Lyft, Inc.

and Brewer. Our President, Kristen Spearchek, is here for the Q&A session. We'll make forward-looking statements on today's call relating to our business strategy and performance, future financial results, and guidance. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings materials and our recent SEC filings. All of the forward-looking statements that we make on today's call are based on our beliefs as of today, and we disclaim any obligation to update any forward-looking statements except as required by law. Our discussion today will also include non-GAAP financial measures, which are not a substitute for our GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. Additionally, today we're going to discuss customers. For rideshare, There are two customers in every car. The driver is Lyft's customer and the rider is the driver's customer. We care about both. And with that, I'll pass the call to David.

Thank you, Sonia. And good afternoon, everyone. Thank you for joining us. We had a great start to 2024 with very strong first quarter results. Rides and gross bookings both grew by more than 20% year over year. And we delivered another quarter of positive free cash flow. We are on track to deliver four-year goals with a higher level of free cash flow than we initially shared. We're executing well, and we're demonstrating that customer obsession drives profitable growth. Since taking on the CEO role just a year ago, over a year ago, I've really been amazed and proud of what we've accomplished. On these calls, we talk a lot about progress in terms of lift performance metrics. But today, I'd like to talk about that progress in terms of what customers experience and how that informs why they choose Lyft. Let's start with drivers. We are improving the ways we provide drivers with what they want, good earnings opportunities, along with more transparency and more control over their time. The result is drivers are earning more. In Q1, the median US driver earned $31.10, including tips and bonuses, for every hour of engaged time. And after taking into account the driver's estimated expenses, like maintenance, gas, and vehicle depreciation, that's around $24.25 per engaged hour. On both a gross and net basis, median driver earnings are higher than they were in the second half of 2023, as we discussed in our white paper on the topic issued a few months back. One reason is that Lyft drivers have more information than ever when choosing their reduced ride cancellations by nearly 50% versus a year ago, and that increases the time they spend earning. Drivers can also plan ahead more easily with scheduled rides. They can balance other obligations using our proprietary stay within the area filter. They can tap into priority mode to stay busy during off-peak periods. And drivers now have access to a more streamlined process to appeal being deactivated, which addresses a longstanding pain point by getting them appeal results faster. Our goal is to lead the industry on making it great to drive with rideshare, and it's resulting in greater driver preference. For example, thanks to the new earnings commitment that we released, Lyft drivers now know they will always earn at least 70% of the rider's fare each week after external fees. Here's the punchline. Since the launch in February, drivers' perception of pay fairness has improved significantly. with 75% telling us they have a better understanding of their earnings. The data shows our commitment is helping us attract and retain drivers and increase driver hours. Additionally, following our nationwide rollout of Women Plus Connect in the first quarter, women and non-binary driver activations increased by nearly 24% year over year. This has continued to be one of Lyft's highest-graded features, and most drivers do tell us who use it tell us they feel safer when driving, which is super important, one of our key objectives. As a result of all of these moves, Lyft had more drivers use our platform in Q1 than we've had in about four years, and driver hours have returned to 2019 levels. And I can tell you, in addition, that over these past few weeks, driver hours have reached new all-times highs. That is the result of our customer obsession for drivers. Now let's talk about riders. Over the past few quarters, we focused on giving them far more reliable rideshare experience with more and better products to choose from. For example, pickup times in Q1 were the fastest they have been in four years. By the way, if you're interested in more examples, please ask me about that during Q&A. Meanwhile, thanks to a ton of behind-the-scenes work, riders are now experiencing far less of something they really don't care for, prime time, which many people know as surge pricing. This means prices for riders have become more stable and more predictable, and that leads to greater repeat use. A good example of where you can see our rider and driver obsession really working well and coming together is in Canada. Over the past year, we've brought our focus on customer obsession to this market, and it's already paying off. For context, Lyft operates in five of Canada's largest cities, as well as in about 13 smaller ones. As we have begun to apply our customer obsession to those markets, we've doubled rides and more than doubled new rider activation and driver hours Q1 year-on-year. These results tell us a couple of important things. One, drivers and riders are hungry for choice in our customer-obsessed approach. And two, there is opportunity for us outside the US over the long term. Finally, I'd like to update you on Lyft Media, which offers a unique value proposition to brands as they look for new ways to connect with customers. Lyft Media had a great quarter with revenue growing by about 250% year over year. And we really liked the mix we're seeing with about half of our business coming from repeat customers like NBC Universal. We've also added several new customers, including Zillow and MasterCard. Here's why. Lyft is one of the largest transportation networks in the country. We support over 700 million rides a year and millions of people rely on our platform every day. We have a captive audience engaging heavily with our app when they ride and we can make use of our first party data about where and when people are moving around. So here are the results. According to our third party brand measurement firm, Lyft media ad campaigns have seven times the impact relative to the norm on brand perception and purchase intent. Our video ads which were new this quarter, also generate more than 10 times the ad industry's typical click-through rate. And in Q1, we added new partners, including Nielsen and Oracle Advertising for their ad measurement and data enrichment solution for targeting, helping us deliver even more value for our customers. When it comes to building a successful media operation, it's all about scale, targeting, and measurement. And when we look at the tools we've built and the results we're delivering, it's clear Lyft Media has a lot of headroom to grow with favorable economics in a way that leverages our customer obsession. Now, before I turn the call over to Aaron, I want to share one closing observation. I get a lot of questions about how we've been able to accomplish so much in such a short period of time. It turns out that our culture of customer obsession and our focus on rideshare are huge assets. That's what gives us the ability to be nimble, even as we drive meaningful leverage. We wake up every day ready to out-execute and out-innovate others in our sector. And the more drivers and riders love us and what we do, the more they use us to earn and to get out and about, the better we all do. Again, customer obsession drives profitable growth. So let me close with just a quick plug. We'll be holding our first ever Investor Day on June 6th in Manhattan, and I look forward to seeing you there in person or online. Not only will you get to hear about the next phase of our plan for customer-obsessed profitable growth, you'll also get to meet our amazing team that's making it all happen. I am really looking forward to it. Over to you, Erin.

