Earnings call transcript: Lyft Q2 2025 misses EPS forecast, stock falls

Lyft Inc. reported its second-quarter 2025 earnings, revealing a notable shortfall in earnings per share (EPS) compared to analyst expectations. The company posted an EPS of $0.10, significantly below the forecasted $0.26, marking a 61.54% miss. Revenue also fell short, coming in at $1.59 billion against an expected $1.61 billion. This earnings miss contributed to a decline in Lyft’s stock, which fell 3.58% in after-hours trading, with a further 4.15% drop in premarket trading, bringing the price to $13.41. According to InvestingPro data, Lyft maintains a market capitalization of $5.88 billion and has demonstrated strong revenue growth of 27.32% over the last twelve months.

Key Takeaways

• Lyft’s EPS and revenue both missed analyst forecasts for Q2 2025.
• The stock experienced a sharp decline in after-hours and premarket trading.
• Despite the earnings miss, Lyft reported record highs in gross bookings and adjusted EBITDA.
• The company is expanding its global footprint with strategic acquisitions and partnerships.

Company Performance

Lyft achieved record-breaking results in several operational metrics for Q2 2025, including gross bookings and adjusted EBITDA, which rose by 26% year-over-year. The company also reported a significant increase in free cash flow, reaching $993 million over the trailing twelve months. Active riders increased by 10%, and ride frequency saw a mid-single-digit rise. These operational successes highlight Lyft’s strong performance in a competitive rideshare market.

Financial Highlights

• Revenue: $1.59 billion, slightly below the forecast of $1.61 billion.
• Earnings per share: $0.10, missing the forecast of $0.26.
• Adjusted EBITDA: Up 26% year-over-year.
• Free cash flow: $993 million over the trailing 12 months.

Earnings vs. Forecast

Lyft reported an EPS of $0.10, falling short of the anticipated $0.26, resulting in a 61.54% negative surprise. Revenue also missed projections, coming in at $1.59 billion compared to the forecasted $1.61 billion, a 1.24% shortfall. This marks a significant deviation from expectations, impacting investor sentiment.

Market Reaction

Following the earnings release, Lyft’s stock dropped 3.58% in after-hours trading, with a further decline of 4.15% in premarket trading, settling at $13.41. The stock’s movement reflects investor concerns over the earnings miss, despite the company’s operational achievements. With a beta of 2.27, InvestingPro analysis indicates high price volatility relative to the market. Despite recent pressure, the stock has delivered an impressive 54.07% return over the past year, with analyst price targets ranging from $10 to $28.

Outlook & Guidance

Looking ahead, Lyft projects gross bookings growth of 13-17% for Q3 2025, incorporating the recent acquisition of FreeNow in Europe. The company plans to continue expanding its global presence and integrating autonomous vehicles into its fleet. Future revenue forecasts for FY2025 and FY2026 are $6.49 billion and $7.32 billion, respectively. InvestingPro analysis shows the company maintains a GOOD overall Financial Health Score of 2.63, with particularly strong metrics in growth potential. For deeper insights into Lyft’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Executive Commentary

CEO David Richer emphasized the company’s transformation, stating, "A new Lyft is emerging. Not only are we consistently delivering for riders and drivers, but that customer obsession is producing record results quarter after quarter." He also highlighted the potential impact of autonomous vehicles, describing them as "transformational for Lyft."

Risks and Challenges

• Continued earnings misses could affect investor confidence.
• Increased competition in the rideshare market.
• Challenges in integrating autonomous vehicle technology.
• Regulatory hurdles in expanding global operations.
• Potential economic downturn affecting consumer spending.

Q&A

During the earnings call, analysts inquired about the details of Lyft’s partnership with Baidu for autonomous vehicles and the strategic rationale behind the FreeNow acquisition. Executives addressed concerns about pricing and market penetration, emphasizing growth through partnerships, which now account for 25% of rides.

Full transcript - LYFT Inc (LYFT) Q2 2025:

Conference Operator: Good afternoon, and welcome to the Lyft Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode to prevent any background noise. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ari Legrier, Nolfe, VP, FP and A and Investor Relations.

You may begin.

Ari Legrier Nolfe, VP, FP&A and Investor Relations, Lyft: Thank you. Welcome to the Lyft earnings call for the second quarter twenty twenty five. On the call today, we have our CEO, David Recher and our CFO, Erin Brewer. As a reminder, our full prepared remarks are available on the IR website, and we will use this time to answer your questions. We’ll make forward looking statements on today’s call relating to our business strategy and performance, partnerships, future financial and operating results, trends in our marketplace and guidance.

These 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 our recent SEC filings. All of the forward looking statements that we make on today’s call are based on our beliefs as of today, and we disclaim any obligation to update any forward looking statements except as required by law. Additionally, today, we are going to discuss customers. For rideshare, there are two customers in every car.

The driver is Lyft’s customer and the rider is the driver’s customer. We care about both. Our discussion today will also include non GAAP financial measures, which are not a substitute 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 Richer, CEO, Lyft: Thanks, Aurelien. Okay, everyone. Listen up, Q2 was a record breaking quarter for Lyft. We delivered all time highs across gross bookings, adjusted EBITDA and free cash flows for the first time in company history. We reduced our share count excuse me, and for the first time in company history, we reduced our share count by repurchasing $200,000,000 worth of stock.

This strong performance positions us for an accelerated growth in Q3 and we remain on track to achieve our long term targets. Our marketplace is thriving, setting us up for an even stronger second half of the year. Over 1,000,000 drivers spent a record amount of hours with Lyft. That’s the same number of drivers that Lyft had pre COVID, but now on average they’re driving 40 more each. We had a record number of active riders in Q2 with new riders increasing double digits year on year for the second consecutive quarter.

