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

So it's very interesting. Okay. Let's -- again, we'll step back for every 1 of these questions just to give a little context. I mean the first thing you have to SP1760348604 In terms of very large cost for rideshare, as you know, in the billions of dollars. So you have to start before you even get to the policy reform, do you have a well-managed insurance program. We have I believe, best-in-class managed insurance program. We've got amazing people on it. We have amazing technology by it. We have a whole set of tools. It's everything from the safety tools that we have to the claims management tools and everything in between. -- and the way we interact with our partners, I'm talking about our insurance partnership is very, very deep, very, very deep. We -- yes, we exchange a lot of data because we, in some sense, have a common outcome, which is we'd like to reduce oxitfrequency and severity. Okay. But you can only go so far given the policy framework, particularly in certain states, California sort of being Exhibit A, where insurance minimums are so high, they encourage all sorts of crazy perverse behavior. As you know and you're kind of alluding to, we had a very, very significant insurance, I would call it a policy in this last year. We had a smaller 1 in New York. We had a very big 1 in California. To give you a sense, the order of magnitude, it could be $6 in a single ride that you're paying just to cover the $1 million minimum insurance prior. Now it's put down to $300,000. So -- and so then the question is, well, where does that extra money go?" -- and the basic answer if you go back to our strategy is we want to give it back to our customers. We want to give it back to our customers, right? We want to give it back to riders in the form of lower prices. We want to give it back to drivers in higher pay and in greater volume. The case study of California is very interesting. And I'm going to be sort of illustrative here rather than quantitative. But looking from your perspective, you might say California growth was kind of looking like this for a pet times. Then we went into reform mode and you might see it kind of look kind of like this because these seem to take a while for people to change their behavior. And now you would say it is going like this. And so every state we can bring this kind of level of sort of policy reform 2, we'll do it. .

Okay. Understood. You alluded earlier to a partnership strategy. You have a lot more of these partnerships in place now than you've done in prior periods. Talk a little bit about what you've learned about the customers who come to you via these partnership strategies? And how are you thinking about the opportunity set to grow the entry way into your platform into a broader example of EV of customer cohort over time.

Love that. And I think if you're -- some analysts kind of stay at high levels, some analysts like to go down deep. This is an area, actually, I think the depth pays off because the partner -- each partnership plays its own role for us and for our partner. Let's give a couple of examples Well, first, again, a reminder, about 30% of our rides are tagged to partners up from 20% a couple of years ago. And we would expect that will continue to decline because it's a very, very important part of our customer acquisition and retention strategy. Okay. Now let's break it down a little bit. Let's look, for example, at DoorDash. Okay. So DoorDash is a relatively new partner in our portfolio, but we are thrilled with the partnership thrilled. And it's not just early indicators anymore. It's now been in place for some time. But the most recent indicator is our recent entry into Canada DoorDash has mildly exceeded our expectations, a crazy number of 40% up on something, I forget exactly. What I can tell you is -- and here's the thing I absolutely do remember, we have certain annual goals for that partnership in terms of new customers that are linked, and we've exceeded those annual goals already and the Canadian expansion just happened a couple of months ago. So okay, what does that tell you? What that tells you is it's working for us, and it's working for them. How is it working for us? It drives frequency, right? People eat 3 times a day. And so that's a frequency driver for us. For them, what it allows them to do, quite obviously, it allows them to have a competitive offering with a competitor. And that's very helpful for them. So it absolutely helps with companies. And you would expect that partnership to continue to deepen over time based on how successful it's for both of us. United Airlines. Okay, United is a newer partner, -- here is a very interesting fact. You can now earn a mileage plus miles by taking lift, you can burn them as well. People have earned roughly in the 6 months or so that it's been out, maybe more I think it's about $600 million so far, and they have burned roughly $300 million miles so far. How we spend those miles on left. Why is that good? Okay. It's good because United customers to be travelers, obviously. So they tend to take airport trips, obviously, which tends to be longer and higher margin, higher price trips, probably obviously. People tend to level off. They take extra comfort in black to airports more often than. And others. So that's good for us. Why is it good in? It's good for United because most people, not the people in this audience, who those people travel maybe once or twice a year on airlines. So you don't have that many ways to spend your points, which means your points only have a certain value. But if you can spend your point every single day on lift, it increases the value of the point pool, which is good for United because all of the sudden as their MileagePlus program, more interesting to people. So it's a great partnership. By the way, we now show up in the rival tab. The departs having departure tab and you can see us growing deeper and deeper there. But it's really around high value, less frequent. Let's take maybe 1 more built, okay, build a much smaller company, some belt because they are a very significant presence in New York. Bilt, as you may know, it's a platform that allows you to pay your reds on their app and then you get points back to do the things in your community. How many times do you pay rent a year, 12 times a year, right? So they don't have -- they have a product that has a certain frequency, but they'd love to interact with their customers every single day. And so through the built point thing, which you can again burn and earn I think people converted over 1.5 billion points since the beginning of that program. So I know that was a lot of color, but it tries to give you a sense that each one of them has -- it has a use for us and has used for our partner. And to wrap it up, I would expect -- don't think of us as having 70 partners in 5 years. Think of this as having, say, 5 to 10, maybe but really deep and mutually beneficial.

