Lyft, Inc. (LYFT) Earnings Call Transcript & Summary

All right. Thank you, everybody, for joining. Good morning. My name is Nikhil Devnani. I'm Bernstein's U.S. Emerging Internet Analyst. I cover the rideshare space for us here. And it's my pleasure today to have Erin Brewer, CFO of Lyft on stage with me. Erin, welcome to the Bernstein TMT Conference.

Thank you. Thank you for having us. We're happy to be here.

Yes, we appreciate it. I have a bunch of questions prepared. If you'd like to submit some to be woven into the conversation, please do so via the QR code available to you and happy to work those in. But let's get started here. So Erin, maybe let's start with a look back on what 2025 was. The business now is doing about $18.5 billion in Gross Bookings, $500 million plus in Adjusted EBITDA. GAAP Profitability is now showing up on a more consistent basis as well. So it's been a journey in improving earnings quality as well. What were the main learnings from 2025? When you look back on it, what were the areas that you hope to improve upon as you look ahead as well as a senior leadership team?

Yes. I appreciate the opportunity to talk about 2025. It was an exceptional year at Lyft. If you look across pretty much any metric, record active riders, record driver hours, record Gross Bookings, record profitability, exceptional free cash flow. So we're extremely proud of that. And that's really underpinned by a couple of critical things. One, the foundational health of the platform continues to strengthen. We're picking up people faster. We're pricing reliably. That is the foundation of when you bring in an active rider, give them a great experience, they're going to come back, you can convert that into frequency. In addition, we've expanded the portfolio in really meaningful ways, great ways to drive active riders into the platform through the expansion of our high-value modes, for example, the expansion of partnerships, growth of our existing partnerships. We obviously added United, drove significant growth through our DoorDash Partnership, which we're really proud of. We brought on 2 acquisitions, the acquisition of Freenow, which expanded us into 9 countries into Europe. We brought on TBR Global Chauffeuring, which is one of the important elements we're putting together as part of our higher-value offerings overall. These have all been really important foundations of the business that have underpinned 2025 and will continue to drive us forward as we think about 2026. On top of that, you've got record high employee engagement. It's really important to have strong, engaged workforce who believe in what we're doing and will continue to drive us forward. And of course, just the foundational financial strength. We announced our inaugural share buyback program in 2025. So proud to be able to deploy capital in multiple ways, again, driven by the strength of the foundation that we've built overall. And as I think about how that all translates into 2026, really strong accomplishments, but we're not done by any stretch of the imagination in any one of them. We operate in growing markets. We'll continue to innovate in those growing markets, introduce new products, expand across partnerships, continue to accelerate growth across our portfolio, in particular, around our high-value modes and continue to grow the business, I think, in a healthy way. So a lot to be proud of as we look behind and a lot to be excited about as we think about 2026.

Maybe let's start with the North American Rideshare business. We're going to -- we're definitely going to get to AVs, but let's start with the core business to begin with. I think a lot of people think about the U.S. rideshare business as being more mature. There's high brand awareness for these apps already. People use them on a fairly regular basis. And so there's been this perception that eventually, we're going to hit a wall on rideshare growth or demand in general. Where do you see the opportunity for new customer acquisition in the U.S.? Where do you see the opportunity to continue driving consistent levels of healthy double-digit growth?

Yes. That is one framing of it. Another framing is there's 160 billion personal vehicle trips that happen and rideshare fulfills only an extremely small fraction of those. So the market opportunity continues to remain very large. And I think what you've seen is we've continued to drive really strong active rider growth. I mentioned a few of those as I was talking about 2025. They've held true for the past couple of years, and they'll continue to hold true as we think about the next few years overall. Again, the foundation is just how do you have an exceptionally good service. And as that improves and as people find that, that's a great way to get around, they're going to incorporate that. Our partnerships will continue to be a strong rider acquisition tool overall in addition to that. And so as we bring in those new riders, we're able to convert them into more frequent riders, introduce them to a broader selection of our products overall. Not only in large markets, but across low-scale markets, which we've talked about have driven exceptional growth as we think about 2025. But again, there's still so much opportunity there. So it's a broad playing field. It's a growing playing field. And I think we've got sort of all of the key ingredients in terms of health of the marketplace, innovative products, partnerships that are bringing new riders into the overall ecosystem to bring that all together.

