管理層發言
Good afternoon and welcome to the Lyft Third Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode to prevent any background noise. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Aurelien Nolf, Vice President, FP&A and Investor Relations. You may begin.
Thank you. Welcome to the Lyft earnings Call for the third quarter of 2024. On the call today, we have our CEO, David Risher, and our CFO, Erin Brewer. We'll make forward-looking statements on today's call relating to our business strategy and performance, partnerships, future financial results, and guidance. These statements are subject to risk and uncertainties that could cause our actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings materials and our recent SEC filings. All of the forward-looking statements that we make on today's call are based on our beliefs as of today, and we disclaim any obligation to update any forward-looking statements except as required by law. Additionally, today we are going to discuss customers. For rideshare, there are two customers in every car. The driver is the Lyft customer and the rider is the driver's customer. We care about both. Our discussion today will also include non-GAAP financial measures which are not a substitute for GAAP results. Reconciliation of our historical GAAP to non-GAAP results can be found in our earning materials, which are available on our IR website. And with that, I'll pass the call to David.
Thank you, Aurelien. Good afternoon and thanks for joining us. Once again, our team executed on all parts of our strategic plan, resulting in a spectacular third quarter with progress on what matters most to riders and drivers more than 2 million times a day. Erin will get into the details about our performance this quarter, but a driver from North Carolina put it well when they called Lyft superior to the other guys because of better transparency and overall better pay per ride. As we outlined at our Investor Day, our customer obsession engine was fueled by several product innovations, progress with Lyft Media, and some big partnership announcements. First, we said we would differentiate with product innovation. Our strategy is simple but effective, obsess over our customers. That's what we did for commuters when we introduced Price Lock. Commute rides make up nearly half of rides Monday to Friday, so it's no wonder Price Lock is performing beyond our expectations.
By the end of September, we already had more than 200,000 active passes, and this number keeps growing. We see that Price Lock riders take on average four more rides per month than they previously did before purchasing the pass. Not only is Price Lock helping commuters, but also drivers by creating more predictability on when and where to drive. It's a win-win. We're pleased with how Price Lock is performing and we're taking feedback from early users to further enhance the product. Related to this, we're always thinking about and providing more value to our riders. So here's an update on that can of whoopass I mentioned last time on prime time, which is our term for surge pricing. Prime time continues to decrease and is now down more than 40% year-over-year and 20% quarter-on-quarter on a per ride basis. In the regions where prime time declines fast, inversion goes up along with rides and market share.
Chicago is a great example where we saw prime time decline very fast in Q3, resulting in conversion improvements, ride growth acceleration, and share gains. I've said before that our strategy was to take rideshare's most hated feature and turn it into a reason to choose Lyft, and again this quarter we're seeing the proof that that's the right strategy. More recently we launched a new set of improvements for drivers to better ensure that every ride and every minute they spend on the road is worthwhile. Imagine driving with Lyft and you accept a ride for a given amount of pay, but you end up sitting in unexpected traffic. The ride takes longer, and on an hourly basis, you earn less than you expected. Not a great experience. So we addressed it. Now, drivers can count on their earnings being increased anytime a ride takes five minutes longer than estimated. Drivers now also see the estimated dollar per hour rate for every ride on the accept screen to help them decide if a ride is worth their time.
And if you drive an EV, you can choose to only match with rides that fall within your battery range, a really important change that takes care of range anxiety. All told, just this year we've launched 33 new products and features, a true testament to our team listening to drivers and riders and delivering on the innovations they want. As a result, we're seeing all-time highs across both driver and rider metrics. Drivers are spending more time with Lyft than they ever have, as driver hours in Q3 reached yet another all-time high. According to interviews, driver preference for Lyft is now 12 percentage points higher than our main competitor. At Investor Day back in June, we said we expect driver hour growth in line with business growth, and right now we're ahead of that target. On the rider side, we see the same. Active riders hit an all-time high, growing at a pace ahead of the long-term target we shared at our Investor Day.
We had record rides again this quarter, with commute rides surpassing their all-time highs from 2019. Ride frequency, the average number of rides taken by each active rider, increased for the seventh consecutive quarter. It is also in line with our long-term target. Riders are taking more bike and scooter rides too. Our bikes and scooters mode had strong performance in Q3, breaking another record in quarterly rides. Bottom line, Lyft is still growing. Up next is more expansion in Canada, where right now we're onboarding drivers in Winnipeg. At this point, roughly 12% of all Canadians have taken a ride with Lyft and we look forward to riders in Winnipeg joining us soon. So now on to Lyft Media. We've been building Lyft Media into a highly performant platform. And we continue to improve it for our ad partners. Last month, we expanded how we measure campaign performance. Brands like Foursquare are now helping us measure foot traffic to brick and mortar stores.