Okay. And you front ran my follow-up. I was going to ask about how to think about the potential for density in this. But it sounds like you can rather deeper with a handful of partners to address maybe certain verticals in general that open up opportunity sets on both sides. So that was very clear. All right. We got this far, and we haven't talked about Evs. So we're going to talk about EV but I want to give you the opportunity to just lay out your world view of what's happening right now in mobility. And the decisions you're making as a company and the team to align yourselves with the secular themes around autonomous longer term? And then maybe I'll have 1 or 2 follow-ups.

Awesome. Okay. AV. The first thing I want to say, and this is again, like if you remember nothing else today, remember this. There are people who believe that AVs are a threat for our industry. That is dead wrong. It is the biggest gift we could possibly have gotten. The biggest gift we possible about. Why? Because it is technology that customers like, right? So if you've taken away low, you know this, right? It feels reliable, it feels primate if that's what you want. It feels safe, magical. And the economics are us Think of the 2 biggest costs we have in the rideshare industry, we pay drivers a lot of money. We pay insurance companies a lot of money. I'd expect over time that will go down, not. So you don't often get to be in an industry. There's going to be a massive transformation where the product itself is actually getting significantly step change better and cheaper to operate. So that's amazing. So then the question becomes how is this Lyft responding. And I would argue very strongly, not just from my position, but I think looking at it somewhat objectively, that we are the best positioned company in the world to take advantage of this transition. Why? Because first, you've got to have demand, right? If you don't have demand, no 1 is going to -- it doesn't matter, right? And it's very expensive, but to create demand very, very spectra. So we have a lot of billion rides a year, 50 million customers over the course of the year. Then what else do we? And then we have all of the systems that are required to take that demand and turn that into a ride. That's -- how is it priced? Where is the pickup location, -- where is the drop-off location? What's the gate code for this community? What's the -- what happens when you leave something in the car, people leave 8,000 times a week today. People leave a phone in a lift thousand times every week, okay? That's a system we've built. We've got a crazy system that does alternative amazing things as soon as you get out of the car, it allows you to contact the call, it's quite a bit of work. But now we've taken our average phone right now, something like 60% of people get their phone back in less than 3 hours, which is a huge deal compared to 0 a couple of years ago. So if all these systems that take millions of pride requests every single year and translate them to rise. That's one thing that we have as well as we have millions of customers. Then what's the next big piece is you've got to manage these things. These are physical assets. They take up space in 3 dimensions. They don't charge themselves. They don't reboot themselves. They don't clean their own sensors. They don't do any of this in themselves. All of that takes human labor, and it takes expertise. We've been doing this now for over a decade. We have a subsidiary called FlexDrive, FlexDrive owns anywhere from 10,000 to 15,000 cars. It was originally designed for right -- excuse me, drivers who didn't want to use their own car. But now we've extended that to capabilities. And this is truly best-in-class. This is all about making sure that, that asset, that multi-hundred thousand dollar asset today, which maybe someday is 50,000, but for some period of time going to be hundreds of thousands dollars per car, has to be utilized, has to be available. And it's all about making sure that that's available. If I compare our availability rates to another -- so think of 100 cars, how many of them are available to drive at any 1 time. Think of it us then think hertz. And I'm not picking on hertz. I'm just using this industry example. Hertz might -- they might be very excited if 80 of those 100 cars was available to drive at any 1 time, be very excited. I think they've done a very good job. We would be disappointed if it were less than 90%. That's our record. I mean that's our it. Okay. So there's physical infrastructure. We can come back to what that kind of feels like and looks like. We've opened up a natural recently. It's kind of an interesting case study. And then there's a whole set of policy issues that have to be sort of worked out and there's a whole set of other issues after we worked out. But our job here, and now I'll stop is we want to be the company that is the best position take this very expensive R&D, billions of dollars worth of R&D and take the products that are coming out of those R&D labs and commercialize them. We will be the absolute best way, the best demand generator, the best fleet operator, obviously, and then the best partner.

