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Lyft, Inc (LYFT 1.14%)
Q1Â 2019 Earnings Call
May. 07, 2019, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, ladies and gentlemen, and welcome to the LYFT First Quarter 2019 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. (Operator Instructions) 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 -- Vice President of Investor Relations
Thank you. Good afternoon and welcome to the LYFT earnings call for the quarter ended March 31st 2019. I'm Catherine Buan, VP of Investor Relations at LYFT. Joining me today to discuss results are Co-Founder and CEO, Logan Green; Co-Founder and President, John Zimmer; and Chief Financial Officer, Brian Roberts. Logan and John will give an update on our business and key initiatives and then Brian will review our Q1 financial results and outlook.
This conference call will be available via webcast on our Investor Relations website at investor.lyft.com. I'd like to take this opportunity to remind you that during this call we will be making forward-looking statements, including statements relating to the expected performance of our business, future financial results, strategy, our partnerships and expected launches of products and services, long-term growth and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call, in particular, those described in our risk factors included in our final prospectus for our initial public offering filed with the SEC on March 29, 2019 and the risk factors included in our Form 10-Q that will be filed before May 15, 2019.
You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them except as required by applicable law.
Our discussions today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and supplemental materials which was furnished with our Form 8-K filed today with the SEC and may also be found on our Investor Relations website at investor.lyft.com.
I would now like to turn the conference call over to Lyft's Co-Founder and Chief Executive Officer, Logan Green. Logan?
Logan Green -- Chief Executive Officer
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 will 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.
The first factor, product innovation, was highlighted by the rollout of the Lyft matching platform. In Q1, we rolled out a service that we've been working on for over a year, called the Lyft matching platform. This handles every single driver and passenger paring on Lyft. The results have been significant, better matches resulting in more rides with fewer cancellations, leading to incremental revenue and margin improvement. The real magic is unlocking entirely new product experiences such as Shared Saver. This is a new and improved version of Shared Rides that allows riders to get an even better price by walking a few blocks or waiting a few minutes. For example, if two riders are two blocks away from each other and both are heading to the same place, Shared Saver would ask them to each one block and meet on the same corner. This would allow driver to pickup both riders without any additional detour. Shared Saver is now live in three markets with more coming soon.
Additionally, we've grown high value modes Lux, Lux Black, and Lux Black XL, twice as fast as the rest of our business year-over-year. This is particularly exciting given the higher margin profile of these rides. Those are just a few of the big wins from Q1 and we expect to continue further gains in the year ahead. The second factor was continued market growth. The overall market for transportation as a service continues to grow as more and more users turn to Lyft. The world is at the beginning of a secular shift away from car ownership toward transportation as a service and ride sharing is just the tip of the iceberg. Transportation as a service is replacing car ownership for a growing portion of the population. In fact, according to our most recent economic impact report, 35% of Lyft users don't own a car at all. As part of this trend, we saw active riders grow to 20.5 million, up 46% in Q1 versus last year. That said, it's still just the beginning. No matter how you size the market, it's just a small fraction of all vehicle miles traveled.
And now, I'll turn it over to John to review the third factor behind Lyft's growth, a strong focused execution.
John Zimmer -- President, Co-Founder and Vice Chairman
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 both competitive advantages along the full stack of offerings. For example, we have exclusive bike share operating contracts in major cities. These exclusive contracts to run bike share programs span across key cities including New York until 2029, Chicago until 2028, San Francisco until 2027, and Boston through 2026. We are now starting to bring together our customers' full transportation experience. Just last week, many New Yorkers received the ability to book Lyft owned city bikes directly in the Lyft app, and we'll be expanding access to more users in New York as well as other markets in the weeks ahead. This focused execution allows us to continue delivering the best unified transportation experience for our customers.
Next, I want to tell you about how we are investing in our driver community. When you take care of drivers, they deliver a better hospitality experience to riders. From day one, we have pioneered key innovations and investments for our driver community. First with tips and later with same day pay and more recently Express Drive, our flexible vehicle rental program.