What do you think the constraints on growth would be or any hurdles that you would worry about?

Not that we're seeing today in the business overall. We continue to see strength in the consumer. I know sometimes that does come up from time to time. Are we seeing any trade down or any differences of behavior? We're not seeing that. We're seeing strength across use cases. So none of those things really remaining a concern as we think about what we have in front of us for 2026.

And when you look at the product roadmap today, what products excite you as you look ahead? And an adjacent question and probably a longer-term one attached to that would just be how do you, in this industry, sustain product advantages, right? Because it's possible for you to replicate a product someone else is doing or vice versa. So a, how does the product roadmap look? And then how do you think about product-led growth and differentiation in this sector?

Yes. It's a great question. I mean I think Lyft has a really proud tradition in our industry of being the innovator. It's something that exists deep within the DNA of the company. I think we've been proud over the last couple of years to really reinvigorate that innovation engine through things like our Driver Earnings Commitment, which still remains unique and very differentiated in the industry, our Teen product, our Silver product. And to your point, sure, could some of those be replicated? Absolutely. But don't forget, we're in a really underpenetrated market, right? So the ability to be innovative and have other people see the strength of those innovations and continue to engage more and more riders in the marketplace is at the end of the day, a good thing. So being worried about being copy doesn't necessarily keep us up at night because, again, you've got those factors around the market. In terms of some of the things that we're really excited about, I'll kind of go back to some of the higher -- the -- our strategy around higher-value modes. We've been working -- arguably, I think historically, Lyft has been underpenetrated, underrepresented, whatever word you want to use there, historically as a company. It's just not been a core area of focus. We began to work on that many, many quarters ago and strengthening the foundation, first of all, with how we more efficiently bring on professional drivers, how we make our product more attractive to riders overall. And you've seen us talk over the last couple of quarters because we're beginning to drive 50% year-on-year growth on -- if you think about Q3 and Q4. So gaining some significant momentum there. But the opportunity is so much broader, right? We're revamping our Business Travel Rewards program. TBR in the ultra-luxury space is going to be an important piece of rounding out that upper end, especially as you think about corporate travel overall. So we're excited about that. We've got momentum. We've got exciting plans that we'll be executing on here in 2026. So I'd highlight that.

Is there a big B2B sales push, a differentiated push you need to make a different strategy to unlock some of that corporate side of things?

We exist and have relationships on the B2B side across different sizes of corporations. But arguably, I think the compelling value proposition, if you think about the business traveler was something that previously was a little bit underdeveloped. That's changing now. And so you'll be hearing more and more about differentiated approaches to business traveler and business partnerships.

With respect to your 2027 targets, you're looking at about $25 billion in Gross Bookings is the ambition. That's a mid-teens compounded growth rate from where we are today. How would you break down the components of that between riders, frequency and pricing?

Yes. I think the -- if you think about this over long periods of time, right, the fuel is around bringing in Active Riders into the marketplace. It's something that we focus very heavily on. We've already talked about a couple of the ways to bring in Active Riders, but you've seen very strong growth and strong progress, especially as you think about 2024 and 2025. That will continue to remain a big focus for us as we think about moving forward. When we bring Active Riders into the platform, then the job is really how do you convert frequency. And that's by having a compelling suite of products and offerings and just delivering a great service. So both of those that we talked about at our Investor Day being really important components of how we drive growth will be the main stays of the focus. If you think about long periods of time over this industry, you've generally seen trends toward modest aggregate price improvements over time. I think that's probably a reasonable way to think about it in the future. Our main focus is on driving Active Riders. And then when we bring them into the platform, continuing to drive that frequency.

If we look back on Q4, and I think everyone has slightly different math on it, but we came up with organic ride volume growth in the business previously might have been 12%, 13%. It looks like it decelerated to about 7%, give or take. Can you explain a little bit what happened in Q4? What might have caused that ride volume to decelerate? And how do we think about that gap between Gross Bookings and ride volume as you look forward?

