Good afternoon, ladies and gentlemen, and welcome to the Lyft First Quarter 2020 Earnings Call. At this time, all participants are in a listen only mode to prevent any background noise. Later, we will conduct a question and answer session and instructions will be given at that As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sean Woodhull, Head of Investor Relations. You may begin.
Thank you. Good afternoon, and welcome to the Lyft earnings call for the quarter ended March 31, 2020. This is Sean Woodhall, Head of Investor Relations. Joining me today to discuss Lyft's results are Co Founder and CEO, Logan Green Co Founder and President, John Zimmer and Chief Financial Officer, Brian Roberts. Logan and John will give an update on our business and key initiatives, and then Brian will review our Q1 results and share some commentary regarding our outlook.
This conference call will be available via webcast on our Investor Relations website at investor. Lyft.com, and a recording will be available at the same location shortly after this call has ended. I'd like to take this opportunity to remind you that during the call, we will be making forward looking statements, including statements relating to the expected impact of the COVID-nineteen pandemic, the expected performance of our business, future financial results and guidance, strategy, long term growth and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors included in our Form 10 ks for the full year 2019 that was filed with the SEC on February 28, 2020, and the risk factors included in our Form 10 Q for the Q1 of 2020 that will be filed by May 15, 2020, as well as risks associated with the current uncertainty and unpredictability in our business, the markets and economy.
You should not rely on our forward looking statements as predictions of future events. All forward looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Lyft disclaims any obligation to update any forward looking statements, except as required by law. Our discussion today will include non GAAP financial measures. These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non GAAP financial results, including a reconciliation of our historical GAAP to non GAAP results may be found in our earnings release, which was furnished with our Form 8 ks filed today with the SEC and may also be found on our Investor Relations website at investor.
Lyft.com. I would now like to turn the conference call over to Lyft's Co Founder and Chief Executive Officer, Logan Green. Logan?
Thanks, Sean. Good afternoon, everyone, and thank you for joining our call today. While Brian will briefly discuss our Q1 financial results, most of our remarks today will address the state of the business and our future plans in the context of the current environment. The COVID-nineteen pandemic and its effects are virtually unprecedented in modern times. The virus is testing our everyday way of life and is having a profound impact on our customers and our business.
Here are the facts. In mid March, we began to experience a sharp decline in rides as various authorities across North America issued guidelines and orders for residents to minimize time spent outside their homes and apartments. For the month of April, rideshare rides were down 75% year over year. Ride levels appear to have stabilized, seeming to have reached a bottom in the 2nd week of April. We have since seen 3 consecutive weeks of week on week growth, but clearly, this is from a low absolute ride base, and rides last week were still down more than 70% year on year.
We cannot predict the trajectory or timing of the eventual recovery, but it is clear that macro trends will continue to negatively impact our business. Even as shelter in place orders and travel restrictions are modified or lifted, we anticipate that continued social distancing, altered consumer behavior and expected corporate cost cutting will be significant headwinds for Lyft. The strength and duration of these headwinds cannot presently be estimated. These are the hard truths we're facing. Now here's how we've responded to the crisis.
First, we acted quickly to ensure the safety of our team, establishing new policies and programs that support our employees during this unique time. Next, we took care of our customers. Then we took care of our business. And of course, we support our community. Let me start with our customers.
We purchased 100 of 1000 of bottles of hand sanitizer and masks and have been distributing them to drivers. It's important to note that we took great care to ensure that these mask purchases did not affect supply chains for health care workers and first responders. We also created a driver fund to provide financial support for drivers test positive for COVID-nineteen or put under individual quarantine by a public health agency. In addition to leveraging company resources, John and I are donating our salaries through June as personal contributions to United Way's Ride United Fund. Further, in mid March, we turned off shared rides across all of our markets as a precautionary safeguard for both drivers and riders on the Lyft platform.
We also took care of our business. We have put an aggressive plan in place to strengthen our financial position, starting with decisive actions to reduce fixed costs. Last week, we took the difficult but necessary step to reduce our workforce, letting go of 17% of team members and furloughing nearly another 300. We also initiated a 3 month pay reduction for all salaried employees, ranging from 10% for most non hourly team members up to 30% for senior leadership team and board members. In addition to these changes related to our employee base, every other expense line is being scrutinized and no stone will be left unturned.
Across the opportunities we've identified, we expect to pull approximately $300,000,000 out of our annualized fixed costs by the end of the year relative to our original expectations for 2020. Additionally, we are moving teams to projects that we believe can improve our unit economics. Furthermore, we've turned off virtually all rider coupons since rides began to decline in mid March. We've also paused driver onboarding in nearly all markets, introducing a wait list for new drivers. This reduces costs we incur associated with onboarding new drivers and helps protect utilization and earnings opportunities for existing drivers during this time of lower ride demand.
In terms of other cash outlays, we have reduced our 2020 CapEx plan by $250,000,000 In addition to all of our efforts to reduce costs, it is important to note that our business model is inherently resilient as roughly twothree of our costs are variable in nature. Since the beginning of Lyft, we've been committed to being the lowest cost operator in our industry. It is embedded in our culture. This discipline has been a key factor of our past success, allowing us to grow faster with less funding than our competition. The actions we're taking now in response to COVID-nineteen will give us an even leaner cost structure and better margins when we are past the crisis.
