Lyft, Inc.
Q1 2019 Earnings Call Transcript

Published: 7 May 2019

[Operator:]

Good afternoon ladies and gentlemen, and welcome to the Lyft’s First Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode to prevent any background noise. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Catherine Buan, VP of Investor Relations. You may begin.

[Catherine Buan:]

Thank you. Good afternoon and welcome to the Lyft earnings call for the quarter ended March 31, 2019. I am Catherine Buan, VP of Investor Relations at Lyft.

[Logan Green:]

Thanks, Catherine, and thank you to everyone for joining today’s earnings call. Q1 was an incredible kick-off to a big year for Lyft. We achieved a record first quarter with $776 million in revenue, representing a 95% year-over-year growth rate. At the same time, adjusted EBITDA margins improved significantly to a loss of 28% versus 60% the year before representing an absolute 32 percentage point improvement year-over-year. On the back of strong execution and momentum, we’re excited about our investments and initiatives this year that’ll drive future growth. Our momentum was driven primarily by three factors. The first was product innovation. Second was market growth; and the third was strong focused execution.

[John Zimmer:]

Thanks, Logan. I want to highlight three areas of execution that are helping us grow fast at scale. One, we are singularly focused on transportation; two, we are investing in our driver community; and three, we are successfully executing on our enterprise strategy we call Lyft Business. It is our singular focus on consumer transportation that has allowed us to go deep and build competitive advantages along the full stack of offerings.

[Brian Roberts:]

Thanks, John and good afternoon everyone. Our first quarter results demonstrate our strong execution and focus on delivering growth while improving operating leverage. Total revenue for the quarter increased 95% year-over-year to $776 million driven by an increase in the number of active riders and the revenue generated on our platform per active rider. The number of quarterly active riders increased by 46% year-over-year to a record $20.5 million, primarily due to the wider market adoption of ride-sharing and our initiatives to attract and retain riders. We also believe that the publicity and attention surrounding the company’s IPO contributed to the strong increase in a number of quarterly active riders.

[Logan Green:]

All right. thanks, Brian. To conclude, we had a great first quarter and are excited for another big year. Our results continue to demonstrate the strength of our scale platform, successful execution on our strategies and discipline towards our financial plan. These are the early days for our company and industry, and we’re all excited by the new innovations and impact that will deliver to the market. We’re proud of the momentum and even more excited by what lies ahead. Before I move to Q&A, I want to tell a quick story to explain why we’re so inspired to bring our mission to life. One of our riders is 76 years old and lives on her own in New York City. She has been recently diagnosed with kidney failure and didn’t have family to take her to the many appointments she has every week. Her story is not unique. Every year, 3.6 million Americans missed medical appointments due to a lack of transportation, which leads to bad health outcomes and a $150 billion loss for the healthcare ecosystem lift. Lyft has established partnerships with the largest healthcare systems in the United States to best serve patients across the country and with our healthcare platform and the incredible driver community; patients like this rider are now able to get the care they need. This is just one among many impacts that motivates our work. And now, I’d like to open it up for questions. Operator?

[Operator:]

Thank you. Our first question comes from the line of Stephen Ju with Credit Suisse. Your line is now open.

[Stephen Ju:]

Okay. Thanks guys and congratulations. So, one of the questions they’ll be got asked a lot, during the IPO process was around the addressable market and how users may be using ride-sharing in general versus the choice of owning a car. I think you talked about 45% of Lyft users not owning a car. So, anything you can share about these cohorts of users you have observed over the years, for which it might have just started with that airport ride at first, but then, Lyft becomes an everyday use case to get them from – to and from work. And secondarily, how long does it usually take before they go from every now and then to perhaps every day. Thanks.

[John Zimmer:]

Yes. Thank you. So, this is John. Brian can comment on the trends we’re seeing year-over-year in rider’s frequency. Nothing to specifically share on the cohorts other than just say that, there’s an increasing number of Lyft users, the most recent estimate was 300,000 that got rid of their car because of Lyft. And so those are trends that we see continuing to increase.

