Lyft Aktie

All right. Well, it's my pleasure to start our next fireside chat with the team from Lyft. David, thanks so much for being part of the conference this year.

Of course.

Okay. To start us off, I think what we want to do is the mobility offering continues to evolve. You've been on a big journey. And what you offer consumers today is very different than what you were offering 2 or 3 years ago as the product and the platform continue to change. Talk a little bit about that. Before we get into all the current state and the future state of the company, talk a little bit about some of the imprint of change you put on the company through platform and product changes.

Yes, for sure. So it's true. So I guess I've been in the chair just about 3.5 years now. Best thing in the world, most fun I've ever had in any job. And let's look back for a couple of years just to sort of maybe set the context. So 3 years ago, when I started, gosh, I think we're doing about 700 million rides a year. We were not GAAP profitable at the time. I think we were generating a couple of hundred million dollars in EBITDA, and we were consuming cash. I think we were burning about $300 million of cash, $250 million 3 years ago in 2023. So now where are we? Okay. So now this year, we're going to do over 1 billion rides, which is absolutely wonderful, and we'll come back to that a whole bunch of different times. Of course, we're generating cash to the tune of about $1 billion a year. We're EBITDA profitable, of course, to the tune of maybe $700 million.

By the way, this math comes from -- just look at Q2 and annualize, just multiply it by 4 and do that kind of comparison. We'll generate maybe $300 million or $700 million in EBITDA and of course, be GAAP profitable. So that is a huge, huge difference. And I have to pause right now for 1 second. This is not your question, but I cannot move beyond looking at Erin Brewer here. I have done this, of course, as CEO, but I've had an incredible partner in crime the whole time, Erin Brewer. Erin just announced yesterday she is going to retire towards the end of this year. And I just want to spend a second to give her a huge, huge round of applause.

If there's any good news and there's only one piece of good news is sitting right next to is Michael Brous. Michael Brous is the guy who took our LUS business from not so good to fantastic. He's a finance guy. He's a strategic guy, he's an operator. He's exactly the right guy to take us forward.

So let's talk a little bit about the future, where we're going out, right? So I think there are 3 dimensions to sort of look at. I think you can look at here's how we talk about it. This is going to grow up, we're going to grow out, and we're going to grow forward. What does that mean? Think about each one of those, up, means up more towards luxury. So if you look at the last couple of years, one of the real sort of macro trends, I think you can see is an enormous interest in higher value items. And you see this sometimes on the economy side, it's called the K-shaped economy. If you talk to people in the airlines, you say they're making all their money at the front of the plane. We will do some of the same. We have a whole set of luxury offerings. Of course, we acquired a company called TBR that really sets the standard up at the top on the Chauffeur side.

So we should talk about that. And we've already made great progress there over the last couple of years. So that's up. Now what does that mean? That means overseas. So about a year ago, we acquired FREENOW. That acquisition has been an incredible, frankly, game changer for us because it's allowed us to think as a truly global company. I'm sure we'll come back to that. But there's a lot more to come there. That doubles our TAM, right? I mean roughly the size of Europe is the size of the United States, a huge, huge amount of opportunity there.

And then forward, of course, is into the AV future. And this is a -- this will be a locomotive. This will be an absolute -- a massive, massive tailwind for us. And the question is how do we make the most of that.

Okay. And we're going to talk about all of those. And I'll hope that Erin will miss me asking her about capital allocation, which I think happened every 90 days for the last couple of years. So let's start with the consumer. You have a read into the consumer. That's been a debate point here at the conference over the last couple of days. What are you seeing about the health of the consumer? You referenced in your first answer a little bit about the K-shaped economy. Talk a little bit about just what you're seeing from the consumer backdrop.

So I'll tell you something interesting here. And I think this is maybe -- this might be a little bit of a shift in sort of at least my narrative. I am not sure that rideshare any longer is going to be the best read on the consumer, and here's why. We're all reading about the stress that consumers are under, right? And it's real. That's not something to take lightly. But if I look at our business, what do I see? I look at last week, for example. Last week was an all-time high for rides in the company's history, all-time high for rides. It was also an all-time high for driver hours in the company's history, right? We've been around for 14 years. In 2 weeks, we are reaching all-time highs now.

Okay. What this suggests to me is that we are embedded in people's lives in a very, very deep way. This is no longer discretionary spending. I think if you -- when you look at -- if you ask about consumer health, you often want to look at discretionary spending, right, because you're looking for trade-offs that people are making when they feel like they have a choice. For many people, Lyft is the way they get to work every morning. By the way, our commute highs, our commute is at all-time highs as well. It's the way they get to the grocery store. Grocery store business have gone up by 15%. It's the way they live their daily lives. It's no longer a question.

Now interestingly enough, we're also seeing all-time high in party hours. And you can also read the media about this. The sort of, let's say, attraction, I think almost magnetic attraction of in real-life experiences, NFL games or concerts, whatever it is. So I actually think as much as I'd like to be able to tell you all about the consumer through our lens, if I only look through our lens, I would say the consumer is very happy up and down the spectrum.

Okay. When you turn the focus to your core business in North America, you've seen strong growth trends in North America year-to-date.

That's right.

Talk a little bit about the building blocks that have produced that type of growth and how you think about trying to maintain and build on the momentum as we get deeper into the year.

Yes. Okay. So I'm going to zoom out for a second. You asked about growth. I'm going to start with a TotalCo perspective just to sort of level set a second and then zoom back into North America. Okay. So on a TotalCo perspective, if you look at growth rates of H1 and H2, and this I would expect a lot of ears to perk up at this point because you tend to look very careful at these things. You're going to see pretty similar numbers in terms of growth rate on a TotalCo perspective. Okay. Why would that be? Well, let's break it down.

Let's go global, then let's go to your question in North America. Globally, we acquired FREENOW about a year ago. That means in the first half, every ride was incremental. Every ride was incremental. Whereas the second half will lap FREENOW acquisition, that means that not every ride will be incremental. Okay. So total growth is roughly similar H1 to H2. And now you just heard what I said about what's happening overseas, let's look at the U.S. In the U.S., quarter after quarter after quarter after quarter, we've seen accelerating growth, accelerating growth. And we expect that, that will be the case through the back half of the year as well.

Okay. So now to your question, what are the drivers? Is this one of those very interesting businesses. We call it a business of inches. It's not one thing. It starts with our very stubborn focus on our strategy, which is customer obsession drives profitable growth. That's where you see the innovation. So first, let's talk about the basics. We're picking you up faster than ever. In fact, if I can brag for a second about the team, 78% of the time right now, we pick you up faster than or as fast as our bigger competitors. So that's a big deal. Our pricing is competitive. Our ETAs are fast. Our cancellation rates are low, basics, right? But you have to do that 24/7.

Then on top of that, you've got a whole set of customer-focused innovations. You might think of them as demographic innovations, things like Lyft Teen, which has grown some crazy percentage over the last couple of months or Lyft Silver for older people. Then you might look at it geographically, where are we sort of overachieving geographically? Well, there are areas which we call low-scale markets. That's where a lot of the TAM is in North America. And we've got very, very strong double-digit growth in these lower-scale markets. You look at Canada, another geographic cut where we're doubling roughly year-on-year, just huge, huge growth in Canada. So that's amazing as well.

And then the last piece of this kind of growth engine, which has all these different kind of pistons all kind of plugging along is around our partnerships. Our partnerships now, and here I'm talking about the DoorDashes, the United, the Bilt, the Hiltons, the Alaskas, the Chases. Each one of those in their own way, and we can talk about them individually if you're interested. But collectively, they account for about 30% of our ride volume. That's up from 20% a couple of years ago. And in every one of those cases, those are strong drivers either of acquisition or retention. So it's really kind of an all-the-above strategy, but I think we're doing a really nice job executing on all these dimensions.

Okay. Let's -- so that's the global picture and it's the North America picture. Let's just double-click down on international. Because you've acquired and now you're talking about going into a further array of markets over time as well and extending your own brand deeper into European markets. Talk about the international opportunity set and what you've done from a capital allocation standpoint to date that sets you up to execute on that strategy?

Sure. So as I said, I mean, the big change, and it really was sort of a step change within the company is the acquisition of FREENOW about a year ago. It cost us $200 million or so. It was about $1 billion of bookings. So significant, but not sort of mind-blowingly big from a financial perspective, but very significantly operationally because what it allowed us to do is say, let's take our U.S. systems and start to globalize. Let's really start to make sure that these systems that were built for North America can work around the world. Okay. What's the evidence that we're on track and then where are we going to be? The evidence that we're on track is we are actually ahead of schedule at unifying the app experience.

So even today, right now, if you're a friends and family of Lyft, if you're in Europe, in fact, my brother, it's literally friends and family, my brother just sent me something. If you're in Paris or in London or in Barcelona, all across Europe, you can open up the Lyft app, if you're a friends and family and get a ride. What does that mean? That means that certainly by this time next year, the 300-plus million people who live in Western Europe will have a new first-tier customer-obsessed rideshare option. Again, it doubles our TAM, and there's just huge, huge upside because we've got great technology we've been working on for 14 years, and we can really bring that into Europe. So that's one thing it means.

Another thing it means -- and by the way, we're actually ahead of schedule on that, which is a whole separate interesting AI story. Second thing it means is that -- so today, 390 airplanes will take off from American soil and will land in European soil, 390, and that's a sort of typical number for this time of year. Every one of those will have 300 people on them and every one of those people need arriving to get to the airport. That today has basically been unavailable to us as a market. But -- and that's a large number. When you do the math, it's 30 million, 40 million arrivals every single year over the course of the year. That is an enormous thing.

So this time next year and before, Europe will have a first-class rideshare system that they don't have today that bring new capabilities and customer obsession and we'll be much more open to the travel market, which is, by the way, a double win for us because it turns out that sometimes when people go to Europe, they switch over to the other guys. And when they come back to the United States, they forget to switch back to the better option, which is us. So there's some leakage there that we can kind of plug. So that's kind of the big picture there. Very, very significant opportunity for us.

Okay. Understood. You talked earlier about the push into premium and repositioning yourself there. Talk about what you need to get right on both the supply side and the demand side to scale the premium offering over time because there's obviously a higher bar for what those types of customers expect for the price points that typically sit in that part of the market.

100%, I'll tell you a funny story. I was talking to one of our drivers last year about exactly this topic. And I said, what are people who are taking black cars expect? And he said, they expect everything. Like they expect the cars in front of me to par, right? And so that I can actually kind of speed up and get to the airport. So yes, you're absolutely right. So okay, let's talk about luxury. Luxury, as you know, just talk about the economics for a second. It's very attractive. Why? The price point is high, that drives bookings. The margins are high, not just because the price is higher, but because remember, professional drivers, and these are professional drivers carry their own insurance. So that's very important to us. And then it has all sorts of interesting access to a whole customer set that's very difficult to get to if you don't have a great high-end offering.

We've been working on this for quarter after quarter. I think I forget the exact numbers, I think we grew maybe 60%, 70%. So very, very significant. It's actually Black and Black SUV and other premium offerings our rideshare portfolio are our fastest-growing, we call them internal modes. So anyway, really, really good start there. And it's not just by accident. So you asked about supply and demand.

On the supply side, 18 months ago, maybe 1 in 3 drivers was a professional driver. Now we're up to about 1 in 2 and soon it will be the vast majority of professional driver with the better economics and the better service and so forth and so on. That's rideshare luxury. And that is a space where, frankly, we're underpenetrated for historical reasons. we've got a lot of headroom, particularly if you compare us to the other guys.

Then on top of that, last year, we bought a company called TBR. TBR is a chauffeur. So now we're talking about the luxury space has some segmentations in it, right? So it's got that. So you've got kind of rideshare luxury and then you've got kind of the ultra-premium chauffeur luxury. TBR is a company that many people in this room, I would expect would know. You may not know my name, but you've almost certainly been in one of their cars. For example, their client list includes 16 of the top 20 investment banks for non-deal roadshows. I don't know who the other 4 are. I feel bad for you guys. You guys got to get a program with appointment.

But anyway, so -- and it's used to exactly. I mean, honestly, there is no -- if you're 10 minutes late with the appointment, you're never hired again type thing. So that sets a level of luxury that is frankly above typically anything that Lyft is able to offer today. It's putting those 2 together and really trying to figure out how to kind of create some kind of cross-pollination between the 2, I think really opens up that opportunity for us.

Okay. At the other end of the spectrum, you've been very consistent talking about the need to make products more affordable to drive rider growth into the platform over time. Maybe update us a little bit on where those efforts sit in terms of driving more affordability. And I would love to also talk about how affordability can also be tied back to some of the insurance dynamics in the business that we're seeing play out as well in 2026.

Sure. Yes, I love the set of questions. I mean the first thing I have to say about affordability is your best -- actually, let me way. I'll take 30 seconds of context. The first thing to remember is we'll do 1 billion rides. The other guys in North America or worldwide, the other guys -- maybe a couple of billion to $3 billion in North America, something like that. So maybe between the 2, we have $3 billion to $4 billion, something like that. Okay. That's a big number. But guess what, people take just in North America, 160 billion rides in their own car every year.

Why don't I start with that? Because guess what? Rideshare is inherently affordable for many people. Average cost of a new car right now, $50,000. That's $800 a month, $800 a month plus gas, $900 plus insurance, $1,100, maintenance, $1,200, whatever. Compare that to a $20 Lyft ride. So let's just start right there. Rideshare is affordable. And I think that's one of the reasons why we're still seeing so much great industry growth independent of the company because it's a good product. And you can text and you can drink if you want to see all the things.

Okay. Now let's move forward. So in the affordability side of things, we want to have a ride for every single price point. Frankly, it starts with bikes. I don't know if you've been out in San Francisco, you guys, we have Lyft bikes on the street. I hope you take them. If you don't take them -- haven't take them on it, take on a dinner, it's an awesome experience. Very affordable option. I was on stage with Daniel Lurie a couple of weeks ago. By the way, Mayor Mamdani feels the same way in New York City. But the bike system that's going to be basic infrastructure for city that's very affordable. Then you've got Wait & Save. We were the innovators there. It's still a great product for us. For people who want to wait a little longer, they can pay a little bit less.

Then you have our standard offering. Best way to save money in standard is to check both apps. We say it over and over again, save money, check Lyft. Here's an interesting thing. On average, if you check both apps over the course of the year in New York City, save $180. By the way, if everybody check both apps whenever they want to ride share, we do pretty well. We do pretty well. That would be very good for us. So just think about that. So that's another affordability option. Then we have Extra Comfort, then we've got the Black and sort of less affordable options. So our goal is to allow anyone who wants to ride to open up our app and shop within. If they want to cross back and forth, that's totally fine. But at the end of the day, obviously, I want them to end up where we are.

And then last thing I'll say is then we have very specific affordability options that we've innovated around. Price Lock would be a good example. If you don't like surge pricing, fine, pay us $3.99 a month for a route and you'll never have to pay more than the average price there. So it's a multifaceted approach. It starts with the fact that we're an affordable option compared to your next best alternative or even compared to the other guys in many cases, and then we try to build in from there. And then you mentioned insurance.

Yes. I'm just curious, like obviously, there's been changes in the business from an insurance standpoint. What does that do to your P&L? And how can the reforms around insurance also feed back into maybe funding some of these initiatives from an affordability standpoint.

So it's very interesting -- okay, let's -- again, we'll step back for every one of these questions just to give a little context. I mean the first thing you have to -- insurance is a very large cost for rideshare, as you know, in the billions of dollars. So you have to start before you even get to the policy reform with do you have a well-managed insurance program? We have, I believe, best-in-class managed insurance program. We've got amazing people on it. We have amazing technology behind it. We have a whole set of tools. It's everything from the safety tools that we have to the claims management tools and everything in between. And the way we interact with our partners, I'm talking about our insurance partnerships is very, very deep, very, very deep.

We exchange a lot of data because we, in some sense, have a common outcome, which is we'd like to reduce accident frequency and severity. Okay. But you can only go so far given the policy framework, particularly in certain states, California sort of being exhibit A, where insurance minimums are so high, they encourage all sorts of crazy perverse behavior. As you know and you're kind of alluding to, we had a very, very significant insurance, I would call it a policy win this last year. We had a smaller one in New York. We had a very big one in California. To give you a sense of the order of magnitude, it could be $6 a single -- in a single ride that you're paying just to cover the $1 million minimum insurance prior. Now it's we're down to $300,000.

And so then the question is, well, "where does that extra money go?" and the basic answer, if you go back to our strategy is we want to give it back to our customers. We want to give it back to our customers, right? We want to give it back to riders in the form of lower prices. We want to give it back to drivers in higher pay and in greater volume. The case study of California is very interesting. And I'm going to be sort of illustrative here rather than quantitative. But looking from your perspective, you might say California growth was kind of looking like this for a period of time. Then we went into reform mode and you might say it kind of look kind of like this because these things take a while for people to change their behavior. And now you would say it is going like this. And so every state we can bring this kind of level of sort of policy reform to, we'll do it.

Okay. Understood. You alluded earlier to partnership strategy. You have a lot more of these partnerships in place now than you've done in prior periods. Talk a little bit about what you've learned about the customers who come to you via these partnership strategies and how you think about the opportunity set to grow the entry way into your platform into a broader example of LTV of customer cohort over time.

I love that. And I think if you're -- some analysts kind of stay at high level, some analysts like to go down deep. This is an area actually I think the depth pays off because the partners -- each partnership plays its own role, both for us and for our partner. Let's give a couple of examples. Well, first, again, a reminder, about 30% of our rides are tagged to partners, up from 20% a couple of years ago. And we would expect that will continue to climb because it's a very, very important part of our customer acquisition and retention strategy.

Okay. Now let's break it down a little bit. Let's look, for example, at DoorDash. Okay. So DoorDash is a relatively new partner in our portfolio, but we are thrilled with the partnership, thrilled. And it's not just early indicators anymore. It's now been in place for some time. But the most recent indicator is our recent entry into Canada with DoorDash has wildly exceeded our expectations. It's a crazy number, 40% off of something, I forget exactly. What I can tell you is -- and here's the thing I absolutely do remember, we had certain annual goals for that partnership in terms of new customers that are linked, and we've exceeded those annual goals already and the Canadian expansion just happened a couple of months ago.

So okay, what does that tell you? What that tells you is it is working for us and it's working for them. How is it working for us? It drives frequency, right? People eat 3 times a day. And so that's a frequency driver for us. For them, what it allows them to do, quite obviously, is it allows them to have a competitive offering with a competitor, and that's very helpful for them. So it absolutely helps for companies. And you would expect that partnership to continue to deepen over time based on how successful it's been for both of us.

Let's look at United Airlines. Okay. United is a newer partner. Here's a very interesting fact. You can now earn United MileagePlus miles by taking Lyft, you can burn them as well. People have earned roughly in the 6 months or so that it's been out, maybe a little bit more. I think it's about 600 million miles so far, and they have burned roughly 300 million miles so far, we spent those miles on Lyft.

Why is that good? Okay. It's good because United customers tend to be travelers, obviously. So they tend to take airport trips, obviously, which tends to be longer and higher margin, higher-priced trips, probably obviously. People tend to level off. They take Extra Comfort and Black to airports more often than others. So that's good for us. Why is it good for United? It's good for United because most people, not the people in this audience, but most people travel maybe once or twice a year on airlines. So you don't have that many ways to spend your points, which means your points only have a certain value. But if you can spend your point every single day on Lyft, it increases the value of the point pool, which is good for United because all of a sudden makes their Mileage Plus program more interesting to people. So it's a great partnership. By the way, we now show up in the arrival tab, the departure tab, and you can see us going deeper and deeper there. But it's really around high value, less frequent.

Let's take maybe one more, Bilt, okay. Bilt is a much smaller company. Some of you know it because they have a very significant presence in New York. Bilt, as you may know, it's a platform that allows you to pay your rents on their app and then you get points back to do things in your community. How many times do you pay rent a year, 12 times a year, right? So they don't have a -- they have a product that has a certain frequency, but they'd love to interact with their customers every single day. And so through the Bilt point thing, which you can again burn and earn, I think people have earned over 1.5 billion points since the beginning of that program. So I know that was a lot of color, but it tries to give you a sense that each one of them has a use for us and has a use for our partner. And to wrap it up, I would expect -- don't think of us as having 70 partners in 5 years. Think of us as having, say, 5 to 10 maybe, but really deep and mutually beneficial.

Okay. And you front ran my follow-up. I was going to ask about how to think about the potential for density in this. But it sounds like you'd rather be deeper with a handful of partners that address maybe certain verticals in general that open up opportunities sets on both sides. That was very clear. All right. We got this far and we haven't talked about EVs, we're going to talk about. But I want to give you the opportunity to just lay out your world view of what's happening right now in mobility and the decision you're making as a company and the team to align yourselves with the secular themes around autonomous longer term. And then maybe I'll have 1 or 2 follow-ups.

Awesome. Okay. AVs. The first thing I want to say, and this is again, like if you remember nothing else from today, remember this, there are people who believe that AVs are a threat for our industry. That is dead wrong. It is the biggest gift we could possibly have gotten, the biggest gift we possibly could have done. Why? Because it is technology that customers like, right? So if you've taken Waymo, you know this, right? It feels reliable. It feels private, if that's what you want. It feels safe. magical. And the economics are awesome. Think of the 2 biggest costs we have in the rideshare industry. We pay drivers a lot of money. We pay insurance companies a lot of money. I would expect over time, that will go down, not up. So you don't often get to be in an industry. There's going to be a massive transformation where the product itself is actually getting significantly step change better and cheaper to operate. Okay. So that's amazing.

So then the question becomes how is Lyft responding. And I would argue very strongly, not just from my position, but I think looking at it someone that we are the best positioned company in the world to take advantage of this transition. Why? Because first, you've got to have demand, right? If you don't have demand, no one's going to -- it doesn't matter, right? And it's very expensive by the way, to create demand, very expensive to create demand. So we have a lot of demand, billion rides a year, 50 million customers over the course of the year. then what else do we have? And then we have all the systems that are required to take that demand and turn that into a ride. That's how is it priced? Where is the pickup location? Where is the drop-off location? What's the gate code for this community? What's the -- what happens when you leave something in the car. People leave 8,000 times a week today. People leave a phone in a Lyft, 8,000 times every week, okay?

That's a system that we've built. We've got a crazy system that does all sorts of amazing things. As soon as you get into the car, it allows you to contact the car, all the sort of stuff. It was quite a bit of work, but now we've taken our average phone right now, something like 60% of people get their phone back in less than 3 hours, which is a huge deal compared to 0% a couple of years ago. So anyway, if all these systems to take millions of ride requests every single year and translate them to ride, that's one thing that we have as well as we have millions of customers.

Then what's the next big piece is you've got to manage these things. These are physical assets. They pick up space in 3 dimensions. They don't charge themselves. They don't reboot themselves. They don't clean their own sensors. They don't do any of these things themselves. All of that takes human labor and it takes expertise. We've been doing this now for over a decade. We have a subsidiary called Flexdrive. Flexdrive owns anywhere from 10,000 to 15,000 cars. It was originally designed for drivers who didn't want to use their own car. But now we've extended that to AV capabilities. And this is truly best-in-class. This is all about making sure that, that asset, that multi-hundred thousand dollar asset today, which maybe someday is $50,000, but for some period of time, it's going to be hundreds of thousand dollars per car has to be utilized. It has to be available. And it's all about making sure that that's available.

If I compare our availability rates to another -- so think of 100 cars. How many of them are available to drive at any one time. Think of us and think of Hertz. And I'm not picking on Hertz. I'm just using them as an industry example. Hertz might -- they might be very excited if 80 of those 100 cars available to drive at any one time. We're very excited. They think they've done a very good job. We would be disappointed if it were less than 90. That's our record. I mean that's ours. Okay. So this physical infrastructure, we can come back to what that kind of feels like and looks like.

We've opened up in Nashville recently. It's kind of an interesting case study. And then there's a whole set of policy issues that have to be sort of worked out and there's a whole set of other issues that have to be worked out. But our job here, and now I'll stop, is we want to be the company that is the best position to take this very expensive R&D, billions of dollars worth of R&D and take the products that are coming out of those R&D labs and commercialize them. We want to be the absolute best way, the best demand generator, the best fleet operator, obviously, and then the best partner.

So there was a lot in there. But let's maybe dive -- maybe just still it down to one question I'll ask as a follow-up, which is what I find investors struggle with is what milestones or road map am I supposed to be following for how this ecosystem evolves. You've made a number of partnership announcements. There's more vehicles that are going to come on the road with each passing quarter and year. How would you anchor investors around thinking about what should they be mindful of to gain more confidence in your strategy with respect to AVs?

Okay. So it's a very, very good question. It has a multidimensional answer, but I will really try to simplify. But the first level setting, I think we have to do is this will take time. And the reason is because it's physical world, it's city by city, it's policymaker by policymaker, it's OEM by OEM. Many things have to line up, right? So then that becomes, well, okay, to your point, what are the big milestones you should look at?

And if I were in your shoes, I might take a number of cities as an example, the top tier and second-tier cities. And I might start to look across them and say, okay, where is there enough demand? Where is there a good chunk of demand where rideshare companies can really -- because you have to have demand otherwise, assets can't be utilized. Where is there a technology partner, an ADAS, self-driving car provider, who is capable of operating at some scale with, very importantly, driver-out, right? So that's going to be another thing. Then where are policy things lining up and then where is their physical infrastructure being built out in each of the -- in the cities.

And I think when you start to see not just 1 city or 3 cities or 5 cities, but 10, 20, 30 cities, where you can check all of those boxes where you can see some sort of driver out at scale thing going on, where you can start to see the policy kind of lining up to open up because a lot of people can say, okay, we'll go up to 200 cars. We're not going to do 2,000 cars. Where you start to see physical infrastructure of the type we put in Nashville. Again, I'll come back to that. I think it's going to be -- you sort of have to be able to check all of those boxes over the next couple of years, and that's what's going to start to kind of open your eyes. If I'm going to say one last thing.