In addition to taking care of our customers and our business, we've taken steps to take care of our community. We're offering free bike and scooter rides to critical workers, such as health care, 1st responder and transit workers in 10 markets, including New York, Chicago, Boston, San Francisco and Los Angeles. For example, just last week, we announced a partnership with Mastercard and Citi to provide a free 12 month Citi Bike membership to eligible critical workers. In mid April, we launched Essential Deliveries, which connects drivers on our platform with government agencies, local nonprofits and businesses and health care organizations to enable on demand delivery of meals, groceries and other essentials. Finally, we've partnered with companies like Mastercard as well as hundreds of nonprofits to donate tens of thousands of Lyft ride credits to people with essential transportation needs.
Looking forward, we face a new reality. Based on the dynamics I outlined earlier, we expect that rider demand on our platform will be down for the foreseeable future. At the same time, with record unemployment, we expect driver supply to outstrip rider demand, which will reduce our required spend on driver acquisition and engagement. We are prepared to weather this crisis, and our progress in 2019 provides us with solid footing. Last year, we brought our product vision to life in the Lyft app, integrating rideshare, bikes, scooters and public transit.
We also introduced Lyft Pink, our new membership program that offers preferred pricing and incentivizes loyalty. Our balance sheet is strong. We ended the Q1 with $2,700,000,000 of unrestricted cash, cash equivalents and short term investments. We are confident that we are sufficiently capitalized to navigate the economic turbulence ahead. Our ability to execute is underpinned by the strength of our team.
Lyft has the most tenured management team in the industry, with battle tested leaders who frequently overcome stacked odds. John and I have been partners for over 12 years. And since 2014, Brian has helped us transform Lyft from an underdog startup to a public company that serves millions of users across hundreds of cities. Finally, I'd like to emphasize that for me and John, this company is not just a workplace. It's our life's work.
We're making tough choices today to ensure the long term success of Lyft, and the 2 of us will be accountable for the future performance of the business. We do not take this responsibility lightly. We're determined to emerge stronger on the other side of the crisis. I'll now turn the call over to John to highlight some of the work we're doing to make that happen.
Thanks, Logan. For Lyft to emerge stronger from the current crisis, it is critical that we adapt our business and our approach to best match the evolving world. To this end, I want to highlight some of the efforts we have underway to 1, help drivers 2, lean into our enterprise business and 3, protect users on our platform. For drivers, we are focused on earnings, especially during this critical time. Given the significant reduction in rides, we paused driver onboarding and established a wait list for new drivers in late March.
This helps maximize utilization and earnings for existing drivers on the platform. With rideshare trips down, we moved quickly in recent weeks to launch our central deliveries program that Logan mentioned earlier. In addition to helping fulfill critical community needs, such as delivering meals for children who normally receive free or subsidized lunches at school, This program is connecting drivers to important earning opportunities. Drivers on our platform are able to opt into this program for contactless deliveries. We are building this program with both national and local partnerships and will continue to explore avenues to expand beyond the initial 11 launch markets.
COVID-nineteen highlights how Lyft has become essential for modern transportation systems. Governors and mayors have recognized this and many have partnered with us as a critical link for non emergency medical transport, food banks and other essential needs. The economic impact of this pandemic will also highlight the unique value and importance of flexible work. When the economy opens up again, ridesharing will be the 1st place many people turn to earn. We have long supported policies that allow for this flexibility, along with portable benefits.
The challenge historically has been that outdated labor laws prevent this. However, the recent CARES Act demonstrates that this is indeed possible. Additionally, the California Balance Initiative we support would allow companies to pay into specific benefits while protecting independent flexible work. We recently delivered the signatures needed to qualify the Ballot Initiative, and it is progressing well. As we track public opinion around the proposal, we are finding significant and growing support.
This is an excellent opportunity for us to establish a new model that both addresses this need for flexibility along with important benefits. While rides are down overall, we continue to see an important need for Lyft among our enterprise partners. In March, our team launched essential commute programs that offer companies and organizations the ability to provide an alternative to public transit for their essential workers. In just a few weeks, we developed programs for organizations across the U. S, including Fortune 500 Companies such as Kroger and Estee Lauder.
Lyft has also secured new partnerships with over a dozen health systems in the U. S, helping more than 10,000 essential workers across more than 160 hospitals and clinics get to and from work. Through these programs, our platform is enabling important rides for workers who are depending on Lyft as their new transportation solution. Within our healthcare initiative, our team remains focused on expanding access to non emergency medical transportation. Our work with partners in the health care sector provides access to rides for patients in need of care from routine dialysis appointments to regular prenatal care appointments.
Since our last call, we have further expanded access to rides for Medicaid beneficiaries in Florida, Indiana and South Carolina. This more than doubles the number of people we can impact to approximately 22,000,000 Medicaid members living across 11 states and Washington, D. C. This program is another key example of the essential service our platform provides as we continue to help patients access medical care, while other transportation options may be less feasible for them. Finally, as a service that people depend on, we recognize the importance of doing what we can to protect all users on our platform.