Thanks, David. Good afternoon, everyone, and thanks for joining us today. I'll start with my usual reminder that unless otherwise indicated, All income statement measures are non-GAAP and exclude select items that are detailed in our earnings materials. Before I dive into our results for Q1, I want to take a moment to reflect on how far Lyft has come over the past four quarters. We've established a strong foundation for profitable growth. Our cost structure is in the right place. We've delivered four quarters of positive adjusted EBITDA, totaling nearly $260 million. We've better aligned our financial disclosures with our strategic priorities, and we've begun to generate positive free cash flow. All of this progress and momentum tracks with the directional guidance we've provided for the full year 2024, including an improved outlook for free cash flow conversion for the full year. And it sets the stage for our investor day next month. Q1 was another solid quarter consistent with our expectations. We executed well and more drivers and riders chose Lyft. The result was more rides and better service levels. In particular, driver hours increased by more than 40% year over year. And ride frequency, referring to the average number of rides per active rider, was the strongest it's been in four years. We also saw continued sequential momentum from Q4 to Q1 in driver hours, ride intents, and frequency, demonstrating that we continue to improve execution quarter by quarter. Now let's turn to our performance for the quarter. We supported 188 million rides and 21.9 million active riders. Total rides grew 23% year over year, reflecting strong demand across use cases. Growth in early morning, commute, and weekend evening trips was particularly strong, which is a continuation of the trends we saw in the back half of 2023. Active riders grew 12% year-over-year, reflecting an improvement in rider retention along with an increase in new riders. Gross bookings were approximately $3.7 billion, up 21% year-over-year. This reflects strong rides growth partially offset by lower total prices year-over-year reflecting lower levels of prime time given the significant improvements in the health of our marketplace. Revenue grew to $1.3 billion, up 28% year over year, reflecting those same dynamics. As a percentage of gross bookings, revenue increased year on year and sequentially, reflecting lower incentives per ride. So let me provide some additional color here. David talked about how Lyft is leading our industry in transparency and choice for drivers and how that is translating into greater driver preference for Lyft. We see that in the number of drivers choosing our platform and the growing number of hours they're spending engaging with our app. In Q1, the median U.S. driver hourly earnings, including tips and bonuses, increased sequentially on both a gross and net basis. And we talked a lot about our focus on operational excellence. Another great example of that is how we're helping drivers anticipate rider demand so they can be at the right place at the right time to be able to optimize their earnings. In our business, the combination of increasing driver preference and increasing driver's visibility into rider demand is incredibly valuable. It means we can be more targeted and efficient in how incentive dollars are spent, even as drivers earn more. The result is healthy profit growth while operating competitively with laser-like focus on customer experience. Now let's turn to our Q1 expense. Cost of revenue was $747 million, up nearly 40% year over year, driven by higher ride volumes along with higher per-ride insurance costs, which reflect last year's third-party insurance renewals. Operating expenses were $500 million, up roughly 8% year-over-year. As a percentage of gross bookings, operating expenses were approximately 14%, an improvement of nearly two percentage points versus Q1 2023, driven by our lower fixed cost structure versus last year. Adjusted EBITDA was $59 million, which as a percentage of gross bookings was 1.6%. Relative to Q1 of last year, our adjusted EBITDA margin has more than doubled as we benefit from efficiencies in our marketplace and operating expense leverage. We ended Q1 of 2024 with a solid cash position with unrestricted cash, cash equivalents, and short-term investments of approximately $1.7 billion. In the first quarter, we generated positive free cash flow of $127 million. And we continue to take a prudent approach to managing our balance sheets. In Q1, we took advantage of favorable convertible debt market conditions to raise approximately $460 million of new convertible notes that will come due in 2029. We used the majority of those proceeds to retire a portion of our bonds coming due in 2025. Turning to Q2, we're off to a good start. We continue to see strong demand for rideshare from drivers and from riders. And as the weather has gotten better, we've seen more bike and scooter usage, which is additive to both rides and active riders on a sequential basis in Q2. As the quarter progresses, we'll continue to focus on great execution to connect customers with the experiences they love, from music festivals to pride celebrations and more. Additionally, with graduation season and summer travel just around the corner, we're focused on enabling a great airport experience to capture more of these rides. Now let me review our outlook. For the second quarter of 2024, we expect gross bookings of $4 to $4.1 billion, up 16 to 19% year over year. This assumes rides growth of approximately 15% year over year. We expect adjusted EBITDA of approximately $95 million to $100 million and an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.4%. Turning to what we expect for full year 2024, our first quarter results and our second quarter guidance inform our perspective on the year. We continue to expect total rides growth in the mid-teens year over year, with gross bookings to grow slightly faster than rides, also on a year-over-year basis. We expect an adjusted EBITDA margin as a percentage of gross bookings to be approximately 2.1%. Turning to free cash flow, we remain on track to generate positive free cash flow for the full year. Given our improved visibility into the first half of the year, we now expect at least 70% of adjusted EBITDA to convert to free cash flow for the full year 2024. As a reminder, you should expect our quarterly free cash flow conversion levels will vary, driven primarily by the timing of certain payments. To give you some perspective on the cadence of our cash flows, based on what we see right now, we expect our free cash flow for the full year will be weighted more toward the first half of 2024, as in the second half of the year, particularly in Q4, we expect to incur cash outflows related to our third-party insurance renewals. With that, I'll bring our prepared remarks to a close. Over the past year, we've made significant progress building a customer-obsessed and financially healthy business. The team continues to execute against high standards, and we see a lot of runway to drive profitable growth. We look forward to seeing you all at our Investor Day. And with that, operator, we're ready to take questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, please press star 1 to join the queue. Your first question comes from Nikhil Devnani with Bernstein. Please go ahead.