I would say by 2030, I think it's quite possible we will be doing at least 10% of our business through AVs. By the way, still 90% driver-driven. Let's be clear. The hybrid network is -- you got to have it. Otherwise, it's very, very difficult to create a great service. But 10% might be AVs. I would then -- if I kind of stepped into it, here we are in 2026. I'd expect in 2027, you to see some significantly larger scale driver out across multiple cities. And then it will be in '28, '29 and '30 where things really start to scale up.

Okay. That is very clear. Micromobility, you referenced it earlier. How should investors think about where you operate with micromobility today, what some of the building blocks or growth are going forward? And how to think about even geographic expansion in areas like micro mobility, if that's an area of focus.

Yes, I love that. You know what, Eric, if you don't mind, and this could be a first. I'm actually going to turn it back to AVs for one more second. Nuts, right? Because I do want to say one thing. We just started to take yesterday. It was our first day of accepting riders onto Waymo's in Nashville. And I think if you're looking back to your earlier question, if you want to see sort of a microcosm of how this is going to get built out, there's a back-end piece to it where we're currently managing a temporary depot. That goes to a full-time depot starting in the middle of October, 80,000 square feet, 4.5 megawatts of power to this thing to keep these things charged, availability is going to go up.

And then you look on the demand side, the integrated marketplace we've created with Waymo, where you can literally get Waymo on the Waymo app or the Lyft app, I think you can almost start to use -- because they're the sort of tip of the spear. So I might encourage you to look at that city and see the progress there and then see how many other cities are following the same.

Okay. Back to your micromobility question. Okay. Micromobility is amazing. It is -- we're primarily talking about e-bikes, of course. If you look at sort of the trajectory of mobility around the world, not just in the U.S., it's really the introduction of e-bikes that have all of a sudden taken cities and flatten them, right, even in a city like San Francisco. It makes the whole city available to you on an e-bike, and we feel that every day.

Just so that everybody knows, we run the bicycle system here in San Francisco, in New York, in Chicago, in warehouse, Portland, and what am I forgetting excuse my in D.C., Boston, Yes. So we're a significant player in that space all across the United States. And then we supply the software and the hardware in around 50 other markets around the world, everything from Barcelona to Madrid to London, to Guadalajara to pick cities all around the world. This is an investment we started to make years and years ago because we could see the future. We could see as London was making itself as bike-friendly city, as New York was remaking itself as bikefriendly City. This would be physical level infrastructure that fits into a city and tends to be long-lived, 10 to 15 years and therefore, provides a really, really good kind of platform for us as a company to kind of frankly, get our fingers into cities in a deep way. And it is something that riders absolutely love.

Okay. Now to your question, a couple of things. We just acquired or in the process of acquiring a company called Serveo. Serveo is a bike operator, the world's best bike operator, I would argue, out of Spain. So you can imagine that some of the work we do today, the end-to-end operations that we do today in places like New York and San Francisco, you can start to see in different cities in Europe, where today, we're kind of a, let's say, sort of a behind-the-scenes vendor. And then I wouldn't be surprised to find us further expanding this as a sort of branding and customer acquisition and retention tool as well as just a strong economic. It's not a good business economically. But so that actually gives us some space to kind of play around with it. So a little bit of a stay tuned message on that one, but don't ignore it. It's economically good for us and it's -- and riders love it.

Okay. We've got about a minute left. I'm going to turn it over to you. When you talk to investors, what do you think is the most misunderstood about the business and frame it against what you're most excited about the business?

Most misunderstood, I think, is there are people who believe that rideshare's best days are behind us. Dead wrong. Dead wrong. Look at the penetration. Look at the value proposition. Again, $20 and you don't have to -- and you can even and it's safe. And it's only going to get safer and better as AVs come along and maybe over time, even less expensive because of the cost of that. So if you look at that transition and then you look at Lyft and look at Lyft, how we're, frankly, underpenetrated in the U.S. in places like, think of again up, out, forward, up, we're underpenetrated in luxury. We've got a lot of room to grow there, but we've got great assets to bring to bear. Think of out overseas.

We just doubled our TAM when we acquired a new company, but we're still quite small in Europe compared to the competition, but we're going to be new and interesting and kind of give people a new reason to kind of look at rideshare. And then forward is AVs. Look at the economics of AVs long term as well as the basic value proposition of a rider that now gets everything they like about drivers because we're still going to have a lot of drivers on the platform, someone to help you with their luggage or talk to you after a tough day or sort of your own cocoon, maybe allows you to take an hour to commute instead of 15 minutes. You can buy a nicer house farther away because all of a sudden, you're in your own screen world and watching Netflix on the way home. Like this is mind-blowing stuff, and we're right at the beginning of it, and we're so well positioned for that.

I really appreciate the opportunity to have the conversation. Thanks for coming to the conference. Please join me in thanking Lyft for being part of this year's event.

Thank you.

Good afternoon, and welcome to Lyft's Second Quarter 2026 Earnings Call. As a reminder, this conference call is being recorded.

On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. Our prepared remarks are available on the IR website, and we'll use this time to answer your questions.

We'll make forward-looking statements on today's call, including statements 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 in our recent SEC filings. All of the forward-looking statements that we make today this call are based on our beliefs as of today, and we have any obligation to update any forward-looking statements, except required by law. Additionally, today, we're going to discuss customers. For rideshare, there are generally 2 customers in every car. The drivers lift customer and the riders a driver's customer. We care about both.

Our discussion today will include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website.

And with that, I'll pass the call to David.

Thank you, Erin. Good afternoon, everyone, and thank you for joining us. Q2 26 was a quarter of record-breaking performance for Lyft, demoting the durable strength of our marketplace. We achieved an all-time high of over 30 million active riders, proving that rideshare is embedded in people's everyday lives. Our results are guided by a simple, powerful strategy, built on our relentless focus on customer obsession, operational excellence and being a world-class partner. This leads to more riders, more rides and more ways to ride. With 262 million rides in the second quarter alone, we are well on our way to hitting over 1 billion rides in 2026.

Our Up & Out strategy continues to gain momentum with premium modes growing double digits year-on-year for the 12th consecutive quarter, supported by record performance in our team referring business. We're also seeing unprecedented success in our ecosystem of partnerships with approximately 30% of North American rideshare rides linked to a partner, a new all-time high, highlighting the scalable impact of our cooperations with leaders like DoorDash and United Airlines. And with our Out part of our strategy, our global integration efforts are on track as we move toward 1 unified Lyft app worldwide with beta testing now live in over a dozen European cities, while our AV road map advances with smooth fleet operations in Nashville and strong testing results in London, ensuring we are well positioned for a hybrid future.

With that, let me turn it over to Erin to take you through a few of our financial highlights.

Thanks, David. From a financial perspective, we delivered accelerating top line growth with bookings up 23% year-over-year to $5.5 billion. Adjusted EBITDA grew 37% year-over-year reflecting continued cost leverage, driving margin expansion and our fourth consecutive quarter of over $1 billion in free cash flow for the trailing 12 months.

Our team continues to build a business that is both high growth and highly disciplined.

And with that, let's take your questions.

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

Hopefully, you can hear me okay. I wanted to ask about the rider growth metric you reported in the quarter. Can you unpack the elements of what's driving rider growth? And maybe track it back to elements of structural product improvements you're making, including some of the go-to-market partnerships you signed how much of it might have been things that were newer into the business like the California insurance dynamics, World Cup demand, any promotional activity? Just wanted to go a little bit deeper in terms of some of the structural versus maybe some of the transient dynamics around rider growth.

Eric, this is Erin. Why don't I start and then David can jump in. So as I think about our results across Q2, it's really to your point, it's not one thing. I think about the strength of our North America rideshare business our growth foundationally are continued strong growth as we think about expanding in low-scale markets, Canada, so themes we've talked about repeatedly. We also just had an outstanding quarter within our bikes business. We talked about in our prepared remarks across several of our operated markets, just hitting weekly, daily all-time highs, the popularity of e-bikes and sort of the way that those are embedded into people's commutes in certain cities is really impressive.

And then even free now, while granted, we didn't have free now in the same quarter last year, even if I look at that organically, rides are up there. So that's great progress in some of the early improvements we've made in delivering great rides across Europe. So it's really foundational strength across the business as we think about growing active riders to that record number that we achieved in the quarter.

David, I don't know if you want to join in. Obviously, partnerships play a role here, and we had some great results there. I'll turn it over to you.

Yes. I mean it's such an interesting -- I mean it's interesting question. And you can -- as Aaron just did, answered on so many dimensions and frankly, see so much strength on so many dimensions. So Erin mentioned geography. We're seeing growth in North America, in some of our largest markets like New York and some of our local markets, as Erin said. In Canada, we're continuing to see extraordinary almost double year-on-year. In Europe, we're seeing organic growth, which is absolutely wonderful. This is about almost exactly a year in free, and already, we're starting to see real results of some of the technology and some of the product innovation that we've added to that platform, and we're really still just getting started there. So that would be 1 dimension.

So then you asked about sort of the product improvement dimension. And there, you can look at everything from early days of things like lift teens, which is going super well. the silver, which continue to do super well. And even some of the stuff that's kind of -- you almost take for granted but really shouldn't around marketplace off.

Let me give you an example. We now have improved, again, year-on-year, our ETAs or pickup times. And on average, they're up another kind of down, I should say, so faster anywhere from 0.5% to 1% to 2% to 3%. It depends on the geography and so forth. But that at our scale is really quite meaningful. And I'll take just a moment to Brad for the team for a second, if I look at our competitor, we actually pick you up faster, the same or faster than they do, 75% of the time right now, which is really quite extraordinary because obviously, we have a smaller share.

So some of the foundational work really continues to help save money check lift, right? So that's another piece now on the marketing side. So it's really quite across the board, and maybe that's unsatisfying, but I think in a certain sense, that sort of says, gosh, the work we're doing, the customer access work we're doing really is working across just about every dimension. Even if you take out things like seasonality and World Cup and other things, which are obviously nice, but that's sort of a bit of external stuff.

Our next question comes from Brad Erickson with RBC.

Two questions. One, as you think about kind of where you are on margins on the path, hopefully, to 4% next year, where do you think you're kind of really outperforming right now as we look forward? And where do you think there's still kind of work to do?

And then second, just on Nashville. The depot coming online, it sounds like in October. Can you just kind of give us an update on what the gating factors are there to rolling out as a potential distribution partner? And is that still kind of on time to happen before the end of the year?

That sounds good, Brad, why don't I start with the second part of the question, then Erin can take the first. So Nash -- I'll ask your question directly and also maybe Zuma just a click. So Nashville, very much on track for a depot opening, as you said. That's the purpose well depot for those of you who I didn't see this. It's about an 80,000 square foot depot. It used to be a USPS facility outfitted now with 4 megawatts of power and multiple charging stations and so forth, capable of handling hundreds of vehicles to give you a sense of the size of that. So that's kind of where things are in there.

Let's back up and then go forward. So if we back up, the big news in Nashville for us over the last quarter was actually are taking on what was called the temporary kind of depot that Waymo had stood up. This is actually a really important milestone for us because our staff took over was actually on June night and our staff took over from the Waymo staff, and it was seamless. It was sales. We got. It was actually -- it was a bit of a complicated weather day and different things happen. But anyway, we not only picked it up. that we are exceeding all of our SLAs with those guys, which is amazing. That's a great first step. So then comes the opening of the depot, the purpose-built guy, which comes later this year in October.

So -- and then to your question, when does supply sharing start? And we haven't said anything about that publicly, except it will happen before the end of the year, but it's still very much on track that before the end of the year, you'll have the opportunity to get matched with Waymo on the Lyft app. So very much on track, great partnership with our partner, and I think they also feel great about us.

Yes. Brad, and then on your question on the margin side, Q2, obviously, we expanded our EBITDA by 37%. Our guide for Q3 calls for margin expansion quarter-on-quarter. So we feel great about the trajectory that we're on overall. I would say in terms of what's driving that, it's kind of a lot of the similar themes that you've heard us talking about. First of all, we're in a growing market. There's still great opportunity. We've for a number of quarters about low scale markets, those tend to -- those have grow higher than average. Canada continues to be a very strong market, of course, for us overall. And you take that very broad market opportunity and you have the foundation of operational excellence, as David said, just continuing to operate more effectively driving better service for riders, investing as we do against, for example, really smart ways to invest rider incentives, that continues to bring new riders to the platform. They ride more frequently.

And so as we get that scale and that operational excellence, of course, there's natural leverage in the business. Cost discipline is another area that we have talked about going all the way back to Investor Day, being disciplined as we scale. I think we've done a nice job of that, and we'll continue to do that as we grow. We've continued to grow very nicely in higher value modes and that mix is a part of our business has been an important dynamic. But on so many levels, as I think about where we sit in the market. We've had some great early progress with some new programs, for example, on B2B, but man on so many levels, we're just getting started there.

So that's exciting. And then partnerships, I mean, reaching this milestone where you have almost 1 rides tagged to a partner and the what we've talked about historically holds true, those rides tend to skew more toward higher-value rides. So again, much more work to do there as we think about our margin expansion overall. But I really like the discipline and the trajectory that we've been on. I think it proves itself out in the numbers that we reported and where we're guiding. But those are really some of the foundational dynamics.

Our next question comes from John Blackledge with TD Cowen.

Great. First question on the GB and rides growth gap, there was an 11% gap between GB growth and rides growth, how should we think about that gap in the back half of the year? Would you expect it to close a bit? And then on AV, I thought it was interesting to call out the 20% rights growth in San Francisco and the ODD. Just curious if you could talk about that dynamic and kind of just your thoughts on that.

Yes. John, it's David. I'll start with that, and then Erin can pick up the gross bookings piece. So yes, glad you noticed that. And I guess maybe I think it's sort of proves is probably a strong word, but it underscores the thesis we have that as AVs enter the market, this will ultimately be great for rideshare in part because it will expand the TAM. And -- this is 1 of the things we've been saying for a while, we're starting to see data that proves it quarter after quarter after quarter. Frankly, you also -- you heard it in the anecdotes. You hear people who say, this opens up rideshare for me in a way that maybe I didn't necessarily want to use it in the past but doesn't necessarily take away from my daily use of ride share.

We've seen -- and I'll brag another couple of seconds on the team's performance. I mean we've seen growth both in commutes, which sort of all-time high. Obviously, San Francisco is a big commute market. We also see huge growth on the sort of leisure side, everything from parties to gyms, actually, it's really interesting more people are taking rideshare to Jims than ever before. So anyway, it's sort of an across-the-board growth story, which then layers on top of the AV story. And I think that they feed each other because people get used to taking rideshare, maybe their point of entries through an AV and then they take you might say, traditional or driver driven rideshare back and forth.

So that's what we're seeing. We see it in a bunch of different places, San Francisco is the area we called out. And I think when I look at the transformation of this industry is going through, it just makes me more excited, not less that we've got a huge kind of road ahead of us.

And John, let me try to be helpful by talking a little bit about, for example, what we see as you think about gross bookings and rides and that overall mix as we head into Q3. So there are some seasonal impacts, right? Q3 is by far our highest quarter for our bikes business, awesome business does carry a lower average gross bookings per ride. Obviously, unit economics are super strong. So we love that. But it does have a mix influence as you think about that gross bookings and rides overall. For free now, we're lapping that acquisition, right? So we'll have the full compared to the previous year where we had 2 months, we'll have the full 3 months. So you have that dynamic. However, free now in the third quarter, sort of with the August holiday season, et cetera, tends to have a lower rides quarter overall. Those tend to be higher gross bookings value.

So you have some of that mix effect with higher bikes, a little bit less free now happening as you're thinking about gross bookings per ride overall, zooming out a little bit, we provided some color commentary in our prepared remarks. It talks about RISE growth in the second half and how we expect that to increase. That's not 1 factor, but really across our business overall as you think about Core North America ride share or bikes business or free now.

So that growth is going to come from each of those dimensions. So that gives you some helpful color as you're thinking about those dynamics, both in Q3 and for the back half of the year.

Our next question comes from Benjamin Black with Deutsche Bank.

Great. There seems to be some consternation about the stand-alone economics of AV ownership and the near-term inflations for the P&L. Obviously, you have the Baidu RTV in London. So can you maybe dig into the expected initial unit economics of your AV deployment there? How does it compare to sort of stand their drive? And how do you expect that to evolve over the next 12 to 24 months?

Yes. Let me try to set some context overall as you think about the economics and really exactly where we are in that overall effort. And obviously, David, please join in. where you see fit. So we're excited to be on the road, obviously, with Baidu in London. A lot of efforts across teams to make that happen and getting testing on the road and mapping overall. For where we are today, it's still a relatively small number of vehicles. So the way it's showing up in our P&L is frankly pretty de minimis, and I expect it to remain so as you think about that going forward.

Beyond that, we're not going to get too much into what scale looks like in unit economics, probably when we do get closer to that point in time, I think we'll have more to say but I'm not anticipating a significant change in the near-term impact of that overall. I think it's important to like set context, obviously, safety matters, right or experience matters overall, and we're going to continue to be quite deliberate in the way that we roll out this technology and our platform.

David, I don't know if you'd add anything to that.

I think that's all put Yes. I mean we like the unit economics long term and short term, not a significant change. Yes, just put it.

Our next question comes from Ken Gawrelski with Wells Fargo.

Two, please, if I may. First, David, maybe could you talk a little bit about the opportunities beyond Nashville potentially with Waymo, there's been some press out there around partnerships with Waymo and maybe even 1 of your competitors. Could you just talk about the opportunities and the opportunity set for you? And what you need to demonstrate in Nashville to kind of prove yourself as a partner there. That's point one. Question one.

Question two, if you think about the -- maybe, Erin, you could touch on the pricing dynamics, especially in the North America rideshare market. It continues to be really robust. Could you talk about how you expect that maybe to continue into the back half? Or any kind of outlook you could provide?

Ken, I'll start. Yes. I mean let's talk about relationships a little bit because let's be honest, you never really know what's going on in someone else's relationship. So I don't want to comment on that. But what I will say is, I think Lyft is a very, very strong partner, and I want to kind of linger on this for a second because I think it's actually kind of a DNA level issue rather than sort of a superficial issue. We keep talking about how 30% of our rides are tagged to a partner. That is not a small thing. It's very significantly up from a couple of years ago, and we first started talking about it and it continues to grow.

Why? Because what we do when we enter in a partnership is we look for partnerships where both parties benefit. And that's why we were able to expand with DoorDash to Canada. That's why the United Airlines partnership is up to such a strong start already quick paths, this has nothing to do with your question, but I was just looking and just with build a partner that we've had for a while, riders have now spent 1.5 billion, billion build points with us, billion build points with us taking rides with us. And that's with the company. It's a very innovative company. They set very has standard, Danker is a true innovator also do really interesting things. And -- but that partnership continues to evolve same with the Chase Sapphire partnership, same with Chase -- actually a new Chase partnership, Chase Southwest partnership and on. Our Alaska Airlines partnership. My God, that's been around for a long time. That's such a successful partnership that Ben Minicucci, their CEO, is just about to -- has just joined our board.

So much evidence that the partnerships we that start tend to flourish for both parties. Okay. So now let's look at Nashville. So in Nashville, there are 2 parts of the partnership. There is a fleet management side where we effectively get paid for availability, and we're click with this. We have a lot of expertise in that area from our leaders of Flex Drive. That's going to be 1 of the ways we have to prove ourselves, right? The more available, the units, the product, the Jaguar or the Ohio whatever it is, the better we do, both financially but also additionally supercritical because otherwise, the car can get dispatched.

And then on what we call supply sharing, okay, so supply sharing, this is a new idea. This is not a sequestered some small number of units that are kind of dedicated 24/7 to Lyft and then another set of units that are dedicated to Waymo. This is a dynamic pool that's constantly being -- and obviously, we're still in engineering on this because it's quite a complex job to do this well but constantly being deployed across the network to maximize, again, utilization through customer experience, pickup times, all the different variables.

So look, we're going to be judged on that as well. How we do, how well we do supply and demand, supply and demand, which -- and then forgive me for going on in such detail, but let's zoom out for a second. If you look at what AV readiness looks like for us, there are 4 big pillars. -- right? There's marketplace health. How healthy is the marketplace, how healthy can we continue to make the marketplace to oxygenate the marketplace so that AVs are being utilized as close to 24/7 as possible.

There are policy issues. In every city we go to, we have different policy issues around local safety issues or time of day issues operationally, all sorts of different things. We take a big role there. So as our partner. They're real estate issues, right? As we know, there's this big depot. We've got to site the depot in the right place. We've got to operate in the right place, all the different things I can go into detail. And then obviously, there's the AV Tech I expect we will be graded to a greater or lesser extent on all of those, particularly on the supply sharing the fleet operations side. Those are the most direct things.

And I think to a certain and we intend to be the absolute best out there. We've said in the past that this partnership is built to scale, right? We did not do all this work just to do it in 1 place. But again, let's be super clear. We're still in the very early days, and we're holding ourselves and our partner is holding us and we are holding our partner to very high standards. So that was maybe more information than you really needed, but that's the sort of color on that.

Ken, maybe to pivot to pricing for a second. So it's important to understand a couple things. One is I think about current environment or maybe where things have been in 2026. I would say, overall, relatively stable. If you look at Lyft in particular, obviously, earlier, we're talking a little bit about gross bookings per ride. That's also going to include mix shifts. Obviously, we've been growing very quickly in higher-value modes. We've also talked about our ads business, our show furring business, contributing to gross bookings. But again, those don't have an equivalent rides component to it. So a few of those things sort of have an influence in that mix overall.

I think importantly, though, as we look at our portfolio, we really have a mode for every price point that supports riders exactly where they are, whether it's the bikes business, bike to work week happened recently, we had a significant surge in the way that people are utilizing bikes for commute, for example. Wait & Save remains a really strong piece of our portfolio. We've talked about our growth in high-value modes, right?

So delivering value really up to the rider really up and down that chain of modes and meeting them where we are. I think it's also important to highlight that we're delivering value in other ways, right? So we deliver value without a membership fee to our riders, increasingly through partnerships. David touched on a few of those. Yate has continued to scale. DoorDash has continued to scale. And that's a really important piece.

And then, of course, we invest in the form of rider incentives as you think about targeting them to drive loyalty or incentivize riders to try new modes or as always, on the marketplace. So if you think about that delivered value to the rider, it's coming in a lot of different forms. In addition, to the mode selector. So I think the results kind of speak for themselves. Obviously, we had record growth in active riders or sorry, record active riders number, record rides in the quarter. And really when we look at where people are going, right, it's places where it's clear to us that we say this word embed, it's really embedded in the day-to-day life. It's no longer sort of necessarily the special occasion. It's work, it's everyday activities.

And so we think that overall positions us well to continue to serve riders really well.

Our next question comes from Chad Larkin with Oppenheimer.

It sounds like you're starting kind of the rebrand of free now. How do we think about kind of the long-term tailwinds from that? And then just kind of nearer term, kind of just how rebrands can sometimes work. Is there any kind of impact baked into the third quarter guide?

I'll talk about it sort of big picture. I don't think in third quarter, there's anything significant. Yes. So here's -- I can actually give you some on the ground experience. I was just in Europe a couple of weeks ago and experienced it myself. So here's where things stand. So as you say, there is a rebranding effort going on. You can see it very actively, for example, in places like Barcelona where now in Dublin and Athens various different places where Fino has particular strength, where you see quite a few of the taxi cab saying now freed out by lift. It's actually about 1/3 of the tax accounts right now. In Barcelona alone, say Freno by lift on them, and you can see them all over the city. So that's great.

So that starts to give people a sense of kind of who we are. People already -- many people actually have a sense of who Lyft is as an American innovative brides company. And now we're sort of starting to put it a little bit more front and center. By next year, as we said in the prepared remarks, we expect to be fully integrated in the sense that any traveler can open up the Lyft app and be able to order a lift kind of natively, let's say, on the app without having to open up a new app. And that's going to be obviously a big step forward for all of us, but that's still 2027.

And so in between now and then, you'll start to see little bits and pieces on the rebranding effort. The truth of the matter is the main action there will be once we have the product ready. We don't really want to sort of get people excited about Lyft and then have them open uplift and not be able to order a product natively. So I'd say that's 1 very, very step by step. They're interested separately, we can talk a little bit about the back-end integration, which is quite significant to make Lyft a real true global company, and we've just made actually massive progress on that, but that's a separate thing from branding. But branding will go kind of step by step as the product gets.

Our next question comes from Michael Morton with MoffettNathanson.

I wanted to ask a question about the acceleration of the business. Is it fair to assume directionally that the, I guess, 3.5% acceleration could also be reflected in the U.S. rideshare business. And then within the U.S. rideshare market, in the past, you've spoken to some increasing competition in wait and see. But I haven't heard about that. I think probably in a couple of months. I was wondering any update for the competitive environment there?

And then lastly, if you could quantify the contribution from World Cup, that would be wonderful as well, but I understand if you can.

Thank you. I'll yes, let me jump in there and maybe I'll take them in reverse order. We made some comments in our prepared remarks across certain of our cities where World Cup showed up, increasing airport rides, some increasing local trips. But what I'd say about this is Lyft is graded events, right? You think about major event Cocea we've got outside lands coming up in San Francisco soon. We rally around these things. And I think cup was another event where we rallied around delivered great services, but I put it in the category of similar to how we handle other major events and show up for our customers.