[Brian Roberts:]

Yes. To talk about it at a high level, we – Lyft is a much more than just a ride-sharing company. And we’re going after in the – in the U.S. alone, the consumer transportation market is $1.2 trillion and of that $1.2 trillion, over $1 trillion is spent on car ownership. And we see this once in a generation opportunity to move this trillion dollar plus car ownership market to the world of transportation-as-a-service. And I think we’ve seen this happen in other industries like entertainment or you have companies like Spotify, Netflix, or you have industries, businesses like the cloud. when you can deliver a product-as-a-service instead of requiring folks to own it, you can often deliver a better customer experience at a lower price point. And so that bit is flipping for more and more of our riders and our customers. predominantly, we see the largest pickup of that and really dense urban areas today, where somebody lives and works within a city. Lyft is often the most convenient and the most economical choice, especially when you’re looking at high insurance rates, high cost of parking in a major city. We’re seeing people sort of switch wholesale and get rid of their cars. When you look further out to the suburbs, you’re seeing trends of families going from two car households to one car households. And we think as the array of services that we offer, continues to expand some of the opening remarks that we were talking about Shared Saver, lowering the price point further. we’re also talking about the introduction of bikes and scooters. and there’ll be more to come. So, as we keep introducing more products that suit more use cases, I think we’re going to continue to see an acceleration of that trend towards a service over ownership.

[Logan Green:]

And just to add a data point, in Lyft’s history, we’ve never had a down quarter in terms of the quarterly active riders. And so in the most recent quarter, we grew 46% year-on-year, 10%, quarter-on-quarter to $20.5 million, so that the growth is very strong.

[Stephen Ju:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Brent Thill with Jefferies. Your line is now open.

[Brent Thill:]

Good afternoon, for Logan and John, if you could maybe expand a little bit on the Google-Waymo partnership, in terms of the near the focus and where are you going to be rolling out first, that will be great. And any quick follow-up for Brian, just maybe talk a little bit about your pathway to profitability. There have been a lot of question around the investments you’re making this year. I think you said, you continue to believe that those losses will trend lower and if you could just provide little more color, that’d be helpful. Thank you.

[Logan Green:]

Great.

[John Zimmer:]

So, on the Waymo partnership, as we mentioned in Q2, Waymo and Lyft would be launching this new public partnership and their Waymo self-driving vehicles will be integrated into the Lyft platform in Phoenix. So, to be in the Phoenix Metro area and we expect it to be at about 10 vehicles by the end of Q3 that will serve thousands of look passengers over time. There will be a safety driver in these vehicles. And so this is the first time that Waymo is providing self-driving vehicles to a partner outside of their own service. the way it will work for a passenger is though be able to book that ride in the Lyft app. and if the Waymo vehicles nearby enabled to service their origin and destination, they would have the opportunity to be matched with that vehicle.

[Brian Roberts:]

So, just to follow-up in terms of the question on the path to profitability. We are day one of a $1.2 trillion market opportunity. We just announced a quarter with 95% year-over-year revenue growth. Our core ride-sharing today drives our P&L and is trending strongly. We’re also making investments in autonomous bikes and scooters and other strategic initiatives, because we believe we’ll strengthen the core business and create long-term shareholder value. Now, in terms of the path to profitability, our strong results today demonstrate not only world-class growth, but also our success leveraging costs and contribution margin jumped to 50% from 35% in the same period a year ago. Non-GAAP sales and marketing declined from 42% to 29%. now, the investments in autonomous bikes and scooters and driver centers hie the underlying improvements in core ride-sharing, but even with the investments, adjusted EBITDA margin improved to a loss of 28% from a loss of 60%, a 32 percentage point improvement year-over-year as absolute adjusted EBITDA improved in the first quarter. So, we are definitely encouraged by the strength of our core business and see a clear path to profitability in core ride-sharing. We have teams across the company dedicated to initiatives that will help us grow more profitably in the core ride-sharing business by both bending cost curves and increasing the efficiency of growth levers. And finally, as I mentioned in my prepared remarks, we anticipate that 2019 will be our peak loss year as we then move steadily towards profitability on a consolidated basis.

