Lyft experienced over 20% year-over-year growth in rides and gross bookings, with another quarter of positive free cash flow.
The company is on track to exceed its initial full-year free cash flow goals.
Driver Initiatives and Earnings
Median U.S. driver earnings increased to $31.10 per engaged hour, with net earnings around $24.25 after expenses.
Introduction of features to reduce ride cancellations by nearly 50% and provide drivers with more control and transparency.
New earnings commitment ensures drivers earn at least 70% of the rider’s fare each week.
Women+ Connect rollout led to a 24% increase in women and nonbinary driver activations.
Lyft saw the highest number of active drivers and driver hours since 2019.
Rider Experience Improvements
Enhanced reliability and reduced pickup times, leading to the fastest service in 4 years.
Reduction in Primetime (surge pricing), resulting in more stable and predictable prices for riders.
Expansion and Lyft Media
Significant growth in Canada with double the rides and new rider activations.
Lyft Media revenue grew by approximately 250% year-over-year.
Financial Results and Projections
Q1 supported 188 million rides and 21.9 million active riders, with gross bookings of $3.7 billion.
Revenue for Q1 was $1.3 billion, up 28% year-over-year.
Q2 projections include gross bookings of $4 billion to $4.1 billion and adjusted EBITDA of $95 million to $100 million.
Full-year outlook anticipates mid-teens year-over-year rides growth and an adjusted EBITDA margin of approximately 2.1%.
Positive free cash flow expected for the full year 2024, with at least 70% of adjusted EBITDA converting to free cash flow.
Operational Focus
Lyft continues to prioritize operational excellence and customer experience.
Cost management and strategic investments led to a strong cash position of approximately $1.7 billion.
Closing Remarks
Lyft has made significant progress towards building a customer-focused, financially healthy business.
The team is executing well with a clear path to profitable growth.
Question and Answer
Growth and Investment Cadence
Question
Is there any reason for the expected growth to slow down in the second half of the year, particularly if the company is investing behind it, and is the increased sales and marketing spending in Q1 a one-off due to take rate capacity or indicative of a new normal investment intensity?
Answer
The company reaffirms its full-year guidance for mid-teens rides growth, with second-half rides growth expected to be approximately 15%.
No change to the outlook for full-year gross bookings growth, which is expected to be slightly faster than rides growth.
The company makes trade-offs between contra revenue and sales and marketing incentives based on dynamic marketplace conditions, and the increased sales and marketing spending in Q1 was due to seizing opportunities for growth.
Mobility Business Initiatives and Brand Repositioning
Question
What are the key initiatives the company is focused on to drive growth and reposition its brand and products within the mobility business, moving away from price competition?
Answer
The company identifies several growth drivers, including commute, “party time” (Friday and Saturday nights), and the importance of bringing people together for mental health and societal well-being.
Operational excellence, such as faster pickup times and improved pricing, drives growth and repeat use.
Innovation for new segments and use cases, such as Women+ Connect and the 70% earnings guarantee for drivers, contributes to incremental growth.
Partnerships, representing around 20% of rides, with companies like Chase and Delta, are an important part of the strategy.
The company acknowledges the need to refine its brand messaging but is confident in its strong brand position and customer loyalty.
Autonomous Vehicles and Rideshare Improvements
Question
What are the latest thoughts on the impact of Tesla autonomous vehicles on ridesharing companies, and what are some other rideshare improvements the company is working on?
Answer
The company views autonomous vehicles as more of an opportunity than a risk, as they represent another potential car type to incorporate into the network.
The company highlights its on-time pickup promise as a significant innovation, with a remediation rate of less than 1.5% and a positive impact on rider and driver experience.
The company teases upcoming improvements related to airports and acknowledges the frustration of not being able to share more details.
Geographic Performance and Free Cash Flow Conversion
Question
Are there any specific geographies besides Canada that drove better-than-expected results, and what factors contributed to the improvement in free cash flow conversion from 5% to 70%?