Hi, thanks for taking the question. I wanted to ask about growth in your investment cadence. You're probably growing bookings 19% to 20% in the first half of the year. So my question is whether there's any reason that should slow down in the second half, particularly if you're investing behind it. And that's my follow on as well. It looks like sales and marketing stepped up a bit in Q1. Was this just a one off because you had the take rate capacity or is this our new normal on the investment intensity of the business going forward? Just trying to put your top line into context with your marketplace investments. Thank you.

Yeah, Nikhil, I'll start with that. You know, I'll probably start by just kind of going back and reframing on our full year guidance for top line growth for 2024. So starting with rides, we reaffirmed our guidance for mid-teens rides growth year over year versus 2023. And I'll just reiterate here that mid-teens is a range. For the second half of the year, we expect rides growth to be approximately 15%. And then again, on the gross booking side, no change to our outlook for the full year. We expect gross bookings to grow slightly faster than rides. So hopefully that gives you a little bit of a sense for the first half, back half cadence. And then the second part of your question with respect to sales and marketing, you know, I might just start by framing this, you know, we anchor on growing our gross bookings, and then growing our adjusted EBITDA as a percentage of gross bookings. And within that, as it relates to the way that we deploy total incentives, as you know, the marketplace is dynamic. So we will make trade-offs between contra revenue and sales and marketing incentives in a given period of time. And in Q1, there's a continuation of us just seeing good opportunities to invest behind some of the areas of growth. in the business. And so that does have an impact on our sales and marketing line in Q1 24. Thanks, Erin.

Your next question comes from Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the question. I wanted to step back and ask maybe a bigger picture question of David. You've talked before about realigning brand and product innovation and competing away from price. Maybe could you frame up some of the key initiatives you're most focused on to move the needle inside the mobility business as you look out not only to the remainder of this year, but out towards a multi-year view about repositioning brand and product? Thank you.

Sure. It was Eric, right? Yeah, great. Hey, great to hear from you, Eric. Yeah, let me take a big picture approach and then I'll kind of zoom in on some of the particulars. And reflect a little again on Q1 and the rest of this here at the start. So it's so interesting to see what the growth drivers are of our business. One thing we should say is you know, there is some, there's still some secular growth going on, right? And we just, and we see it every day, right? We see, you know, more bosses trying to get their, you know, employees to come back to work. We see, you know, concerts being super exciting to people. It's really interesting when you look at some of the drivers of growth in Q1, we saw commute, obviously strength there, but we also saw what we call internally party time, which is basically after five on Friday and Saturday night. That was up 26% year on year. And so what that shows you is that people are getting out and it's not just a post COVID thing. It's a connecting, you know, I've got a whole thing I can talk about, about the importance of bringing people together and how important that is for our sort of mental health and sort of societal wellbeing. So anyway, that's, that's great to see. And then when you look at what Lyft actually does, there are a couple of things I think that are super important before I even get to brand. I think first is around operational excellence. Now, We give we provide and sort of support about two million rides every single day. Right. So that that means that even small differences in how fast pickup happens or, you know, exactly what pricing is or, you know, so on and so on has an enormous, enormous impact. And so that also drives growth primarily, by the way, in repeat. Like we're actually seeing great. indications around loyalty, people who are regular Lyft users using us more often. It's actually where we see quite a lot of growth. So that shows, and people, that makes sense, right? Because if you've taken a Lyft ride and you've gotten picked up, our ETAs now are basically as fast as they've ever been. They're faster than they were even just about four years ago. And we're down to sort of like the, anyway, very fast. I can tell you more about that if you're interested. So So that operational excellence, big, big deal because it pays dividends every single day, particularly for repeat use. And then on top of that, you can layer real innovation for new segments or new use cases. So these will be familiar because I've talked about them before, but Women Plus Connect is incredibly important to us, incredibly important to us. One of the stories I heard recently was a woman saying, I can now finally take a nap in a lift, take a nap in a lift, something that, you know, men have enjoyed for years and women haven't so much. So that, and we can see what that does both on the rider side, but also at the driver's side, something like 24% of our new, I think we've got about 20,000 new women plus connect to drivers just in the last couple of months. And it's something like 24, maybe even 26% of this meaningful percentage of our new applicants to be drivers are women higher than, than we've seen in the past. So that's, Awesome. And then of course our 70% earnings guarantee also incredibly important to drivers. So those sort of innovation levers really do, you know, drive incremental growth. And then we have these partnerships, right? Partnerships are incredibly important part of our strategy. They represent around 20% of our rides right now. And it's everyone from chase who you can get, you know, Sapphire 10 X points on if you're a chase Sapphire member or Delta, we're one of only two partners that allow you to earn, um, Delta SkyMiles on our platform. So that's also very important. And then we come to brand, which is where you started, which is we are very conscious that we're in a very, very nice position with our brand people. And I drive myself. And when I drive, I ask people why they choose Lyft. And a good percentage of them say every single time, I just like you guys better. I like you guys better. Now, We have some work to do internally on how to crisp up the messaging around that, if I'm honest. So there's more work we can do there. But at the end of the day, we're in a very, very nice position there. And I'll end by saying I was in Canada a couple weeks ago visiting our Toronto team, and I visited with a number of different people, including some drivers there and political figures and so on and so forth. And they were so enthusiastic about our arrival because they kind of like us, they like what we stand for, they like our values, and they like the choice they're going to get. It's a very long answer, but it really is exactly the way we think about it. Our strategy we really see is working. Our strategy is working. Customer obsession drives profitable growth. And we see a lot of opportunities all across North America over the coming years. In some ways, I feel like we're really just getting started there.