[Brent Thill:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Doug Anmuth with JPMorgan. Your line is now open.

[Doug Anmuth:]

Thanks for taking the questions. I wanted to ask two. Just first, you see leverage and incentives as a percentage of revenue over the past couple of years. There has been a lot of discussions just about the degree of promotions and incentives in 1Q. Can you just give us your view of the current incentive environment? How do you think it compares to previous periods? And then secondly, Brian, you’ve talked about bending the cost curves. Can you give us some more detail particularly on insurance and how you can bend that cost curve and move towards the 70% contribution margin they are thinking about long-term? Thanks.

[Brian Roberts:]

Absolutely. So, let me start with your first question. Again, we grew revenue in the first quarter, 95% year-over-year while non-GAAP sales and marketing as a percentage of revenue declined from 42% to 29%. We are extraordinarily pleased with our momentum. I mean just for historical context, non-GAAP sales and marketing as a percentage of revenue was 127% in 2016, 54% in 2017 and 37% in 2018. the 29% achieved in the first quarter is just another proof point of our success in driving brand preference, and sales and marketing efficiencies. Now, in terms of your question on the current competitive environment, I would say competitive pressure in terms of rider incentives has recently receded. We’re encouraged by this simply that the industry is headed in the right direction and becoming increasingly rational. Our strategy is to win on experience, not price. And then to answer your insurance question, we have a variety of initiatives to reduce the cost of insurance. There’s two factors that drive insurance costs, the frequency and the severity of accidents. And we’re making investments in technology, data science as well as just changing business workflows to reduce both factors. You may need to cut me off, because I get very excited when I talk about insurance. but we believe the insurance related initiatives can have super high ROI and I’ll just share three quick examples. We are investing in telematics to be able to monitor driver behavior and assess speeding or heartbreaking. We’re investing in predictive analytics to mitigate fraudulent claims. And then finally in the first quarter, we moved to a new third-party claims administrator to help us handle new insurance claims. The goal here is to reduce claims cycle times, thereby improving settlement results. This is both in terms of how quickly we contact someone and in closing out the claim itself.

[Doug Anmuth:]

Thank you. I appreciate the color.

[John Zimmer:]

Sure.

[Operator:]

Thank you. And our next question comes from the line of Mike Olson with Piper Jaffray. Your line is now open.

[Mike Olson:]

Hey, good afternoon. Just following on the Waymo question earlier, maybe a bit higher level than the specific details of the deal. Could you maybe share some thoughts on how you think about your internal autonomous technology development effort while at the same time, partnering with external technology developers like Waymo and should we potentially expect additional future partnerships like this?

[John Zimmer:]

Yes. So, we have two pieces of our autonomous strategy. one is first party, which is our Level 5 group. we believe we’re in a great position, given our platform, our access to data, and an amazing talented team to build our own self-driving components. And something that’s important to note that those investments that we’re making today and our first-party system can benefit the existing business even before there’s autonomous vehicles through mapping a better ETAs and therefore a higher utilization and efficiency in the marketplace. but we are agnostic to where this technology comes from. And so therefore we have a third-party part of our strategy. and Waymo is a phenomenal partner with leading AV technology. And so it’s part of that two-pronged strategy, and it doesn’t affect the other relationships that we have. And you can expect more developments on both sides of that strategy.

[Mike Olson:]

Okay. And then you mentioned you’re singularly focused on transportation, but I don’t think you said transportation owned again, North America, I realize with $1.2 trillion spent on transportation, there’s a lot of wood to chop in the North American market, but do you think about international expansion is a long-term option for growth at least to focus really North America? Thank you.