Yes. So in the fourth quarter, late in the fourth quarter, we saw some, what I would say, unusually heavy promotion activity that was concentrated around the lower end, I think the Wait & Save portion of our product portfolio. So that did cause some disruption on the rides side late in the fourth quarter. As we got into the first quarter, that was -- those effects were not structural. They were very temporary. Why is that? We didn't lose any Active Riders. We emerged from kind of that short-term disruption in even a better market position than when we entered. So the strength of the platform is healthy. The foundation of our Active Riders is just fine. So that's sort of the fourth quarter. What we further talked about then as you think about the first half of the year is you should expect Gross Bookings to grow faster than rides. We talked about that -- the wedge of that growth being slightly elevated. And that's driven by really two primary factors. One, we are lapping a period over the prior year in the fourth quarter, in Q1, a little bit into Q2 of just lower pricing levels in aggregate over the industry. So think about 2/3 of that wedge being driven by that lapping of that particular environment. The balance 1/3, if you will, of the wedge is driven just by continued growth and diversification of our portfolio. So think about strong growth on the high-value mode side. Think about the addition of Freenow and TBR, which encompass that. Think about things like the growth of our Ads business contributing to that. Also in our bikes and scooters business, the growth of the enterprise piece of that portfolio. Those are things that are a little bit more structural that as they continue to grow, we will expand that wedge a little bit, all else being equal. But hopefully, that's a helpful framework to think about that as we look at the near term.

And investors should continue to think about the opportunity for acceleration this year. You still feel that's in the cards for North America?

Yes, that is absolutely still in the cards. I would say that as you think about Q1, Q1 across our business tends to be a seasonally lower quarter. That's fairly typical. That's primarily weather-driven. It's driven by impacts, for example, in our bikes and scooters business, fewer bike rides taken in seasonal months. And then Freenow, as we closed the acquisition of Freenow, we were careful to highlight that Q1 is also a lower quarter, Q4 being a seasonally higher quarter as you think about the Freenow business, Q1 being lower. So those are some of the structural elements as you think about just the pace of Q1. I guess the other thing that I would say about this Q1 is we've had some pretty interesting weather events across our country. Obviously, Finn, which we knew about in advance of the guidance, this recent storm, Hernando -- when you've got major cities shut down for a day or 2, weather impacts are going to happen. I would say they're a little bit heavier this year than in the previous years. But at the end of the day, we've got -- we're looking forward to strong bookings growth in the first quarter, obviously expanding our profitability in the first quarter. So we like where we're positioned.

At least the kids got a snow day this time, which is good.

That's good for them.

We're sitting in California, right? Where you recently gained some ground on insurance reform that went into effect at the start of the year. How has Lyft approached reallocating and reinvesting those insurance savings? And how are you -- what are you seeing in terms of the benefit that that's providing for demand overall?

I'll zoom out and then let's zoom in on California. One of the things that we've talked about as we talk about overall managing cost of insurance, if you will, which are a significant component of our business. One of the key pillars that we've talked consistently about is our efforts around policy and regulatory reform. So this strategy is nothing new. You've seen us talk in the past about more tort reform-related activities, for example, in Georgia and Florida in the past. Obviously, the coalitions that came together in California to just structurally change what's required, what we view as very common sense reform in the market. All of these things are part of a broader strategy about bringing a much more common sense way, which brings -- has the effect of bringing down prices for riders, generating more rides for drivers and more economic opportunities. And when those 2 constituents win, we also win. So overall, it's a model that we will continue to pursue. So California, that structural reform, as you pointed out, went into effect at the beginning of the year. And what we're seeing in the market is pretty much exactly what we expected to see. I'll describe a couple of dynamics there. Any time in any historical context, when you have some of the structural change, and it does result in lower pricing, you're going to have some of your more power riders, if you will, sort of see that immediately, right? Because they're high frequency, say, daily commute users of rideshare. And then you're going to have a broader set of the population that are less frequent users. Let's say, they take 3 rides a quarter. So it's going to take a period of time for them to see and incorporate that we're in a different environment. And then the behavioral change piece of that also builds over time. We've seen that in other areas in varying degrees as we pursued other policy reforms. And so I would expect California to play out very similarly. In terms of pricing overall in the market, California is no different than we operate more broadly. Our aim is to price competitively and price reliably. We've been doing that in California, I think, consistent with our expectations as you think about some of the savings. In many cases, those have been passed through in the market as we think about building this long-term flywheel of more rides, more earnings opportunities for drivers and better outcomes overall for Lyft.

