Image source: The Motley Fool.
Date
Wednesday, Nov. 5, 2025 at 4:30 p.m. ET
Call participants
Chief Executive Officer — David Risher
Chief Financial Officer — Erin Brewer
Head of Investor Relations — Aurelien Nolf
Need a quote from a Motley Fool analyst? Email [email protected]
Takeaways
Active Rider Growth -- Reported an 18% year-over-year increase in active riders, reaching an all-time high for the company.
Gross Bookings -- Achieved a 16% year-over-year rise in gross bookings, also marking an all-time high.
Adjusted EBITDA -- Adjusted EBITDA grew by 29% year-over-year, setting another all-time high.
Free Cash Flow -- Exceeded $1 billion in free cash flow on a trailing twelve-month basis for the first time in company history.
Q4 Guidance -- Management provided rides growth guidance in the "mid to high teens" percentage range for Q4 and projected gross bookings growth of 17% to 20% for Q4.
United Airlines Partnership -- Now live, enabling riders to earn United MileagePlus miles on eligible rides anywhere, including business profile rides.
TBR Acquisition -- Recently announced, but will only modestly contribute in Q4.
Underpenetrated Markets -- Approximately 70% of rides growth in North America originated from underpenetrated markets.
California Insurance Reform -- SB 371, effective 2026, will lower mandatory uninsured/underinsured motorist coverage, resulting in average insurance fees for riders in California (currently over $6 per ride, nearly twice as high in Los Angeles) expected to decrease in 2025 and stimulate rider demand.
Insurance Renewal -- Management expects a mid-single-digit per-ride increase following the October 1 insurance renewal, but characterized outcome as "very competitive."
Waymo Autonomous Vehicle (AV) Partnership -- Deployment in Nashville will involve construction of a $10 million to $15 million depot scheduled for 2026 and integrated supply management with high availability and utilization as core metrics; Lyft earns revenue regardless of whether the ride is dispatched via Lyft's or Waymo's platform.
International and Segment Expansion -- FreeNow positions Lyft in the European taxi segment; TBR acquisition extends reach to global business travelers in 3,000 cities.
High-Value Modes -- Experienced 50% year-over-year growth in high-value modes, supported by organic and acquisition-driven efforts.
Canada Operations -- Delivered approximately 11.5 million rides in Canada.
Business Rewards Program -- New offering provides 6% back on company-funded rides, as announced in September, targeting increased enterprise adoption with no cost to participants.
Summary
Lyft (LYFT +3.40%) highlighted broad-based operational records, including maximum driver hours, active riders, and gross bookings. Management detailed that the United Airlines loyalty partnership has launched nationwide and extended business integration. The introduction of California's SB 371 is expected to significantly reduce insurance-related ride costs and drive incremental demand after regulatory implementation in 2026. In autonomous vehicles, Lyft stressed that the Waymo partnership in Nashville is engineered for scalability, with deeply integrated supply and utilization management. Recent acquisitions—FreeNow and TBR—signal international and high-end segment priorities, each positioned to accelerate into 2026. Guidance for the upcoming quarter anticipates continued double-digit growth in core metrics, while ongoing insurance cost strategy and policy reforms remain in focus.
David Risher said, "Adjusted EBITDA grew 29% year over year, and our free cash flow generation for the trailing twelve months was over $1 billion for the first time in Lyft's history."
CFO Erin Brewer stated, "Our guide for the fourth quarter is for rides to be up mid to high teens, gross bookings up 17% to 20%."
Brewer also clarified, "In California, riders have been paying an average of over $6 per ride in insurance costs in 2025. And then in certain areas like LA, it's even higher. Almost double than that."
As described by management, the Waymo agreement provides Lyft with "an integrated supply management partnership" where Lyft receives earnings regardless of which platform dispatches the ride.
FreeNow is anticipated to generate approximately 1 billion euros in top-line revenue in 2026, according to management expectations.
Industry glossary
AV (Autonomous Vehicle): A self-driving vehicle equipped with technology to operate without a human driver in specific scenarios.
Gross Bookings: Total dollar value of transactions, including taxes, tolls, and fees, before deductions for driver and other payouts.
Integrated Supply Management: Coordinated system aligning vehicle availability and rider demand across multiple platforms for optimization.
TBR: TBR Global Chauffeuring, a provider of premium chauffeur services, recently acquired by Lyft, serving business travelers in global metropolitan markets.
SB 371: California Senate Bill 371, legislation modifying insurance requirements for ridesharing, reducing minimum uninsured/underinsured motorist coverage.
High-Value Modes: Premium transportation segments such as luxury rides, business travel, or specialized market offerings beyond standard peer-to-peer ridesharing.
FreeNow: European taxi mobility platform acquired by Lyft, expanding its international segment presence.
FlexDrive: Lyft subsidiary focused on car rentals and vehicle availability for drivers, referenced for its 90% availability record.