[John Zimmer:]

Yes. Our focus today is 100% on the United States and Canada. We do look at international as a potential future opportunity. but right now, we’re absolutely focused on the U.S. and Canada and don’t have any current plans.

[Mike Olson:]

Thanks.

[Operator:]

Thank you. And our next question comes from the line of Eric Sheridan with UBS. Your line is now open.

[Eric Sheridan:]

Thanks so much for taking the question. Sales and marketing, obviously the biggest driver of the improvement year-on-year in the cost structure below gross margin. Just wanted to get a little bit better sense of whether the sales and marketing channels you’re leaning into where you’re seeing potentially higher returns against marketing dollars and how that should factor into the way we think about marketing efficiency, not only in 2019, but more longer-term? Thanks so much.

[Logan Green:]

Sure. let me start and then I’ll hand it off to John to add some additional color. I would say, maybe, where I started in my last answer, which is the current competitive market is improving. We are seeing a reduction in terms of rider incentives. And so we do believe, the industry is headed in the right direction. For us, we are focused on building the defining brand of our generation.

[John Zimmer:]

Yes. And so just from the perspective, Logan and I have now been in the market for – Lyft is about seven years old. And if you look at the economics, you can see as a percent of revenue that this is the most rational the market has been. I think that’s a really important takeaway. And as that happens, that happens, because there are now two strong players, right? And both players can provide three-minute ETAs, three-minute pickup times in major markets. And so then the reason why people choose one company versus the other comes down to the brand. And this is where something that we’ve always believed is important. Something that we have always valued and always, I believe done better than the industry. And so within that brand, we don’t mean adds, we mean every single touch point that you have with us and our company. And that gets to the actions we take locally. That takes place in the app itself, that takes care place in the products we build for our drivers. And we think that will be the biggest opportunity for leverage against that sales and marketing line, so that it can continue to come down.

[Eric Sheridan:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of John Blackledge with Cowen. Your line is now open.

[John Blackledge:]

Great, thanks. Just a couple of questions, on the driver center rollout, could you just provide an update on the number of driver centers that have been rolled out thus far this year and perhaps how the drivers are responding to these centers. And then the second question on bikes and scooters, just how is this initiative ramping thus far this year? How many markets are you in now with bikes and scooters and color on how you – how incremental it was or a percent of revenue from bikes and scooters that you saw in the quarter? Thank you.

[John Zimmer:]

Yes. On driver centers, this is part of our broader strategy to go above and beyond to take care of our drivers. So, we have a history of leading the industry with driver facing initiatives. We’ve had tipping from day one. We were the first to launch Express Pay, which provided a same day pay option for drivers. We were also the first to launch Express Drive, which is a weekly rental program for drivers, all of which have helped build and sustain driver preference over the years. We’re very excited about the driver service centers, vehicle operating expenses, our drivers top cost, and service is a big component of that. And so we’ve had hubs, we refer to them as hubs in the market for a number of years. and that’s where drivers can show up to get a sort of to do some of their onboarding activities and get imprisoned help. So it’s sort of like a genius bar type experience. What we realized was we had an opportunity to provide, really low-cost, essentially at cost vehicle service for drivers instead of just answering basic questions. So, we’ve now opened up and are operating our first two driver service centers with a number of more that it’ll continue to scale this year. it’s still early days, but we’re – the anecdotal feedback from drivers has been very positive. And we’ve really focused on speed at these driver centers. So we’re able to turn cars around quite quickly, help get drivers back on the road and making money. As a driver on the platform, if your car’s in the shop for a number of days, that can be very tough financially, because you use and depend on that car to make money. So, we’ve focused on helping high-quality service with record speeds. So, it’s – anyway, it’s still very early, but we’re excited about the initiative.

[Logan Green:]

And then on bikes and scooters, we have approximately nine markets with bikes, 15 with scooters. We’re not going to be breaking that out separately, on the economic side. but as I said in the prepared remarks, it’s something that we will continue to invest in, with those relationships we have with local cities. And we’re excited that now, in New York, the first few customers will be able to actually book a city bike within the Lyft app.