We have already taken steps to enhance the health and safety protocols on the Lyft platform and will continue to innovate in this area on behalf of drivers and riders. We are incorporating key safety and public health update alerts such as curfews and shelter in place orders in our driver and rider apps. And as Logan mentioned, we have purchased and started to distribute 100 of 1000 of bottles of hand sanitizer and masks to help protect drivers and riders during this time. As authorities across the United States and Canada lift restrictions and encourage people to return to parts of daily life, it is critical that we continue prioritizing the safety of drivers and riders on the Lyft platform. I'll now hand it over to Brian to review our Q1 results and outlook.
Thanks, John, and good afternoon, everyone. Before I get into specifics regarding our Q1 performance and outlook, I want to start by stressing that while COVID-nineteen poses a formidable challenge, we believe we are well positioned to navigate this crisis. As Logan indicated, we have a strong balance sheet ending the quarter with 2,700,000,000 dollars of unrestricted cash, cash equivalents and short term investments. Our business model is highly resilient given approximately 2 thirds of our costs are variable in nature. For example, the cost associated with primary auto insurance risk, the single largest cost recorded in contribution margin is virtually 100% variable.
In addition, we are taking decisive actions that will position Lyft to be stronger and profitable in the long term. We are treating this crisis as a catalyst to shine an even brighter light on every expense and investment line to drive savings and efficiencies to better position the company for the future. So let me begin with the Q1. Our Q1 revenue trend was exceeding our expectations until the middle of March when we began to experience a sharp deceleration in rides as local and state governments initiated measures and restrictions to prevent the spread of COVID-nineteen. RISE on our Rideshare platform fell nearly 80% during the week ending March 29 relative to the week ending March 1.
We ultimately closed the quarter with revenue of $956,000,000 up 23% from the prior year. We achieved a record high revenue per active rider in Q1 of $45.06 an increase of 19% year over year. Revenue per active rider benefited from healthy engagement in advance of widespread shelter in place orders. There was also a COVID-nineteen related impact, which benefited this metric, which I will explain shortly. Active riders increased 3.5% from the year ago period to 21,200,000, but declined from Q4 as new rider activations dropped in March and some of our lower frequency riders from prior quarters did not use the platform in Q1 as the crisis worsened.
This decline, however, contributed to the record high revenue per active rider since additions to our active rider base at the end of any quarter are generally dilutive to revenue per active rider, since there is only limited time for these new riders to generate revenue. Now before I move on, I want to note that unless otherwise indicated, all income statement measures that follow are non GAAP and exclude stock based compensation and other select items. A reconciliation of historical GAAP to non GAAP results may be found in our earnings release, which was furnished with our Form 8 ks filed today with the SEC and is available on our Investor Relations website. This includes contribution, which is defined as revenue less cost of revenue, adjusted to exclude amortization of intangible assets, stock based compensation related expenses and changes to liabilities for insurance required by regulatory agencies attributable to historical periods. Both contribution and adjusted EBITDA are also adjusted to exclude the one time net cost related to the transfer of certain legacy insurance claims, which I will discuss later.
Notwithstanding the significant revenue deceleration beginning in mid March, Lyft had an exceptional quarter from a profitability standpoint. Our adjusted EBITDA loss for the quarter was $85,000,000 compared to a loss of $216,000,000 in the year ago period and guidance for a loss of between $140,000,000 $145,000,000 Adjusted EBITDA margin improved to a loss of 8.9%, our best result ever versus a loss of 27.8% in the prior year, representing a 19 percentage point improvement year over year. So let me dive into the details of this outperformance. Contribution was $547,000,000 in Q1, up 42% year over year. Contribution margin for Q1 was 57%, 300 basis points above our outlook and up over 700 basis points from the same period a year ago as a result of improved monetization and strong expense leverage.
It will take time for us to return to the right volume achieved in Q1, but the Q1 exemplifies the margin potential that we expect will resume following the recovery. Now as a reminder, contribution excludes changes to the liabilities for insurance required by regulatory agencies attributable to historical periods. It also excludes the one time net cost related to the transfer of certain legacy insurance claims. In terms of specifics, we experienced $58,000,000 of adverse development in Q1 related to historical claims. At the end of the Q1, we took actions that we expect should help minimize future adverse development.
On March 31, we entered into a innovation agreement with subsidiaries of NSTAR and Zurich. This transaction will effectively eliminate nearly all of Lyft's primary auto insurance liabilities related to periods preceding October 2018 for a one time net cost of $65,000,000 nearly all of which was classified to cost of revenue. The transfer of these insurance liabilities will allow our insurance team to spend less time on legacy claims and instead focus their efforts on managing our go forward insurance costs, which is an important contributor to our path to profitability. Cost of insurance required by regulatory agencies as a percentage of revenue was lower in the Q1 than in the Q4. We are pleased that our partnerships with State Farm, Travelers and Progressive are improving claims handling and lowering costs.
