A great helmet, and I will show you why. Check this feature out. Oh, yeah.
Oh, nice.
Isn't that nice? Keeps me safe on the road.
Hi, Eric. How are you?
I'm good. How are you?
Good to see you.
Good to see you.
I'm gonna try to do this without falling off the front.
Please, yeah, exactly.
All right. All right, I think, let me lower this a little bit. Okay, so in the interest of time, we're gonna keep the train moving on the tracks. Thank you, everyone, for joining for our next fireside chat with the team from Lyft. We have David Risher, CEO, director on the board, Erin Brewer, CFO. David, Erin, thanks so much for being here.
Great to be here.
Thank you.
Okay, so I'm gonna start with some disclosure-
Okay.
Before we allow everybody to have a sip of water while I get the disclaimer out of the way.
Sounds good.
Before we get started, I wanna make note that David and Erin may make forward-looking statements about Lyft's performance and expectations. Those statements are subject to risks, with a full list available in Lyft's latest 10-Q. David and Erin may also reference certain non-GAAP financial metrics, and reconciliations are available on Lyft's investor relations website. Okay, with that behind us.
Yeah.
David, you hosted your first Investor Day in June, where you framed key strategic priorities for the organization the coming years. Why don't we take a step back before we take a step forward and start with that Investor Day, and what your priorities were coming out of it?
Sure. So, great question, and I'm gonna answer it in sort of a full way to kind of maybe set the table a little bit. So, the way that. Here's how I think about making decisions at Lyft. The first bit of context is this is a very large market, and I know we know that, but just to sort of remind ourselves. So we do. Let's say last year we did about 700 million rides. This year we'll do about 800 million rides. It's amazing, but it's large, you know, two million rides a day. But if you think of the total number of private vehicle trips that people make every year, just in North America, it's 160 billion. 160 billion.
We're doing 700-800 million, 160 billion. The first bit of context is, this is a big marketplace. There's a lot going on there. Now, when we zoom in a little bit, and we look at what we've done over the last, you know, fifteen months or so since I've been at the company, a lot of it really has been about just kind of really getting the basics right. Really reorienting the company around customer obsession, which we always say drives profitable growth. Reorient our pricing so that it's competitive, our driver pay, so that it's competitive. Our service levels are now as good, actually better than they've ever been in the company's history. So that gives us a really good sort of stepping-off place.
And if you look at some of the indicators of success there, and Erin will talk more about this for sure, but even if you just look at share, a year ago when I was here, we've grown our share versus our big competitor. Even since the end of last quarter, we've grown our share versus our largest competitor. So all those things tell me that it's a big marketplace. It's quite healthy and dynamic. We're seeing good consumer sentiment and on and on and on, and we're in a good position, both absolutely as well as relative to our competitor. So now the question is: How do you set priorities going into the future? Three things. First thing is around customer obsession, and in particular, driving a level of service excellence that's almost unreasonable, right? We absolutely...
You know, to the extent we wanna compete both with the other guys, but also with private car or even staying at home on your couch, we wanna provide a level of service which is unparalleled, and I actually think that our industry has gotten a little bit, complacent there. So we wanna raise the bar in service and compete very, very strong on that. That's how customer obsession translates, number one, and we've seen the results. It's great. Number two, innovation. Innovation around new products, right? So we launched Women+ Connect last year, which allows women riders and drivers to choose each other. We launched a 70% earnings guarantee, which has driven driver preference. So innovation for products and services to drive frequency and customer acquisition, we can talk about that more, as well as innovation in partnerships, right?
We have a partnership with Chase, with Delta, with, you know, Alaska, with Hilton. How do we make sure those partnerships are working as hard as they possibly can? That's number two, and then number three, media. So our media business is fairly small right now, but I think it is a genuinely new sector that's going to appear, and brands always want new ways to talk to customers, and we're gonna be driving that super hard. I'm sure we'll talk more about that. All that underpinned by a brand that's a top 300 brand, so the decision-making framework is always that, the customer, and in particular, compete on service, real innovation, and then grow the media business. Those are the big priorities.
