Lyft, Inc.

I would now like to turn the conference over to Aurélie Nauv, VP, FP&A, and Investor Relations. You may begin.

Thank you. Welcome to the Least Earnings Call for the second quarter 2025. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. As a reminder, our full prepared remarks are available on the IR website, and we will use this time to answer your questions. We'll make forward looking statements on today's call relating to our business strategy and performance, partnerships, future financial and operating results, trends in our marketplace, 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 filing. 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. Additionally, today we are going to discuss customers. For ride share, there are two customers in every car. The driver is the customer, and the rider is the driver's customer. We care about both. Our discussion today will also include non-GAAP financial measures, which are not a substitute for GAAP results. Reconciliation of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. And with that, I'll pass the call to David.

Thanks, Aurelian. Okay, everyone, listen up. Q2 was a record breaking quarter for Lyft. We delivered all time highs across gross bookings, adjusted EBITDA and free cash flows for the first time in company history. We reduced our share count, oh, excuse me, and for the first time in company history, we reduced our share count by repurchasing $200 million worth of stock. This strong performance positions us for an accelerated growth in Q3, and we remain on track to achieve our long-term targets. Our marketplace is thriving, setting us up for an even stronger second half of the year. Over 1 million drivers spent a record amount of hours with Lyft. That's the same number of drivers that Lyft had pre-COVID, but now on average, they're driving 40% more each. We had a record number of active riders in Q2, with new riders increasing double digits year on year for the second consecutive quarter. As a result, rides reached an all-time high of almost 235 million, marking our ninth consecutive quarter of double digit growth year over year. A new Lyft is emerging. Not only are we consistently delivering for riders and drivers, but that customer obsession is producing record results quarter after quarter, and our momentum is building. We are now a global, more diversified company, but double the TAM. We are significantly broadening options for riders, from market expanding innovations like Lyft Silver for nearly 60 million older Americans, to a greater emphasis on margin expanding luxury offerings, like our improved black and black SUV options. And we are uniquely positioned to benefit from the coming edition of autonomous vehicles to our platform across North America and Europe. This will be transformational for Lyft. Look, if you are getting tired of our customer obsession and operating excellence delivering quarter after quarter of record breaking performance, well, we aren't. We are just getting started. I'm gonna do it over and over again. So there's a whole lot to talk about. It's go time. Bring your questions over to you.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. We ask that you please limit yourself to one question and one follow-up. Thank you. Your first question comes from Eric Sheridan with Goldman Sachs. Your line is open.

Thanks so much for taking the question. Maybe a two-parter, when you think about the scaling of some of your broadening out of the array of products that you bring to market with a specific focus on affordability, can you talk a little bit about what you're seeing in terms of maybe two factors? One, as a stimulant of both rider growth and rider frequency and how you think the broader competitive landscape continues to evolve when you think about affordability becoming more a key theme across the industry looking out of the next six to 12 months. Thanks so much.

Sure, here you are, David. I will take it and maybe, Aaron, you might wanna add in a little bit about the context as well. So, as you've seen, our growth has never been greater, it continues to be strong. And you point to affordability, I might zoom out a little bit and put it in even a little bit broader context. So when we think about what drives our growth, we think of the fundamentals, or actually the fundamentals we outlined at our investor day about a year ago. The first thing we actually think about is operational excellence, right? The better you do, the better you do, the better you do. And this is why frequency is up, this is why, I'll give you a specific stat, I know it's different, far away from where you asked, but just to fill all this in. When I started about two and a half years ago, our driver cancellation rate was about 15%. Now it's sub 5%, it's about 4.7%. So dramatic increases, improvements in ETA, improvements in driver cancellation, so that's the first thing. The second thing is innovation. And here again, you hit an innovation, talking about affordability, affordability requires innovation, right? So let's look at price lock as an example. Price lock is a way for you to lock in a price, as you know, commute is our single biggest use case, as you know, and it has got incredible retention rates, price lock does. So I look at it not just in terms of pricing affordability, but also in terms of reliability and like that. The third is partnerships. Now partnerships are a funny thing to talk about in affordability, but let me say why. First of all, it's a big growth mechanism for us, right? It expands our TAM, it allows us to talk to Chase customers, to now United customers, to DoorDash customers, and so forth and so on. But what's interesting about each one of these agreements is they tend to come with great economics, not just for both businesses, but for our riders. So if you look at Chase, for example, Chase now you get $10 off a month, that's a new offer, $120 a year for Chase Afro Reserve customers, and you get 5X points. With DoorDash, you get great points. With United, you'll get points on every single ride. So when you look at affordability, again, you have to think of more than just pricing, you have to think of value to customers, and that's important. And then we can talk about media and global and AVs separately as part of the growth plan. But that's sort of how I think about it, is more of a value to customer thing rather than just a price thing. Now having said that, our prices remain competitive, our price strategy is always to remain competitive and reliable. Pricing is a little different from what we expected a year ago, and again, it's sort of a nod to your point that pricing is actually not, hasn't grown as much as we expected. We're very focused on making sure that we deliver great values to riders through that. So I'll turn it over to Erin to talk a little bit more about that, but give you some context.