Full Conference Call Transcript
David Risher: Thank you, Aurelien. Wow. Q3 was another record quarter across driver hours, active riders, and gross bookings. Adjusted EBITDA grew 29% year over year, and our free cash flow generation for the trailing twelve months was over $1 billion for the first time in Lyft's history. You saw this morning, our partnership with United Airlines is now live. You can now all link your accounts to earn miles on all eligible rides you take anywhere, not just to the airport. And even better, rides taken through your company business profile earn even more. Now that's big stuff. I'm not kidding. I want you to be opening up your Lyft app. Go to that profile on the lower right-hand side.
Click that profile button. Look for rewards, get manage rewards, add United MileagePlus. Every single one of you. That's gonna be your ticket to ask a question today. So I hope you've done that. Give you a couple of seconds to get that done.
Aurelien Nolf: Okay.
David Risher: Additionally, we've focused on continuing to create AV partnerships that are differentiated and purposeful, with each bringing unique learnings and dynamics to Lyft, as Tensor powered by NVIDIA. We're demonstrating how we're positioning ourselves across the entire AV value chain. Looking ahead to 2026, we are well-positioned with multiple growth catalysts converging to accelerate our momentum. I am very excited for this comeback story. And with that, let's get to your questions.
Aurelien Nolf: Great. Thank you, David. We will now open the call to questions. So if you would like to ask one, please just press 1. And if you want to withdraw your question, just do the same another time. So I think our first question is coming from Doug Anmuth from JPMorgan.
Douglas Till Anmuth: Great. Thanks so much. David, maybe I'll just ask first about your very last comment there. Just about the multiple converging catalysts in 2026 and what makes you so excited there? And then if you could also just comment on insurance. You had talked about the savings from SB 371 and just curious if that is still the plan to kind of benefit from all of those savings or if there's some component that gets reinvested into the business? Thanks.
David Risher: Sure. Hey, Doug, two great questions. I'm going to speak very briefly here, and then Erin is gonna take both of those. I'll say very, very briefly on the catalyst side. You know, I've been in this job two and a half years now, and, oh, man, we have more opportunity ahead of us than we've had, you know, since the first day. And again, we'll talk about each of the different pieces there in just a couple of seconds, but I can give you some very live data since that was just in our weekly business review. We were just looking at what happened last week.
Last week was Halloween, of course, and Halloween was not only our biggest day, it was actually our biggest hour by hour. We've never had as many rides. We've never been able to fulfill as many rides as we have. It's our biggest day. It was our biggest week. You know, and not by a little bit. It's just extraordinary momentum going on here that's allowing us to continue to grow. And I should say, just to sort of say the very obvious there, that's just in The United States. That's not even the Free Now in Europe opportunity and the TBR opportunity.
So we're coming into the quarter, you know, operationally so strong, so customer test, and with so many opportunities next year. It's really a pretty extraordinary time. So I'll turn it over to Erin to talk both about the catalyst and then the insurance question or the California question.
Erin Brewer: Yeah. Great. Thanks, Doug. I might go on a little longer than David because I'm kind of excited about this subject. But, you know, you see our Q3 results active rider growth at 18% year over year, all-time high. Gross bookings up 16% year over year, another all-time high. Adjusted EBITDA, as David mentioned, up 29%, another all-time high. So that's our consolidated business, but take any of those metrics just for North America, same. All-time highs. So we've got a lot of momentum. Our guide for the fourth quarter is for rides to be up mid to high teens, gross bookings up 17% to 20%. So we see accelerating growth into the fourth quarter.
And as we sort of sat and reflected on where we'll end up for 2025, you know, it was important for us to talk about how we see 2026. So it really starts with our marketplace is stronger than ever. Right? We've got record levels of active riders. We've got record driver hours, as David mentioned, record rides. And so multiple catalysts coming together to keep driving this momentum forward. But we're excited about that. We think that's gonna be a great program. Obviously, great value TBR Global Chauffeuring, the acquisition that we announced recently. That's only gonna show up for a pretty small portion of Q4. In 2025. Underpenetrated markets remain, you know, a fantastic area for us.
We had previously talked about and in Q3 alone, about 70% of our rides growth came out of those areas in North America, and we see a strong continued catalyst for growth there. I'll get to California insurance reform in a moment, but that's another area that we think has great upside in terms of continuing driving new demand on the platform as a result of that. And we've just got strength across our core. You know? As you know, we've been driving, you know, many programs over a long period of time now to drive driver preference. We've got a great driver rewards program. You know, that's gonna underpin our health.
We've got a fantastic business rewards program that we're continuing to promote and get out there. You know, the acquisition of TBR is a natural catalyst. A lot of those people are business travelers. So, yeah, there's a lot to be excited about as we think about how we're ending 2025 and then what the setup is for 2026. So thank you for indulging me. Hopefully, you could hear the excitement in my voice. As it relates to California, just to kind of bring everyone on the same page, some people talk about this as the California insurance reform. It's also formally known as SB 371.
The headline here is the passage of this bill, which is going to go into effect in 2026, is a true win-win-win. Riders win, Drivers win. And the great thing is when both of those constituents win, so does Lyft. So what does it mean? Rideshare is gonna become more accessible to riders with a reduction in insurance. It does away with outdated, you know, $1 million required coverage for uninsured, underinsured motorist requirements. It's been in place for a while. And it's 16 times higher than the typical auto coverage you know, where a vast majority of claims are settled for under $100,000.