As I think about Wait & Save, overall, I mentioned a little bit earlier in the call, remains a really important part of our overall portfolio, customers continue to engage with the product. Overall, it definitely serves its purpose where you're willing to trade off price for time. So I wouldn't highlight any meaningful changes there as I think about our overall business or the way customers are engaging with that feature or that mode in particular. And then I think your first question, I'll kind of go back to what I said, we gave some color commentary about the back half rides in our prepared remarks.

And I'll just reiterate that we see that across our bikes business, our North America rideshare business, our free now business. So not excluding anything here, we're seeing that dynamic across each of those areas.

Our next question comes from Nikhil Devnani with Bernstein.

Given the improving outlook for rides you've talked about and even your competitor has talked about, I would hope to hear a little bit more about how you feel on just driver supply as you think about the balance of the year. do you feel like the industry is adequately supplied to keep up with this level of improving growth? And maybe can you talk to any of the investments you intend to make to help bridge that gap if needed as well.

Yes. Nikhil, it's David. So we feel great about the driver supply. And I actually would maybe zoom out and say, feel great about the relationship that we have with drivers and vice versa. So let's start with that. So -- we -- this is something that maybe over the last 3 years since Erin and I started, have really made a very focused investment on in terms of energy, not just dollars, making sure that people understand their 2 customers in every car a rider and a driver. Okay. So what have been the results? And some of the, and you know some of the ways we've made those investments. We now have a 30% fee cap, which you probably know what that's all about. We have a great ride of rewards -- excuse me, driver rewards program that we launched earlier this year. I actually just got new data about that. It's paid out $14 million so far to drivers, a bunch of that co-funded by the way, which is wonderful.

So we made real investments in the driver supply and the health of the driver community, I would more characterize it that way over the last couple of years and even this year. Okay. So what's the result? The result is -- we have very strong supply right now is sort of in the top strongest ever I think, and that's both in terms of number of active drivers on the platform as well as driver hours. By the way, driver earnings are effectively at an all-time high. These things are always tricky to kind of measure. But if we kind of look at it, certainly, again, since Erin and I started, they're the highest ever up. I think 8% per ride year-on-year, side point, tipping is also up 10%, which is wonderful, and that's, I think, a reflection of great service being driven by the drivers of the lift platform.

So all of those things kind of give us a lot of hope and sort of early indication that our driver supply will continue to be good. Last question that you didn't ask, but I'm going to answer anyway. You might say, well, how do you compare it to the competition. And I am pleased to say that now we have about a 30-point preference gap when you ask drivers or drive on multiple platforms, with to the 2 major platforms do you prefer to drive on. We have over 50% of people who say, like us, and there's a much, much smaller number much smaller number of people say they prefer the other guys.

So that's nice too, right? I don't mind being competitive with those guys because it's sort of good for the whole industry to be to kind of fight over your drivers a little bit. And I think we're doing a nice job, I'd say, winning that fight.

Our last question comes from Andrew Gutt with Wolfe Research.

This is Andrew on for Shweta. I want to follow up on partnerships more broadly, as you look at the portfolio of partnerships today, how are you thinking about the incremental opportunity from deepening existing partnerships versus adding new ones? And then where do you see kind of the most untapped runway?

Yes. Thanks for the question, Andrew. I think, yes, we would prioritize and our prioritizing deepening our existing partnerships. And it's because they're so kind of untapped in so many ways. And that's Look, there's -- this is -- maybe I'll make a general statement that specific. I have the general statement I make because there's so much innovation left in this space. And again, I mean, gosh, 160 million, call 300 million rides that people are taking in their private car every year. And between us and our big competitors, $3 billion or $4 billion, maybe more, that's in North America, I don't know $6 billion or $7 billion, something like that across the world.

Every one of the other ones is the product isn't yet good enough. Or the partnership isn't yet strong enough with a partner that's going to make the ride relevant or whatever it is. So there's so much general opportunity in the rideshare space. And certainly, we think we're doing very well and very well positioned there. And then within the partnership place, DoorDash, we just expanded to Canada. But gosh, there's a lot more white space out there. The Chase partnerships, we just renegotiated and relaunched our Chase Sapphire Reserve program a couple of months ago, it's about 6 months ago now. And it's been completely reinvigorated thanks to the 5x points than $10 a month. They just added the Chase Southwest kind of benefit as well the South Africa benefit as well in a different portfolio and on and on or on.

So each one of the partnerships we have, we think we're sort of in early days. But I'll get back to the earlier point I was making, I think partnership and being a good partner is in our DNA, and we're seeing that with our partners that they want more from us and vice versa. And I mean more in the most positive way possible. They want to deepen the partnership and go even bigger. So -- and like I'm getting ahead of myself by saying I think there'll be some really more interesting news with our existing partners and stay tuned for that.

This concludes the question-and-answer session. I will now turn the call back over to Lyft's CEO, David Risher for closing remarks.

You all, as always, thank you so much for your time today, for following us so closely, your continued interest in Lyft. We are firing on all cylinders and super excited for a strong year in the company and strong times ahead. So thanks again, and we will see you all next time.

Good afternoon, and welcome to Lyft's First Quarter 2026 Earnings Call. As a reminder, this conference call is being recorded. On the call today, we have CEO, David Risher; and our CFO, Erin Brewer. Our full prepared remarks are available on the IR website, and we'll use this time to answer your questions.

We'll make forward-looking statements on today's call, including statements 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 in our recent SEC filings. All of the forward-looking statements that we make today's call are based on beliefs as of today, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Additionally, today, we're going to discuss customers. For rideshare in North America, there are generally 2 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 GAAP results. Reconciliation 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.

Thank you, Erin. Hello, everyone. This Q1 represented another strong quarter for Lyft. We again delivered on our financial commitments and again had double-digit growth in active riders, gross bookings and adjusted EBITDA year-over-year, further setting ourselves up for a global hybrid AV future. Rideshare demand remained healthy. We saw double-digit rides growth around peak events like Valentine's Day, Super Bowl Sunday and St. Patrick's Day. Stepping back, our share of the U.S. rideshare market has grown from 3 years ago when I joined and has held above that point ever since, but an increase in Q1 over last quarter.

And in March, we delivered our highest ever number of rides in a week. Taken together with our financial results, this continues to validate our thesis that customer obsession drives profitable growth.

Looking globally, we're now operating in over 120 countries around the world and have further deepened our presence in London with our acquisition of Gett's U.K. business, which we just officially closed this week. And finally, we took significant steps forward with our partner, Waymo in Nashville for the construction of a state-of-the-art AV depot. We continue to be extremely bullish about AV's ability to expand our market and about our own capacity to operate them at industry-leading utilization levels, the ultimate driver of profitability. And with that, let me turn it over to Erin to take you through a few financial highlights.

Thanks, David. The consistent execution David just described translated directly to strong financial results. In the first quarter, gross bookings were up 19% and adjusted EBITDA up 25% year-over-year. Over the last 12 months, we've generated a record $1.12 billion in free cash flow. And during Q1, we executed our largest quarterly share repurchase ever, totaling $300 million in the quarter. Looking forward, our guidance reflects continued momentum across the business. At the midpoint of our range, we expect gross bookings to accelerate to approximately 20% and adjusted EBITDA to expand by more than 30% year-over-year. And with that, we'll take your questions.

Let's dive into Q&A. [Operator Instructions] First question comes from Eric Sheridan with Goldman Sachs.

Okay. Great. Hopefully, you can hear me okay. I wanted to dive into the partnerships and how they continue to evolve. What are the key learnings as these partnerships continue to build in the momentum and build in their duration in terms of them as stimulants of increased frequency on your platform or stimulants of increased new rider growth on the platform more broadly. We'd love to get a better sense of color there. I appreciate it.

Sure. Eric, it's David. I'll take it. Maybe Erin will tag team on me a little bit here as well. So super good question. And I think I'm just going to maybe reset the table for one second because I think the role of partnerships continues to be incredibly important to our current business and will be incredibly important in our AV business. So how we perform as a partner, I think it's actually a good predictor and how our partners perform is a good predictor of the future.

Okay. So to your question, we got a record number of rides this quarter from partnership tagged rides -- ride requests, so about 27%, I think. And that's a big deal. I think when we first started talking about this, we're at 20%, then 22%, then 25% and 27%. Why? Two reasons.

Number one, we partner with great organizations that have huge TAMs, right? So if you look at some of our most recent ones, of course, DoorDash is still only about 1.5 years old. United is more recent. Even Southwest Airlines through their credit card program, these are enormous programs. And so they represent a huge opportunity for us to acquire new customers.

Now those -- I'll come back to frequency in a second. Those customers are different, right? So for example, DoorDash customers tend to be very heavy users. And you can understand this, right? People eat 3 times a day, and they tend to take rides relatively more often than others. So you saw us obviously complete -- double down on that partnership by expanding that to Canada, okay? If you look at United Airlines. United Airlines is kind of a different buy, right? They tend to be more business customers. We out-index in some of United's big hubs, Chicago being a good example where we had great growth this past year. They tend to be airport rides, not surprisingly, which means higher bookings per ride, which tends to mean higher profits. So that's wonderful. How do we reward United customers? Well, we give them miles, which they've done for years now. I think we've got -- we're over 350 million rides -- excuse me, 350 miles awarded -- 350 million miles awarded right around there. That's a big deal.

And then a couple of weeks ago, we announced Pay with Miles, which is amazing. I mean that's literally -- I don't know how many billions of miles or hundreds of millions maybe United has banked, but this allows United MileagePlus customers to pay with their miles on Lyft. And that's wonderful. It's an industry first and it deepens that relationship. So you put all these things together and you get sort of a portfolio. Some tend to drive frequency and new customer acquisition a little bit more. Some tend to drive other behaviors that we kind of like the airport rides and so forth. But super, super important. Maybe I'll talk about AV partners another time. I don't think that was the sort of core of your question, but that's -- we remain very committed to the sort of concept of sort of really developing the ecosystem and going deeper and deeper in the TAM, which is quite large.

Great. Next question will be Doug from JPMorgan.

This is Neeraj on for Doug. So a couple of questions. One is on the SF commentary. I think you guys mentioned that you have continued to gain share and also saw a ride increase by 20% in the ODD. So just curious, given Uber has said their CP has gained -- that they have gained CP in the last 6 months as well. So just trying to understand the share dynamics there. Like are you gaining share from Waymo? Or like how does the share dynamics work there? And the next one was, are you -- have you started seeing any elasticity from the California insurance mandate?

Sure. Why don't I take the first half and then Erin you can take the second half. So broadly speaking, as we've said before, we think AVs are an incredible positive for rideshare. And really, it's because it's a great product. And therefore, you would expect over time, that's going to bring new people on to the -- sort of into the rideshare ecosystem. And when we look across sort of in aggregate, all of the regions where AVs are in the marketplace, we've effectively held share pretty steady. So that's kind of a good theme because a good indication because it means that as new riders are coming on, still the whole pie is growing. San Francisco is doing great. As we said, we actually had an increase -- we've had nice growth in San Francisco. These things are always multi-variable. We're also doing some marketing in San Francisco. So that is sort of a maybe confounding factor. But we like what we see in San Francisco. I will say, when I look at what the other guys say, they maybe pick 6 months for a particular reason, I'm not sure. But broadly speaking, I feel pretty good about our position in SF.

Yes. I'm happy to comment on California. So on our previous earnings conference call, we talked about, obviously, the insurance reform in California that we expected to deliver great value to riders and to drivers. We further talked about how we expected that to translate into increasing demand over time and sort of gaining momentum in the back half of the year. I can sit here today and tell you that as we got into sort of February, March and even in here to the second quarter, we are seeing that growth begin in California. That growth in the first quarter outpaced other top regions. And so we're starting to see those effects. We obviously look forward to that momentum continuing for the balance of the year.

Our next question will be Nikhil from Bernstein.

I wanted to ask about the rides growth and appreciate the call out in the letter. That's helpful. So the mid-single-digit North America volume, if I'm reading it right, it looks like Canada is growing much faster, almost 50%. So it would be helpful if you could maybe just outline what you saw in the U.S. business on a ride volume basis. And I guess the big picture factors that maybe weighed on that in the quarter. It seems like it's decelerated over the last few quarters. So just your perspective on what's happening there would be really helpful.

Yes, for sure. Nikhil -- so a couple of things. I mean the first thing I think was okay, let's just sort of maybe level set on the data and then talk about what we're seeing. So on the data, we grew both in the United States and in Canada, to be super clear. No question, Canada outgrew the U.S. I don't think it was quite to the degree you're talking about, but it was a very significant growth. I mean, we did grow something like 50% year-on-year in Canada, might get that a little bit wrong. Anyway, okay. So look, so North America, let's think about that and then the U.S. North America is a huge region, of course, super diverse, a lot of geographies and a lot of segments within those geographies. What we have seen is in Canada for sure, but also low-scale markets that we've been talking about for now, I don't know, 6 or 7 quarters, that's where we are seeing our sort of outsized growth for sure. Low-scale markets, again, you can sort of imagine those as maybe the Milwaukees of the world or maybe the Pittsburghs, whatever it might be. But sometimes second and third-tier cities or even more rural areas where there's a huge amount of TAM left and it is sort of underpenetrated.

And then obviously, in some of the cities, particularly the largest cities where rideshare has been active for the longest, I would say the industry on average is seeing slightly lower rates of growth or at least did see this past quarter. And I think that's an industry thing, and it has a lot to do just with kind of S curves and being in markets for a long, long time. Okay. So once you look at that and you say, well, okay, how are you going to reaccelerate growth in some of those markets? And that's where some of the segments, I think, become so interesting. So you've heard us, of course, talk about Lyft Silver, which addresses older people who, by the way, take a lot of rides. And even on our platform, once they become Silver members, they take a lot more rides. Lyft Teen, still a very, very new product, huge opportunity there, one that obviously is sort of infinitely replenishing, you sort of might say. You look at the partnerships that we have in some major cities, DoorDash is a great, obviously, they've got both urban and suburban footprint, but anyway, they've got a nationwide footprint. If you look at United Airlines, they've got real hubs and some of those hubs are where we're seeing really good growth. We saw, for example, double-digit growth in both New York and in San Francisco. Part of that, of course, is also some marketing, right? We're now really leaning into this idea of Check Lyft. What we find and of course, national study show is that when people check both apps, they tend to save money. That's a very powerful message and frankly, one that favors us, both because of our pricing strategy and also if you're not even looking at our app, then how can you be saving money. So there's a lot of room left there to go. So when I kind of look across all those, I see a lot of vectors for growth. That's why we're saying our rides are going to -- overall, we're seeing acceleration in Q2 and beyond. And maybe I'll turn it over to Erin to talk a little bit about that and then maybe some other things as well.

Sure. Yes, I'll offer a little bit of color, Nikhil. In our prepared remarks, we quantified the impact that we saw the weather in the first quarter had on our overall rides, roughly about 3 million rides. You can think about that as a little bit more than half of that being bike rides overall, obviously, given the severity of the weather in the Northeast. Beyond that, I think it's important to highlight a couple of seasonal factors, right? We always have a deceleration naturally in the bikes business, Q4 to Q1, same with FREENOW. Those both seasonally accelerate into the second quarter. So that, in addition to a number of the areas that David just mentioned, I talked about California. We've got a very healthy marketplace right now as well. Those are some of the underlying factors as we think about acceleration into Q2. And then maybe zooming out a little bit more broadly. Really nothing has changed as we think about our trajectory here in 2026 and our overall objective to deliver north of 1 billion rides for the full year.

Next question will be Ben from Deutsche.

So the theme this quarter has been AI productivity and sort of the investments companies are making sort of into tokens, for instance. So I'm wondering how you think philosophically about sort of balancing the need to maintain your improving margin trajectory today versus growing talent and also investing in these tools to support productivity? And then secondly, I'd be curious to hear what you're seeing in the market this quarter that required you to increase incentives per ride by 17%. Can you maybe touch on that as well, please?

Sure. Again, we'll sort of tag team this. So I mean, maybe just state the obvious, I mean, AI is amazing. It's just -- it's rolling through our org just like every other org. It's at a lightning pace. I was looking at AI adoption recently just among the developers, our engineers. And just with a new tool, we have a strategic relationship with Claude, and a new tool has gotten to 80-some percent adoption over the course of whatever, 35 days, 45 days of AI, the cogeneration tool there. So anyway, amazing. Now how we think about it? I know you asked specifically about the cost of tokens and so forth. But just zooming out for a second, how we really think about it is AI builds capacity. It actually does 2 things. It builds capacity and it increases speed. So capacity and velocity. That's the way we think about it. And we see examples of this all across the organization. We've talked a couple of different times about becoming a more global org. Gosh, when you become a more global org, you have to do all kinds of things around data and privacy and security and systems integration and so forth. And truthfully, a lot of that is not particularly customer value add, but you just have to do it. And our team has just been crushing it. And a lot of the reasons they've been crushing it without having to hire a bunch of new people is we're relying on new AI tools that we've written internally or developed -- codeveloped with others and so forth that allows us to get things done. Same with customer-facing things. We'll talk about that maybe another time as kind of a whole separate topic. But broadly speaking, I'd say we run a pretty lean ship and what AI is allowing us to do is to move faster and to build capacity among our staff so that they can either be more productive or work on more things simultaneously, or what have you.

Sure. I'll take the question on incentives and sort of start with our usual line about incentives in this business, which fall in 2 places in our P&L, the contra revenue line and sales and marketing lines are used dynamically in the marketplace to balance and optimize overall. Stepping back, that's why we always say that we are optimizing our P&L as we think about gross bookings, as we think about adjusted EBITDA. So I think that's important context. So let's kind of get into the details on the incentive line. If you think about contra revenue incentives overall, on a year-over-year basis, that's actually been a source of leverage. In the first quarter, we had our highest driver hours ever in the first quarter, very strong engagement overall. We talked a little bit in the prepared remarks about our most recent driver preference survey. Again, super strong results. So you see some leverage there in the contra revenue line. And then as I think about sales and marketing incentives, I think it's really important to chat about this from a P&L perspective. So if you look at our performance in the quarter, you see strong revenue growth. You see gross margins expanding year-over-year. I mentioned insurance being a point of leverage. So that's aided by that. We, of course, continue with our very disciplined fixed cost base. Why is all of that important to incentive? Because those are the things that can continue to allow us to invest when we see great return opportunities to invest in that rider incentive line. We do it very deliberately. We do it very focused on what the ROI is over the long term. And so some of that strong performance throughout our P&L gave us the opportunity to take advantage of some of those strong investment opportunities, especially at a time when the marketplace is performing so well. And we delivered across all of our financial commitments. So hopefully, that gives you a little bit of color about how we manage that piece in the quarter.

Next question is John Blackledge with TD Cowen. John, we're going to come back to you, okay? We're going to go to. I can hear somebody. Is that John?

Yes. Sorry. Sorry. First time Zoom. Could you talk about the strength in the high-value modes and how much runway there is for further penetration of total rides? And then second question, would you expect this kind of divergence between GB growth and rides volume growth to extend into the second half? Or will the gap close a bit as we get through the second half?

Yes, let's -- we'll tag team on that one again. So a lot of runway there. A lot of headroom maybe is a better way to say it. It's just -- this is an area where I would say Lyft may be underinvested for some period of time and now has completely made up for lost time, let's say. So we're really focusing on improving the quality of the cars, the types of drivers, some drivers who drive for black in high-value modes. So we call this the Black XL, even XXL, actually a new product for big families. Anyway, the types of drivers, we're sort of, let's say, shifting towards a more professional set of drivers there. Of course, TBR also operates in the very high-end kind of chauffeur service as well. So lots of growth there and lots of runway ahead, I would say. It's been an area that over the last couple of quarters, you've heard us talk about the acceleration, and we have big ambitions there because there's a lot of demand to fill with a high-quality product.

Yes. And I'll take the one on gross bookings and rides growth rates. So if you think about the dynamic there in the first quarter, there's a couple of different components. Obviously, part of what you're seeing is this continuation of a very active shift toward higher-value modes. We've been talking about that for a few quarters. In the first quarter, that growth is up over 35% year-over-year. Obviously, adding in the FREENOW business, which carries a higher average gross bookings per ride is helpful. And then separately, but correspondingly, we continue to diversify the things that add to our gross bookings where there may not be a ride attach, things like ads and luxury, for example. And so those are some of the dynamics that are driving that. If you think about expectations for the second quarter, I do expect that delta between gross bookings growth and rides growth to narrow somewhat. You've got the significant seasonal expansion of the bikes business, I think, is probably one of the main underlying drivers. So it will narrow somewhat as you think about those trends from Q1 to Q2.

Okay. Now we really are going to take a question from Mike at MoffettNathanson.

Awesome. It was nice knowing that it was coming. Yes, I had time to prepare, but it was going to be the same questions anyways. Can we talk about pricing in the U.S. market? All intra-quarter, we get questions from clients about what the third-party data shows for industry pricing, kind of head scratching kind of ramp. And then when we see this reported number, I know that there's some FREENOW aspect on it, but can we maybe just simplify point like what year-over-year pricing is for like a Lyft standard ride? I know there's a premiumization aspect, but just to kind of level set that and any nuance around that would be really helpful. And then another question. I'd love to hear how you're feeling about your ad business. Maybe some updates on the run rate there and if anything has changed on your outlook for the future, if you're more optimistic or anything along those lines would be really great.

David, do you want to start with the ads business, and then I'll talk about -- talk about pricing.

Erin and I are chuckling here at that. Yes, that sounds good. So okay, on ads. Ads, as we said, we've talked about ads for a while, I think, and talked about how we were super pleased with sort of the run rate, the exit rate from last year. I think the sort of big picture that we have on this is, gosh, there's a lot of opportunity. And the reason for it is advertisers are always looking for new ways to connect with customers. And in an increasingly virtualized world where people are spending more and more time on their phones, the big open question is not how do I do more virtual digital ads. I mean that is a fairly well solved problem in a sense. What's really interesting is how do you actually connect that to the physical world. And so if you look at some of the campaigns we've done, we talked about Sephora last time, we talked about a Charles Schwab ad campaign this time that I think in the prepared remarks. Actually, I think just today, we're doing something with McDonald's. You start to see some really interesting trends where people are really changing behavior as a result of being in cars when they're seeing ads in real time. Also bikes here in San Francisco, Gemini is all over the bike system here. So same sort of deal, of course, city across all of New York City. So a lot of opportunities there. And then when you start to look at the audience we have, which is a fairly large audience, talking about 50 million people plus, then the question is, well, how can you take that audience and extend that? And so we're doing something called audience extension, which allows us to sort of extend beyond sort of our 4 walls. How can you take some of that same data and extend that beyond just beyond the in-car experience to off-platform through Trade Desk and through other ad brokers. So there's just a lot of opportunity here. And the person -- I call her up from time to time, the person who runs our ad group, Suzie Reider joined us from YouTube a couple of years ago, where she had run their ad business for many years, really started it and then kind of grew it to something quite big. And we've got the same amount of conviction here. It may not be quite the same size as YouTube, that would be impressive. But certainly, we've got a lot of conviction that there's a lot of headroom ahead.

Yes, Mike, and to talk about pricing, I appreciate the simplicity of your question, and I may somewhat frustrate you because as you know in following our business, it tends to be fairly complex, right? There are changes year-over-year as you think about the mix of our business in top markets or certain geographies, which are going to carry higher average pricing. We've obviously been growing very significantly in low-scale markets. So you've got some of that mix effect, which makes it probably not straightforward to give you the best answer. I would offer a couple of perspectives though. I think if you look over a number of years, this industry generally does see some amount of price increases if you think about longer-term trends over years. Maybe over the near term, what I can tell you is sequentially from Q4 to Q1, pretty stable overall. A couple of questions ago, one of the things I was trying to highlight as you think about our overall gross bookings and kind of the mix of that, it has evolved. It has evolved over time. So we've talked about the significant growth of higher value modes in that mix, the addition of FREENOW. We further talked about things like ads or our chauffeuring business, which contribute to gross bookings and have been growing obviously nicely, but don't carry the same rides component. So those are some of the areas. Sequentially, I would say, overall pricing pretty stable as we think about Q4 to Q1. So hopefully, that's some helpful color.

Up next, we have Ken with Wells Fargo.

Can you hear me okay?

Yes.

All right. Can you -- maybe can you help me a little bit strategically understand you've made several acquisitions, some in the kind of -- some are geographic diversification, but others just it's not strictly in the rideshare business. Could you talk a little bit about how you see them all coming together strategically? What are the key like points of synergy? What beyond geographic expansion to those assets -- why are they better together? Maybe I'll just put it that way simply.

Yes. Let me take a stab at that. So -- and maybe a little -- just a tiny bit of history, I guess. So we were not a particularly acquisitive company for a period of time. And I think there's a pretty obvious reason for why is because we were kind of just getting our base business going strong. Last year, we made our first significant acquisition, at least as long as I've been here with FREENOW. That was definitely a rideshare acquisition. Of course, it's a taxi-focused kind of core rather than what's called PHV in Europe. But it expanded our footprint, which is nice for geographic diversity into 9 new countries and allowed us, in that case, in particular, strategically also to build upon the government relations, the company that's been in the taxi business has had to have had for a long time, which is so important for AVs. So I would look at much of our acquisition activity in Europe as important for geographic diversity, but also for NAV future. You can see that with Gett as well, which just closed last or this week actually. Gett is a well-respected, largely B2B taxi service in London. As we mentioned kind of in the prepared remarks, between that and the FREENOW presence in London, we're on something north of 70%, maybe 80%, something like this of the taxis that have apps in their cars, now have a Lyft app in the car. So that's amazing because that allows us, obviously, access to a very, very important market. Europe is the biggest rideshare market, arguably one of the most interesting and important in the world. And again, if you think of our activity in London, there's a short-term issue there of kind of wanting to build volume in part because that's part of what we bring to the AV category as well as government relations. And again, Gett actually directly works with governments, and then we've got good relationships through FREENOW. So I would say those are sort of the things. Now TBR is the other acquisition that we've announced recently. Also in the rideshare space, they're quite different. That's really a chauffeur space, a very, very high end. And I think that speaks to -- so we talk about this as up and out, right? Out is kind of the overseas piece and up is how can we strengthen our position in kind of higher-end offerings. And it's wonderful to have a very, very top tier. Perhaps you may know TBR because often they kind of service non-deal road shows in the United States and abroad, 120 countries. Once you have a service level that is sort of marked at 10 out of 10, that frankly brings your whole company up. And so many companies, of course, are now making good money in the high end. So I think that's maybe the -- that touches on the significant ones.

