Lyft - Earnings Call - Q3 2025

Executive Summary

• Record Q3 with Gross Bookings $4.78B (+16% y/y), revenue $1.69B (+11% y/y), net income $46.1M and Adjusted EBITDA $138.9M; Active Riders (+18% y/y to 28.7M) and Rides (+15% y/y to 248.8M) reached all-time highs.
• Q4 guide calls for accelerating growth: Gross Bookings $5.01–$5.13B (+17–20% y/y), Adjusted EBITDA $135–$155M, margin 2.7–3.0%.
• Versus S&P Global consensus, Q3 revenue was slightly below ($1.686B vs $1.698B estimate*) and Primary EPS was roughly in line ($0.30 actual* vs $0.31 estimate*); note SPGI EPS differs from GAAP diluted EPS ($0.11) reported by Lyft.
• Call catalysts: integrated AV partnership with Waymo (Lyft to invest ~$10–15M depot, “earn regardless of platform”), CA insurance reform (SB371) expected to reduce rider prices in 2026 and stimulate demand, and underpenetrated markets contributed ~70% of Q3 rides growth.

Values retrieved from S&P Global*

What Went Well and What Went Wrong

• What Went Well

  • Record KPIs and profitability: “all-time high records for Active Riders and Gross Bookings,” Adjusted EBITDA up 29% y/y to $138.9M; TTM free cash flow surpassed $1.0B for the first time.
  • Market momentum in underpenetrated geographies: ~70% of Q3 rides growth came from these markets; management cited targeted programs (e.g., back-to-school at college towns).
  • Strategic partnerships expanding TAM and utilization: integrated supply management AV partnership with Waymo designed for high availability/utilization; Lyft “earns regardless of platform” and will build a Nashville depot (~$10–15M).

• What Went Wrong

  • Slight top-line shortfall vs SPGI consensus: revenue $1.685B vs $1.698B estimate* (≈0.8% miss); Primary EPS roughly in line at $0.30 actual* vs $0.31 estimate*; GAAP diluted EPS reported by Lyft was $0.11. Values retrieved from S&P Global*
  • Insurance still a headwind near term: 2025 “101 renewals” imply mid-single-digit per-ride insurance cost increase; CA reform benefits begin in 2026, not immediate.
  • Non-GAAP adjustments and acquisition costs: Adjusted EBITDA excludes $66.6M SBC and $11.6M acquisition/divestiture-related costs in Q3, underscoring reliance on adjustments during scale-up.

Transcript

Aurelien Nolf (VP of Investor Relations)

Good afternoon and welcome to Lyft third quarter 2025 earnings call. As a reminder, this conference call is being recorded. I'm Aurelia North, VP of Public Affairs and Investor Relations. On the call today we have our CEO David Risher and our CFO Erin Brewer. As a reminder, our full prepared remarks are available on the IR website and we will use this time to answer your questions. We will make forward looking statements on today's call relating to our business strategy and performance partnerships, future financial and operating results, trends in our marketplace and guidance. These statements are subject to risks and uncertainties that could cause our actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings materials and in our recent SEC filings.

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

David Risher (CEO)

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 12 months was over $1 billion for the first time in Lyft's history. As 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. Even better, rides taken through your company business profile earn even more. Now, that's big stuff. Don't worry. I'm going to give all you about 20 seconds right now to link your account. I'm not kidding. Would you be opening up your Lyft app? Go to that profile in the lower right hand side, click that profile button. Look for rewards, hit Manage Rewards.

Add United MileagePlus every single one of you. That's going to be your ticket to ask a question today. If you've done that, give you a couple seconds to get that done, okay? Additionally, we focused on continuing to create AV partnerships that are differentiated and purposeful, with each bringing unique learnings and dynamics to Lyft. We further build upon our AV framework this quarter with the announcements of Waymo as well as Tensor powered by NVIDIA. We are 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. With that, let's get to your questions. Great.

Aurelien Nolf (VP of Investor Relations)

Thank you, David. We will now open the call to questions. If you would like to ask one, please just press star one. If you want to withdraw your question, just do the same another time. I think our first question is coming from Doug Anmuth from JPMorgan.

