Lyft, Inc.

Good afternoon, and welcome to the LIFT third 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 touchtone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sonia Banerjee, Investor Relations. You may begin.

Thank you. Good afternoon and welcome to the Lyft earnings call for the quarter ended September 30th, 2020. Joining me today to discuss Lyft's results are our 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 Q3 results and share some commentary regarding our outlook. A recording of this conference call will be available on our investor relations website, at investor.lyft.com 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 continuing 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 initiatives. 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-Q for the second quarter of 2020, filed August 13, 2020, and in our Form 10-Q for the third quarter of 2020 that will be filed by November 16, 2020, as well as risks associated with the outcome of litigation, 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 lift 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 8K 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, Sonia. Good afternoon, everyone, and thank you for joining our call today. Before I review our financial results... I want to acknowledge that 2020 has been challenging on many fronts. We are proud of our team's execution and we remain focused on controlling what we can to support the recovery and accelerate our path to profitability. I also want to highlight the outcome of Prop 22. Last week we made history in California as voters stood with drivers to pass Prop 22, a landmark achievement for our industry that will make ride sharing even better for drivers and riders. We believe the outcome in California is a win-win-win. It's good for the drivers who will maintain their flexibility and independence. It's good for the riders who will continue to have access to rides. And it's good for California's economic recovery because hundreds of thousands of its residents will continue to have access to flexible earnings opportunities on platforms like ours. Beyond California, we're continuing to engage with policymakers across the country and believe that the policy solution that California voters chose can provide a model for other states. Turning to our third quarter, let's start with the trends we saw in our business. As we expected, the recovery in ride sharing was ongoing. We saw strong performance improvements in other areas, such as bikes, scooters, and fleet, which includes express drive, lift rentals, and our driver centers. Revenue for our third quarter was down 48% year over year, but up 47% quarter over quarter. The sequential improvement in revenue was driven primarily by growth in active riders, which increased 44% quarter over quarter. As communities reopened, more people turned to ridesharing to go about their daily activities. Revenue per active rider was up 2% quarter over quarter, reflecting an improvement in ride frequency. Even though rideshare rides are still down from pre-COVID levels, they have meaningfully recovered from the trough we observed in the second week of April. In fact, for the last week of October, rideshare rides were up over 130% from April's low. It's worth noting that recovery trends vary locally across North America, reflecting differences in responses to COVID-19. While some cities have sustained wider reopenings, enabling people to be more active, other cities have taken a more cautious approach by maintaining or reimposing restrictions. We remain confident that demand will continue to return to our platform as we progress through the recovery and vaccines are approved and become available. While the recovery and ride sharing continued, we also saw strong engagement in our bike share and scooter operations in Q3. Likewise, in our fleet business, we saw improved express drive vehicle utilization and strong uptake of lift rentals, our best-in-class consumer car rental experience. Our first-party business achieved record revenue in September, as customers have embraced road trips and car-related travel during the pandemic. And with our sixth integration now complete, Lyft riders across the country have been using our app to book a sixth rental car the Lyft way. That means selecting the exact car and skipping the counter at pickup. Early trends have been positive. We are the only company in North America that has a seamless, integrated solution to replace car ownership, all of which can be accessed through Lyft Pink. Since we launched LiftPink late last year, we've continued to look for ways to help members unlock even more value from the program. And I'm excited to highlight our new partnership with Grubhub. Every LiftPink member now has access to unlimited free delivery from nearly 200,000 of their favorite restaurants through Grubhub Plus and Seamless Plus. Grubhub stands out in the crowded food delivery category as a pioneer that built significant scale and selection across key markets. and we're thrilled to be able to extend the benefits of Grubhub Plus to our members. So whether LiftPink members are going out or staying in, they receive preferred pricing and exclusive benefits on our rideshare, bike, and scooter offerings, plus new access to free delivery and one-of-a-kind rewards from the restaurants they love. We'll continue to look for ways to further enhance the value of LiftPink to delight riders on our platform. Let me now turn to recent trends that we've been seeing in ridesharing. October rides were down 47.4% year over year. On our last call in August, we discussed an imbalance we were seeing in the marketplace as the rebound in rider demand was outpacing the supply of available drivers. Since then, this issue has become less pronounced, and we have been pleased with the improving balance in our marketplace. Looking ahead, while we continue to expect there will be bumps along the road to recovery, we're prepared to withstand this turbulence thanks to the natural operating leverage in our business, our robust balance sheet, and our expense discipline. Before handing the call over to John, I want to share an updated view of our path to profitability. While we cannot control the timing or trajectory of the recovery in our top-line results, we're continuing to make strong progress on the cost actions we outlined earlier this year to strengthen our financial position. In addition, as we approach 2021 budgeting, we are taking an extremely disciplined approach to increase our operating leverage. We're focused on achieving adjusted EBITDA profitability by Q4 2021, even with a slower recovery. For context, with our current plans at execution, we're now positioned to achieve adjusted EBITDA profitability with approximately 30% fewer rides than what was required when we originally issued our Q4 2021 profitability target in October 2019. This is a further improvement from what we shared last quarter. Before Brian reviews our financial performance and outlook, I'll turn it over to John to talk about the results of Prop 22 and some of the important work we've been doing to support drivers, riders, and the communities we serve.