Next question is going to be from Ross with Barclays.

Great. So this is a good follow-on from that last answer. Can we just get an update on whether the FREENOW kind of like-for-like is growing? I think it was like flattish when you guys made that acquisition. I know we haven't anniversaried it, but is the business growing? And are there any like early proof points of U.S. Lyft enthusiasts going to Europe and kind of whatever adding to the FREENOW business that way? Any color there?

So I'll start with the performance, and then David, do you want to talk about what we've got coming up on that -- on the rider side. So Ross, to answer your question directly, yes, the business is growing. We talked about when we bought the business having about a $1 billion overall annual run rate that we talked about that being on track. As we closed last year, we anticipate growth as we look into 2026.

And on the second part, there, we've just begun, but maybe I can give you kind of the arc of the project. So today, what happens very directly, if you're a Lyft user and you open up FREENOW app in London, you'll get a notification saying -- if you open up a Lyft app, I'm sorry, you get a notification saying our partner, FREENOW is delivering rides here in Europe. And so it's a fairly kind of basic integration just like that. And we do some other small things as well with Chase and some other things. Our vision for sure, and we can say now really by 2027 is that anywhere as a rider on the Lyft app, the sort of Lyft ecosystem, anywhere you are with that app and that we do business through FREENOW or others, you'll be able to open that app and be able to get a ride anywhere you want. So it will be a much, much more tightly integrated experience. That's happening over in 2027. And that's always been kind of the plan we started is step-by-step integration such that by 2027, we're able to debut that. Once that happens, of course, then you would expect the business -- the growth of the business to be much more significant as a result of that work.

Okay. Great. Next question is Chad with Oppenheimer.

Could you maybe talk about the margin benefits of some of these higher-value rides as they become a larger share of overall rides and as well as like taxi expansion into more cities?

Sure. I'll take the margin profile. David, do you want to talk about taxi expansion overall. So, absolutely, as you think about the higher value mode mix of rides, all the way up to and including TBR and chauffeuring that David was just describing, they absolutely bring a higher overall margin profile to the business. So the mix is not only helpful financially, but also gives riders a lot greater choice. And what we're seeing is when we -- when those are offered up, we are definitely seeing behavior where that trade-up will happen. And so it's both satisfying rider needs and desires at that point in time, but also obviously, increasing that mix is bringing in a healthier margin profile.

Yes. And I'm going to give a shout out to Lyft Black in particular and then zoom back out. It's actually our highest rated ride -- highest rated ride. So it is a great product. It's been a little bit under marketed over the years. But as I say, we both improved the quality of it, and you're starting to see maybe a little more uptake. If you're on the call and you haven't taken it, I highly recommend and go ahead and pay with your United miles. Okay. So -- and then the taxis, one of our strategic priorities this year, and we talk about our internal -- kind of our internal framework for it is expanding the platform. And you've seen some experiments we've done in a kind of small scale in St. Louis that I would say much more significant scale in L.A. over the other cities beyond that. It's great because taxis carry their own insurance. So that's got sort of an interesting slightly different financial profile than the typical rideshare, that's wonderful. And then, of course, taxis in Europe are a whole different thing, right? It's a much higher-end product, a very predictable product in many countries and has also higher bookings per ride typically just because of, again, the combination of regulation and it's seen as a little bit more of a luxury product than here in the U.S. So yes, when you look across our whole platform, it's -- I feel really good about our kind of building out a very strong foundation. But then ultimately, of course, will embrace AVs as well, and that's next, though.

Great. Next question will be Justin with KeyBanc.

This is Miles on for Justin. I wanted to ask about loyalty. I was wondering if you could just provide an update. I know it's pretty early on Lyft Cash Rewards. And then maybe just a broader view. You mentioned wanting to do more in loyalty. So how that fits in with the strategy and then along with Lyft Pink and your existing offering there. And then maybe just continuing on international expansion, been pretty active in M&A in new geographies, obviously. But do you think this puts you in a position where you can start organically entering new markets now that you have more of a portfolio in places like Europe to bolster that expansion?

Sure. Miles, why don't I start with that one, and then we'll see if Erin has anything to add or maybe not on this one. Oh, wait, I just totally spaced on your question. My apologies.

Loyalty.

Loyalty, yes, of course, of course. Okay. So right. So yes, loyalty. So we've made some real inroads in loyalty. This is an area again of the company where maybe we've been a little bit kind of silent because we've been getting some things together behind the scenes. But here's what's happened. So in the last -- I think it was last August, we really started to lean into loyalty for our business riders. So this is a really interesting program. So we have not really had a good business product for some period of time when it came to a loyalty product. And this was causing us some pain in the marketplace. And so what we did is we said, well, let's come out with the best program that there is for rideshare, full stop. And so here it is, super clear. It's free, okay? That's very important, and it's 6% back up to 8% back depending on your load. And then you also get point multipliers for United and Hilton and Alaska, if I'm not mistaken. And that's quite -- I'm going to say the free part one more time because it's quite important. We have a competitor out there that sells something else. And internally, we sometimes talk about it as selling a time bomb. Hate to say it that way, but you sell something for free and then a couple of months later, it starts to charge you. So we don't have that. We have a product that's a free product that gives you immediate rewards back for what we call our managed business rewards program. We've learned a ton there. It's been quite successful. I'm going to forget the exact statistics, but it's significant. Maybe I can kind of find it as I'm talking here, but it's been significant. It's grown very significantly and has some kind of interesting characteristics about how many more rides people take once they start to sign up. So that's kind of been the basis of it. And you also mentioned the cash rewards. That's something we're experimenting with on the consumer side. Super cool is still relatively small because it's definitely an experimentation mode. But what I think you can see is we're starting to put some energy in this area, and this is a bit of a stay tuned story, but something that we've got some good stuff to talk about in the future.

Maybe I can add in some of the stats on business rewards overall. So if we think about sort of first-time rides on rewards eligible business profiles, that grew 59% year-over-year. And those rewards eligible riders are taking 25% more Lyft rides per month. So we're super excited about what we're seeing kind of in these early phases. That tells us a lot about that we've got a great -- a great product overall that people are finding value in it. They're taking more airport trips. So a little bit more on the stats.

And then I think you had a question, I know about kind of organic expansion maybe into new markets internationally. And I think that's probably one we're not going to talk too much about.

Okay. Next question, we have Shweta with Wolfe Research.

Two quick ones for me, please. First, I'm sorry if I missed it, but did you quantify the impact of the fuel program on your P&L? If not, could we please get a sense of the impact? And then the second is how should we think about the partnership rights growth? So the 27% data point is great. Any sense on how that cohort of 27% of the rides, what that growth is versus the non-partnership rights? How does that compare?

Shweta, I'll take the fuel question and then turn it over to David. So we talked in our prepared remarks and on this call, we're really proud just generally all the time about the way that we engage with our drivers, about the continued preference that they demonstrate for our platform. And I think that's important because we're super proud to have been really first out there with a relief program. I think it says a lot about who we are as a company overall. And what we did in this overall program is really take the approach of leaning in with our partners. We've got a great driver rewards program overall. It offers all kinds of benefits to partners. And so leaning in with our partners to provide relief here in terms of drivers can get almost $1 in savings across all the programs. That's really co-funded overall, if you think about the way that, that -- those benefits accrue. So while all of this is meaningful to drivers, certainly and material to them, it's not material to our overall financial profile nor do we expect it to be in the second quarter.

And then on the partnership side, there's not too much more I can say, but maybe just give a little bit of color. Maybe 2 ways to think about it. One is like different partners do provide different types of benefits to us as a business. On average, partners tend to be quite strong at bringing higher -- sort of higher bookings type rides on average. United, you can absolutely probably imagine why that would be true, same with Alaska, same with Hilton, same with Chase. And sometimes it's quite significant. So it's a sort of a new set of rider or a set of riders who are taking typically higher-priced rides, which tend to have higher margins and people tend to be quite loyal to those programs, and therefore, they take rides quite regularly. Then you have maybe more of a sort of volume strategy with DoorDash. I mean DoorDash is kind of the -- you might sort of think of it as the volume anchor because it's got such a large program, but it also -- DashPass, but also, as I mentioned, people eat quite a lot. And so therefore, that's an important piece of the puzzle. So -- and overall, as a portfolio, it tends to be quite a healthy part of our kind of our rider portfolio. So that just kind of gives you a sense of how we think about it, have different characteristics. But on average, really quite nice, typically on the booking side and frequency side.

And the last question is going to be with Rohit from ROTH Capital.

Can you hear me now? It said unmute. I hope you can hear me.

It's okay.

I had 2 questions. One on pricing and one on AVs. You talked about this Check Lyft messaging campaign. Are you seeing any kind of measurable changes in rider behavior since you launched it, perhaps improved conversion from price-sensitive shoppers? And kind of if you think and becomes a normalized kind of consumer behavior, is there a scenario that could lead to more structural pressure on industry pricing over time or perhaps there is more pricing power that both companies have? That's just first question. And second, on AVs, it feels like the 3 cities closer to launch, Nashville, Hamburg, London. Can you just level set how are you operating in or offering your services, be it the orchestration layer, data operations, depot management, perhaps talk through your capabilities across those 3 places.

Sure, Rohit. I'll take this, and these are big last questions, but let's do it. Okay. Yes. No, no problem at all. So okay, on pricing, let's talk about that for a second. So here's -- so okay, you asked about sort of results and then maybe kind of implications on the future. The results right now are great, promising, but it's still very early. These are -- it's quite an early campaign. You'll see us turn up the volume there, which is probably a good indication that we like what we see so far. This is a very, very price competitive -- already a very, very competitive marketplace. I don't think either company truthfully has a lot of room on the price side because if we did, we would have done it. We do it every day. Another way to say we do 3 million times a day. We try to offer the best price we possibly can. As Erin says, reliable competitive pricing is our strategy. So that is maybe not something I worry so much about. What I do think is true is customers who check both apps tend to do better. And there's that study out there that says in New York, they save $170. It's just true. The more people who kind of check both, I think the healthier the marketplace gets, keeps us both on our toes. So that's the way we think about it. We -- obviously, our position is kind of a nice one to be in because we offer a very competitive product. fast ETAs, in many cases, faster than the competition, good pricing, in many cases, less expensive, although good and not always than the competition. And so if more people check us out, then we can start to impress them with the quality of our service and so forth and so on. And now I can talk all about driver cancellation, how we've done a great job there and pickup times and so forth. So it kind of seems to be a very nice reinforcement once people -- once people get into our place. Yes. I'm going to turn it over to Erin, and then we'll come back on AVs.

Yes. Maybe before you dive into AVs, Rohit, I think something interesting to point out, David mentioned early days. This campaign has been live in San Francisco and New York. These are 2 cities that also have a pretty heavy mix of premium mode. So in your question was the implication of sort of price-sensitive riders. And hopefully, what you gathered from David's answer, but I think it's really important in our observation in these early cities is that's not really the thing, right? The thing is just, hey, check as opposed to doing something maybe out of habit, just check. So I just wanted to clarify that.

Absolutely right. Super appreciate it. And by the way, everybody likes the deal. Everybody likes the deal. So -- and we see that up and down. On AVs, okay. So you mentioned a couple of areas where we're -- a couple of cities that we've talked specifically about. Let's give you a quick update on each. Maybe start with Nashville and go to London and go to Hamburg. So in Nashville, it's actually quite exciting. You see Waymo is on the road right now. Later this summer, we start to take over operations of that. Then we open up our whole kind of new center, this 80,000 square foot center, and then you'll be able to actually order a Waymo on the Lyft app in our hybrid marketplace there, which is really something we're very, very excited about. It's going great. I kind of characterize it. I guess what I would say there is we've been in a very nice position for the last 10 years. We've about 50,000 cars that we've had to manage through our FlexDrive subsidiary. Those 50,000 cars have driven literally billions of miles, billions of miles. And that has required an enormous amount of expertise or that has delivered to us an enormous amount of expertise on maintenance and availability and so forth. And we think we're industry-leading on the operations side. So when you look at the partner we have, in this case, Waymo, probably the world's -- not probably, inarguably, the world's leader in AV tech. And then you marry that with what we believe is the world's leader in fleet operations and efficient fleet operations, low-cost fleet operations, we really are very excited about what we see there. So that's kind of where Nashville is. And over the summer, you'll see that grow pretty quickly.

Okay. In London, it's a different situation. In London, our partner is Baidu. Baidu, arguably the second sort of most advanced technology out there, certainly in terms of driver out, miles driven and so forth and so on. I was actually just in China a couple of weeks ago meeting with them, an incredible company. Their RT6 cars that just rolled off literally the docks, the same ones I was riding in Beijing and now in London. They're beginning mapping streets. It will take a while there. It takes a while when you add a new technology to city streets, there are regulators that you have to work with. And we're spending a lot of energy working with regulators on issues like data privacy, for example, very, very important, but I'm super proud of our team. and they've made incredible progress there. And then there's just the physics of the thing. And just as a quick story, in London, a lot of small streets that are 2-way and sort of how do you navigate a 2-way street with AVs where you can't signal to each other, you go first, you go first. So these things take time, but we've got an ODD that's beginning to get mapped out, and we're sort of beginning there. So a little bit earlier in the process just because it's -- but at the same time, very much on track. And then Hamburg, that's a different thing. Hamburg is really just we've established a partnership at the city level saying that we're going to be the AV provider there. We haven't given too much more detail on it. I won't do so today, but it just gives you a sense that things are going to roll out both in the U.S. and Europe in a number of different ways. So that's kind of where things stand.

Okay. Listen, I think I'll wrap up. Yes, you're so welcome. Thank you, Rohit. And thank you all. Really appreciate you joining the call today, of course. Looking ahead, super excited about another strong year coming up as we continue to track towards our 2027 targets. Thanks for coming along on the ride with us. You take care, and we'll see you next time.

All right. Thank you, everybody, for joining. Good morning. My name is Nikhil Devnani. I'm Bernstein's U.S. Emerging Internet Analyst. I cover the rideshare space for us here. And it's my pleasure today to have Erin Brewer, CFO of Lyft on stage with me. Erin, welcome to the Bernstein TMT Conference.

Thank you. Thank you for having us. We're happy to be here.

Yes, we appreciate it. I have a bunch of questions prepared. If you'd like to submit some to be woven into the conversation, please do so via the QR code available to you and happy to work those in. But let's get started here. So Erin, maybe let's start with a look back on what 2025 was. The business now is doing about $18.5 billion in Gross Bookings, $500 million plus in Adjusted EBITDA. GAAP Profitability is now showing up on a more consistent basis as well. So it's been a journey in improving earnings quality as well. What were the main learnings from 2025? When you look back on it, what were the areas that you hope to improve upon as you look ahead as well as a senior leadership team?

Yes. I appreciate the opportunity to talk about 2025. It was an exceptional year at Lyft. If you look across pretty much any metric, record active riders, record driver hours, record Gross Bookings, record profitability, exceptional free cash flow. So we're extremely proud of that. And that's really underpinned by a couple of critical things. One, the foundational health of the platform continues to strengthen. We're picking up people faster. We're pricing reliably. That is the foundation of when you bring in an active rider, give them a great experience, they're going to come back, you can convert that into frequency.

In addition, we've expanded the portfolio in really meaningful ways, great ways to drive active riders into the platform through the expansion of our high-value modes, for example, the expansion of partnerships, growth of our existing partnerships. We obviously added United, drove significant growth through our DoorDash Partnership, which we're really proud of. We brought on 2 acquisitions, the acquisition of Freenow, which expanded us into 9 countries into Europe.

We brought on TBR Global Chauffeuring, which is one of the important elements we're putting together as part of our higher-value offerings overall. These have all been really important foundations of the business that have underpinned 2025 and will continue to drive us forward as we think about 2026. On top of that, you've got record high employee engagement. It's really important to have strong, engaged workforce who believe in what we're doing and will continue to drive us forward.

And of course, just the foundational financial strength. We announced our inaugural share buyback program in 2025. So proud to be able to deploy capital in multiple ways, again, driven by the strength of the foundation that we've built overall. And as I think about how that all translates into 2026, really strong accomplishments, but we're not done by any stretch of the imagination in any one of them. We operate in growing markets. We'll continue to innovate in those growing markets, introduce new products, expand across partnerships, continue to accelerate growth across our portfolio, in particular, around our high-value modes and continue to grow the business, I think, in a healthy way. So a lot to be proud of as we look behind and a lot to be excited about as we think about 2026.

Maybe let's start with the North American Rideshare business. We're going to -- we're definitely going to get to AVs, but let's start with the core business to begin with. I think a lot of people think about the U.S. rideshare business as being more mature. There's high brand awareness for these apps already. People use them on a fairly regular basis. And so there's been this perception that eventually, we're going to hit a wall on rideshare growth or demand in general. Where do you see the opportunity for new customer acquisition in the U.S.? Where do you see the opportunity to continue driving consistent levels of healthy double-digit growth?

Yes. That is one framing of it. Another framing is there's 160 billion personal vehicle trips that happen and rideshare fulfills only an extremely small fraction of those. So the market opportunity continues to remain very large. And I think what you've seen is we've continued to drive really strong active rider growth. I mentioned a few of those as I was talking about 2025. They've held true for the past couple of years, and they'll continue to hold true as we think about the next few years overall.

Again, the foundation is just how do you have an exceptionally good service. And as that improves and as people find that, that's a great way to get around, they're going to incorporate that. Our partnerships will continue to be a strong rider acquisition tool overall in addition to that. And so as we bring in those new riders, we're able to convert them into more frequent riders, introduce them to a broader selection of our products overall.

Not only in large markets, but across low-scale markets, which we've talked about have driven exceptional growth as we think about 2025. But again, there's still so much opportunity there. So it's a broad playing field. It's a growing playing field. And I think we've got sort of all of the key ingredients in terms of health of the marketplace, innovative products, partnerships that are bringing new riders into the overall ecosystem to bring that all together.

What do you think the constraints on growth would be or any hurdles that you would worry about?

Not that we're seeing today in the business overall. We continue to see strength in the consumer. I know sometimes that does come up from time to time. Are we seeing any trade down or any differences of behavior? We're not seeing that. We're seeing strength across use cases. So none of those things really remaining a concern as we think about what we have in front of us for 2026.

And when you look at the product roadmap today, what products excite you as you look ahead? And an adjacent question and probably a longer-term one attached to that would just be how do you, in this industry, sustain product advantages, right? Because it's possible for you to replicate a product someone else is doing or vice versa. So a, how does the product roadmap look? And then how do you think about product-led growth and differentiation in this sector?

Yes. It's a great question. I mean I think Lyft has a really proud tradition in our industry of being the innovator. It's something that exists deep within the DNA of the company. I think we've been proud over the last couple of years to really reinvigorate that innovation engine through things like our Driver Earnings Commitment, which still remains unique and very differentiated in the industry, our Teen product, our Silver product. And to your point, sure, could some of those be replicated? Absolutely.

But don't forget, we're in a really underpenetrated market, right? So the ability to be innovative and have other people see the strength of those innovations and continue to engage more and more riders in the marketplace is at the end of the day, a good thing. So being worried about being copy doesn't necessarily keep us up at night because, again, you've got those factors around the market. In terms of some of the things that we're really excited about, I'll kind of go back to some of the higher -- the -- our strategy around higher-value modes.

We've been working -- arguably, I think historically, Lyft has been underpenetrated, underrepresented, whatever word you want to use there, historically as a company. It's just not been a core area of focus. We began to work on that many, many quarters ago and strengthening the foundation, first of all, with how we more efficiently bring on professional drivers, how we make our product more attractive to riders overall.

And you've seen us talk over the last couple of quarters because we're beginning to drive 50% year-on-year growth on -- if you think about Q3 and Q4. So gaining some significant momentum there. But the opportunity is so much broader, right? We're revamping our Business Travel Rewards program. TBR in the ultra-luxury space is going to be an important piece of rounding out that upper end, especially as you think about corporate travel overall. So we're excited about that. We've got momentum. We've got exciting plans that we'll be executing on here in 2026. So I'd highlight that.

Is there a big B2B sales push, a differentiated push you need to make a different strategy to unlock some of that corporate side of things?

We exist and have relationships on the B2B side across different sizes of corporations. But arguably, I think the compelling value proposition, if you think about the business traveler was something that previously was a little bit underdeveloped. That's changing now. And so you'll be hearing more and more about differentiated approaches to business traveler and business partnerships.

With respect to your 2027 targets, you're looking at about $25 billion in Gross Bookings is the ambition. That's a mid-teens compounded growth rate from where we are today. How would you break down the components of that between riders, frequency and pricing?

Yes. I think the -- if you think about this over long periods of time, right, the fuel is around bringing in Active Riders into the marketplace. It's something that we focus very heavily on. We've already talked about a couple of the ways to bring in Active Riders, but you've seen very strong growth and strong progress, especially as you think about 2024 and 2025. That will continue to remain a big focus for us as we think about moving forward.

When we bring Active Riders into the platform, then the job is really how do you convert frequency. And that's by having a compelling suite of products and offerings and just delivering a great service. So both of those that we talked about at our Investor Day being really important components of how we drive growth will be the main stays of the focus. If you think about long periods of time over this industry, you've generally seen trends toward modest aggregate price improvements over time. I think that's probably a reasonable way to think about it in the future. Our main focus is on driving Active Riders. And then when we bring them into the platform, continuing to drive that frequency.

If we look back on Q4, and I think everyone has slightly different math on it, but we came up with organic ride volume growth in the business previously might have been 12%, 13%. It looks like it decelerated to about 7%, give or take. Can you explain a little bit what happened in Q4? What might have caused that ride volume to decelerate? And how do we think about that gap between Gross Bookings and ride volume as you look forward?

Yes. So in the fourth quarter, late in the fourth quarter, we saw some, what I would say, unusually heavy promotion activity that was concentrated around the lower end, I think the Wait & Save portion of our product portfolio. So that did cause some disruption on the rides side late in the fourth quarter. As we got into the first quarter, that was -- those effects were not structural. They were very temporary. Why is that? We didn't lose any Active Riders. We emerged from kind of that short-term disruption in even a better market position than when we entered. So the strength of the platform is healthy. The foundation of our Active Riders is just fine. So that's sort of the fourth quarter.

What we further talked about then as you think about the first half of the year is you should expect Gross Bookings to grow faster than rides. We talked about that -- the wedge of that growth being slightly elevated. And that's driven by really two primary factors. One, we are lapping a period over the prior year in the fourth quarter, in Q1, a little bit into Q2 of just lower pricing levels in aggregate over the industry. So think about 2/3 of that wedge being driven by that lapping of that particular environment.

The balance 1/3, if you will, of the wedge is driven just by continued growth and diversification of our portfolio. So think about strong growth on the high-value mode side. Think about the addition of Freenow and TBR, which encompass that. Think about things like the growth of our Ads business contributing to that. Also in our bikes and scooters business, the growth of the enterprise piece of that portfolio. Those are things that are a little bit more structural that as they continue to grow, we will expand that wedge a little bit, all else being equal. But hopefully, that's a helpful framework to think about that as we look at the near term.

And investors should continue to think about the opportunity for acceleration this year. You still feel that's in the cards for North America?

Yes, that is absolutely still in the cards. I would say that as you think about Q1, Q1 across our business tends to be a seasonally lower quarter. That's fairly typical. That's primarily weather-driven. It's driven by impacts, for example, in our bikes and scooters business, fewer bike rides taken in seasonal months. And then Freenow, as we closed the acquisition of Freenow, we were careful to highlight that Q1 is also a lower quarter, Q4 being a seasonally higher quarter as you think about the Freenow business, Q1 being lower. So those are some of the structural elements as you think about just the pace of Q1.

I guess the other thing that I would say about this Q1 is we've had some pretty interesting weather events across our country. Obviously, Finn, which we knew about in advance of the guidance, this recent storm, Hernando -- when you've got major cities shut down for a day or 2, weather impacts are going to happen. I would say they're a little bit heavier this year than in the previous years. But at the end of the day, we've got -- we're looking forward to strong bookings growth in the first quarter, obviously expanding our profitability in the first quarter. So we like where we're positioned.

At least the kids got a snow day this time, which is good.

That's good for them.

We're sitting in California, right? Where you recently gained some ground on insurance reform that went into effect at the start of the year. How has Lyft approached reallocating and reinvesting those insurance savings? And how are you -- what are you seeing in terms of the benefit that that's providing for demand overall?

I'll zoom out and then let's zoom in on California. One of the things that we've talked about as we talk about overall managing cost of insurance, if you will, which are a significant component of our business. One of the key pillars that we've talked consistently about is our efforts around policy and regulatory reform. So this strategy is nothing new. You've seen us talk in the past about more tort reform-related activities, for example, in Georgia and Florida in the past.

Obviously, the coalitions that came together in California to just structurally change what's required, what we view as very common sense reform in the market. All of these things are part of a broader strategy about bringing a much more common sense way, which brings -- has the effect of bringing down prices for riders, generating more rides for drivers and more economic opportunities. And when those 2 constituents win, we also win. So overall, it's a model that we will continue to pursue. So California, that structural reform, as you pointed out, went into effect at the beginning of the year. And what we're seeing in the market is pretty much exactly what we expected to see. I'll describe a couple of dynamics there.