[John Blackledge:]

Thanks.

[Operator:]

Thank you. And our next question comes from the line of Ron Josey with JMP Securities. Your line is now open.

[Ron Josey:]

Great. Thanks for taking the question. one of the folks a little bit more on rider growth, the 40% to $20.5 million. Brian, you mentioned initiatives to attract and retain riders here. Just can you provide a little more details on those initiatives you mentioned and while we’re at it, any insights or lessons learned on the testing of prescription or loyalty programs and how that’s helping the service? Thank you.

[Logan Green:]

Yes. this is Logan. I’ll just go back into a couple of the big initiatives that we launched in Q1 that we attribute a decent portion of our growth curve; one was the investment in the Lyft matching platform that we’ve been working on for over a year. That reduces cancels, increases the reliability of the service and the unlock of new rider experiences. So, Shared Saver now live in three markets and that’s able to provide a lower cost shared ride by driving further efficiency in the system. and like John was just talking about our first rollouts of the bikes and scooter integration into the Lyft app. So, as a whole we are trying and striving to continually provide a better multimodal experience for all of our customers, a more reliable experience and we see those afterwards stack over time.

[Ron Josey:]

Great. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Andy Hargreaves with KeyBanc. Your line is now open.

[Andy Hargreaves:]

Thanks. I just want to ask you a question on sort of the share gain and the brand, it seems like bit share gain is persistent. So, just wanted to get your thoughts on the underlying drivers there and what you’re doing to reinforce that? And then just a follow-up on the insurance, if you could give us any help on – should we see those – the benefits there sort of scale smoothly overtime or are there stair steps that we might hit a different milestone?

[Logan Green:]

Great. Just on the brand front. One of the advantages, we’ve always had in the market has been on a driver preference. So when you ask drivers, who drive for both Lyft and Uber, which service they prefer? Historically, to this day, drivers – the majority of drivers prefer driving on Lyft. And like we talked about the Lyft Driver Centers are one of the latest initiatives as well as Lyft Direct. So, we had launched Express Pay, which is a same-day pay service a number of years ago, and it’s been extremely popular. And the new Lyft Direct Debit Card actually puts money after every ride directly on that driver’s debit card. In addition, drivers – a lot of our drivers yet hit with a ton of banking fees. And so by launching a no fee bank account, we think we can drive a lot of additional economic value. And at the end of the day, all of this adds up to providing a better hospitality experience. Our goal is for – when you get in a Lyft for that, Lyft to take care of the driver and the driver in turn to take care of the rider in the car. So that’s part of our broader hospitality experience. Additionally, we’ve made some significant investments to really showcase our values. So last year, we became one of the largest voluntary purchasers of carbon offsets, and we made every single ride on the Lyft platform, carbon neutral through the purchase of those offsets. Additionally, we have a program, we’re really proud of called RoundUp and Donate. And through RoundUp and Donate, riders can optionally opt into this program and round up the fair at the end of the ride to the nearest dollar with the difference being donated to one of a handful of non-profits that we’ve partnered with. So, collectively, we’ve raised, since launching the program a little over a year ago, we’ve raised over $14 million for a number of different causes. And I think really, living our values and finding ways to harness the power of the platform for change has been a big part of building this differentiated brand.

[John Zimmer:]

Thanks, Logan. Let me answer part two of your question around insurance. We have a range of initiatives and I should say, what gets me so excited about insurance is just the opportunity, because it is both business spectrum, there’s short-term opportunities and then there’s really exciting long-term opportunities. I can say when I look back though the last five quarters, every single quarter; we’ve reduced the cost of TNC insurance as a percentage of revenue excluding any adverse development. So, this is an opportunity for us to continue to try to really leverage one of the largest costs on our income statement.

