We are going to get started. So thanks everybody for joining us. My name is Ross Sandler. I head up the U.S. Internet Research team here. We're very excited to have Erin Brewer in the hot seat, no less. First time. Welcome to Barclays.
Thank you. Thank you, Ross.
Before we get started, I'm gonna read the quick prepared remarks for Lyft. I wanna make sure that to note that Erin will make forward-looking statements, may make forward-looking statements about Lyft's performance and expectations. Those statements are subject to risks, and the full list available in Lyft's latest 10-Q. Erin may also reference certain non-GAAP financial metrics, and reconciliations of those are available on Lyft's IR website. Excellent. Okay, so you've been on the job now for five months, is that right?
Just, in a few days, it'll be five months.
Okay, excellent. You had two earnings calls, so I guess, how's the transition been? What are the biggest learnings? I thanked you earlier, but I'll thank you again now, in front of everybody about the new disclosure. It's, it's amazing. It's really helpful. But yeah, so, you know, how do you feel about things so far?
Yeah. Well, first of all, we're happy to be here.
Thank you.
Thank you for having us, and nothing like putting your guests at ease by calling them being in the hot seat.
Yeah. That was in reference to the spotlight more than anything else.
Oh, okay.
Yeah.
Yeah. So, you know, thanks for the question. I'm really excited to be here today and talk a little bit more about Lyft. As I think about the journey of the company, you know, in Q2, we started off with you know, new leadership, different strategy. As I think about coming into this role as the CFO, you know, the company made some hard choices about right-sizing the cost structure. We're operating from the baseline of just a much healthier place as it relates to the cost structure overall. And of course, we continue to enjoy a really solid cash position. And then I think about the momentum in the business. You know, as I think about the last couple of quarters, as we think about the early implementation of that strategy, more riders and drivers are choosing Lyft. That's a great thing.
Our marketplace is operating from a much healthier foundation, you know, as compared to maybe a year ago. And our rides are growing, and that growth is accelerating. We've seen acceleration quarter-over-quarter. So there's a, you know, a lot there as you think about really the foundation and the momentum in the business. And then, as I think about what my core focus is, it's really around operational excellence, focused execution. You know, to your point, we've spent time, again, and focus on just making it easier for the investment community to follow our progress, so we're very pleased to get the new metrics out there.
You know, maybe to get back a little bit to more of the transition, you know, it's been a really good transition and a lot for me personally to be excited about, a lot that has affirmed my choice to join Lyft. You know, first and foremost, there's incredible talent in this company. There really is. You know, amazing tenure, amazing experience in this industry overall. We are really lucky to have the talent profile that we have. And then in terms of thinking about joining the company, right? I've been a Lyft user, and I've, you know, over many years, I've had a real affinity for the brand.
And so coming into a company that has maintained that brand affinity at its core, even through some arguably trying times and COVID and things like that, has been a real plus. So a lot of things that have really just affirmed it. I'd probably highlight one thing that's been, you know, particularly eye-opening for me as I joined the company. You know, obviously, coming into this, understanding the critical importance and that we serve two customers in every ride, right? Drivers and riders. But I'll lean in here a little bit more on the driver side, because as I've had the chance to join the company, we actually spend a lot of time at Lyft.
We have driver roundtables and forums on a very frequent basis, and these are really small group settings where we bring in drivers across the spectrum of drivers who use the Lyft platform. And these are both in person; we host them fairly frequently at our headquarters, not too far from here. And then, virtually, where we get a broader spectrum of drivers, really from across the company. And so walking into this, you understand at the highest level, right? Drivers want control, right? They love the control. They love that they can drive when they want, where they want, and they want transparency, right? And they want to optimize their earnings. Really easy to understand at the highest level. But what's been particularly eye-opening to me when I sit around the table with drivers is just really understanding this is not a monolithic group.
It's a very diverse group, and the reasons that they drive and their objectives for driving and what they want to get out of driving, right, the use cases can vary. And listening to them and understanding, you know, what are the pieces that we're delivering really well? And what are really the finer, more granular points where we can continue to sort of reduce friction in their experience? Has been very eye-opening, and I think, you know, a reflection of this sort of customer obsession lens that Lyft has really leaned into since David Risher has joined the company. So that has been particularly gratifying because it's, it's both a learning and sort of a continual reminder of the power of our platform, the purpose that it serves throughout communities.... So it was something I've particularly enjoyed.