Okay. Great, great place to start. Erin, let me bring you into the conversation. Building on those priorities that David just laid out, why don't you bring it back to, again, some of the messaging around the Investor Day in terms of a multiyear financial framework against those priorities?
Sure. I might start by just talking about how those priorities are today-
Sure
... driving really, really strong results. So just coming off of our Q2 , we delivered record-high driver hours, record-high active riders, record-high ride intents, record-high gross bookings. We grew our revenue 40%, and we achieved more than $250 million in free cash flow. If I zoom out a little bit and think about 2024, as, you know, kind of year one of our long-range plan, we set some directional guidance at the start of the year. We reiterated that at our Investor Day and again in Q2, and we are right on track with those plans to deliver about approximately $16 billion in gross bookings in 2024 and approximately 2.1% Adjusted EBITDA margin as a percentage of gross bookings. So right on track with our plans. Really, really important, because execution in this business is critical.
So then, let me get to beyond 2024, really the heart of what we talked about at our Investor Day, and I'll start at the top line, and I'll leverage off of what David said. We are in a growing and vibrant market. That's really, really important. And now with the last, you know, four to five quarters under our belt, we've really proven that customer obsession really drives preference, retention, and engagement. And so it's our job to leverage those strategies, and we talked about this as measuring against growing our active riders and growing frequency at the end of the day over our long-range plan, mid-single digits. Let me kind of make that real for where we are today. Q2 is the Q4 in a row that we've driven double-digit growth in active riders and mid-single-digit growth in frequency, and that has continued into Q3.
So we really like where we are, and it sets a very strong foundation as we think about the future. So how, right? Sticking with the top line, vibrant market, operational excellence is critical. This is a 24/7, 365 marketplace, where delivering reliably and consistently for our drivers and for our, for our riders, is really foundational to competing in the market and capturing a portion of that vibrant market growth. And then building beyond that, it's around innovation, and David mentioned our track record thus far. Driver earnings commitment, Women+ Connect. We just launched nationally last week, Price Lock, which really gets to that frequency use case, and we're really bullish on. And then beyond that, it's the opportunity with partners.
We dove into this at our investor day, and I think it was a reveal for some folks to understand that roughly 20% of our rides are tagged to a partner, and then even our penetration of our existing partner base is still relatively low. So we see ample opportunity not only to grow there, but we're excited about the possibilities of adding new partnerships in the mix. So those are the building blocks of the top line over the multi-year period, and let me touch briefly on profitability. So we outlined a plan to expand profit margins from 2.1% of adjusted EBITDA up to 4% in 2024, up to 4% margins in 2027. And I'm gonna start with fixed costs. So fixed cost leverage is foundational to the plan and foundational to what we've achieved over the last year.
If you just look at the bookings growth that we've driven over the last four quarters, that's been delivered on headcount that's relatively flat. And we expect to continue to drive that leverage over our planning horizon, being very disciplined around costs, around our cost structure. It's incredibly important in scaled marketplace businesses and is a big focus for us. So that's the fixed cost side, and now let me talk a little bit more, maybe in the context of unit economics and how we think about that. We outlined a plan to continue to drive efficiencies in our marketplace, and this is really about the efficiencies of our incentive dollar spend, and committed to a plan that drives 10% efficiencies over the planning horizon. We're well ahead of that for 2024. Really, committed, obviously, to that over the long term.
You have other areas where we see strong opportunities to expand margins. These are mostly around the innovation area, around products that drive innovation, around mode mix, and our opportunities to continue to define and refine our higher-value modes. Partnership rides tend to bring a higher average margin, so growth in partnerships rides is a key to this. Another building block is media, which we've talked a little bit about, and we can get into in a little bit more detail. Those are the foundations for our profitability expansion at the end of the day. Continuation of the strategies that are really working well for the company as we sit here today at the end of Q2, and we now feel like we've got great visibility and confidence as we build on those strategies through twenty twenty-seven.