Yeah, happy to add on. Eric, I guess the few things that I would add is you think about affordability, and I think I've said this on a previous earnings call, this is not new to Lyft, right? We've got a wide array of products to offer the consumer overall. And so affordability and having that be part of our portfolio is not new to Lyft. Our growth algorithm is really centered, as David mentioned, on active riders and frequency. In Q2, we saw active riders up 10%, frequency increased mid-single digits. This has been a pretty consistent trend now for 18 months. So we're super proud of that. And then David talked a bit about pricing. What I would say is there's not much to highlight there. So in Q2, I would say prices were roughly flat, quarter over quarter, up a little bit year over year as we think about Q3 and what's embedded in our guidance, kind of the same, assuming roughly flat, sequentially and up year over year. And yet we've continued to drive great profitability. Record in Q2, our adjusted EBITDA was up 26%. So I think we're positioned well, and again, I just end with this concept of affordability and having that as part of our toolkit, I guess, if you will say, is not new to Lyft. So we feel like we're positioned well.

Great, appreciate it, thank you.

The next question comes from John Blackledge with TD Cowan, your line is open.

Oh, great, two questions. First on the third quarter gross bookings guide, the range is 13 to 17%. Just curious if you can talk about the expected contribution from FreeNow or maybe frame the gross bookings guide range excluding FreeNow. And then second question, kind of follow up on the partnership deals. Could you provide an update on some of the more impactful partnership deals that are driving the business? And as we think, looking into the second half in 2026, what are some of the key existing deals that could be growth drivers? Thank you.

Hey, John, I'll start and then I'll turn it over to David. So I'll start a little bit with where I left off in the last question. It really centers around our algorithm around continuing to grow active riders in frequency, right? So I mentioned our performance in Q2, that has been a very consistent drumbeat over a long period of time and we expect that to continue. And that's what really leads into our expectation in Q3 around rise growth in the mid teens. We expect that continued strong rider and driver engagement, continued industry leading service levels. We're gonna continue to grow exceptionally well across our markets. And in particular, last quarter we highlighted some of the outsize growth we see in places like underserved markets or in Canada, et cetera, et cetera. Now, the thing to highlight with FreeNow, remember we closed one week ago. I think it's really important to note a couple of things. Our Q3 guidance includes two months of FreeNow in it. Another, I think important thing to think about is you think about that business, which is a taxi business across nine European markets. Taxi tends to be a little bit more of an elevated experience. They have a heavy business travel population. So this is all getting to the Q3 is generally a seasonally lower quarter for them. And in our guide, it only includes two months of activity. So hopefully that color is helpful, David.