And over time, this has increased the cost of Lyft rides in 2025 in California, riders have been paying an average of over $6 per ride just in insurance costs alone. And then in certain areas like LA, it's even higher. Almost double than that. You know? It's just nuts. So this bill modernizes those regulations. You know, we see past along the vast majority of those savings to riders in the form of price reduction. That's gonna stimulate demand. That's gonna be great for drivers, more earnings opportunities, and then great growth opportunities for Lyft overall.
Aurelien Nolf: Right. Thank you, Doug. Our next question comes from Eric Sheridan with Goldman Sachs.
Eric James Sheridan: Thanks so much for taking the question. Dave, I think there's a debate going on among investors right now in the sector on how to think about the engines of growth when measured against incremental margins. In the sector beyond just the end of this year, but out over the next couple of years. Can you just hit refresh on your philosophical view on how to think about the balance between incenting growth driving innovation, but also delivering on continued margin trajectory over the next couple of years? Thanks so much.
David Risher: Yes, sure. Good to hear from you. I mean, I think gosh, when you hear that perspective, I think it almost immediately should make you think, know, the people who ask that question are sort of thinking a little bit small. Either thinking kinda zero sum. You know? Because, again, just to sort of state the obvious, but as you say, kind of, you know, reground. We're now doing 2.5 million rides a day. That's a big number. And, you know, by the way, when I started this job, at an investor day, you'll have heard us say 2 million rides a day. Now it's two and a half million rides a day. But we are more profitable now.
Than when I started by a lot. And we're delivering better service. Here's a fun fact. Remember those Halloween sets I was just sort of putting out? We actually pick people up faster this year than we did last year even though we were doing more rides by a lot. So what that tells you is there is an enormous amount of service upside that is that we've unlocked over the last couple years. That did not come at the expense of our economics. In fact, was exactly the opposite. Now why might that be?
Well, that might be because those two and a half million rides, which then translates to 900 million rides a year, let's call it, plus the other guys, you know, one and a half billion rides a year, let's call it, so two point some billion rides per year is a tiny fraction of the 161 billion rides just in North America. Then remember, with our free acquisition, TDR acquisition, we now have TAM that's twice as big.
So I sort of I mean, like, get this kind of conceptual trade off, but I think that conceptual trade off is sort of a scarcity mindset, sort of zero you know, binary, kinda like, you know, we win, the other guy lose or whatever. I think there's so much innovation left. I'll give you a little tiny story there. We launched Lyft Silver that was maybe six months ago. And now, we've increased ridership just in silver. So this is for older Americans. It's only available in The United States right now. For older Americans, those rides have increased 50% just in the six months to well over, you know, a million rides in total.
That's just the beginning of that program, and that's not like a low cost program or sort of a margin, you know, diluted program, whatever. So, anyway, I'd go on this for a long time, but I think that the customer obsession drives profitable growth. That continues to be our mantra. Innovation is what is that's how you get from, you know, tiny to small to medium to large, extra large. And it's a great product, and it's only gonna get a better product. And I sort of I don't worry a whole heck of a lot about having to buy that growth or anything like that.
I think there are much better ways to get that growth, and it's it's for in through innovation.
Eric James Sheridan: Great. Appreciate the perspective. Thank you.
Aurelien Nolf: Sure. Alright. Our next question is coming from Justin Post with Bank of America.
Justin Post: Great. Thank you. I'll ask a couple on AVs. I'd love to hear your thoughts on how nice job on the Waymo deal, but how you think about AV economics and if that changes anything on margins. And then second, what you're seeing in markets where Waymo is currently operating? Thank you.
David Risher: Yeah. Let me take it was Justin, right?
Justin Post: Yeah. Yeah.
David Risher: Yeah. Let me, I'll take the last part first. I'll kinda back into it a little bit and then maybe hand it to Aaron to talk a little bit about the economics. Of what we're seeing. So the first okay. The answer the first question is in markets where AVs operate, rideshare is growing faster than and I'm talking about comparable apples to apples markets. Than rideshare than markets where AVs are not operating. So that you right there that the first thing that happens as AVs come on is they expand the market. And this is what we because these are new markets. Right? I mean, let's be clear. So, that's very exciting for us.
As an industry, we should be very excited about AVs. It's a good product. Works well. People like it. And they take that, and then they take, you know, traditional driver-driven rideshare as well. So that's that's, wonderful. So then so then let's talk about the economics. So you know, in the in the medium term okay. First. Like, any new thing requires investment. You know that. Right? So for example, in Nashville, where we're, you know, hooking up with Waymo, we're gonna build a depot. Aaron will talk to you about that in a couple of seconds. But the relationship the reason I'm gonna go into this a little bit of depth on this.
Know, we spent quite a lot of time with the Waymo team really trying to work out an arrangement that was built to scale. And built to scale means it's good for us, and it's good for Waymo, and it's good for riders. So what does that look like? That's good on one click. When you when you put AVs, we're talking about now in Nashville, a couple 100 AVs that'll be on the ground over the next year, and that'll that'll grow over time. Put AVs on the ground, the first thing you wanna make sure is are you set up for them to be highly available?