Answer
The West Coast continues to show nice growth due to recovering from pandemic-related restrictions, but there are no other significant trends to report in specific geographies.
The improved outlook for free cash flow conversion is primarily driven by better visibility into expected payments related to the legacy book of insurance, which are coming in better than initially anticipated.
Pricing Strategy, Elasticity, and Contra Revenue
Question
Can you reiterate the company’s overall pricing strategy and philosophy, discuss any changes in the pricing environment in Q1 and Q2, and provide insights into the elasticity of demand within the various modalities?
Answer
The company’s pricing philosophy is to operate in a healthy and competitive manner, and in Q1, it saw some higher pricing in the back half of the quarter, partially offset by lower prime time.
Contra revenue incentives per ride have become more efficient as the company focuses on increasing driver preference and helping them maximize earnings through improved demand forecasting.
The company’s pricing strategy includes offering a variety of ride options to cater to different customer preferences and needs, and it aims to bring prices down by improving supply-demand management and reducing prime time.
Take Rate Opportunities and G&A Expenses
Question
What are the opportunities for take rate expansion, and what are the key drivers behind it? Additionally, were there any one-time or unusual factors contributing to the slightly higher-than-expected G&A expenses?
Answer
The healthy take rate is a result of operating competitively with a focus on customer experience, which drives increased driver preference and higher earnings, enabling the company to be more efficient with contra revenue incentives.
The company expects the revenue margin to be reasonably similar in Q2, with healthy marketplace trends and increased bike and scooter usage contributing to higher revenue in the second and third quarters.
The slight increase in G&A expenses from Q4 to Q1 was primarily due to changes in the tax accrual and other lumpy corporate expenses and accruals.
Media Business and Driver Earnings
Question
Can you discuss the opportunities and performance of the media business, including the impact on take rate, and elaborate on the strategies to further increase driver earnings?
Answer
The media business presents opportunities for brands to reach consumers in new ways, and the company has seen positive results and early advertiser return on investment.
The company’s first-party data and in-app advertising capabilities, such as video ads and targeted promotions, provide a valuable and accretive experience for both advertisers and drivers.
The company is focused on increasing drivers’ gross and net earnings through various initiatives, including increasing ride volume, improving driver positioning, negotiating better gas prices, and exploring new use cases and modes.
User Growth, Frequency, and Partnerships
Question
How does the company approach efforts to drive user growth and increase frequency among active riders, and what are the opportunities in adjacent categories for partnerships?
Answer
The company’s strategic focus over the past year has been on driving frequency, with initiatives to improve driver pay, pricing, and ETAs, resulting in a significant increase in frequency and improved user experience.
The company is now shifting its focus to attracting new users through both traditional and innovative methods, while continuing to invest in partnerships to drive growth and expand the range of use cases for rideshare.
Regulatory Challenges and Mode Mix
Question
How is the company positioned for upcoming regulatory challenges, including potential reclassification of drivers, and what strategies are being implemented to improve the gross margin profile, such as mix and mode adjustments?
Answer
The company has specific strategies tailored to each market, including trials, legislative proposals, and ballot initiatives in Massachusetts, working with officials in Minnesota, and monitoring the California Supreme Court’s decision on Prop 22.
The company highlights the success of its “wait and save” mode and the recent launch of “Extra Comfort” as examples of mode mix adjustments that have shown notable progress.
Use Cases and Frequency Outlook
Question
Can you discuss the impact of changes in use cases, such as shared rides, on frequency, and provide insights into how existing use cases can grow faster or new use cases can be developed to drive increased frequency beyond pre-pandemic levels?
Answer
The company believes there is significant room for growth in both existing and new use cases, and the current frequency is not a ceiling.
The company highlights the potential to attract new users through targeted marketing and partnerships, while also increasing frequency among existing users by offering a more compelling experience compared to competitors.