Doug Anmuth (Analyst)

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. If you could also just comment on insurance. You know, you had talked about the savings from SB371 and just curious if that is still the plan to, you know, to kind of benefit from all of those savings or if there's some component that gets reinvested into the business. Thanks.

David Risher (CEO)

Sure.

Hey, Doug, two great questions. You know, I'm going to speak very briefly here and then Erin is going to 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. You know, again, we'll talk about each of the different pieces there in just a couple of seconds. I can give you some very live data. Since I 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, 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. Just extraordinary momentum going on here that's allowing us to continue to grow. I should say just to sort of say that very obvious there, that's just in the United States. That's not even the Freenow in Europe opportunity, in the TBR opportunity. 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. I'll turn it over to Erin to talk about the catalyst and then the insurance question or the California question.

Erin Brewer (CFO)

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%-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, was important for us to talk about how we see 2026.

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. Multiple catalysts coming together to keep driving this momentum forward. I'll just mention a few. You know, first David let off with the United partnership. You know, Doug, you were first, so maybe you connected your accounts first. That's great. Congratulations. We're excited about that. We think that's going to be a great program. Obviously great value for Lyft, value with our partner United. We will see full year contributions from Freenow and we expect that business to grow year-over-year. We're also going to see a full year of impact from TBR Global chauffeuring, the acquisition that we announced recently. That's only going to show up for a pretty small portion of Q4 in 2025.

Underpenetrated markets remain a fantastic area for us. We had previously talked about those markets in the U.S. representing about 2/3 of that $161 billion personal vehicle trips annually that we see as our market opportunity. In Q3 alone, about 70% of our rides growth came out of those areas in North America. We see strong continued catalyst for growth there. I'll get to California insurance reform in a moment. 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. We've just got strength across our core platform. 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 going to underpin our platform 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. 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. Thank you for indulging me and 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 formerly known as SB371. 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. The great thing is when both of those constituents win, so does Lyft.

What does it mean? Rideshare is going to become more accessible to riders with a reduction in insurance. It does away with outdated $1 million required coverage for uninsured underinsured motorist requirements. It's been in place for a while and it's 16x higher than the typical auto coverage, you know, where a vast majority of claims are settled for under $100,000. 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. In certain areas like Los Angeles, it's even higher. It's almost double that. You know, it's just nuts. This bill modernizes those regulations. You know, we see passing along majority of those savings to riders in the form of price reduction.

That's going to stimulate demand, that's going to be great for drivers, more earnings opportunities, and then great growth opportunities for Lyft overall.

Doug Anmuth (Analyst)

Right.

Thank you.

David Risher (CEO)

Thank you, Doug.

Aurelien Nolf (VP of Investor Relations)

Our next question comes from Eric Sheridan with Goldman Sachs.

Eric Sheridan (Analyst)

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 (CEO)

Yeah. Sure. Hey Eric, good to hear from you. I mean, I think, gosh, when you hear that perspective, I think it almost immediately should make you think, you know, the people ask that question are sort of thinking a little bit small.

They're thinking kind of zero sum, you know, because again, just to sort of state the obvious, but as you say, kind of reground, you know, we're now doing two and a half 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 two million rides a day. Now it's two and a half million rides a day. 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 stats I was just sort of putting out? We actually picked people up faster this year than we did last year, even though we were doing more rides by a lot.

What that tells you is there is an enormous amount of service upside that we've unlocked over the last couple of years. That did not come at the expense of our economics. In fact, it was exactly the opposite. Now, why might that be? 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 guy's one and a half billion rides a year, let's call it. Two point some billion rides per year is a tiny fraction of the 161 billion rides just in North America. Remember, with our Freenow acquisition, TBR acquisition, we now have a TAM that's twice as big.

I sort of, I mean like I 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 kind of like, you know, we win, the other guys lose or whatever, whatever. I think there's so much innovation left. I'll give you a little tiny story there. We launched Lyft Silver whenever that was maybe six months ago. Now we've increased ridership just in Silver. 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 last six months to well over a million rides in total. That's just the beginning of that program. That's not like a low cost program or sort of a margin diluted program, whatever.

