Lyft (LYFT) Q4 2025 Earnings Call Transcript

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DATE

Tuesday, Feb. 10, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — David Risher
• Chief Financial Officer — Erin Brewer
• Director of Investor Relations — Erin Rome

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TAKEAWAYS

• Gross Bookings Growth -- 19% year-over-year increase, described as "accelerated" and explicitly highlighted as a driver of Q4 performance.
• Active Riders -- 51.3 million riders in the quarter, with active rider count growing 18% year over year, representing a company record.
• Total Rides -- 946 million rides delivered during the period.
• Record Profitability -- Management referenced the quarter as "our most profitable quarter ever," and cited printing "over a billion dollars in cash."
• Driver Hours -- Achieved a twelfth consecutive quarter of record driver hours.
• Ads Business -- Lyft (NASDAQ:LYFT) Ads reached a $100 million annualized revenue run rate, as stated by Risher: "we've done exactly what we said we wanted to do, which is reach a $100 million run rate."
• High-Value Modes Growth -- On-demand, high-margin modes grew 50% year over year and remain underpenetrated, according to management.
• TAM Expansion -- Management estimates a 300 billion ride addressable market across US and Europe, with current combined rideshare platform penetration at approximately 5%.
• FreeNow Acquisition -- Management indicated the European FreeNow business is "on track," targeting an exit rate of about €1 billion in 2025, and noted improved conversion rates and driver cancellations at "the lowest they've been in years."
• Partnerships -- The DoorDash partnership is described as "our most successful partnership ever," now with "millions" of cross-linked users; United MileagePlus partnership has driven 115 million miles earned, with additional partnerships in play (Build, Chase).
• Margin Performance and Guidance -- Adjusted EBITDA margin is expected to expand steadily, with management forecasting over $1 billion in free cash flow as part of the 2027 goals, and reiterating that their multi-year margin plan "remain the same as we outlined at investor day."
• Insurance Savings Effect -- In California, management confirms that post-January 1 regulatory changes are producing insurance cost savings already being "pass through" to riders, with the demand impact anticipated to become more visible in the second half of the year.
• FlexDrive Cost Efficiency -- Management projects a 20% per-mile cost savings for autonomous vs. driver-driven rides by 2030, with FlexDrive operations potentially bringing that savings to 24%-25% through proprietary software and fleet management.
• Loyalty Program Activation -- Lyft Business Rewards program activations grew 26% year over year; a new cash rewards program for riders is in pilot phase and showing promising engagement.
• Super Bowl Operational Metrics -- Super Bowl day rides increased 15% year over year, with surge pricing down 20% and improved ETAs, demonstrating operational strength during peak periods.
• Promotional Activity in Q4 -- Heightened promotional spend occurred, especially in the back half of the quarter and concentrated at the lower end of the market, but described as temporary and not expected to have ongoing impact.
• Legal, Tax, and Regulatory Impact -- $210 million in one-time items affected Q4 financials, with $168 million of that directly reducing reported revenue, clarifying revenue margin dynamics sequentially.
• Taxi Supply Strategy -- Taxis have been added in three US cities and provide "quality supply;" management sees expanded taxi integration, especially in Europe through FreeNow, as a lever for supply growth and regulatory alignment.
• Adjusted EBITDA Bridge -- Supplemental materials show a reconciliation of revenue margin, driven by the aforementioned legal, tax, and regulatory items.

SUMMARY

Management emphasized the successful acceleration of gross bookings and rider engagement during the quarter, underpinned by operational improvements and expanding partnerships. Lyft highlighted progress toward long-term goals, including margin expansion, scaling its European footprint via the FreeNow acquisition, and leveraging cost efficiencies through hybrid autonomous and traditional driver networks. The call detailed continued investment in higher-margin products, advertising, and loyalty programs to diversify and protect future revenue streams. Regulatory changes in California are enabling meaningful insurance cost savings now being shared with riders, with a more significant demand impact anticipated later in the year. One-time legal and regulatory charges materially impacted reported revenue, but were clarified as non-recurring in supplemental disclosures.

• Management stated that high-value modes and partnership-based rides are driving incremental gross bookings growth, distinct from ride volume growth, and that "gross bookings to grow faster than rides" in the first half as product mix shifts.
• CFO Brewer clarified that margin expansion is being achieved by growing ride volumes while reducing incentive spend, resulting in operational leverage and improved incentive efficiency metrics.
• Risher described the hybrid model as "the dominant network" approach, emphasizing that AV-only models cannot match the demand swings and service flexibility offered by combined human and autonomous supply.
• Management noted that, in AV-competitive markets like San Francisco, Lyft maintains price competitiveness and service advantages, with double-digit ride growth sustained despite new entrants.
• Investments in FlexDrive facilities and fleet are transitioning to support future AV/EV requirements, with new, purpose-built sites for major partnerships and a long-term transition strategy rather than duplicative capital outlays.