Yeah, no, it's been a huge, huge 180 from the two of you coming in versus prior. So I think the one big question that most investors often pepper us with around the ride-hail category-
Mm-hmm.
is just how do we think about, like, long-term growth rates?
Sure.
And, you know, we're not gonna talk about specifics here, but Uber, you know, likes to talk about a framework where the base UberX business can provide, you know, X% growth, new products provide Y, and hence the long-term CAGR is Z. And I think folks are trying to figure out what is Lyft's equation. So could you just enlighten us on how you guys think about that?
Yeah, sure. You know, it's a perfectly reasonable, you know, equation to think about a growth profile of the company. And, you know, bringing it back to Lyft, I sort of talked about our trajectory over the last couple of quarters. So as I think about the top line, you know, there's a piece of this that's just continuing to refine that efficiency of our overall marketplace, the way that we just day in and day out, deliver, deliver rides, deliver them in a, you know, a clear, sort of transparent way on both the driver and the rider side, and continuing to optimize that overall.
And then what I'd say, sort of as we move into some of the next phase, if you will, of executing the overall strategy, there's real opportunity to lean into the ways that we think about sort of mode and mix across the platform. And you, we can chat about different ways that we've, you know, begun to do this, but, you know, everything from some of the higher value modes around scheduled, airport, where you've seen us, you know, begin to do a few things. From the Wait & Save product, which really offers really nice optionality. A really interesting product, both in terms of shopping within the app from the rider lens, but also really useful as we think about overall optimization and utilization of a driver's time on the platform.
And so there's more that we can, and you should expect to see us do going forward as it relates to that optimization across modes and mix overall. And then, really, you'll hear me talk about this, and you know, David certainly talks about it a lot, but it's that customer obsession lens as well. So you've begun to see us sort of lean into that in a number of different ways. We can sort of chat in more detail about things like Women+ Connect, you know, Priority Mode offerings that we have across the driver base. But those types of things that continue to drive volume, drive frequency, drive engagement on the driver side in terms of the hours that they spend on the platform and continuing that momentum.
Those are the things, as I think about, you know, I think you're touching on sort of Gross Bookings or of our top-line volume-
Yeah.
that I think about some of the key inputs, if you will, to the equation going forward.
Okay. And just drilling in there, you've talked about how now that we've kind of normalized the pricing on Lyft, we're not, we're not really interested in, you know, going head-to-head on price or on leveraging Take Rate with incentives. So could you, you know, flesh out maybe with some of those examples you provided?
Mm-hmm.
... you know, the product changes? Like, how quickly is product development happening, and are you seeing, you know, bookings accelerate after launching some of these products you just mentioned?
Yeah. No, great question. You know, you know, to start off with, you know, our objective here is to price competitively, obviously, and in line with the market, and then really, really develop products that have a deep, deep focus on both the driver and the rider experience. You know, so let me touch a little bit on, since I mentioned Women+ Connect, sort of happy to go into that example. We were excited to launch that, right? Our initial launch markets were five major markets across the U.S. And this is a feature that allows women and nonbinary drivers and riders to have a preferential match.
You know, probably offering consideration on both the driver and rider side to drive on the driver's side more frequently, maybe at different hours, and same thing, just increasing consideration for that set and segment of customers, and to drive preference overall. So we were excited about the launch. We had a lot of opt-in in those initial markets. You know, drivers were turning it on. Once they turned it on, they were using it, you know, 98%-99% of the time that they were on the road. And so we actually pulled forward a broader launch, and you saw us launch across 50 cities. So at our last earnings call, we were pretty early into that launch.
We talked about on the rider side, in some of the initial phases of our launch, about 200,000 riders just kind of coming in really quickly. Well, as we sit here now, sort of a couple of weeks post the broader launch, that number has jumped to 1.4 million riders opting in. So again, early, right? We're still arguably in the early days of that, but we think there's a lot there to be excited about.
Definitely. The other big question investors often ask is your cost structure, and I think the third quarter actually demonstrated some pretty good pull-through-
Yeah.