Okay, thank you for that, Erin. Building on that again and maybe staying big picture for just one or two more questions.
Mm-hmm.
David, we still get a lot of questions from investors about the growth algorithm for the rideshare industry.
Yep.
Going forward. I think investors think about the journey we've been on, no pun intended.
Mm.
-and where we sit as an industry now, and where the industry will go going forward. And then they also tend to think of it through the lens of competitive intensity-
Yep.
-and where there are areas for folks to create, interesting growth opportunities and gain share-
Yep
... across that landscape. So, one more big picture one, but just set the stage for us on how you think about the building blocks of growth for the rideshare industry, the state of competition, and how you fit into that competitive landscape?
Sure. So it's a funny thing, and the reason I say I start with that word is I think there's a natural tendency to sort of see this as kind of, you know, us versus the other guys back and forth in a, in a little zero-sum. And I... Not that you said this, but I sort of reject the premise. As we've said, this is a gigantic marketplace, and we're so, so under-penetrated. I mean, anyway, we'll talk about that in a second. But anyway, so... But now speaking again, more competitively, so we've picked up share, as I say, year on year, quarter on quarter. We like that. It's a nice show that the work we're doing is actually paying off. But so how do you continue to grow?
Okay, let's talk new riders, new active riders, to use the framework, Erin was just saying, and then frequency. In fact, actually, let's talk frequency first. So one thing that, the one way you can grow is you can get people to take one additional ride a month. Right now, a pretty active, normal rideshare user might take on Lyft, two-ish, maybe three, you know, rides a month out of 30 days, right? Only two or three days, so just notice that, which is quite under-penetrated. So how do you start to increase frequency? Well, Price Lock would be a good example. We can use that as a little bit of a case study. About a third of our rides are commuting rides. People tend to commute to work two to three days a week.
Many of them, you know, shop back and forth day by day. Literally, they'll get up early in the morning and say, "Who's offering the better deal?" What Price Lock allows you to do as a rider is say, "I'm gonna pay $2.99," and that's gonna lock in a maximum price over the course of a month, which people love. They hate the variability, the surge pricing stuff. People hate it, and so it locks it in. So in a sense, people are paying us to take surge pricing off the table, and that's great. And then what we see is it increases frequency, both at Price Lock time, but also outside. So that's great. That literally will take people... I'm not gonna give exact numbers, but you can imagine if people go from two rides to three rides or three rides to four rides, that's quite significant.
That's a, you know, 25% increase or 33% increase, depending how you think about it, for that segment, for 30%. Okay, that's a frequency play. Now let's look at a new customer play. I'll use a small area, but I think it's actually quite interesting, healthcare. So Lyft right now is a leader in healthcare, what's called non-emergency medical transport, and this is, I would say, inarguable. I don't think even our competitor would argue that they're in the lead on this. We have relationships with about 4,000 individual providers, pardon me, of non-emergency medical transportation service, and we're the infrastructure that literally gets people to the doctors and so on and so forth.
That business is growing about 40% year on year, so faster than our overall growth rate by a lot. Relatively small, but guess what? Newsflash, we're all getting older, we're all gonna have more medical problems. Honest to God, every time I get together with my friends, it seems to be half of what we talk about right now. Don't get me started, my hip. Anyway, but, you know, but it like, that's the thing. So finding, in particular, partnership opportunities that can expand our market in new and interesting ways is, is, is obviously super important. And then the last, and let's again stay on the partnership side for a second as part of this kind of growth algorithm.
If you think about big consumer partnerships, of the Delta, of the Hilton, of the Alaska, of the Disney, of, you know, that type, and those are all partners of ours. To just take one partner, and I won't say who they are, but in one of those partnerships alone, we're only about 10% penetrated. Now, in other words, 10% of their active members are also cross-linked with Lyft. Every additional percentage, pardon me, of users, of their members, that come onto our platform and link, drives an additional $300 million in annual bookings, $300 million, which is very significant, and I would say an area we have not yet invested in, in the way we should have, and of course, then there are always new partnerships.