Are there additional markets where you're optimistic about similar reform happening on the back of what we've seen in terms of the benefits for California?

I think the nice thing as you begin to build the specific use cases, and again, they're not like-for-like. Georgia and Florida, a little bit more tort reform. Obviously, California's core insurance reform. But as you begin to build these use cases and then over time, see the data of how that transpires in the market, that's extremely helpful in the conversations that we have across a variety of other states that we might be working with or other coalitions that we might be working with in terms of seeing what's happening on the ground. In California, again, that will build over time. Georgia and Florida, slightly different reforms. But again, those have been in place for a longer period of time. And so absolutely, we will continue to pursue this as a strategy. We think it's structurally long term, great for the market overall.

Can we talk a bit about the smaller markets or the underpenetrated markets? In Q3, you described it as driving about 70% of your growth, which is a fairly substantial number. Maybe just to level set, when you talk about underpenetrated markets, what is the scale and scope of the market we're talking about in terms of size?

Yes. A great way to think about it just structurally, earlier, I talked about the 160 billion personal vehicle trips in the U.S. is sort of the overall available market. The way that we define those lower scale markets, which are markets outside of, say, our top 39 to 40, that's about 2/3. That represents about 2/3 of that overall market size. So it's substantial. And it's been an area that we've been growing significantly. That's through great market management, focused local activities. We will continue to do that. That remains an attractive growth vector for us as we think about 2026 as well. So it's a sizable piece of the available market, and you'll continue to see us focus growth efforts there.

And what does the investment curve look like for those markets? And when you look at end state, do you think the economics in these sparser markets can be comparable to what you see in bigger cities as well?

The short answer to the second part of your question is yes. And so in terms of the investment curve, of course, it's going to vary. It's going to depend on what your starting point is overall. But the great thing around Lyft and the strength of our marketplace team is we do this every day, right? We've expanded across provinces and cities across Canada. We've continued to build across low-scale markets in the U.S. And so you begin to see incredible patterns that are broadly applicable. You put on top of that a lens with -- that has a local lens to that. It's a really powerful combination, and you get a team that gets very good at executing that. And so yes, attractive economics, obviously, efficient ways for us to spend as we think about growth overall. And that's not just theoretical. That's at this point, very much proven.

And starts with supply, I'm guessing in...

This is a supply-driven marketplace. So absolutely, things start with supply.

On international, you closed the acquisition of Freenow, which is becoming -- Europe is now part of your business as you look forward. What is the ambition longer term on the Europe business now? How big do you think you can get for Lyft over the next 3 to 5 years? And when you are allocating dollars as a CFO and making discretionary investment decisions, right, how does investing behind Europe stack up against the opportunities you have in the U.S.?

That's about 3, if not 4 questions. So if I miss one, please bring me back. So in the context of the acquisition of Freenow, it brings us into 9 new markets across Europe. Freenow, for the benefit of everyone, is a taxi-focused business. That is their primary product. Taxi tends to be obviously a more elevated product across Europe. They have a heavy business user audience overall. And so some of the attractiveness of that as a platform came across a few dimensions. One, just we saw out-of-the-gate synergies as we think about marketplace management. We knew we could improve the service overall. That's been an area where our engineering teams have been collaborating and making really strong progress as we think about the early days. We also saw attractive opportunities as we think about growth and expansion across our Ads business. Don't forget, we partner with global brands, that being an important piece. Our partnerships, again, we partner with global companies. So it's an attractive expansion and synergy opportunity. And then we also saw the opportunity around potential AV partnerships at the time of the announcement. Again, with the ambition that as AVs scale and roll out, operating in North America and in Europe, where you tend to have the highest Gross Bookings value per ride's going to be an attractive place to be positioned as we thought about AV partnerships. And so I think all of those things are very much in the process of proving themselves out as we think about Freenow. So excited about the platform overall and the progress we're seeing in the early days. I think the second part was capital allocation and how we think about that overall. One of the things I'm incredibly proud of now after being at Lyft for almost 3 years is that we're in a fully different financial position than we were when I entered the company. So you've got a company, to your point, in the opening that's generating consistent profitability, continuing to grow over time, generating extremely strong cash flows. So it puts us in a nice position as we think about the allocation of capital. And as we think about the growth of the business, it opens the aperture in terms of what we can achieve through organic growth and where the opportunities might be to accelerate through inorganic growth. I think TBR is a great example of that as I've highlighted the high-value mode strategy. So we'll continue to look at that through that lens. We have rigorous expectations, obviously, when we deploy inorganically for what we want that to return. But the flexibility is there, and we'll continue to look at it that way as we think about the future.