Thank you. Sure.

Your next question comes from Mark Mahaney with Evercore. Please go ahead.

Two questions. David, there's been some controversy recently about the Tesla autonomous vehicles and the impact that could have on ride-sharing companies like you and Uber. Just your latest thoughts on how investors should think about the autonomous risk to ride-share companies. And then I think you teased in your earlier prepared comments about providing more space ride share improvements in addition to the faster pickup times. Any others you'd roll out in terms of how the experience has gotten better for either drivers or riders? Thank you very much.

Yeah, sure. So on the first, you know, I would actually characterize it a little differently. I wouldn't say, okay, I understand why you asked the question the way you did around Tesla, but I would actually qualify it as more of an opportunity than a risk. And here's what I mean by that. So autonomous cars, let's step back. Autonomous cars are definitely coming, right? And if you're in San Francisco, you know it, you see it every day. Sometimes you see good things, sometimes you see things that are a little bit strange, but at the end of the day, they're clearly, you know, on the scene. But it's one thing, and I should say a very expensive one thing, to build an autonomous vehicle. Very, very expensive. It's expensive to build it, billions of dollars of R&D. It's expensive to operate it. These things are not free to operate, you know, Absolutely not. They break down, they have repairs, they have shadow drivers in the back, all sorts of things. So anyway, so that's an expense that somebody's got to bear. And then it's also very expensive to build a ride share platform. And I think it's maybe tempting or maybe it's, I don't know, easy, let's say, to hear someone say, oh, well, you know, you just build an app and you think, well, that's a ride share network. Well, no, that's not a ride share network. A ride share network involves conversations with every airport in the United States to figure out how did you pick up a drop-off. It's every municipality in the United States. It's pricing 2 million times a day. It's picking things up 24-7, even in bad weather, even when it's snowing. It's figuring out how to do supply-demand management such that you get cars in the right place at the right time and so on and so on at quite a large scale. And this is obviously expensive. We spend a lot of money on it every single year, as you guys will know. So So when I look at it that way, and then here's where I'll kind of finish on that. If you think of autonomous, here's maybe the way I might break it down. Somebody has to build that technology, right? And there are companies that are just focused on that. Somebody then has to build the cars, either bring their own homegrown technology into the car or take somebody else's technology. That's the second thing. Then somebody's got to own these cars. right? In the Lyft business model, of course, we don't typically own the car. Drivers own their own car, which is great. It means it's very capital efficient for us. We can put 2 million rides on the road every day and not effectively own a single car asset. So that's great. It means we don't have to spend hundreds of million dollars in depreciating assets called cars. And then someone has to build the network and operate the network. And that's what we do. So if I look at it in that context, I get excited about autonomous cars because I think, great, it's going to be another way for people to get around. You know, you can sort of think of it as another car that we could, you know, run into our network. And, you know, personally, if I were sort of running the world, I would sort of think of companies as specializing maybe in one of those areas. And if companies that try to do more than one of those areas might find it very expensive and maybe not such a great use of capital or resource focus. So that's sort of general thought there. And I do definitely ask another question. Oh, yeah, yeah, yeah. I mean, so this is where as a CEO, man, I love to talk about stuff coming out, and I'm just completely unable to. But what I can tell you is this. It's so frustrating. It just keeps me up. Anyway, but what are you going to do? But here's what I can tell you. So if you look at, for example, our on-time pickup promise, this is another innovation that I just think we're super proud of. So when we launched it last year, you remember the promise. The promise is if we're more than 10 minutes late to pick you up for an airport ride, We will pay you up to $100, no questions asked. Now, we've done two things since then that are both pretty amazing. The first is it is now available in just about every major airport in the country. When we launched it, we were in a subset. Now we're in just about every major airport. Second of all, we look very closely at that remediation rate, right? What percentage of rides end up not going well? When we last talked about it, that number was about 2%. Now it is sub 1.5%. And that shows you how operational excellence can drive so much value. And by the way, when we do end up paying this 1.5% of the time, when we do end up paying, those riders end up taking another lift in the next couple of weeks more frequently than people that that hasn't happened to. So it's just, I think, a good example of how the innovation we're doing really does pay back for riders and drivers in this case, giving drivers more business and riders more reliability. So you can expect to see more of those. We mentioned in the earlier remarks, some, you know, as we go into the summer, some other things with airports. Yeah, this is where I just have to stop talking, otherwise I'll get myself in trouble. But that, I hope, gives you a little flavor of what we're working on.

That's great. Thank you very much, David.

Thank you.

Your next question comes from John Blackledge with TD Cowan. Please go ahead.

Great. Thank you. Two questions. First, you specifically mentioned Canada's strong growth. Just curious, any other geos you would call out that drove the better than expected results. And then the second question, just coming back on a free cash flow conversion, just any further color on what drove that uptick to 70% from initially 50%. Thank you.

Yeah, let's tag team on this one. On the first, really nothing to report. We're still seeing, you know, the West Coast is still kind of growing nicely just because in a sense it was held back a little more than some of the rest of the country. But no, we're really actually seeing, you know, nice growth kind of across the board. Nothing significant there.

I'll talk about free cash flow and sort of what drove the update to our outlook. So fundamentally, as we went through Q1 and here at the start of Q2, we began to get better visibility into the expected payments that we'll make related to our legacy book of insurance. And that coming in a little bit better than we had initially anticipated in our original plan when we talked about full year free cash flow conversion. So that's what's really behind the change in our improved outlook for the year, a little bit better visibility into Q1 and Q2. Okay.

Thank you very much.