Doesn't any good to have an AV sitting there that's not charged, that's not clean, that's not repaired, you know, properly maintained, not ready to go. Okay. If you don't have that, you got nothing. So why are we good at that? We're good at that because our FlexDrive subsidiary has been doing it for many, many years. Have a 90% availability rate. Know, talk to the rental car guys, they'll tell you that is an admirable and viable number. So we're good at that and we're we're only gonna get better. So that's number one. And we get paid for that. Erin will talk about that in a couple of seconds.
The second thing is you have to talk about utilization. Utilization means okay, car is available, but is there a rider in it? Because that's how revenue is generated. And the answer there is we've worked very, very closely, very deeply, very technically, with Waymo to set up an arrangement where regardless of whether the car is ordered on Waymo, or on Lyft, we're gonna be maximizing utilization. It's an integrated supply management system quite technical, but, and we'll be hard to implement. But once we've got it right, we'll be able to scale it up because both companies have ambitions to scale up, you know, both within Nashville and, and beyond, over time.
So that's sort of the structure of this thing. You've to have high availability, you've to have high utilization, you've got to have systems that super tightly integrated to make sure that, you know, the physical world and the digital world all come together seamlessly. And it's a beautiful experience for riders, which is how drive growth. And now we can talk about the economics. Broadly speaking, of course, you've got to invest in some physical infrastructure, but the we like the unit economics there a lot, and I'll turn it over to Aaron to talk about.
Erin Brewer: Yeah. Sure. A couple of things to think about here. You know, David just sort of described what we call an integrated supply management partnership. Right? So that's, you know, number one on the fleet side, driving availability. And number two, as we think about the, you know, sort of integrated supply piece of it, it's about driving utilization to critical things. You know, the good thing is about this construct that we have going in with Waymo is that Lyft earns regardless of platform. Right? So regardless of where the car is deployed, we're responsible for it being available. Obviously, when a ride is deployed on Lyft, then there's economics there. So that's the piece of the arrangement.
David mentioned we're building a depot. We had previously disclosed we thought it'd be about $10 million to $15 million investment. We signed a lease. Teams are raring to go, so we're excited about that. For, for 2026.
David Risher: Alright. Thank you.
Aurelien Nolf: Yep. Alright. And our next question is coming from John Blackledge with TD Cowen.
John Ryan Blackledge: Great. Thank you. Two questions. First can you talk about the opportunity in the low scale markets as a driver of growth over the next couple of years? And then second, I think you maybe just got through your the annual insurance renewal. Just curious, what we should expect to see in terms of impact to cost of revenue? Thank you.
Erin Brewer: Sure. Hey, John, I'll start with that and then I'll turn it over to David to talk about what we're seeing in low scale markets. So yes, we just completed our ten one renewals. What we're seeing is we expect a mid single digit increase on a per ride basis, you know, great outcome, very competitive. Our team continues to make really strong progress in bending that insurance cost curve. All the pillars that we talked about at our investor day are the same things. You know, continuing on technology and approaches to make our platform to reduce accidents, to reduce accident frequency on our platform. Critical pillar, we continue to make strong advancements there.
We've continued to build to continue to deepen our relationship with our third party insurance partners, which has a number of benefits, including the way that we share data, and can quickly and efficiently resolve claims. And then, of course, on the policy front, we talked I talked a little bit about California a little minute ago a minute ago, but we continue to push forward with what we think are common sense reforms on the policy front. So really, really proud of our team for the outcome on our ten one renewals. And I'll turn it over to David.
David Risher: Good. And we can even tag team on this. I mean, so for the last I'll give you just a little color. Maybe it's been eighteen months or so since we've really started to focus on underpenetrated markets. And the reason is, I mean, from just sort of you don't really want all your eggs in, you know, in the sort of biggest city basket. But two thirds, we look at I just mentioned that 161 billion rides in North America. About two thirds of those are in underpenetrated markets. And we saw in Q3 about 70% of our growth came again from those markets.
So it's a large part of the country, a large part of the TAM, and then there's we're seeing great opportunity there by doing some very you know, clever and careful market management. In those markets. Give you some examples so you can kind of visualize. You might think of back to school as just kinda coming on. And so when you think back to school, you might think high school. But if you think college, you're talking very significant communities. You know, Bloomington and East Lansing and State College and so forth and so on. And in each one of these, we deployed a specific program to really tap into, you know, that back to school market.
And we saw, incredible results, actually outsized results compared to the growth we've seen elsewhere. So this is one of those. And I will also say, without tipping our hat too much, I think AI can play an interesting role here as well. As we look to manage those markets more carefully than maybe we have in past. So lot of opportunity there. More to come, but, but for sure, you should you should expect to see quite a bit of our growth come from there in the future.
Aurelien Nolf: Thank you. And our next question is coming from Michael Morton from Nathanson.