Sure. So partnerships, yeah, lots to talk about there. And let's sort of go maybe sort of new to older, that might be helpful. So on the new side, of course, United is the big news today. United as we all know, first or second largest global airline, depending on how you count it. Super excited about that partnership. We'll talk more about the specific later this year when we launch it to consumers. But the headline there is we expect it to be industry leading. You'll get points on every single ride, not just rides to the airport. And that's super exciting. And we think it's, we're super flattered to be chosen by United. They've never had a ride share partner before. This would be their first and they're taking it very seriously. So that'll provide a lot of growth. Miles Plus, of course, is an enormous program. Then on sort of the newer side, let's go back to Chase. So Chase, of course, we've had as a partner for many years, Chase Sapphire Reserve and the JP Morgan card. But the refresh has been extraordinary in driving growth, particularly among kind of higher value riders. So we're seeing, there are over a million connected accounts. So let's just sort of start with the baseline there. And what we're seeing is that because of the new offer, which is now $10 a month and five X points, we're seeing a real acceleration of adoption of that program or the use, I would say, of that program. So that drives growth, no question. It's also now a global program for us. So Aaron, of course, was just talking about FreeNow. You can now acquire Chase points on the FreeNow app. So all of a sudden we become a more interesting partner, of course, but also, you know, the value becomes more valuable to more people, the offer does. Okay, now let's talk about, say DoorDash. Okay, DoorDash, we launched at the end of last October, a great launch, far exceeded our expectations right in the first couple of months, and it's continuing to grow. I think in the prepared remarks, you saw that their summer DashPass produced unbelievable results. It was the highest one-day spike, something like 300% more account rankings on that one day than we typically seen. So, you know, again, that sort of shows you, remember DashPass is an 18 million member program globally, and again, we're now more relevant on the global side than we were before. So that can produce real growth. Now let's talk about Alaska. Alaska, you know, I think it's the fifth largest airline in the United States. We just refreshed that there now, of course, Alaska and Hawaii are linked. We just refreshed our offer with them. Again, a better offer for consumers than it was before, and one that we're seeing grow. Now let's talk about a built. So built, relatively small in the grand scheme of things, but hugely important for a particular audience. And there we have a variance in partnership. People can gain points, but again, also burn points. In other words, use their built points to take lift. There've been something like 360 million points redeemed already in the last four months or so. So huge, and again, just getting started. Let's talk about business rewards. So we just launched a business rewards program. The program itself is, I think it officially sort of launched yesterday in terms of actual customers being able to use it. It's a free program, which is differentiated. It allows you to get cash back, which is wonderful. Back to the affordability question that Eric asked, but it also allows you to get double points on some of our partners, including Hilton and others. So that's absolutely wonderful. And again, that just literally started yesterday in the market. So when you zoom out now, you'll remember that when we talked about this as part of our investor day, we said that roughly 20% of our rides are associated with partnerships. That number is now up to 25%. We have more than 50 million rides that are linked to partnership. And again, when we look at the penetration of our existing partnerships, and of course of our new partnerships, zero, but even existing partnerships, huge growth. So sorry for going on to this length on that, but it's such a big story. It's worth really going deep on.

Thank

you, Steve. Thanks,

Steve. Yep. The next question comes from Doug Enmuse with JP Morgan. Your line is open.

Thanks for taking the questions. David, can you talk more about how Lyft is looking to build the AV use case? And when you think about some of the stuff that you're doing in Europe, for example, in the recent partnership that you announced with Baidu, what are the key capabilities that Lyft and FreeNow bring for AV tech providers?

Sure, hey, Dan. So yeah, great question. And obviously, sort of a very rich area. The first thing to say, whenever we think about AVs, is you have to think about them as a massive TAM expander for rideshare. And the reason I'm so confident in this is we see the data. We see the data. So for example, in the markets where, and this is in the United States, in the markets where AVs are operational, and these are the San Francisco's and LA's and Phoenix's of the United States, we are seeing growth, industry growth I'm talking about, that is five times larger, five times larger than what you're seeing in other top markets. Five times larger. Okay, why might that be? Well, you put a new product in the market, if it's a good product, it tends to get traction. So AVs are safe,