You bet.

Your next question comes from Ken Gorelsky with Wells Fargo. Please go ahead.

Thank you so much. I want to touch on pricing and industry pricing. First, could you reiterate your strategy with respect to overall pricing and how you view that? And David, maybe could you just talk about any changes there may have been in the pricing environment, you know, in 1Q into 2Q. There's been some speculation that one of your, that your competitor may have raised prices in conjunction with the annual insurance renewal at the end of 1Q. And then maybe on that same point more broadly, Could you talk about the elasticity that you see? And maybe you could see this in your various modalities. Investors often debate the elasticity in this industry. And we would love to hear any highlights or key anecdotes that you could provide. Thank you so much.

Thanks, Ken. You know, I'll start off here and sort of talk about pricing and what we're seeing. So you started your question just by wanting us to reiterate what our philosophy or approach is around pricing. And that's really that our goal is to operate in a healthy and competitive way. That's how we think about it, bottom line. In Q1, we did see some higher pricing in the back half of the quarter. However, you know, I think what's important to understand is that was partially offset by lower prime time. David talked about it in his prepared remarks, you know, quite a bit, really driven by the health that we're seeing in the marketplace. So when you net the two of those together in Q1, the impact of pricing was really quite modest. You know, it's important to remember that the price a rider experiences is the combination of many factors, right? its mode, its mix, its distance. It can also include prime time, depending on the supply conditions and a certain geography or at a certain time. And I think it's important to remember that prime time coming down is a good thing. It means that, you know, there's more stable, more predictable price to the rider, and that translates into more rides. You know, so on a full year basis, Again, we talked about gross bookings growing slightly faster than rides. Nothing has changed there. Nothing has changed in terms of the way we contemplate what informs that assumption. It's a number of variables, including ride type, ride mix, the growing mix of non-ride share businesses, and then competitive pricing, which is the foundation of our philosophy. And David, do you want to try the second part?

Just a little bit. I mean, that is for sure 90% of it right there. One, I would say, strategy we have is that anytime a rider opens the app, they can find a ride that works for them. And so it could be a standard ride. Of course, that's the majority of the business. It could be a wait and save ride, which I think is just a I love it because it allows people who want to price shop to sort of price shop right within our app and to save a little bit of money by, you know, giving up a little bit of time. And that actually works really well for a lot of people. It's, you know, a lot of people, some people are busy all the time. Some people have got a little bit more flexibility and they trade that for a little extra money. So that's great. And then we have, you know, various other modes that are sort of higher value, extra comfort, which is actually a relatively new mode. And then we have what we call the high value modes, the kind of the black side of things. Interesting, this is a little bit of a side point, but you might find it interesting. It's actually our high value modes that have grown slightly faster than the rest this quarter, which I think is just sort of an interesting commentary on, I don't know what, how people want to spend their money. But the real point here is our price sort of strategy, you know, is just like any retailer, let's say, with multiple, or maybe a manufacturer with sort of multiple product lines, you know, we want to have something that, you know, kind of works for everybody. And so we work the whole mix. And then the end where Aaron ended, you know, in some cases, our job is to try to bring prices down, right? Most notably around prime time. Anytime we have prime time, it's a defect, right? It's a defect. It means that we didn't have exactly the right number of drivers where we needed them at exactly the right time. Some of them are unavoidable, right? It's very hard to predict, you know, a a flash storm, for example. That's quite hard to predict. But there are other things that are not so hard to predict. And so as we improve our forecasting internally, which is actually an enormous effort, we don't talk too much about it externally, but enormous effort, we do it so that we can actually bring prices down in a funny way. Because what we want, of course, is riders and drivers to match at the highest volume they can. And that clearing price tends to be, you know, sort of our standard price at every mode.

Very comprehensive. Thank you.

Your next question comes from Michael Morton with Moffitt Nathanson. Please go ahead.

Hi. Thank you for the question. Could you talk a little bit about the opportunities around take rate and then maybe a deeper dive into the drivers behind it? You've spoken in the past about the health and efficiency of the marketplace being one driver, but would love if you could potentially quantify or maybe impact the contribution of the advertising business currently. or going forward, and then if I could sneak in one, just like a counting one. For G&A, it was just a tad higher than expected and would love to hear if there was any one time in nature related, maybe legal contingencies or insurance accruals, or is this a reasonable run rate for the year? Thank you so much.

Hi, Michael. This is Erin. I'll talk a little bit about revenue margin and then your question on G&A. And I'll ask David to join me and talk a little bit about the media business. So as it relates to revenue margin, again, this is really the healthy outcome of operating competitively with a focus on customer experience. So on the call, we talked about how we're working to increase drivers' preference for Lyft. and then help them maximize their earnings by helping them identify, you know, when and where rider demand is going to be. And this is why drivers are earning more. And that is really driving why we're able to be more efficient with rider, with, sorry, contra revenue incentives per ride, even as drivers earn more. You know, to give you a little flavor of how we see this playing out in Q2, We think that revenue margin will be reasonably similar. As I talked a little bit about in my prepared remarks, we are entering the quarter continuing to see healthy marketplace trends. And then, of course, in the second quarter and into the third, we see an increase in bike and scooter usage, building in Q2 and then really peaking in Q3. And that brings along with it a higher revenue margin. So hopefully that, you know, re-emphasizes a little bit of our prepared remarks and gives you some color for what we see here in Q2. As it relates to the G&A line, there's a good portion of that G&A line that's fixed. There is a portion where there are some corporate expenses and can be some accruals, for example, that can occasionally result in some lumpy behavior. And that's really what you're seeing between Q4 and Q1. The change in the tax accrual in particular is fundamentally what's driving that. And then I'll turn it over to David to address the third part of your question around media.