NCSolutions provides insights on brand loyalty for consumer packaged goods companies. And Kochava is measuring digital outcomes like app installs and purchases. Overall Lyft Media continues to gain great traction with in-app ads growing nearly 3x year-over-year in Q3. Now I want to take a look at two partnership-focused initiatives that will help strengthen Lyft’s position going forward. We are very proud of the best of what we do in rideshare. We are the pure play in on-demand mobility, and that allows us to be 100% focused on getting it right for drivers and riders every time. As we said at Investor Day, that approach includes deeply partnering with other companies for the best of what they do. For food delivery, that's DoorDash. DashPass has millions of subscribers and with last week's partnership announcement, we're giving every one of them a reason to prefer Lyft. So I encourage each and every one of you to link your accounts immediately so you can save the next time you go out with friends and then on that late-night snack when you get home.
Second, today we announced our next step in helping bring autonomous vehicles to millions of people. And again, we're doing that in partnership, beginning with Mobileye, Nexar, and May Mobility. Let me talk about each of these briefly. With Mobileye, our partnership makes our rideshare platform available to all vehicles with Mobileye Drive level for self-driving technology. These vehicles will be Lyft ready, giving small and large fleet operators seamless access to Lyft's platform network of riders. With Nexar, our partnership combines Lyft's vast network with Nexar's intelligent video telematics with the goal of accelerating how AVs learn. And finally, we're very excited to partner with May Mobility to make their autonomous vehicles available to Lyft riders in Atlanta next year. Each of these partnerships plays a different role, but collectively, they help Lyft become the best option for AV stakeholders and asset holders to go to market.
At Lyft, we envision a robust future that brings together human drivers and autonomous vehicles in an always-on transportation network. Adding AVs is a huge opportunity and we look forward to partnering with even more leaders in the industry to shape this future. Stay tuned because this is just the beginning. Before I finish up, I want to share something with you that is foundational to the way we lead our company, and that's our purpose. The team at Lyft had always been passionate about having an impact. It's often cited as the reason people love our brand and why people choose us. It's one of the reasons I came here too. And it's good for business in ways beyond brand love. Research shows that the purpose-driven organizations have returns that significantly outperform the S&P 500. Lyft's purpose is to serve and connect. Let me say that again, because it's new. Our purpose is to serve and connect.
On service, we want to reset the bar, serving drivers and riders better than they have ever experienced before. And on connection, in an increasingly virtual but physically disconnected world, we're going to fight hard to keep bringing people together in person. Lyft is moving ahead. Quarter after quarter, we're winning riders and drivers over with our service. As a result, people are choosing rideshare more, and when they choose rideshare, they're increasingly choosing Lyft. Sure, we're competing against the other guys and we're more than holding our own, but increasingly, you'll find that we're playing a different game. We're competing with your car, even with your couch. Every day, over 2 million times we serve and connect, and I hope you see how early we are in that journey and just how important that purpose is. Over to you, Erin.
Thanks, David. Good afternoon, everyone, and thanks for joining us today. I'm excited to share an update on our results for the third quarter as well as the outcome of our recent insurance renewals, the next steps regarding our capital allocation plans, and our increased outlook for the full year 2024. Now let's get into the details of the quarter. I'll start with my usual reminder that unless otherwise indicated, all income statement measures are non-GAAP and exclude select items that are detailed in our earnings materials. For the third quarter, gross bookings exceeded $4.1 billion, up 16% year-over-year, with double-digit rides growth in both rideshare and our bikes and scooters mode. Q3 saw strong demand with active riders growing by 9% and frequency up 6%, driven by growth in Canada, our back-to-school activations, and the success of new products, all underpinned by our focus on operational excellence.