Are there synergies, be it revenue or cost for 2 assets sitting globally in different markets today?

As you think about things in the near term, that hasn't been the primary focus. Of course, where those opportunities were transparent as we think about service providers that we might equally use. We've captured that absolutely. As you think about the road to a single platform, we'll continue to execute where we see good, again, structural and foundational cost opportunities, but that wasn't the immediate focus right out of the gate.

We have to talk about autonomous vehicles, which are by far the biggest theme in the sector right now. And I think with respect to how investors think about AVs within the context of the incumbent rideshare platforms, there are several questions around the degree of TAM expansion, how the technology fragments over time or the extent to which that happens and then also the capital intensity of running a rideshare network in the future. On the first point around TAM expansion, what have you observed to date in terms of growth rates for markets like the Bay Area, where we have obviously seen an influx of AVs in the market today. I think you recently called out a 10% growth rate in San Francisco. But what has been the longer-term trend, I guess, on growth in this kind of market?

Yes. So over 2025, you probably heard us talk about fairly regularly what we were seeing across several of the U.S. markets where you had some scale of AVs on the road. And when you get to that place, the data becomes increasingly clear. And it's clear across multiple cities that AVs entering the market expands the marketplace. We've provided data across, I think, now Phoenix, L.A. and then to your point in the fourth quarter across San Francisco that demonstrate how we're seeing that. So not only is that 10% growth rate, if you think about in San Francisco in the fourth quarter, an interesting fact, Active Riders growth in San Francisco was also at what I would say is a higher-than-average growth rate as you think across the U.S. That's a great leading indicator. And we did see growth acceleration across every quarter in 2025 in San Francisco. And so again, just additional data points to sort of round out how even in a market like San Francisco, which has been one of the first and one of the more mature that you continue to have a growing market. You continue to have a market where our growth is not only accelerating on a ride basis, but bringing in new Active Riders into the Lyft ecosystem in a very strong way.

On the notion of tech fragmentation or self-driving technology becoming a bit more commoditized over time and accessible to more players, what do you as a management team look at for conviction and confidence in that end-state outcome? And when you look at the array of partners that you're working with or could work with, how do you think about where everybody else is relative to, let's say, the benchmark in the industry today, which is Waymo?

Yes. It's a great question. As a company, we obviously have an incredible team that's focused on this space that spends their day not only working with our existing partners, but continuing to develop deep relationships with players across this overall ecosystem. And we're super proud to be partnering with and launching with 2 of the global leaders, both Waymo and Nashville and launching with Baidu in London. So we feel great about where we're positioned. In terms of the more structural question to the way that we think about this, it all begins and ends with safety, right? Any time you're rolling out a new technology and you're thinking about going into markets with a new partner on a specific either vehicle or technology stack, safety is by far and away the most important, the first thing that we think about, the first thing that we're going to consider as we maybe launch new partners or continue to expand. And it turns out getting to the places, for example, that impressively Waymo has demonstrated, the leap to getting to those last few percentage points of edge cases is very, very hard. And so while you've got definitely an ecosystem of folks on the technology side who are doing exceptional work. And I think you will get to a place of fragmentation where you've got a number of providers. We're talking about an industry that will still be measured in terms of development over a factor of, call it, years versus quarters. So hopefully, that sort of provides some framework, how we think about it, sort of how we're seeing the ecosystem evolving.

To the point of the Waymo and Lyft partnership in Nashville, I think it's been described as being fairly productive or cooperative on unit economics, which I think when that first came out, sort of surprised people because the cost to run these AV networks are actually quite high. What is it about the structure of that arrangement that makes it a productive relationship for Lyft?