As a result, rides reached an all time high of almost $235,000,000 marking our ninth consecutive quarter of double digit growth year over year. A new lift is emerging. Not only are we consistently delivering for riders and drivers, but that customer obsession is producing record results quarter after quarter and our momentum is building. We are now a global more diversified company with double the TAM. We are significantly broadening options for riders from market expanding innovations like Lyft Silver for nearly 60,000,000 older Americans to a greater emphasis on margin expanding luxury offerings like our improved black and black SUV options.

And we are uniquely positioned to benefit from the coming addition of autonomous vehicles to our platform across North America and Europe. This will be transformational for Lyft. Look, if you are getting tired of our customer obsession and operating excellence delivering quarter after quarter of record breaking performance? Well, we aren’t. We are just getting started and we’re going to do it over and over again.

So there’s a whole lot to talk about. It’s go time. Bring your questions over to you.

Conference Operator: Thank you. Your first question comes from Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan, Analyst, Goldman Sachs: Thanks so much for taking the question. Maybe a two parter. When you think about the scaling of some of your broadening out of the array of products you bring to market with a specific focus on affordability, can you talk a little bit about what you’re seeing in terms of maybe two factors: one, as a stimulant of both rider growth and rider frequency? And how you think the broader competitive landscape continues to evolve when you think about affordability becoming more a key theme across the industry looking out over the next six to twelve months? Thanks so much.

David Richer, CEO, Lyft: Sure. Hey, Eric. It’s David. I will take it and maybe, Erin, you might wanna add in a little bit about the the context as well. So, you know, as you’ve seen, you know, our our growth has never been, has never been greater, continues to be strong.

And, you know, you point to affordability. I might zoom out a little bit and put it in even a little bit broader context. So when we think about what drives our growth, we think of the fundamentals and or actually the fundamentals we outlined, at our investor day, years you know, about a year ago. The the first thing we actually think about is operational excellence. Right?

The better you do, the better you do, the better you do. And this is why frequency is up. This is why, you know, I’ll give you a specific stat. I know it’s different, you know, far away from where you asked, but just to fill all this in. When I started about two and a years ago, our driver cancellation rate was about 15%.

Now it’s sub 5%, it’s about four point seven percent. So dramatic increases, improvements in ETA, improvements in driver cancellations, so that’s the first thing. The second thing is innovation. And here again, you hit on innovation talking about affordability. Affordability requires innovation.

Right? So let’s look at Price Lock as an example. Price Lock is a way for you to lock in a price, as you know. Commute is our single biggest use case, as you know, and it has got incredible retention rates, Price Lock does. So, you know, I look at it not just in terms of pricing affordability, but also in terms of reliability and, like that.

The third is partnerships. Now partnerships are a funny thing to talk about in affordability, but let me say why. First of all, it’s a big growth mechanism for us. Right? It expands our TAM.

It allows us to, talk to Chase customers to now United customers, to DoorDash customers, and so forth and so on. But what’s interesting about each one of these agreements is they tend to come with great economics, not just for both businesses but for our riders. So if you look at Chase, for example, Chase now you get $10 off a month, that’s a new offer, a $120 a year for Chase Saffer Reserve customers and you get 5x points. With DoorDash, you get, great points. With United, you’ll get points on every single ride.

So when you look at affordability, again, you have to think of more than just pricing. Have to think of value to customers, and that’s important. And then we can talk about media and global and AVs, you know, separately as part of the growth plan. But, but that’s sort of how I think about it. It’s more of a value to customer thing rather than just a pricing.

Now having having said that, our prices remain competitive. Our price strategy is always to remain competitive and reliable. Pricing is a little different from what we expected a year ago. And, again, it’s sort of a nod to your point that pricing has actually not hasn’t grown as much as we expected. We’re very focused on making sure that we deliver great values to riders through that.

So I’ll turn it over to Erin to talk a little bit more about that, but that gives you some context.

Erin Brewer, CFO, Lyft: Yeah. Happy to add on. You know, Eric, I I guess the few things that I would add is as you think about affordability, and I think I’ve said this on a previous earnings call, this is not new to Lyft. Right? We’ve got a a wide array of products to offer the consumer overall, and so affordability and having that be part of our portfolio is not new to Lyft.

You know, our growth algorithm is really centered, as David mentioned, on active riders and frequency. In q two, we saw active riders up 10%, frequency increased mid single digits. You know, this has been a pretty consistent trend now for eighteen months, so we’re super proud of that. And then, you know, David talked a bit about pricing. You know, what I would say is there’s not much to highlight there.

Right? So in in q two, I would say prices were roughly flat quarter over quarter, up a little bit year over year. As we think about q three and what’s embedded in our guidance, kind of the same, you know, assuming roughly roughly flat sequentially and up year over year. And yet, we’ve continued to drive great profitability. Right?

Record in q two. Our adjusted EBITDA was up 26%. So I think we’re positioned well. And, you know, again, I just end with this concept of affordability and having that as part of our, you know, toolkit, I guess, if you will say, is is not new to Lyft. So we feel like we’re positioned well.

Eric Sheridan, Analyst, Goldman Sachs: Great. Appreciate it. Thank you.

Conference Operator: The next question comes from John Blackledge with TD Cowen. Your line is open.