Your EBITDA to gross bookings. Now that we can see the gross bookings, I think just under 3%. But as we look out over the horizon, you know, longer term, I think Uber's laid out around 10% or 11% for their segment EBITDA, maybe take, like, half their corporate, you're probably going to land around 7% as their future state, in terms of their efficiency. What's structurally different about your ability to get to that kind of a number long term? I know we have slightly more insurance as a percent of your business than they do, but is there any structural reason why we can't achieve those kinds of, those kinds of figures?
Yeah. Well, first, thanks for the note, right? We're pleased with that momentum-
Yeah.
and that sort of an improvement in the overall profitability profile over the last couple of quarters, really driven by, you know, just core marketplace efficiency and getting better at that, and just operating from a much, much healthier, just overall cost structure for the company. You know, specifically as it relates to insurance, and I'm, I'm sure we'll get into this a little bit later, you know, as you think about it structurally, that is- that's priced per mile, on a per mile basis, and so there's no bulk discount-
Right.
Overall as you think about insurance. And I'm sure we can go into that later. But let me talk a little bit more about sort of the overall as I think about the business model and some of the different ways that you can expect to see us, you know, focus on that profitable growth as we go forward. And so, you know, we've talked about marketplace efficiency. There's, you know, we've made great progress. There's more there that we have in front of us in terms of improving and just continuing to tune and fine-tune that overall efficiency of the way that we match riders and drivers. We do that in a very careful way in balancing the overall marketplace, first and foremost.
I touched a little bit on mix and mode, but, as we think about entering this sort of next phase overall, there's still, you know, a good amount of work that we can do there. In particular, as we think about some of the higher value modes, and so that should certainly be a contributor if you think about margin leverage over time. Just fundamentally, we believe, again, cost structure is in the right place. As we are looking at finalizing some of our plans here into 2024, we think we're in the right place, and so we, we think we're at a place we can continue to grow off of that fixed cost structure.
And then we've chatted a little bit about, you know, businesses today that are smaller, but have a very nice growth profile that we'll continue to invest and, and obviously monitor. And a few of those areas are around our healthcare business, which we've been in for a while, where we provide transportation with a little bit of additional services where needed, to get people who wouldn't otherwise be able to easily get to medical appointments, get there on time. That business has grown in a very promising way, and so that has a, you know, different margin profile, if you will, from the base. And then, you know, we can chat a little bit more about ads, but again, this is sort of early days, but advertising just has a fundamentally different margin profile overall.
And again, a small component of our business today, but we've seen really promising signs there of growth, and so you can expect to continue to see us, you know, invest in the growth of that business overall. And so it's a mix of continuing that foundational focus, you know, continuing to focus, I think, in a much finer, sort of more customer-obsessed way through the lens of mode and mix, and then continuing to grow these other pieces of the business that can offer, you know, better margin profiles over time.
Yeah. I think one thing that we don't really hear you and David talking about more recently, as it relates to mode and mix, is some of the kind of smaller side businesses that you guys have with scooters and bikes-
Mm-hmm.
... the rental program, et cetera. How strategic are those? I think investors often ask us, why don't we just get out of the scooters and bikes business entirely? So any thoughts on, you know, staying in, rationalizing, et cetera?
Well, we have talked, specifically as it relates to bikes and scooters, that, you know, we are exploring, you know, strategic partnerships, other avenues in that business. Nothing really new to update there, but let me chat a little bit about the dynamics of that business overall. You know, first and foremost, the bikes and scooters piece of the business is kind of an interesting way to engage with riders, you know, at different parts of their journey. I'll say that I use our bikes product specifically multiple days a week as I make my ride up from the ferry here in San Francisco to our offices that are closer to the ballpark. So just to, you know, another way to engage with riders.
In New York, in Q3, you know, we've had some of our best weeks really ever, with more than 125,000, you know, rides happening across that network. And for those of you who spend time there, it's, you know, really pervasive in the city through the Citi Bike program in particular. And then, of course, that business, through that business, you know, we have a fairly significant presence. I think something roughly over 2,500, sort of, infrastructure display advertisements. So that's, you know, part of that overall omni-channel strategy. And then, of course, a piece of that business, we actually sell hardware, both in terms of the bikes and scooters piece, but the docked piece of that business, throughout markets globally.