Michael Morton: Hi. Evening. Thank you for the question. This one's for David. With the FreeNow acquisition complete and then the TBR deal, your global vision for Lyft is starting to come into view and you love to talk about two customers in the car. So what I would love to learn, what is the opportunity that you see outside of The U. S. For where those two consumers are being underserved by the competition. And how Lyft can offer a better product for both of those consumers. And then maybe a very quick one, for Aaron.
We've had a couple questions on this so far, but the number one question we got from investors this last ninety days and after the Waymo announcement was, they're losing money on AVs? So I don't know if maybe you could talk a little bit about is the take rate different because it's a hybrid network or anything around there, I think, would be really helpful for some of the investors. Yes. Those questions. Thank you so much to both of you.
David Risher: So, Michael, if you'll, permit me, I'm gonna zoom out just a click from your question. And then and then zoom back in. So your the premise was, gosh. You've acquired FreeNow. And you've acquired TBR. What are you gonna learn, particularly about service and sort of under maybe, like, underserved maybe for riders and drivers? I'll come back to the second part in a second. But let's just talk about those acquisitions for just thirty seconds each. So if we now, you'll remember the theory of the case is fairly Right? It sets us up great in the short term to become a much, much more global company. It doubles our TAM.
It works with the leader in Europe across the taxi segment in particular. Is an incredibly important, you know, part of the sort of European, you know, ecosystem kind of ethos. And it sets us up very, very nicely for autonomous in the future because fleet management and government relations turn out to be really turn out to be really important, in the world of autonomous. TBR, more recent, and we haven't talked about that publicly, of course, happened during the quiet period. You know, this is a global chauffeur network. A very, very global. I'd say that in the sense that it operates in some 3,000 you know, cities around the world.
And, you know, and we're talking about you know, Paris and London and Frankfurt and Manchester and Zurich, and Hong Kong and Singapore and Dubai. You know? So, you know, world capital Why? Because it focuses on executives, doing, for example, non deal roadshows, some of the bankers on the call, very familiar with big events like the Super Bowl or F1, those sorts of things. And so and it offers a very, very high level of service. Part of a $54 billion market. This is a different market from the on demand lift black, for example, you know, this is a thing way up above that, much, much higher service. Level.
So if you then look at those assets that we now have, then the question becomes right. How can you deploy them best? And, also, how can you take what you've learned in The United States and bring it on globally? And just maybe a little bit of editorialization here. I think, know, taking a North American company and making a global company is no small thing. We're gonna do it. We're gonna do it because the great companies are truly global.
They're the ones that are not just thinking of The US as center of the universe and everywhere else is kinda big less than They're the ones that learn from what you see overseas and bring it back to The United States and then take it all around the world. So, for example, if you look at TBR, their service excellence is unmatched. Very much a global company. They're actually headquartered in Glasgow. They have their global operations center, center of excellence in Dubai. You know, if extraordinary, extraordinary skill set there. To level up the service that Lyft can provide all up and down the stack. And then FreeNow, of course, has been a high service group forever. Okay.
So what are then the opportunities? I think the opportunities are I'd I'd say that ride hailing in Europe in particular has been a little bit of a degraded experience if you spend time overseas. It's maybe not, even to the quality here in The United States, and I'm not satisfied with where we are in the United States either.
So and I don't want to tip my hand too much, but I would say a lot of the value we're gonna add from, you know, quote, unquote, Lyft is bringing some of our marketplace you know, the skills, like priority pickup and wait and save and some other modes to Europe, bringing our driver obsession, think in particular, to Europe, And then from Europe, bring some of the service excellence that we're seeing, particularly at TBR, but also for now and bringing that, know, all around the world. So bit of a long answer, but I hope that gives you at least a flavor of how we're thinking about it.
Erin Brewer: Yeah. I've couple things maybe that I would add to that, and then I'll I'll come back to your question, Michael, on the Waymo deal is you know, also as you think about FreeNow, you know, think about the skill set that we have around the way that we drive value and volume through partnerships, and our partnerships the partners that we are aligned with are global. Right? There's a great opportunity there. And we talked about David talked about AVs just a minute ago, you know, another great there. I think I mentioned earlier, TBR. Obviously, David highlighted that a lot of those are business rides.
We've been investing across our high value modes now for some time, and just organically seeing some very strong success in Q3 alone. Our high value modes were grew 50% year over year. And so TBR is a great addition to that overall strategy. Sort of back to your Waymo question, question, you know, I'd I'd talk about a couple of things. I articulated this as being about driving availability and driving utilization. So the availability side leverages FlexDrive. And I think the unique thing here and maybe a bit of the advantage we have is this is something we know.
We know how to keep a car available you know, with very high quality, very high uptime, so to speak. And so we feel great about our ability to drive value the partnership through that in house expertise where, again, we're bringing skill and experience to the table. The second piece of this is all about utilization. Right? And these two words are kind of the I think the magic ingredients here, high availability and then high utilization. And if you think about this fairly differentiated way that this integrated supply management partnership is constructed. It's really designed for high utilization, whether the car is you know, deployed across Lima one, dispatched across Lyft, you're gonna get maximum utilization.
It's really sort of the our vision of a hybrid network over time. So that's the framework with which I would leave you think about this.