So the structure of the arrangement has 2 key components. One, we'll be providing fleet management operations in Nashville. We've talked about that. And we also have a component of the arrangement where we'll be doing some integrated supply sharing across platforms. And so that's unique as well. We're excited to work on that. We've talked for a long time about the capability that we have within Flexdrive, talking about why that mattered, why it matters that you understand the nuances of fleet management in a way that's integrated with rideshare. So obviously, our point of view is that we can deliver leading uptime availability through that capability, that will be a differentiator. And then I think in terms of delivering great rider experience, to your point, the level with which the 2 companies need to work together behind the scenes in terms of our marketplaces to pull that off in a way that's a great rider experience has been -- has some complexity. But obviously, as you think about delivering that experience and executing on that in a way that's beneficial to both partners, extremely important. The economic opportunities exist both on the fleet management side. And then, of course, as rides are -- as autonomous rides are delivered across the Lyft platform. So those are the 2 components of the economics overall.

On the component of fleet management and Flexdrive, how do you strategically think about that asset and that business now within the context of AVs? And should we interpret it as if you can improve the utilization rates and uptime on these cars, you can then recycle those savings back into competitive take rates, for lack of a better word, or competitive offers for AV partners? Like how do you evaluate the bundle of the service versus 2 disparate offerings?

Yes. So I think the bundle of the service is important, right? The advantages that are driven out of the Flexdrive are at its core, you have in an AV, an asset that needs to be maximally utilized, meaning you want to have a paying passenger in the car for the maximum amount of time. That all begins and ends with the car's availability to be dispatched, right? It starts with that. We think we can drive superior outcomes there. We think that, obviously, by having that integrated, it brings some advantages. You also don't have a middle person needing to earn economics at scale out of the over. So there's a number of different ways we think that drives advantages overall and competitive advantages. So as we launch, as we scale, looking forward to talking about how that manifests a little bit more.

What have been the learnings to the first, I think, deployment that went live in the U.S. was Atlanta with May Mobility. What have been some of the key learnings from that? And how do you take that as you go into more cities going forward?

Yes. I think the most key learnings sort of start where I started with -- you asked about what are the things that we factor in, and it's all about safety because safety is going to influence the way riders experience a new technology. And so some of the key learnings and observation is when you bring a new technology, a new supply base, something that people may have never experienced before, what is the response to different situations, how is the rider experience. So a lot of it is gauging input from the rider, understanding how they're experiencing the ride, experiencing the overall new way to get around and incorporating to the extent that some of that feedback can come back in terms of the way that the ride is delivered, that's been a really core foundational learning.

And you've talked about investment on the -- again, back to the fleet operations side of things, I think about $10 million to $15 million of capital investment to support the build-out in Nashville. How do we think about the number of vehicles, if we try to think about the level of spend needed as this portion of your business scales up, what scale of operations does $10 million to $15 million essentially support? And how do we think about that mechanism going forward?

So without giving you a specific number, obviously, as we've entered into approaching this market, Obviously, we're building towards something that has durable, long-lasting applicability as you think about operating the market. And so building a facility of the size that's going to support what we hope to see as we think about how Nashville develops over the long term, I think, is the way you should think about what that investment supports.

And what are the challenges or bottlenecks to fleet management on the AV side versus perhaps for traditional ridesharing?

I don't know that I'd describe it as challenges or bottlenecks, but some of the important nuances is obviously the level of charging capacity that has to exist within these depots. That influences the way that you kind of work with cities, develop a particular functional site. And so I would say that's an extremely important piece in fact certainly factoring in both where the Nashville depot will be positioned and sort of the work that was required that is required to get it up and functional overall. And that's an important distinction.

And is there a role for the rideshare services on the insurance side of things to help with AVs as they commercialize as well, given the experience you have already in the sector and the relationships you have working in different markets. What is the role of your platform from that angle of things?

Yes, it's a great question. Of course, it's a super early question because if you think about, again, where we are in the overall development of this industry, it's extremely new. To have a market where you have sizable insurance companies sort of getting into it, you're going to need more miles, more data, frankly, more certainty as you think about structural, the whole rules of the road, regulatory, what will be required. And so I think that will develop over time. That being said, if you think about the operations that we've built around our own insurance portfolio and you think about the management of claims as being an important piece of how you manage costs over time. There are portions of that expertise and that capability, which we do think will be useful and helpful as this market develops over time, for sure. Very difficult to, with precision today, say exactly how that will transpire. But there's no doubt that, that foundational capability is going to be helpful.