So there was a lot in there. But let's maybe maybe just do it down to 1 question. I'll ask as a follow-up, which is what I find investors struggle with is what milestones or road map am I supposed to be following for how this ecosystem evolves. You've made a number of partnership announcements. There's more vehicles that are going to come on the road with each passing quarter and year. How would you anchor investors around thinking about what should they be mindful of to gain more confidence in your strategy with respect to AVs.

Okay. So it's a very, very good question. It has a multidimensional answer, but I will really try to simplify. And -- but the first level setting, I think we have to do is this will take time. And the reason is because it's physical world, it's city by city, it's policy maker by policymaker, it's OEM by OEM. Many things have to line up, right? So then that becomes well, okay, to your point, what are the big milestones you should look at. And if I were in your shoes, I might take a number of cities as an example, top-tier and second-tier cities. And I might start to look across them and say, okay, where is there enough demand? Where is there a good chunk of demand where rideshare companies can really work in a way because you have to do demand otherwise, assets can't be utilized. Where is there a technology partner an ADAS profile self-driving provider, who is capable of operating at some scale with very importantly, driver out, right? So that's going to be another thing. Then where policy things lining up? And then where is their physical infrastructure being built out in each of the -- in the cities. And I think when you start to see not just 1 city or 3 cities or 5 cities, but 10, 20, 30 cities. Where you can check all of those boxes where you can see some sort of driver out at scale thing going on, where you can start to see the policy kind of lining up to open up because a lot of people can say, "Okay, well, good up to 200 cars. We're not going to do 2,000 cars when you start to see physical infrastructure of the type we've put in Nashville. Again, I'll come back to that. I think it's going to be -- you sort of have to be able to check all of those boxes over the next couple of years, and that's what's going to start to kind of open your eyes. If I'm going to say 1 last thing. I would say, by 2030, I think it's quite possible we will be doing at least 10% of our business through AVs. By the way, still 90% driver driven, let's be clear. The hybrid network is the -- you've got to have it. Otherwise, it's very, very difficult to create a great service. but 10% might be AVs. I would then -- if I kind of stepped into it, here we are in 2026. I expect in 2027, you do see some significantly larger scale driver out across multiple cities and then it will be in 28, 29 and 30 where things really start to scale up.

Okay. That is very clear. Micromobility, you referenced it earlier, -- how should investors think about where you operate with micro mobility today, what some of the building blocks or growth are going forward? And how to think about even geographic expansion in areas like micromobility, if that's an area of focus.