David Risher: Don't mind, I wanna underscore exactly what Erin said and point out that in the flex Drive side, not only are we best of breed in terms of availability, but as Aaron said, it's an owned asset of ours. That means we don't have to pay someone else for So you can you can partner with other fleet management but that's gonna cost you money, right? So we've got a we've got a very, very nice cost at both high expertise and very nice cost position on that side.
Then on the utilization side, yeah, we think we've worked out a scheme that allows whether you get the car from Waymo or the car from Lyft it's gonna be the same pool dynamically sort of dispatched, you know, depending on the kind of algorithmic work we do. That'll lead to high utilization, which then improves the economics for both of us.
Michael Morton: Thank you.
Aurelien Nolf: Mhmm. Our next question is coming from Brad Erickson with RBC.
Brad Erickson: Hi. Thanks. Two for me. So first, I think last quarter, Aaron, you'd given us some nice insight on how FreeNow might layer into the model both on bookings and then on the margins. I see the 42,000 rides in the in the letter, but just curious if you can update us on anything there, what you wound up seeing in Q3 and then what you're embedding into the Q4 outlook.
And then secondarily, you know, when you're calling for the bookings acceleration next year, I guess, both North America and globally, just curious if you're embedding any anything additional partnerships wise that you that you have in the pipeline or if that's just based on everything you've announced as of today? Thanks.
Erin Brewer: Yeah. I'll I'll work my way backwards. The 2026 sort of, you know, building blocks that I articulated right out at the center are you know, if you'll notice, it's just all of the things that you know, you know about today, announced partnerships, announced acquisitions, etcetera. So that's what's embedded overall in that in that outlook. And then as it relates to free now, you know, I don't I don't have a big update for you here for the back half of the year. We sort of talked about the incoming run rate. We expect free now to accelerate in 2026. We're expecting about a billion euro on the top line. Overall. So, hopefully, that's helpful.
We gave some additional guidance about the dynamics of how FreeNow flows into our p and l. Talked about the impact on revenue margin, etcetera. But happy to go into any more detail. Brad. If you have anything else.
Brad Erickson: I guess, just yeah. You had talked about those gross margin effects last quarter. Just curious if those were playing out as expected? Sounds like they are.
Erin Brewer: Yes, they are. Yes.
David Risher: Great. Thanks. Brad, I might add just because we're not talking about the international world outside of The U. S. Canada also turns out to be a nice growth for us. We've talked about the growth there in the past. I think we delivered about 11.5 million rides in the quarter there as well. So I know your customer is about free now, but just to sort of fill out the international story just a bit k?
Brad Erickson: That's great. Thanks.
Aurelien Nolf: Our next question is coming from Nikhil Devnani with Bernstein.
Nikhil Vijay Devnani: Hi, there. Thanks for taking the question. If I could please follow-up on the Waymo partnership. How does the algorithm kind of balance demand between your funnel and their funnel? Presumably, you're going to have a lot more demand on day one than they are. So what does that balance look like? And do you fully expect to be facilitating rides during peak times of day as well? Or is their platform the first one of choice when ride requests come in? It'll be helpful to understand that. And then maybe a follow-up for Erin on insurance. Following California, are you expecting any movement in other any other major markets as you think about 2026 and 2027? Thank you.
Erin Brewer: Hey, Nikhil. I'll start with that and then turn it over to David. So know, as I mentioned when I talked about our ten one renewal, you know, working toward common sense, what we view as common sense, policy and insurance reform has long been a pillar. You know, I think in the past, we've talked about changes to reform in Florida, changes in Georgia. So this is something that's that's not new. We will continue to work on it. Progress is difficult to predict. There's nothing inherently in any of the remarks that we've talked about for 2026 necessarily assumed. I mean, these things are difficult overall to forecast.
But you know, I would say that we are certainly optimistic that as perhaps other states see how some of the reforms in California, we believe, will lead to much better ride accessibility better earnings opportunities for drivers, that they'll think that's pretty interesting.
David Risher: Yeah. Well put. And then, Nikhil, I'm not going to give you too much detail, but I'll but I'll say a little bit, I think, maybe so that everyone kinda understands the complexity that you're that you're referring to. So yeah. So imagine a world as you know, as will be the world we exist in, you know, next year, where there are hundreds of AVs in a market, but there's no way that all of those AVs can satisfy all the ride requests, not even close. So okay. So then and then reimagine again, you don't have use your imagination. This is the future.
Where those ride requests for AVs are well, those ride requests in general, but specifically for AVs course, are coming in from two different platforms. They're coming in from the Waymo platform and they're coming up from the Lyft platform. So you get a quite a complex situation there that you have to manage if you want not to do goofy things like saying, Well, you, Waymo, get a 100 of those and Lyft, you get 300, which is never a good idea. Because it means inevitably there'll be some stranded on one side that get to the other and stranded on the other, know, silly stuff like that.