John Blackledge, Analyst, TD Cowen: Great. Two questions. First on the third quarter gross bookings guide, the range is 13% to 17%. Just curious if you can talk about the expected contribution from Free Now or maybe frame the gross bookings guide range excluding Free Now? And then second question, kind of follow-up on the partnership deals.

Could you provide an update on some of the more impactful partnership deals that are driving the business? And as we think, look into the second half in 2026, what are some of the key existing deals that could be growth drivers? Thank you.

Erin Brewer, CFO, Lyft: Hey, John. I’ll start, and then I’ll turn it over to David. So I’ll I’ll start a little bit with where I left off in the last question. You know, it really centers around our algorithm around continuing to growth grow active riders and frequency. Right?

So I mentioned our performance in q two. That has been a very consistent drumbeat over a long period of time, and and we expect that to continue. And that’s what really leads into our expectation in q three around rides growth in the mid teens. We expect that continued strong rider and driver engagement, continued industry leading service levels. We’re going to continue to grow exceptionally well across our markets.

And in particular, last quarter, we highlighted some of the outsized growth we see in places like under underserved markets or in Canada, etcetera, etcetera. Now the thing to highlight with free now, remember we closed one week ago. I think it’s really important to note a couple of things. Our q three guidance includes two months of free now in it. Another, I think, important thing to think about is you think about that business, which which is a taxi business across nine European markets.

Taxi tends to be a little bit more of an elevated experience. They have a heavy business traveler travel population. So this is all getting to that q three is generally a seasonally lower quarter for them. And in our guide, it only includes two months of activity. So, hopefully, that color is helpful.

David?

David Richer, CEO, Lyft: Sure. So partnerships. Yeah. Lots to talk about there. And let’s sort of go maybe maybe sort of new to to older.

That might be helpful. So on the new side, of course, is the big news today. United, as we all know, you know, first or second largest global airline depending on how you count it. Super excited about that partnership. You know, we’ll talk more about the specific later this year when we launch it to consumers, but the headline there is we expect it to be, yeah, industry leading.

You’ll get points on every single ride, not just rides to the airport, and that’s, that’s super exciting. And and we think it’s, you know, it it’s we’re we’re super flattered to be chosen by United. They’ve never had a rideshare partner before. This would be their first, and they’re taking it very seriously. So that’ll that’ll provide a lot of growth.

Mileage plus, of course, this is an enormous program. Then on sort of the newer side, let’s go back to Chase. So Chase, of course, we’ve had as a partner for many years, Chase Sapphire Reserve and the JPMorgan card. But the refresh has been extraordinary in, driving growth, particularly among kinda higher value riders. So we’re seeing there are over a million connected accounts.

So let’s just sort of start with with the the baseline there. And what we’re seeing is that the because of the new offer, which is now $10 a month and, you know, five x points, we’re seeing a a real acceleration of adoption of that program or the use, I would say, of that program. So that drives growth. No no question. It’s also now a global program for us.

So Erin, of course, was just talking about FreeNow. You can now acquire Chase points on the FreeNow app. So all of a sudden, we become a more interesting partner, of course, but also, you know, the value becomes more valuable to to to more people they offer us. Okay. Now let’s talk about, say, DoorDash.

Okay. DoorDash, we launched at the end of last October. A great launch. It far exceeded our expectations right in the first couple months, and it’s continuing to grow. I think in the prepared remarks, you saw that, their summer of DashPass produced unbelievable results.

It’s, it was the highest one day spike, something like 300% more, you know, account makings on that one day, than we than we typically seen. So, you know, again, that sort of shows you remember DashPass is an 18,000,000 member program globally. And, we’re now more relevant on the global side than we were before. So that can produce real growth. Now let’s talk about Alaska.

Alaska, you know, I think it’s the fifth largest airline in The United States. We just refreshed that. They’re now of course, Alaska and Hawaii are are linked. We just refreshed our offer with them. Again, a better offer for consumers than it was before and one that we’re, seeing growth.

Now let’s talk about a build. So build, relatively small in the grand scheme of things, but hugely important for, you know, particular audience. And the there we have a variance in partnership. People can gain points, they can also burn points. In other words, use their bill points to to take lift.

There’ve been something like 360,000,000 points redeemed already in the last four months or so. So huge. And again, just getting started. Let’s talk about business rewards. So we just launched a business rewards program.

The program itself is is, maybe I think it officially sort of launched yesterday in terms of actual customers being able to use it. It’s a free program, which is differentiated. It allows you to get cash back, which is wonderful, back to the affordability question that Eric asked. But it also allows you to get double points on some of our partners, including Hilton and others. So that’s absolutely wonderful.

And again, that just literally started yesterday in the market. So when you zoom out now, you’ll remember that when we talked about this as part of our investor day, we said that roughly 20% of our rides are associated with partnerships. That number is now up 25%. We have more than 50,000,000 rides, that are linked to partnership. And and again, when we look at the penetration of our existing partnerships, and of course, our new partnerships, it’s zero, but even existing partnerships, huge growth.

So sorry for going on to slink on that, but it’s such a big story. It’s worth really going deep on. Thank you. Thanks. The

Conference Operator: next question comes from Doug Anmuth with JPMorgan. Your line is open.

Doug Anmuth, Analyst, JPMorgan: Thanks for taking the questions. David, can you talk more about how Lyft is looking to build the AV use case? And when you think about some of the stuff that you’re doing in Europe, for example, and the recent partnership that you announced with Baidu. What are the key capabilities that Lyft and FreeNow, bring for AV tech providers?