In Q1, we introduced two new important programs, Lyft Direct and Lyft Driver Centers. Lyft direct is no-fee bank account and debit card tailor-made for our driver community. Drivers are able to instantly access their earnings after each ride, plus they get cash back on everyday purchases, including gas and groceries regardless of their credit. Additionally, the card includes access to financial planning tools and goal setting features.
Next, we have opened our first driver centers offering significant discounts on maintenance repairs and car washes. This is a great example of how we can use our scale to save drivers' money and increase their loyalty to Lyft.
Last, I want to talk about Lyft Business, our enterprise channel. Our partnership spend several categories including corporate partnerships for employee travel, healthcare partnerships for patients to get to and for medical appointments, national partnerships with airlines such as Delta, Southwest and JetBlue, university partnerships for student travel with major universities like USC and UT Austin, and financial partners such as Mastercard and many others.
In Q1, we saw continued growth in all of these categories, specifically corporate partnerships for employee travel, are growing even faster than this overall business. We have seen some great results from the Certify's SpendSmart quarterly report which analyzes the most recent business expense transactions and vendor ratings data to provide valuable insights on the corporate T&E industry. For the fifth quarter in a row, Lyft was the top-rated ride-hailing service with an average rating of 4.9 stars according to Certify's 5-Star customer rating system. And that has resulted in significant momentum. Since Q1 2017, Lyft has increased its share of employee ride-hailing expenses from 9% to almost 22%. Lyft is now tied with American Airlines and Delta as the fourth most expensed vendor by business travelers. This is up from Number 5 in Q4 2018, a further indication of Lyft's momentum in the enterprise space. This momentum with corporate T&E spend is significant because it indicates that our awareness and brand preference is strengthening with many of the most important companies across the country. Their decision to choose Lyft is often driven by alignment with our corporate values for sustainability and social impact work, which is a key differentiator.
In November, Forbes cited a study of 1,000 Americans. In it, 87% of consumers will purchase a product because the company advocated for an issue they cared about, 88% will be more loyal to a company that supports social or environmental issues, and 92% will be more likely to trust a company that supports social or environmental issues. We see this play out in many areas of our business, in particular, our enterprise channel where corporate social responsibility is a strategic initiative for the companies we partner with.
There's one more thing we're excited to talk about. Today Waymo announced that they're working to deploy Waymo vehicles on the Lyft platform. We expect this deployment to start this quarter Q2 and reach 10 vehicles by Q3 signifying an important step in bringing world-class self-driving technology together with our leading transportation network.
With that, I'll hand it over to Brian for our financial results.
Brian Roberts -- Chief Financial Officer
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 the number of quarterly active riders. As we continue to drive usage and monetization of our platform, revenue per quarterly active rider increased 34% year-over-year to $37.86.
Before I move on, I want to note that the non-GAAP income statement measures that follow in my remarks exclude $894 million of stock-based compensation and related payroll tax. Our restricted stock unit awards or R issues have both a time-based vesting condition and a liquidity event related performance condition. Upon the effectiveness of our IPO, R issues that had previously met the time-based vesting condition also met the second requirement immediately triggering the stock-based compensation expense. A reconciliation of GAAP to non-GAAP results may be found in our earnings release.
Let me move to contribution. In the first quarter, contribution margin reached a record 50%, up from 35% in the same period a year ago. This increase in contribution margin can be attributed to strong revenue growth and our successful leveraging of expenses in the first quarter. These expenses include insurance required under TNC regulations, transaction processing and hosting, all three costs declined as a percentage of revenue relative to the year-ago period as well as the fourth quarter of 2018. The historical changed insurance reserves is excluded in the calculation of TNC insurance expense for all periods.