While demand exceeded our expectations in the quarter, gross bookings per ride and the continued reduction in prime time were in line with our expectations. As we discussed last quarter, reducing the variability from prime time addresses a significant concern for our riders, ultimately drives preference for Lyft, and makes our platform healthier. Revenue exceeded $1.5 billion, up 32% year-over-year. During the quarter, we delivered revenue margin expansion, both year-over-year and sequentially, reflecting efficiency in the deployment of incentives. Consistent with the framework we outlined at our Investor Day in June, our focus is on generating efficiencies on a per-ride basis across total incentive spend. During the quarter, incentive expenses in contra revenue and sales and marketing combined declined 17% on a per-ride basis year-over-year, well ahead of the annual multi-year target of 10% we outlined at Investor Day as we continue to improve the balance of our marketplace.
Operating expenses were $602 million or 14.7% of gross bookings, including planned investment in rider engagement and higher legal and insurance expenses, some of which are accrued on a per-ride basis. In the third quarter adjusted EBITDA was $107 million, which as a percentage of gross bookings was 2.6%. Third quarter adjusted EBITDA included the benefit of a one-time $14 million tax accrual release. GAAP net loss in the third quarter was $12.4 million, which includes restructuring charges of $36 million related to the previously announced restructuring plans in our bikes and scooters division, now known as Lyft Urban Solutions. We ended the third quarter with a strong cash position with unrestricted cash, cash equivalents, and short-term investments of approximately $1.9 billion, and we generated $243 million of free cash flow. As a reminder, our free cash flow trends will vary quarterly due to the timing of insurance payments.
So I'd encourage you to focus on a 12-month view. At quarter-end for the trailing 12 months, we've delivered more than $641 million in free cash flow. This outpaced our previous target, driven primarily by higher insurance reserves directly related to higher ride volume, coupled with lower cash payments related to our legacy book. Moving to capital allocation, I want to reiterate our current strategy, which focuses on three main areas. First, it's crucial for our scaled marketplace to maintain ample liquidity for operations and to comply with our existing covenants. Next, we're prioritizing investing in profitable growth. We have plans to invest in initiatives like building partnerships and enhancing our ad tech platform, which are important to our long-term growth strategy. And third, we're focused on shareholder returns, starting with dilution management. After restructuring last year, we've seen improvements in stock-based compensation dilution and remain on track to our commitment for 2024 stock-based compensation of approximately $340 million.
Building on that progress, starting later this month, we will leverage our improving cash position to transition to net share settlement to address the tax withholding obligation for all employer restricted stock units. This will reduce the number of shares that would otherwise be issued into the market upon vesting. In 2025 we expect to use approximately $100 million of our cash balance which will reduce dilution by approximately 2 percentage points compared to our prior tax withholding method. The use of cash will be reflected in the financing section of our statement of cash flows beginning in the fourth quarter of 2024. Now, on to guidance. Our Q4 outlook includes both the impact of the DoorDash partnership as well as the renewal of our third-party insurance agreements. As we laid out at our Investor Day, partnerships are a key component of our profitable growth strategy and we're very excited about the opportunity to partner with another category leader.
In the fourth quarter, we're investing in the launch, and we're excited about bringing the benefits of Lyft and DoorDash to riders and DashPass members throughout the U.S. Our experience with large-scale partnerships tells us that achieving broad consumer adoption happens with time, and we look forward to sharing more updates in the coming months. Next, the renewal of our third-party insurance agreements reflects our success in continuing to bend the insurance cost curve through product and safety initiatives. We expect our fourth-quarter cost of revenue will increase by approximately $50 million quarter-over-quarter, reflecting the impact of our recent third-party renewals. That's significant progress versus last year's increase driven by the multi-year strategy we outlined at Investor Day. Additionally, I'll remind you that last year we moved some agreements to a biannual cycle, creating less disruptive impacts throughout the year.
As such, we're comfortable that we can manage the insurance cost increase within our operating and financial plans. For the fourth quarter of 2024, we expect gross bookings growth of approximately 15% to 17% year-over-year, or approximately $4.28 billion to $4.35 billion. We expect adjusted EBITDA of approximately $100 million to $105 million and an adjusted EBITDA margin as a percentage of gross bookings of approximately 2.3% to 2.4%. For the full year 2024, we are raising our outlook and now expect rides growth in the mid-teens year-over-year, gross bookings to grow approximately 17% year-over-year, adjusted EBITDA margin as a percentage of gross bookings to be approximately 2.3%, up from the prior outlook of 2.1%, and free cash flow to exceed $650 million. 2024 is the first year of our multi-year plan laid out at our Investor Day in June. Through customer obsession and operational excellence, we're delivering on all our commitments and are on pace to achieve our long-term targets. With that, I'll bring our prepared remarks to a close. Operator, we're ready to take questions.