So anyway, to your point then so then your first thought is, well, maybe you're just gonna come up with some other very basic heuristics. You know? But it turns out those heuristics are not the way the real world. The real world is very, very to quote our head of marketplace stochastic, it changes very quickly, very dynamic. You have some peak times. You've got some low times. You know, neither one of us wants to be stuck with Anyway, so I can go into detail, but this maybe another time. But the point is it's not gonna be straightforward. It's not gonna be like, okay.
You know, so and so gets the first 10, and then you get the next 10 or whatever is. Literally, every single time a ride request comes in, the work that we have done and will continue to do will be to figure out what is the absolute best way to fulfill that ride. And there will be many, many dimensions of Some of it is ETA, you know, and so forth. ETA meaning how fast it is to pick you up. So it might be time of day. It might make all the sense in the world to start picking people up, you know, at certain times of day using only AVs, you know, for certain reasons.
So it's sort of a non answer, non answer. I grant you that. But the this is the reason why this partner partnership you know, frankly, took quite a while for us to work out. But we're very confident. Both companies are very confident having run, you know, a bajillion models across this thing. That we have something that is gonna be effectively accretive for both and keep these assets, you know, best utilized. The last thing I'll say is think in a sense, this is really the argument for the big thing, which is a hybrid network. It's really, really hard to satisfy demand just with AVs anytime in the near future.
You just there's just not enough supply in the world. And so but drivers, you know, they own their own cars, so that's nice. There's no, you know, asset ownership you have to. And they come on and off, quite dynamically, again, depending on price. So that's a third dimension. It all together, and we think we're gonna create something where the whole is greater than the sum of the parts. Maybe someday down the road, we'll tell you a little bit more about how we do that, but that's that's the big picture.
Nikhil Vijay Devnani: Thank you both.
David Risher: Yeah.
Aurelien Nolf: Alright. Our next question is coming from Ben Black with Deutsche Bank.
Benjamin Thomas Black: Hi, thanks. This is Kunal for Ben. Couple of ups on the on the AV and the Waymo opportunity. One would be in terms of building out these the centers the service centers in each market, is that something that you're going to do ahead of time, like, planning for the next few markets? Or is that going to be on a market by market basis based on partnerships that you have already entered into? And then second, what level of availability and utilization do you need to be, you know, breakeven or contribution profit neutral? For the network to kind of pay off.
So, like, in a in a twenty four hour day, how many hours do you need the vehicle to be available, and how many hours of usage does it need to have?
Erin Brewer: So, Kunal, I'll start there, and then maybe, David, do you wanna talk about how we think about you know, over the over a much longer period of time, you how you scale AVs across a broader set of partners. For sure. You know, short answer here, Kunal, is I'm not gonna go into the details obviously. You know, as we ramp up this partnership, as we gain experience together, we have a lot of optimism. Obviously, you know, both the teams will have more to say down the road, but I'm I'm gonna stop it at that.
David Risher: Yeah. I you know, this is gonna be an area where we're gonna have to be a little bit a little vague. The thing so yeah. I gosh. Let me just let me talk about utilization for one more second and then and then zoom out. So you might think to yourself, it's not that hard to keep an AV utilized. You don't have that many of them and you've a lot of demand. It turns out that's not the way riders think about things. Riders think about things Is this close enough? So I need to get someplace, and is this car close enough to pick me up on time? And if it is, then I'll take it.
If it's priced right, and if it's not, then I won't. And so this is where our history comes in. Right? I mean, we've been operating in Nashville, for a decade now. So we have an enormous amount of data about what time you would expect supply to be needed, where the demand is gonna be specifically, I mean, down to the block by block level. So, you know, so it is this sort of the inputs here are everything from you know, geography to history to weather to, you know, special events you know, when you know, is it a is it a big event weekend, so on so forth?
And that's something we've been doing for many, many years, and that's expertise that we can bring even in a in a new city. It's a new city for Waymo, but not a new city for us. So that's kinda good news. You've gotta make sure that, as I say, the car is available to drive and that it's priced right and so forth and so on. Again, I'm not going to talk about exactly those breakeven points. But I will say that, you know, we look at the economics of this, and we don't we're we're not scared by it. The opposite. You know, the unit economics you would expect would favor AVs over time, you would expect.
Because the variable cost, obviously, to running an AV is relative low. Not zero. To be clear, there are cloud costs or electricity costs or maintenance costs and so forth. But you know, it's it's, you know, there's certain costs you don't have to pay. And then you would expect insurance to be lower as well. So those are sort of some of the inputs that we put in our model when we try to model these things out. But we like the economics of babies a I think that we've set up something that from the start is gonna be accretive, and then we'll we'll get better from there.
Benjamin Thomas Black: Great. Thank you.
Nikhil Vijay Devnani: Mhmm.
Aurelien Nolf: Great. So our next question is coming from Walt Piecyk from LightShed.
Walt Piecyk: Both. Thanks. Yeah. It's nice. Can you hear me now? Just Yep. David, I just wanna go back to the earlier question in terms of Nashville, and I think you said expand beyond Nashville. I think you meant maybe Downtown Nashville, but can you just update us on how you see that relationship going over time if you execute with this kind of shared inventory that you have with Waymo, that obviously is different than how Uber has structured it in Phoenix. Mhmm. Is there opportunity to get additional markets and what time line do you think would have to occur before relationship could expand, not just beyond, you know, Downtown Nashville, but into new markets?
