we're seeing -- there are over 1 million connected accounts. So let's just sort of start with the baseline there. And what we're seeing is that because of the new offer, which is now $10 a month and 5x points, we're seeing a real acceleration of adoption of that program or [indiscernible], I would say, of that program. So that drives growth, no question. It's also now a global program for us. So Erin, of course, was just talking about FREENOW. You can now acquire Chase points on the FREENOW app. So all of a sudden, we become a more interesting partner, of course, but also the value becomes more valuable to more people, the offer does. Okay. Now let's talk about say, DoorDash. Okay, DoorDash, we launched at the end of last October, a great launch, far exceeded our expectations right in the first couple of months and it's continuing to grow. I think in the prepared remarks, you saw that their Summer of DashPass produced unbelievable results. It was the highest 1-day spike, something like 300% more account linking on that 1 day than we've typically seen. So again, that sort of shows you -- remember, DashPass is an 18 million member program globally. And again, we're now more relevant on the global side than we were before. So that can produce real growth. Now let's talk about Alaska. Alaska, I think it's the fifth largest airline in the United States. We just refreshed that. They're now, of course, Alaska and Hawaii are linked. We just refreshed our offer with them, again, a better offer for consumers than it was before and one that we're seeing growth. Now let's talk about Bilt. So Bilt, relatively small in the grand scheme of things, but hugely important for a particular audience. There, we have a very interesting partnership. People can gain points, but they can also burn points. In other words, use their Bilt points to take Lyft. There's been something like 360 million points redeemed already in the last 4 months or so. And again, just getting started. Let's talk about Business Rewards. So we just launched a Business Rewards program. The program itself is maybe, I think it officially sort of launched yesterday in terms of actual customers being able to use it. It's a free program, which is differentiated. It allows you to get cash back, which is wonderful, back to the affordability question that Eric asked. But it also allows you to get double points on some of our partners, including the Hilton and others. So that's absolutely wonderful. And again, that just literally started yesterday in the market. So when you zoom out now, remember that when we talked about this as part of our Investor Day, we said that roughly 20% of our rides are associated with partnerships. That number is now up 25%. We have more than 50 million rides that are linked to partnership. And again, when we look at the penetration of our existing partnerships and of course, with our new partnerships is zero, but in existing partnerships, huge growth. So sorry for going on -- just lengthen that, but it's such a big story. It's worth really going deep on.

The next question comes from Doug Anmuth with JPMorgan.

David, can you talk more about how Lyft is looking to build the AV use case? And when you think about some of the stuff that you're doing in Europe, for example, and the recent partnership that you announced with Baidu, what are the key capabilities that Lyft and FREENOW bring for AV tech providers?