it's

great. They not only know the rules, they follow the rules. They're private, it's great. They're reliable. The cars tend to be very new for obvious reasons. So there's some really good reasons. Now, some of that growth might tail off over time, of course, as it becomes a less novel product, but still, this is a step change. Okay, so that's the thing. Okay, so what do you need to commercialize an AV at this very expensive technology that's put in an expensive car and made even more expensive by all the extra maintenance and so on and so forth that you have to do to it? Well, you have to have a couple of things. Of course, you have to have demand. We got lots of demand, so that's great. And now we've got demand not just in the United States, but we've got it in Europe. You've got to have a marketplace that works, that manages supply and demand, it sets prices. You know, you need to have customer care. If you don't have customer care, when someone leaves their thing in the AV or when the AV does something unexpected, any number of things, you got, someone's got to answer the phone effectively. So then as you move through this sort of value chain, I'm sure it's talking on the right of the value chain, let's say, and then moving towards the left, you need fleet management. You need fleet management. Now fleet management is so unsexy. As soon as I say it, people say, okay, I don't even know what that is. Well, let me tell you what that is. What that is is that's on board, that's buying a car, that's on board in the car, it's maintaining the car, it's cleaning the car, it's charging the car. It's making sure that that car is available, utilizable, you know, as close to 24 hours a day, seven days as it possibly can be. We have, as you well know, a very, very well established operation, subsidiary called FlexDrive. It's been in business for about 10 years. It manages tens of thousands. I mean, over the course of the years, it's managed many tens of thousands of cars. We currently have, you know, some 10 to 15,000 cars on that platform. And it's a very distinct set of capabilities. It's distinct from what rental car groups might have. I can explain that if you're interested. Anyway, it's very tailored to rideshare. It's very, very tailored to rideshare. And it's very, very sophisticated, right? It sort of knows when a car's gonna need maintenance before the driver knows. It knows what the tire pressure is. It knows when to deploy cars versus not because demand is gonna be low. You know, when demand is high, you deploy a lot of cars when it's low. That's when you put them in for maintenance and cleaning. It's a very sophisticated operation. We've got about 28 of them across the United States, depots across the United States. And now we come to Europe. So Europe has, we're free now, has a very, very good relationship with the taxi fleets, right, the taxi fleets who are fleets. So they know how to do fleet management as well, free now does, and the taxi fleets. And then I would say adjacent to that, and this is sort of a little bit of an aside, but when you talk to CEOs of AV tech companies or just industry folks, and you ask them, what will be the rate limiter? What will be the rate limiter on AVs? Many different things could be, of course, technology could be, adoption could be people's interest in it, could be different parts of the country, snow could be, ice could be a rain, all these different things. But the fundamental thing that's gonna slow AVs down over time, or let's say regulate their adoption, is gonna be regulators, regulators. In the United States, the 50 different states, all those municipalities, in Europe, free now operates in nine countries. Now, what do we have going for us in Europe in particular? We have very good relationship with regulators through free now. Free now has had to work very closely with regulators because tax is a regulated business. And it's a real differentiator for us versus other approaches who've been not as regulatory friendly. So that's, and then of course there's financing. We bring our many to the table, we'll talk a bit about that, and a bunch of other things I can talk about. But I think that broadly speaking, when you look at us, first, again, and just sort of summarize, AVs definitely gonna be wind at the back of ridesharing. It's gonna introduce a lot of people to AVs. Most people's first AV experience will be through rideshare. That's valuable to us, but it's also valuable to AV companies. Second, you're gonna need demand, we've got that. You're gonna need a marketplace, we've got that. You're gonna need seven by 24 operational excellence. We got it. And then you gotta have great fleet management somehow. And the fact that ours is integrated with rideshare is awesome. And you gotta have good relationships with regulators and regulators need to understand that you're on their side, not trying to mull them over.

Great, thank you, David.

Sure.

The next question comes from Benjamin Black with Deutsche Bank. Your line is open.

Great, thank you for taking my questions. I just want to dig a little bit deeper into the Baidu partnership. Sort of any sense on the economic model and anyway, sort of think about the vehicle ramp and can you talk about the regulatory process in Germany and the UK? I have a clear view of the site there. And then on three now, now that the acquisition is closed, can you just talk about the incremental investment you may need to deploy to sort of ramp and scale that business? What are some of the key focus areas that you're looking at now that you're fully consolidated? Thank you.