In addition, our initiatives to increase safety and reduce accident frequency continue to show progress and impact. The leveraging of insurance cost was a key factor in delivering our outperformance versus expectations for contribution margin. Let's move to operating expenses. Operations and support expense for Q1 was $129,000,000 or 13.5 percent of revenue, an improvement of nearly 400 basis points from the same period a year ago. R and D expense was $154,000,000 or 16% of revenue, which was in line with guidance.
Sales and marketing was $191,000,000 in Q1, down from $227,000,000 in the same period a year ago, representing a decline of 16%. As a percentage of revenue, sales and marketing was 20% in the Q1, a decline of 9 percentage points from 29% in the same period a year ago. G and A expense was $187,000,000 or 20 percent of revenue, 2 percentage points better than guidance. Legal settlements and accruals in Q1 were significantly below expectations as many mediations and hearings were postponed due to social distancing protocols and shelter in place orders. This was a key contributor to our G and A outperformance versus guidance, which we believe was more of a timing benefit that will prove temporary.
Let me turn to our outlook. Despite our strong liquidity and business model resilience, given the current uncertainty and decline in ride volumes, we are taking firm actions to strengthen our ability to manage through this crisis by reducing CapEx and expenses. More specifically, we are reducing 2020 CapEx from $400,000,000 to $150,000,000 representing a 63% reduction. Additionally, as Logan mentioned, we implemented a workforce reduction last week to ensure that we are appropriately optimizing our resources in light of the new environment. As we detailed in our 8 ks last week, we expect to incur a charge of between $28,000,000 $36,000,000 related to this restructuring, the majority of which will be incurred in Q2.
In addition to this amount, we expect to record a stock based compensation charge and corresponding payroll tax expense related to affected employees as well as restructuring charge related to the shutdown of certain facilities, but cannot estimate these charges at this time as they depend in part on our future stock price. We will exclude these non recurring charges in our calculation of non GAAP metrics in our 2nd quarter results. In addition, the company has identified other opportunities to reduce additional fixed costs including professional services and general overhead. We estimate that in aggregate, these actions once fully implemented by Q4 will help Lyft reduce fixed costs by approximately $300,000,000 on an annualized basis or $75,000,000 in the 4th quarter relative to what we expected at the beginning of the year. Separately, we have identified and staffed new stretch initiatives to improve our underlying unit economics, which be on top of the annualized $300,000,000 in savings.
In light of the rapidly evolving and unpredictable effects of COVID-nineteen on our business, Lyft is currently not in a position to forecast our financial and operating results for the remainder of 2020. As a result, on April 21, we withdrew our previously provided revenue and adjusted EBITDA guidance for full year 2020. In terms of the Q2, we are focused on reducing expenses to mitigate the significant decline in revenue that began in mid March and which is expected to continue. Not only is there a wide spectrum of varying COVID-nineteen predictions and recommendations by government and healthcare officials, but it is also too early to speculate on the full impact of a COVID-nineteen pandemic on the global economy and how the various scenarios could impact rides on our platform. Given this fluidity, it is impossible for us to predict with any certainty our results for the Q2.
As such, we are providing investors with an estimate of adjusted EBITDA loss based on April ride volumes. More specifically, if rides on our rideshare platform remain at April levels, which were down approximately 75% year over year for the remainder of the quarter, we expect we can manage to keep our Q2 adjusted EBITDA loss to under $360,000,000 This figure excludes restructuring costs that I previously mentioned. So let me share a few closing thoughts. While we continue to make investments that will fuel our long term growth and margin expansion, it is impossible to accurately predict the duration and depth of the economic downturn we face. Our business may be impacted for an extended period of time, so we must be prepared to adapt accordingly.
Notwithstanding the strength of our balance sheet as of March 31, again with $2,700,000,000 of unrestricted cash, cash equivalents and short term investments, we are streamlining our cost structure and reducing CapEx to help navigate this crisis. Further, as Logan and John discussed, it is essential that we do our part to help drivers, riders and partners during these uncertain times and we will continue to fund critical efforts to support our communities in this time of crisis. Now, despite the significant challenges ahead, our long term opportunity remains extraordinary. It is our responsibility to execute and we are ready to deliver. Our Q1 adjusted EBITDA gives us confidence in the profit potential that our business can and will generate over time.
And with the actions that we have described on this call, we believe that we can achieve consolidated adjusted EBITDA profitability at a lower ride volume than our previous cost structure required. We recognize that this downturn may be longer and more severe than predicted, and we fully recognize that the ride volumes we saw in the Q1 may not be achieved again for some time. It is exactly for this reason that we are taking aggressive actions, reducing our annualized fixed cost by 300,000,000 dollars lowering our CapEx plan by $250,000,000 and pursuing additional opportunities to improve our unit economics. These steps will allow us to preserve maximum cash and emerge stronger and better position when the economy recovers. So with that, let me turn it back to Logan.