I think if you look at that as sort of a model, how do you drive new customer acquisition? Often, although not always, through large partnerships or going deeper in ones, that's one very powerful tool, particularly when goals are aligned. And then how do you increase frequency using things like Price Lock? That gives you sort of a sense of how I think we're gonna. And then we're gonna compete on service every single day. And the better the service level, the better your repeat customer, the more you get people coming back, and the less you have to pay to acquire new customers and so forth.
Okay. The other big debate that's emerged more recently is around autonomous vehicles-
Yeah
and the impact they'll have on the broader mobility landscape.
Mm-hmm.
Talk a little bit about how Lyft as a company is thinking about autonomous vehicles and their emergence, and how it fits into your worldview for mobility in general?
Yeah. So the first thing I'll say is autonomous vehicles are coming. I mean, let's be clear about that. We can see, I'm sure those of you visiting San Francisco have seen, you know, quite a few around. Of course, the scale is small and, you know, but it will absolutely come. Now, how do we think about it? We think of it as a huge tailwind for us. And that might be counterintuitive. I'll tell you how we think about it. So in order for autonomous vehicles to make any economic sense, they have to be put to work, right? An autonomous vehicle sitting in a garage is doing nothing at all. And these are very expensive. This is billions of dollars of R&D and hundreds of thousands of dollars per unit to actually put on the street.
So you want to keep that thing deployed twenty-four seven if you can, otherwise, it's a loser. So that's gonna be our role to play. Our role is going to be, how do we welcome as many autonomous vehicles onto the platform in a hybrid form? This is not gonna replace drivers. Believe me, there's plenty of demand out there, so we can have a hybrid thing for a long, long, long time. And welcome on the platform and be very efficient at that and keep them very highly utilized. So our strategy, very clearly, is we want to be the best way to help AV manufacturers monetize their assets, the best way. And that is a combination of providing demand, of course, right?
We do two million rides a day already, so that's a lot of demand that's already out there, and not to mention all the new demand that gets unlocked by new partnership and so on and so forth. Then how do we actually keep them active on the platform? This is quite subtle, and I'm not going to go into super detail unless you're interested, but it's not... You know, you've got to price it millions of times a day. You've got to service, provide customer onboarding, right? You've got to provide customer offboarding. You've got to do customer care when things go wrong. You've got to do fleet management for people who own multiples, and we have a whole fleet management capacity that we have been developing through what we call our Flex drive subsidiary.
So there's a whole set of work that has to be done. It's not just as simple as like a little app on a phone to keep these things active on the platform. But that's where we think we add the most value, and we'll be doing that in partnership with multiple. There's no incentive for anyone to sign exclusive deals right now. It makes no sense. So we, just like, you know, others, I'm sure, will have multiple partnerships where we try to be, you know, and we compete on that. We try to be the best.
Okay, so that's a potential future for supply.
Yeah.
Maybe come back to present day-
Mm-hmm
... and give us a sense of where supply sits today and how you're feeling about the health of your marketplace?
Yeah, so super healthy marketplace right now. So we have more driver hours, as Erin said, at the end of Q2, we announced this publicly, than we'd ever had in our company's history, and that's only gotten better. Every week, we've kind of continued to break records. So that's always a good leading indicator of supply, because the demand is out there. People like being driven around, it turns out. And roughly speaking, the more drivers you have, the faster you can pick people up, the better the pricing, and so on and so forth. So super, super healthy marketplace. Then above and beyond that, we've worked really hard to be the platform of choice for drivers today. So we have, and this isn't something we've talked too much about, but we do driver sentiment surveys every quarter.
And pretty consistently, and it's particularly strong right now, we have a six-point lead over our competitor in terms of driver preference. That's express preference. Who would you like to drive with? Who do you prefer to drive with? We beat the other guys by six points. That's a result of the driver earnings guarantee, of transparency, of a bunch of things we do to make sure our drivers understand we respect them, we're there for them, we want them to succeed, because when they succeed, we succeed. So absolutely like where we are. You'll hear a lot more over the coming weeks, months, and years about ways we're gonna improve the driving experience, but we're in a good spot.