Yeah, sure. So let me start, Benjamin, and I'll start with the process around Baidu and maybe I'll just say, I'll answer 1.5 of the question and then Aaron will answer the last 0.5, something like that, we'll break it down like that. So on Baidu, okay, super, super excited about this partnership, right? And just to level set, I think everyone on the call knows this, but Baidu is the largest provider of AV tech in the world. They've delivered over 11 million rides right now, driver out rides, to be clear. And they're a market leader where they operate, which of course is China. So if you're Baidu, you're looking for access to other parts of the world, and they chose us, we're very proud of that, to be their European, at least the first European expansion kind of partner. Okay, so what does the deal look like? Well, we're not gonna get super specific. What I can tell you is that there's an initial deployment, think of that as hundreds and then that goes to thousands of cars. We will effectively be the sort of the sort of face, let's say, both to regulators, because Baidu understands that we've got a stronger relationship with regulators in Europe than they do, as well as actually the -to-day operator of these cars. There's sort of, let's say, three pieces to the whole process. One is, there's what's called a homologation process. So the cars have to be certified to be road ready in Europe, specifically in Germany and the UK. That's a process that's well understood. These cars are, it's called the RT6, and it's a car that they designed themselves, it's been on the road for many years, and they're still going through that process already in Switzerland and various other countries. So anyway, that's part of the process. Then the tech has to be tried on the road, of course, first with the driver, a safety driver, then taking riders and not charging, and then finally charging for riders. And that whole process will take some time. We're getting started immediately, but it takes time. However long it takes the first time, the second time takes 80% as long, and the third time takes 80% as long as that, and so on and so forth. It'll be a bit country by country because countries have very specific interests here. And of course, the UK driving on one side of the street, Germany on the other. So there are a whole bunch of different things we have to go through, but you can expect that that process is, we understand it already, they understand it already. We're gonna go step by step through that process. And the results should be that in 2026, we're operating in two markets, a number of the cars, those cars we will own ourselves, so we're gonna purchase those cars ourselves, as we will do strategically when that makes sense. We can talk more about the long-term economics of AVs in a couple of minutes. So that's where I think I stand with, I do super excited about that partnership and stay tuned obviously for much more to come on that. If I stay in Europe, a shift over to free now, again, maybe just sort of step back for a second. I mean, the European ride share, ride-hailing market, of course, is a gigantic market. It's roughly the size of the United States. Taxis continue to play a gigantic role there. And remember that half those taxes are still effectively offline. These are either hailed on the street or people doing old-fashioned phone calls. So there's huge growth opportunity built right into the system effectively, because there's a lot of ride share going on within big quotes that's being done in a way that is more 20th century than 21st century. So there's immediate work that we can do there. There's also immediate work we can do to bring, first lifts current customers onto the Baidu platform. I think we talked about how 4.6 million times over the last two years, people have opened lift in Europe, expecting to get a lift. Now we can direct them to free now. So all of these things are relatively straightforward and not particularly costly. This is not a gigantic investment. Then we can start to apply our own technology and help free now incorporate that technology onto their platform. And this will give you more stable pricing, for example, it'll give you faster pickups, for example. And the teams, even though of course the deal just closed last week, but the teams have already been in kind of brainstorming early mode and are now really getting to work rolling up their sleeves on that. So all of those things is all that's safe. This is a growth partnership, a growth acquisition. Aaron will talk a little bit about the economics in a couple of seconds, but really the whole premise of this is, this is about growth. The last thing I'll say is back to the taxi market. Remember that the taxi market in Europe is a much higher end market, much more luxury product that is in the United States that comes with some nice unit economics and nice bookings as well. So anyway, a lot to get excited about there. I was just in Barcelona a couple of weeks ago with our technical team, Humbert, their office a month before. Teams have already been talking. They're gonna be here next week. So we're just in the early days, but we've got a whole lot of immediate term opportunities to drive growth. And maybe Aaron can talk a little bit more about the cost side, if that doesn't quite answer the question.

Yeah, I don't know that I have a lot more to add to the cost side, but I'll add a little bit more to some of the near term color. Clearly after kind of a deal process and a month long regulatory review process, as you might imagine, pretty typical in this type of a situation, right? That takes focus. So you're kind of splitting your focus between running the business and making sure that the deal gets done. So I'll just read it. David said, the teams are super excited to get going, right? We're just here in the first few days. And so we have really ambitious plans, as David just articulated going forward. I'd say, very near term, and as I think maybe about the balance of 2025, we had articulated when we announced the deal about a billion euro run rate on an annualized basis for the business. I'll just emphasize again, our third quarter guidance, that includes two months, not three, but as we think broadly about those five months or the balance of the five months throughout the year, I would say that run rate is a little bit lighter, nothing dramatic, and it does nothing to change our long-term plans. And then, we're also assuming that at least again, in this near term, this sort of five months, for the balance of 2025 on an EBITDA dollar basis for it to be relatively neutral, right? So we're going in here, eyes wide open, really focused on driving that growth on the top line side and energizing some of those growth opportunities that we see.

The next question comes from again, sorry, Ken Gryalski with Wells Fargo. Your line is open. Ken? Perhaps your line is on mute. Okay, the next question comes from Stephen Fox of Fox Advisors. Your line is open.

Hi, good afternoon. Erin, I was wondering if you could break down free cash flows a little bit more. It was a very strong number. Is there anything unusual one time in nature in that number? And outside of that, can you talk about the organic progress you made in cash flows? Thanks very much.