Let's move to operations and support. First quarter operations and support was $133 million or 17% of revenue compared to 15% in the same period a year ago. The increase as a percentage of revenue was driven by investments in bikes, scooters, and Express Drive. Just as a data point, if our bikes and scooter initiative was excluded from our P&L, operations and support as a percentage of revenue would have been lower in the current period than in the same period a year ago.
R&D expense was $108 million or 14% of revenue compared to 16% from the same period a year ago. Our investments in R&D are fueling key improvements in our core platform in autonomous future. The current period includes a $14 million reimbursement from autonomous co-development partner. Without the reimbursement, adjusted R&D would have been 16% of revenue compared to 16% from the same period a year ago.
As we gain scale and drive brand preference, we are leveraging our investments in sales and marketing. In the first quarter, sales and marketing was $227 million or 29% of revenue, down significantly from 42% in the same period a year ago. And keep in mind that this 13 percentage point improvement was realized while the Company achieved 95% year-on-year revenue growth.
Our adjusted EBITDA loss for the quarter was $216 million compared to a loss of $239 million in the year-ago period. Adjusted EBITDA margin improved significantly to a loss of 28% versus 60% in the prior year, representing a 32 percentage point improvement year-over-year.
Moving on to cash balances. We remain in an extremely strong cash position. As of March 31st, Lyft had over $1 billion of unrestricted cash, cash equivalents and short-term investments. On a pro forma basis for the $2.5 billion of net proceeds from our IPO, which closed in the first part of April, we have $3.5 billion with no debt.
So moving to guidance. Let me start with revenue. For the second quarter of 2019, we anticipate revenue will be in the range of $800 million to $810 million, representing a growth rate of 58% to 60% year-over-year. This strong growth is being achieved in light of a difficult comp as we lap the industrywide price increases introduced in the second quarter of last year. For the full-year 2019, we anticipate revenue will be in the range of $3.275 billion to $3.3 billion, representing an annual growth rate of 52% to 53%.
Now moving to operating leverage. We are pleased with our success leveraging cost in the first quarter. We now believe that the strength and efficiencies we're realizing our ride-sharing business will help offset an even larger portion of our strategic initiatives than we originally expected. As a result of the success, in the second quarter, we anticipate our adjusted EBITDA loss will be in the range of $270 million to $280 million. For the full year, we anticipate our adjusted EBITDA loss to be in the range of $1.15 billion to $1.175 billion, which includes the impact of investments we're undertaking in autonomous, bikes and scooters and driver centers. We're encouraged by our strength of our core business and see a clear path to profitability in ride-sharing. We anticipate that 2019 will be our peak loss year as we then move steadily toward profitability on a consolidated basis.
I'll now turn it back to Logan for closing remarks.
Logan Green -- Chief Executive Officer
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 skilled platform, successful execution on our strategies, and discipline toward 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 we'll 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 miss medical appointments due to a lack of transportation, which leads to bad health outcomes and a $150 billion loss for the healthcare ecosystem. 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 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?
Questions and Answers:
Operator
Thank you. (Operator Instructions) Our first question comes from the line of Stephen Ju with Credit Suisse. Your line is now open.
Stephen Ju -- Credit Suisse -- Analyst
Thanks guys and congratulations. So one of the question that we got asked a lot during the IPO process was around the addressable market and how users maybe 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 you might have 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 -- President, Co-Founder and Vice Chairman
Thank you. So, this is John. Brian can comment on the trends we're seeing year-over-year in riders frequency. Nothing to specifically share on the cohorts, other than to say that there is 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 -- Chief Financial Officer
To talk about it at a high level, Lyft is much more than just a ride-sharing company, and we're going after in the US 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 $1 trillion plus car ownership market to the world of transportation as a service. I think we've seen this happen in other industries like entertainment companies or you have companies like Spotify and 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 in really dense urban areas today where somebody lives and works within the 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, so in the opening remarks we were talking about Shared Saver lowering the price point further, we were also talking about the introduction of bikes and scooters and there'll be more to come. So as we keep introducing more and more products that suit more use cases, I think we're going to continue to see an acceleration of that trend toward service over ownership.