Sure. So yes, great question, and obviously, sort of a very rich area. The first thing to say, whenever you think about AV is you have to think about them as a massive TAM expander for rideshare. And the reason I'm so confident in this is we see the data. We see the data. So for example, in the markets where [indiscernible] is in the United States, in the markets where AVs are operational, and these are the San Franciscos and LAs and Phoenixes of the United States, we are seeing growth, industry growth I'm talking about, that is 5x larger, 5x larger than what you're seeing in other top markets, 5x larger. Okay. Why might that be? Well, you put a new product in the market, if it's a good product, it tends to get traction, right? So AVs are safe. It's great. They not only know the rules, they follow the rules. They're private. It's great. They're reliable. The cars tend to be very new for obvious reasons. So there's some really good reasons. Some of that growth might tail off over time, of course, it becomes a less novel product, but still this is a step change. Okay. So that's the -- okay. So what do you need to commercialize an AV of this very expensive technology that's put in an expensive car and made even more expensive by all the extra maintenance and so on and so forth? What do you have to do to it? Well, you have to have a couple of things. Of course, you have to have demand. We've got lots of demand. So that's great. And now we've got demand not just in the United States, but we've got in Europe. You've got to have a marketplace that works, that manages supply and demand and sets prices. You need to have customer care. If you don't have customer care, when someone leaves their thing in the AV or when the AV does something unexpected, any number of things, you got -- someone's got to answer the phone effectively. So then as you move through this sort of value chain, I'm sure it's talking on the right of the value chain, let's say, and then moving towards the left, you need fleet management. You need fleet management. Now fleet management is so unsexy. As soon as I say it, people say, okay, I don't even know what that is. Well, let me tell you what that is. What that is, is that's onboard -- that's buying a car, it's I'm borrowing the car, it's maintaining the car, it's cleaning the car, it's charging the car. It's making sure that, that car is available, utilizable as close to 24 hours a day, 7 days a week as it possibly can be. We have, as you well know, a very, very well-established operation, a subsidiary called Flexdrive. It's been in business for about 10 years. It manages tens of thousands, I mean, over the course of the years, it's managed many tens of thousands of cars. We currently have some 10,000 to 15,000 cars on that platform. And it's a very distinct set of capabilities. It's distinct from what rental car groups might have. I can explain that if you're interested. Anyway, it's very tailored to rideshare. It's very, very tailored to rideshare. And it's very, very sophisticated, right? It sort of knows when a car is going to need maintenance before the driver knows. It knows what the tire pressure is. It knows when to deploy cars versus not because demand is going to be low. When demand is high, you deploy a lot of cars. When it's low, that's when you put them in for maintenance and cleaning. It's a very sophisticated operation. We've got about 28 of them across the United States, depots across the United States. And now we come to Europe. So Europe has -- FREENOW has a very, very good relationship with the taxi fleets, right? The taxi fleets to our fleet. So they know how to do fleet management as well, FREENOW does and the taxi fleets. And then I would say adjacent to that, and this is sort of a little bit of an aside, but when you talk to CEOs of AV tech companies or just industry folks, and you asked them, what will be the rate limiter? What will be the rate limiter on AVs? Many different things could be, of course, the technology could be, adoption could be, people's interest, then it could be a different parts of the country, snow could be, ice could -- rain, all these different things. But the fundamental thing that's going to slow AVs down over time, let's say, regulate their adoption is going to be regulators. In the United States, we have a few different states, all these municipalities. In Europe, FREENOW operate in 9 countries. Now what do we have going forward in Europe, in particular, we have a very good relationship with regulators through FREENOW. FREENOW has had to work very closely with regulators because taxi is a regulated business. And it's a real differentiator for us versus other approaches who've been not as regulatory friendly. And then, of course, there's financing. We bring our menu to the table. We talked a bit about that and a bunch of other things I can talk about. But I think that, broadly speaking, when you look at us, first, again, and just sort of summarize, AV is definitely going to be wind at the back of rideshare. It's going to introduce a lot of people to AVs. Most people's first AV experience will be through a rideshare. That's valuable to us, but it's also valuable to AV companies. Second, you're going to need demand, we've got that. You're going to need a marketplace, we've got that. You're going to need 7/24 operational excellence, we got it. And then you got to have great fleet management somehow and the fact that ours is integrated with rideshare is awesome. And you got to have good relationships with regulators, and regulators need to understand that you're on their side, not trying to mow them over.

The next question comes from Benjamin Black with Deutsche Bank.

I just wanted to dig a little bit deeper into the Baidu partnership, sort of any sense on the economic model, and any way to sort of think about the vehicle ramp? And can you maybe talk about the regulatory process in Germany and the U.K.? Do you have a clear line of sight there? And then on FREENOW, now that the acquisition has closed, can you just talk about the incremental investment you may need to deploy to sort of ramp and scale that business? What are some of the key focus areas that you're looking at now that you're fully consolidated?