Thanks, Brian. While the pandemic has upended our daily routines and strained societies around the world, it is also highlighting the underlying strength in our community. We are grateful for our driver and rider community, partners and team members who are working to deliver solutions to a rapidly evolving situation. During these difficult times, we will rely on the strong foundation that we've built over the last decade working together, and we will continue to take disciplined actions that further strengthen our position. We will take care of our customers, our business and our community, and we will emerge stronger from the adversity.
We're now ready to take questions.
Our first question comes from the line of Stephen Ju of Credit Suisse. Your question please.
Okay. So thank you. So Logan, it seems like states are reopening and letting people go outside step by step now. But does that but that doesn't necessarily mean that people aren't going outside. And you talked about, I guess, a directional recovery in the aggregate, but what are you seeing in terms of consumer behavior in those quarantine lift cities?
And as we start to come out of this, do you think you will have to take on incremental costs for cleaning and sanitizing, Is that enough or not enough granted some of this is a judgment call based on what you think the potential recovery should look like and by when. But if the quarterly EBITDA loss rate is in a down 75% scenario is about 360,000,000 dollars Should we think the absolute cash burn rate on an annual basis is about $1,500,000,000 or so? Thanks.
Thanks for the question. Brian, can you give some color on the individual markets?
Sure. So let me start with just some trends. And Stephen, let me start at the sort of system level and then I'll go to city specific details. So as we mentioned, overall, rideshare rides were down 75% in April. The week ending April 12 was the low for the month.
So rides last week, so I'm referring to the week ending Sunday, May 3, rides were up 21% from that low. I think it's also important to understand April's entry and exit ride volumes. So between the week ending April 5th and the week ending May 3, rideshare rights system wide increased 13%. And I also want to just provide some color in terms of the most recent week. So for the week ending May 3, total rideshare rides grew 7% week on week.
Now keep in mind, all this growth is off a low base since for the month of April, rides were down 75% year over year. And as Logan mentioned, even in the most recent week, we're still down over 70%. And then keep in mind that in terms of any sort of year over year growth comparisons, we have virtually turned off coupons, there are no shared rides and there are almost no airport rides. And just so you have some additional data points, in April, airport rides were under 2% of total rideshare rides, and this is down from about 9% in Q3 and Q4 of last year. In April, we had 0 shared rides as we paused the offering, and this is down from about 17% to 18% of rides in Q3 and Q4 of last year.
Now let me provide some city specific details to help answer your question as well. We are seeing what may be beginning signs of a recovery in certain cities, but I want to caveat again, this is from a low base. In terms of April's entry and exit ride volume, so again, I'm comparing the week ending April 5 and the most recent week, the week ending May 3, rideshare rights increased 25% in Atlanta, 35% in Chicago, 29% in Houston, 39% in New Orleans, 22% in New York City and finally, 25% in Seattle. And this is relative to the 13% that I mentioned for the overall company in terms of the rideshare platform. And then finally, just so you have the most recent data points for some of the cities, This is looking at week over week growth for the week ending Sunday, May 3.
We saw the following. In Las Vegas, rides grew 22% week on week. Nashville grew at 16% week on week. Moving to Florida, Miami grew at 15% week on week. Orlando at 14% week on week and then finally, Texas, Austin at 16% week on week and then Houston at 12% week on week.
And again, this is overall relative to the overall business, which grew rideshare rides 7% week on week. Now again, keep in mind these are from a low base, but all of these cities I mentioned in terms of week over week growth, this is the 3rd consecutive week of positive week on week growth as well. In terms of your question, in terms of let me just maybe touch on cash burn as we think about full year. The extent to which our operations will be impacted by COVID-nineteen will largely depend on future developments, which are obviously highly uncertain and cannot be accurately predicted. We cannot speculate today on what the rest of 2020 looks like.
As I mentioned earlier, if rides do remain at April levels for the remainder of the quarter, we expect we can limit our Q2 adjusted EBITDA loss to under $360,000,000 And keep in mind that we're willing to use cash if it helps reduce our fixed costs. For example, we will incur a cash charge in Q2 related to the headcount restructuring, but this will generate meaningful savings over time. So we're willing to use near term cash if it offers strong ROI and reduces ongoing cash usage. So it's hard to provide a more precise cash usage figure for this year beyond what I've shared. Now I also want to just again, I guess reiterate that we ended Q1 with $2,700,000,000 of unrestricted cash, cash equivalents and short term investments.
And even within that $2,700,000,000 we're keeping nearly $1,000,000,000 in overnight liquidity right now to hedge against any sudden capital market. So I would say given our significant reductions in CapEx and fixed costs, we believe we are more than sufficiently capitalized to reach
free cash flow breakeven. Thank you. Sure.
Thank you. Our next question comes from Mark Mahaney of RBC.
Actually, I
think there were a couple more parts to that one that I can take on the part about the health safety. And then I can pass it back to Logan just to fully answer your question on I believe you also asked about the layoffs. So just first on health safety. As we mentioned, obviously, the safety and health of our drivers and riders is critical, and we'll continue to fund these efforts in a thoughtful way. And we'll be announcing our health safety program in the next week, so that as governments continue to ease the stay at home orders, we'll be putting out new policies, commitments and products that will address the needs of our community during this time.