INDUSTRY GLOSSARY

• FlexDrive: Lyft’s in-house vehicle rental platform enabling drivers to access fleet vehicles; operates at scale and integrates proprietary optimization software for rideshare use cases.
• High-Value Modes: Lyft terminology for premium product segments such as luxury rides, specialty transport, or adjacent higher-margin transport services.
• FreeNow: European mobility platform acquired by Lyft, specializing in taxi supply, regulatory engagement, and multimodal partnerships across European cities.
• Adjusted EBITDA: Non-GAAP earnings measure reflecting earnings before interest, taxes, depreciation, amortization, and certain other adjustments as defined in company disclosures.
• ETAs: Estimated Time of Arrival; core performance metric for on-demand transport platforms measuring time from booking to pickup.

Full Conference Call Transcript

Now let's dive in. 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'll use this time to answer your questions. We'll make forward-looking statements on today's call, including statements relating to our business strategy and performance, partnerships, financial and operating results, trends in our marketplace, and guidance. 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 in our recent SEC filings.

All of our forward-looking statements that we make today are based on a belief as of today, and we disclaim any obligation to update any forward-looking statements except as required by law. Additionally, today, we're going to discuss customers. For rideshare in North America, there are generally two customers in every car. The driver is Lyft, Inc.'s customer, and the rider is a driver's customer. We care about both. Our discussion today will also include non-GAAP financial measures, which are not substitutes for GAAP results. Reconciliations of our historical GAAP to non-GAAP results can be found in our earnings materials, which are available on our IR website. And with that, I'll pass the call to David.

David Risher: Thank you, Erin. And thank you, Erin. Aurelien, I'll get back to you later. Q4 delivered accelerated gross bookings growth and record profitability, closing out another incredible year with 51.3 million riders taking 946 million rides. In fact, in the time it took me to say that sentence, almost 400 rides started on the road or in the bike lane. Wow. That's 30 rides a second. That's a ton. As I reflect on this year, I am extraordinarily proud of what Lyft, Inc.'s team around the world has accomplished. We launched best-in-class customer-obsessed products and partnerships. We expanded into Europe and into the world of chauffeuring. And we have positioned ourselves in the center of the trillion-dollar autonomous vehicle revolution.

We did all this and more while tracking relentlessly towards our 2027 goals we outlined at our Investor Day back in 2024. That's $25 billion in gross bookings, a 4% adjusted EBITDA margin, and free cash flow of over $1 billion. Before we jump into our results, because I know many of you are financially minded on this call, here are two life hacks. I highly recommend both involving Lyft, Inc. First, yesterday we launched Lifteen, a reliable, affordable way for the US's 40 million teens to get what they all want, which is independence.

With safety prioritized at every step of the way, compare a $20 Lyft, Inc. ride to thousands of dollars of annual cost of insurance, gas, wear and tear in your car, and you'll understand why it's such a great way for your teen to get around. And second, a recent independent study highlighted that riders can save about $170 a year just by checking both rideshare apps before booking. Now more than ever, there are more reasons to check Lyft, Inc. Alright. With that, let's get to your questions.

Erin Rome: Great. A little housekeeping. If you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. When you're called on, please unmute your line and ask your question. Please keep to one, and we'll pause for a moment to assemble the queue.

David Risher: Okay.

Erin Rome: Our first question comes from Eric Sheridan with Goldman Sachs.

Eric Sheridan: Thanks so much for taking the question. Maybe a two-parter, if I can. Looking backwards first, would love to understand the team's appreciation of what worked this year on sort of the product innovation side of the equation that drove elements of volume and user growth across the platform? And then how does that align with some of the strategic priorities you're most excited about that could continue sort of the growth path as we think forward over the next twelve months? Thanks so much.

David Risher: Sure. Hey, Eric, it's David. Let me see if I can take that question. So it's a nice big picture question. So, I mean, first, maybe just sort of underscore the premise there. I mean, gosh, our results are impressive. I guess this is the time to brag for a second. You know, we had gross bookings growth, obviously, 19% year on year, which is pretty extraordinary. And that accelerated. We have driver hours that are higher than ever. I think it's our twelfth highest our twelfth consecutive quarter of record driver hours. We had active riders that grew 18% year on year. Obviously, we had our most profitable quarter ever, printed over a billion dollars in cash.

So those are good results. Okay. Where did they come from? Well, this is not going to surprise you at all. Customer obsession is what drives our profitable growth. And I think I feel more strongly about that than ever, and let me use that as a way to kind of pivot to the next thing. If you think of our addressable market for a second, think of the 160 billion rides in the US and the same number in Europe because, of course, now we're a European operator, very important. 300 billion rides our addressable market. Let's say, let's cut that in third, just to be super conservative, call it 100 billion, just to make the math super easy.

And remember that we do maybe a billion in our competition, you in total does maybe three or four billion. So maybe that's five billion out of the 100. Okay. So that's 5% penetrated, which shows there is an enormous amount of headroom. In this market, an enormous amount of headroom in this market. What does that lead you to do? What it leads you to do is to focus on your customers, not your competitors. Because if you focus on your competitors, you're just fighting over the 5%, not the 95%. You make sure your TAM is as big as possible.