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, is that 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 going to 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 for. Through innovation.

Eric Sheridan (Analyst)

Great. Appreciate the perspective. Thank you.

Sure.

Aurelien Nolf (VP of Investor Relations)

All right, our next question is coming from Justin Post with Bank of America.

Justin Post (Analyst)

Great, thank you. Also a couple on AVs. I'd love to hear your thoughts on how, you know, 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 (CEO)

Yeah, let me take it. Was Justin right? Yeah, yeah, yeah. Let me, I'll pick the last part first. I'll kind of back into a little bit and then maybe hand it over to Erin to talk a little bit about the economics of overseas. So the first, okay, the answer to 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.

That tells you right there that the first thing that happens as AVs come on is they expand the market. This is what we, because these are new markets.

Right.

I mean, let's be clear. That's very exciting for us as an industry. We should be very excited about EVs. It's a good product, works well, people like it and they take that. Then they take, you know, traditional driver driven rideshare as well. That's wonderful. Then let's talk about the economics. You know, in the medium term. Okay. First, like any new thing requires investment. You know that. Right. For example, in Nashville where we're, you know, hooking up with Waymo, we're going to build a depot. Erin will talk to you about that in a couple of seconds.

The relationship, the reason I'm going to go into a little bit of depth on this, you 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. Okay, so what does that look like? Let's go down one click. When you put AVs, we're talking about now in Nashville, a couple hundred AVs that'll be on the ground over the next year, and that'll grow over time. When you put AVs on the ground, the first thing you want to make sure is, are you set up for them to be highly available?

Doesn't do any good to have an AV sitting there that's not charged, it's not clean, it's not repaired, it's not properly maintained, not ready to go. If you don't have that, you got nothing. Why are we good at that? We're good at that because our Flexdrive subsidiary has been doing it for many, many years at a 90% availability rate. You know, talk to the rental car guys and they'll tell you that that is an admirable, enviable number. We're good at that, and we're only going to get better. 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, you know, okay, the car's available, but is there a rider in it? Because that's how revenue is generated.

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 going to be maximizing utilization. It's an integrated supply management system that's quite technical and will be hard to implement. Once we've got it right, we'll be able to scale it up, because both companies have ambitions to scale up, both within Nashville and beyond over time. That is sort of the structure of this thing. You got a high availability, you got a high utilization, you got to have systems that are super tightly integrated to make sure that the physical world and the digital world all come together seamlessly. It's a beautiful experience for riders, which is how you drive growth. Now we can talk about the economics.

Broadly speaking, of course, you got to invest in some physical infrastructure, but we like the unit economics there a lot. I'll turn it over to Erin to talk about that.

Erin Brewer (CFO)

Yeah, sure. A couple of things to think about here. David just sort of described what we call an integrated supply management partnership. Right. That is, number one on the fleet side, driving availability, and number two, as we think about the sort of integrated supply piece of it, it is about driving utilization. Two critical things. You know, the good thing about this construct that we have going in with Waymo is that Lyft earns regardless of platform. Right. Regardless of where the car is deployed, we are responsible for it being available. Obviously, when a ride is deployed on Lyft, then there is economics there. That is the piece of the arrangement David mentioned. We are building a depot we had previously disclosed we thought it would be about $10 million-$15 million investment. We signed a lease, teams are raring to go.

We're excited about that for 2026.

David Risher (CEO)

Thank you.

Aurelien Nolf (VP of Investor Relations)

All right, and our next question is coming from John Blackledge with TD Cowen.

John Blackledge (Analyst)

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? Then second, I think you maybe just got through your, the annual insurance renewal. Just curious, you know, what we should expect to see in terms of impact to cost of revenue. Thank you.

Erin Brewer (CFO)

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. Yes, we just completed our 101 renewals. What we're seeing is we expect a mid single digit increase on a per ride basis. 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 and 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, and can quickly and efficiently resolve claims.

Of course on the policy front, we talked, I talked a little bit about California a little minute ago. We continue to push forward with what we think are common sense reforms on the policy front. Really, really proud of our team for the outcome on our 101 renewals. I'll turn it over to David.