[Operator:]

Thank you. And our next question comes from the line of Ron Josey with JMP Securities. Your line is now open.

[Ron Josey:]

Hey guys, it’s me again. Just real quick, I’m in to also ask Brian, can you just give us a little more detail on 2Q expense guidance, I noticed that definitely coming down relative to where we were on an EBITDA basis? That’d be helpful. Thank you for that. And I’ll get back in.

[Brian Roberts:]

Sure. So, I may provide some extended comments on guidance. Just want to have everyone on the phone. So, this may be a relatively long answer. And I’ll actually – let me start with the revenue. And then I’ll go into your expense question. So, as I mentioned in my prepared remarks, we’re really pleased with a momentum underscored by the positive trends of both active riders and revenue per active rider. The strong increase in Q1 active riders was a positive surprise for us. The number of quarterly active riders jumped 10% quarter-on-quarter. That being said, we do believe in the first quarter, we benefited from some unprecedented publicity about Lyft given where the first major tech company to go public in 2019. In terms of Q2, we want to remind investors that there was an industry wide price increase introduced in the second quarter of last year. This significant increase – this increased significantly boosted revenue in the second quarter of 2018. Just as a data point, revenue per active rider jumped 16% quarter-on-quarter in the second quarter of last year, which led to 27% quarterly revenue growth and a 111% annual revenue growth. So, this obviously creates a challenging comp this year. Our revenue guides of $800 million to $810 million for Q2 implies annual revenue growth of 58% to 60% off of last year’s exceptional Q2. So, this is still a super strong quarter for us coming up. Additionally, as we continue to grow our bike and scooter business, it’s worth noting seasonality. This is really going to be our first summer and fall with both bikes and scooters. We anticipate that revenue per active rider may be more flat over this period, especially, if there’s a positive surprise the number of active riders from new bike and scooter customers. Also, as we look out later in the year, we anticipate that the seasonality from bikes and scooters may have a more pronounced impact on consolidated revenue trends. More specifically, we expect that bikes and scooter revenue will decline between Q3 and Q4 given snow and other seasonality. This may cause our consolidated quarter-on-quarter revenue growth in Q4 to exhibit more meaningful seasonality in it and impact revenue per active rider for the same reason. Now, let me switch gears to answer the question you asked on expenses. We are extremely pleased that we were able to leverage expenses in important areas of our P&L in the first quarter. We now believe that the strength and efficiencies we’re realizing in our core ride-sharing business will help offset and even larger portion of our strategic initiatives than we originally expected. Notwithstanding this benefit, the investments and bikes and scooters, autonomous and driver centers will increase operating expenses. And so let me just spend a moment to provide some highlights. In terms of contribution margin, we reached a 50% record in the first quarter versus 35% the same period a year ago, as we leveraged key expenses. For the remainder of 2019, contribution margin will be negatively impacted by two to three percentage points versus Q1 as we expand our shared network of bikes and scooters. I want everyone to remember that depreciation is in contribution. We’re also able to leverage the efficiency of operations and support excluding our new strategic investments. Now, over the remainder of 2019, we expect to increase our investments in our shared network of bikes and scooters, Express Drive and Driver Centers. So, notwithstanding the efficiencies we’re unlocking and core ride-sharing, we anticipate that non-GAAP operations and support as a percentage of revenue will increase from Q1 levels as a result of these investments. This is baked into the guidance that we’ve provided. In the remaining quarters of 2019, we anticipate an increase of three to five percentage points relative to Q1 level with an expected peak in the third quarter. Moving to R&D, as we invest fuel key improvements in our multimodal platform and our autonomous future, non-GAAP R&D as a percentage of revenue will increase over the remainder of 2019. We anticipate that Q2 non-GAAP R&D will increase two percentage points versus Q1 with Q3 and Q4 up two percentage points from the Q2 levels. Now, in terms of sales and marketing, again, we are extraordinarily excited about the leverage we’ve delivered. We expect that sales and marketing will decline to 28% as a percentage of revenue in the second quarter, down from 35% in the year-ago period and really hold there for the remainder of 2019 as we launched and expand our network of shared bikes and scooters as well as Driver Centers across the country. Finally, we anticipate that non-GAAP G&A expense as a percentage of revenue will increase approximately four percentage points in Q2 from Q1 and peak at 26% in Q3 and Q4 as part of the build out required to support our new strategic initiatives as well as SOX readiness. We anticipate that we can unlock G&A leverage beginning in 2020. And I just want to end with repeating what I said in my prepared remarks. We are really encouraged by the strength of our core business and we see a clear path to profitability in ride-sharing. We anticipate the 2019 will be our peak last year and then we move – then we’ll move steadily towards profitability at a consolidated basis. And again, all of the remarks I just said were baked into the guidance we provided on EBITDA.