Okay. Maybe, Erin, bringing you back into the conversation, building on David's comments on supply, maybe talk a little bit about unit economics and where we sit in the landscape right now for incentives.
Sure.
When you think about both supply and demand.
Yeah
in the marketplace. Totally.
Yeah, absolutely, and great point, because thinking about them together, as you know well, in our business model is really important. So we have supply-based incentives that sit in the contra-revenue line, in between gross bookings and our reported revenue, and then demand-related incentives that sit in our sales and marketing line. And as we think about the purpose of those incentives, at the end of the day, is to balance the marketplace, right? And so there's a day in, day out, market by market element of how those are deployed, and then there's a way to think about those over the longer term. And as David mentioned, you know, if you think about the last four to five quarters, we've executed a very deliberate strategy...
Around the driver engagement side, and we're really, really pleased with the health of driver hours and the engagement in the marketplace. And that allows us, and has allowed us to become increasingly more efficient with the way those incentives are deployed. At the same time, we've seen good opportunities to deploy incentives on the rider side that fall in our sales and marketing line, and have continued to drive, as I mentioned, growth in active riders, growth in frequency, and continued to build on that quarter over quarter. As we think about targeting, you know, part of our long-range plan is to get increasingly efficient on a per-ride basis as you think about that combined total incentive spend.
To sort of bring it to the present day for where we are now, in Q2, for example, on a year-over-year basis, we drove about nine million more rides year over year, and spent less in absolute dollars year over year. That was about 20% efficiency. Again, it gives us the right foundation and the right set of confidence for the strategies we've been executing to derive optimism around our goals of achieving those 10% efficiencies across 2025 to 2027 on incentives.
Okay.
And Erin, if you don't mind, I want to build on something Erin said and tie the last two comments together. So again, I think it's easy, and there's maybe a sort of a myth out there of like, "Oh, running a rideshare business is pretty easy. You know, you just kind of have an app, and you put some cars on it, and whatever, whatever." It turns out that's not true. It turns out that's not true. And so if you, for example, are of the opinion that autonomous cars are going to be potentially competitive with us, right? A new competitor is gonna come in, and I understand people think that. You also have to believe that that competitor is gonna be just as smart as we've gotten over years and years with all the data we have about balancing those incentives, right? People are not gonna...
Oh, your phone here.
I believe it is, which I did not think was on. I apologize.
All right. Not a problem. Maybe one of our competitors is calling in and wants to get on the, on the line.
Sorry about that.
No problem, but anyway, you have to believe that the company will go from sort of, like, say, zero to smart about how much do you have to pay a driver, in this case, not a driver, it's an owner of a car, to put their car on the platform? How much do you have to pay a rider to get them to take that ride right now to keep that marketplace balanced? It's really quite sophisticated, and it's not to say it's impossible to replicate, but it is very hard to do at the scale we do, twenty-four hours a day, seven days a week. A lot of things will have to go well for that to be the case.
So just sticking with that, David, though, and thinking about building upon that scale-
Yep
... and elements of driving growth, one of the themes I took away from the Analyst Day was that you're gonna think about a lot of different ways to bring new products and drive new modes of mobility-
Yep
... to the consumer landscape. Talk a little bit about what your plans are there over the medium term?
Sure. So it's really... Again, you know, it might be sort of tempting to think, oh, there's sort of a single thing that happens when you open the app and sort of call a car. But remember, typically, when you talk about modes, you're talking about what we call, there's a whole portfolio of modes. There's what we call Wait & Save, right? That's meant for value shoppers, right? And every single brand, if any consumer brands you ever study, there's a sort of a value mode. In our case, we ask people to wait a little longer and save a little more. Then we have our standard mode, which everyone probably knows very well.