分析師問答
Your first question comes from Doug Anmuth with JPMorgan. Please go ahead.
Thanks for taking the questions. I have two, one for David, one for Erin. David, I was hoping you could talk about the benefits that you're seeing of less prime time and surge on the platform and just how that's showing up in terms of ride volume via frequency and retention. I know you mentioned higher conversion. Just wondering if there's any way you can quantify the benefits there. And then Erin, can you talk about the $650 million in free cash flow in 2024? I just want to make sure that we understand the drivers of the significantly higher outlook is that all function of more shift to first-party and captive, and then how do we think about that trend in ‘25 in sustainability? Thanks.
Sure, Doug. I'll begin and then hand it over to Erin. First, regarding prime time, it's not performing well, and we're focused on reducing it. As noted, we're down 40% year-on-year, which is excellent. When we analyze market by market, we observe that the areas where we reduce it the quickest see an increase in inversion and ride growth. We mentioned Chicago before, and Boston is another city where this is happening effectively. It's encouraging. I can compare it to Starbucks' recent decision to eliminate the extra charge for oat milk and similar items; it's something that no one appreciates, especially when there’s unexpected variability in charges. Moreover, when we consider frequency, which continues to rise, it's primarily driven by great service. The better the service, the more likely customers are to take another ride, which is quite obvious. Additionally, we have strategies like Price Lock and other features that can enhance frequency even further. Prime time fits into this, as it is about delivering excellent service and maintaining consistency. Overall, I’m pleased with our progress. Our conversion rates have increased as well, improving by about 0.1 percentage points. We’re seeing positive growth there, although this averages out various factors. That’s the general overview, and now I’ll pass it to Erin.
Yeah, sure, Doug. On cash flow, I'll kind of start hovering up a little bit here. First of all, we're incredibly proud of the performance that this team has been able to drive across the business, obviously strengthening our operating efficiency and improving our margins. And then given that we're a relatively low-kind of CapEx profile business, from a modeling perspective, you can assume that a significant portion of that adjusted EBITDA converts to cash. And that is of course, before considering the impacts of insurance. So let me kind of talk about the dynamics that we're seeing this year and some of the dynamics that I mentioned here in the third quarter. So, first is the function of our insurance accruals, and those are a bit higher because our growth is a bit higher than expectations. So that's one part. The second part is lower cash payout. So let me spend just a second here, chatting through that.
When we accrue for these expenses in period, we expect the total payout from any particular cohort to take approximately seven years to resolve, with the peak of that usually happening in year three and the majority of those claims paying out sort of year one through three if you think about that overall horizon. So, today for example, it's fair to assume that the majority of claims that we're paying out are from the 2021 to 2023 time period where, of course, our rides volume were lower, therefore fewer claims, therefore a reduction in those cash outflows. You asked a little bit about what does that mean longer term? So, looking further ahead, if you think about the near-term phase of our LRP, I think it's fair to assume that that conversion and that near-term, say 2025 part, would be a bit higher than 90%, but likely not as high as we're seeing here in 2024. And then as we move into the outer years of that LRP, we would expect that dynamic to normalize as insurance-related accruals and cash payments would be a little bit more balanced. So, longer term we believe that 90% plus adjusted EBITDA conversion target is appropriate.
Great. Thank you both.
Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.
Thanks so much for taking the question. Really just a two-parter. When you think about some of these new partnerships you're announcing with DoorDash and on the supply side with autonomous vehicle companies, I think for DoorDash, how should we think about that driving demand on the rider and ride side in terms of an underlying assumption of what that might contribute to incremental growth? And in terms of autonomous, maybe just refresh us on your view about how adding autonomous supply and partnering across the autonomous vehicle industry landscape might alter some of what you see in terms of the growth prospects and the margin prospects going forward. Thanks so much.
Sure. Let me address both partnerships and autonomous vehicles. I'll start with partnerships. DoorDash is quite interesting, having around 18 million DashPass users globally. While some of these users may also be Lyft customers, the overlap might be smaller than anticipated. You're correct to focus on the top line; it's about acquiring riders in a customer-friendly manner. People tend to ride share when going out and prefer delivery upon returning home. It's early in our partnership development, but we're pleased with initial responses. Riders are engaging, linking accounts, and using our services in ways they might not have otherwise done. Now, regarding autonomous vehicles, I want to zoom out a bit and provide some context. We've recognized AVs as an incredible opportunity; they offer a unique experience, especially noted in cities like San Francisco. However, the current scale is limited and the technology is still costly.