[Operator:]

Thank you. And our next question comes from the line of Michael Graham with Canaccord. Your line is now open.

[Michael Graham:]

Thanks a lot. Just two. First on shared rides, just maybe, can you talk a little bit about the KPIs and shared rides as it is straightforward as a three-minute arrival time or what else do you think about there is obviously a more complex proposition. And then just wonder if you could spend a minute on the government and regulatory landscape, what are some of the key things you’re focused on as you look to cement relationships with local and state governments? Thank you.

[Logan Green:]

Yes, this is Logan. So on shared rides; we do have a lot of internal KPIs that we use to measure the quality of the service. We don’t disclose any of those, but I can sort of talk through at a high level of what we look for. The first is around the efficiency generated by the system overall. So, we look at based – what’s the match rate? What’s the quality of those matches? So what’s the overlap of those rides? And what type of efficiency does that generate in the system? Because then we can pass that efficiency back to our riders. And then we look at – in addition to pickup times, there’s also a matching window, and there’s an obvious tradeoff, the longer the matching window, the more opportunities there are for higher quality matches and that lets just pass on lower prices. So, we’re not always trying to just optimize on price or pickup time. There’s a tradeoff between the two and we’re really working to find the right balance for our users. And then lastly, the quality of the match, so not just how fast the car comes to pick up the rider, but how quickly do you get to your destination and what’s the sort of detour on the route. And obviously, we try to minimize the detours as much as possible. So those, hopefully that gives you a little bit of a sense of the kind of high level areas that we look at internally. But again, we don’t break out shared ride numbers or disclose those other KPIs.

[John Zimmer:]

On the policy and local policy front, some of you know, we hired Secretary Anthony Fox, who used to run the Department of Transportation for President Obama to leave policy at Lyft; he was also the Mayor of Charlotte, North Carolina. So, he understands both local and federal politics and opportunities in transportation. And so with him and his team, we’re continuing to build the local relationships that have served us well. We’re investing locally, and we’re listening to make sure that the actions we’re taking are aligned with the interests of the local officials.

[Michael Graham:]

Thanks very much.

[Operator:]

Thank you. And our next question comes from the line of Justin Patterson with Raymond James. Your line is now open.

[Justin Patterson:]

Great. Thanks. On enterprise, it sounds like you had some continued success there during the quarter. Could you talk about the factors driving that growth? What do you need to do to get further traction within the healthcare vertical? Thanks.

[John Zimmer:]

Yes. So, a part of it is just changing over how an industry has done things in the past. And I think the first critical thing that the team did is they built relationships with I believe nine, the top nine transportation, healthcare brokers. So historically, when someone like the rider, Logan mentioned in his remarks with needing a non-emergency medical transportation, they would call into a call center, and then that call center would call out to a taxi dispatcher. And then they would do their best to have that taxi show up, which would happen sometimes. And other times if that taxi was held from the street, it wouldn’t show up for that patient. And so we’ve worked directly with those call centers, which are run by those brokers to build a service that’s called Lyft Concierge. And it’s a web platform that allows – and there’s an API that allows us to basically, have a deep integration with these large transportation brokers. And order rides, multiple than the rides when needed and for the book – the customer in some cases and the broker in other cases to be able to track the success of that pickup and drop off. So, first was establishing those relationships. Second was building the technology platform to scale that. And then third will be more work on the policy front, because these are new ways of bringing non-emergency medical transportation patients to their appointments and in some cases, laws didn’t account for this new form of transportation and will need to be adjusted.