Then we have what we call Extra Comfort, which is sort of like, you know, the kind of the sort of that part of the cabin, you know, in airline terms, the sort of economy plus. Then we have our what we call high-value modes, which are... we're sort of under-penetrated, honestly, and there's a lot of opportunity there. And then we have something called Priority Pickup, which is quite interesting, which is really where you're in a big hurry, and there's all sorts of interesting things we can do there to dramatically improve the service level and really pick you up in an almost unreasonably fast way.
And of course, you'll pay for it because you're busy, and you're typically running a little late and need to be at a place and don't have any time to wait. So I think that. Oh, and then, by the way, actually, our newest offer, I'm super excited to say, we just launched this two weeks ago: Pet Mode. Pet Mode. So if any of you has a dog or cat, you're welcome now on Lyft. After all these years, we finally got that done. So that's just to say that we have this portfolio, and I think that rather than maybe talk about the new ones, which, you know, we don't tend to announce, just this portfolio optimization is such an important piece of sort of data science and customer behavior driving.
And when Erin talks about unit economics, you know, as with any portfolio, you wanna figure out, you know, how to kind of move people through that, such that over time, you can improve the unit economics in general, either by moving people up, right? Because typically, higher prices yield higher margins, or on the low-price side, figuring out ways to subsidize that, such that you can still have a strong, you know, unit economic proposition, even for people who don't wanna pay a lot of money.
Okay. With about 10 minutes left, there's a couple topics I wanna get through, so we'll try to move as quickly-
Lightning round
... as possible. We're going to the lightning round.
Yeah.
Erin, you talked earlier about advertising as a potential-
Yeah
... stimulant for the financial model and the business going forward. Refresh the audience about key messages around Lyft Media and how we should be thinking about that evolving in the years ahead.
Yeah, sure. So, look, brands are always looking for new and innovative ways to connect with customers overall. And so the thing about the premise of Lyft Media is really building a full-service, performant ad platform that's attractive to all kinds of marketers. And so we do that, at the end of the day, we'll achieve that by delivering really targeted and measurable advertising offers across a very broad set of advertisers. What does that actually mean? So, let me talk a little bit about where we are today, because this will be built in phases. So I would describe where we are today as kind of phase one, and phase one is all about building our capability and capacity in our platform for measurement and analytics.
Because brands and advertisers really care, at the end of the day, about the efficiency and the effectiveness of their dollar spend, and so you've seen us, Q1, Q2, announce a number of different integrated partnerships that really get at this sort of measurements, measurement and analytics capability. Today, we have in-app ads. We launched video ads at the end of last year, and not only do we really like what we're seeing, but our brand partners are really liking what they're seeing, so as we build that measurement capability, they're seeing click-through rates that are 10 times above what they're seeing across a broad set of other platforms, and viewability that's 20% better than what they're seeing across other types of platforms, and so giving them the measurement and analytics capability to really build that confidence is critical, and it's foundational.
And so let me bring that real in another way. We've talked about brands coming on and advertising on the platform, coming back again and again. And then in Q2, we added over forty new brands onto this. So all of these different ways that we are building capability, confidence, proof points, and really results out of where we are today, you have to do that, and you have to do that well to earn the right to build on top of it. So what does that next phase look like? It's really about leveraging the unique set of first-party data that we have to build very targeted, very rich experiences for riders and very rich experiences for the brand overall.
And so that can take the form of, you know, really up-leveling customer experiences, whether that's sponsored upsells, sponsored rides, extremely relevant for where you are and where you're going, either, you know, in-store, in-retail promotions, and at the end of the day, really opens the aperture to the types of brand partnerships, whether it be retail, bars, restaurants, venues, et cetera. So that's really the promise and the opportunity, but it's a deliberate build and building that foundational capability that will allow us to really continue to drive value off of that opportunity.
Okay. David, maybe, getting through this, bikes and scooters.
Mm-hmm.
Can you talk a little bit about how that fits into your business, medium to longer term, and the strategic vision for the future of mobility? Obviously, also had an announcement around the bikes and scooters business in the last couple of days as well.