We'll be following CDC and local guidelines in addition to products and policies that we're going to be putting forward. And so I believe, as you know, we've purchased and started to distribute hundreds of thousands of bottles of hand sanitizer and masks, to protect drivers and riders, and we've incorporated key safety and public health update alerts into our driver and rider apps on the website.
Thank you.
Okay, great. Great. And then just to cover a few parts of the question. So to cover the question about the reduction in force and was that sized to be enough. So this was a very significant reduction in the size of our team.
Nearly 1300 team members were impacted between the workforce reduction and the furloughs, and the layoffs were determined within the context of an overall plan for navigating to the crisis that we outlined, which factors in pay reductions, the variable nature of our cost base and additional cost cutting measures, including reductions in professional services and office expenses. So like Brian outlined before, in total, these steps are expected to generate annualized savings of approximately $300,000,000 in our fixed costs by Q4, and that's in addition to the 250,000,000 dollars in 2020 CapEx that we described as well. So we do believe, these are significant and sufficient actions to strengthen the business and ensure that we emerge stronger on the other side. So at this time, we do not expect further adjustments to the employee base. So with that, let's move to the next question.
Thank you. Our next question comes from Mark Mahaney of RBC. Your question please.
Thanks. 2 things. 1, has this crisis caused you to rethink additional revenue streams in particular delivery of products from retailers or whoever the use of the driver fleet that you have to deliver products? And then secondly, could you talk about what you plan to do about shared rides in the future? I think you said it was roughly mid teens of all your rides, share rides were shared rides.
Is that something that you plan to delay for quite a substantial time for health reasons? Is it a category that you think you'll just your thoughts on how long it will take you to bring that offering back to market? Do you think that there'll be really depressed demand for that for a year, just given the distance concerns of people? Thank you very much.
Yes. Thanks. John, do you want to cover delivery and I'll take shared rides at the end?
Sure. Mark, so we in terms of delivery, we're focused on the programs that we've launched around essential deliveries, and we're going to be evaluating any future opportunities based on how those perform. And then for clarity, anything that we do or would do, we have no interest in launching a consumer food delivery service. And so we would not be doing that.
Great. And then on shared rides, we're closely following the CDC guidelines and regularly communicating those to riders and drivers and not operating shared rides at the moment was part of the CDC guidance. And as municipalities and governments consider reopening plans, we'll keep monitoring the situation and begin to relaunch shared rides based on official guidance from both federal and local authorities. There is one product that we recently launched that's worth mentioning. So we launched a new product called Wait and Save.
And this is a new low cost product that allows us to optimize the marketplace by being more efficient with matching drivers and riders. So what we do is we lengthen the match window. So it takes a little longer to be matched with a driver and that increases the chances that we can match a rider with a nearby driver and reduce the time it takes for them to ultimately get to the pickup. So that is a new low cost mode that we've rolled out and is somewhat taking the place, not one for 1, but somewhat taking the place that shared rides had served.
Okay. Thank you, Logan. Thank you, John.
Thank you. Our next question comes from Doug Anmuth of JPMorgan. Your line is open.
Great. Thanks for taking the questions. I have 2. First, just hoping you could talk more about your driver network. Can you tell us if you have an idea of what percentage of drivers have remained on the road during the crisis in some capacity?
And then what steps are you taking to ensure that they come back as things normalize? And then second, just wanted to ask about AV spending and whether there's anything that's included in the $300,000,000 that you mentioned? Thanks.
Yes. Brian, do you want to take drivers and I'll come back and take AV.
Sure. So when rides dropped beginning mid March in terms of the data we provided roughly down 80% between the beginning of March and the end of March. Both supply and demand dropped. Those have a natural way of rebalancing. And so I think right now we are seeing utilization initially dropped, as you can imagine, but now we're starting to see utilization tick up, which then helps drive up higher earnings, which then attracts more drivers onto the platform.
Let me pass it back to Logan to talk about autonomous.
Great. So in terms of autonomous, the our autonomous group, the Level 5 group, was impacted by the cost reductions and reduction in force. They were done across the company. So our investments in AV are critical to Lyft's future and we expect that they'll deliver strong returns in the long run despite COVID. One interesting thing that's becoming really clear about AV programs is that the progress the teams are making is not necessarily directly tied to dollars invested in the program.
And we've taken a really efficient approach from the beginning of our program and we'll continue to do so. We think long term, we have a really unique opportunity when it comes to developing self driving technology. An important point that we made before is, we believe that autonomous vehicles will first roll out on ride sharing networks. So the 1st generation of driverless vehicles will only be able to serve a small percentage of total trips due to technical limitations. So it'll be critical that those vehicles are rolled out on a platform like ours that can serve 100% of customer ride requests and allow AVs to provide the rights that they can and be supplemented by traditional vehicles.
Another kind of piece to point out is during the COVID crisis, every AV program, including ours, has had to pull back on on road testing. And so what we've done is we've moved over to put a focus on simulation. And that has always been a critical part of our program, but now is what we're leaning on as the primary way to continue improving our autonomous vehicle.
Great. Thank you both.