Any time in any historical context, when you have some of the structural change, and it does result in lower pricing, you're going to have some of your more power riders, if you will, sort of see that immediately, right? Because they're high frequency, say, daily commute users of rideshare. And then you're going to have a broader set of the population that are less frequent users. Let's say, they take 3 rides a quarter. So it's going to take a period of time for them to see and incorporate that we're in a different environment. And then the behavioral change piece of that also builds over time.

We've seen that in other areas in varying degrees as we pursued other policy reforms. And so I would expect California to play out very similarly. In terms of pricing overall in the market, California is no different than we operate more broadly. Our aim is to price competitively and price reliably. We've been doing that in California, I think, consistent with our expectations as you think about some of the savings. In many cases, those have been passed through in the market as we think about building this long-term flywheel of more rides, more earnings opportunities for drivers and better outcomes overall for Lyft.

Are there additional markets where you're optimistic about similar reform happening on the back of what we've seen in terms of the benefits for California?

I think the nice thing as you begin to build the specific use cases, and again, they're not like-for-like. Georgia and Florida, a little bit more tort reform. Obviously, California's core insurance reform. But as you begin to build these use cases and then over time, see the data of how that transpires in the market, that's extremely helpful in the conversations that we have across a variety of other states that we might be working with or other coalitions that we might be working with in terms of seeing what's happening on the ground. In California, again, that will build over time. Georgia and Florida, slightly different reforms. But again, those have been in place for a longer period of time. And so absolutely, we will continue to pursue this as a strategy. We think it's structurally long term, great for the market overall.

Can we talk a bit about the smaller markets or the underpenetrated markets? In Q3, you described it as driving about 70% of your growth, which is a fairly substantial number. Maybe just to level set, when you talk about underpenetrated markets, what is the scale and scope of the market we're talking about in terms of size?

Yes. A great way to think about it just structurally, earlier, I talked about the 160 billion personal vehicle trips in the U.S. is sort of the overall available market. The way that we define those lower scale markets, which are markets outside of, say, our top 39 to 40, that's about 2/3. That represents about 2/3 of that overall market size. So it's substantial. And it's been an area that we've been growing significantly. That's through great market management, focused local activities. We will continue to do that. That remains an attractive growth vector for us as we think about 2026 as well. So it's a sizable piece of the available market, and you'll continue to see us focus growth efforts there.

And what does the investment curve look like for those markets? And when you look at end state, do you think the economics in these sparser markets can be comparable to what you see in bigger cities as well?

The short answer to the second part of your question is yes. And so in terms of the investment curve, of course, it's going to vary. It's going to depend on what your starting point is overall. But the great thing around Lyft and the strength of our marketplace team is we do this every day, right? We've expanded across provinces and cities across Canada. We've continued to build across low-scale markets in the U.S. And so you begin to see incredible patterns that are broadly applicable. You put on top of that a lens with -- that has a local lens to that. It's a really powerful combination, and you get a team that gets very good at executing that. And so yes, attractive economics, obviously, efficient ways for us to spend as we think about growth overall. And that's not just theoretical. That's at this point, very much proven.

And starts with supply, I'm guessing in...

This is a supply-driven marketplace. So absolutely, things start with supply.

On international, you closed the acquisition of Freenow, which is becoming -- Europe is now part of your business as you look forward. What is the ambition longer term on the Europe business now? How big do you think you can get for Lyft over the next 3 to 5 years? And when you are allocating dollars as a CFO and making discretionary investment decisions, right, how does investing behind Europe stack up against the opportunities you have in the U.S.?

That's about 3, if not 4 questions. So if I miss one, please bring me back. So in the context of the acquisition of Freenow, it brings us into 9 new markets across Europe. Freenow, for the benefit of everyone, is a taxi-focused business. That is their primary product. Taxi tends to be obviously a more elevated product across Europe. They have a heavy business user audience overall. And so some of the attractiveness of that as a platform came across a few dimensions. One, just we saw out-of-the-gate synergies as we think about marketplace management. We knew we could improve the service overall. That's been an area where our engineering teams have been collaborating and making really strong progress as we think about the early days.

We also saw attractive opportunities as we think about growth and expansion across our Ads business. Don't forget, we partner with global brands, that being an important piece. Our partnerships, again, we partner with global companies. So it's an attractive expansion and synergy opportunity. And then we also saw the opportunity around potential AV partnerships at the time of the announcement. Again, with the ambition that as AVs scale and roll out, operating in North America and in Europe, where you tend to have the highest Gross Bookings value per ride's going to be an attractive place to be positioned as we thought about AV partnerships.

And so I think all of those things are very much in the process of proving themselves out as we think about Freenow. So excited about the platform overall and the progress we're seeing in the early days. I think the second part was capital allocation and how we think about that overall. One of the things I'm incredibly proud of now after being at Lyft for almost 3 years is that we're in a fully different financial position than we were when I entered the company. So you've got a company, to your point, in the opening that's generating consistent profitability, continuing to grow over time, generating extremely strong cash flows. So it puts us in a nice position as we think about the allocation of capital.

And as we think about the growth of the business, it opens the aperture in terms of what we can achieve through organic growth and where the opportunities might be to accelerate through inorganic growth. I think TBR is a great example of that as I've highlighted the high-value mode strategy. So we'll continue to look at that through that lens. We have rigorous expectations, obviously, when we deploy inorganically for what we want that to return. But the flexibility is there, and we'll continue to look at it that way as we think about the future.

Are there synergies, be it revenue or cost for 2 assets sitting globally in different markets today?

As you think about things in the near term, that hasn't been the primary focus. Of course, where those opportunities were transparent as we think about service providers that we might equally use. We've captured that absolutely. As you think about the road to a single platform, we'll continue to execute where we see good, again, structural and foundational cost opportunities, but that wasn't the immediate focus right out of the gate.

We have to talk about autonomous vehicles, which are by far the biggest theme in the sector right now. And I think with respect to how investors think about AVs within the context of the incumbent rideshare platforms, there are several questions around the degree of TAM expansion, how the technology fragments over time or the extent to which that happens and then also the capital intensity of running a rideshare network in the future. On the first point around TAM expansion, what have you observed to date in terms of growth rates for markets like the Bay Area, where we have obviously seen an influx of AVs in the market today. I think you recently called out a 10% growth rate in San Francisco. But what has been the longer-term trend, I guess, on growth in this kind of market?

Yes. So over 2025, you probably heard us talk about fairly regularly what we were seeing across several of the U.S. markets where you had some scale of AVs on the road. And when you get to that place, the data becomes increasingly clear. And it's clear across multiple cities that AVs entering the market expands the marketplace. We've provided data across, I think, now Phoenix, L.A. and then to your point in the fourth quarter across San Francisco that demonstrate how we're seeing that.

So not only is that 10% growth rate, if you think about in San Francisco in the fourth quarter, an interesting fact, Active Riders growth in San Francisco was also at what I would say is a higher-than-average growth rate as you think across the U.S. That's a great leading indicator. And we did see growth acceleration across every quarter in 2025 in San Francisco. And so again, just additional data points to sort of round out how even in a market like San Francisco, which has been one of the first and one of the more mature that you continue to have a growing market. You continue to have a market where our growth is not only accelerating on a ride basis, but bringing in new Active Riders into the Lyft ecosystem in a very strong way.

On the notion of tech fragmentation or self-driving technology becoming a bit more commoditized over time and accessible to more players, what do you as a management team look at for conviction and confidence in that end-state outcome? And when you look at the array of partners that you're working with or could work with, how do you think about where everybody else is relative to, let's say, the benchmark in the industry today, which is Waymo?

Yes. It's a great question. As a company, we obviously have an incredible team that's focused on this space that spends their day not only working with our existing partners, but continuing to develop deep relationships with players across this overall ecosystem. And we're super proud to be partnering with and launching with 2 of the global leaders, both Waymo and Nashville and launching with Baidu in London. So we feel great about where we're positioned.

In terms of the more structural question to the way that we think about this, it all begins and ends with safety, right? Any time you're rolling out a new technology and you're thinking about going into markets with a new partner on a specific either vehicle or technology stack, safety is by far and away the most important, the first thing that we think about, the first thing that we're going to consider as we maybe launch new partners or continue to expand. And it turns out getting to the places, for example, that impressively Waymo has demonstrated, the leap to getting to those last few percentage points of edge cases is very, very hard.

And so while you've got definitely an ecosystem of folks on the technology side who are doing exceptional work. And I think you will get to a place of fragmentation where you've got a number of providers. We're talking about an industry that will still be measured in terms of development over a factor of, call it, years versus quarters. So hopefully, that sort of provides some framework, how we think about it, sort of how we're seeing the ecosystem evolving.

To the point of the Waymo and Lyft partnership in Nashville, I think it's been described as being fairly productive or cooperative on unit economics, which I think when that first came out, sort of surprised people because the cost to run these AV networks are actually quite high. What is it about the structure of that arrangement that makes it a productive relationship for Lyft?

So the structure of the arrangement has 2 key components. One, we'll be providing fleet management operations in Nashville. We've talked about that. And we also have a component of the arrangement where we'll be doing some integrated supply sharing across platforms. And so that's unique as well. We're excited to work on that. We've talked for a long time about the capability that we have within Flexdrive, talking about why that mattered, why it matters that you understand the nuances of fleet management in a way that's integrated with rideshare. So obviously, our point of view is that we can deliver leading uptime availability through that capability, that will be a differentiator.

And then I think in terms of delivering great rider experience, to your point, the level with which the 2 companies need to work together behind the scenes in terms of our marketplaces to pull that off in a way that's a great rider experience has been -- has some complexity. But obviously, as you think about delivering that experience and executing on that in a way that's beneficial to both partners, extremely important. The economic opportunities exist both on the fleet management side. And then, of course, as rides are -- as autonomous rides are delivered across the Lyft platform. So those are the 2 components of the economics overall.

On the component of fleet management and Flexdrive, how do you strategically think about that asset and that business now within the context of AVs? And should we interpret it as if you can improve the utilization rates and uptime on these cars, you can then recycle those savings back into competitive take rates, for lack of a better word, or competitive offers for AV partners? Like how do you evaluate the bundle of the service versus 2 disparate offerings?

Yes. So I think the bundle of the service is important, right? The advantages that are driven out of the Flexdrive are at its core, you have in an AV, an asset that needs to be maximally utilized, meaning you want to have a paying passenger in the car for the maximum amount of time. That all begins and ends with the car's availability to be dispatched, right? It starts with that. We think we can drive superior outcomes there. We think that, obviously, by having that integrated, it brings some advantages. You also don't have a middle person needing to earn economics at scale out of the over. So there's a number of different ways we think that drives advantages overall and competitive advantages. So as we launch, as we scale, looking forward to talking about how that manifests a little bit more.

What have been the learnings to the first, I think, deployment that went live in the U.S. was Atlanta with May Mobility. What have been some of the key learnings from that? And how do you take that as you go into more cities going forward?

Yes. I think the most key learnings sort of start where I started with -- you asked about what are the things that we factor in, and it's all about safety because safety is going to influence the way riders experience a new technology. And so some of the key learnings and observation is when you bring a new technology, a new supply base, something that people may have never experienced before, what is the response to different situations, how is the rider experience. So a lot of it is gauging input from the rider, understanding how they're experiencing the ride, experiencing the overall new way to get around and incorporating to the extent that some of that feedback can come back in terms of the way that the ride is delivered, that's been a really core foundational learning.

And you've talked about investment on the -- again, back to the fleet operations side of things, I think about $10 million to $15 million of capital investment to support the build-out in Nashville. How do we think about the number of vehicles, if we try to think about the level of spend needed as this portion of your business scales up, what scale of operations does $10 million to $15 million essentially support? And how do we think about that mechanism going forward?

So without giving you a specific number, obviously, as we've entered into approaching this market, Obviously, we're building towards something that has durable, long-lasting applicability as you think about operating the market. And so building a facility of the size that's going to support what we hope to see as we think about how Nashville develops over the long term, I think, is the way you should think about what that investment supports.

And what are the challenges or bottlenecks to fleet management on the AV side versus perhaps for traditional ridesharing?

I don't know that I'd describe it as challenges or bottlenecks, but some of the important nuances is obviously the level of charging capacity that has to exist within these depots. That influences the way that you kind of work with cities, develop a particular functional site. And so I would say that's an extremely important piece in fact certainly factoring in both where the Nashville depot will be positioned and sort of the work that was required that is required to get it up and functional overall. And that's an important distinction.

And is there a role for the rideshare services on the insurance side of things to help with AVs as they commercialize as well, given the experience you have already in the sector and the relationships you have working in different markets. What is the role of your platform from that angle of things?

Yes, it's a great question. Of course, it's a super early question because if you think about, again, where we are in the overall development of this industry, it's extremely new. To have a market where you have sizable insurance companies sort of getting into it, you're going to need more miles, more data, frankly, more certainty as you think about structural, the whole rules of the road, regulatory, what will be required. And so I think that will develop over time.

That being said, if you think about the operations that we've built around our own insurance portfolio and you think about the management of claims as being an important piece of how you manage costs over time. There are portions of that expertise and that capability, which we do think will be useful and helpful as this market develops over time, for sure. Very difficult to, with precision today, say exactly how that will transpire. But there's no doubt that, that foundational capability is going to be helpful.

On the broader point of capital intensity with AV fleets, how do you think about using your balance sheet within the context of bringing more of these cars to more places? To what degree do you want to use your balance sheet? And just help us understand sort of the CapEx implications for Lyft.

Sure. We have talked about that, again, as we are in the early stages of this technology being an important piece of supply as you think about rideshare that we would be willing to invest in these rollouts, whether it be what we're doing in Nashville in terms of building a depot, what we're doing initially with Baidu in London in terms of buying that initial test set of cars. So that makes sense to us, especially as the markets are developing and as everyone is in this very much learning phase of how markets roll out at scale and then become good financial engines for all the players involved overall.

Don't forget today, right? We own thousands of cars on our platform today through Flexdrive. We own and lease multiple sites across the country to support that overall. And so we have experience in terms of what it takes to have financeable assets. I do think JVs, again, at scale over longer periods of time will become financeable assets. But in these early phases, in certain cases, it will make sense for us to deploy some limited capital as we're launching in cities and launching with new partners.

And today, it feels very early stage and then small amounts in general. As you think longer term, are there guardrails you put on the business in terms of capital intensity that prevent this from becoming like a bigger shift in business model?

Yes. I don't think we see it today as developing Lyft materially changing in terms of the way that our asset structure happens. Again, as this supply comes in over a matter of years and not quarters, you will develop foundational data that will make these financeable assets. We think we can see a pretty clear path to that. And I think likely more at scale, that's how this rolls out rather than rideshare somehow transforming into a different asset model.

And is the key on financing essentially the unit economics getting better, the cost curves coming down?

Yes. And seeing the data on the road. Yes. Costs coming down, unit economics becoming more definable at scale rather than today where they're very -- you have many different experimental models that are happening in the market at very low scale.

With the longer-term vision of local operators owning more of these fleets or financing them?

I think that's a very reasonable scenario. Yes, I think that will happen.

On the broader topic of capital allocation, you've done some M&A recently. There's organic investment opportunities. You just have your inaugural buyback now. How are you broadly thinking about capital allocation? And why was this the right time to announce the buyback?

Yes. We chat a little bit earlier about sort of frameworks around capital allocation. Our framework is, obviously, we are a scale business. So maintaining core liquidity is really important just into our foundational operations. We are in a growth business. So investing against that growth is going to be important for us as we think about going forward. And then importantly, returning capital to shareholders. So we completed about $500 million of our inaugural share buyback program in 2025. That leaves about -- that left about $250 million left on the authorization, and we announced a new $1 billion authorization.

Stepping back, as you think about share buybacks, what I would say is, as a company, our point of view is that as you think over longer periods of time, it's important to be reasonably steady as we think about share buybacks in the market. That means we'll probably be in the market each quarter, et cetera, et cetera. And I think that's important to have as you add this as a component of your capital allocation. That being said, the framework of our program allows us to be opportunistic. And as I think about where we sit today, arguably, our argument, our stock is undervalued. It allows us to be opportunistic in periods of time where we see a dislocation. So that's a broad framework for our program, how you should expect us to approach it and how we think about it as part of our portfolio.

Part of the financial framework looking forward is that margins will continue to grind higher. You've talked about a 4% target as a percentage of Gross Bookings. We are in and around 3% today. So can you bridge us to those levels? In your opinion, where do you have the most conviction in incremental margin expansion coming from?

So the conviction in incremental margin expansion, I'm going to touch on the core themes you heard us talk about at Investor Day. They've been the same levers that have driven us in 2024 and 2025 to record levels of profit and profit expansion. And they're around a couple of critical areas. One, obviously, as our platform continues to get healthier and healthier, meaning that we've got great balance in the marketplace. We're picking up faster than ever, in most cases, faster than our major competitors. We've got pricing that's reliable. That's going to continue to grow and expand the platform. This is a scale business and scale matters.

When you do that exceptionally well, as I think we've been demonstrating, you can then get very, very efficient at the core economic tools of the way you balance the marketplace, and those are through incentives. So we set out some targets at our Investor Day about how we wanted to -- or the goals we wanted to reach around efficiency. We've well exceeded those in the first 2 years, and I think we have a great opportunity to continue to leverage that as we continue going forward. So that will be an important piece of things overall.

The expansion and broadening of our portfolio across, in particular, the higher-value mode end, both in and of itself and frankly, through new rider acquisition through partnerships, those riders tend to take a higher mix of higher-value rides. So the expansion and mix of our portfolio around that higher value is going to be an important driver. And our ability across that growth and that scale to remain extraordinarily disciplined as you think about our foundational cost structure. We talked about at Investor Day, our goal to drive about 50 basis points of fixed cost leverage.

We've almost doubled that in the first 2 years. We're not done. We'll continue to get more efficiency there overall. So it's the foundations of the business, the discipline and excellence with which we operate, our ability to expand our mix overall, those will be -- those will continue to be the fuel that continues to drive our margin expansion.

Given the progress you've already made on some of those incentives and platform variable costs, should we think about fixed cost leverage being a bit of a handoff now to that portion of operating leverage? Or do you think there's still on the variable cost side, still opportunity?

I think there's still opportunity across all of those.

And how about advertising within that context as a higher margin revenue.

Thank you for bringing that up. Yes, the Ads business has also been an important component of that. Obviously, we exited 2025 right on track with sort of the long-term framework we set out. We grew -- we talked about innovation earlier, right? Lyft was an innovator in terms of mobility marketing through the app, and that's grown exceptionally well. We're now entering sort of the next phase, the next leaping off point, if you will, of our ambitions for the ad platform.

And those are all things around experiential, more experiential ways that we can bring value both to riders and through the advertisers. And then frankly, through companies who also have an interest in mobility marketing and mobility data and partnerships that we can leverage around that is going to be another value unlock. So our teams are hard at work on launching those pieces of the portfolio. So we'll look forward to continue to keeping you up to date on that.

A bit of a theoretical question, but I've always wondered why there hasn't been a stronger push to not that I want to see ads everywhere, but why there hasn't been a stronger push to ads when someone is in the car, right? I mean someone is in the car for 20 minutes. They're probably on their phone for 19 out of 20 minutes. Is that a surface area that is untouched today that you think can be monetized more?

No, we definitely deliver ads through the ride. We've innovated that in terms of different ways that they're experienced best for different users, but it's absolutely a compelling piece of the value proposition, especially when you're working with companies who are building brand overall, maybe launching something interesting because you tend to have a little bit more captive attention for longer periods of time.

And there's a lot of discussion these days around AI making people generally more productive in the workplace. As a CFO, as you look at how quickly the world is changing and as you think about resource allocation and doing more with less, what is your view on where you see this going? And how does that influence your perspective on managing the cost base as you look forward?

Great questions. I would say in terms of what we have deployed within the company, it's probably pretty similar to what you're hearing from other companies. We're definitely deploying developer tools where we're seeing strong efficiencies. That's not new. We've been doing that for a little while. We're definitely deploying innovation around the way that we approach customer care, whether that's on the rider or the driver side and continuing to see great efficiencies out of that. We've also launched it through customer-facing product, specifically initially to the driver with the Driver Earnings Assistant, which is basically an AI tool that helps the driver plan, set a goal, and then plan their week or their time on the platform, and that's been very effective. So we'll continue to leverage these tools. It's obviously something that as a company, we evaluate across multiple disciplines on a semi-regular basis. But those are some of the things that are in flight today where we've seen the efficiencies clearly come to life.

And is the philosophy to reinvest that back into more growth as you think about doing more with less?

I think how this plays out in reality is generally, there's some combination of that becomes a little bit more fuel as you think about fixed cost leverage, in particular, as you think about development costs, general productivity tools overall. And then a portions of that become where do we invest just generally as a company where we think we have great long-term growth opportunities, all with the mindset of those 2027 targets being our North Star.

Last question for me is closing remarks from you. What do you want to leave the audience with today? What should investors continue to expect from you and Lyft as they look forward?

I guess what I would leave with is just the pride that we have as an organization for the incredible results we've delivered economically over the last couple of years, arguably, I think the way that we've transformed the strength of the platform. This is not the Lyft of 3 or 4 years ago. This is a resilient company. This is a company that executes extraordinarily well. And I think we are really excited as we look to the next couple of years and the growth opportunities that we have ahead of us.

Great. With that, we'll leave it there. Thank you so much for your time.

Thank you, Nikhil.

Good afternoon, everyone. This is Erin Brewer. Welcome to Lyft's Fourth Quarter and full year 2025 Earnings Call. As a reminder, this conference call is being recorded.

Before we start, I'd like to take a moment to share an update. Aurelien Nolf has accepted a new role and will be leaving lift. On behalf of David and myself, we are incredibly grateful for his contributions, and we wish him every success in his next chapter. I'm also pleased to welcome Aaron Rome to the call today. Aaron joined us in September 2024 as a Senior Director on our Investor Relations team, bringing a wealth of professional experience in Investor Relations. She's played an instrumental role in shaping our program since she joined, and I'm delighted that she'll be stepping in as Lyft's new Head of Investor Relations. You're all in great hands.

Turning over to you, Aaron.

Thanks, Erin. I just want to take a moment to echo the same thoughts. We are so proud of our friend and our colleague and will be rooting for him in his new role.

Now let's dive in. 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'll use this time to answer your questions. We'll make forward-looking statements on today's call, including statements relating to our business strategy and performance, partnerships, 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 in our recent SEC filings. All of our forward-looking statements that we make today are based on a belief as of today, and we disclaim any obligation to update any forward-looking statements, except as required by law.

Additionally, today, we're going to discuss customers for rideshare in North America, there are generally 2 customers in every car. The driver is list customer and the rider is a driver's customer. We care about both. Our discussion today will also include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website.

And with that, I'll pass the call to David.

Thank you, Aaron, and thank you, Erin. And Erin, I'll get back to you later. Q4 delivered accelerated gross bookings growth and record profitability, closing out another incredible year with 51.3 million riders taking 946 million rides. In fact, in the time it took me to say that sentence, almost 400 rides started on the road or in the bike lane. Wow, that's 30 rides a second. That's a ton.

As I reflect on this year, I am extraordinarily proud of what Lyft's team around the world has accomplished. We launched best-in-class customer-obsessed products and partnerships. We expanded into Europe and into the world of chafing, and we have positioned ourselves in the center of the $1 trillion autonomous vehicle revolution. We did all this and more while tracking relentlessly towards our 2027 goals we outlined at our Investor Day back in 2024, that's $25 billion in gross bookings, 4% adjusted EBITDA margin and free cash flow of over $1 billion.

Before we jump into our results because I know many of you are financially minded on this call, here are 2 life hacks. I highly recommend, both involving Lyft. First, yesterday, we launched [indiscernible] a reliable, affordable way for the U.S. is 40 million teens to get what they all want, which is independent, with safety prioritized at every step of the way, compare a $20 Lyft ride to the thousands of dollars of annual cost of insurance, gas, and wear and tear in your car and you'll understand why it's such a great way for your gene to get around.

And second, a recent independent study highlighted that riders can save about $177 a year just by checking both rideshare apps before booking. Now more than ever, there are more reasons to check Lyft. All right. With that, let's get to your questions.

Great. A little housekeeping. [Operator Instructions]. Okay. Our first question comes from Eric Sheridan with Goldman Sachs.

Maybe a 2-parter, if I can. Looking backwards first, I would love to understand that the team's appreciation of what worked this year on sort of the product innovation of the equation that drove elements of volume and user growth across the platform? And then how does that align with some of the strategic priorities you're most excited about that could continue sort of the growth path as we think forward over the next 12 months? .

Sure. Eric, it's David. Let me see if I can take that question. So it's a nice big picture question. So I mean, first, maybe just sort of to underscore the premise there. I mean, gosh, our results are impressive. I guess this is a time to brag for a second. We had gross bookings growth, obviously, 19% year-on-year, which is pretty extraordinary. And that accelerated. We have driver hours that are higher than ever. I think it's our 12th consecutive quarter of record driver hours. We had active riders that grew 18% year-on-year. Obviously, we had our most profitable quarter ever. printed over $1 billion in cash. So those are good results, okay?

So where did they come from? Well, this is not going to surprise you at all customer obsession is what drives our profitable growth. And I think I feel more strongly about that than ever. And let me use that as a way to kind of pivot to the next thing. If you think of our addressable market for a second, Think of the 160 billion rides in the U.S. and the same number in Europe because, of course, now we're a European operator, very important. That's 300 billion rides in our addressable market.