We think our operational excellence has frankly given us the foundation and our financial strength, I guess, to be overseas as well. So you can kind of see how that's playing out with our acquisition of FreeNow, and the growth of that. And so just to focus on that for a second, you'll see more growth there. You'll see more growth there. You'll see a lot of the resources that we put, you know, perfecting our US marketplace, then Canada marketplace, you'll see that go into Europe. So that's certainly a huge, huge growth factor. So then the second area is our partnerships. We know we can't do this alone, nobody can.

You can't get to three, you know, 100 billion, let alone 300 billion, you know, alone. That's nuts. So if you look at partnerships, like existing partnerships like DoorDash, that's our most successful partnership ever. We have millions of people who are now kind of cross-linked on the platforms and there's still huge, huge headroom there. And then United is even earlier. You know, United is just a couple of months old already. I think people have earned over what is 100 million miles. Actually, I just looked at 115 million miles. As of a couple of minutes ago on the United on the Lyft, Inc. platform, you know, getting United MileagePlus miles.

So that and you look at Build, and you look at Chase, and so on and so forth. I mean, there's a lot of headroom there in partnership, so that's a second area. A third area, of course, has to be around margin expansion. Right? So rideshare business is not a high-margin business inherently. You've got riders and drivers kind of competing for the same dollars. So, we've done a really good job, I think, of sort of moving upmarket. And, you know, TBR, obviously, the acquisition, that's a huge growth in front of us there.

In terms of margin, but even our basic kind of on-demand high-margin modes have grown, you know, 50% year on year, and that's, again, just getting started. We still are fairly underpenetrated there. Okay. I'll mention two more things. On the I don't think I mentioned drivers, but let's move on. Let's talk about Lyft, Inc. ads for a second. Lyft, Inc. ads, you know, two years ago when we were doing investor day, it was an idea. You know? It was an early concept. Now, you know, we've done exactly what we said we wanted to do, which is reach a $100 million run rate. That's wonderful.

If you've been in the Bay Area, you'll see Exit rate from Q4. You know, Gemini all over the place on Lyft, Inc. bikes. You'll see Adobe also over all over the place. You'll see Jurassic Park, Cars on Xfinity, which is Xfinity cross-promotion that's also being advertised in the app. So, anyway, a lot of ways for brands to kind of connect with their customers, super innovative ways, and the ads business is just going great, and it's got great leadership and a lot of focus there. Then, of course, I have to talk about AVs.

Now AVs are not going to be material in 2026, you know, from a financial perspective, but if you look at the long-term growth of rideshare, again, you remember that 5% penetrated compared to 300 AVs are going to expand the TAM of rideshare. There's just no doubt about it. We come back to that in a couple of seconds. But that, I think, you know, every time we add EVs to the platform, you'll see incremental, you know, growth on the top line. And over time, you'll see cost reduction as well. So I'm sorry I'm forgetting something, but I mean, are the big things that are really on our mind.

Eric Sheridan: Great. Thank you. Sure.

Erin Rome: Next on the call will be Doug Anmuth with JPMorgan.

Doug Anmuth: Great. Thanks for taking the questions. Just for 1Q, you talked about your guidance for gross bookings accelerating at the high end, but the margin more in line with 1Q from a year ago. So just hoping you could talk a little bit about some of the key investments you're making and what's happening there with margin in 1Q. And then David, can you talk more about FlexDrive and the kind of 20% cost efficiencies that you're seeing there? What are some of the drivers, and how do you compare that to other lead operators? Thanks.

David Risher: Sure.

Erin Brewer: Yeah. Aaron, why don't you take the first for sure?

Erin Brewer: Yeah. Sure. Hi, Doug. So, yeah, if I think about the Q1 guide, you've got it, in terms of gross bookings growth at the top line, and that's really fueled by the marketplace, you know, running extremely well. Very healthy, you know, competitive, fast ETAs. Etcetera. David just mentioned our partnership. We will continue to see strong growth across all of our markets, including low-scale markets, and then also high-value modes, which are growing at a very rapid rate. And, of course, we've got FreeNow in the mix. So those are the things that underpin the top line. As I think about our profitability for the quarter, you know, I think we're right where we need to be overall.

On a year-over-year comparison, if you recall last year in Q1, there was a favorable, nonrecurring item in the quarter. So absent that, we've got really strong profit growth year over year over year, and I think we're set up well as we look into 2026.

David Risher: And then let me on your second, Doug, I think Erin and I will actually tag team on this one, and I want to zoom out just one click. To talk about the cost of AVs versus, let's say, the cost of kind of driver-driven rideshare. So the first thing to think about and I'm going to go big picture on because I know AVs are very much on people's minds. So let's just start from the total top. You know, we have so much confidence that this is a trillion-dollar, you know, trillions maybe dollar opportunity for the rideshare market. So why would that be? The first thing is, you know, AVs will expand the TAM.