We did. I'll be super brief. First is I'll rep the brand. I actually bike on the Lyft Bike every single day. I use my helmet. I stay safe. Key man insurance, it's all fine. Anyway, but look, we run. I mean, our bikes business is really interesting. So to be clear, it, economically, it's relatively small. But if you look at the sort of grand sweep of history, like, look at New York City, we do 160-170 thousand rides a day on bikes, City Bike system in New York City. Unbelievable. It's like a small, medium-sized, actually, public transportation system. And we're in Chicago, and we're in San Francisco, and we're in D.C., and we're in Boston, and, and, and. And then we're also in about, I think it's 19 countries.
I think we're in about 56 markets outside the United States, 19 countries. Barcelona, London, all these sorts of things. Okay, strategically, what does it do for us? Well, first of all, at the rider level, literally, it's becoming a serious part of a lot of people's daily transportation, particularly with e-bikes. E-bikes are insane. They are addictive. Once you take an e-bike, it's like pickleball. You have all of a sudden have to tell, like, every one of your friends, like, "You're never going to believe this. This is the fastest growing sport ever." Anyway, it's this whole almost viral thing, and that's and we've seen that. Like, we do daily ride volumes that are greater than, you know, yesterday's, almost every single day. So it is a growing category. It's environmentally good. It's good for health.
It's good for all sorts of things. It's an international thing. We as I say, we're outside the United States as well as inside the United States, and there are obvious, you know, cross-sell opportunities. People don't tend to take a bike ride to the airport, for example. And so it actually tends to be quite subscription-based, too. So it all sorts of different characteristics to it. We are now operating it with a lot more efficiency, a lot more customer obsession, and we're at the point where the unit economics of a typical ride aren't that far off from the unit economics in terms of contribution margin of a rideshare ride. So we like, we like it all, and we obviously and then so we're restructuring last week to get ourselves on economically stronger ground, but feels good.
Okay, good stuff.
Yeah. Yeah.
Erin, one of the questions we continue to get is around insurance, the costs from insurance. Obviously, there's renewals that happen on a regular way.
Yeah
... basis. You'll have one of those coming up in Q4. Just share with investors what the key messages are on insurance and how people should be thinking about that as an input cost in the business model.
Yeah, absolutely. So, we've made a lot of progress here, is, you know, the key message and key thing to take away. So we have an upcoming renewal cycle that happens on 10/1 . We talked in our most recent earnings call about having very good visibility into the outcomes of that. That is factored into the guide that we provided and reiterated for the full year, very, very consistently. So let me kind of touch on the key tenets of progress that we've made, because I think this is important for where we are today, but also important for where we're going.
So we continue and have continued to, and highlighted some of this at Investor Day, continue to very deliberately build within the product features, functionality that continue to drive safety, continue to drive reduced accident frequency, and when claims happen, efficiency in those settlement outcomes. We've done that both internally, but also in a really, really unique way, in the way that we partner with our third-party partners, which I think is differentiated in the way that we are very transparent and collaborative across the technology. And that allows them to drive better outcomes across their book of business. So I think it's meaningful and different. We're now about seven years in to kind of the maturity cycle of overall data.
That's where you want to be, to really get to a mature state as you're managing a scaled book of insurance business, where we are today. And so we talked about, with this renewal cycle, insurance is still an inflationary element. Those increases will be lower this year, certainly than we articulated in the previous years, and we just have a fantastic team, and I'm really, really pleased with the progress we're making and how that sets us up for the future.
Okay, one last one for you, Erin, and I promise this is not a buyback question, because I tried it at the Investor Day and on the last earnings, so I'm not going to that well-
Okay.
Again, but I do want to ask through the frame of capital allocation priorities, what message do you want to leave investors with on the priorities for capital inside the organization?