David Richer, CEO, Lyft: Sure. Hey, Ben. So, yeah, great question. And, obviously, you know, sort of a very rich area. The first thing to say whenever we think about AVs is you have to think about them as a massive TAM expander for rideshare.

And the reason I’m so confident in this is we see the data. We see the data. So for example, in the markets where and this is in The United States. In the markets where AVs are operational, you know, and these are the San Francisco’s and LA’s and Phoenix’s of The United States, we are seeing growth, industry growth I’m talking about, that is five times larger, five times larger than what you’re seeing in other, top markets. Five times larger.

Okay. Why might that be? Well, you put a new product in the market. If it’s a good product, it tends to get traction. Right?

So AVs are safe. It’s great. They not only know the rules, they follow the rules. They’re private. It’s great.

They’re reliable. The cars tend to be very new, you know, for obvious reasons. You know? So so there’s some there’s some really good reasons. Now now some of that growth might tail off over time, of course, as it becomes a less novel product, but, you know, still this is a this is a step change.

Okay. So that’s the that’s the thing. Okay. So what do you need to to commercialize an AV if this very expensive technology that’s put in an expensive car and made even more expensive by all the extra maintenance and so on and so forth that you have to do to it. Well, you have to have a couple of things.

Of course, you have to have demand. We got lots of demand. So that’s great. And now we’ve got demand not just in The United States, but we’ve got in Europe. You’ve gotta have a, you know, a marketplace that works.

It manages supply and demand. It sets prices. You know, you you need to have customer care. If you don’t have customer care, when someone leaves their thing in the a b or when the a b does something unexpected, any number of things, you know, you got someone’s gotta, you know, answer the phone effectively. So then as you move through this sort of value chain, I’m sure it’s talking on the right of the value chain, let’s say, and then moving towards the left, you need fleet management.

You need fleet management. Now fleet management, it’s so unsexy. As soon as I say it, people say, okay. What I don’t even know what that is. Well, let me tell you what that is.

What that is is that’s onboard. That’s buying a car. It’s onboarding the car. It’s maintaining the car. It’s cleaning the car.

It’s charging the car. It’s making sure that that car is available, utilizable, you know, as close to twenty four hours a day, seven days a week as you possibly as it possibly can be. We have, as you all know, a very, well established operation, subsidiary called FlexDrive. It’s been in business for about ten years. It manages tens of thousands.

I mean, over the course of the years, it’s many tens of thousands of cars. We currently have, you know, some 10 to 15,000 cars on that platform. And it’s a very distinct set of capabilities. It’s distinct from what, rental car groups might have. I can explain that if you’re interested.

Anyway, it’s very tailored to Rideshare. It’s very, very tailored to rideshare. It’s very and it’s very, very sophisticated. Right? It sort of knows when a car is gonna need maintenance before the driver knows.

It knows what the tire pressure is. It knows what knows when when to deploy cars versus not because demand is gonna be low. You know, demand when when demand is high, you deploy a lot of cars and that’s low, that’s when you put them in for maintenance and cleaning. It’s a very sophisticated operation. We’ve got about 28 of them across The United States, depots across The United States.

And now we come to Europe. So Europe has with FreeNow has a very, good relationship with the taxi fleets. Right? The taxi fleets who are fleets. So they know how to do fleet management as well, FreeNow does, and the taxi fleets.

And then I would say adjacent to that, and this is sort of a little bit of an aside, but when you talk to CEOs of of AV tech companies or or just industry folks and you ask them, what will be the rate limiter? What will be the rate limiter on on AVs? You know, many different things could be. Course, technology could be adoption, could be people’s interest in it, be different parts of the country, snow could be ice, could be rain, all these different things. The fundamental thing that’s going to slow AVs down over time, or let’s say regulate their adoption, is going to be regulators.

Regulators. In The United States, have 50 different states, all these municipalities. In Europe, Free Now operates in nine countries. Now what do we have going for us in Europe in particular? We have very good relationship with regulators through Free Now.

Free Now has had to work very closely with regulators because taxes are regulated business. And it’s it’s a real differentiator for us versus, versus other approaches who’ve been, not as not as regulatory friendly. So that’s and then, of course, there’s financing. You know, we bring our many to the table. You know, we talked a bit about that and a bunch of other things I can talk about.

But I think that broadly speaking, you know, when you look at us first, again, and just sort of summarize, AV is definitely gonna be, you know, wind at the back of of rideshare. It’s gonna introduce a lot of people to AVs. Most people’s first AV experience will be through rideshare. That’s valuable to us, but it’s also valuable to to AV companies. Second, you’re gonna need demand, we’ve got that.

You’re need a marketplace, we’ve got that. You’re gonna need seven by 24 operational excellence, we got it. And then you gotta have great fleet management somehow, and the fact that ours is integrated with rideshare is awesome. And you got to have good relationships with regulators and regulators need to understand that you’re on their side, not trying to mull them over.

Benjamin Black, Analyst, Deutsche Bank: Great. Thank you, David.

David Richer, CEO, Lyft: Sure.

Conference Operator: The next question comes from Benjamin Black with Deutsche Bank. Your line is open.

Benjamin Black, Analyst, Deutsche Bank: Great. Thank you for taking my questions. I just wanted to dig a little bit deeper into the Baidu partnership. Sort of any sense on the economic model? Any way to sort of think about the vehicle ramp?

And can talk about the regulatory process in Germany and The UK? Do you have a clear line of sight there? And then on FreeNow, now that the acquisition has closed, can you talk about the incremental investments you may need to deploy to sort of ramp and scale that business? What are some of the key focus areas that you’re looking at now that you’re fully consolidated? Thank you.