And this isn't just speculation. This is what we see happening in San Francisco. Where you have hundreds of thousands of rides being driven by Waymo. But you see us growing, you know, at a nice clip. And so what that suggests is that those rides are largely incremental, that the pie is growing, this is not surprising. When you have an interesting new product, like a self-driving car, which is, you know, safe and reliable and so on and so forth, that obviously opens up the rideshare market to new use cases. And then the cost will go down. Why? Well, again, that's probably fairly obvious, but let's sort of lay it out.

You would expect, I mean aside from obviously not, you know, paying drivers in the same way, but you would expect insurance costs to go down in particular. As the safety profile of AVs gets proven out. There's a lot of data out there right now, different people maybe have different perspectives, but broadly speaking, I think that most people would agree, over time, insurance will go down as safety improves. Those are the two big drivers. So we look at those and again, this is at the sector level and then we'll come to FlexDrive in a second.

We look at those as providing by 2030, right, so some years out after this technology has proven itself, you know, yada. Maybe a 20% cost savings on a per mile basis. Versus just today. Now the last thing I'll say before I turn it over to Aaron is, remember, that's a 20% savings. It's wonderful, but it's on maybe a five to 10% base. Right? That we are building a hybrid network, a hybrid network. This is so important. You cannot build an AV only can't say you can't build one, but of course you can.

But if you build one, what you won't have is millions of drivers on the platform who can pick you up at five in the during rush hour, or nine in the morning, or right after a concert. We see a 20 to one swing over the course of, you know, a couple of days, from, you know, middle of the night to rush hour. And that's very, very difficult to handle. In fact, it's probably impossible to handle just with AVs. And then of course, have people who, you know, want to help with their luggage and so forth and so on. A hybrid network, we think, is the dominant network.

Within that, we think AVs are going to be net positive because they expand the market. And because they lower cost. Now, you asked about FlexDrive. I'm going to turn it over to Aaron to talk about the economics that brings to the conversation.

Erin Brewer: Yeah. Sure. So we're kind of setting the stage here as we think multi years down the road, call it 2030. You know? As David just mentioned, we think the hybrid market will be sort of the most efficient way to deploy. Our goal is to be the best partner there. And then, obviously, when you've got that hybrid network, you've got drivers, you've got autonomous vehicles. There are obvious differences in cost between the two of those, which David just articulated. And so, you know, in, say, the 2030 world, if you compare those costs per mile, we think, as David mentioned, about 20% difference. Okay. So then you think about FlexDrive. Right?

FlexDrive is a fantastic asset for us in this whole and our goal with it is to be the most efficient way to deploy. And we see that driving advantages as we look ahead, as think about our own long-range plans in a few ways. Number one, just our existing experience with fleet management at scale. And importantly, specific to rideshare. So understanding high mileage, long lifetime assets, managing these very efficiently is going to provide an advantage.

And then we look at how we can optimize that leveraging our proprietary software for rideshare, which actually makes a huge difference when you think about minimizing empty miles or scheduling that maintenance at a time which is optimal where you can still maintain that really efficient utilization of the asset. Then, obviously, with this capability, we've got a team of experts. There is no middleman. And so if you think about that 20% cost per mile differential out, you know, say in 2030, we think we can drive improvement on top of that. So that 20% becomes 24%, 25%. And so, that's the way we see it. That's how we see, some of our advantages.

And why we think we're going to be just the best partner out there.

Erin Rome: Okay. Awesome. Next question, we have John Blackledge from TD Cowen.

John Blackledge: Great. Thank you. Yeah. Could you talk about the 04/2025 rides growth relative to your expectations? And how should we think about rides growth in the context of the 1Q 2026 gross bookings guide? And is the heavy promotional activity that you saw in 4Q extending into 1Q 2026? Thank you.

David Risher: Awesome. Hey, John. It's David. Let's we'll it's kind of Aaron and I will tag team on that a little bit too. So I think maybe the big picture I would say is we really I can't say this enough. We are a very disciplined operator. And the reason I say this is because we nerd you know, you when you identify as discipline, it means you have to decide what you're going to focus on. And we have decided, if quarter after quarter, and I think you've seen this, that we're going to focus on our top line and our bottom line. That's how we're going to run this business for our shareholders.

So when you do that, then that's great because it gives you real clarity. Okay. So what does that also mean? It means that when you see some, you know, kind of promotional, you know, gimmickry or whatever it is within a quarter, you sort of look at it and say, well, okay, whatever. It's going to happen. But meanwhile, what we're really focused on is making sure we can deliver on the top and the bottom, in a customer-obsessed way. You don't get jumped by the marginal ride that's maybe not profitable, whatever, the promotional thing, whatever. You do these different things. So that's kind of the way we looked at Q4.

It was a little unexpected, but it you know, again, we were resilient with this sort of stuff. Like, we kind of look at it and we say, okay, fine. We deal with that. We didn't see any particular consumer softness, you know, nothing like that. To answer maybe a question you didn't ask, but I'll answer it anyway about Q4, you know, remember, we're know you didn't ask the question, but I'll just sort of state the thing anyway.