Yes, I love that. SP1760348604 You know what, Eric, if you don't mind, this could be a first. I'm actually going to turn it back to AVs for 1 more second nuts, right? Because I do want to say 1 thing. We just started to take yesterday. It was our first day of accepting riders onto Waymo's in Nashville. And I think if you're looking back to your earlier question, if you want to see sort of a microcosm of how this is going to get built out, there's a back-end piece to it where we're currently managing a temporary depot. That goes to a full-time depot starting in the middle of October, 80,000 square feet, 4.5 megawatts of power to this thing to keep these in charge. Availability is going to go -- and then you look on the demand side, the integrated marketplace we've created with Waymo, where you can literally get Waymo and Waymo app or the Lyft app. I think you can almost start to use because they're sort of tip of the spear. So I might encourage you to look at that city and see the progress there and then see how many other states are falling the same that. Okay. Back to your micromobility question. Okay, Microphone is amazing. It is -- we're primarily talking about eBags, of course. If you look at sort of the trajectory of mobility around the world, not just in the U.S. it's really the introduction of e-bikes that have all of a sudden taken cities and flattened them, right, even a study like ASCO. It makes the whole city available to you on an e-bike, and we feel that every day. Just so that everybody knows, we run the bicycle system here in San Francisco and New Era Chicago, in warehouse Portland and what am I forgetting Brauman. In D.C., Boston Yes. So we're a significant player in that space all across the United States. And then we supply the software and the hardware in around 50 other markets around the world. It's everything from Barcelona to Madrid to London, to Guadalajara to pick sites all around the world. This is an investment we started to make years and years ago because we could see the future. We could see as London was remaking itself as a bike friendly city as New York was be making selves back ran the city. This would be physical level infrastructure that fits into the city and tends to be long list 10 to 15 years and therefore, provides a really, really good kind of platform for us as a company to kind of frankly get fingers cities in a deep way. and to do something that rider absolutely a lot. Okay. Now to your question, a couple of things. We just acquired -- or in the process of acquiring a company called Survey. Asure is a bike operator, the world's best back operator, I would argue out of Spain. You can imagine that some of the work we do today, the end-to-end operations that we do today in places like New York and San Francisco, you can start to see intercont cities in Europe, where today we're kind of, let's say, behind the scenes vendor. And then I wouldn't be surprised to find us further expanding this as a sort of branding and customer acquisition and retention tool as well as just a strong economic, it's not a good business economically. But -- so that actually gives some space to kind of play around with it. So a little bit of a stay-tuned message on that one, but no, it's economically good for sent,and riders love it.

Okay. We've got about a minute after I'm going to turn it over to you when you talk to investors, what do you think is the most misunderstood about the business and frame it against what you're most excited about the business?

Most misunderstood, I think, is there are people who believe that Rieter's best days are behind it. Dedo,eadwronk. Look at the penetration, look at the value proposition, again, $20 and you don't have to and you can. And it -- and it's only going to get safer and better as AV has come along and maybe over time, even less expensive because of the costing of that. So if you look at that transition and then you look at Lyft and look at Lyft, how we're frankly underpenetrated in the U.S. and plays like , I think again a route up out forward. up, we're underpenetrated in luxury. We've got a lot of room to grow there, but we've got great assets to bring to bear. Think of out overseas. We just doubled our TAM and we acquired a new company, but we're still quite small in Europe compared to the competition, but we're going to be new and interesting and kind of give people a new reason to kind of look at ride share. And then forward is AV. So okay, the economics of AVs long term as well as the basic value proposition of a rider that now gets everything they like about drivers because we're still going to have a lot of drivers on the platform, someone to help you with your luggage or talks to you after a tough day or sort of your own cocoon. It maybe allows you to take an hour to commute instead of 15 minutes. You can buy have nights or house farther away because all of a sudden, you're in your own screen world and watching Netflix on the way home, like that this is my long stop. And we're right at the beginning of it, and we're so well positioned for that.

I really appreciate the opportunity to have the conversation.

Thanks for the conference. Please join me in taking left for being part of this year's event.