Lyft (LYFT) Q3 2026 Earnings Call Transcript

So let's take Lyft Go, which we announced earlier today. We built it to be the best membership program for the industry. Remember that old Lyft -- excuse me, the Reese's peanut butter commercial, peanut butter cup commercial, 2 great tastes that go great together. That's Lyft Go, which includes DashPass membership. It gives you an industry-leading 8% backing credit to use on the best rideshare platform on the best delivery platform. Look, if you have DashPass, you've already got Lyft Go, just link your accounts. And if you don't sign up for a free trial in the Lyft or DoorDash app, and let me know what you think.

So this engine we have built keeps getting stronger, and it's fueling our transformation. Lyft is growing, and I want you to think about this, up, out, and forward as we become a global AV-ready mobility platform. So up means providing better premium modes, more business-to-business services and luxury chauffeur under our new Alcove brand, all of which will continue to strengthen our margins. [indiscernible] by leveraging our expertise, technology and infrastructure, we're going to grow into our expanded TAM and strengthen our global chauffeur offers significantly. And forward, as we build the best hybrid network and become the best partner to commercialize AV, we are going to reset our industry and our place within it.

So that's where we're headed, global AV-ready mobility platform. We are very confident in the drivers we have to grow this business, and we are proud of the progress we've made. Before I hand it off, I'd like to introduce our new CFO, Michael Brous. This may be his first earnings call as CFO, but he is not new to Lyft. He has spent about 8 years in senior roles, including on my team here and has been an incredible operator across a complex international business. I have found that's what makes for the best CFOs, those who understand both their financial world as well as operations.

I'm super excited to partner with him as we execute on our next transformative phase of growth. Brous, over to you.

Michael Brous:Thanks, David. Really excited to partner with you as well. Before I begin, I just want to thank Erin for her leadership and partnership for setting Lyft up so well for this next chapter. As David mentioned, I've been at Lyft for nearly 8 years, the last 3 on the leadership team helping shape the strategy David just described. You should expect continuity, not a reset. What I want to share today is how I think about running the business financially because it follows the same logic as the strategy itself. Execution in the core is the fuel, operational rigor turns that fuel into capital and disciplined allocation puts that capital to work towards our future, up, out, and forward.

First, the core is the fuel. The third quarter was another proof point. Gross bookings grew 17% year-over-year to $5.6 billion. Adjusted EBITDA grew 47% year-over-year to $204 million, with margin expanding to 3.6% of gross bookings, our most profitable quarter-to-date on a non-GAAP basis. North American rides growth accelerated again with momentum in both the U.S. and Canada, and we delivered our fifth consecutive quarter of more than $1 billion in trailing 12-month free cash flow. Three years ago, that number was negative $248 million. That swing is what funds everything else and protecting and compounding it is my first job.

Second, the operational rigor and cost discipline that we demonstrate are what frees up capital to invest in our future. I'm an operator by background. At Lyft Urban Solutions, we ran an international asset-heavy business and the lesson was simple: the economics are won and loss on a handful of operating levers, fleet availability, asset utilization, unit cost efficiency, and you manage those relentlessly. During my time as Head of [indiscernible], team scaled e-bikes and improved those operating drivers. This led to double-digit rides growth, strong margins, and cash flow for the total business.

We saw this kind of discipline in our results this quarter as well with total company cost of revenue declining year-over-year as we continue to bend the insurance cost curve. Every dollar of efficiency we generate is a dollar we can reinvest or return to shareholders. As CFO, I'll hold every part of the business, including our newest ones to the same standard of operational excellence. Third, we allocate capital deliberately towards the future. Our capital allocation framework is unchanged, maintain ample liquidity and a strong balance sheet, prioritize investing in profitable growth and return capital to shareholders.

That framework has served us well, and I'll continue to apply it with the same discipline now across a much broader range of opportunities than we've ever had before. You can already see this in practice. We acquired TBR a year ago for its service standard, and now we're building on it with Alcove rather than starting from scratch. Within our out strategy, FREENOW made Lyft a global company. We set out to grow into our expanded TAM with Q3 Active Riders, rides and gross bookings in Europe all increasing year-over-year. And forward, in Nashville, where we're building a best-in-class AV operation that pairs end-to-end seat management with a hybrid marketplace.