You know, we're doing you know, millions of 4 million people, you know, every day are relying on us from one way or another to, you know, to get where they need to go know, commuters and people going to work and so forth and so. So we feel real strength there, and that's a real blessing as long as we can continue to deliver for them, that's incredible. And you can see that reflected in our record active riders, for example, which I think is super important, which then leads me to Q1. This is where I'll finish.

If you look at Q1, and Erin again can talk a little bit about if we've seen any promotional stuff or whatever. But if you look at Q1, we're super, super well set up. Why? Because we've got, you know, more active riders than ever, you know, up 50% from, you year on year type thing, and then and then we're operating incredibly well. Here's the stat that I'll share with you that I'm super proud of that kind of reflects how far we've come. If we look at our Super Bowl performance just from a couple of days ago, we compare it to where we were last year.

Super Bowl, of course, is an incredible day, crazy peaks and crazy valleys depending on, you know, how the game is going and when it ends and so forth. Anyway, we delivered about 15% more rides year on year, and we did it better than we did last year by which I mean we had lower surge pricing by about 20%, which is enormous, incredible affordability thing, and we picked people up faster. Our ETAs were better. So we provide better service, you know, even as the prices were lower, you know, net of all the all the search pricing.

So anyway, all that is to say, when we look at our Q4 performance and then how we're set up for Q1, we feel really good about it. And then, Erin, if you want to add anything more about the promotional, what we've seen.

Erin Brewer: Yeah. Sure. You know, David, you mentioned a couple of really important things in terms of optimizing our business for the metrics that matter. At the end of the day, our goal is to engage and retain as many drivers and riders as possible on the platform. I think we're doing an incredible job of that. Our active riders growth in the fourth quarter was 18%. That's a record. And the highest. We also saw the highest and record retained riders in the quarter. That's a fantastic leading indicator. It's growing both quarter on quarter and year over year. And then, of course, really strong gross bookings and margin performance in the quarter.

We did see, as David mentioned, that heightened promotional quarter. It was weighted a little bit toward the back half of the quarter. You know, primarily across the lower end. But effects were temporary. You know? We're not sitting here today. I think we're in a great position. Our position in the market is strong, and so we feel great about that. You know, thinking about the read-through for Q1, we do expect gross bookings to grow faster than rides as we think about, you know, in particular, the dynamics of the first half of the year. We've got really strong growth across our higher value modes.

You know, we've got obviously FreeNow incorporated into that overall mix, and so that you can expect as we think about, you know, the first half of the year overall.

David Risher: Thank you.

Erin Rome: Wonderful. Next question is Chad Larkin with Oppenheimer. Hey. Thanks.

Chad Larkin: Could you maybe talk about the long-term opportunity for taxis? You know, you're in a couple of cities now. What could that kind of become over the medium term? And then is it kind of the same, you know, financial profile as regular Lyft, Inc. ride?

David Risher: I'll start with the first, and then, Aaron, you can talk a little bit about the finances. So as you mentioned, yeah, we started to welcome taxis on the platform, I think, in three cities. We started in Saint Louis, then we expanded to LA, and then San Francisco. We like it, and the reason we like it is because it adds supply. And, you know, we've got a lot of quality control and some other things that sort of make sure that this is good quality supply, that we're not, you know, going the opposite direction from what we want to. And it's great.

Taxis are, you know, an important part of, you know, some cities in the United States. I'll just say it that way. Of course, taxis are a very big part of many cities in Europe, I think one of the things that we've really found as we've brought FreeNow into the conversation, into the company, is their expertise here is going to help us, you know, sort of turbocharge our business around the world, it's really one of the areas of expertise that they have. This is a little bit of a side note, but also because taxis tend to be quite regulated particularly in Europe, it gives us sort of a nice relationship with regulators. And so forth.

So a bunch of different things to like about taxis broadly if you think globally. But back to the United States, you know, I don't think we've talked publicly about how significant a part of the business is, but I'm glad we're welcoming it on the platform. Because it certainly gives us, you know, frankly, additional supply in certain key markets.

Erin Brewer: Yeah. Absolutely. You know, it's a strong supply lever, and so we do that purposefully and thoughtfully as we think about the overall health and balance of the marketplace. You know? And then just as I think about FreeNow, you know, really pleased with how that is going, the help we've seen good progress in the health of the marketplace since acquisition. You know, our teams have been collaborating on improvements in conversion rates. You know, reduction in drive cancellations. Those are the lowest they've been in years. So excited about that. You know? In 2026. And we talked about having an exit rate of about a billion euros in 2025 and going into 2026. We're right on track.

So, really pleased with how that's going overall.

Erin Rome: Next question will be Nikhil Devnani from Bernstein.

Nikhil Devnani: Great. Thank you for taking my question. Maybe a follow-up for Erin on margins. So when I look at the year-on-year dynamic for 1Q, it looks like a bit of margin but then the 2027 framework broadly requires more than that. So could you please elaborate on the factors that get better on the margin expansion beyond Q1? And then somewhat similar theme, to the broader point of competitive intensity, in markets where AVs are becoming a bigger presence now like the Bay Area, have you had to evolve the offering at all, be it on pricing, promos, investment efforts?