David Richer, CEO, Lyft: Yes. Sure. So let me start, Benjamin, and I’ll start with the process around Baidu. And, maybe I’ll just say I’ll answer 1.5 of the question, and then Aaron will answer the last point five. Something like that.

We’ll break it down like that. So on Baidu okay. Super, super excited about this partnership. Right? And just to level set, I think everyone on the calls knows this, but Baidu is the largest provider of AV tech in the world.

They’ve delivered over 11,000,000 rides right now, driver out rides, to be clear. And, you know, and they’re a market leader where they where they operate, which, of course, is is China. So if you’re Baidu, you’re looking for access to other parts of the world, and they chose us. We’re very proud of that, to be their European, at least the first European expansion, kind of partner. Okay.

So what does the deal look like? Well, we’re not gonna get super specific. What I can tell you is that there’s an initial deployment. You know, think of that as hundreds, and then that goes to thousands of cars. You know, we will effectively be the, you know, the sort of the sort of face, let’s say, both to regulators because Baidu understands that we’ve got a stronger relationship with regulators in Europe than than they do, you know, as well as actually the day to day operator, you know, of these cars.

There’s a there’s a there’s sort of, let’s say, three pieces to the whole process. One is there’s a what’s called a homologation process. So the cars have to be certified to be road ready in the in Europe, specifically in Germany and The UK. That’s a process that’s well understood. You know, these cars are it’s called the r t six, and it’s a car that they’ve designed themselves.

It’s been on the road for many years. They’re going through that process already in Switzerland and in various other other countries. So anyway, that’s part of the process. Then the tech has to be tried on the road, of course, first with the driver, you know, then a safety driver, you know, then taking riders and not charging and then, you know, finally charging for riders. And and that whole process will will take some time.

You know, it’s we’re getting started immediately, but it it takes time. You know, however long it takes the first time, you know, the second time takes, you know, 80% as long and the third time takes 80% as long as that and and so on and so forth. It’ll be a bit country by country because countries have very specific, you know, interests, here. And, of course, The UK drive on one side of street, Germany on the other. So, you know, there are a whole bunch of different things we have to go through, but you can expect that that process was is you know, we we understand it already.

They understand it already. We’re gonna go, you know, step by step, through that process. And the results should be that in 2026, we’re operating in two markets, you know, a number of the cars. Those cars we will own ourselves. That’s that we we are gonna purchase those cars ourselves as we will do strategically, when that, makes sense.

You know, we can talk more about the long term economics of of AVs in a couple of minutes. So that’s where I think sort of stand with Baidu. Super excited about that, about that partnership and, you know, stay tuned obviously for much more to, more to come on that. If I stay in Europe and shift over to free now, now, you know, again, maybe just sort of step back for a second. I mean, the the European, the ride share, ride hailing market, of course, a gigantic market.

It’s roughly the size of The United States. It re taxis continue to play a gigantic role there. And remember that half of those taxis are still effectively offline. These are either held on the street or people doing old fashioned phone calls. So there’s huge growth opportunity built right into the the system effectively because there are a lot there’s a lot of rideshare going on within big quotes that’s being done in a way that that is, you know, more twentieth century than than twenty first century.

So, you know, there’s immediate work that we can do, there. There’s also immediate work we can do to bring, you know, first Lyft’s current customers onto the Baidu platform. I think we talked about how 4,600,000 times over the last, you know, two years, people have opened Lyft in Europe expecting to get a Lyft. Now we can direct them to buy new to free now. So all of these things are, relatively straightforward and and not particularly costly.

You know, this is not a a gigantic investment. Then we can start to apply our own technology and help FreeNow incorporate that technology onto their platform. And this will give you more stable pricing, for example, or it’ll give you faster pickups, for example. And the teams even though, of course, the deal just closed last week, but the teams have already been in kind of brainstorming early mode and are now, you know, really getting to work rolling up their their sleeves on that. So all of those things is all that say, this is a growth partnership, a growth acquisition.

Erin will talk a little bit about the economics in a couple seconds, but, really, the whole premise of this is, you know, this is this is about growth. And the last thing I’ll say is back to the taxi market. Remember that the taxi market in Europe is a much higher end market, much more luxury product than it is in The United States that comes with, some nice, unit economics, and and nice, and nice bookings as well. So, a lot to get excited about there. I was just in Barcelona a couple weeks ago with their technical team, Hamburg, their office, you know, a month before.

Teams have already been talking. They’re gonna be here next week. So we’re just such in the early days, but we’ve got a whole lot of immediate term opportunities to drive growth. And and maybe Erin can talk a little bit more about the cost side if if that if that doesn’t quite answer the question.

Conference Operator: Yeah. I don’t know that

Erin Brewer, CFO, Lyft: I have a a lot more to add to the cost side, but I’ll I’ll add a little bit more to some of the near term color. You know, clearly, after kind of a deal process and a month long regulatory review process, as you might imagine, pretty typical in this type of a situation. Right? That takes focus. So you’re kinda splitting your focus between running the business and and, making sure that the deal gets done.

So I’ll just read out what David said. The teams are super excited to get going. Right? We’re just here in the first few days, and so, we have really ambitious plans as David just articulated going forward. I’d say, you know, you know, very near term and as I think maybe about the balance of 2025, we had articulated when we announced the deal about a billion euro run rate on an annualized basis for the business.