Yes, sure. So let me start, Benjamin, and I'll start -- so I'll start with the process around Baidu, and maybe I would say -- I'll answer 1.5 of the question, and then Erin will answer the last 0.5, something like that. We'll break it down like that. So on Baidu, okay, super, super excited about this partnership, right? And just to level set, I think everyone on the call knows this, but Baidu is the largest provider of AV tech in the world. They've delivered over 11 million rides right now, driver out rides, to be clear. And they're a market leader, where they operate, which, of course, is China. So if you're Baidu, you're looking for access to other parts of the world and they chose us. We're very proud of that to be their European -- at least the first European expansion kind of partner. Okay. So what does the deal look like? Well, we're not going to get super specific. What I can tell you is that there's an initial deployment, think of that as hundreds and then that goes to thousands of cars. We will effectively be the sort of face, let's say, both to regulators because Baidu understands that we've got a stronger relationship with regulators in Europe than they do as well as actually the day-to-day operator of these cars. There's sort of, let's say, 3 pieces to the whole process. One is there's what's called a homologation process. So the cars have to be certified to be road-ready in Europe, specifically in Germany and the U.K. That's a process that's well understood. These cars are -- it's called the RT6 and it's a car that they've designed themselves. It's been on the road for many years. They're going through that process already in Switzerland and various other countries. So anyway, that's part of the process. Then the tech has to be tried on the road. Of course, first with the driver, a safety driver, then taking riders and not charging and then finally, charging for riders. And that whole process will take some time. We're getting started immediately, but it takes time, however long it takes the first time. For the second time, takes 80% as long, and the third time, takes 80% as long as that and so on and so forth. It will be a bit country by country because countries have very specific interest here. And of course, the U.K. drive on one side of the street, Germany on the other. So there are a whole bunch of different things we have to go through, but you can expect that, that process is -- we understand it already. They understand it already. We're going to go step by step through that process. And the results would be that in 2026, we're operating in 2 markets, a number of the cars -- those cars we will own ourselves. So we are going to purchase those cars ourselves, as we will do strategically when that makes sense. We can talk more about the long-term economics of AVs in a couple of minutes. So that's where things sort of stand with Baidu, super excited about that partnership. And stay tuned obviously for much more to -- more to come on that. If I stay in Europe and shift over to FREENOW, again, maybe just sort of step back for a second. I mean the European rideshare, ride- hailing market. Of course, it's a gigantic market. It's roughly the size of the United States. Taxis continue to play a gigantic role there. And remember that half of those taxis are still effectively off-line. These are either hailed on the street or people doing old-fashioned phone calls. So there's huge growth opportunity built right into the system effectively because there's a lot of rideshare going on within big quotes that's being done in a way that is more 20th century than 21st century. So there's immediate work that we can do there. There's also immediate work we can do to bring first Lyft's current customers on to the Baidu platform. I think we talked about how 4.6 million times over the last 2 years, people have opened Lyft in Europe, expecting we have a Lyft. Now we can direct them to Baidu -- actually to FREENOW. So all of these things are relatively straightforward and not particularly costly. This is not a gigantic investment. Then we can start to apply our own technology and help FREENOW incorporate that technology onto their platform. And this will give you more stable pricing, for example, it will give you faster pickups, for example. And the teams, even though, of course, the deal just closed last week, but the teams have already been in kind of brainstorming early mode and are now really getting to work rolling up their sleeves on that. So all of those things is -- all that say, this is a growth partnership, a growth acquisition. Erin will talk a little bit about the economics in a couple of seconds. But really, the whole premise of this is about growth. The last thing I'll say is back to the taxi market. Remember that the taxi market in Europe is a much higher end market, much more luxury product than it is in the United States. That comes with some nice unit economics and nice bookings as well. So anyway, a lot to get excited about there. I was just in Barcelona a couple of weeks ago with our technical team, Hamburg, their office a month before. Teams have already been talking. They're going to be here next week. So we're just -- especially in the early days, but we've got whole lot of immediate-term opportunities to drive growth. And maybe Erin can talk a little bit more about the cost side if that doesn't quite answer the question.

Yes. I don't know that I have a lot more to add to the cost side, but I'll add a little bit more to some of the near-term color. Clearly, after kind of a deal process and a month-long regulatory review process, as you might imagine, pretty typical in this type of a situation, right, that takes focus. So you're kind of splitting your focus between running the business and making sure that the deal gets done. So I'll just reiterate what David said, the teams are super excited to get going, right? We're just here in the first few days. And so we have really ambitious plans, as David just articulated going forward. I'd say very near term, and as I think maybe about the balance of 2025, we had articulated when we announced the deal about EUR 1 billion run rate on an annualized basis for the business. I'll just emphasize again, our third quarter guidance, that includes 2 months not 3, but as we think broadly about those 5 months or the balance of the 5 months throughout the year, I would say that run rate is a little bit lighter. Nothing dramatic, and it does nothing to change our long-term plans. And then we're also assuming that at least, again, in this near term, this sort of 5 month, a few -- 5 months for the balance of 2025 on an EBITDA dollar basis for it to be relatively neutral, right? So we're going in here, eyes wide open, really focused on driving that growth on the top line side and energizing some of those growth opportunities that we see.

The next question comes from Ken Gawrelski with Wells Fargo. The next question comes from Steven Fox of Fox Advisors.