David Risher (CEO)

Sounds good. We can even tag team on this. I mean, for the last, I'll give you just a little color. Maybe it's been 18 months or so since we've really started to focus on underpenetrated markets. The reason is, aside from just sort of diversification, let's say you don't really want all your eggs in the sort of biggest city basket. 2/3, we look at, I just mentioned that 161 billion rides in North America. About 2/3 of those are in underpenetrated markets. We saw in Q3, about 70% of our growth came again from those markets. There, it's a large part of the country, large part of the TAM, and we're seeing great opportunity there by doing some very clever and careful market management in those markets. I'll give you some examples.

You can kind of visualize, you might think of back to school as just kind of come and gone. When you think back to school, you might think high school, but if you think college, you're talking about very significant communities, you know, Bloomington and East Lansing and State College and so forth and so on. In each one of these, we deployed a specific program to really tap into, you know, that back to school market. We saw incredible results, actually outsized results compared to the growth we've seen elsewhere. This is one of those. I will also say, without sort of tipping our hat too much, I think AI can play an interesting role here as well as we look to manage those markets, you know, more carefully than maybe we have in the past.

A lot of opportunity there, more to come. For sure you should expect to see quite a bit of our growth come from there in the future.

Thank you.

Aurelien Nolf (VP of Investor Relations)

Our next question is coming from Michael Morton from MoffettNathanson.

Michael Morton (Senior Research Analyst)

Hi, good evening. Thank you for the question. This one's for David. David, with the Freenow acquisition complete and then the TBR deal, your global vision for Lyft is starting to come into view. You love to talk about two customers in the car. What I would love to learn is what is the opportunity that you see outside of the US for where those two consumers are being underserved by the competition and how Lyft can offer a better product for both of those consumers. Maybe a very quick one for Erin. We've had a couple questions on this so far, but the number one question we got from investors this last 90 days and after the Waymo announcement was how can Lyft's deal be accretive when the other guys talk about that they're losing money on AVs?

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 asking those questions.

David Risher (CEO)

Thank you so much to both of you, for sure. Michael, if you'll permit me, I'm going to zoom out just a click from your question and then zoom back in. The premise was, gosh, you've acquired Freenow and you've acquired TBR. You know, what are you going to learn particularly about service and sort of under, maybe like underserved markets, 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 30 seconds each. Freenow, you'll remember the theory of the case is fairly simple, 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 a leader in Europe across the taxi segment in particular, which is an incredibly important part of the sort of European ecosystem kind of ethos. It sets us up very, very nicely for autonomous in the future because fleet management and government relations turned out to be really important in the world of autonomous TBR. More recent, and we have not talked about that publicly, of course, this happened during the quiet period. This is a global chauffeur network, very, very global. I say that in the sense that it operates in some 3,000 cities around the world. We are talking about Paris and London and Frankfurt and Manchester and Zurich and Hong Kong, in Singapore and Dubai, you know, so, you know, world capitals. Why?

Because it focuses on executives, people doing, for example, non-deal roadshows. Many of the bankers on the call are very familiar with big events like the Super Bowl or, you know, F1, this sorts of things. It offers a very, very high level of service. It's part of a $54 billion market. This is a different market from the on-demand, you know, sort of even the on-demand high-value mode like Lyft Black, for example, you know, this is a thing way up above that, much, much higher service level. Okay, if you then look at those assets that we now have, then the question becomes, right, how can you deploy them best? Also, how can you take what you've learned in the United States and bring it globally? Just maybe a little bit of editorialization here.

I think, you know, taking a North American company and making a global company is no small thing. But we're going to do it. We're going to do it because the great companies are truly global. They're the ones that are not just thinking of the U.S. as center of the universe and everywhere else is kind of being 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. For example, if you look at TBR, their service excellence is unmatched. They're very much a global company. They're actually headquartered in Glasgow. They have their global operations center, center of excellence in Dubai. Extraordinary, extraordinary skill set there to level up the service that Lyft can provide all up and down the stack.