Just how do you philosophically think about running those markets where there's a bit more competition now from the AV side of things? Thank you.

Erin Brewer: Thanks, Nikhil. I'll start with the first one and then turn it over to David. So, you know, we last quarter, we gave some color commentary on 2020. No change there. We continue to expect gross bookings to accelerate in North America and globally. We continue to expect adjusted EBITDA margin to expand, and that will generate over a billion dollars in free cash flow. So, no changes there, and I feel like we're right on track. As I think about the targets we set out for 2027. Right? We talked about our goals around top-line growth. We said steady margin expansion and, of course, free cash flow.

So the components of margin expansion remain the same as we outlined at investor day. It ends and begins with the core health of our marketplace and the operational we're able to deliver there. We've demonstrated extremely strong results there. And you can see that in the efficiency of our incentive metrics. Right? The marketplace working better. Generating much higher volumes of rides, and having to deploy lower levels of incentives are just one financial indicator, and we're certainly exceeding the goals we set out for ourselves there. In addition, we talked about things like expanding our partnerships. Riders that come through partnerships tend to take a higher mix of higher value rides. That's absolutely what we're seeing in driving.

And so that will continue to be helpful as we think about our going forward. We've also now spent a good period of time really focused on expanding across our high-value modes. And that's everything from just making it easier for delivery drivers to get on the platform to really building out our strategy at the luxury end with TBR. And so we're excited, and that will continue to deliver margin expansion. And then last but not least, is really just around our cost discipline. We set out a target to drive operating fixed cost leverage over the horizon. And we nearly doubled our goal in 2025.

We're positioned really well, and we'll continue to operate with discipline and drive leverage over fixed costs. So those are the elements we see in 2026 and as we chart a course toward our LRP.

David Risher: And then, Nikhil, to the question of kind of operating in markets where we're seeing AVs, you know, I guess maybe it's sort of a nuanced answer. I mean, of course, we look at those markets, you know, in a little bit different way. Right? So for example, if you look at our pricing strategy, our pricing strategy is to be reliable, and competitive. And, of course, in those markets, we have effect in some cases, we have effectively a new competitor, and so we have to kind of make sure that our pricing sort of makes sense in that context.

I wouldn't say that was a major issue in part because I think, you know, AVs are sort of positioned as sort of a premium product. They're not really competing on price. So and then you have to look at service levels and make sure that your service levels are super good. Frankly, that's an area where rideshare is advantaged. Lyft, Inc. is advantaged. You know, you will get picked up faster typically. You will get dropped off, you know, at the right place, not the wrong or have to walk a couple of blocks, these different things. You will get your luggage, you know, picked up. You can do scheduled rides. You can do wait and save rides.

You know? So we have a whole set of tools that the other guys don't, but then we have to, you know, make sure we pay attention to do a particularly good job there just to make sure, again, that we're sort of earning our keep every single day. Same thing with some of the other advantages that come with riding on Lyft, Inc. So let's take San Francisco. In San Francisco, it's United hub. So you can expect that our United partnership is particularly important in a market like this where we have a real advantage for people who want to get United MileagePlus miles. They really only have one option.

So you know, in a sense, it's nothing dramatically different. It's just, I'd say, looking with a little bit just a little more closely at some of those markets to make sure something unexpected isn't happening there. As I said, again, at San Francisco, we're actually growing around 10%, which is pretty good. It was actually quite good for a, you know, major market like that we've been in for so many years. So I guess that suggests that it's working, which is wonderful. We'll keep our eye on.

Erin Rome: Next question. Thank you both.

Nikhil Devnani: Sure.

Erin Rome: Next question will be from Ben Black with Deutsche Bank.

Ben Black: Great. For taking my question. So could you talk about what you're seeing in California? I'm curious. Why you now anticipate demand to pick up in 2026 on the back of the lower insurance rates. Also, it'll be good to sort of understand the phasing of the insurance savings pass through if at all. And then, David, can you give us your updated thoughts on loyalty? In the letter, you mentioned that there's room for growth in that space, in the loyalty space. So can you just expand on that a little bit? Thank you.

Erin Brewer: I bet I'll take the first question on California and then turn it over to David. So, you know, as we talked about quite a bit last quarter, you know, really pleased to see what we view as common sense reform in the state of California that really drives a win-win-win for riders, drivers, and just the broader ecosystem. Those changes went into effect on January 1. You know, sitting here in the first quarter, we are currently passing through, you know, a good amount of those savings to riders throughout the state of California. Those vary on a market-by-market basis.

I think we highlighted that in fact, insurance costs vary quite differently depending on the market or prior insurance costs, I should say, vary quite differently on a market-by-market basis in California. So if we think about adoption, right, and these changes going into effect in the first quarter. It tends to be just a marginally, seasonally lower quarter overall. Riders tend to take only a handful of trips in a given quarter, especially in Q1. So with that kind of backdrop, it takes time for price improvements to be experienced and then recognized by the rider and then incorporated into their behavior, into their ride behavior overall. So really, for those you know?