Yeah, thanks for the question, Stephen. I wouldn't highlight anything in particular. We specifically focus on a trailing 12 month number, right? Because there can be some quarter to quarter variation, but nothing new in terms of the dynamics. So just to refresh everyone, as we think about free cash flow, right? This is gonna be influenced by a few things. Of course, the growth of the base business, but also timing around our rides growth and the way that we accrue for insurance. And then the actual cash out the door payments for insurance, which tend to be on rides that were delivered, anywhere between one and seven years ago, but the bulk between the last one and three. So those similar dynamics, which we've walked through and articulated, remain the same. So nothing in particular to highlight, but we are incredibly proud of the progress. We continue to make 993 million over a trailing 12 month period. So we feel great about where that's positioned. Our balance sheet continues to be extremely strong. And so hopefully that is helpful, Stephen.

Yeah, that's a great perspective. Thank you.

The next question comes from Steven Ju with UBS. Your line is open.

Great, thank you. So David, I think one of the things you talked about before in terms of a product development direction for Lyft is to hopefully start opening up a differentiated innovation wedge versus your competitor, and you start diverging in different directions over time and Lyft will be known for various things, innovation, et cetera, but it seems like whatever innovation gap from either yourself or from Uber gets closed fairly quickly. So has your thinking evolved here in terms of how Lyft competes, how Lyft resources product development, et cetera? Thank you.

Yeah, hey, Stephen. I like this question a lot, and I'm gonna spend a minute on it. So the first thing I'll say is no, our approach hasn't changed. And the reason I say that is because in the technology world, you must continue to innovate. It is an imperative. And you can see that sort of by looking at history and look at what happens when companies start to outsource their innovation to competitors or just stop entirely. That's death, that's death. And books get written about this. You can read those books. If you start to read those books, I encourage you to look at chapter 11, because that's where you'll find a lot of those companies who decide to stop innovating. Now, if you look at the gap between us and our competitor, I would say their strategy does appear to be a bit of a photocopy strategy. Now, this I would characterize again, it's interesting territory to try to mine. But what's my evidence? Well, let's look at Women Plus Connect. Women Plus Connect, we did about two years ago. They just sort of came up with their kind of lightweight version a couple of weeks ago in a couple of markets. Let's look at Pricelock. Pricelock, we launched maybe eight months ago, something like this. Now, they've come up with something sort of similar. Let's look at the Silver, same story. So, okay, so you say to yourself, well, that's an interesting pattern. And we detect it. Again, when you see a company looking to it's other companies, competition, instead of the market for innovation, I don't think it tends to work out super well. But you might ask yourself, well, what's been the results? Well, the results are, we're continuing to grow quite nicely. And I don't tend to talk a lot about market share, but I will just take a moment to note that when I start, well, I'll just say it this way, our market share is at the highest point it has been in the last two and a half years. Highest point it's been in the last two and a half years. So, that's nice, right? And we're now, by the way, when we started, we were not making any money, we were consuming cash, we're doing a whole bunch of different things. Now, as Aaron DeSipp pointed out, 990 million dollars of cash, highest profits in the company's history, of course, highest growth rates, or excuse me, highest active riders in the company's history. Oh, a driver advantage of 29 points, 29 points over the other guys, in terms of preference, we could go with a driver of both apps, 29 points. Hugely important if you're in the service industry to have the people on the front line prefer driving on your platform versus the other guys. Okay, so, you know, you can feel, you can hear I feel strongly about this, the customer session drives for off-road growth, and it's working quite well, and I'd rather be the leader than the follower in the tech space. Here's the last thing I'll say, and this is maybe the most surprising thing you're gonna hear me say. For all of that, it's still small stuff, whatever, whatever, because if you look at this industry, this is an industry, there's a multi-billion dollar industry, it is growing at mid-teens growth, quarter after quarter after quarter, and it is ridiculously under-penetrated, ridiculously under-penetrated, with a gigantic 10, a gigantic 10, 151 billion arrives, and between the two of us, we do maybe three billion, okay? So if you just look at all that, and you're like, I don't care, copy, fine, go ahead, knock yourself out. What I really care about is, are riders and drivers getting a better experience on rideshare? If they are, the market's gonna grow, and if we're doing better than the other guys, faster than the other guys, leading more than the other guys, well guess what? History tells you pretty clearly how that's gonna end up. Thank you.

The next question comes from Nikhil Devdani with Bernstein, your line is open.