Freenow, of course, has been a high service group forever. Okay, what are then the opportunities? I think the opportunities are, I'd say that ride hailing in Europe in particular has been a little bit of a degraded experience if you spend time overseas. You know, it's maybe not even to the quality here in the United States. I'm not satisfied with where we are in the United States either, so.

I do not want to tip my hand too much, but I would say a lot of the value we are going to add from, you know, quote unquote, Lyft is bringing some of our marketplace, you know, skills like Priority Pickup and Wait and Save and some other modes to Europe, bringing our driver obsession, I think, in particular out to Europe and then from Europe, bringing some of the service excellence that we are seeing, particularly at TBR, but also Freenow and bringing that all around the world. Bit of a long answer, but I hope that gives you at least a flavor of how we are thinking about it.

Erin Brewer (CFO)

Yeah, a couple things maybe that I would add to that and then 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, you know, the partners that we are aligned with are global. Right. There's a great opportunity there. We talked about, David talked about AVs just a minute ago. You know, another great opportunity there. I think I mentioned earlier, TBR, obviously, David highlighted that a lot of those are business rides. You know, we've been investing across our high value modes now for some time and just organically seems to some very strong success. In Q3 alone, our high value modes grew 50% year-over-year.

TBR is a great addition to that overall strategy. Sort of. Back to your Waymo question. I talk about a couple of things. I articulated this as being about driving availability and driving utilization. The availability side leverages Flexdrive. 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. We feel great about our ability to drive value to the partnership through that in-house expertise, where again we are bringing skill and experience to the table. The second piece of this is all about utilization, right? These two words are kind of the, I think the magic ingredients here. High availability and then high utilization.

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 Waymo 1, dispatched across Lyft, you're going to get maximum utilization. It's really sort of the, our vision of a hybrid network over time. That is the framework with which I would leave you to think about this.

David Risher (CEO)

If you do not mind, I want to underscore exactly what Erin said and point out that in the Flexdrive side, not only are we best of breed in terms of availability, but as Erin said, it is an owned asset of ours. That means we do not have to pay someone else for that. You can partner with other fleet management, but that is going to cost you money, right? We have got a very, very nice cost, both high expertise and very nice cost position on that side. On the utilization side, yeah, we think we have worked out a scheme that allows whether you get the car from Waymo or the car from Lyft, it is going to be the same pool dynamically sort of dispatched, you know, depending on this, you know, kind of algorithmic work we do.

That'll lead to higher utilization, which then improves the economics for both of us. Thank you.

Aurelien Nolf (VP of Investor Relations)

Oh, next question is coming from Brad Erickson with RBC.

Brad Erickson (Internet Equity Analyst)

Hi, thanks. Two for me. First, I think last quarter, Erin, 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 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, when you're calling for the bookings acceleration next year, I guess, in both North America and globally. Just curious if you're embedding any, anything additional partnerships wise that you have in the pipeline or if that's just based on everything you've announced as of today. Thanks.

Erin Brewer (CFO)

Yeah, I'll work my way backwards. The 2026 sort of, you know, building blocks that I articulated right out at the center, you know, if you'll notice. It's just all of the things that, you know, you know about today, announced partnerships, announced acquisitions, et cetera. That's what's embedded overall in that outlook. As it relates to Freenow, 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 Freenow to accelerate in 2026. We're expecting about EUR 1 billion on the top line overall. Hopefully that's helpful. We gave some additional guidance about the dynamics of how Freenow flows into our P&L, talked about the impact on revenue margin, et cetera. Happy to go into any more detail.

Brad, if you have anything else.

Brad Erickson (Internet Equity Analyst)

Yeah, you had talked about those gross margin effects last quarter. Just curious if those are playing out as expected. Sounds like they are.

Erin Brewer (CFO)

Yeah, they are. Yes.

David Risher (CEO)

Great. Thanks, Brad. I might add, just because we're now talking about the international world outside of the U.S., Canada also turns out to be a nice growth driver 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. Again, I know your question is about Freenow, but just to sort of fill out the international story just a bit more.

Brad Erickson (Internet Equity Analyst)

That's great, thanks.