Well, before I conclude, what I'd say is the underlying economics are working as expected. Right? And so what we see now in the demand impact is we think it'll be more noticeable overall in the back half of the year.

David Risher: And then on loyalty. So I'll say a couple of things here. I think the first way I always think about it, we tend to think about loyalty, is the best way to create, you know, a loyal customer, a loyal rider or driver, is to do well by them. I mean, that's just the flat-out best way. Everything else is a little bit on top of that. And we've got, you know, a lot of great news there. On the driver side, which probably wasn't the focus of your question, but I'll just mention it, we now have a 31 advantage over the other guys in terms of driver preference, so that's wonderful because drivers are quite juicy.

And then on the rider side, Erin, I think, mentioned this briefly earlier, we had a record number of retained riders in Q4. And what that speaks to is when you do well by them, when you give them, you know, consistently great service, you know, they will continue to come back. So that's great. That's a great, great baseline. Okay. So what can you do on top of that for particular segments? Well, you can start to build programming that speaks specifically to people's needs. If you look at business travelers, business travelers, there's a very well understood dynamic that involves getting typically points, you know, cash back or something on business travel, and then spending them on leisure.

Well understood, and we now have a great program there. It's up. Activations, as we mentioned in the prepared remarks, are up 26% year on year, and it's a great program. Doesn't cost you anything at all. You just sign up as a business. If anyone here has not signed up as a business traveler through their business on Lyft, Inc. Business Rewards, you absolutely should be. You get money back and then you spend it on Lyft, Inc. and it's a wonderful thing.

And then on the consumer side, we build a new I think it's very much in pilot phase called it's a Lyft, Inc. cash rewards program that basically says, if you're willing to put a certain amount of money on accounts, $25, $50, $100, you'll get a certain percent again cash back. It doesn't cost you anything and you can get some extra comfort rides and such at higher levels. So we like what we've seen there. Riders are responding to it. I would put both of these sort of in the category of early programming.

It's an area, I think loyalty programming, where we've been, you know, a little bit less focused over the years and now we're increasing the focus. I'm not going to talk too much about the future because that's just laying out a, you know, a road map for others to follow, but I'm excited about the innovation we're going to bring to this space, and stay tuned for more.

Ben Black: Very helpful. Thank you very much.

Erin Rome: Sure.

Erin Rome: Next question will be Michael Morton from MoffettNathanson.

Michael Morton: Hi. Good evening. Two questions, if I could. Quick one maybe on AVs. You guys are doubling down on the hybrid commentary. And last quarter, you talked about that you spent a lot of time with Waymo to get this arrangement to scale. If we look at, I would say, the lack of additional partnerships with their current partners, seem to suggest maybe there's some friction in that existing economic deal. I was wondering, is it correct to interpret that you really think, like, this hybrid model that you are doing with Waymo is kind of the future model for these big dominant platforms. And then a second question, I think, will be for Erin.

Aaron, if we just look at FreeNow the acquisitions and we kind of do our best to back it out, of the trips. I know it's not perfect, then look at your reported trips, and then take rate coming in a little bit lower than we expected. Maybe we were doing some bad forecasting on our perspective. It kind of instigates me wondering if I'm missing something that's going on in the US market competitively or from a demand perspective. So anything incremental there would be really great. Thank you.

David Risher: Yeah. Michael, let me I'll we again, we tag team on this. Nice. The two-question thing is actually works for us. We'll just each take one. So on the EVs, let me maybe challenge your premise a little bit. So gosh. Okay. So here's how I look at our partnership strategy. And then we can talk about the economics and sort of what it looks like going forward. Our partnership strategy is quite deliberate. You know, we want to pick the absolute, a relatively small number, cause we're not playing a press release, you know, who wins the press release game, an operational game. Relatively small number, of partners that we can go really deep on and learn with.

Some of those learnings will be operational, you know, as we're doing with May Mobility, for example, Atlanta. Some of them will be about kind of supply sharing and various other things that we're, you talked about. Obviously, of the flex drive work we're doing in Nashville to support Waymo, you know, and there'll be others. Obviously, we're working with Baidu overseas and so forth. Okay. So yeah. And that's the strategy. And as we said last time, yes, we like the economics of it. But I think maybe your implication was that we like the economics so much that it's to do more of those deals. That's not really the case.

I think the deeper case is, if you look at the short term, there just aren't that many suppliers. I mean, let's be clear. Like, you know, there just aren't that many people who can operate at scale and where the technology is proven to be safe. We've got Waymo, that's great. We've got Baidu, that's great. And now, you know, of course, there's Zoo is doing some stuff, and there's some other things at very small scale, but honestly, that's the sort of bigger issue. Now, if you look forward to 2030, you know, which is sort of when the action, I think, starts to get really interesting, we see a lot of supply coming online.

And even when you again, not precisely to the point of your question, but I think the supply constraint, or let's say supplier constraint, you know, who's got actual driver of technology working at scale, that's a very small number of players. And so our focus is on those players and really deepening the relationship there. You know, you'll see us do some other things as well, but the issue isn't so much an economic one. It's just more where things are.