John Zimmer -- President, Co-Founder and Vice Chairman
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 -- Credit Suisse -- Analyst
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 -- Jefferies -- Analyst
Good afternoon. For Logan and John, if you could maybe expand a little bit on the Google, Waymo partnership in terms of the focus and where you're going to be rolling out first, that would be great. And a quick follow-up for Brian, just maybe talk a little bit about your pathway to profitability. There have been a lot of questions around the investments you're making this year. I think you said you continue to believe that those losses will trend lower, but if you could just provide little more color, that'd be helpful. Thank you.
John Zimmer -- President, Co-Founder and Vice Chairman
Great. On the Waymo partnership, as we mentioned in Q2, Waymo and Lyft will be launching this new public partnership and their Waymo self-driving vehicles will be integrated into the Lyft platform in Phoenix. So it will 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 Lyft 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 they'll be able to book that ride in the Lyft app and if the Waymo vehicle is nearby and able to service their origin and destination, they would have the opportunity to be matched with that vehicle.
Brian Roberts -- Chief Financial Officer
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 will strengthen the core business and create long-term shareholder value.
Now in terms of the path to profitability, our strong results to date demonstrate not only to 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%. The investments in autonomous, bikes and scooters and driver centers hide 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 toward profitability on a consolidated basis.
Brent Thill -- Jefferies -- Analyst
Thank you.
Operator
Thank you. Our next question comes from the line of Doug Anmuth with JP Morgan. Your line is now open.
Doug Anmuth -- JP Morgan -- Analyst
Thanks for taking questions. I wanted to ask two. Just first, you've seen leverage and incentives as a percentage of revenue over the past couple of years, there's been a lot of discussion just about the degree of promotions and incentives in 1Q. Can you just give us your view of the current incentive environment, how you think it compares to previous periods?And then secondly, Brian, you talked about bending cost curves. Can you give us some more detail, particularly on insurance and how you can bend that cost curve and move toward the 70% contribution margin there thinking about long term? Thanks.
Brian Roberts -- Chief Financial Officer
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. Maybe 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 are encouraged by this and believe 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 cost, 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 hard braking. 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 claim 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 -- JP Morgan -- Analyst
Thank you. Appreciate the color.
Brian Roberts -- Chief Financial Officer
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 -- Piper Jaffray -- Analyst
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 -- President, Co-Founder and Vice Chairman
Yeah. 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 in our first-party system can benefit the existing business even before there's autonomous vehicles through mapping better ETAs and therefore 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 -- Piper Jaffray -- Analyst
Okay and you mentioned you're singularly focused on transportation, but I don't think you said transportation only in 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 as a long-term option for growth at least or is it the focus really North America? Thank you.
John Zimmer -- President, Co-Founder and Vice Chairman
Yeah. 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 US and Canada and don't have any current plans.
Mike Olson -- Piper Jaffray -- Analyst
Thanks.
Operator
Thank you. And our next question comes from the line of Eric Sheridan with UBS. Your line is now open.
Eric Sheridan -- UBS -- Analyst
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 of better sense of what are the sales and marketing channels you're moving into where you're seeing potentially higher returns against marketing dollars and how that should factor into the way be think about marketing efficiency, not only in '19, but longer term? Thanks so much.
Logan Green -- Chief Executive Officer
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 -- President, Co-Founder and Vice Chairman
Yes. And so just from the perspective, Logan and I have now been in the market for -- Lyft is about 7 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 3-minute ETAs, 3 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 -- done better than the industry and so within that brand, we don't mean ads, 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 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 -- UBS -- Analyst
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 -- Cowen -- Analyst
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 any color on how incremental it was or percent of revenue from bikes and scooters that you saw in the quarter? Thank you.