Aurelien Nolf (VP of Investor Relations)

Our next question is coming from Nikhil Devnani with Bernstein.

Nikhil Devnani (Senior Analyst)

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. What does that balance look like? 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 any other major markets as you think about 2026 and 2027? Thank you.

Erin Brewer (CFO)

Hey, Nikhil, I'll start with that and then turn it over to David.

As I mentioned when I talked about our 101 renewal, working toward common sense, what we view as common sense policy and insurance reform has long been a pillar. I think in the past we've talked about changes to reform in Florida, changes in Georgia. This is something 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. 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 (CEO)

Yeah, well put. Nikhil, I'm not going to give you too much detail, but I'll say a little bit, I think maybe so that everyone kind of understands the complexity that you're referring to. Yeah, imagine a world, as will be the world we exist in 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. Okay, then imagine, and again, you don't have to use your imagination, this is the future where, you know, those ride requests for AVs are—well, those ride requests in general, but specifically for AVs of 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.

You get quite a complex situation there that you have to manage if you want not to do goofy things like saying, okay, well, Waymo gets 100 of those and Lyft, you get 300, which is never a good idea because it means inevitably there will be some stranded on one side that do not get to the other and get stranded on the other. You know, silly stuff like that. Anyway, to your point, then your first thought is, maybe you are just going to come up with some other very basic heuristics, you know. It turns out those heuristics are not the way the 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. Go into detail about this maybe another time. The point is, it's not going to be straightforward. It's not going to be like, okay, you know, so and so gets the first 10, and then you get the next 10, or whatever. It 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. There will be many, many dimensions to that. Some of it is ETA, you know, and so forth. ETA meaning how fast it is to pick you up. Some of them might be time of day.

It might make all the sense in the world to start picking people up at certain times of day using only AVs for certain reasons. Anyway, it's sort of a non answer, non answer, I grant you that. This is the reason why this partnership, frankly, took quite a while for us to work out. We're very confident, both companies are very confident having run a bajillion models across this thing that we have something that is going to be effectively accretive for both and keep these assets best utilized. The last thing I'll say is, I 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. There's just not enough supply in the world.

Drivers, they own their own cars, so that's nice. There's no asset ownership. You have to. They come on and off quite dynamically again depending on pricing. That's a third dimension. Put it all together and we think we're going to 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. That's the big picture.

Nikhil Devnani (Senior Analyst)

Thank you both.

David Risher (CEO)

Yeah.

Aurelien Nolf (VP of Investor Relations)

All right, our next question is coming from Ben Black with Deutsche Bank.

Kunal Khanna (Analyst)

Hi, thanks for taking the question. This is Kunal for Ben. A couple follow ups on the AV and the Waymo opportunity. One would be in terms of building out 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? Then second, what level of availability and utilization do you need to be, you know, break even or contribution profit neutral for the network to kind of pay off?

Like in a 24 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 (CFO)

Kunal, I'll start there and then maybe David, do you want to talk about how we think about, you know, over a much longer period of time, how you scale AVs across a broader set of partners? Short answer here, Kunal, is I'm not going to 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 going to stop it at that.

David Risher (CEO)

Yeah, you know, this is going to be an area where we're going to have to be a little bit, a little vague the thing. Yeah, gosh, let me just, let me talk about utilization for one more second and then zoom out. You might think to yourself, well, it's not that hard to keep an AV utilized because you don't have that many of them. You got a lot of demand. It turns out that's not the way riders think about things. Right. I just 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? If it is, then I'll take it if it's priced right. If it's not then I won't. This is where our history comes in. Right.

I mean, we've been operating in Nashville for a decade now. We have an enormous amount of data about what time you would expect, you know, supply to be needed, where the demand is going to be specifically. I mean, down to the block-by-block level. You know, the inputs here are everything from geography to history to weather to special events, is it a big event weekend and so on and so forth. That is something we've been doing for many, many years. That is expertise that we can bring even in a new city. Like, it is a new city for Waymo, but not a new city for us. That is kind of good news.