Thank you. Our next question comes from Eric Sheridan of UBS. Your line is open.
Thanks so much for taking the question. Maybe 2 follow ups if I can. Market asked about shared rides. Can we broaden that out a little bit to think about the way in which you think about your product portfolio both as we go through the current situation and as shelter in place unwinds on the other side of COVID-nineteen, how you might think about aligning your product portfolio against consumer desires in the marketplace, maybe even specifically a comment on bikes and scooters? And then, one other thing with respect to insurance costs going forward, just wanted to know if we could dive a little bit deeper into the fixed versus variable nature of that as you see the current side of drivers on the road versus drivers and supply coming back on the road again on the other side of COVID-nineteen?
Thank you so much.
Thanks. John, you want to weigh in on bikes and scooters? And Brian, then you want to take insurance?
Yes. So I think our approach of having multiple modes that serve multiple use cases pays off really well in this environment because of the flexibility it provides. So specifically with bikes and scooters, obviously, you don't need to be present with another person when you're using a bike or scooter. And so we're seeing that be a really important mode for essential workers and those that are out and about at this time. We've obviously upped the cleaning programs on those bikes and scooters as well.
And overall, our bike strategy has been focused on a single operator, which is serving us well. What that means is that in markets like New York City, we own and operate City Bike, and we are the exclusive provider of bikes in that market. It's allowed us to partner with the local government, provide the best service for New Yorkers, get rides to essential provide essential workers who need it. And so we're going to continue to lean into our largest markets, and we're going to continue to lean into the densest markets. So you also saw or you may have seen that we exited 3 scooter markets a few days ago.
And the reason was that the density in those markets was not as high. And all the markets we remain in, we see a clear path to profitability for our bikes and scooters.
Thanks, John. Eric, let me address your insurance question in terms of fixed costs. As we mentioned about 2 thirds of our costs are variable in nature. And what I would say is the cost associated with primary auto insurance risk and transaction processing, which are the 2 our 2 largest Q1 expenses recorded in contribution margin, they're virtually 100% variable. So to answer your question, we as rides drop, obviously, that our primary auto insurance drops.
Our next question comes from Benjamin Black of Evercore ISI.
Hey, thanks for the questions. Perhaps the follow on here. So really would be curious to get your thoughts and your expectations for recovery. Obviously, not the timing, but perhaps the structure. So do you expect to see share shifts from to ride sharing from other forms of transportation?
And perhaps relatedly, which trips do you think will return first? I'm thinking corporate versus airport versus leisure, daily commute and events. And then perhaps one for Brian. You mentioned initiatives aimed at lowering the frequency and severity of incidents that were key to some of your insurance cost leverage. Could you expand on those and perhaps tell us how much runway you have left there?
Thanks.
Sure. So this is Logan. I'll say it's really difficult for us to speculate on how consumer behavior might change on the other side of the crisis. I think obviously the recovery will be shaped by government recommendations and progress made on treatments and vaccines. I think there's a couple of trends to watch.
We believe that affordable transportation is going to be critical for consumers. A lot of people are going to be navigating a challenging economic environment. And we believe that, that means people will be reconsidering high fixed costs and owning a vehicle is a very high fixed cost to maintain. We do think that consumers may also choose to avoid public transportation in favor of ride sharing and bike and scooter sharing. And in terms of personal car use, I think it's worth noting that car ownership rates in some of our biggest markets like New York City, San Francisco, Chicago are already well, well below the national average.
So for example, New York has 2 50 cars per 1,000 people, while San Francisco and Chicago have about 4 50 cars per 1,000 people, which are both well below the national average of 700 cars per 1,000 people, according to census data. So, as it sort of relates to exactly what type of trips people take, we definitely can't speculate on that. But we do think that lift is going to play incredibly important role on the other side. And we don't think that the crisis will impact this long term secular shift away from car ownership and towards transportation as a service.
Hi, Ben. This is Brian. Let me touch on some of the questions around insurance. What I would say, 1st of all, we are very proud with some of the achievements we've made in terms of leveraging this cost. As I mentioned earlier, contribution margin increased over 700 basis points year over year.
2 thirds of this improvement was from reducing the cost of insurance required by regulatory agencies as a percentage of revenue. So I think we've put up a very strong track record. I think on a go forward basis, we continue to invest in that team in terms of how do we increase safety on the platform. And so when Logan and I were talking about unit economics, Insurance is definitely front of mind in terms of the investments we're making to help lowering the insurance costs even further. And then separately, we're also leaning into our world class partners, including State Farm, Travelers and Progressive to help us reduce costs.
Our current primary auto insurance policies expire at the end of September and we will continue to consider the best options to reduce future volatility as well as lower our overall costs. So, we remain bullish that we have a long list of opportunities still to help leverage the cost of insurance.
Perfect. Thank you.
Thank you. Our next question comes from Edward Yruma of KeyBanc. Your line is open.
Hey, good afternoon and thanks for taking the questions. I guess first on the new weight program, do you think it will have the same economics to lift the shared ride? And then 2, as a follow-up, clearly, you guys have been able to successfully pull back on driver promotions. As you re ramp back up, do you think that promotions will return to the consumer environment? Or do you think that you and your major competitor have finally achieved kind of some degree of equilibrium when it comes to demand?