Despite this, we see AVs extending our total addressable market, providing new supply and experiences for our riders. We aim to be the partner of choice for any AV stakeholders, focusing on maximizing asset utilization. These vehicles represent significant investments; they need to be in continuous service to generate revenue, much like planes and restaurants require full occupancy. Let’s break this down into three main areas: first is demand generation. We are one of the leading platforms in North America with 40 million active riders. Second, we excel in marketplace management, supporting 1.4 million drivers annually. This includes onboarding, insurance, payments, and ensuring efficient matching of cars with riders around the clock, despite the complexities involved. The third area is fleet utilization, which involves managing maintenance and the ongoing operational needs of these vehicles.
We’ve invested heavily in this with our Flexdrive subsidiary, which handles the acquisition, leasing, management, and maintenance of tens of thousands of vehicles each year. We are the only rideshare company with such capabilities in-house, achieving an industry-leading utilization rate of about 90%. In summary, AVs represent an exciting opportunity as a new supply source that can complement our driver-operated services. Our existing capabilities allow us to implement them effectively, enhancing profitability for all stakeholders involved. The interplay of these components creates a greater advantage collectively. Erin, would you like to add anything?
No, you nailed it in terms of just – I think there's a lot of great work being done out there about how this will fold over some period of time. The cost of the asset, how the regulatory and insurance environment, etc. But the bottom line, as you just said, is asset utilization is going to be incredibly important for unit economics.
Thanks. Operator, your next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.
Thanks for taking my questions. I have two. The first one on Price Lock, it's a good early signal on adoption and frequency bump. I just wanted to ask you about, can you walk us through sort of the go-to-market strategy you're using on this? Is it available across all markets? Are you rolling it market by market? Are you targeting certain types of users and sort of rolling it that way? Just how do we think about kind of the strategic rollout of that business across the corpus of users is the first one. And then the second one just on autonomous, there's a decent amount of discussion about sort of San Francisco and Waymo, etc. So anything you can tell us about sort of San Francisco trends and sort of what you've seen on San Francisco volumes over the last, call it, three months, six months. Thanks.
Sure. Let me address your questions one at a time. First, regarding Price Lock, it has been launched nationwide, and everyone in the country now has access to it. This feature targets commuters, and our data indicates that roughly half of our daily volume during weekdays consists of commute-related rides, which is significant. It's understandable how frustrating it can be for commuters who wake up each morning to fluctuating ride prices. For example, a passenger I had recently mentioned that she decides to take Lyft based on the price; if it costs $20, she will ride with us, if it's $30, she will consider it but still likely choose us unless another service is cheaper, which is uncommon. If the price hits $40, she'll opt to drive herself, which she dislikes. Interestingly, she was in a good mood when she rode with us on a Friday morning with cupcakes for a birthday, primarily because our pricing was favorable.
This situation highlights the compelling product-market fit for Price Lock, as users appreciate the price stability, especially during those crucial morning hours. Additionally, besides generating four extra rides, this feature also offers drivers a sense of reliability, which aids in backend operations and enhances marketplace management. We observe that users who enroll in Price Lock typically renew their subscriptions, indicating low churn rates. While it's still early days—just a couple of months into the rollout—we are encouraged by the trends we see. We plan to further promote Price Lock, as users tend to stay subscribed and increase their ride frequency, which is a positive sign overall. Therefore, expect more developments from us as we continue to scale. Regarding autonomous vehicles in San Francisco, we are closely monitoring the situation. There are numerous Waymo vehicles on the streets, and Zoox has recently announced its impending presence in the city.
We view these companies more as collaborators than competitors. They will conduct research and develop their understanding of customers, which is logical. Our discussions with them center around how we can work together to manage these complex assets regarding maintenance and operational logistics. Lastly, I've noticed that the presence of autonomous vehicles includes significant parking needs, which can be costly. It's fascinating to observe the current limited-scale experimentation in this space. However, as these companies expand their operations from a few vehicles to potentially thousands, they will face different challenges. We are genuinely excited about the opportunity to partner deeply with them and assist in addressing these challenges.
Great. Thank you.
Your next question comes from the line of Ken Gawrelski with Wells Fargo. Please go ahead.