On the broader point of capital intensity with AV fleets, how do you think about using your balance sheet within the context of bringing more of these cars to more places? To what degree do you want to use your balance sheet? And just help us understand sort of the CapEx implications for Lyft.

Sure. We have talked about that, again, as we are in the early stages of this technology being an important piece of supply as you think about rideshare that we would be willing to invest in these rollouts, whether it be what we're doing in Nashville in terms of building a depot, what we're doing initially with Baidu in London in terms of buying that initial test set of cars. So that makes sense to us, especially as the markets are developing and as everyone is in this very much learning phase of how markets roll out at scale and then become good financial engines for all the players involved overall. Don't forget today, right? We own thousands of cars on our platform today through Flexdrive. We own and lease multiple sites across the country to support that overall. And so we have experience in terms of what it takes to have financeable assets. I do think JVs, again, at scale over longer periods of time will become financeable assets. But in these early phases, in certain cases, it will make sense for us to deploy some limited capital as we're launching in cities and launching with new partners.

And today, it feels very early stage and then small amounts in general. As you think longer term, are there guardrails you put on the business in terms of capital intensity that prevent this from becoming like a bigger shift in business model?

Yes. I don't think we see it today as developing Lyft materially changing in terms of the way that our asset structure happens. Again, as this supply comes in over a matter of years and not quarters, you will develop foundational data that will make these financeable assets. We think we can see a pretty clear path to that. And I think likely more at scale, that's how this rolls out rather than rideshare somehow transforming into a different asset model.

And is the key on financing essentially the unit economics getting better, the cost curves coming down?

Yes. And seeing the data on the road. Yes. Costs coming down, unit economics becoming more definable at scale rather than today where they're very -- you have many different experimental models that are happening in the market at very low scale.

With the longer-term vision of local operators owning more of these fleets or financing them?

I think that's a very reasonable scenario. Yes, I think that will happen.

On the broader topic of capital allocation, you've done some M&A recently. There's organic investment opportunities. You just have your inaugural buyback now. How are you broadly thinking about capital allocation? And why was this the right time to announce the buyback?

Yes. We chat a little bit earlier about sort of frameworks around capital allocation. Our framework is, obviously, we are a scale business. So maintaining core liquidity is really important just into our foundational operations. We are in a growth business. So investing against that growth is going to be important for us as we think about going forward. And then importantly, returning capital to shareholders. So we completed about $500 million of our inaugural share buyback program in 2025. That leaves about -- that left about $250 million left on the authorization, and we announced a new $1 billion authorization. Stepping back, as you think about share buybacks, what I would say is, as a company, our point of view is that as you think over longer periods of time, it's important to be reasonably steady as we think about share buybacks in the market. That means we'll probably be in the market each quarter, et cetera, et cetera. And I think that's important to have as you add this as a component of your capital allocation. That being said, the framework of our program allows us to be opportunistic. And as I think about where we sit today, arguably, our argument, our stock is undervalued. It allows us to be opportunistic in periods of time where we see a dislocation. So that's a broad framework for our program, how you should expect us to approach it and how we think about it as part of our portfolio.

Part of the financial framework looking forward is that margins will continue to grind higher. You've talked about a 4% target as a percentage of Gross Bookings. We are in and around 3% today. So can you bridge us to those levels? In your opinion, where do you have the most conviction in incremental margin expansion coming from?

So the conviction in incremental margin expansion, I'm going to touch on the core themes you heard us talk about at Investor Day. They've been the same levers that have driven us in 2024 and 2025 to record levels of profit and profit expansion. And they're around a couple of critical areas. One, obviously, as our platform continues to get healthier and healthier, meaning that we've got great balance in the marketplace. We're picking up faster than ever, in most cases, faster than our major competitors. We've got pricing that's reliable. That's going to continue to grow and expand the platform. This is a scale business and scale matters. When you do that exceptionally well, as I think we've been demonstrating, you can then get very, very efficient at the core economic tools of the way you balance the marketplace, and those are through incentives. So we set out some targets at our Investor Day about how we wanted to -- or the goals we wanted to reach around efficiency. We've well exceeded those in the first 2 years, and I think we have a great opportunity to continue to leverage that as we continue going forward. So that will be an important piece of things overall. The expansion and broadening of our portfolio across, in particular, the higher-value mode end, both in and of itself and frankly, through new rider acquisition through partnerships, those riders tend to take a higher mix of higher-value rides. So the expansion and mix of our portfolio around that higher value is going to be an important driver. And our ability across that growth and that scale to remain extraordinarily disciplined as you think about our foundational cost structure. We talked about at Investor Day, our goal to drive about 50 basis points of fixed cost leverage. We've almost doubled that in the first 2 years. We're not done. We'll continue to get more efficiency there overall. So it's the foundations of the business, the discipline and excellence with which we operate, our ability to expand our mix overall, those will be -- those will continue to be the fuel that continues to drive our margin expansion.