It's generally a product that cities really like as they're building out their infrastructure overall, and just an interesting and another channel to engage with riders. That being said, it's operationally complex, right? Don't get me wrong. If you think about the operational complexities, you know, there's a capital component that you are investing in, which is, you know, obviously different profile from the core ride share. And then if you think through the ways that that business executes, you need warehouses to, you know, store the bikes, maybe during a snowy season, you've got people out repairing, recharging batteries. There's just a lot of day-to-day and situating the bikes around periods of demand. There's a lot of different day-to-day operational complexities of that business overall.
And so it's really a balance between, you know, maintaining the pieces of the business that allow us to engage with riders in this, in this cross-platform ways. They use rideshares, they use bikes and scooters as they make their way around cities from a day-to-day business. And then continuing to, you know, maybe find and think a little bit differently about ways to optimize that more complex physical infrastructure servicing of the business, over time. So hopefully that sort of helps set a bit of a framework for how we think about it.
And you talked about mix and mode and some higher margin products kind of coming on. And you know, I think one of the things you guys are doing that's interesting is for drivers kind of the upfront fare, upfront destination service, and you mentioned, like, better driver utilization-
Yeah.
... as that builds out. So where is that today in terms of your mix, and like, could that be, you know, a meaningful percentage of your overall rides, you know, a year or two from now?
Yeah. Look, this sort of customer obsession lens, and I'll try to provide a couple of examples, specifically as it relates to drivers. You know, I would say we've got, we've got a great start, and there's definitely more there to come overall. You know, I think if you think about some of the data that we've shared, sort of drivers are voting with how they're choosing to spend their time, and we've seen a 45%, we talked about in our previous quarter, a 45% increase in driver hours. We talked about that sustaining into October, and we see that sustaining into November. So we feel really good that, you know, that is the best direct representation of how drivers are responding to some of the...
What I would, you know, arguably say, our initial forays into this customer obsession lens with the way that we're servicing them overall. If you think about you know, we care about what drivers care about, right? They want control, they want transparency, and for the time that they are choosing to drive on our platform, they really wanna maximize that time, and they wanna optimize their earnings. And so that's how we are thinking about designing for them. And I'll talk a little bit about Priority Mode, because I think it's a good and sort of recent example where drivers can opt in to something called Priority Mode.
And what that means is that, you know, maybe in comparison to not operating on Priority Mode, that sort of per ride fare that they might see when they're operating in Priority Mode, might be a little bit less, but their utilization for an hour spent on the road is higher. And so what we've seen in some of that early data is that drivers operating in Priority Mode, in that given hour, there's about 12 minutes of that time where that utilization, they're seeing more utilization, right? And that translates into more dollars. And so it's that type of thinking as we think about optimizing the driver experience when they're choosing to use Lyft, that I think you can continue to see us build on.
Now, stepping back, as you think about driver, driver earnings on a per utilized hour basis, just in general, those have remained fairly steady over the past couple of years and sort of the, you know, across the spectrum, maybe the low to high $30s. In Q3, we saw that number being about $35 per utilized, per utilized hour overall. But again, very focused on, again, stepping ourselves into the shoes of the drivers who are choosing to use their platform and continuing to design in ways that drive preference for Lyft and, and drive the optimization of their time.
Yeah, that's, that's really interesting. You mentioned advertising with media. So could you just talk about the overall philosophy? You have some in-app-
Mm-hmm.
... inventory, you have in-car, you have the scooters and bike docking station. Yeah, could you just talk about the overall big picture and how you see that evolving in the next couple of years?
Sure. So to give you a sense of where we are today, you know, we have a little more than 8,000 sort of in-car tablets. You can think about that, so opportunities to make brand impressions. We have about 2,500 sort of on-street ad opportunities primarily through the bikes and scooters network overall. And then we have just over 1,000 sort of, you know, vehicle car-focused ways that we can make a display. And then today, about 70% of our overall ride volume is has some sort of in-app advertising available as an option.