Yeah. So first of all, we're really proud of where we are. So Q2 marks the third consecutive quarter where we've generated positive free cash flow. You know, good stage in our development. We obviously have opportunities ahead, but that gives you a sense for where our starting point is. Beyond that, our capital allocation priorities are really in three primary buckets. One, to have ample liquidity in a business. In a scaled marketplace business, having ample liquidity is important. I think the other ways that I would articulate ample liquidity is we have a convertible note coming due in May 2025, and so retaining ample liquidity to have flexibility for the way that we address that is important as we think about the near term.
And we, you know, we also have ample liquidity to maintain compliance with things like the way our existing revolver facility is. So that's one, just ample liquidity for the core of the business. The second area is investing in our growth. We've articulated our plans over the next few years about our ambitions to grow, and some of those investment areas are going to be around things like building out our partnership landscape, continuing to invest in building our ad tech platform. Those are really key foundations for our multi-year plan and where we will continue to invest. And then, of course, optimizing shareholder returns. So I know this is an incredibly important area. We're very focused on it. We made a significant delta in the way that our stock-based comp solution happened when we did our restructuring a year ago.
We're starting to see the benefits of that roll in today, but we're very, very focused on strategies to continue to improve that over the near term, and those are our key tenet areas for capital deployment.
Okay. David, bring us home.
Yeah.
We've got two minutes left.
Right.
Your biggest priorities, anything we didn't touch upon, things you're most excited about in the next twelve to eighteen months?
Let me do that, and I'll go even further. So my biggest priority... So as I say, look back, we've gotten ourselves to a very different level from where we were a year and a half ago. Very, very different level. Listen to all the statistics that Erin gave. Listen to the team that you've built, you know, and on and on, and then look at the service our customers are getting, and as a result, you know, the both profitable quarter, but also obviously great service level. So that's great. Step one. Now, step two is: How do you build on that? How do you continue to sort of take more out of this 161 billion, you know, rides that happen every single year?
I feel really good, not just about competing against the other guys. I think we'll provide better service, but also providing more and more use cases. It turns out it's just better to be driven, you know, by somebody else rather than drive yourself. I'll push it out even beyond what you asked to sort of the next five years, let's say. Like, look at five years from now. First, three things I want people to think about. First is, the gig economy is here to stay. Like, let's be super clear about that. Like, I think for those of us who grew up in the '60s, '70s, '80s, you know, you have a certain view of kind of what a career looks like. It's a different world today, and it'll be different in five years.
So people want jobs, ways to earn, that accommodate, you know, their other obligations, eldercare, childcare, whatever it is, allows them to take breaks when they want to, allows them to really take agency over their own world. And for a lot of people, literally millions of people every single year today, and many millions more, it's a big, big part of the world. And so our whole job there is to be the best platform to earn on, and, you know, full stop. That'll be us. Number two, here's what else is gonna happen. How many times do you think people check their phones today? Like, literally, it's a hundred times a day. Four hours on average, people look at their phone, and that's gonna happen more in the future. More screens, more digital, more isolation, more, you know, these things.
And so as you do that, meanwhile, like, look at us as people. We're social people. All the best stuff happens. So our whole job at Lyft is to keep connecting to the world, create this hybrid, digital, physical experience that's so important for our happiness, our well-being, and frankly, it's the way the world works. So I think that's gonna be, you know, still a really interesting physical world fighting back thing against the digital world. It's already happening today, a little bit, but I think it'll be big. And the third thing is, it turns out customers really like rideshare. You're seeing a whole generation of people today grow up, where getting a driver's license isn't the big thing.
At the other end of the sort of demographic spectrum, as all of us get older, you know, nobody wants to lose the car keys. Nobody wants to lose agency when they get to a certain age, but rideshare can really help there. So I think you'll see a continually growing category, even five years from now, and our job is to provide the absolute best service, absolute best product, best company around, and I hope we're gonna be, you know, the big winner there.
David, Erin, really appreciate the opportunity-
Thank you, Erin.
... to have the conversation.
Of course. Thanks, Erin. That was a lot of fun.
Great. Please join me thanking Lyft for being part of the conference.
Thank you.