I’ll just emphasize again our third quarter guidance that includes two months, not three. But as we think broadly about those, you know, five months or the balance of the five months throughout the year, I would say that run rate is a little bit lighter. You know, nothing dramatic, and it does nothing to change our long term plans. And then, you know, we’re also assuming that, at least, again, in this near term, this sort of five month, if you five months for the balance of 2025 on an EBITDA dollar basis for it to be relatively neutral. Right?

So we’re going in in here, you know, eyes wide open, really focused on driving that growth on the top line side and energizing some of those growth opportunities that we see.

Conference Operator: The next question comes from Ken Gralvsky with Wells Fargo. Line is open. Ken? Perhaps your line is on mute. Okay.

The next question comes from Steven Fox of Fox Advisors. Your line is open.

Steven Fox, Analyst, Fox Advisors: Good afternoon. Erin, I was wondering if you could break down free cash flows a little bit more. It was a very strong number. Is there anything unusual one time in nature in that number? And outside of that, can you talk about the organic progress you made in cash flows?

Thanks very much.

Erin Brewer, CFO, Lyft: Yes. Thanks for the question, Steven. I wouldn’t highlight anything in particular. We specifically focus on a trailing twelve month number, right, because there can be some quarter to quarter variation, but nothing new in terms of the the dynamics. So just, you know, to refresh everyone, as as we think about free cash flow, right, this is gonna be influenced by a few things.

Of course, the growth of the base business, but also timing around our rides growth and the way that we accrue for insurance. And then the actual cash out the door payments for insurance, which tend to be on rides that were delivered, you know, anywhere between one and seven years ago, but the bulk between the last one and three. So those similar dynamics, which we’ve which we’ve walked through and articulated, remain the same. So nothing in particular to highlight, but we are incredibly proud of the progress. We continue to make 993,000,000 over a trailing twelve month period.

So we feel great about where that’s positioned. Our balance sheet continues to be extremely strong. And so, hopefully, that is helpful, Steven.

Steven Fox, Analyst, Fox Advisors: Yeah. That’s great perspective. Thank you.

David Richer, CEO, Lyft: You bet.

Conference Operator: The next question comes from Steven Ju with UBS. Your line is open.

Steven Ju, Analyst, UBS: Great. Thank you. So, David, I think one of the things you talked about before in terms of, you know, a product development direction for Lyft is to, you know, hopefully start opening up a differentiated, you know, innovation wedge versus your competitor, and you start diverging in different directions over time and Lyft will be known for various things and innovation, etcetera. But, you know, it seems like whatever innovation gap from, you know, either yourself or from Uber, you know, gets closed fairly quickly. So, you know, has your thinking evolved here in terms of how Lyft competes, how Lyft, you know, resources, product development, etcetera?

Thank you.

David Richer, CEO, Lyft: Mhmm. Yeah. Hey, Steven. You know, I like this question a lot, and I’m gonna spend a minute on So the first thing I’ll say is no. Our approach hasn’t changed.

And and the reason I say that is because in the technology world, you must continue to innovate. It is an imperative. Now the and and you can and you can see that sort of by looking at history and and look at what happens when companies start to outsource their innovation to competitors or just or just stop entirely. That’s that’s death. That’s death.

And and, you know, I mean, books get written about this. You know, you can read those books. If you start to read those books, I encourage you to look at chapter 11 because that’s where you’ll find a lot of those companies who decide to stop, stop innovating. Now if you look at the gap between us and our competitor, I would say their strategy does appear to be a bit of a photocopy strategy. Now this, I would characterize again as, you know, it’s a it’s interesting territory to try to, try to mine.

But but what’s my evidence there? Well, let’s look at OnePlus Connect. OnePlus Connect we we did about two years ago. They just sort of came up with their kind of lightweight version, you know, a couple weeks ago in a couple of markets. Let’s look at Price Lock.

Price Lock, we launched maybe eight months ago, something like this. Now, you know, they’ve come up with, you know, something sort of similar. Let’s look at with Silver. Same story. So okay.

So you say to yourself, well, that’s an interesting pattern, and we detect it. Again, when you see a company looking to its other companies, competition, it’s been a market for innovation, I don’t think it tends to work out super well. But you might ask yourself, well, what’s been the results? Well, the results are, you know, we’re continuing to grow quite nicely. And I don’t tend to talk a lot about market share, but I will just take a moment to note that when I start well, I’ll just say it this way.

Our market share is at the highest point it has been in the last two and a half years. Highest point it’s been in the last two and a half years. So so that’s nice. Right? That’s and we’re now you know, by the way, we started, we were not making any money.

We were consuming cash. You know, we’re doing a whole bunch of different things. Now as Erin just said pointed out, 930 excuse me, $993,000,000 of cash. You know, highest profits in the company’s history, of course, highest growth rates or excuse me, highest active riders in the company’s history. Oh, a driver advantage of 29 points, 29 points over the other guys in terms of preference, will drive on both apps, 29 points.

Hugely important if you’re in the service industry to have the people on the front line prefer driving on your platform versus the other guys. Okay. So, you know, you can feel you can hear I feel, strongly about this. The customer session drives profitable growth, it’s working quite well. And I’d rather be the the leader than than the follower in the tech space.

Here’s the last thing I’ll say, and this is maybe the most surprising thing you’re gonna hear me say. For all of that, it’s still small stuff. What I mean? What I mean? Because we if you look at this industry, this is an industry.

It is a multi billion dollar industry. It is growing at, you know, mid teens growth, you know, quarter after quarter after quarter. And it is ridiculously underpenetrated. Ridiculously underpenetrated with a gigantic TAM. A gigantic TAM.

151,000,000,000 rides. And between the two of us, we do maybe 3,000,000,000. Okay? So if you just you look at all that and you’re like, I don’t care. Copy.