Erin, I was wondering if you could break down free cash flows a little bit more. It was a very strong number. Is there anything unusual onetime in nature in that number? And outside of that, can you talk about the organic progress you made in cash flows?

Yes. Thanks for the question, Stephen. I wouldn't highlight anything in particular. We specifically focus on a trailing 12-month number, right, because there can be some quarter-to-quarter variation, but nothing new in terms of the dynamics. So just to refresh everyone, as we think about free cash flow, right, this is going to be influenced by a few things. Of course, the growth of the base business, but also timing around our ride growth and the way that we accrue for insurance, and then the actual cash out the door payments for insurance, which tend to be on rides that were delivered anywhere between 1 and 7 years ago, but the bulk between the last 1 and 3. So those similar dynamics, which we've walked through and articulated remain the same. So nothing in particular to highlight, but we are incredibly proud of the progress. We continue to make $993 million over a trailing 12-month period. So we feel great about where that's positioned. Our balance sheet continues to be extremely strong. And so hopefully that is helpful, Stephen.

The next question comes from Stephen Ju with UBS.

So David, I think one of the things you talked about before in terms of a product development direction for Lyft is to hopefully start opening up a differentiated innovation wedge versus your competitor and you start diverging in different directions over time and Lyft will be known for various things, innovation, et cetera. But it seems like whatever innovation gap from either yourself or from Uber, gets closed fairly quickly, so has your thinking evolved here in terms of how Lyft competes, how Lyft resources product development, et cetera?

Yes. Stephen, I like this question a lot. And I'm going to spend a minute on it. So the first thing I'll say is, no, our approach hasn't changed. And the reason I say that is because in the technology world, you must continue to innovate. It is an imperative. Now -- and you can see that sort of by looking at history. And look at what happens when companies start to outsource their innovation to competitors or just stop entirely. That's death. And I mean books get written about this. You can read those books. If you start to read those books, I encourage you to look at Chapter 11 because that's where you'll find a lot of those companies who decided to stop innovating. Now if you look at the gap between us and our competitor, I would say their strategy does appear to be a bit of a photocopy strategy. Now this, I would characterize again as it's an interesting territory to try to mine. But what's my evidence there? Well, looks like a Women+ Connect. Women+ Connect, we did about 2 years ago. They just sort of came up with their kind of lightweight version a couple of weeks ago in a couple of markets. Let's look at Price Lock. Price Lock we launched maybe 8 months ago, something like this. Now they've come up with something sort of similar. It's like Lyft Silver, same story. So okay, so you say to yourself, well, that's an interesting pattern and we detect it. Again, when you see a company looking to its other companies, it's competition, it's the market for innovation. I don't think it tends to work out super well, but you might ask yourself, well, what's been the results? Well, the results are, we're continuing to grow quite nicely. And I don't tend to talk a lot about market share, but I will just take a moment to note that when I start -- well, I'll just say it this way, our market share is at the highest point it has been in the last 2.5 years, highest point it's been in the last 2.5 years. So that's nice, right? And we're now -- by the way, when we started, we were not making any money, we were consuming cash. We're doing a whole bunch of different things. Now as Erin just pointed out, 930 -- excuse me, $993 million of cash, highest profits in the company's history, of course, highest growth rates -- or excuse me, highest active riders in the company's history. Oh, the driver advantage of 29 points over the other guys in terms of preference who drive on both apps, 29 points. Hugely important if you're in the service industry to have the people on the front line prefer driving on your platform versus the other guys. Okay. So you can hear I feel strongly about this. The customer session drives profitable growth and it's working quite well. And I'd rather be the leader than the follower in the tech space. Here's the last thing I'll say, and this is maybe the most surprising thing you're going to hear me say. For all of that, it's still small stuff. What do I mean? Because if you look at this industry, this is an industry, there's a multibillion industry. It is growing at mid-teens growth quarter after quarter after quarter. And it is ridiculously underpenetrated, ridiculously underpenetrated, with a gigantic TAM, 151 billion rides, and between the two of us, we do maybe 3 billion, okay? So you just look at all that and you're like, "I don't care, copy. Fine. Go ahead, knock yourself out." What I really care about is, are riders and drivers getting a better experience on rideshare? If they are, the market is going to grow. And if we're doing better than the other guys, faster than the other guys, leading more than the other guys, well, guess what? History tells you pretty clearly how that's going to end up.

The next question comes from Nikhil Devnani with Bernstein.