Thanks so much.
Yes, great. Just on Wait and Save, it's a very new program. We're in the 1st couple of weeks of testing it. So we will make sure that it operates with an economic profile that is very positive for the business. But it's too early to comment on anything specific.
Brian, would you want to weigh in on driver action effects?
Sure. Yes. So we've said consistently that our strategy is to focus on profitable growth, not growth at all costs. And so ultimately, we want to win a product innovation, customer experience and brand preference, not coupons. And what I would say, since rides began to decline significantly in mid March, we virtually turned off all rider coupons and we're not alone.
Companies in the rideshare industry are also adjusting spend. There are 3rd party data providers reporting that coupons have virtually disappeared across the industry. So given the current economic times, the industry appears to be focused on reducing losses and preserving cash. I know we are. So we're going to continue to lean more into innovation experience in brand versus coupons.
We think this is good for the industry.
Got it. Great to hear. Thanks so much.
Sure. Thank you. Our next question comes from Brent Thill of Jefferies. Your line is open.
Hey, Brian. I know there's a lot of curiosity about the liquidity position with cash and if you need to raise capital. But if you could just maybe give us your perspective on how you feel the balance sheet looks right now and any other color will be super helpful. Thank you.
Sure.
So look, as we mentioned, we do have $2,700,000,000 of basically cash. So we feel we're in a very strong position. We've made some pretty decisive decisions to reduce the cash burn for this year in terms of the $300,000,000 of fixed costs we're taking out, as well as we're funding new initiatives to improve unit economics, which would be on top of the 300. And then finally, we did lower CapEx from 400 down to 150. So all of those initiatives will obviously help us preserve cash.
So we believe we are sufficiently capitalized to reach free cash flow breakeven. So we don't think we need to raise capital, but look, we're always willing to be opportunistic. I will call out our long term debt stands at a whopping $82,000,000 right now.
Thanks.
Thank you. Our next question comes from Brian Fitzgerald of Wells
Fargo. So I want to ask a follow-up to Mark's question on essential deliveries. Could you give us a sense for how that ramped in those 11 cities? And then there are 2 sides to that, Boris. So you need people to have stuff delivered in addition to having drivers.
And how many drivers have opted into that? What are the gating factors finally in terms of expanding that beyond those 11 markets? Thanks, guys.
Thanks. John, you want to give some more color on delivery?
Sure. I'm not going to comment on the specific ramp other than to say that on the driver side, there was a large interest and large opt in to do that. I think for obvious reasons, people are looking for earning opportunities and appreciate the contactless nature of that. I think the big determinant will be the partnerships that we establish with those that need deliveries, essential deliveries at this time.
Thank you. Our next question comes from Itay Moshelet from Citi. Your line is open.
Great. Thank you. Good afternoon. Just two questions. First, going back to AV, wondering how you're thinking about potential for Lyft to pursue deeper strategic partnerships as a way to create more cost savings with some of your peers kind of targeting deployments by 2022?
And secondly for Brian, I think you mentioned
kind of
a lower break even. And just given the improvement in contribution margin and cost savings, any thoughts around beyond 2020, what kind of quarterly revenue is required to reach EBITDA positive?
Great. Thanks for the question. So partnerships have always been a fundamental part of our approach to AV. We clearly enter the space as a second mover and we know there are a lot of great programs out there, led by incredible teams who invested significantly more than us and have been at this a lot longer. So for example, we have a great partnership with Waymo that's operating in the Chandler, Arizona area.
And we have a wonderful partnership with Aptiv that's been running for some time in the Las Vegas area. And we continue to talk to many folks across the industry. So that is and will continue to be a major part our AV strategy. Brian, do you want to take the next question?
Sure.
It's hard for us to speculate. Obviously, our operations are going to be impacted by COVID-nineteen. And so when we're trying to think about ride volumes, it's highly uncertain and we just can't predict today. We've talked about the prudent steps that we've taken in terms of reducing our costs and CapEx. Now, if we successfully execute on our stretch initiatives to improve unit economics, given our new lower fixed cost structure, we believe we can achieve adjusted EBITDA profitability at a ride volume roughly 15% to 20% lower than what was required in our previous forecast to achieve profitability.
Now in terms of estimating the date of our 1st profitable quarter, this is ultimately tied to future ride volumes, which we obviously cannot predict at this time. Again, we lowered the ride threshold required by 15% to 20%. So if there wasn't COVID, with our new cost structure, we believe that we would have been profitable earlier than our original guidance. So to answer your question, the actual timing will depend on the speed of the recovery. It could be earlier or later.
Again, it's going to be tied to ride volumes and the bounce back.
Great. Thank you very
much. Sure.
Thank you. That concludes the Q and A portion of the call. I'll turn the call back to management for closing comments.
All right.
Thank you all for joining us for this call today. We hope that everybody is staying safe and healthy during this time and we look forward to talking to everybody again next quarter. Take care.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.