Erin Brewer: And then, Michael, to your other question, you know, I'd probably highlight a couple of things for you. In our supplemental tables, we provided an EBITDA bridge. And in that bridge, it highlights a one-time impact of totaling about $210 million under the category of certain legal tax and regulatory reserve changes. It's important to note that a $168 million of that $210 million impacted revenue. So without that, our revenue would be closer to $1.8 billion, and you'd get a revenue margin that's, you know, pretty close to what we saw in the previous quarter. So, hopefully, that's helpful as you're thinking about revenue margin overall.

And then your second question was sort of around Q4 rides and anything in particular that we're seeing. You know, as I think about FreeNow, I already I mentioned, the of that business. I would say, you know, exiting the year, on track. We feel good about where that stands overall and very excited about the opportunities ahead. And then, as we think about North America, we've also talked a little bit earlier about, you know, probably what was a little bit different at the end of the quarter was just some heightened promotional activity that we saw. We made intentional trade-offs around that. I think we made the right choice.

In terms of, you know, driving the metric that matter and then sitting here today, you know, just in a great position, no lingering impacts. And so I think those were the right trade-offs. So those are some of the things as you think about, you know, revenue, revenue margin, and Q4 rides.

Michael Morton: Thank you so much.

Erin Rome: Next question comes from Ross Sandler with Barclays.

Ross Sandler: Great. Can we go back to FlexDrive? It seems like you guys are trying to position that as, like, kind of a killer use case for, you know, future AV partnerships. And can you remind us first we I think we had 27 locations last disclosed. How many cities we have total? And I guess, what level of investment in charging stations or other kind of retrofit is required. I think the Nashville Waymo facility was a scratch build. How many are going to be that versus kind of going back and just retrofitting the 27 for AV/EV. Thanks a lot.

Erin Brewer: Yeah. So, Ross, let me start, and then, David, you know, chime in. And so the locations across the US today, Ross, are a little bit lower than you highlighted, but you know, have been purposely built over time as we think about cities where having that additional lever for supply was going to be meaningful. Right? And so investing in the cars and the facilities in those sites is, you know, has been helpful to Lyft, Inc. over a number of different years. That being said, of course, as we think about Nashville or an AV site, the requirements are different. And so that will have to be taken into account.

Obviously, in Nashville, that will be a purpose-built facility overall. And what we've chatted about is, look. You know, this is super obviously exciting. David mentioned, you know, trillion-dollar opportunity. Absolutely. We're excited about that. We think we're well-positioned. It will take time. And so as we think about these early phases of the model overall, I think we chatted about this a little bit last quarter as well, you know, it is reasonable to assume that where it makes sense, we're going to invest in these early stages. There's a lot of learnings to be had. You know, there's a lot of opportunity there. But, again, we already have investments in facilities and cars.

And so I would think about this over the long term as more of a transition than a doubling up, if that's, you know, a reasonable way to think about it. David, do you want to add anything to that? No. It sounds that's exactly right.

Erin Rome: Great. And our next question comes from Justin Post with Bank of America.

Justin Post: Great. Thank you. I'd like to follow-up on USAV supply. I just want to see if you're encouraged by what you're seeing out there with technology advancements. And how do you see the pipeline of suppliers building towards 2030 when you think there'll be much more supply available? Thank you. Mhmm. Yeah. I mean, you know, because it's a trillion-dollar type a lot of investment capital and, you know, R&D and so on and so forth is being drawn into this space. So which is part of the reason it gives us so much confidence.

You know, you can sort of see if you even if you think about a year ago, you know, people weren't really talking so much about NVIDIA, for example, but now people are talking a lot about NVIDIA because they've made their intentions known that they want to be sort of an aggressive player here. So I guess the only thing I would say is you know, these things will come in waves. Right? They're the people who are kind of good at it already. Obviously, Waymo has gotten super, super good at it. There's some people who are maybe a step or two behind, but, you know, they're kind of coming on fast.

And then there's going to be, you know, yet another wave of people who are sort of just in the early days right now, and, you know, you could look at everyone from I mean, I'll name names, but please don't take too much out of this. But you could look at anyone from, you know, look at what Rivian is doing, for example, in a house, again, look at what NVIDIA is doing. Look at Mobileye, of course, one of our own technology partners has been at this game for years and years and years, and you would expect those guys were have a relationship with them already, and so forth and so on.

So I think the smart money, let's say, is that there's going to be a lot of different people trying to get in. Who the winners are? That's the thing that nobody really knows. Thing that nobody really knows. I just know that there'll be multiple.

Erin Rome: And that ends our call. And will turn the call back to CEO David Risher for closing remarks.

David Risher: Thank you so much, Erin. And thanks to you all for joining the call today. I do have to do one last shout-out to Aurelien, who we're all going to miss dearly. Aurelien, you have been an incredible thought partner and finance leader for Aaron and me, and we wish you all the best. To you. And looking ahead to all of you on the call, super excited for another strong year at Lyft, Inc., and we continue to track towards our 2027 goals. Forward to keeping you guys up to date. Thanks so much for all your interest.

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