Let's say -- let's cut that in third, just to be super conservative, call it 100 billion, just to make the math super easy. And remember that we do maybe 1 billion and our competition maybe in total, does maybe 3 billion or 4 billion. So maybe that's $5 billion out of the $100 billion Okay. So that's 5% penetrated, which shows there is an enormous amount of headroom in this market, an enormous amount of headroom in this market.

So what does that lead you to do? What it leads you to do is to focus on your customers, not your competitors, because if you focus on your competitors, you're just fighting over the 5%, not the -- you make sure your TAM as big as possible. We think we -- our operational excellence has frankly given us the foundation and our financial strength, I guess, to be overseas as well. So you can kind of see how that's playing out with our acquisition of FREENOW and the growth of that. And so just to focus on that for a second, you'll see more growth there. You'll see more growth there. You'll see a lot of the resources that we put perfecting our U.S. marketplace, then in Canada marketplace, you'll see that go into Europe. So that's certainly a huge, huge growth vector.

So then the second area are our partnerships. We know we can't do this alone. Nobody can. You can't get to $100 billion on $300 billion alone, that's not. So -- if you look at partnerships like existing partnerships like DoorDash, that's our most successful partnership ever. We have millions of people who are now kind of cross-linked on the platforms, and there's still a huge, huge headroom there. And then United is even earlier. United is just a couple of months old already. I think people have earned over what is 100 million miles. Actually, I just 115 million miles as of a couple of minutes ago on the United -- on the Lyft platform getting United MileagePlus mode. So that -- and you look at build, and you look at Chase and so on and so forth. I mean, there's a lot of headroom out there in partnership. So that's a second area.

A third area, of course, it has to be around margin expansion, right? So rideshare business is not a high-margin business inherently. You've got riders and drivers kind of competing for the same dollars. And so we've done a really good job, I think, of sort of moving up market. And TBR, obviously, the acquisition, that's a huge growth in front of us there. in terms of margin. But even our basic kind of on-demand, high-margin modes have grown 50% year-on-year, and that's just getting started. We still are fairly underpenetrated there.

Okay. I'll mention 2 more things. On the -- I can mention drivers, but let's move on. Let's talk about Lyft ads for a second. Lyft ads, 2 years ago when we were doing Investor Day, it was an idea. It was an early concept. Now we've done exactly what we said we wanted to do, which is reach $100 million run rate, exit rate from Q4. That's wonderful. If you've been in Bay area, you'll see Gemini all over the place on lift bikes. You'll see Adobe also all over the place. You'll see Jurassic Park cars on Xfinity cross-promotion that's also being advertised in the app. So anyway, a lot of ways for brands to kind of connect with their customers. super innovative ways and the ads business is just going great, and it's got great leadership and a lot of focus there.

And then, of course, I have to talk about AVs. Now AVs are not going to be material in 2026 from a financial perspective. But if you look at the long-term growth of ride share, and again, you remember that 5% penetrated compared to the $300 billion, AVs are going to expand the TAM of rides. There's just no doubt about it. We come back to that in a couple of seconds. But -- but that, I think every time we add AVs to the platform, you'll see incremental growth on the top line in a inertest reduction as well. So I'm sorry, I'm forgetting some -- I mean, those are the big things that are really on our mind.

Next on the call will be Doug Anmuth with JPMorgan.

Great. Thanks for the question. just for 1Q, you talked about your guidance for gross bookings accelerating at the high end, but the margin more in line with 1Q from a year ago. So just hoping you could talk a little bit about some of the key investments you're making and what's happening there with margin in 1Q? And then David, can you talk more about Flexdrive and the kind of 20% cost efficiencies that you're seeing there? What are some of the drivers? And how do you compare that to other lead operators?

Yes, Erin, you take the first for sure.

Yes, sure. Doug. So yes, if I think about the Q1 guide, you've got it in terms of gross bookings growth at the top line, and that's really fueled by the marketplace running extremely well. very healthy, competitive, fast ETAs, et cetera. David just mentioned our partnership. We will continue to see strong growth across all of our markets, including low-scale markets. and then also high-value modes, which are growing at a very rapid rate. And of course, we've got free now in the mix. So those are the things that underpin the top line.

As I think about our profitability for the quarter, I think we're right where we need to be overall. On a year-over-year comparison, if you recall, last year in Q1, there was a favorable nonrecurring item in the quarter. So absent that, we've got really strong profit growth year-over-year, and I think we're set up well as we look into 2026.

And then let me -- on your second, Doug, I think Erin and I will actually tag team on this one. And I want to zoom out just 1 click. To talk about the cost of AVs versus, let's say, the cost of kind of driver driven ride share. So the first thing to think about -- and I'm going to go a big picture on this because I know AVs are very much on people's mind. So let's just start from the total top. We have so much confidence that this is a $1 trillion, maybe dollar opportunity for the rideshare market. So why would that be?

The first thing is AVs will expand the TAM. And this isn't just speculation. This is what we see happening in San Francisco, where you have hundreds of thousands of rides being driven by Waymo. But you see us growing at a nice clip. And so what that suggests is that those rides are largely incremental, that the pie is growing. And this is not surprising. When you have an interesting new product like a self-driving car, which is safe and reliable and so on and so forth, that obviously opens up the ride share market to new use cases.

Okay. And then the cost will go down. Why? Well, again, that's probably fairly obvious, but let's sort of lay it out, you would expect -- I mean, aside from obviously not paying drivers in the same way, but you would expect insurance costs to go down in particular. -- as the safety profile of AVs gets proven out. There's a lot of data out there right now, different people maybe have different perspectives. But broadly speaking, I think that most people would agree, over time, insurance will go down as safety improves. Those are the 2 big driver.

So we look at those. And again, this is at the sector level and then we'll come to Flexdrive in a second. We look at those as providing by 2030, right? So some many years out after this technology is proving itself maybe a 20% cost savings on a per mile basis versus just today.

Now the last thing I'll say before I turn it over to Erin is, remember, that's 20% savings, is wonderful, but it's maybe a 5% to 10% base, right? We are building a hybrid network, a hybrid network. This is so important that you cannot build an AV only I can't say you can't build one, but your question you can. But if you build one, what you won't have is millions of drivers on the platform who can pick you up at 5 in the afternoon during rush hour or 9 in the morning right after a concert. We see a 20:1 swing over the course of a couple of days from middle of the night to rush hour. And that's very, very difficult to handle. In fact, frankly, impossible to handle just with AVs. And then, of course, you've got people who want to help with their luggage and so forth and so on.

So a hybrid network, we think, is the dominant network within that with GPs are going to be positive because they expand the market and because they lower cost. Now you ask Flexdrive. I'm going to turn over to Erin to talk about the economics that, that brings to the conversation.

Yes, sure. So we're kind of setting the stage here as we think multiple years down the road, call it, 2030. As David just mentioned, we think the hybrid market will be sort of the most efficient way to deploy our goal is to be the best partner there. And then obviously, when you've got that hybrid network, you've got drivers, you've got autonomous vehicles, there's obvious difference in cost between the 2 of those, which David just articulated. And so in, say, the 2030 world, if you compare those costs per mile, we think, as David mentioned, about 20% difference.

Okay. So then you think about Flexdrive, right? Flexdrive is a fantastic asset for us in this whole ecosystem. And our goal with it is to be the most efficient way to deploy -- and we see that driving advantages as we look ahead as we think about our own long-range plans in a few ways. Number one, just our existing experience with fleet management at scale and importantly, specific to rideshare, so understanding high mileage, long life time assets and managing these vehicles very efficiently is going to provide an advantage.

And then we look at how we can optimize that, leveraging our proprietary software for ride share, which actually makes a huge difference when you think about minimizing empty miles or scheduling that maintenance at a time, which is optimal where you can still maintain that really efficient utilization of the asset. And obviously, with this capability, we've got a team of experts -- there's no middleman. And so if you think about that 20% cost per mile differential out, say, in 2030, we think we can drive improvement on top of that. So that 20% becomes 24%, 25%. And so that's the way we see it. That's how we see some of our advantages and why we think we're going to be just the best partner out there.

Next question, we have John Blackledge from TD Cowen.

Yes, could you talk about the 4Q '25 rights growth relative to your expectations? And how should we think about rights growth in the context of the 1Q '26 gross bookings guide? And is the heavy promotional activity that you saw in 4Q extending into 1Q '26? .

Awesome. John, it's David. Let's move kind of air and I'll tag team on that a little bit, too. So I think maybe the big picture, I would say is we really -- I can't say this enough. We are a very disciplined operator. And the reason is because we when you identify is discipline, it means you have to decide what you're going to focus on. And we have decided in quarter-after-quarter, and I think you've seen this that we're going to focus on our top line and our bottom line. That's how we're going to run this business for our shareholders. So when you do that, then that's great because it gives you real clarity.

Okay. So what does that also mean? It means that when you see some kind of promotional [indiscernible] or whatever it is within a quarter, you sort of look at it and say, well, okay, whatever it's going to happen. But meanwhile, what we're really focused on is making sure we can deliver on the top and the bottom in a customer obsessed way. You don't get dumped by the marginal ride, it maybe not profitable, whatever the promotional thing whatever, you do these different things. So that's kind of the way we looked at Q4. It was a little unexpected, but again, we are resilient with this sort of stuff. Like we kind of look at it and we say, okay, fine, we deal with that.

To answer maybe about Q4, we didn't see any particular consumer softness, nothing like that. Remember, we're -- again, I know you didn't ask the question, but I'll just sort of state the thing anyway, we're doing millions of about 4 million people every single day are relying on us one way or another to get where they need to go, commuters and people going to work and so far and so on. So we feel real strength there, and that's a real blessing as long as we can continue to deliver for them, that's incredible. And you can see that reflected in our record active riders, for example, which I think is super important, which then leads me to Q1. And this is where I'll finish.

If you look at Q1, and Erin, again, can talk a little bit about if we've seen any promotional stuff or whatever. But if you look at Q1 we're super, super well set up. Why? Because we've got more active riders than ever, up 50% from year-on-year type thing. And then we're operating incredibly well. And here's the staff that I'll share with you that I'm super proud of that kind of reflects how far we've come. If we look at our superb performance just from a couple of days ago, when compared to where we were last year, Super Bowl, of course, is an incredible day has crazy peaks and crazy values depending on how the game is going and when it ends and so forth. Anyway, we delivered about 15% more rides year-on-year, and we did it better than we did last year, by which I mean we had lower surge pricing by about 20%, which is enormous incredible affordability thing, and we pick people up faster. Our ETAs were better. So we provide better service even as the prices were lower, net of all the surge pricing. So anyway, all that is to say with when we look at the -- our Q4 performance and then how we're set up for Q1, we feel really good about it.

And then, Erin, if you want to add anything more about the promotion of what we've seen.

Yes. Sure. David, you mentioned a couple of really important things in terms of optimizing our business for the metrics that matter right at the end goal is to engage and retain as many drivers and riders as possible on the platform. I think we are doing an incredible job of that. Our active riders growth in the fourth quarter was 18%. That's a record and the highest -- we also saw the highest in record retained riders in the quarter. That's a fantastic leading indicator. It's growing both quarter-on-quarter and year-over-year. and then, of course, really strong gross bookings and margin performance in the quarter.

We did see, as David mentioned, that heightened promotional activity was weighted a little bit for the back half of the quarter, primarily across the lower end, but effects were temporary. We're not sitting here today. I think we're in a great position. Our position in the market is strong, and so we feel great about that. Thinking about the read-through for Q1, we do expect gross bookings to grow faster than rides as we think about, in particular, the dynamics of the first half of the year. We've got really strong growth across our higher-value modes. We've got, obviously, free now incorporated into that overall mix. And so that you can expect as we think about the first half of the year overall.

Next question is Chad Larkin with Oppenheimer.

Could you maybe talk about the long-term opportunity for taxis. You're in a couple of cities now -- what could that kind of become over maybe the medium term? And then is it kind of the same financial profile as a regular Lyft ride?

I'll start with the first, and then Erin, you can talk a little bit about the finances. So as you mentioned, yes, we started to welcome taxes onto the platform. I think in 3 cities now. We started in St. Louis, and we expanded to L.A. and then San Francisco. We like it. And the reason we like it is because it adds supply. And we've got a lot of quality control and some other things that sort of make sure that this is good quality supply that we're not going in the opposite direction from what we want to, and it's great. And taxes are an important part of some cities in the United Sates, I'll just say it that way. Of course, taxies are a very big part of many cities in Europe.

And I think one of the things that we've really found as we've brought for now into the conversation into the company, is their expertise here is going to help us sort of turbocharge our business around the world, and it's really one of the areas of expertise that they have. This is a little bit of a side note but also because taxes tend to be quite regulated particularly in Europe, it gives us sort of a nice relationship with regulators and so forth. So a bunch of different things to like about taxies broadly, if you think globally. But back to the United States,

I don't think -- I don't think we've talked publicly about how significant a part of the business is, but I'm glad we're welcoming the platform because it certainly gives us, frankly, additional supply in certain key markets.

Yes, absolutely. It's a strong supply lever, and so we do that purposely and thoughtfully as we think about the overall health and balance of the marketplace. And then just as I think about free now, really pleased with how that is going. The help. We've seen good progress in the health of the marketplace since acquisition. Our teams have been collaborating on improvements in conversion rates, reduction in driver cancellations. Those are the lowest they've been in years.

So excited about that in 2026 and we talked about having an exit rate of about EUR 1 billion in 2025 and going into 2026. We're right on track. So really pleased with how that's going overall.

Next question will be Nikhil Devnani from Bernstein.

Great. Maybe a follow-up for Aaron on margins. So when I look at the year-on-year dynamic for 1Q, it looks like a bit of margin expansion within the 2027 framework broadly requires more than that. So -- could you please elaborate on the factors that get better on the margin expansion beyond Q1? And then somewhat similar theme, but to the broader point of competitive intensity, in markets where AVs are becoming a bigger presidents now like the Bay Area, have you had to evolve the offering at all, be it on pricing, promos, investment efforts? Just how do you philosophically think about running those markets where there's a bit more competition now from the AV side of things?

Thanks, Nikhil. I'll start with the first 1 and then turn it over to David. So we -- last quarter, we gave some color commentary on 2026. No change there. We continue to expect gross bookings to accelerate in North America and globally. We continue to expect adjusted EBITDA margin to expand and that will generate over $1 billion in free cash flow. So no changes there, and I feel like we're right on track. As I think about the targets we set out for 2027, right? We talked about our goals around top line growth. we said steady margin expansion and, of course, free cash flow. So the components of margin expansion remain the same as we outlined at Investor Day.

It ends and begins with the core health of our marketplace and the operational excellence we're able to deliver there. We've demonstrated extremely strong results there. And you can see that in the efficiency of our incentive metrics, right? The marketplace working better, generating much higher volumes of rise and have to deploy lower levels of incentives or just 1 financial indicator, and we're certainly exceeding the goals we set out for ourselves there.

In addition, we talked about things like expanding our partnerships riders that come through partnerships tend to take a higher mix of higher-value rides. That's absolutely what we're seeing and driving. And so that will continue to be helpful. as we think about our trajectory going forward. We've also now spent a good period of time really focus on expanding across our high-value modes. And that's everything from just making it easier for delivery drivers to get on the platform to really building out our strategy at the luxury end with TBR. And so we're excited and that will continue to deliver margin expansion.

And then last but not least, is really just around our cost discipline. We set out a target to drive fixed cost leverage over the horizon. And we nearly doubled our goal in 2025. We're positioned really well, and we'll continue to operate with discipline and drive leverage over fixed costs. So those are the elements we see in 2026 and as we chart a course towards our LRP.

And then, Nicole, to the question of kind of operating in markets where we're seeing AVs, I guess maybe sort of a nuanced answer. I mean, of course, we look at those markets in a little bit different way, right? So for example, if you look at our pricing strategy, our pricing strategy is to be reliable and competitive. And of course, in those markets, we have -- in some cases, we have effectively a new competitor, so we have to kind of make sure that our pricing sort of makes sense in that context. I wouldn't say that was a major issue in part because I think AVs are sort of positioned as sort of a premium product. They're not really competing on price.

So then you have to look at service levels and make sure your service levels are super good. Frankly, that's an area where Rideshare is advantaged, diff disadvantaged. You will get picked up faster typically, you'll get dropped off at the right place, not the wrong place or have to walk a couple of blocks, these different things. you will get your luggage picked up. You can do scheduled rides. You can do wait and say, rides. So we have a whole set of tools that the other guys don't, but then we have to make sure we pay attention to do a particularly good job there, just to make sure, again, that we're sort of earning our keep every single day.

Same thing with some of the other advantages that come with riding on lip, so let's take an Francisco and San Francisco, it's United Hub. So you can expect that our United partnership is particularly important in a market like this. where we have a real advantage for people who want to get United MileagePlus miles, they really only have 1 option. So in a sense, it's nothing dramatically different. It's just, I'd say, looking with a little bit -- just a little more closely at some of those markets to make sure something unexpected isn't happening there. As I said, again, in San Francisco, we're actually growing around 10%, which is pretty -- it was actually quite good for a major market like that, that we've been in for so many years. So I guess that suggests that it's working, which is wonderful. We'll keep our eye on them.

Next question will be from Ben Black with Deutsche Bank.

Great. So you talk about what you're seeing in California. I'm curious why you now anticipate demand to pick up in the second half of 2026 on the back of the lower insurance rates. Also, it'd be good to sort of understand the phasing of the insurance savings pass-through if at all. And then David, can you give us your updated thoughts on loyalty in the letter, you mentioned that there is room for growth in that space in the outspace. So can you just expand on that a little bit?

Ben, I'll take the first question on California and then turn it over to David. So as we talked about quite a bit last quarter, really pleased to see what we view as common sense reform in the state of California that really drives a win-win-win for riders, drivers and just the broader ecosystem. Those changes went in effect on January 1. And sitting here in the first quarter, we are currently passing through a good amount of those savings to riders throughout the state of California. Those vary on a market-by-market basis. I think we highlighted that, in fact, insurance costs vary quite differently depending on the prior insurance costs, I should say, very quite differently on a market-by-market basis in California.

So if we think about adoption, right, and these changes going effect into effect in the first quarter, it tends to be just a marginally seasonally lower quarter overall. -- rider tend to take only a handful of trips in a given quarter, especially in Q1. So with that kind of backdrop, it takes time for price improvements to be experienced and then recognized by the rider and then incorporated into their behavior into their ride behavior overall. So really for those -- well, before I conclude, what I'd say is the underlying economics are working as expected, right? And so what we see now in the demand impact is we think it will be more noticeable overall in the back half of the year.

And then on loyalty. So I'll say a couple of things here. I think the first way I always think about it and we tend to think about loyalty is the best way to create loyal customer loyal rider or driver is to do them. I mean that's just the flat or best way. Everything else is a little bit on top of that. And we've got a lot of great news there. On the driver side, which probably wasn't the focus of your question, but I'll just mention it -- we now have a 31-point advantage over the other guys in terms of driver preference, so that's wonderful because drivers are quite choosy. And then on the rider side, Erin, I think I mentioned this briefly earlier, we had a record number of retained riders in Q4. And what that speaks to is when you do well by them when you give them consistently great service, they will continue to come back. So that's great. That's a great, great baseline.

Okay. what can you do on top of that for particular segments? Well, you can start to build programming that speaks specifically to people's needs. If you look at business travelers, business travelers is a very well understood dynamic that involves getting typically points cash back or something on business travel and then spending them on leisure. That's well understood. And we now have a great program. It's up activations, as we mentioned in the prepared remarks, about 26% year-on-year. And it's a great program. It doesn't cost you anything at all. You just sign up as a business. If anyone here is not signed up as a business traveler through their business on Lyft business rewards you absolutely show, but you get the money back and then you spend it on Lyft and it's -- it's a wonderful thing.

And then on the consumer side, we built a new, I think, it's very much in pilot phase called it's a lift cash rewards program that basically says, if you're willing to put a certain amount of money on accounts, $25, $50 $100 you'll get a certain percent, again, cash back, doesn't cost you anything and you even get some extra comfort rides and such at a higher level. So we like what we've seen there. riders are responding to it. I would pick both of these sort of in the category of early programming. It's an area, I think, loyalty programming where we've been a little bit less focused over the years and now we're increasing the focus. I'm not going to talk too much about the future because that's laying out a road map for others to follow, but I'm excited about the innovation we're going to bring to the space and stay tuned for more.

Next question will be Michael Morton from MoffettNathanson.

Two questions, if I could, a quick 1 maybe on AV. You guys are doubling down on the hybrid commentary. And last quarter, you talked about that you spent a lot of time with Waymo to get this arrangement to scale. If we look at, I would say, the lack of additional partnerships with the current partners seem to suggest maybe there's some friction in that existing economic deal. I was wondering, is it correct to interpret that you really think like this hybrid model that we are doing with Waymo is kind of the future model for these big dominant platforms?

And then my second question, I think, maybe for Erin. And if we just look at FREENOW, the acquisitions and we kind of do our best to back it out of the trips. I know it's not perfect and then look at your reported trips and then take rate coming in a little bit lower than we expected, maybe we are doing in bed forecasting on our perspective. it kind of instigates me wondering if I'm missing something that's going on in the U.S. market competitively or from a demand perspective. So anything incremental there would be really great.

Yes, Michael, let me -- I'll -- again, we can talk to you about this. The 2 question thing is actually works for us. We'll just see it Shaked. -- on AVs, let me maybe challenge your premise a little bit. So I -- got you. Okay. So here's how I look at our partnership strategy and then we can talk about the economics and sort of what it looks like going forward. Our partnership strategy is quite deliberate. We want to pick the absolute a relatively small number because we're not planning a press release who wins the press release game. Is this operational game. We have a relatively small number of partners. So we can go really deep on and learn with. Some of those learnings will be operational as we're doing with May Mobility, for example, in Atlanta, some of them will be about kind of supply sharing and various other things that we talked about. Obviously, all of the flex drive work we're doing in Nashville to support Waymo. And there'll be others. Obviously, we're working with Baidu overseas and so forth. Okay.

So Yes. And that's the strategy. And as we said last time, yes, we like the economics of it. But I think maybe your implication was that we like the economics so much that it's hard to do more of those deals. That's not really the case. I think the deeper case is, if you look at the short term, there just aren't that many suppliers. I mean let's like there just aren't that many people who can operate at scale and where the technology has proven to be safe. We've got Waymo, that's great. We've got Baidu, that's great. And now, of course, [indiscernible] doing some stuff and there are some other things at a very small scale. But honestly, that's the sort of bigger issue.

Now if you look forward to 2030, which is sort of when the action, I think, starts to get really interesting. We see a lot of supply coming online. And even when you -- again, not precisely to the point of your question, but I think the supply constrained or let's say, supplier constraint, who's got actual driver of technology working at scale. That's a very, very small number of players in or our teen those players and really deepening the relationship there. You'll see us do some other things as well. But the issue isn't so much an economic one. It's just more just where things are statement.

And then, Mikkel, to your other question, I'd probably highlight a couple of things for you. In our supplemental tables, we provided an EBITDA bridge -- and in that bridge, it highlights a onetime impact of totaling about $210 million of -- under the category of certain legal tax and regulatory reserve changes. It's important to note that $168 million of that $210 million impacted revenue. So without that, our revenue would be closer to $1.8 billion, and you'd get a revenue margin that's pretty close to what we saw in the previous quarter. So hopefully, that's helpful as you're thinking about revenue margin overall.

And then your second question was sort of around Q4 rides and anything in particular that we're seeing. As I think about free now, already I mentioned the performance of that business, I would say exiting the year on track. We feel good about where that stands overall and very excited about the opportunities ahead. And then as we think about North America, we've also talked a little bit earlier about probably what was a little bit different at the end of the quarter was just some heightened promotional activity that we saw. We made intentional trade-offs around that. I think we made the right choice in terms of driving the metrics that matter and then sitting here today just in a great position, no lingering impacts. And so I think those were the right trade-offs.

So those are some of the things as you think about revenue, revenue margin and Q4 rides.

Next question comes from Ross Sandler with Barclays.

Great. Can we go back to Flexdrive? It seems like you guys are trying to position that as like kind of a killer use case for future AV partnerships. And can you remind us first -- I think we had locations, last disclosed. How many cities do we have total? And I guess, what level of investment in charging stations or other kind of retrofit is required. I think the Nashville Waymo facility was a scratch build. How many are going to be that versus kind of going back and just retrofitting the 27 for AV/EV?

Yes. So Ross, let me start and then David chime in. And so the locations across the U.S. today, Ross, are a little bit lower than you highlighted, but have been purposely built over time as we think about cities where having that additional lever for supply was going to be meaningful, right? And so investing in the cars and the facilities in those sites has been helpful to lift over a number of different years. That being said, of course, as we think about Nashville or an AV site, the requirements are different. And so that will have to be taken into account. Obviously, in Nashville, that will be a purpose-built facility overall.

And what we've chatted about is, look, this is a super obviously exciting. David mentioned $1 trillion opportunity, absolutely. We're excited about that. We think we're well positioned. It will take time. And so as we think about these early phases of the model overall, and I think we chatted about this a little bit last quarter as well. it is reasonable to assume that where it makes sense, we're going to invest in these early stages. There's a lot of learnings to be had. There's a lot of opportunity there. But again, we already have investments in facilities and cars. And so I would think about this over the long term as more of a transition than a doubling up if that's a reasonable way to think about it.

David, do you want to add anything to that?

No, on -- that's exactly right.

Great. And our next question comes from Justin Post with Bank of America.

I'd like to follow up on U.S. AV supply. I just want to see if you're encouraged by what you're seeing out there with technology advancements. And how do you see the pipeline of suppliers building towards 2030 when you think there'll be much more supply available?

