Lyft, Inc.

Good afternoon, and welcome to the Lyft second 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 time. If anyone should require operator assistance, please press star, then zero on your touch-tone telephone. 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 June 30th, 2020. This is Sean Woodhull, 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 Q2 results and share some commentary regarding our outlook. This conference call will be available on our Investor Relations website at investor.lift.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-19 pandemic, the expected performance of our business, future financial results and guidance, strategy, long-term growth, and overall future prospects. as well as statements regarding litigation matters and the Proposition 22 ballot initiative. 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 including in our Form 10-Q for the first quarter of 2020 filed on May 8, 2020 and our Form 10-Q for the second quarter of 2020 that will be filed by August 14, 2020, as well as risks associated with the outcome of litigation, including a decision issued on Monday, August 10, granting a motion for preliminary injunction in an action by the people of the state of California, as well as 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 Lyftis claims 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-K 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. Before we review our second quarter results, I want to acknowledge how difficult the past few months have been for riders, drivers, and the communities we serve. The effects of COVID-19 have been severe for our society and economy, as well as for our own business. As a country, we also received a long overdue call to action to address the persistent injustices that black Americans face. We will discuss our efforts on this in more detail, but we recognize there's more we can do to speak up and to be part of the solution. Turning to our second quarter, I'll focus my remarks on the recovery to date, as well as our efforts to accelerate our path to profitability. Let's start with the recovery we're seeing in our business. Our Q2 results reflect the challenging operating environment. While the recovery in our ridesharing business has not been a straight line, we're seeing encouraging progress. Revenue for our second fiscal quarter was down 61% year over year, reflecting a significant decline in rideshare rides. This was driven primarily by a decline in active riders, as shelter-in-place orders and other restrictions across North America reduced travel overall. At the same time, ride frequency was relatively more resilient. This is reflected in our revenue per active rider, which was down just 2% year over year despite the extremely challenging environment. Even though rideshare rides were down significantly in the second quarter, rides have meaningfully recovered from the trough we observed in the second week of April. Trends within rideshare also reflect changes riders are making in their lives and in how they use Lyft. For example, in Q2, we saw an increase in the percentage of rides taken during what have traditionally been off-peak times, as riders increasingly turned to ride-sharing to complete essential trips. And while airport rides fell significantly in April and remained down significantly year over year, weekly airport rides grew by over 350% between the trough in April and late June. While ride share is still down significantly from prior periods, we saw very strong engagement in our bike share operations in Q2. Bike revenue increased both quarter over quarter and year over year. This remarkable performance demonstrates the tremendous value that bikes are adding to our platform and helps validate our diversified approach to transportation. Let me turn now to recent trends that we've seen. We saw a rebound in demand in Q2, and have seen further evidence of this trend since the end of Q2. Rideshare rides in July were 78% greater than April. And despite all the negative headlines regarding COVID, even in the last month we saw 12% growth from June to July. As the recovery progresses, our performance will depend on our ability to anticipate and adapt to changes in the marketplace. And although the pandemic is certainly unprecedented, We have over eight years of experience navigating an evolving marketplace. More than any other company in our industry, managing through adversity thoughtfully and strategically has been a core part of our success since we founded Lyft near the start of the last decade. Over that period of time, we've built the right team, culture, tools, and processes to adapt to changes on both sides of our platform, which we are fully leveraging in the current environment. In March and April, our primary challenge was a decline in rider demand relative to driver supply, which created an imbalance that led to low driver utilization. In order to help us protect utilization for existing drivers and provide additional earnings opportunities, we introduced a waitlist for new drivers and launched essential deliveries, which John will elaborate on. Over the last few months, we've seen this dynamic reverse. Rider demand began to outpace the supply of available drivers. This was observed across the industry in most cities. Given these circumstances, driver earnings and utilization are now at or above pre-COVID levels in nearly all of our markets. Accordingly, while we will continue to innovate and launch products and features to encourage riders to come back to our platform, we're also focusing significant resources on reengaging drivers so that we can capture our full growth potential. John will share some more details on the work we're doing on this front, including the significant progress we're making on our new health safety program. Looking ahead, we expect there will be bumps along the road to recovery, but we're prepared to withstand this turbulence thanks to natural operating leverage in our business, our cost management focus, and our robust balance sheet, which we reinforced in May through the issuance of our first convertible senior notes. Before handing the call over to John, I want to share an updated view on our path to profitability. While we cannot control the timing of the recovery and our top line results, we're continuing to make progress on the actions we outlined a few months ago to strengthen our financial position. Brian will discuss this progress in more detail, but we're executing on our previously announced cost reduction plans as well as projects to improve our unit economics. We now expect we can achieve adjusted EBITDA profitability with 20 to 25% fewer rides than what was assumed when we initially disclosed this target last year. While we can't perfectly predict the timing of recovery, based on the reduced ride levels required for us to break even, as well as what we've observed in terms of the recovery to date, we believe that there are multiple scenarios and levers that should allow us to hit this milestone by the fourth quarter of 2021. Now I'll turn it over to John to talk about the important work we're doing to support drivers, riders, and our communities.