Logan Green -- Chief Executive Officer
Yeah on driver centers. This is part of our broader strategy to go above and beyond to take care of our drivers. So we've had 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 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 are a driver's tough 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 shop to get sort of -- to do some of their onboarding activities and get in-person help. So it's sort of like a genius bar type experience. What we realized was we had an opportunity to provide really low -- low cost, essentially at cost vehicle service for our drivers instead of just answering basic questions. So we've now opened up and are operating our first two drive service centers with a number more that will continue to scale this year, it's still early days, but we're -- the anecdotal feedback from drivers has been very positive, 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, form with your cars 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 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.
Brian Roberts -- Chief Financial Officer
And then on bikes and scooters, we have approximately 9 markets with bikes, 15 with scooters. We're not going to be breaking that out separately on the economics 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 -- Cowen -- Analyst
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 -- JMP Securities -- Analyst
Great. Thanks for taking the question. Wanted to focus further more on rider growth of 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 subscription or loyalty programs and how that's helping the service? Thank you.
Logan Green -- Chief Executive Officer
Yeah, this is Logan. I'll justgo back into a couple of the big initiatives that we launched in Q1 that we attribute a decent portion of our growth to. 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 3 markets and that's able to provide a a lower cost shared ride by driving further efficiency in the system. Like John was just talking about our first rollouts of the bike and scooter integration into the Lyft app. So, as a whole, we are trying and striving to continually provide a better multi-modal experience for all of our customers, a more reliable experience, and we see those those efforts stack over time.
Ron Josey -- JMP Securities -- Analyst
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 -- KeyBanc -- Analyst
Thanks. Just want to ask a question on the share gain and the brand. It seems like share gain has persisted, 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 over time or are there stair steps that we might get at different milestones?
Logan Green -- Chief Executive Officer
Great. Just on the brand front, one of the advantages we've always had in the market has been on driver preference. So when you ask drivers who drive for both Lyft and Uber, which service they prefer? Historically and 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 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 get 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 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 roundup the fare 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 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.
Brian Roberts -- Chief Financial Officer
Thanks Logan, let me answer part of your question around insurance. We have a range of initiatives that I should say what gets me so excited about insurance is just the opportunities exist both there's a spectrum, there is short-term opportunities and then there's really exciting long-term opportunities. I can say, when I look back though the last 5 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 what is the largest cost 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 -- JMP Securities -- Analyst
Hey guys, it's me again, just real quick, I meant also asking, Brian, can you just give some little more detail on 2Q expense guidance, I noticed it definitely coming down relative to where we were on an EBITDA basis. That'd be helpful. Thank you for allowing me get back in.
Brian Roberts -- Chief Financial Officer
Sure. So I may provide some extended comments on guidance, just want to have everyone on the phone. So this maybe a relatively long answer. I actually -- let me start with revenue, and then I'll go into your expense question. So as I mentioned in my prepared remarks, we're really pleased with the 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 we were the first major tech company to go public in 2019.
In terms of Q2, we want to remind investors that there was an industrywide price increase introduced in the second quarter of last year. This significant increase -- 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. This obviously creates a challenging comp this year. Our revenue guidance of $800 million to 810 million for Q2 implies annual revenue growth of 58% to 60% off of last year's exceptional Q2. 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 maybe more flat over this period especially if there is 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 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 of efficiencies, we're realizing in our core ride-sharing business will help offset an even larger portion of our strategic initiatives than we originally expected. Notwithstanding this benefit, the investments in 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% in the same period a year ago as we leveraged key expenses. For the remainder of 2019, contribution margin will be negatively impacted by 2 percentage points to 3 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 were 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 in 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 provided. In the remaining quarters of 2019, we anticipate an increase of 3 percentage points to 5 percentage points relative to Q1 level with an expected peak in the third quarter.