Fine. Go ahead. Knock yourself out. What I really care about is our riders and drivers getting a better experience on rideshare. If they are, the market’s gonna grow.

And if we’re doing better than the other guys, faster than the other guys, leading more than the other guys, well, guess what? History tells you pretty clearly how that’s gonna end. Thank you. Mhmm.

Conference Operator: The next question comes from Nikhil Devdani with Bernstein. Your line is open.

Ari Legrier Nolfe, VP, FP&A and Investor Relations, Lyft0: Hi there. Thanks for taking the question. Apologies if this is a little bit repetitive, been bouncing around. But now that you’ve closed the FreeNow transaction, can you maybe talk about how you’re thinking about investment into Europe as a region for you next year and thereafter? Is this going to be a significant area of investment or not so much?

And I guess how much investment is required to get that business to grow a bit quicker add to the overall platform?

David Richer, CEO, Lyft: Okay, Nikhil. It’s definitely good to hear from you, and I promise I’m not at all gonna make fun of you for asking the exact same question that was asked two times ago. So look. Just to be really brief, we we we bought FreeNow for all the growth opportunities it has. Its economics are great.

Its service is great. Its its relation with regulators is great. You know, all these different things. And we have a lot of ideas as we we were saying a couple of minutes ago of ways we can, you know, leverage it. And it’s not gonna be very costly.

And I’ll I’ll let Erin speak much more directly, and equally briefly, I think.

Erin Brewer, CFO, Lyft: Yeah. I’d I’d just sort of reemphasize, you know, again, the the case that we talked about here is you gotta remember that more than half of this market is offline. Right? So just the opportunity to, you know, more creatively and innovatively capture more of that to come online, you know, just refocusing, frankly, the team after a month long, you know, deal and and regulatory process is is gonna bring some improvements. You know, the tech teams in in some of the initial, at least, thinking and brainstorming, you know, have ideas about, you know, dispatch, you know, other areas where efficiencies can be driven across the platform, you know, taking expertise and experience that’s already there.

You know? And then, of course, over the long term, you know, we see a lot of value around, you know, our partnership strategy and expanding that in a much more global way, media, autonomous vehicles, etcetera. So that’s really how we think about the growth there.

Ari Legrier Nolfe, VP, FP&A and Investor Relations, Lyft0: Appreciate it. Thank you. And if I could follow-up with a separate question. Sure. Overall, it seems like the DashPass program has been helpful for you.

Is there any reason that Lyft should not be a bigger part of other other larger subscription bundles out there? Is that a viable way to acquire new customers when you think about your partnership strategy at large? Or is some of the constraints there just making sure the economics make sense? Obviously, there’s between Prime, Walmart, Netflix, Instacart, there’s a lot of bundles out there that are pretty large. Are those addressable at some point as well via partnership, you think?

David Richer, CEO, Lyft: Yeah. Hey, Nicole. Yeah. I love that question. I mean, I think the answer is yes.

You know, I mean, rideshare plays a super, super important role in a lot of people’s lives. Right? I mean, it’s 800,000,000 rides a year just that we give. You know, we’re talking about 2,000,000 rides plus a day. So therefore, we’re a very, very embedded part of people’s lives.

And if you look, you mentioned Sephora. I think it’s an interesting example, and then we can kind of zoom back out. So Sephora, we actually had a partnership with Very Specific. It was more targeted. It was over the summer.

It was a three day partnership. And literally, we increased so Sephora has something over 1,700 to 2,000 stores in The United States. Some are, you know, freestanding, some are pop up. And we delivered something like four times the average daily, you know, volume, when we did this partnership with Sephora over over a short period of time to their stores. So that’s foot traffic that goes right to the store.

You can imagine if you’re Sephora why you might wanna do something like that. If you’re competing with online only competition, gosh, which is very convenient, of course. Gosh, it’s very helpful to have someone literally, you know, be driven to your your your front door, you know, who’s who’s ready to buy. So I think what that suggests is that so far, it’s not a subscription program. Of course, they’ve got a great points program and so forth.

It’s a subscription program, but it it that’s a point in time program, but it gives you a sense of the type of opportunities that we can unlock. I think to your broader point, you know, we we very much see ourselves as part of a an ecosystem that surrounds individual riders and drivers. Individual riders and drivers. I’m talking about drivers in a second actually. We through our loyalty program there, we’ve actually already given out something like 1,200,000,000 points to them to spend in their own way that they could actually then spend in places like Walmart or Starbucks or other gas stations, other things like that.

So, you know, a little bit of a roundabout way of saying, I think if you think of yourself not as the king of the world, but rather a part of a person’s life and ecosystem of, you know, opportunity that that that riders and drivers are are are part of, then very much you say, gosh, if DoorDash is working very well, and it is, then why not, others as well? We’ll definitely be exploring it. And I’ll and I’ll just end here by saying the thing that I I feel the most strongly about is any partnership has to satisfy a couple criteria. It’s gotta be really interesting for riders or drivers. Otherwise, it’s just, you know, kind of noise, and it’s gotta work really well for both companies, which means they take a while to to negotiate because they gotta have, you know, economics that flow in two directions, you know, positively.

And, hopefully, they can be really durable and and great for both. So, anyway, more to come. Nothing specific to talk about there, but definitely, I the overall question and approach.

Ari Legrier Nolfe, VP, FP&A and Investor Relations, Lyft0: The

Conference Operator: next question comes from Ken Gorelski with Wells Fargo. Your line is open.