Yeah, and I'll take... It was Michael, right? Yeah. So let's really talk about two things kind of as they intersect. One is media... And then, and then we'll go back to drivers because I think that's a great place to just to sort of settle on. So on the media side, it's, it's, so it's such an interesting business. And the reason is because, you know, there are only so many meta ads and, you know, and Google AdWords and so forth that you can buy before you've, you've sort of saturated that channel. And so brands who increasing and, you know, and TikTok appearances and so on. So your brands are so interested. in trying to figure out new ways to connect with their, their consumers, their own customers and, and, and different ways, right? Because, you know, again, same old, same old, everyone starts to get a little tired of that. So what's, what's so interesting to us is looking at the ways that the brands who've come to us are being results over fairly short periods of time, such that they are already returning, even though, you know, this business is still relatively new and I'll give you just a little bit of color and then we'll tie back to the driver in a second, but a little bit of color. So, we served, you know, there are multiple ways you could be served up an ad in a Lyft experience. It might be on a tablet, it's in the car, but most likely it's on the app. And typically you're, you know, a 15 minute ride. People actually check their app about nine times, right? Sort of the, you know, I guess it's the adult equivalent of are we there yet kind of thing. So anyway, you're looking and then the question is, well, what are you doing? And the answer increasingly is, well, if we can serve you an interesting, relevant ad, and it has to be both of those things, then you'll actually tend to watch it, which is why our, and then often you'll, you'll act as a result. So our click through rate, I think I'm getting this right, is about 10 times the average. We just, uh, introduced me, um, video ads too. Um, and those are particularly interesting to people because short form video when well done turns out to be incredibly engaging. So, oh, that's a long way of saying, I think there's a lot of options. And then of course we have first party data, right? We, we know where you're going as a writer. And so, you know, you may have seen some of the tests we're doing now, a number of tests we're doing in the background that kind of know either where you're going or the type of place you might want to go, and maybe it'll give you a coupon to go there. So as long as saying, I think there's a lot of opportunity here. I think it's quite accretive. I think it's a good customer experience, a good partner experience for sure. They're getting good value. And then to the driver point, We pay our drivers when advertising happens, particularly when it's on a tablet. But more generally, it allows us to have more margin to sort of play back to drivers. And that's simply one of many ways, and I'll flip to drivers and stop. We're so focused now, and I think this really is sort of a manifestation of our customer-obsessed strategy. of saying, how can drivers earn more? How can drivers earn more? There is a ceiling. The ceiling is called the fare that a rider pays. Well, I guess plus media if you want to go crazy. But we have to take a little bit of money to operate the platform. We've got to pay insurance and so forth. So then the question is, well, how can drivers earn more? And the answer is they can get more rides. Those rides can be more profitable for them because maybe media or other sorts of things. They could be positioned closer to riders as opposed to long pickups because the pay tends to favor them a little bit that way. We can negotiate on their behalf for better gas prices. We actually do this. We've got a program that, you know, gives you 25 cents up to 30 cents, I think off a gallon of gas for certain things. So there are all sorts of things we can do that increase drivers, both gross and net earnings. And we are really taking a sort of whole of company approach to make sure that we can do that because we know the more drivers we have and the happier they are, the better preference they have, the more they'll come back. So I know we covered a whole lot there, but hope that gives you some insight.

Thank you so much. Sure.

Your next question comes from Doug Anmuth with JP Morgan. Please go ahead.

Thanks for taking the questions. Just given the strong supply in the marketplace, can you just talk about how you think about the efforts to drive the 40 million annual users higher versus increasing frequency among the quarterly active rider base that's roughly half that number? And then separately, you've often highlighted partnerships, and I know that remains a key priority for 24. We've seen some industry activity on that front. I'm just curious how you're thinking about opportunities in adjacent categories. Thanks.

Yeah, maybe I'll take that one, and then Aaron and I can tag team on that if we want to. Okay, I remember the partners. Oh, yeah, yeah. So a couple of data points. So on active riders, so you're absolutely right, Doug, of course, to sort of distinguish between a new rider and an existing rider and kind of what that looks like. And just to emphasize one quick point, we've mentioned it briefly, our active riders are total active riders were up about 12% year on year, which is the strongest growth rate we've had in six quarters. So that's great news, right? Because that shows that we're an attractive proposition to people, you know, day in and day out. That's awesome. Now, where we have actually seen more, so, and both matter, right? So new and existing, they both matter. You can't, you don't get to choose just one out of two. Our focus strategically over the last year has actually been more on driving frequency than And the reason that is true is because, you know, this is something actually Scott Cook at Intuit said years ago. He said, first, you have to first you have to work on the do the right things and you have to do it right. So doing the right thing meant getting driver pay right, getting pricing right, getting ETAs down to a great a great point and so forth. Because if you don't get that right, then you're going to bring a bunch of new people on the platform and they're just going to turn out. So we've done exactly the right thing. We've really focused on that operational excellence to get to the point where we are providing a very, very good experience. I'd say objectively significantly better if you look at ETA times and so forth than a year ago. And we've seen the results. Our frequency is actually increasing quite significantly, which is wonderful. It's a really good indicator, early indicator of when your heaviest users are using you even more, that you're doing something right. And they're the ones that have the most exposure to what you're doing. And so then, over time, the focus can kind of broaden to how can we start to attract new people to the platform. And there are many ways to do that. Some of them are very familiar to all of us, referral bonus and so on and so forth. Others are maybe a little more innovative. And those are some things we're sort of cooking up in the background. But that leads me very naturally, I think, to your second point around partnerships. I think, you know, here's another, I'm full of chestnuts today. So I used to spend a lot of time in Africa. In Africa, a lot of the countries there have this little saying that says, if you want to go fast, you go alone, but if you want to go far, you go together. And so in order for us to go far in our customers' lives, riders' lives in particular, I would say, you know, partnerships really matter, right? Because people have complicated lives. They take airplanes, they do all sorts of other things. And so we will continue to invest in our partnership strategy. It's been one that we've been working on for years and you'll see a lot more. I don't have anything particular to announce there, but I will certainly say, again, just sort of almost schematically, you know, partnering with someone who is a values aligned and kind of customer obsessed aligned partner can be really helpful because it can mean that we can get new riders that way.