Given the progress you've already made on some of those incentives and platform variable costs, should we think about fixed cost leverage being a bit of a handoff now to that portion of operating leverage? Or do you think there's still on the variable cost side, still opportunity?

I think there's still opportunity across all of those.

And how about advertising within that context as a higher margin revenue.

Thank you for bringing that up. Yes, the Ads business has also been an important component of that. Obviously, we exited 2025 right on track with sort of the long-term framework we set out. We grew -- we talked about innovation earlier, right? Lyft was an innovator in terms of mobility marketing through the app, and that's grown exceptionally well. We're now entering sort of the next phase, the next leaping off point, if you will, of our ambitions for the ad platform. And those are all things around experiential, more experiential ways that we can bring value both to riders and through the advertisers. And then frankly, through companies who also have an interest in mobility marketing and mobility data and partnerships that we can leverage around that is going to be another value unlock. So our teams are hard at work on launching those pieces of the portfolio. So we'll look forward to continue to keeping you up to date on that.

A bit of a theoretical question, but I've always wondered why there hasn't been a stronger push to not that I want to see ads everywhere, but why there hasn't been a stronger push to ads when someone is in the car, right? I mean someone is in the car for 20 minutes. They're probably on their phone for 19 out of 20 minutes. Is that a surface area that is untouched today that you think can be monetized more?

No, we definitely deliver ads through the ride. We've innovated that in terms of different ways that they're experienced best for different users, but it's absolutely a compelling piece of the value proposition, especially when you're working with companies who are building brand overall, maybe launching something interesting because you tend to have a little bit more captive attention for longer periods of time.

And there's a lot of discussion these days around AI making people generally more productive in the workplace. As a CFO, as you look at how quickly the world is changing and as you think about resource allocation and doing more with less, what is your view on where you see this going? And how does that influence your perspective on managing the cost base as you look forward?

Great questions. I would say in terms of what we have deployed within the company, it's probably pretty similar to what you're hearing from other companies. We're definitely deploying developer tools where we're seeing strong efficiencies. That's not new. We've been doing that for a little while. We're definitely deploying innovation around the way that we approach customer care, whether that's on the rider or the driver side and continuing to see great efficiencies out of that. We've also launched it through customer-facing product, specifically initially to the driver with the Driver Earnings Assistant, which is basically an AI tool that helps the driver plan, set a goal, and then plan their week or their time on the platform, and that's been very effective. So we'll continue to leverage these tools. It's obviously something that as a company, we evaluate across multiple disciplines on a semi-regular basis. But those are some of the things that are in flight today where we've seen the efficiencies clearly come to life.

And is the philosophy to reinvest that back into more growth as you think about doing more with less?

I think how this plays out in reality is generally, there's some combination of that becomes a little bit more fuel as you think about fixed cost leverage, in particular, as you think about development costs, general productivity tools overall. And then a portions of that become where do we invest just generally as a company where we think we have great long-term growth opportunities, all with the mindset of those 2027 targets being our North Star.

Last question for me is closing remarks from you. What do you want to leave the audience with today? What should investors continue to expect from you and Lyft as they look forward?

I guess what I would leave with is just the pride that we have as an organization for the incredible results we've delivered economically over the last couple of years, arguably, I think the way that we've transformed the strength of the platform. This is not the Lyft of 3 or 4 years ago. This is a resilient company. This is a company that executes extraordinarily well. And I think we are really excited as we look to the next couple of years and the growth opportunities that we have ahead of us.

Great. With that, we'll leave it there. Thank you so much for your time.

Thank you, Nikhil.