Ari Legrier Nolfe, VP, FP&A and Investor Relations, Lyft1: Thanks so much. And sorry about the technical difficulties last time. I just want to touch upon, David, you’re talking about the penetration levels in the domestic rideshare market and how there’s so much room still to go. Can you talk a little bit about pricing? And if I go back way back to kind of the IPO days, the talk was around getting cost per mile down low enough where you’d replace car ownership or at least partial car ownership, especially outside the cities.

Could you talk a little bit about how you’re going to continue to how you can address some of those lower price or lower cost use cases and the unlock there. It’s been a struggle in in domestically. Other markets have figured it out, let’s say, or, you know, India, etcetera. But but US has been a real struggle.

John Blackledge, Analyst, TD Cowen: Could you could you please address that?

David Richer, CEO, Lyft: Yeah. Sure. Think a couple of things. I mean, first, I think the basic thesis no. I don’t think I know it.

It’s in it’s like the sun coming up tomorrow. Like, there will be fewer cars over time that are individually owned. There’s just no question. There’s because there are just other opportunities. I mean, you know, sort of demand kind of follows supply.

So if you only have one opportunity, buy a car, you do it. Okay. Then car manufacturers got clever. They said, well, how about you lease a car? Okay.

Cool. That unlocks all sorts of interesting opportunities. That’s a financing strategy. Now you’ve got, you know, various different, you know, car share networks, which are still, you know, quite small, but you have rideshare. And that’s the fundamental reason why so many kids today I mean, I’m a little it’s like a sort of a whatever demographic comment.

But, you know, the the sort of the the the big moment of getting your driver’s license, this is not that big anymore. The reason is not because people don’t want the freedom. It’s because they can get it another way. And then get it in an on demand way and the car, you know, literally, you know, comes to them. And and then they don’t have to maintain and all those sorts stuff.

So all those things are part of the big picture. Now when you get down to pricing, it is there’s no question that price elasticity is a thing. You know, the lower you can get the price, you know, the more demand you can you can tap into. It is not the only way. You can see what’s happening with AVs, are not priced low but are still expanding markets.

So that suggests that you can do it in multiple ways. But clearly, you can lower price to to to sort of stoke demand, unlock more demand. So, you know, what’s the floor there? Well, you know, obviously, driver earnings are a huge part of it. Right?

You’ve got a two sided marketplace. It’s which makes things quite complex. You know, riders and drivers, they kinda want the same thing, they kinda want a different thing, which is drivers wanna be paid more, riders wanna be paid less. Well, what’s gonna be the big unlock there? I mean, no surprise.

AVs. AVs are gonna be the big unlock there because now you don’t have a two sided marketplace in that same way, you’ve got a fixed cost that you can price in a different way. So that will absolutely have some pricing impact over time. Over over time. There’ll be other things to push in another direction, but that’s something to think about.

What’s another floor for us? Insurance. In terms of the cost. We’ve done an incredibly good job managing insurance. Incredibly good.

It has gone to it’s a it’s a it’s a it’s an art of science, and and we’ve got it we’ve really got it dialed in. But there are floors. Those floors typically are as much regulatory as anything else. We’re working super, super closely with regulators across the country and state governments because it’s a state industry. Aaron can talk a little bit about the general trends that we’re seeing there.

I wouldn’t be surprised to find the subsept change things happen over time in certain states where the minimums are just out of hands. They’re just too high, and that causes higher prices and it costs lower, you know, earnings for drivers. There are a lot of people who don’t really like that. You might have seen, for example, there’s some press, come out of the state of Washington around Seattle. Rideshare prices are are too high.

It’s not because we’re pricing them too high. It’s because the the state regulations it’s a combination of state regulations and and insurance that, that cost high prices. So, anyway, long way of saying, really, state regulations in in Washington to be clear. But in other states like California, insurance is is a bigger issue. So so those are those are some things.

And then there’s just, you know, some cool innovation. Things like price lock and other, you might say, bundles or almost cross subsidies can continue to drive the effective price down. If you look at our media business, our media business, which continues to be on track for, you know, $100,000,000, run rate, you know, coming out of the fourth quarter, that is a business that over time can help, you know, subsidize rides. And and Sephora, again, I’ve already used the example, but it’s a good example. Right?

Those were those were free rides. In fact, they’re they’re they’re discounted rides to Sephora stores. So so there are times, I think, where you can find third parties to offset the price of a ride such that the driver still makes what the driver needs to make, but the rider pays less. So there’s a lot more innovation here. There are some sort of semi hard floors, but we’ll kick through them.

It’ll just take time, things like insurance. And then, again, a b’s, I think, will also, you know, could slightly reset the table there. I don’t wanna overset expectations there because there’s cost to running AVs as well. But it certainly, you know, changes economics, I think, favorably, over time.

Steven Fox, Analyst, Fox Advisors: Thank you, David.

Conference Operator: That is all the time we have for questions. I will turn the call to CEO, David Richer, for closing remarks.

David Richer, CEO, Lyft: Listen, I just want to thank you all very much for being a part of this call. I’m going go off script for about thirty seconds and say, I think, you know, it’s a new lift you’re looking at now. It’s a much more global lift, a much more diversified lift, a lift that’s got a lot of, you know, good irons in this sort of growth fire, and also, margin as well. So we’ve got we’re a stronger company than we’ve been ever before, and I’m super excited to have you guys along on the journey. Look forward to talking to you all, either in person or next quarter when we all get back together again.

Thank you so much.

Conference Operator: This concludes today’s conference call. Thank you for joining. You may now disconnect.

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