Lyft, Inc.

Good afternoon and welcome to the LIFT fourth quarter 2022 earnings call. At this time, all participants are in 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 you 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, head of investor relations. You may begin.

Thank you. Welcome to the Lyft earnings call for the quarter and fiscal year ended December 31st, 2022. Joining me to discuss Lyft's results and key business initiatives are our co-founder and CEO, Logan Green, co-founder and president, John Zimmer, and chief financial officer, Elaine Paul. A recording of this conference call will be available on our investor relations website at investor.lift.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. This includes statements relating to macroeconomic factors, the performance of our business, future financial results and guidance, the impact of our cost reduction initiatives, strategy, long-term growth, and overall future prospects. We may also make statements regarding regulatory matters. 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 third quarter of 2022, filed on November 8, 2022, and in our Form 10-K for full year 2022 that will be filed by March 1, 2023, as well as risks related to the current uncertainty in 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 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, as well as in our earnings slide deck. These materials may also be found on our Investor Relations website. I would now like to turn the conference call over to Lyft's co-founder and chief executive officer, Logan Green. Logan?

Thanks, Tony, and good afternoon. Today, I'm going to cover the team's Q4 performance, important updates to our non-GAAP financial measures, as well as our Q1 expectations. But first, I want to reflect on the progress we made in 2022. I'm appreciative of the team's execution in a challenging year. We took important steps to strengthen our business and deliver significant value to our customers. We connected more than 1 million drivers with nearly 40 million riders. We supported hundreds of millions of rideshare rides and more than 50 million bike and scooter rides, which was a new record for us. Millions of people used Lyft to take trips to get to work, vote, attend events, and connect with friends and family. The team worked incredibly hard and delivered significant value. We also introduced high-impact product improvements. Upfront information is a major advancement to the driver experience. And our work in other areas, including with Lyft Maps, is competitively differentiating and delivers valuable marketplace efficiencies. We've also expanded our market reach by relaunching our Lyft Pink membership program with new benefits and a lower price point. Additionally, by integrating services for car owners into the Lyft app, like roadside assistance, parking, and maintenance, we can deliver even more value to the roughly 75% of Lyft riders who have a car. With innovations like these, we can capture more of consumers' transportation spend. Before I move on to our financial results, I want to highlight two items from the press release. First, we've updated our definitions of contribution and adjusted EBITDA to include reserve adjustments for prior periods. And in Q4, we took action to strengthen our insurance reserves by $375 million, which, given the definition change, affected our reported results. Elaine will discuss this in more detail. Now let me talk about Q4. We saw important tailwinds in rideshare, including strong demand and more drivers organically using Lyft. Revenue was the highest in our company's history, and our results beat our outlook on every metric, excluding the action we took to strengthen our insurance reserves. Rideshare demand was strong. We had 20.4 million active riders, which was the highest level in nearly three years, and revenue per active rider reached a new record. In particular, the airport use case reached another new high at just over 10.4% of rideshare rides, with the absolute number up 25% versus Q4 of 2021. Additionally, on the enterprise side, managed bookings grew by more than 60% year over year and set a new record with continued strong adoption of our B2B offerings, particularly in the healthcare and retail verticals. In Q4, we had the most active drivers on our network in nearly three years, reflecting healthy organic tailwinds. Bookings per active driver were more than 50% higher than they were in Q4 of 2019 and near our all-time high. Drivers spent more time driving than they did in Q3 of 2022 or in Q4 of 2021, and across the U.S., our average rideshare ETA has improved. Even with these tailwinds, our marketplace was running hot in Q4. Demand outstripped supply, and primetime went into effect more often than we would have liked. As a result, our conversion rates, meaning the share of ride intents that convert to rides taken, came down quarter over quarter. This dynamic contributed to revenue and adjusted EBITDA exceeding the high end of our outlook, excluding the increased insurance reserves. But we know high primetime can hurt conversion and is not healthy over time. Going forward, we're prioritizing competitive service levels to maximize long-term growth and retention. Next, I'm going to address our Q1 guidance. There are three factors putting pressure on both revenue and adjusted EBITDA relative to Q4. First, seasonality. As we've shared before, our business faces pressures in the first quarter of the year, both in terms of ride share as well as bikes and scooters related to colder weather. Second, prime time is coming down dramatically quarter over quarter because of increased driver supply. This reduction in prime time is good for our service levels, but will reduce our Q1 revenue and adjusted EBITDA. Third, base price. In January, we slightly reduced base pricing to remain competitive with the industry. Given the combination of these factors, we anticipate Q1 revenues of roughly $975 million. Relative to Q4, this is a decline of approximately $200 million. About one-third of this sequential decline is due to seasonality, while the remainder is due to less prime time and lower base prices. We expect this will result in Q1 adjusted EBITDA between $5 and $15 million. This is obviously not the level of growth or profitability we are aiming for or capable of. And we are laser-focused on driving additional growth and managing costs. Relative to three months ago, the competitive dynamics changed, and the better marketplace balance we see today creates significant opportunities for long-term growth. To take advantage of this opportunity and grow the market, we must prioritize competitive service levels. This will impact our 2024 adjusted EBITDA and free cash flow targets. We are assessing the impacts of these changes and are actively reviewing adjustments to the business, including cost-cutting measures. We will share additional long-term margin targets in the near future. Stepping back, the fundamentals of the business are strong. We're seeing healthy rider demand, and our driver supply position has significantly improved. We believe these conditions, paired with cost cuts, will ultimately enable us to build a larger, healthier business. Now let me turn the call over to Elaine to share the details on our financials.