Hi there, thanks for taking the question. Apologies if this is a little bit repetitive, I've been bouncing around, but now that you've closed the FreeNow transaction, can you maybe talk about how you're thinking about investment into Europe as a region for you next year and thereafter? Is this gonna be a significant area of investment, or not so much? And I guess how much investment is required to get that business to grow a bit quicker? And add to the overall platform?

Okay Nikhil, it's definitely good to hear from you, and I promise I'm not at all gonna make fun of you for asking the exact same question that was asked two times ago. So look, just to be really brief, we bought FreeNow for all the growth opportunities it has. Its economics are great, its service is great, its relationship with regulators is great, all these different things, and we have a lot of ideas, as we were saying a couple of minutes ago, of ways we can leverage it. And it's not gonna be very costly. And I'll let Erin speak much more directly, and equally briefly, I think.

Yeah, I'll just sort of re-emphasize again, the case that we talked about here is you gotta remember that more than half of this market is offline, right? So just the opportunity to more creatively and innovatively capture more of that to come online, just refocusing frankly the team after a month long deal and regulatory process is gonna bring some improvements. The tech teams in some of the initial, at least thinking and brainstorming, have ideas about dispatch, other areas where efficiencies can be driven across the platform, taking expertise and experience that's already there. And then of course, over the longterm, we see a lot of value around our partnership strategy and expanding that in a much more global way, media, autonomous vehicles, et cetera. So that's really how we think about the growth there.

Appreciate it, thank you. And if I could follow up with a separate question, overall it seems like the DashPass program has been helpful for you. Is there any reason that Lyft should not be a bigger part of other larger subscription bundles out there? Is that a viable way to acquire new customers when you think about your partnership strategy at large? Or is some of the constraints there just making sure the economics make sense? Obviously there's between Prime, Walmart, Netflix, and Sikard, there's a lot of bundles out there that are pretty large. Are those addressable at some point as well via partnership, you think?

Yeah, I love that question. I mean, I think the answer is yes. I mean, Ryder plays a super, super important role in a lot of people's lives, right? I mean, it's 800 million rides a year just that we give. We're talking about two million rides plus a day. So therefore we're a very, very embedded part of people's lives. And if you look, you mentioned Sephora, I think it's an interesting example and then we can kind of zoom back out. So Sephora, we actually had a partnership with very specific, it was more targeted. It was over the summer, it was a three-day partnership. And literally we increased, so Sephora has something over 1,700 to 2,000 stores in the United States, some are pre-sending, some are pop-up. And we delivered something like four times the average daily volume when we did this partnership with Sephora over a short period of time to their store. So that's foot traffic that goes right to the store. You can imagine if you're Sephora, why you might wanna do something like that. If you're competing with online only competition, gosh, which is very convenient, of course, gosh, it's very helpful to have someone literally be driven to your front door, who's ready to buy. So I think what that suggests, because that's Sephora, it's not a subscription program. Of course, they've got a great points program and so forth. It's a subscription program, but it's a point in time program, but it gives you a sense of the type of opportunities that we can unlock. I think to your broader point, we very much see ourselves as part of an ecosystem that surrounds individual riders and drivers, individual riders and drivers. I'll talk about drivers in a second, actually. Through our loyalty program there, we've actually already given out something like 1.2 billion points to them to spend in their own way that they can actually then spend in places like Walmart or Starbucks or other gas stations, other things like that. So, a little bit of a roundabout way of saying, I think if you think of yourself not as the king of the world, but rather a part of a person's life and ecosystem of opportunity that riders and drivers are part of, then very much you say, gosh, if DoorDash is working very well, and it is, then why not others as well? We'll definitely be exploring it. And I'll just end here by saying, the thing that I feel the most strongly about is any partnership has to satisfy a couple of criteria. It's gotta be really interesting for riders or drivers, otherwise it's just kind of noise, and it's gotta work really well for both companies, which means they take a while to negotiate because they've gotta have economics flow in two directions positively. And hopefully they can be really durable and great for both. So, anyway, more to come, nothing specific to talk about there, but definitely I like the overall question and approach.

Thank you both. Sure.

The next question comes from Ken Gurelski with Wells Fargo. Your line is open.