Apologies if this is a little bit repetitive, been bouncing around. But now that you've closed the FREENOW transaction, can you maybe talk about how you're thinking about investment into Europe as a region for you next year and thereafter? Is this going to be a significant area of investment or not so much? And I guess, how much investment is required to get that business to grow a bit quicker and add to the overall platform?

Okay, Nikhil, it's definitely good to hear from you, and I promise I'm not at all going to make fun of you for asking the exact same question that was asked 2 times ago. So just to be really brief, we bought FREENOW for all the growth opportunities it has. Its economics are great. Its service is great. Its relation with regulators is great. All these different things. And we have a lot of ideas as we were saying a couple of minutes ago of ways we can leverage it. And it's not going to be very costly. I'll let Erin speak much more directly and equally briefly, I think.

Yes. I'll just sort of reemphasize again, the case that we talked about here is you got to remember that more than half of this market is off-line, right? So just the opportunity to more creatively and innovatively capture more of that to come online. Just refocusing, frankly, the team after a month's long deal and regulatory process is going to bring some improvements. The tech teams in some of the initial at least thinking and brainstorming, have ideas about dispatch other areas where efficiencies can be driven across the platform, taking expertise and experience that's already there. And then, of course, over the long term, we see a lot of value around our partnership strategy and expanding that in a much more global way. Media, autonomous vehicles, et cetera. So that's really how we think about the growth there.

Appreciate it. And if I could follow up with a separate question. Overall, it seems like the DashPass program has been helpful for you. Is there any reason that Lyft should not be a bigger part of other larger subscription bundles out there? Is that a viable way to acquire new customers when you think about your partnership strategy at large? Or is some of the constraints there just making sure the economics make sense? Obviously, there's -- between Prime, Walmart, Netflix and Instacart, there's a lot of bundles out there that are pretty large. Are those addressable at some point as well via partnership, do you think?

Yes. Yes, I love that question. I mean I think the answer is yes. I mean rideshare plays a super, super important role in a lot of people's lives, right? I mean it's 800 million rides a year just that we give. We're talking about 2 million rides plus a day. So therefore, we're a very, very embedded part of people's lives. And if you look -- you mentioned Sephora, I think it's an interesting example and then we can kind of zoom back out. So Sephora, we actually had a partnership but very specific. It was more targeted. It was over the summer. It was a 3-day partnership. And literally, we increase -- so Sephora has something over 1,700 to 2,000 stores in the United States. Some are freestanding, some are pop up. And we delivered something like 4x the average daily volume when we did this partnership with Sephora over a short period of time to their stores. So that's foot traffic that goes right at the store. You can imagine if you're Sephora why you might want to do something like that. If you're competing with online-only competition, gosh, which is very convenient of course, gosh, it's very helpful to have someone literally be driven to your front door, who's ready to buy. So I think what that suggests is that Sephora is not a subscription program. Of course, they've got a great points program and so forth, it's a subscription program, but that's a point-in-time program, but it gives you a sense of the type of opportunities that we can unlock. I think to your broader point, we very much see ourselves as part of an ecosystem that surrounds individual riders and drivers. I'll talk about drivers in a second, actually. Through our loyalty program there, we've actually already given out something like 1.2 billion points to them to spend in their own way that they can actually then spend in places like Walmart or Starbucks or other gas stations, other things like that. So a little bit roundabout way of saying, I think if you think of yourself not as the king of the world, but rather a part of a person's life and ecosystem opportunity that riders and drivers are part of, then very much you say, "Gosh, if DoorDash is working very well, and it is, then why not others as well? We'll definitely be exploring it." And I'll just end here by saying the thing that I feel the most strongly about is any partnership has to satisfy a couple of criteria. It's got to be really interesting for riders or drivers. Otherwise, it's just kind of noise. And it's got to work really well for both companies, which means they take a while to negotiate because they've got to have economics that flow in 2 directions positively. And hopefully, they can be really durable and great for both. So anyway, more to come, nothing specific to talk about there, but definitely, I like the overall question and approach.

The next question comes from Ken Gawrelski with Wells Fargo.