Thank you very much. I have two questions, if I may. The first is more detailed regarding insurance. I appreciate the guidance on the $50 million increase in costs on the revenue side. Are there any other differences in the cost of revenue line that we should consider moving from the third quarter to the fourth quarter, aside from the usual factors and insurance? My second question is broader; as you look ahead to next year in the domestic rideshare market, how are you approaching pricing? I am specifically curious about how the potential decrease in prime time might be countered by surge pricing, rider incentives, and initiatives like Price Lock. Should we expect any benefits from the decrease in prime time to be balanced out by these other strategies, or how should we view your overall pricing strategy for the upcoming year? Thank you.
Hi, Ken. So on the cost of revenues side, the answer to your question is no, there's nothing other of significance or that you should be considering in that line in terms of the changes I outlined from Q3 to Q4. With respect to pricing, let me kind of start, and I'll hover up just a little bit. Our goal is to operate in a healthy and competitive way. We've talked about that previously, right? Pricing competitive to the market. There's no change to that. No reason to think that there would be any change to that as you think about the future. I think another level set is the price of rider experiences is a combination of many, many factors. That includes mode mix, it includes a distance, it can also obviously include prime time depending on the supply conditions, a certain geography at a certain time. And so our job, and I think our results speak for themselves, we've been doing this really well, is to bring value to riders.
And that means having a selection of modes that are going to meet use cases that are important. It means providing reliable pricing. We've talked a bit about Price Lock and then obviously prime time coming down is really, really beneficial to that. So those are some of the foundational, if you will, theses as I think we would ask you to think about pricing. I won't talk about 2025 because I think it's, I don't have anything specific to say there. Maybe offering a little bit of color as you think about the third quarter, our gross bookings per ride was down Q-on-Q compared to what we saw in the second quarter. And that is influenced by prime time continuing to come down, as we've mentioned. But also seasonally, Q3 tends to be the highest quarter for bikes and scooters, right? Weather related. So that's a pretty natural place for our gross bookings per ride to be lower. Q4, that seasonal mix shifts a bit, right?
Q4 and Q1 in bikes and scooters. So all else being equal, it's fair to assume that that gross booking per ride would increase primarily driven by the change of mix. But, hopefully that gives you some beneficial color on just how we think about pricing overall and some of the maybe more near-term dynamics.
Thank you so much.
Your next question comes from the line of Benjamin Black with Deutsche Bank. Please go ahead.
Great. Thank you for taking the questions. So, Erin, I guess contra revenue and consumer incentives, they were down 17% year-on-year. Can you just help us understand what the drivers of the outperformance were and how should those trend as we look ahead? And then I guess it's either for David or Erin, but can you just touch on the returns you are seeing on your consumer incentive investments? Are you generally seeing growing competition for active riders in the U.S. and Canada? And how should we think about the durability of the current active rider growth? Thank you.
Yeah, sure. Thanks for the question. So as a reminder, when we think about the deployment of incentives, it's really aligned with our broader strategy as a company. We make those investment trade-offs to keep the marketplace balanced, incredibly important. I'll also remind you that in 2024, we're running ahead of our Investor Day targets for 10% efficiencies on a combined basis. And at the same time, we've made really, really strong progress. David mentioned this in his prepared remarks, focusing on drivers, innovations like earnings commitment or recent fall release that was just full of features that drivers love and thus attracts more drivers to our platform. And this allows us to invest. So, you mentioned what are we seeing? I think if you look at our strong progress, we've been talking about it now pretty much consistently each quarter in 2024, growing active riders, the growth in frequency, riders taking more rides on the Lyft platform, coming to the platform and having a really, really good experience.
So those are some of the results for the year and sort of foundations about how we think about it. Just to give you the specific data, because I know some of you get curious about this, that total incentive spend and contra revenue and sales and marketing was about $274 million in the third quarter. That's about 6.7% of gross bookings and that's down sequentially from about 7% in the second quarter and is also in the third quarter really the lowest mark as a percentage of gross bookings in the last six quarters. So, absolutely driving efficiency there and as we continue to build on the great momentum we've seen with drivers, it allows us to invest. So, you asked a little bit about maybe how we think about investing, etc., and what we're seeing in terms of outcomes. I'll do the how first, because I think I've already talked about the outcomes in terms of growth in riders and frequency, etc. But we monitor that impact as we make those investments, whether it's a particular initiative around incremental rides or new riders or retention rates.