Thank you, David.

Your next question comes from Benjamin Black with Deutsche Bank. Please go ahead.

Great. Thank you for taking my question. Obviously, there have been quite a few moving pieces related to the regulatory backdrop. You had the ballot proposal in Massachusetts, Minneapolis issue, and then obviously the looming Supreme Court decision on Prop 22 in California. So I guess the question is, how do you feel positioned for these upcoming challenges? And what's your strategy if potential reclassification is required? And then just one on I think you've mentioned this as one of the potential drivers of improvements to your gross margin profile over time. Just can you dig into a little bit of the progress there? Can you give us some examples of some of those strategies that are showing sort of notable progress? Thank you.

Yeah. Kristen, our president will start with the first and then we'll tackle the second separately.

Sure. Hey there. This is Kristen. Happy to answer your question. And I'll take each of those in turn, Massachusetts, Minnesota, and then California, because we really have a particular strategy designed specifically for each market. You know, in Massachusetts, we'll have a trial starting with the Massachusetts attorney general in another week, but in parallel, we have two potential paths that we're driving a legislative proposal and a ballot initiative as well. And so we really think that we have multiple options to continue operating in that market because we both have the legislative path and we have the ballot initiative. And so in that market, we really want to focus on driver's voices being heard and supporting driver's voices who tell us that they prefer independence and flexibility to traditional employment. In Minnesota, we're working closely with city officials and state officials to find a solution. We're optimistic that we'll be able to do this. If we can't do this, we will be forced to stop offering rideshare services on July 1st, but that would only be because we wouldn't be able to deliver the customer experience that drivers and riders want and expect with respect to the current rates proposed. However, we will still keep looking to work toward a new rate structure. And then in California, just a reminder there, in California, the California Supreme Court is hearing oral argument in a couple of weeks on the very narrow issue of whether Proposition 22 is consistent with the California Constitution. So that initiative itself is not about reclassification. It's just about whether the ballot that was passed a few years ago overwhelmingly is constitutional. And so in that case, we don't have any immediate change to driver's independent contractor status, and we will just continue again to listen to customer voices. We know that drivers value Prop 22 deeply, and we also heard from the California people in 2020 that they value driver independence with respect to passing Prop 22 by a wide majority.

Thanks, Kristen. And then on your second question, Benjamin, about mode mix, I guess what I would say, because I think you're maybe looking for specific examples. I think one of the ones that I'll mention to very briefly, wait and save, I've mentioned before, nothing really new to add there, but it's a significant and important part of our business. And as I said before, I like it because I think it gives people a way to save a little bit of money, which who doesn't like that? On sort of the exact flip side, we have actually a new mode that we launched a couple of months ago and are still kind of fine-tuning called Extra Comfort. I think what's so interesting about Extra Comfort, so it's a nicer, slightly newer car, slightly nicer car with a more experienced driver. And I think you can sort of, by analogy, you can think of it as a kind of comfort plus type kind of upgrade on an airplane in between the business class and the economy. And if you looked at what airlines have done, it's actually quite successful for them. And it's because customers like it, right? They like the extra leg room in that case and priority boarding and these sorts of things. And so we're thinking along the same lines, how can we create something that has that kind of value for our riders every day? And we've seen nice kind of early adoption of it. It's a relatively small mode in the grand scheme of things, but I think it's one we can build out as a sort of affordable everyday luxury. I'll tell you, interestingly enough, one of the highest use cases is actually going to the airport because it's a time where you've already got a lot of stress in your life. And so you sort of want the kind of quieter, bigger ride, a little bit more space for luggage and so forth. So I think it's an area, again, when I talk sometimes about, let's say, innovation being a little bit stale in this category. I'm not saying this is the most innovative thing that we're working on, but I think it gives you a sense that there are new customer use cases that we can develop for and new modes. And I think extra comfort is a good example. So I recommend anyone on this call download Lyft immediately and put extra comfort for your next ride.

Wonderful. Thank you for that. Sure.

Your next question comes from Steven Ju with UBS. Please go ahead.

Okay. Thank you so much. So David, Aaron, I wanted to tie your comments about use cases to your prior comments about frequency. So just doing a simple math of, I guess, rides divided by active users, it seems like folks took about eight and a half rides during the quarter. I think prior to the pandemic, it was probably nine and a half or so ballpark. So can we talk about the use cases like shared rides that are probably no longer in the picture and how much that impacted frequency? There might be some lingering regional considerations we may have to think about, but I guess more importantly, looking forward, how some of the existing use cases can perhaps now grow faster or what new use cases you may be looking at. So I'm looking for reasons to why I should believe the frequency that we're seeing, you know, prior to the pandemic. You know, should that be a ceiling or should we be thinking that it should be much higher than that? Thank you. Oh, yeah. No, it's no ceiling.