And so I describe that to all of you because we think that omni-channel approach has value to it, specifically as it relates to sort of some top of the funnel brand and awareness, and we can talk about a fun example of that a little bit later on. But that's, that's sort of where we are today. This is, this is early days of the business, but I'll try to give you a sense both of, of where we are and, and some of the things, early indications of, of what's interesting. We sell primarily through a couple of channels. We have both direct sales with brand partners and then programmatically through, through an ad tech partner. You know, if you think about a typical rideshare ride, the rider will check their phone something like, you know, 9x, 10x during the ride.
Today, what we offer is sort of 100% sort of share of ride, if you will, to that brand ad advertiser. So you've got. It's just a different way in terms of making impressions versus sort of a click-through on Instagram or, you know, another social media platform. So we think that piece of it is really interesting. And we've got really good early feedback from brand partners, you know, really good early feedback as we look at engagement with that. But we're also, I think, building this business very carefully because I think, you know, ultimately, as we think about long-term, sustained, durable value, it's making this relevant both for brand partners as well as for the rider.
And so, I think you can expect to see us continue to sort of, you know, talk about this business and the development of it. Early days. The early growth is exciting and something that offers, again, the differentiated margin profile overall to Lyft.
And just a point of clarification. So the 70%, that's like 70% of all your rides going on at any given moment, you have the inventory available to you to put an ad in?
Yeah.
But we're not-
Roughly, yeah.
We're not serving across that 70% yet, or are we? Like, is it-
Yeah.
Okay.
Yeah. You know, yes. So 70% of rides, we're serving some sort of-
We are serving some.
Yeah.
Okay, gotcha. That's helpful. Okay, insurance, just going back to that one we touched on earlier.
Sure.
Insurance is, you know, obviously been a huge headache for the ride-hail industry for the last couple of years, and I think, you know... How, how do you guys manage it?
Mm-hmm.
Do you view, you know, some point in the future as being the point where this levels out as a % of gross bookings? And is that, you know, 1-5 years out in the future where you might see, we know it's not going to leverage, but will it stabilize at some point?
Sure. Yeah, look, everyone can look at CPI data around auto insurance, right? It's a challenge for all of us, I'm sure, as personal auto policy holders. It's a challenge for insurers, and yes, it's a challenge in our industry, in particular with the dynamics here in the U.S. market. And so the way that we are approaching this, and this needs to be approached, is through a multi-year sort of, you know, multi-level or multi-pillar strategy. And I'll chat about a couple of those. You know, first and foremost, it's continuing to develop our capability within the experience of using our product to reduce accident frequency, right? The number one way that we think about as we think about the levers we can, you know, influence, if you will, overall, to continue to influence that.
We have been doing that. That's not new. So we have data that shows as we intervene in those moments or in the areas where we see harsh braking and maybe, you know, have an intervention or a message to the driver, you know, we understand that data very well, but there's more that we can do there. It's about continuing to leverage and working in an increasingly seamless way with our third-party insurance carriers around the telematics data that we have. You know, when an accident does occur, having some database and factual base for where the accident was, based on the telemetry, perhaps how severe it was. So how accurately and how quickly, when an accident does happen, you can adjudicate those claims is meaningful. And so continuing to lean in and leverage those pieces of the overall portfolio.
And then the third piece is really around working with partners across the industry. As I mentioned, you know, it's not just a, a Lyft challenge or even a rideshare challenge, but there's a broader coalition of partners that's increasingly paying attention to this space. And so we have been, and we will continue to work across partners, to continue to influence here. So some recent examples that you can see are in states like Georgia and Virginia, where there's been some evolution at the state level on excess insurance related to uninsured or underinsured motorists. You know, we think that's moving in a good direction. You know, Florida also very recently implemented some tort reform that we think could be a model going forward.
And then very recently, we signed on to a letter across a broad spectrum of industry partners, a letter that went to the US House Committee on Oversight and Accountability. And this was specifically related to some federal legislation that's being contemplated around legal system abuse, and in particular, we, along with other industry partners, wanted to give some context to a piece of this, basically, third-party litigation funding, you know, to help drive that. And so I offer that just as, you know, a number of different examples on the way that we partner on the outside, in addition to the levers on the inside that we continue to work toward in managing overall insurance on our cost basis.
That's great. So we're out of time, but on behalf of myself and Barclays, I want to thank you for attending.
Thanks, Ross.
Great. Thanks a lot.
Okay.