Yes. I mean, because it's a trillion type opportunity, a lot of investment capital and R&D and so on and so forth is being drawn into the space. So -- which is part of the reason it gives us so much confidence you can sort of see -- even if you think about a year ago, people aren't really talking so much about NVIDIA, for example, but not people are talking a lot about NVIDIA because they've made their intentions known that they want to be sort of an aggressive player here. So I guess the only thing I would say is these things will come in ways, right? They are the people who are kind of good at it already. Obviously, Waymo has gotten super, super good at it.

There are some people who are maybe a step or 2 behind, but they're kind of coming on fast. And then there's going to be yet another wave of people who are sort of just in the early days right now, and you can look at everyone from -- I mean I'll name names, but please don't take too much out of this, but you could look at anyone from look at what Rivian is doing, for example, in the house, again, look at what NVIDIA is doing. Look at Mobileye, of course, one of our own technology partners has been at this game for years and years and years, and you would expect those guys who have a relationship with them already. and so forth and so on.

So I think the smart money, let's say, that there's going to be a lot of different people trying to get in, who the winners are? That's the thing that nobody really knows. That's something that nobody really knows. I just know that there'll be multiple.

And that ends our call, and we will turn the call back to CEO, David Risher, for closing remarks.

Thank you so much, Aaron, and thank you all for joining the call today. I do have to do 1 last style at Aurelian who we're all going to miss dearly. -- lien, you have been incredible thought partner and finance leader for Erin and me, and we wish you all the best bunches to you. And looking ahead to all of you on the call, we're super excited for another strong year at lift, and we continue to track towards our 2027 goals. Look forward to keeping you guys up to date. Thanks so much for all your interest.

All right. Good morning, everyone. Welcome to our next fireside chat this time with Erin Brewer, the CFO of Lyft. Good to see you.

Good to see you. Thank you for having us.

Thanks for joining us. Let's do the disclosures first to get that out of the way. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures appear on the Morgan Stanley public website at www.morganstanley.com/researchdisclosures. They are also available at the registration desk. Some of the statements made today by Lyft may be considered forward-looking. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Any forward-looking statements made today by the company are based on assumptions as of today, and Lyft undertakes no obligation to update them. Please refer to Lyft's Form 10-K for a discussion of the risk factors that may impact actual results.

That's a good way to kind of get everything through. We're very compliant.

Okay. So there is a lot going on in the rideshare industry, Lyft specifically, the autonomous debate. So I'm really happy to have you here today. Maybe let's start with the strength in North America. I think one of the parts that has surprised a lot of investors throughout this year has been the way in which you've seen acceleration in the core business. The oldest business has accelerated over the course of the year pretty healthy. Can you sort of walk us through some of the drivers of that acceleration in North America throughout 2025?

Yes. So look, I'll start out by saying 2025 by all measures, I think, in the company's history has just been record breaking. And really, the foundation of that is, of course, our marketplace and the efficiencies that we drive there, that's enabled us to drive quarter after quarter of record growth in active riders, record growth in driver hours, record rides. So it's just been a strong year across the board. Then you've got the strength of our partnership portfolio and in particular, just about a year ago, we launched DoorDash. So it's in its real first cycle. That's been an extremely strong contributor overall and very excited about that. We still have a lot of runway ahead of us as well. So that's been fantastic. And then the financial health of the company overall is just set us up really nicely as we look forward.

Very specifically, if we think about North America, let's just kind of start from a geo perspective. In the U.S., certainly, what we call our top markets, so the largest cities, those continue to grow. What's been a standout in 2025 is what we call the more underpenetrated markets. So these tend to be secondary or smaller cities, let's just say, still great cities, but smaller cities that have really generated extremely strong growth out of a focused effort and initiative that we've been at now for a while. And importantly, these geographies represent a huge portion of the available market. So that's encouraging not only for 2025, but as we think beyond. And then expanding further Canada, right?

We continued in 2025 to launch new provinces, new cities in Canada. That's been a strong contributor. And then in the back half of the year, we also launched in Puerto Rico. So geographically, in the U.S., that's been strong. partnerships have been exceptionally strong. That's been important to the growth overall. So we've got a number of vectors there that have been driving our optimism and our performance in North America.

It's a good starting point. I mean I think one of the words is always so interesting to me about the rideshare industry is, despite the fact that it's been around for quite a while, over a decade, the actual penetration of miles is still so low. And even the percentage of Americans who use the products on a regular basis is still very low. As you sort of address your core markets and now these underpenetrated markets, what do you think are sort of the keys that you found to unlocking new user growth? Getting new people to use rideshare and use Lyft for the first time despite the fact that the industry has been around for quite a while.

Look, it all starts in a couple of fundamentals. It's providing a great service at a competitive price, right? You want a competitive price, you want the car to show up on time. You want accurate ETAs, you want to have a smooth experience. That by far and away, is the foundation. We always say sort of great rides. We get the next several rides. So the strength and the health of our overall marketplace has just been phenomenally improved over the last couple of years. And so we've built upon that foundation, right? You add on top of that, deepening and expanding our partnership portfolio. That is a very strong capability of the company that drives new rider acquisition, engagement with riders. It tends to drive preference, it tends to drive loyalty. Generally, riders who come to the platform through a partnership tend to take a higher mix of more profitable rides. And so that's a really important piece of expanding the portfolio.

And then I think innovation has been really important. Whether it's product innovation that sort of gets maybe at a hurdle people might have had previously. Women plus Connect is a great example, just that comfort and confidence of a woman rider riding with a woman driver. Silver, which is a product -- a recent product that we're really proud of, which gets at the use case of older adults, finding freedom in transportation and getting around through ride share. So those are bringing new users and new cohorts overall to ride share. So it's really a number of different vectors as opposed to sort of a singular thing that I think have really allowed Lyft to make such significant progress.

You talked about, again, the underpenetrated markets. I think it's over 70% plus of the TAM to still go after in the U.S. is sort of the sparse markets, not that small. They're like million population cities, not that small. How do you -- what have you learned about effective ways to sort of not attack, but better address those markets? How does it start? Does it start with supply? Do you start with marketing? Like what is sort of the go-to-market that you've learned that's more effective to better penetrating these newer markets?

Yes. So to some extent, it's been the journey of our company over the last couple of years, coming out of the pandemic leadership change, stabilizing the business, you sort of start with that with your classic, maybe top markets and getting the foundations and the fundamentals right. And then taking that focus beyond the top markets into some of these less densely populated, if you will, markets overall. And so absolutely, it starts with coming in, understanding the market, understanding what's going to resonate in that market. So on the ground, research with drivers, with riders, building the supply base and taking everything, all the foundational capabilities, the efficiency with which we can deliver rides and deliver a great experience and really focus. I mean those are some of the -- it's getting those basics right and doing it in a way that's meaningful within that market and then doing that repeatedly and doing it more broadly at scale.

The other area where you've called out strength in the past has been the universities and the college towns in the U.S. I agree with your call out. When I go back to Ann Arbor, I always use Lyft. The wait times are lower, the pricing is lower. It's not even close. So what have you learned about the universities like sort of you really do seem to have a differentiator in the universities versus your competitors? So what's happened there?

It's sort of back-to-school time is one of those critical times in a year where transportation habits just fundamentally changed, right? People are going back to school, it tends to be the end of summer, commute patterns change. It's capturing those times when you understand that people are in motion with the way they're going to get where they need to be, they tend to be moving around different geographies. And so having that focus, having that presence, it's building the supply in advance of that. It's having the right marketing message at the right time. It's having the right offerings to those student populations. And we found that to be really compelling.

And then, of course, as you're delivering those great experiences, hopefully, you're building broader lifetime value, obviously, with both the drivers and the riders. And so capturing those moments when people are making changes naturally in their lives is a really compelling entry point. We found a lot of success there.

I want to ask one more about the user acquisition strategy and specifically with the partnerships. I feel like on Wall Street, there's a lot of misunderstanding for how the partnerships are structured financially as a user acquisition. Are they loss leaders upfront? Are the partnership members always lower margin? Like sort of just how do we think about the investment structure and the contract structure of those partnerships as you bring on those users?

It's a great question. So as I mentioned previously, Lyft has been -- has had strong partnerships for many, many years. This is something that we're really proud of, the way that we partner. And the way that we approach that is truly a win-win, right? Both companies are typically in it to engage with consumers, in our case, riders in a more meaningful way, in a way that's going to drive loyalty, in a way that's going to drive new users to the platform. That's going to look slightly different between, for example, a DoorDash partnership and United. So you really want to tailor that message. You really want to understand the audiences that you're going after, and you really want to understand those methods by which both partners are winning.

Those are the foundations for long-term success in any given partnership. So that's where we focus very intently. I think it's why we tend to have partnerships that grow over time are quite successful. The funding mechanisms, therefore, can vary because it depends on what you're trying to achieve. But what I would say is generally true, is that there is typically an element of co-funding in those partnerships and then they do tend to ramp over time. And it's not a matter of the initial offering is the forever offering. You typically have different strategies that you're executing throughout the life cycle.

So early, for example, in the phase of a partnership you're naturally going to bring in folks who are already fans of both participants in partnership. That's a very quick adoption cycle. And then you execute strategies for the other audiences that you're going to get. And some of that -- some of those marketing and offering will evolve over time. They need to be refreshed. And so you've got this very deep engagement on both sides. Those are some of the ways that we approach it and how they build over time.

Got it. The gig economy has brought a lot of exciting new learning opportunities for all of us on Wall Street and Sell-side analysts trying to understand the industry, including the insurance industry. some pretty meaningful changes coming in insurance in 2026, specifically in California. Maybe just walk us through the changes that we should sort of be aware of? And how do we think about the financial impact of that?

Absolutely. Just very briefly because we've got a broad audience here. I might just set the foundation that in the U.S. market, rideshare companies are required, and these laws are jurisdictional by state to carry insurance on behalf of the drivers. Those insurance limits tend to be at levels far higher than, for example, I'm required to do as a personal auto policyholder, for example. And that started at the beginning of the industry because there wasn't a framework overall. It's stuck with the industry over time and has created a number of problematic scenarios because you're carrying much higher limits when the average, when an accident does happen. So those limits can be as high as $1 million or higher. When an accident does happen, those typically resolve in the vast majority of cases for less than $100,000.

So it's an area that is ripe for reform. It's an essential part of our overall strategy with the way that we manage our insurance portfolio and our programs. And recently, in California through a collaboration at the state level with the leaders in the state, with labor and with the rideshare industry, there's been reform paths that substantially lowers those limits and therefore, will lower the cost of insurance on a per ride basis, which in the state of California and a couple of other states is particularly high. And what that really presents is an opportunity. This is truly a classic win-win-win scenario. So first and foremost, riders win, right? This is going to deliver the ability to offer lower pricing in the market because we are substantially reducing one of the primary costs of delivering a ride.

When you do that, you expand the market, you grow rides. And that happens, drivers get more rides. There's higher utilization. They make more money. That's fantastic. All of those things mean that Lyft wins as well. And so that starts on January 1. Obviously, we'll be observing very carefully how that rolls out. We certainly hope it can serve as a model for other states where similar challenges exist.

Yes. It should be great for growth, the ability to get pricing down and drive more growth on the elasticity curves and also give you more cushion to invest in growth and deliver healthy EBITDA and free cash flow. Are there any other states that are sort of on your watch list for '26 or '27 potential further reform, kind of like looking at California as an example?

Yes, there are a number. I won't front run some of those discussions, but there are a number of other states that have very high policy limitations that we think that there are opportunities to make a difference. And again, I think watching the example of California will hopefully inspire some of that to happen faster.

And just as a reminder, I know we all have our estimates. What have you guys done in size in California as a percentage of the total business?

We haven't. It's an important market, but we haven't given a particular size.

We think low teens, but we'll see. But it is meaningful. So okay. If we're wrong, let me know. I mean, I'd love to know. All right. So let's talk about autonomous driving. We made it 20 minutes and here we are on the AV topic. So you have a partnership with Waymo in Nashville. Maybe, again, just for this audience, remind us sort of the structure of the partnership, how is it going to sort of work from an app perspective, from a management perspective, what does the Waymo partnership look like?

Yes, absolutely excited to launch this in 2026. The teams are hard at work on the core of the execution. So we'll certainly be ready to go. But what we announced with Waymo, very excited to work with them and we think in a way that's pretty unique overall. So the structure of the way that will launch in Nashville is we will be providing sort of the fleet operations piece of the of the overall construct, we'll construct a purpose-built vehicle depot.

We'll invest about $10 million to $15 million and getting that done. And that will -- the purpose of that is to control all of the hands on the knob, if you will, of making sure that the cars have very high availability, having high availability, combined with high utilization is essential in this overall model and important, obviously, to both partners.

So we'll earn economics based on availability overall of the fleet. And then you'll be able to hail, if you will, the Waymo car on both apps. And so that's getting at the utilization piece and then there'll be obviously economics that we earn to the extent that ride is delivered on the Lyft platform.

I believe it's because we have a new AV model out city by city. Nashville is fully in the model with Lyft. I believe it's the only -- the only one -- the only partner that has 2 apps, correct? For now? Same city?

I think that's probably.

I believe as of right now, that is the only one. So maybe walk us through, I think, externally, when we look at these AV adoption curves and what has to change to go from 20 basis points of AV miles to 10% of miles the next 15 years. Sometimes I feel like externally, we underappreciate some of the complexities. As you have been getting smarter, working with Waymo, learning more about the industry from your perspective, what do you think are some of the more challenging hurdles that the AV industry has to overcome sort of hit any of these numbers we all put in Excel sheets?

So stepping that back very, very broadly, I think first and foremost is around safety right, and adoption by the rider. You need that to be in a very healthy place. Obviously, Waymo has done a good job of that as other entrants come into the market that needs to be foundational and a primary focus. So I absolutely want to start with that because it's critical as the industry develops overall. The second thing that I would point to is that AVs certainly expand the market. We see that today, right? So it's another reason why we are so excited about that. That was always a premise, but we see it actually in the data today in the cities that have a reasonable sized fleet within the U.S. So that's super exciting.

In terms of the various hurdles, I'd point to as well, we also see this ultimately the successful model is a hybrid platform, right? The key here is about having high vehicle availability and then very high utilization. And we believe absolutely that the optimal model of that is a hybrid network over time. And so that's very much where we're focused. To your point, there's a lot of devil in the details behind that, certainly, the complexity of the technology, the ability to deliver safe rides prove that out, ensure that the riders have comfort whenever they step into a vehicle.

But it's also a very physical, real-world asset. And I do think -- I think it's becoming more appreciated as some of these cities are rolling out at more scale. You need to understand that you have to have a place where the vehicles can home, where they can come, be cleaned, they can be charged, they can have maintenance on them. It might sound like the less sexy piece, but that's incredibly, incredibly important to high availability. And that's where Lyft is pretty uniquely positioned. We own tens of thousands of cars today, we have for years. We run physical centers in dozens of top markets across the U.S. through our Flexdrive subsidiary.

So we have proprietary software that optimizes this for rideshare. That's quite unique. When partners come and speak to us, we don't have to refer to a third party or say we'll get back to you. We've got this expertise in-house. So it really accelerates the conversation and we think accelerates will ultimately be a differentiator in accelerating time to scale and vehicles on the road.

Got it. I think you mentioned it before about the faster growth in some of the markets that have more scaled fleets. I think the discussion about AV driving incrementality to the rideshare industry really important as we go throughout '26, '27, just to make sure we're expanding the TAM. So maybe just first, remind us what you've said about the growth rates of Lyft in those markets with more AV development? And why do you think they're growing faster? What is your best logic of why you think that's happening?

Yes. So we've tried to highlight some of the cities where again, there's a little bit more of scale. Again, it's still relative to rideshare, frankly, a much smaller scale, but also cities where these cars have been on the ground for a period of time. So we'll tend to talk about places like San Francisco, Phoenix and L.A., because they really fit that overall profile and criteria. But we talked about those markets growing at a much higher rate than comparable top markets that do not have scaled AV deployment.

So why is that? AVs are really opening a new lens in terms of bringing riders into the marketplace. In some cases, it can start with a curiosity or it can start with this really fits a need today or a barrier of block that traditional rideshare has been presented. I want to commute in rideshare to work. But every Monday, I've got my one-on-one with my boss. I don't want to do that in a car potentially with a driver. I can do that more easily in an AV. I'm a woman who's out at a party late at night for whatever reason, I'm going to journey back to my home on my own. I might feel more comfortable with that in an AV.

And we see also in these cities, riders who might be trying rideshare for the first time through AVs. We then see them continuing on with classic, if you will, or human-driven rideshare as well. And so coming, having a good experience, finding that this is really a great fit in their overall journey and transportation needs. And so it's that cycle. But most importantly, again, still relatively small scale, but we're seeing it actually on the ground. So that -- it's a data point that just further bolsters our conviction.

Yes. Just it speaks again to the long runway for rideshare as aviation runway. You completed the acquisition of FREENOW. Maybe now that you've had it sort of under the -- you've got under the hood, not pun and intentional, FREENOW, what has sort of surprised you most about the business now you've kind of digging around a little bit?

Yes. This is going to sound trite, but not much, right? We did pretty extensive diligence coming in. I would say pleasantly as I think about -- in any acquisition, you tend to have a smaller group that's doing the diligence and doing the deal. I would say, as our broader teams have become engaged, what's been a pleasant surprise is just how incredible the cultural fit is, right? We approach things the same way.

We think about the industry the same way we think about our riders and optimizing the same way. That's been -- I think the teams have been very happy to see that. The early phases of the value creation here, FREENOW is incredible at bringing on fleets onto their platform. What Lyft is bringing, especially in the early phases, is sort of technology behind how do you dispatch better, how do you utilize better, there's such a huge opportunity to bring the off-line taxi market online. And so that's going to be the initial place that we're starting along our path. But as we go, also AVs present an opportunity. We are announced our intention to launch with Baidu in a couple of markets in Europe.

We talked already about partnerships. All of those partners, United, Hilton, et cetera. Our partnerships are with global companies. We've had a lot of success in North America. That's an opportunity as we look further down the road with FREENOW, our ads business. All of those, again, global brands who are looking at this as an opportunity. So we're just getting started. It's early days, but I think the teams are incredibly encouraged about how much alignment there is. essential anytime you endeavor in M&A.

If you look at the Analyst Day 1.5 years ago, so we talked a lot about the ad business. It doesn't seem to be as a bigger part of the discussion anymore, maybe it's because of AV and everything else going on. But maybe just remind us, where are you now on the ad business? And how do you think about the next key execution points to really drive that to a much larger part of profitability?

Yes. So our goal, as we set out on this overall journey was to exit 2025 at about $100 million run rate. We are right on target for that. And so the team has just done a tremendous job in delivering that value. And really, the next layer of growth there is certainly expanding. The majority of that has come through compelling offers on -- in terms of in-app advertising in ways we've continued to innovate there. The next journey of this is really making that experiential piece very relevant to brands, right?

There's a lot of physical world engagement that we deliver to riders by nature of the business. We're taking them from one place. We understand their intent and where they're going. And so how do you really enrich that from an experiential lens and that's going to unlock the next phase of growth.

Great. Well, we're very excited to see everything happens in 2026, Erin. Thank you very much for your time.

Thank you so much.

Good afternoon, and welcome to Lyft Third Quarter 2025 Earnings Call. As a reminder, this conference call is being recorded. I'm Aurelien Nolf, VP of P&A and Investor Relations. On the call today, we have our CEO, David Risher Rasche; 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 will 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 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 or rideshare, there are 2 customers in every car. The driver is -- customer and the rider is the driver customer. We care about both. Our discussion today will also include non-GAAP financial measures, which are not a substitute for GAAP results. 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 will pass the call on to David.

Thank you, Aurelien. Wow, Q3 was another record quarter across driver hours, active riders and gross bookings. Adjusted EBITDA grew 29% year-over-year and our free cash flow generation for the trailing 12 months was over $1 billion for the first time in Lyft's history. As you saw this morning, our partnership with United Airlines is now live. You can now all link your accounts to earn miles on all eligible rides you take anywhere, not just to the airport. And even better rides taken through your company business profile earn even more. Now that's big stuff. Don't worry, I'm going to give all of you about 20 seconds right now, to link your account. I'm not kidding. Would you be opening up your Lyft app, go to that profile on the lower right-hand side, click that profile button, look for rewards, get managed rewards, add United MileagePlus, every single one. That's going to be your ticket to ask a question today. So have you done that give you a couple of seconds to get that done.

Okay. Additionally, we focused on continuing to create AV partnerships that are differentiated and purposeful. With each bringing unique learnings and dynamics to Lyft. We further built upon our AV framework this quarter with the announcement of Waymo as well as Tensor powered by NVIDIA. And we're demonstrating how we're positioning ourselves across the entire AV value chain. Looking ahead to 2026, we are well positioned with multiple growth catalysts converging to accelerate our momentum. I am very excited for this comeback story.

And with that, let's get to your questions.

Great. Thank you, David. [Operator Instructions] Our first question is coming from Doug Anmuth from JPMorgan.

David, maybe I'll just ask first about your very last comment there just about the multiple converging catalysts in 2026 and what makes you so excited there. And then if you could also just comment on insurance. You had talked about the savings from SB 371. And just curious if that is still the plan to kind of benefit from all of those savings or if there's some component that gets reinvested into the business?

Sure. Doug, two great questions. I'm going to speak very briefly here, and then Erin is going to take both of those. But I'll say very, very briefly on the catalyst side. I've been in the stop 2.5 years now and all man that we have more opportunity ahead of us than we've had since the first day. And again, we'll talk about each of the different pieces there in just a couple of seconds, but I can give you some very live data since that was just in our weekly business review. We were just looking at what happened last week. Last week was Halloween, of course, and Halloween was not only our biggest day was actually our biggest hour by hour. We've never had as many rides that ever been able to fulfill as many rides as we have. It's our biggest day. It was our biggest week and not by a little bit. Just extraordinary momentum going on here that's allowing us to continue to grow.

And I should say, just to sort of say the very obvious there, that's just in the United States. That's not even the -- and Europe opportunity and the TBR opportunity. So we're coming into the quarter operationally so strong, so customer test and with so many opportunities next year. it's really a pretty extraordinary time. So I'll turn it over to Erin just help both about the catalyst and then the insurance question or the California question.

Yes. Great. Thanks, Doug. I might go on a little longer than David because I'm kind of excited about this subject. But you see our Q3 results, Active Rider growth at 18% year-over-year, all-time high. Gross bookings up 16% year-over-year, another all-time high. Adjusted EBITDA, as David mentioned, up 29%, another all-time high. So that's our consolidated business, but take any of those metrics just for North America, same, all-time highs. So we've got a lot of momentum. Our guide for the fourth quarter is for rides to be up mid- to high teens, gross bookings up 17% to 20%. So we see accelerating growth into the fourth quarter.

And as we sort of sat and reflected on where we'll end up for 2025, it was important for us to talk about how we see 2026. So it really starts with our marketplace is stronger than ever, right? We've got record levels of active riders. We've got record driver hours, as David mentioned, record rides. And so multiple catalysts coming together to keep driving this momentum forward. And I'll just mention a few.

First, David led off with the United partnership, Doug, you were first, so maybe you connected your accounts first. That's great. Congratulations. But we're excited about that. We think that's going to be a great program. Obviously, great value for Lyft, great value with our partner, United we will see full year contributions from free now, and we expect that business to grow year-over-year. We're also going to see a full year of impact from TBR Global show furring the acquisition that we announced recently. That's only going to show up for a pretty small portion of Q4 in 2025.

Underpenetrated markets remain a fantastic area for us. We had previously talked about those markets in the U.S., representing about 2/3 of that $161 billion personal vehicle trips annually that we see as our market opportunity. And in Q3 alone, about 70% of our rides growth came out of those areas in North America, and we see strong continued catalyst for growth there. I'll get to California insurance reform in a moment, but that's another area that we think has great upside in terms of continuing -- driving new demand on the platform as a result of that. And we've just got strength across our core platform. As you know, we've been driving many programs over a long period of time now to drive driver preference. We've got a great driver rewards program. That's going to underpin our platform health. We've got a fantastic business rewards program that we're continuing to promote and get out there.

The acquisition of TBR is a natural catalyst. A lot of those people are business travelers. So yes, there's a lot to be excited about as we think about how we're ending 2025, and then what the setup is for 2026. So thank you for indulging me. Hopefully, you could hear the excitement in my voice.

As it relates to California, just to kind of bring everyone on the same page, some people talk about this as the California insurance reform. It's also formerly known as SB 371. The headline here is -- the passage of the bill, which is going to go into effect in 2026 is a true win, win, win. Riders win, drivers win. And the great thing is when both of those constituents win, so does Lyft. So what does it mean? Rideshare is going to become more accessible to riders with a reduction in insurance it does away with outdated $1 million required coverage for uninsured -- underinsured motorist requirements. It's been in place for a while. And it's 16x higher than the typical auto coverage where a vast majority of claims are settled for under $100,000. And over time, this has increased the cost of lift rides in 2025 in California riders have been paying an average of over $6 per ride just in insurance costs alone. And then in certain areas like L.A., it's even higher, it's almost double than that. it's just not.

So this bill modernizes those regulations. We see passing along the vast majority of those savings to riders in the form of price reduction, that's going to stimulate demand. That's going to be great for drivers, more earnings opportunities and then great growth opportunities for Lyft overall.

Thank you. Thank you, Doug. Our next question comes from Eric Sheridan with Goldman Sachs.

David, I think there's a debate going on among investors right now in the sector on how to think about the engines of growth when measured against incremental margins in the sector beyond just the end of this year, but out over the next couple of years. Can you just hit refresh on your philosophical view on how to think about the balance between incenting growth, driving innovation, but also delivering on continued margin trajectory over the next couple of years.