David Risher: Mhmm. Yeah. Good question and good clarification, Walt. So we have structured this partnership. I will say it this way. Both companies have ambitions to scale. You know, beyond know, just Nashville. And we built this partnership with the belief that's that's the that's the goal. You know, talking about timelines is, you know, is premature. But I would say that certainly the constructs we're using here are constructs that both companies believe can be the basis of something that expand expands to other markets. I'll just sort of leave it at that.
Walt Piecyk: And do you think just a quick follow-up. Do you think the structure of how you've done this deal with Waymo because it obviously is different when you're sharing that fleet, right, as opposed to separate fleets. Yeah. And flex drive, you know, make it a stickier relationship. Obviously, if you execute on both, it becomes maybe harder for Waymo to least in those markets that you that you launched, to try and execute on something different.
David Risher: I mean, I don't want to comment exactly on how they view it. But I would certainly say that our goal I know speaking just from a Lyft perspective here, is to provide such a great level of service that no one has any reason to look anywhere else. But yeah. And I think it's also fair to say that the deeper a partnership, you know, the more likely it is that neither one wants to you know, do too many other things beyond that. You know? But here, I'm just speaking sort of generically.
Walt Piecyk: Okay. Thank you.
Aurelien Nolf: Our next question is coming from Stephen Ju with UBS.
Stephen D. Ju: Okay, great. Thank you. Hi, David, Aaron. I've seen you guys talk about the university, programs in a while, and I suppose the opportunity is a attractive as it ever been as you get to onboard these users who get hopefully, very accustomed to using Lyft on other people's money. But I also recall there were all kinds of other directions for these partnerships between getting folks to doctor's appointments, etcetera. So can we talk about the resources that you might be putting together to maybe accelerate the signing of, I suppose, the enterprise customers? Because it seems like such a win development for everybody involved. Thanks.
David Risher: Yeah. Steven, I appreciate the question. I guess maybe as was I don't know. My habit today, I'll zoom out of touch before, you know, kinda zooming in. So your business to business opportunity and there and there are different types. Right? You mentioned universities as a particular, you know, area of interest, and we have, you know, specific relationships with certain universities. To provide transportation on campus. Very interesting. We have health care. Lyft Healthcare, you know, remains a leader in the field. It's called nonemergency medical transportation. And it's getting you know, quite a lot of additional focus now, you know, versus the past.
We've got a new Buck who continues to lead that is the same, but then over him, Susie now brings a kinda new perspective and new energy to that. And then and then b two b, when you're thinking about kind of corporate, transportation of various different types. Of course, TBR is a very high end thing. We talked about that already, but, you know, many companies have preferred travel partners and so forth. So I think each of these areas is getting you know, renewed focus. One of the nice things about really focusing on rideshare is, you know, are a lot of like, we're not distracted by, you know, food delivery and all kinds of things.
Like, we can really, really focus on rideshare and look at all the different segments and how we're we're treating each one of them. You know, in the highest quality way. So maybe what I'll do, if you don't mind, is I'll pivot just a tiny bit towards the business rewards or the business side of things, rather than just the university and the healthcare side. We, for a number of years, if I'm honest, we haven't had a great offering for business travel managers who wanna get their companies excuse me, their employees, a reason to choose, to choose Lyft. Now we have one. We rolled one out September, You get 6% back.
You just mentioned this idea of other people's money. So, yeah, so often at a company, it's the company that's paying. We're giving you 6% back. You can then use that on your personal rides as well. That's the relief cashback you can use on your personal rides. We've seen great uptake there. By the way, how much does it cost? Zero. It costs 0. Is different from the other guys that cost not 0. So that's an area where we so I would say just generally, again, you know, business to business has become an increased area of focus for us. We're seeing really good you know, traction in some of these early programs we put out.
Health care has been a strength of ours for a long, long time. And then universities, I'm glad you bring it up. You know, maybe stay tuned for more on that one. Thank you.
Aurelien Nolf: Alright. Thank you, Steven. Thank you, David. David, any closing remarks?
David Risher: Think if that's it, my main closing remark is, you know, you dang well better be hooking up your, United MileagePlus to Lyft because that's a that's a great program. And up to four miles back for every dollar you spend. Look. We've had a great quarter, and the reason we've had a great quarter is not just because what we've done in last, you know, three months. It's because we've been doing over the last at least two and a half years since I've been here. Obsessing over customers, that's what drives profitable growth. I think when Aaron and I started, I think, the first quarter, think we had consumed $329 million of cash, if I'm not mistaken.
Now we're producing a billion dollars of cash. A $1.3 billion swing. And the reason that's that's happened is because we've been obsessed with our customers, and we have an incredible team every single day that wakes up and just crushes it. And they're the ones that get all the credit. So we get to talk about it. They're the ones that do the work. And thank you all very much investors for traveling along with us and looking forward to keeping you up to date.
Aurelien Nolf: Great. Thank you, David. Thank you, Erin. This concludes today's conference. Thank you for joining and you may now disconnect.