It really depends on the nature of the incentive. But we monitor the efficiency of that incentive deployment. And we've been really leaning in because we're seeing great efficiency and really good outcomes in the way that those are deployed. So hopefully that's helpful.
Your next question comes from the line of Shweta Khajuria with Wolfe Research. Please go ahead.
Thank you for taking my questions. Could you discuss consumer sentiment during the quarter? There have been mixed data points, but what can you share about the resilience of consumer spending and any specific drivers you're noticing? Additionally, I would like your thoughts on your take rate and revenue margin in the near to midterm as you consider its trajectory, particularly as we look ahead to next year. Thank you very much.
Yeah, hey, Shweta, it's David. I'll start with the first question and Erin can address the second one. We're encouraged by the current consumer sentiment. We're closely analyzing the data to identify any unusual trends. A couple of key points stand out. First, our major use cases are increasing, which we expected due to the return to office and initiatives like Price Lock. Interestingly, our second biggest area is "party time," which has also seen a notable increase, particularly on Friday and Saturday nights. For example, our data on Halloween this year has been outstanding compared to last year, showing significant growth. This suggests that spending on discretionary activities, like Halloween celebrations and using our service, is strong, indicating that what we're doing resonates with customers and that we're positioned well price-wise. As Erin mentioned earlier regarding pricing, we recognize that being a large consumer brand requires a focus on value.
It's important to acknowledge that while many are doing well, there are others who are struggling. We're mindful of this and continue to enhance our offerings, such as our savings mode. I also want to highlight our bike service, as it plays a vital role in many people's daily routines, providing around 250,000 rides daily at peak times at a low cost per ride. Overall, we observe strength across our services without significant concerns. So in summary, we’re not encountering major issues, and this insight should provide you with a better understanding of our perspective.
Yeah. And, Shweta, on your question on revenue margins. So, the revenue margin trends that we've seen in 2024, and it's absolutely true for Q3 as well, reflect the efficiency that I was mentioning a few questions ago in terms of overall incentive spend and the strong progress that we're seeing there. But also, I would remind you in particular in the third quarter, there is a mix impact on the revenue margin from our bikes and scooters business. So different from our rideshare business, the bikes and scooters flow through pretty much one-to-one from gross bookings to revenue. So in the quarters where we've got more volume, that's going to have a larger impact. And so, for example, in the third quarter, that was about 2.5 points attributed to the mix of the bikes and scooters mode. So hopefully that gives you some additional color.
Sure.
Your next question comes from the line of John Blackledge. Please go ahead.
Great. Thanks. Two questions. Any further color on how the Canada business performed in the third quarter, and then discuss the continued expansion in Canada? And then secondly, on Lyft Media, if you can give maybe some color on the revenue run rate trend in 3Q and I think Erin mentioned investing in ad tech, any color there would be helpful. Thank you.
Sure, I'll address both points briefly. In Canada, as we've stated previously, we're on track to double our ride volume year-on-year, which is exciting. Canada is performing exceptionally well, and it’s encouraging to see such strong product-market fit. Toronto has become our sixth largest market, which is a fantastic development compared to last year when it wasn't even in the top 10. We're seeing positive momentum and good product-market fit, and there's more to look forward to. Regarding Lyft Media, we continue to progress toward our goals and are on a solid path for this year's run rate. It's important to note that brands are constantly seeking new ways to reach their customers. When I think about marketing evolution, from pamphlets in the late 1800s to billboards, radio, and television, the current shift is amplified by the online nature of engagement and the value of first-party data.
We gather significant first-party data from our riders, who share their journey details with us — where they start, where they’re headed, and their intentions. This data allows us to create personalized experiences for our riders, who typically spend around 17 minutes in the car and check their app several times during the ride. This presents substantial media opportunities for us. As always, we're still in the early stages, focusing on establishing measurable outcomes, which is crucial for marketers. We're excited about our progress, particularly with the new video ad unit, and you might notice an ad or movie trailer when using the Lyft app. Overall, we're pleased with our trajectory and look forward to realizing the targets we’ve set for this year's exit run rate.
Thank you.
Your next question comes from the line of Mark Mahaney with Evercore ISI. Please go ahead.
Hi, this is David on for Mark. I wanted to follow up with an AV question. You talked about AVs as a TAM expander. I'm just wondering, are there any specific use cases where you think riders might prefer an AV ride over a regular ride and any early signals from what you're seeing competitively in San Francisco that might inform that?