You have to make sure that as I say, the car is available to drive and then it is priced right and so on. You know, again, I am not going to talk about exactly those break even points, but I will say that we look at the economics of this and we do not, we are not scared by, effectively 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 relatively low, not zero. To be clear, there are cloud costs or electricity costs or maintenance costs and so forth. But you know, it is, you know, there are certain costs you do not have to pay and then you expect insurance to be lower as well.

Those are sort of some of the inputs that we put in our model when we try to model these things out. We like the economics of AVs a lot and think that we've set up something that from the start is going to be accretive and then we'll get better from there.

Kunal Khanna (Analyst)

Great. Thank you. Great.

Aurelien Nolf (VP of Investor Relations)

Our next question is coming from Walt Piecyk from LightShed.

Walt Piecyk (Analyst)

Thanks. Yeah, it's nice. Can you hear me now, David? I just want to 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. 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. Is there opportunity to get additional markets and what timeline do you think would have to occur before that relationship could expand not just beyond, you know, downtown Nashville, but into new markets?

David Risher (CEO)

Good question and good clarification, Walt. We have structured this partnership. I'll say it this way, both companies have ambitions to scale beyond just Nashville.

We built this partnership with the belief that's the goal. Talking about timelines 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 expands to other markets. I'll just sort of leave it at that.

Walt Piecyk (Analyst)

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 and Flexdrive, makes it a stickier relationship? Obviously, if you execute on both, it becomes maybe harder for Waymo to, at least in those markets that you launch, to try and execute on something different.

David Risher (CEO)

I mean, I do not want to comment exactly on how they view it, but I would certainly say that our goal, and 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, 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. Okay, thank you.

Aurelien Nolf (VP of Investor Relations)

Our next question is coming from Stephen Ju with UBS. Okay, great.

Stephen Ju (Analyst)

Thank you. Hi, David. Erin. I do not think I have seen you guys talk about the university programs in a while, and I suppose the opportunity is as attractive as it has ever been as you get to onboard these users who get hopefully very accustomed to using Lyft on other people's money. I also recall there were all kinds of other directions for these partnerships between getting folks to doctors' appointments, et cetera. You know, can we talk about the resources that you might be putting together to maybe accelerate the signing of, I suppose, the enterprise customers? It seems like such a win-win development for everybody involved. Thanks.

David Risher (CEO)

Yeah, Stephen, I appreciate the question. I guess maybe as is, I do not know, my habit today, I will zoom out a touch before kind of zooming in. Business-to-business opportunity, and there are different types, right?

You mentioned universities as a particular area of interest and we have specific relationships with certain universities to provide transportation on campus. Very interesting. We have Lyft Health. Healthcare remains a leader in the field. It's called non emergency 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 kind of new perspective and new new energy to that. And then, and then B2B 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. 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, there 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 treating each one of them, you know, in the highest quality way. Maybe what I'll do, if you don't mind, 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. You know, for a number of years, you know, if I'm honest, we haven't had a great offering for business travel managers who want to give their companies, excuse me, their employees a reason to choose Lyft. Now we have one, we rolled one out beginning of September.

You get 6% back. You just mentioned this idea of, you know, 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 literally Lyft cash back. You can use their personal rides. We've seen great uptake there. And by the way, how much does it cost? Zero. Cost zero. Which is different from the other guys that cost not zero. 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. Healthcare has been a strength of ours for a long time, and then universities. I'm glad you bring it up.

You know, maybe stay tuned for more on that one.

Stephen Ju (Analyst)

Thank you. All right.

Aurelien Nolf (VP of Investor Relations)

Thank you, Stephen. Thank you, David. David, any closing remarks?

David Risher (CEO)

I 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. The reason we've had a great quarter is not just because of what we've done in the, 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 Erin and I started, I think the first quarter, I think we had consumed $329 million of cash. If I'm not mistaken, now we're producing a billion dollars of cash. It's a $1.3 billion swing.

The reason 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. They're the ones that get all the credit, so we get to talk about it. They're the ones that do the work. Thank you all very much, investors, for traveling along with us and looking forward to keeping you up to date. Right.

Aurelien Nolf (VP of Investor Relations)

Thank you, David. Thank you, Erin. This concludes today's conference. Thank you for joining. You may now disconnect.