And because it's a no. No, the whole, the thing about our, you know, I keep saying our strategy is working. And what I really mean by that is, you know, the more we understand what it is that our riders and drivers want, the better we can, you know, every single day, you know, get them that, even ahead of their own, you know, recognizing it. So let's take the data you were just using. So right now, you're right. Actually, a person who uses Rideshare 10 times a month, that's actually quite a heavy user already, right? So let's just start from the fact that a lot of people, because with any distribution, obviously you've got tails on both sides, a lot of people who are maybe using it once a month, maybe they only use it to go to the airport, for example. So gosh, there are a whole lot of other parts of their life that we can, without really much creativity at all, simply by reminding them of our existence, we can grow into. And that'll just increase frequency just mathematically. And then if you look at the other end, if you look at people who are already heavy users, you know, what's a typical heavy user? Well, it might be someone who commutes to the office, you know, a couple of times a week. Well, today, maybe they switch between us and the other guys. So maybe there are things we can do to make it easier for them to take more rides on Lyft versus doing something else, as an example, right? And, you know, of course, then there's the secular thing, right? As more and more offices, I think, come to realize that there's real value in having people in the office at least a couple of days a week. If you look at the distribution there, there's still quite a few people, and maybe some people on this call fall in this category, who are only going to the office once a week or maybe even less than that. And I think there's a lot we can do both to work with companies to make it easier for them to partner with us as we do with LinkedIn, for example, or Starbucks, for example, Delta Airlines, for example. These are all companies in various different ways. Amazon, that we work with, part of their kind of commute strategy to help their employees come back to the office in a way that's more productive than sitting in traffic driving for 45 minutes. So that's just a very long way of saying, I think there are a lot of use cases that we're sort of just scratching the surface of. And honestly, I would be very, very disappointed in us as a company if we, over the next weeks, months, years, can't come up with other ways to get people using ride share in new ways.

Thank you.

Your next question comes from John Colentoni with Jefferies. Please go ahead.

Thanks for taking my questions. I wanted to start with a strategic one. As autonomous and robo taxi initiatives continue to move forward, talk about how Lyft is considering approaching balancing autonomous partnerships while maintaining its focus on maximizing driver satisfaction and earnings. And second question, I believe Aaron mentioned second quarter guidance assumes 15% rides growth during the prepared remarks, which is a few hundred basis points below the expectations for bookings growth. Can you talk about what's driving the gap between bookings and rides growth in the second quarter? and also walk through how that slowdown in TRIPS growth versus the first quarter breaks down between market share versus broader industry trends.

Thanks. Hey, John. It's David. I'll take the first part of your question, and then Erin will tackle the second. So I think maybe the first thing to say is, again, as I mentioned before, autonomous vehicles are going to happen, right? This is not one of these things where you can sort of decide whether or not they're going to be part of the future. They will. There are too many, let's just say, forces going in that direction for them not to happen. So then the question for us becomes, how do we incorporate them into our network? And the nice thing is that we are going to continue to grow, as we've been talking about, for a long, long time. And so it's, I think, 100% easy to predict. that our network will turn in overtime. And now here we absolutely are talking about years, uh, into a hybrid network, right? Where we'll have some driver driven cars and some autonomous cars. I think that's actually very stable for a long, long time, long, long, long time, far beyond the sort of event horizon that we can easily see because there will be riders who only, uh, you know, prefer one or the other. There'll be parts of the country or even parts of cities. that aren't well-suited for autonomous, airport being sort of an obvious example, or right after a concert, those are very difficult times. There may be seasons where autonomous works better or worse, autonomous in the snow is quite unproven, and so forth and so on. So I think there's every reason to believe that this will be sort of a coexistence. And then the question is, will it be a peaceful coexistence or sort of an angry coexistence? I think it will be a peaceful coexistence. I think drivers will say, great there's still a lot of demand for my services you know i think there'll be other and and now i'll get a little bit weird to say like you know who knows what happens in a couple of years maybe there are autonomous cars that in the front seat instead of a driver is, you know, I always like this example, a car tender, someone, you know, literally making you a drink as you go to your, your party one night or whatever it is. So I think there are all kinds of interesting, I think human beings are quite good at coming up with new fun things to do, to, you know, employ themselves, keep themselves busy, you know, entertain themselves and so forth. So I don't, even when I talk to drivers today, I honestly don't feel a lot of anxiety of, you know, these robots are going to take my job. Part of them say, well, gosh, they've got pretty good sensors on them. So, you know, my eyes are 60 years old. There's a quote. And they're they're pretty good drivers. So, you know, you know, by the time they're around, I'm going to be long gone. And, you know, I'm glad someone's going to be driving me around. So, you know, I don't know. I think this is I think it's going to be fine. I really do. And we're going to continue to focus for drivers in making sure it's the best driving experience. Absolutely possible. Absolutely possible. How do you earn the most? How do you have the most satisfying experience? And I think that's a that's a great strategy. It's going to be very durable for many, many years.

John, this is Erin. It's hard to follow the visual of a car tender, but let me attempt to do that and just go over our Q2 guidance for rides and bookings. So starting with rides in Q2, we expect rides growth of approximately 15% year over year. That implies about 9% quarter over quarter. And then for bookings, our guidance is for $4 billion to $4.1 billion year over year. That implies growth of 16% to 19% on a year over year basis. And on a quarter over quarter basis, that's 8% to 11% growth. So hopefully that sort of clarifies that dynamic both on a year-over-year basis and quarter-over-quarter for rides growth and gross bookings growth that we expect in the second quarter.

Thank you.

This will end our Q&A session. I will now turn the call back over to Lyft CEO David Risher for closing remarks.

Y'all, thank you so much. I really appreciate your questions and your support over the years. Look, this is just about my first year. You know this. Really just quite an extraordinary opportunity. And I just want to mostly end by saying thank you for your patience with us as we clarify and articulate our strategy. And a huge, huge, huge thanks to Lyft team members. We have 3,000 people who wake up every single day obsessing over drivers and riders. And I just couldn't be prouder of all we've accomplished. So Thanks to all, and we hope to see everyone who can at Investor Day, either virtually or physically. Thank you all.

This concludes today's conference call. Thank you for your participation. You may now disconnect.