Thanks so much. And sorry about the technical difficulties last time. I just wanna touch upon, David, you're talking about the penetration levels in the domestic ride share market and how there's so much room still to go. Can you talk a little bit about pricing? And if I go back, way back to kind of the IPO days, the talk was around getting cost per mile down low enough where you'd replace car ownership, or at least partial car ownership, especially outside the cities. Could you talk a little bit about how you're gonna continue, how you can address some of those lower price or lower cost use cases and the unlocks there? It's been a struggle domestically. Other markets have figured it out, let's say Brazil or India, et cetera, but US has been a real struggle. Could you please address that?

Yeah, sure. I think a couple of things. I mean, first, I think the basic thesis, no, I don't think I know it. It's like the sun coming up tomorrow. There will be fewer cars over time that are individually owned. There's just no question. Because there are just other opportunities. I mean, demand kind of follows supply. So if you only have one opportunity, buy a car, you do it. Okay, then car manufacturers got clever. They said, well, how about you lease a car? Okay, cool, that unlocks all sorts of interesting opportunities. That's a financing strategy. Now you've got various different car share networks, those are still quite small, but you have ride share. And that's the fundamental reason why so many kids today, I mean, a little sort of whatever demographic comment, but the big moment of getting your driver's license, this is not that big anymore. The reason is not because people don't want the freedom, it's because they can get it another way and then get it in an on-demand way and the car literally comes to them and then they don't have to maintain it all the sorts of. So all those things are part of the big picture. Now, when you get down to pricing, there's no question that price sell necessity is a thing. The lower you can get the price, the more demand you can tap into. It is not the only way you can see what's happening with AVs, which are not priced low, but are still expanding markets. So that suggests that you can do it in multiple ways, but clearly you can lower price to sort of stoke demand, unlock more demand. So, what's the floor there? Well, obviously driver earnings are a huge part of it. You've got a two-sided marketplace, which just makes things quite complex. Riders and drivers, they kind of want the same thing, but they kind of want a different thing, which is drivers want to be paid more, riders want to be paid less. Well, what's gonna be the big unlock there? I mean, no surprise, AVs. AVs are gonna be a big unlock there because now you don't have a two-sided marketplace in the same way, you've got a fixed cost that you can price in a different way. So that will absolutely have some pricing impact over time. There'll be other things to push in the other direction, but that's a big one. What's another floor for us? Insurance, in terms of big costs. We've done an incredibly good job managing insurance, incredibly good. It's an art of science, and we've really got it dialed in. But there are floors. Those floors typically are as much regulatory as anything else. We're working super, super closely with regulators across the country and state governments because it's a state industry. Aaron can talk a little bit about the general trends that we're seeing there. I wouldn't be surprised to find that some step-changes happen over time in certain states where the minimums are just out of hands. They're just too high, and that causes higher prices, and it causes lower earnings for drivers. There are a lot of people that don't really like that. You might have seen, for example, there's some press come out of the state of Washington, around Seattle, rideshare prices are too high. It's not because we're pricing them too high. It's because the state regulations, it's a combination of state regulations and insurance that cause higher prices. Anyway, long way of saying, really state regulations in Washington would be clear, but in other states like California, insurance is a bigger issue. So those are some things. And then there's just some cool innovation. Things like Pricelock and other, you might say bundles or almost cross-subsidies can continue to drive the effect of price down. If you look at our media business, our media business, which continues to be on track for $100 million run rate coming out of the fourth quarter, that is a business that over time can help subsidize rides. And Sephora, again, I've already used the example, but it's a good example, right? Those were free rides, or they were discounted rides to Sephora stores. So there are times, I think, where you can find third parties to offset the price of a ride, such that the driver still makes what the driver needs to make, but the rider pays less. So there's a lot more innovation here. There are some sort of semi-hard floors, but we'll kick through them. It'll just take time, things like insurance. And then again, AVs, I think, could slightly reset the table there. I don't wanna overset expectations there because there's cost to running AVs as well. But it certainly changes economics, I think, favorably over time. Thank you, David.

That is all the time we have for questions. I will turn the call to CEO David Rischer for closing remarks.

Listen, I just wanna thank you all very much for being a part of this call. I'm gonna go off script for about 30 seconds and say, I think it's a new lift you're looking at now. It's a much more global lift, a much more diversified lift, a lift that's got a lot of good irons in this sort of growth fire, and also margin as well. So we're a stronger company than we've been ever before, and I'm super excited to have you guys along on the journey. Look forward to talking to you all, either in person or next quarter, when we all get back together again. Thank you so much.

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