Moving to R&D, as we invest to fuel key improvements in our multi-modal 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 2 percentage points versus Q1 with Q3 and Q4 up 2 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 launch 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 4 percentage points in Q2 from Q1 and peak at 26% in Q3 and Q4 as part of the buildout required to support our new strategic initiatives as well as (inaudible). 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 that 2019 will be our peak loss year and then we'll move steadily toward 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 -- Canaccord -- Analyst
Thanks a lot. Just two, first on shared rides, just maybe can you talk a little bit about the KPIs in shared rides, as is is straightforward is a 3-minute arrival time? Or what else do you think about, there's 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 -- Chief Executive Officer
Yeah, 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 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, or 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 is an obvious trade-off, the longer the matching window, the more opportunities there are for higher quality matches and that lets us pass on lower prices. So we're not always trying to just optimize on price or pickup time, there is a trade-off 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 pickup 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 detour 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 breakout shared ride numbers or disclose those other KPIs.
John Zimmer -- President, Co-Founder and Vice Chairman
On the policy and local policy front, as some of you know, we hired Secretary Anthony Foxx who used to run the Department of Transportation for President Obama to lead 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 -- Canaccord -- Analyst
Okay. 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 -- Raymond James -- Analyst
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 -- President, Co-Founder and Vice Chairman
Yeah, so 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 build relationships with I believe 9, the top 9 transportation healthcare brokers. So historically when someone like the rider Logan mentioned in his remarks with needing 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 on 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 is an API that allows us to basically have a deep integration with these large transportation brokers and order rides multiple rides when needed. And for the -- both 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, it was establishing those relationships. Second, it 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 lodged in account for this new form of transportation and we'll need to be adjusted.
Operator
Thank you. And our last question comes from the line of Tom White with DA Davidson. Your line is now open.
Tom White -- DA Davidson -- Analyst
Okay, great. Thanks for taking my questions. First off, congrats on the IPO. Brian, since you like talking about insurance so much, maybe just a follow-up there. You highlighted three specific drivers kind of leverage related to insurance. Could you just give us a sense of the magnitude of the efficiencies that you guys can think -- you think you can get there over the next 12 months to 24 months, maybe 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 5 years 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 -- Chief Financial Officer
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 was 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 is going to be stack fig in terms of having an impact, but it will take time for the actuaries then to give credit in terms of loss -- loss reserves et cetera. So this is one where we see we have years of opportunities in terms of unlocking costs on the platform.
John Zimmer -- President, Co-Founder and Vice Chairman
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 -- DA Davidson -- Analyst
Okay, great. Maybe just one last one, I try to slip it in. Could you guys give us any sense about gross booking trends. I see, it's not there, I don't think it was in the press release and also rides as well. I'm just curious why maybe you guys are going to be sharing that quarterly going forward?
Brian Roberts -- Chief Financial Officer
Sure. Thank you. So our historical business was virtually entirely a ride-sharing marketplace. And so we included bookings in take rate in the S1 so investors can understand the monetization trends. We are now aggressively investing in new areas, including those where revenue equals bookings. So we really want to try to avoid investor confusion. List 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 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 right milestones from time to time, but as we begin to expand our shared networks of 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 -- DA Davidson -- Analyst
Great, thank you.
Operator
Thank you. Now, I would now like to turn the call back over to Co-Founder and CEO, Mr. Logan Green, for any further remarks.
Logan Green -- Chief Executive Officer
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.
Duration: 60 minutes
Call participants:
Catherine Buan -- Vice President of Investor Relations
Logan Green -- Chief Executive Officer
John Zimmer -- President, Co-Founder and Vice Chairman
Brian Roberts -- Chief Financial Officer
Stephen Ju -- Credit Suisse -- Analyst
Brent Thill -- Jefferies -- Analyst
Doug Anmuth -- JP Morgan -- Analyst
Mike Olson -- Piper Jaffray -- Analyst
Eric Sheridan -- UBS -- Analyst
John Blackledge -- Cowen -- Analyst
Ron Josey -- JMP Securities -- Analyst
Andy Hargreaves -- KeyBanc -- Analyst
Michael Graham -- Canaccord -- Analyst
Justin Patterson -- Raymond James -- Analyst
Tom White -- DA Davidson -- Analyst
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