Sorry about the technical difficulties last time. I just want to touch upon -- David, you're talking about the penetration levels in the domestic rideshare market and how there's so much room still to go. Can you talk a little bit about pricing? And if I go back, way back to kind of the IPO days, the talk was around getting cost per mile down low enough where you'd replace car ownership or at least partial car ownership, especially outside the cities. Could you talk a little bit about how you're going to continue -- how you can address some of those lower price or lower cost use cases and the unlocks there? It's been a struggle domestically. Other markets have figured it out, let's say, Brazil or India, et cetera. But U.S. has been a real struggle. Could you please address that?

Yes, sure. I think a couple of things. I mean, first, I think the basic thesis -- no, I just [indiscernible] something, I know it, it's like the sun coming up tomorrow. Like there will be fewer cars over time that are individually owned. There's just no question because there are just other opportunities. I mean sort of demand kind of follows supply. So if you only have one opportunity, buy a car, you do it, okay? Then car manufacturers got clever. They'll say, how about you lease a car? Okay, cool, that unlocks all sorts of interesting opportunities. That's a financing strategy. Now you've got various different car share networks, those are still quite small, but you have rideshare. And that's the fundamental reason why so many kids today, I mean, I'm a little [indiscernible], whatever, demographic comment. But the sort of the big moment of getting your driver's license is just not that big anymore. The reason is not because people don't want the freedom. It's because they can get it another way and they get it in an on-demand way, and the car literally comes to them, and then they don't have to maintain all the sources. So all those things are part of the big picture. Now when you get down to pricing, there's no question that price elasticity is a thing. The lower you can get the price, the more demand you can tap into. It is not the only way. You can see what's happened with AVs, which are not priced low, but is still expanding market. So that suggests that you can do it in multiple ways. But clearly, you can lower price to sort of stoke demand, unlock more demand. So what's the floor there? Well, obviously, driver earnings are a huge part of it, right? You've got a 2-sided marketplace, which makes things quite complex. Riders and drivers, they kind of want the same thing, but they kind of want a different thing, which is drivers want to be paid more, riders want to pay less. Well, what's going to be the big unlock there? I mean no surprise, AVs. AVs are going to be a big unlock there because now you don't have a 2-sided marketplace in the same way and you've got a fixed cost, but you can price in a different way. So that will absolutely have some pricing impact over time. There'll be other things that push in the other direction, but that's something to think about. What's another floor for us? Insurance, in terms of the cost. We've done an incredibly good job managing insurance, incredibly good. It has gone to -- it's an art and a science, and we've really got to dial it in. But there are floors. Those floors typically are as much regulatory as anything else. We're working super, super closely with regulators across the country and state governments because it's a state industry. Erin can talk a little bit about the general trends that we're seeing there. I wouldn't be surprised to find some step change. Things happen over time in certain states where the minimums are just out of hand. They're just too high and that causes higher prices and it caused lower earnings for drivers. There are a lot of people who don't really like that. You might have seen, for example, there's some press coming out of the state of Washington around Seattle, rideshare prices are too high. It's not because we're pricing too high because the state regulations -- it's combination of state regulations and insurance that cost [ have ] prices. So anyway, long way of saying, really state regulations relations in Washington to be clear. But in other states like California, insurance is a bigger issue. So those are some things. And then there's just some cool innovation, things like Price Lock and other, you might say bundles or almost cross subsidies, can continue to drive the effective price down. If you look at our media business, our media business, which continues to be on track for $100 million run rate coming out of the fourth quarter, that is a business that over time can help subsidize rides. And Sephora again, I've already used the example, but it's a good example, right? Those were free rides or discounted rides to Sephora stores. So there are times, I think, where you can find third parties to offset the price of the ride such the driver still makes what the driver needs to make, but the rider pays less. There's a lot more innovation here. There are some sort of semi-hard floors, but we'll kick through them. It will just take time, things like insurance. And then again, AVs, I think will also could slightly reset the table there. I don't want to overset expectations there because there's cost to running AVs as well, but it certainly changes economics, I think, favorably over time.

That is all the time we have for questions. I will turn the call to CEO, David Risher for closing remarks.

Listen, I just want to thank you all very much for being part of this call. I'm going to go off script for about 30 seconds and say, I think it's a new Lyft you're looking at now. It's a much more global Lyft, a much more diversified Lyft. A Lyft that's got a lot of good irons in the sort of growth fire and also margin as well. We're a stronger company than we've been ever before. And I'm super excited to have you guys along on the journey. Look forward to talking to you all either in person or next quarter when we all get back together again. Thank you so much.