Yes, sure. Good to hear from you. I mean I think -- gosh, when you hear that perspective, I think it almost immediately should make you think the people ask that question sort of thinking a little bit small. They're thinking kind of zero-sum because again, just to sort of state the obvious, but as you say, kind of reground we're now doing 2.5 million rides a day. That's a big number. And by the way, when I started this job at an Investor Day, you heard us say 2 million rides a day. Now it's 2.5 million rides a day. But we are more profitable now than when I started by a lot. And we're delivering better service. Here's a fun fact. Remember, there's Halloween set I was just sort of putting out. We actually put people up faster this year than we did last year even though we were doing more rides by a lot.

So what that tells you is there is an enormous amount of service upside that we've unlocked over the last couple of years that did not come at the expense of our economics. In fact, it was exactly the opposite. The opposite. Why might that be? Well, that might be because those 2.5 million rides, which then translates to 900 million rides a year, let's call it. Plus the other guys, 1.5 billion rides a year, let's call it, so -- billion rides per year is a tiny fraction of the 161 billion rides just in North America. And then remember, with our free acquisition, our acquisition, we now have a TAM that's twice as big.

So I -- so I sort of -- I mean like I get this kind of conceptual trade-off, but I think that conceptual trade-off is sort of a scarcity mindset sort of -- binary, kind of like we win, the other guys lose or whatever, whatever. I think there's so much innovation left. I'll give you a little tightening story there. We launched Lyft silver, whenever that was maybe 6 months ago. And now we've increased ridership just in silver. So this is for older Americans, it's only available in the United States right now. For old Americans, those rides have increased 50% just in the last 6 months, it's well over 1 million rides in total. And that's just the beginning of that program, and that's not like a low-cost program or sort of a margin dilutive program, whatever.

So anyway, I'd go on this for a long time, but I think that the customer obsession drives profitable growth. That continues to be our mantra. Innovation is what is -- that's how you get from tiny to small to medium to large, extra large, and it's a great product, and it's only going to get a better product. And I sort of -- I don't worry a whole heck of a lot about having to buy back growth or anything like that. I think there are much better ways to get that growth and it's through innovation.

All right. Our next question is coming from [indiscernible] with Bank of America.

I ask a couple on AVs. I'd love to hear your thoughts on how nice job on the Waymo deal, but how you think about AV economics and if that changes anything on margins? And then second, what you're seeing in markets where Waymo is currently operating.

Yes. Let me take -- it was Justin, right? Yes. Let me -- I'll take the last part first. I'll kind of back into a little bit and then maybe hand it over to Erin to talk a little bit about the economics of what we're seeing. So the first -- okay, the answer to the first question is, in markets where AVs operate, rideshare is growing faster than -- and I'm talking about comparable apples-to-apples markets, then rideshare -- is markets where AVs are not operating. So that tells you right there that the first thing that happens as AVs come on as they expand the market. And this is what we -- because these are new markets, right? I mean, let's be clear.

So that's very exciting for us. As an industry, we should be very excited about -- as -- it's a good product. It works well, people like it, and they take that and then they take traditional driver driven ride share as well. So that's wonderful.

So then -- so the economics. So in the medium term -- okay, first, like any new thing requires investment. You know that, right? So for example, in Nashville, where we're hooking up with Waymo, we're going to build a depot. Erin will talk to you about that in a couple of seconds. But the relationship -- the reason I'm going to go into a little bit of depth on this. We spent quite a lot of time with the Waymo team really trying to work out an arrangement that was built to scale. And built to scale means it's good for us and it's good for Waymo and it's good for riders. Okay. So what does that look like that's go down 1 click.

When you put AVs, we're talking about now in Nashville, a couple of hundred AVs that will be on the ground over the next year, and that will grow over time. When you put AVs on the ground, the first thing you want to make sure is, are you set up for them to be highly available, doesn't do any good to have an AV sitting there that's not charged, it's not clean, it's not repaired, it's not properly maintained, not ready to go. If you don't have that, you've got nothing. So -- why are we good at that. We're good at that because our Flex Drive subsidiary has been doing it for many, many years. We have a 90% availability rate. Talk to the rental car guys and they'll tell you that, that is an [indiscernible] number. So we're good at that, and we're only going to get better. So that's number one. And we get paid for that. Erin will talk about that in a couple of seconds.

And the second thing is you have to talk about utilization. The utilization means, okay, the car is available, but is there a rider in it because that's how revenue is generated. And the answer there is we've worked very, very closely, very deeply, very technically with Waymo to set up an arrangement where regardless of whether the car is ordered on Waymo or on Lyft we're going to be maximizing utilization. It's an integrated supply management system. It's quite technical, but -- and will be hard to implement, but once we've got it right, we'll be able to scale it up because both companies have ambitions to scale up both within Nashville and beyond over time.

So that's sort of the structure of this thing. You got to have high availability. You've got to have high utilization. You got to have systems that are super tightly integrated to make sure that the physical world and the digital world all come together seamlessly. And it's a beautiful experience for riders, which is how you drive growth.

And now we can talk about the economics, broadly speaking, of course, you've got to invest in some physical infrastructure, but we like the unit economics there a lot, and I'll turn it over to Erin to talk about that.

Yes, sure. A couple of things to think about here. David just sort of described what we call an integrated supply management partnership, right? So that's number one on the fleet side, driving availability. And number two, as we think about the sort of integrated supply piece of it, it's about driving utilization, 2 critical things. The good thing is about this construct that we have going in with Waymo is that Lyft earns regardless of platform, right? So regardless of where the car is deployed, we're responsible for it being available. Obviously, when a ride is deployed on Lyft and there's economics there. So that's the piece of the arrangement. David mentioned, we're building a depot. We had previously disclosed -- we thought it would be about $10 million to $15 million investment. We signed a lease, teams are raring to go. So we're excited about that for 2026.

All right. And our next question is coming from John Blackledge with TD Cowen.

Great. Two questions. First, can you talk about the opportunity in the low scale markets as a driver of growth over the next couple of years? And then second, I think you maybe just got through the annual insurance renewal. Just curious what we should expect to see in terms of impact to cost of revenue.

Sure. John, I'll start with that, and then I'll turn it over to David to talk about what we're seeing in those scale markets. So yes, we just completed our 10/1 renewals. What we're seeing is we expect a mid-single-digit increase on a per ride basis great outcome, very competitive. Our team continues to make really strong progress in bending that insurance cost curve. All the pillars that we talked about at our Investor Day are the same things. Continuing on technology and approaches to make our platform to reduce accidents, reduce accident frequency on our platform. Critical pillar. We continue to make strong advancements there. We've continued to build -- to continue to deepen our relationship with our third-party insurance partners, which has a number of benefits, including the way that we share data and can quickly and efficiently resolve claims.

And then, of course, on the policy front, we talked -- I talked a little bit about California a little a minute ago, but we continue to push forward with what we think are common sense reforms on the policy front. So really, really proud of our team for the outcome on our 10/1 renewals. And I'll turn it over to David.

Sounds good, and we can even tact team on this. I mean so for the last -- I'll give you just a little color. Maybe it's been 18 months or so since we've really started to focus on underpenetrated markets. And the reason is -- I mean, aside from just sort of diversification, let's say you don't really want to at your eggs in the sort of biggest city basket. But 2/3, we look at -- I just mentioned that 161 billion rides in North America. About 2/3 of those are in underpenetrated markets. And we saw in Q3 about 70% of our growth came again from those markets. So there -- it's a large part of the country. It's a large part of the TAM. And then there's -- we're seeing great opportunity there by doing some very clever and careful market management in those markets.

I'll give you some examples so you can kind of visualize. You might think of -- back-to-school is just kind of come and gone. And so when you think back to school, you might think high school. But if you think college, you're talking about very significant communities, [indiscernible] and State College and so forth and so on. And in each one of these, we deployed a specific program to really tap into that back-to-school market. and we saw incredible results actually outsized results compared to the growth we've seen elsewhere. So this is 1 of the -- and I will also say without sort of tipping our hat too much, I think AI can play an interesting role here as well as we look to manage those markets more carefully than maybe we have in the past. So a lot of opportunity there, more to come. But for sure, you should expect to see quite a bit of our growth come from there in the future.

And our next question is coming from Michael Morton from MoffettNathanson.

Just one for David. David, with the free now acquisition complete and then the TBR deal, your global vision for list is starting to come into view. And you love to talk about 2 customers in the car. So what I would love to learn -- what is the opportunity that you see outside of the U.S. for where those 2 consumers are being underserved by the competition. And how Lyft can offer a better product for both of those consumers?

And then maybe a very quick one for Aaron, we've had a couple of questions on this so far. But the #1 question we got from investors this last 90 days and after the Waymo announcement was, how can Lyft deal be accretive when the other guys talk about that they're losing money on AVs. So I don't know if maybe you could talk a little bit about is the take rate different because it's a hybrid network or anything around there, I think, would be really helpful for some of the investors asking those questions.

For sure. So Michael, I feel -- permit me, I'm going to zoom out just a click from your question and then zoom back yet. So the premise was, gosh, you've acquired free now and you've acquired TBR. What are you going to learn, particularly about service and sort of maybe like underserved markets maybe for riders and drivers. I'll come back to the second part in a second. But let's just talk about those acquisitions for just 30 seconds each. So for now, you'll remember the theory of the case is fairly simple, right? It sets us up great in the short term to become a much, much more global company. It doubles our TAM. It works with the leader in Europe across the taxi segment in particular, which is an incredibly important part of the sort of European ecosystem kind of ethos. And it sets us up very, very nicely for autonomous in the future because fleet management and government relations turned out to be really turned out to be really important in the world of autonomous. TV more recent, and we haven't talked about that publicly, of course, this happened during the quiet period. This is a global software network, very, very global.

I'd say that in the sense that it operates in some 3,000 cities around the world. And we're talking about Paris and London and Frankfurt and Manchester and Zurich and Hong Kong and Singapore and Dubai. So World Capital is. Why? Because it focuses on executives people doing, for example, non-deal road shows, many of the bankers on the call are very familiar with big events like the Super Bowl or F1, those sorts of things. And so and it offers a very, very high level of service. It's part of a $54 billion market. This is a different market from the on-demand sort of even the on-demand high-value mode like Lyft black, for example, this is a thing way up above that, a much, much higher service level. Okay.

So if you then look at those assets that we now have, then the question becomes, right, how can you deploy them best? And also how can you take what you've learned in the United States and bring it on globally? And just maybe a little bit of editorialization here. I think taking a North American company and making a global company is no small thing. But we're going to do it. We're going to do it because the great companies are truly global. They're the ones that are not just thinking of the U.S. incentive of the universe and everywhere else is kind of being less than they are the ones that learn from what you see overseas and bring it back to the United States and then take it all around the world. And so for example, if you look at TBR, their service excellence is unmatched. They're very much a global company. They're actually headquartered in Glasgow. They have their global operations center, Center of Excellence in Dubai, extraordinary, extraordinary skill set there to level up the service that Lyft can provide all up and down the stack.

And then free now, of course, has been a high service group forever. Okay. So what are then the opportunities? I think the opportunities are. I'd say that ride-hailing in Europe, in particular, has been a little bit of a degraded experience. If you spend time overseas, it's maybe not even to the quality here in the United States, and I'm not sense with where we are in the United States either. So I don't want to my hand too much, but I would say a lot of the value we're going to add from Lyft is bringing some of our marketplace, the skills like priority pickup and wait and save and some other modes to Europe, bringing our driver obsession, I think, in particular, at Europe. And then from Europe, bringing some of the service excellence that we're seeing, particularly at TBR, but also now and bringing that all around the world. So a bit of a long answer, but I don't think it's a list of flavor of how we're thinking about it.

Yes. A couple of things maybe that I would add to that, and then I'll come back to your question, Michael, on the Waymo deal, is also, as you think about free now, think about the skill set that we have around the way that we drive value and volume through partnerships and our partnerships, the partners that we are aligned with are global, right? There's a great opportunity there. We talked about -- David talked about AVs just a minute ago, another great opportunity there. I think I mentioned earlier, TBR. Obviously, David has highlighted that a lot of those are business rides we've been investing across our high-value modes now for some time. And just organically seeing some very strong success in Q3 alone, our high-value modes were -- grew 50% year-over-year. And so TBR is a great addition to that overall strategy.

Sort of back to your Waymo question, I'd talk about a couple of things. I articulated this as being about driving availability and driving utilization. So the availability side leverages FlexDrive, and I think the unique thing here and maybe a bit of the advantage we have is -- this is something we know. We know how to keep a car available with very high quality, very high uptime, so to speak. And so we feel great about our ability to drive value to the partnership through that in-house expertise where, again, we're bringing skill and experience to the table.

The second piece of this is all about utilization right? And these 2 words are kind of the, I think, the magic ingredients here, high availability and then high utilization. And if you think about this fairly differentiated way that this integrated supply management partnership is constructed, it's really designed for high utilization, whether the car is deployed across Waymo, dispatched across Lyft, you're going to get maximum utilization. It's really sort of our vision of a hybrid network over time. So that's the framework with which I would leave you to think about this.

If you don't mind, I want to underscore exactly what Erin said and pointed out that in the Flex Drive side, not only are we best of breed in terms of availability -- but as Erin said, it's an owned asset of ours. That means we don't have to pay someone else for that. So you can partner with other fleet management, but that's going to cost you money, right? So we've got a very, very nice cost both high expertise and a very nice cost position on that side. And then on the utilization side, yes, we think we've worked out a scheme that allows whether you get the car from Waymo or the car from Lyft, that's going to be the same pool dynamically sort of dispatched, depending on this kind of algorithmic work we do, and that will lead to high utilization, which then improves the economics for both of us.

Our next question is coming from Brad Erickson with RBC.

Two for me. So first, I think last quarter, Erin, you've given us some nice insight on how free now might layer into the model both on bookings and then on the margins. I see the 42,000 rides in the letter, but just curious if you can update us on anything there, what you wound up seeing in Q3 and then what you're embedding into the Q4 outlook. And then secondarily, when you're calling for the bookings acceleration next year, I guess, in both North America and globally. Just curious if you're embedding anything additional partnerships wise that you have in the pipeline or if that's just based on everything you've announced as of today.

Yes. I'll work my way backwards. The 2026 sort of building blocks that I articulated right out at the center if you'll notice is just all of the things that you know about today, announced partnerships, announced acquisitions, et cetera. So that's what's embedded overall in that outlook. And then as it relates to free now, I don't have a big update for you here for the back half of the year. We sort of talked about the incoming run rate. We expect free now to accelerate in 2026. We're expecting about EUR 1 billion on the top line overall. So hopefully, that's helpful. We gave some additional guidance about the dynamics of how free now flows into our P&L. Talked about the impact on revenue margin, et cetera, but happy to go into any more detail, Brad, if you have anything else.

Yes, you had talked about those gross margin effects last quarter. Just curious if those are playing out as expected. It sounds like they are.

Yes, they are.

Brad, I might add just because we're now talking about the international world outside of the U.S. Canada also turns out to be a nice growth driver for us. We've talked about the growth there in the past. I think we delivered about 11.5 million rides in the quarter there as well. So again, I know your customer is about free now, but just to sort of fill out the international story just a bit more.

Our next question is coming from Nikhil Devnani with Bernstein.

If I could please follow up on the Waymo partnership, how does the algorithm kind of balance demand between your funnel and their funnel? Presumably, you're going to have a lot more demand on day 1 than they are. So what does that balance look like? And do you fully expect to be facilitating rides during peak times of day as well? Or is there a platform the first kind of choice when ride requests come in. It would be helpful to understand that. And then maybe a follow-up for Erin on insurance. following California, are you expecting any movement in any other major markets as you think about 2026 and 2027.

Nikhil, I'll start with that and then turn it over to David. So as I mentioned when I talked about our 101 renewal, working toward common sense, what we view as common sense policy and insurance reform has long been a pillar. I think in the past, we've talked about changes to our reform in Florida, changes in Georgia. So this is something that's not new. We will continue to work on it. progress is difficult to predict. There's nothing inherently in any of the remarks that we've talked about for 2026 necessarily assumed. I mean, these things are difficult overall to forecast. But I would say that we are certainly optimistic that as perhaps other states see how some of the reforms in California, we believe, will lead to much better ride accessibility better earnings opportunities for drivers that they'll think that's pretty interesting.

Well -- and then, Nikhil, I'm not going to give you too much detail, but I'll -- but I'll say a little bit, I think maybe so that everyone kind of understands the complexity that you're referring to. So. Yes. So imagine the world as will be the world we exist in next year, where there are hundreds of AVs in a market. But -- but there's no way that all of those AVs can satisfy all the ride requests, not even close. So -- okay, so that -- and then imagine -- and again, you have to use your imagination, this is the future where those ride requests for AVs are -- well, those are requests in general, but specifically various courses were coming in from 2 different platforms. They're coming in from the Waymo platform and the company the Lyft platform. So you get quite a complex situation there that you have to manage if you want not to do goofy things like saying, okay, well, you Waymo get the hundred of those and Lyft, you get 300, which is never a good idea because it means inevitably, there will be some stranded on 1 side, they don't get to the other and get trained on so stuff like that.

So anyway, to your point, so then your first thought is well, maybe you're just going to come up with some other very basic heuristics. But it turns out those heuristics are not the way the real world is very, very head of marketplace to cast, it changes very quickly, very dynamic. You have some peak times, you've got some load times. Neither 1 of us wants to be stuck with. Anyway, so going to diesel, but this maybe not the time. But the point is, it's not going to be straight formed. It's not going to be like, okay, someone so gets the first 10 and then you get the next 10 or whatever it is. literally every single time a ride request comes in, the work that we have done and will continue to do will be to figure out what is the absolute best way to fulfill that ride. -- and there will be many, many dimensions to that. Some of it is ETA and so forth, ETA, meaning how fast it is pick you up. So it might be time of day. If I make all the sense in the world to start picking people up so times of day using only AVs certain reasons.

So anyway, it's sort of a nonanswer, I grant that. But this is the reason why this partnership frankly took quite a while for us to work out. But we're very confident, both companies are very confident having run a [indiscernible] models across this thing that we have something that is going to be effectively accretive for both and keep these assets best utilized.

The last thing I'll say is I think in a sense, this is really the argument for the big thing, which is a hybrid network. It's really, really hard to satisfy demand just with AB us anytime in the near future. There's just not enough supply in the world. And so the drivers, they own their own cars for that size. There's no asset ownership you have to -- and they come on and off quite dynamically again, depending on pricing. So that's the third dimension, Put it all together, and we think we're going to create something like the holes credit some of the parts. Maybe someday down the road will say a little bit more about how we do that, but that's the big picture.

All right. Our next question is coming from Ben Black with Deutsche Bank.

This is Kunal for Ben. A couple of follow-ups on the AV and the Weibo opportunity. One would be in terms of building out the centers, the service centers in each market, -- is that something that you're going to do ahead of time like planning for the next few markets? Or is that going to be on a market-by-market basis based on partnerships that you have already entered into? And then second, what level of availability and utilization, do you need to be breakeven or contribution profit neutral for the network to kind of pay off. So like in a 24-hour day, how many hours do you need the vehicle to be available? And how many hours of usage does it need to have?

So, Kunal, I'll start there and then maybe, David, do you want to talk about how we think about over a much longer period of time, why -- how you scale AVs across a broader set of partners. Short answer here, Kunal, is I'm not going to go into the details, obviously. As we ramp up this partnership as we gain experience together, we have a lot of optimism, obviously, both the teams have more to say down the road, but I'm going to stop it at that.

Yes. This is going to be an area where we're going to have to be a little vague. The -- so -- yes. Let me just -- let me talk about utilization for 1 more second and then -- so you might think to yourself, well, it's not that hard to keep an AV utilized because you don't have that many of them. You've got a lot of demand. Well, it turns out that's not the way riders think about things, right? I just think about things? Is this close enough? So I need to get some place? And is this car close enough to pick me up on time? And if it is, then I'll take it if it's priced right and if it's not that I won't.

And so this is where our history comes in, right? I mean we've been operating in Nashville for a decade now. So we have an enormous amount of data about what time you would expect supply to be needed, where the demand is going to be specifically. I mean down to the block-by-block level. So it is this sort of -- the inputs here are everything from geography to history to weather, to special events, is a big event we can and so on and so forth. And that's something we've been doing for many, many years, and that's expertise that we can bring even in a relative -- in a new city, like it's a new city for Waymo, not new city for us.

So -- that's how we go. And then you've got to make sure that the car is available to drive and then it's priced right and so forth and so on. Again, I'm not going to talk about exactly those breakeven points. But I will say that we look at the economics of this, and we don't -- we're not scared by effect of the opposite. The unit economics you would expect would favor AVs over time, you would expect because the variable cost, obviously, the running in AV is relatively low, not 0, to be clear. There are cloud costs, their electricity costs and maintenance costs and so forth. But it's -- there's certain costs you don't have to pay. And then you would expect insurance to be lower as well.

So those are sort of some of the inputs that we put in our model when we try to model these things out. But we like the economics of AVs a lot and I think that we've set up something that from the stars is going to be accretive, and then we'll get better from there.

Great. So our next question is coming from [indiscernible] from [indiscernible].

David, I just want to go back to the earlier question in terms of Nashville. And I think you said expand beyond Nashville. I think you meant maybe downtown Nashville. But can you just update us on how you see that relationship going over time if you execute with this kind of shared inventory that you have with Waymo that obviously is different than how Uber has structured it in Phoenix. Is there opportunity to get additional markets? And what time line do you think would have to occur before that relationship could expand not just beyond downtown Nashville but into new markets?

Yes. Good question and good clarification. Walt. So we have structured this partnership -- I would say it this way, both companies have ambitions to scale beyond just Nashville. And we built this partnership with the belief that that's the goal. Talking about time lines is premature. But I would say that certainly, the constructs we're using here are contracts that both companies believe can be the basis for something that expands to other markets. And I'll just sort of leave it at that.

And do you think -- just a quick follow-up. Do you think the structure of how you've done this deal with Waymo -- because it obviously is different when you're sharing that fleet, right, as opposed to separate fleets. And Flex drive make it a stickier relationship. Obviously, if you execute on both, it becomes maybe harder for Waymo to -- at least in those markets that you launched to try and execute on something different?

I mean I don't want to comment exactly on how they view it, but I would certainly say that our goal -- and I'm speaking just from a lift perspective here is to provide such a great level of service that no one has any reason to look anywhere else. But yes, and I think it's also fair to say that the deeper partnership, the more likely it is that neither one wants to do too many other things beyond that. But here, I'm just speaking sort of generically.

And our next question is coming from Stephen Ju with UBS.

Okay. Great. David, Erin, I don't think I've seen you guys talk about the university programs in a while. And I suppose the opportunity is as attractive as it's ever been as you get to onboard these users who get hopefully very accustomed to using Lyft on other people's money. But I also recall there were all kinds of other directions for these partnerships between getting folks to doctors' appointments, et cetera. So -- can we talk about the resources that you might be putting together to maybe accelerate the signing of as opposed to enterprise customers? Because it seems like such a win-win development for everybody involved.

Yes, Steve, I appreciate the question. I guess maybe as -- I don't know if I have it today, I'll zoom out to touch before kind of zooming in. So business-to-business opportunity, and there are different types, right? You mentioned universities as a particular area of interest, and we have specific relationships with certain universities to provide transportation on campus. Very interesting. We have health care, Lyft healthcare remains a leader in the field. It's called nonemergency medical transportation. And it's getting quite a lot of additional focus now versus the past. We've got a new buck who continues to leave that is the same, but then overham. Suzi now brings kind of new perspective and new energy to that.

And then B2B, when you're thinking about kind of corporate transportation of various different types. Of course, TBR is a very high-end thing. We talked about that already, but many companies preferred travel partners and so forth. So I think each of these areas is getting renewed focus. One of the nice things about really focusing on rideshare is there are a lot of -- like we're not distracted by food delivery and all kinds of things, like we can really, really focus on rideshare and look at all the different segments and how we're treating each 1 of them in the highest quality way.

So -- maybe what I'll do, if you don't mind, is I'll pivot just a tiny bit towards the business rewards or the business side of things rather than just the university and the health care side. We, for a number of years, if I'm honest, we haven't had a great offering for business travel managers who want to get their companies -- excuse me, their employees a reason to choose Lyft. Now we have one. We rolled out at the beginning of September. You get 6% back. You just mentioned this idea of other people's money. So yes, so often as a company. It's a company that's paying. We're giving you 6% back. You can then use that on your personal rides as well. That's the Lyft cash back, you can use in personal rides. We've seen great uptake there. And by the way, how much does it cost? 0, cost 0, which is different from the other guys that cost not 0.

So -- that's an area where we -- so I would say just generally, again, business-to-business has become an increased area of focus for us. We're seeing really good traction in some of these early programs we've put out Health care has been a strength of ours for a long, long time. And then university as I'm glad you bring it up, maybe stay tuned for [indiscernible].

All right. Thank you, Stephen. Thank you, David. David, any closing remarks?

I think if that's it, my main casing market is you than will better be hooking up your United Mileage Plus it's a Lyft because that's a great program and up to 4 miles back for every dollar spend. Look, we've had a great quarter. And the reason we've had a great quarter is not just because of what we've done in the last 3 months. It's because we've been doing over the last at least 2.5 years since I've been here, obsessing over customers, that's what drives profitable growth. I think when Erin and I started, I think the first quarter, I think we had consumed $329 million of cash, if I'm not mistaken. Now we're producing $1 billion of cash, it's a $1.3 billion swing. And the reason that's happened is because we've been obsessed with customers, and we have an incredible team every single day that wakes up and just crushes it. And they're the ones that get all the credit. So we get to talk about it. They are the ones that do the work. And thank you all very much investors for traveling along with us and -- looking forward to keeping you up to date.

Great. Thank you, David. Thank you, Erin. This concludes today's conference. Thank you for joining, and you may now disconnect.