It's probably too early for us to have real insights on that. We've provided around 130,000 rides, mainly in Las Vegas, so we have some understanding from that experience, although Las Vegas is a unique case. We're closely monitoring what's happening on the ground in cities like San Francisco, Phoenix, and Texas. Currently, I wouldn't say we've observed anything significant to report. There are several factors at play, including novelty and tourism, which is a big factor in San Francisco. For instance, a team member mentioned their parents took an AV ride while visiting. The novelty of tourism likely overshadows other factors right now. Additionally, the experience is very curated at the moment, especially in San Francisco, where we're using high-end vehicles like Jaguars. The future AV experience will be quite different with a variety of models and makes. Overall, we're in a learning phase, and while we're excited about the partnerships we've recently announced — particularly May Mobility in Atlanta next year with Toyota Siennas — we can't draw any strong conclusions just yet due to the novelty of the situation.
Got it. Thank you, David.
Your next question comes from the line of Steven Choi with UBS. Please go ahead.
Okay, great. Thank you so much. So, David, I think the default thought process right now is that Lyft will be an asset light partner for the fleet owners of AVs, but should we be thinking about you potentially taking a more direct role, either in fleet maintenance or management? Does that come up in discussions with potential new partners at all? And second, as the active rider base gets larger, I mean I would imagine that growth will decelerate, given the large numbers. So in order to get to the longer-term booking targets, you need to drive frequency higher as an offset. So, can you talk about what your latest data is telling you about cohort behavior? Maybe how is your rider's age, the activity picks up meaningfully so that the average usage right now is about three per month, but the gap between the newer cohorts versus older cohorts, any sort of color you can provide there in terms of the overall level of activity as your customers become more used to using you. Thank you.
I’d like to share a few thoughts on this. Erin, feel free to jump in as well. Regarding your point about the AV side, I believe you're correct. We operate our business in an asset-light manner, which is significant. It's worth noting that we have 1.4 million drivers on our platform, each of whom owns their own cars, which greatly benefits us. This arrangement saves us from having to invest a substantial amount of capital. We view this as a core aspect of our model. When it comes to maintenance and service, we don't need to handle that ourselves. Our Flexdrive subsidiary owns a limited number of cars, allowing individuals who may not want to use their own vehicles for rideshare, or who might lack a primary car, to participate. This also serves as valuable research and development, giving us direct exposure to driver experiences through the subsidiary. Moreover, when it comes to service and maintenance, we primarily rely on service level agreements with partners who specialize in repairs and maintenance.
Our software helps ensure these agreements are being fulfilled. For instance, if a catalytic converter needs replacing, we know the associated costs and timeframes, and we have gathered extensive data over the years. Thus, we can meticulously track and ensure that such tasks are performed according to specifications and within agreed timelines. Our focus is mainly on management rather than operations, which is why we refer to it as fleet management. We are not involved in building or purchasing vehicles in the traditional sense. We definitely maintain an asset-light approach, but the network and fleet management capabilities we've developed are crucial. I got sidetracked with that topic and forgot to address your other question.
User growth versus frequency growth, yeah.
Certainly. When we discussed this at Investor Day, we view it as a balance between attracting new riders and increasing ride frequency. We take pride in our 800 million rides a year, which averages about 2 million daily, and we are growing steadily. However, this is quite small compared to the 160 billion rides taken in personal vehicles annually in the United States. Our current share of the market is minimal when considering how often people drive compared to how often they use rideshare services. Even accounting for competitors, our penetration is still low. We are focused on encouraging existing riders to use our services more frequently, primarily by providing excellent service, which we believe is the most effective strategy. Our commitment to customer satisfaction is aimed at making people want to return.
Thank you.
And that's all the time we have for questions today. And now I would like to turn the call back to David Risher, CEO, for closing remarks.
Thank you very much, everyone. Look, I know everyone's busy, particularly today. There's a lot going on in the world, but we're super excited about what we've achieved, but also really what lies ahead and are looking forward to connecting with our investor community. I have a little bit of news here. We'll be out in LA, New York, London, San Francisco over the next few weeks and we actually plan to further ramp up our outreach in 2025. So please do reach out if you'd like to connect with any of us. We look forward to talking to you. Thanks for your interest and your curiosity, everything you do to help us be as good as we possibly can. And we will connect with you another time. Thank you.
This concludes today's conference call. Thank you for your participation, and you may now disconnect.