[Operator:]

Thank you. And our last question comes from the line of Tom White with D.A. Davidson. Your line is now open.

[Tom White:]

Great. Thanks for taking my question. So first off, congrats on the IPO. Brian, since you like talking about insurance so much, maybe just a follow-up there. You’ve highlighted three specific drivers kind of leverage related to insurance. Could you maybe, give us a sense of the magnitude of the efficiencies that you guys can think – do you think you can get there over the next 12 to 24 months maybe you put it in terms of kind of insurance costs per driver, per day, today versus maybe where you think that can go? And then just on the Waymo announcement, realize it’s early, but if we were to look out five to 10 years and partnership was a big part of your autonomous strategy, how should we think about kind of how the economics get split? And I’m also curious if it’s cheaper for a Phoenix based person to grab a Waymo ride versus a Lyft ride and maybe by how much roughly?

[Brian Roberts:]

Sure. So, this is Brian. Let me tackle the first question. The reason I get so excited about insurance is there’s just so many different initiatives. For the company, we have different goals for the company. And so in the first half reducing the cost of insurance is actually the number one goal companywide. And so, I mentioned three, we probably have a list of probably 10 to 20 different programs and initiatives that we could discuss. What’s really powerful is each initiative has a different timeline in terms of unlocking benefits. And so this is one, and again, we work with third-party actuaries. and so we may know internally something it’s going to be a stat sig in terms of having an impact, but it will take time for the actuaries then to give credit in terms of loss reserves et cetera. So, this is one where we see, we have years of opportunities in terms of unlocking costs on the platform.

[Logan Green:]

And for the Waymo relationship, we can’t comment on the economics. But again, we are very excited about the opportunity to work with them and to get Waymo’s on the Lyft platform.

[Tom White:]

Okay, great. Maybe just one last one. Sorry, slip it in. Could you guys give us any sense about, gross booking trends that I see? It’s not – I don’t think it was in the press release and also rides as well. I’m just curious why – maybe, you guys aren’t going to be sharing that quarterly going forward?

[Logan Green:]

Sure. Thank you. So, our historical business was virtually entirely a ride-sharing marketplace. And so we included bookings and take rate in the S1. So, investors could understand the monetization trends. We’re now aggressively investing in new areas including those were revenue equals bookings. So, we really want to try to avoid investor confusion. Lyft take rates could increase solely based on the relative proportion of initiatives, where revenue equals bookings. We believe it’s more appropriate for investors to use revenue as the best top-line growth metric since revenue drives our P&L across all initiatives. And just so that there is absolutely no confusion on this call, this is absolutely a positive metric for us in the first quarter. Revenue as a percentage of bookings increased in the first quarter on both a year-over-year and quarter-over-quarter basis. We just believe it’s more important for investors to analyze the performance using revenue going forward. In terms of rides, we will report important ride milestones from time to time. But as we begin to expand our shared networks up bikes and scooters and really lean into related subscriptions, we don’t think the ride metric is the best way to understand our business going forward. For example, we offer a bike subscription right now in New York, where rider has access to unlimited bikes for a fixed dollar amount. We believe it’s better for investors to understand trends in our business based on active riders and revenue per active rider.

[Tom White:]

Great. Thank you.

[Operator:]

Thank you. And I would now like to turn the call back over to Co-Founder and CEO, Mr. Logan Green for any further remarks.

[Logan Green:]

All right. Thanks so much everybody for joining our very first earnings call. And thanks for all the great questions. We look forward to seeing you all soon. All right, take care. Bye.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.