We've made tremendous progress to date, which is why we expect to significantly grow the fleet we service by year-end. The scale here really follows the proof. And on shareholder returns, we repurchased approximately $50 million in shares in Q3 and expect that to be about $500 million for the full year, consistent with what we said all year. Put simply, this is a business that's generating more than $1 billion of cash, a team that knows how to make that engine more efficient and a disciplined process for deploying what it produces to deliver value for our customers and our shareholders. That's how we'll build Lyft up, out, and forward from a position of strength.

And with that, we'll take your questions.

Francesca Ford-Filandro: [Operator Instructions] Our first question comes from Eric Sheridan with Goldman Sachs.

Eric Sheridan:Thanks so much for taking the question and for all the details in the materials so far around earnings. I wanted to come back to Lyft Go and maybe ask a 2-part question. First, in terms of implementing something like this, how are you going to be measuring what success is of this kind of partnership? Is it about driving more frequency or elements of bringing new riders into the platform? Just help us understand a little bit about what you're going to be monitoring to make sure that this achieves its goals? And then the second question would be, is there any way to better understand some of the unit economics of the partnership between yourself and DoorDash?

John Risher:Eric, it's David. Let's, we'll -- Brous our first tag team on this. So thanks for your question. First of all, I got to say we are super excited about Lyft Go. As a reminder to those of you who maybe are newer, we've been partnered with DoorDash for just over 2 years now, about 2 years and 3 days. And the partnership has been remarkable. It's been one of our most productive partnerships, both in terms of new customer acquisition and in particular, driving frequency. But it had its limits.

And so we kind of put our heads together over the last 6 or at least months and tried to come up with a construct that we think is even stronger, this 8% cash back that you can spend on either with DoorDash included. And again, just to say it, if you have a DashPass, you've already got Lyft Go, you just have to link your accounts. Okay. So all that's great. So the question you're asking is how are we going to measure success? And in a sense, it's very simple. We're going to look at new customer acquisition, of course, and we're going to look at frequency.

But the nice thing is we're going to do it in a framework that we've spent years and years developing. So as you know, I mean, we deploy rider incentives all day long, and Brous will talk a little bit more about this. But we look at this as potentially what we hope will be a more efficient way over time to attract and retain customers than we even have today. And we've been developing those tools. The bar is high, right? We've been developing those tools quarter after quarter, year after year, but that's really what it's all about. I'll say one more tiny thing. In the case -- maybe break it down just a tiny bit more.

First thing you got to do is you got to link, right? You got to kind of sign up for the program. I hope I'm not speaking out of school here. We've literally seen hundreds of thousands of people already. That's a good leading indicator that the program has product market fit. And then we're going to look at usage. We're going to look at the economics of it. And hopefully, it's going to drive our business exactly the way we wanted to. And of course, for DoorDash, we hope it will help them retain their customers and increase the value of DashPass. Brous?

Michael Brous:Just building on what David mentioned, so any of the near-term sort of economic impact is reflected in our Q4 guide. But more broadly, we just view this as another tool in our toolbox to drive durable long-term growth in the business. We spent the last couple of years building out an incredible kit. Rider incentives, as David mentioned, has been a really, really efficient way in order for us to drive growth. And as we've really fine-tuned and perfected that, this is kind of the next evolution, we feel like we're ready to really hit the gas on the pedal here and drive it going forward.

So yes, just one of many things that we're going to do to drive durable growth into the future.

Francesca Ford-Filandro:Our next question comes from Brad Erickson with RBC Capital Markets.

Bradley Erickson:So I had a couple on the cost side of the equation on S&M being up a fair bit. So 2 questions there. One, just where is that spend going maybe between North American business versus some of the other kind of newer initiatives or geos that you're in? And then second, are these kind of new levels of rider incentives we're seeing generally consistent with kind of reaching the margin targets as we think about a little longer term? Or is this something that can maybe more show some moderation over time?

Michael Brous:Yes. Great question. So first, maybe just zooming out for a second. We really try to manage this business optimizing for long-term bookings growth and adjusted EBITDA margin. And all of the investments that we make here are in support of those 2 goals. Incentives, as we just previously talked about, are one of the many levers we pull in support of those 2 metrics. And we're pulling this lever really right now because it's never been more efficient. We've been able to do this. You see this in the financials in Q3.

We've been able to generate significant leverage in cost of revenue as we really focused on bending the insurance cost curve here and sort of given us a lot of capacity to invest, again, in a lever that's been super efficient. So right now, we're really happy with the results. And as we just previously discussed around Lyft Go, this is going to be a new piece for us going forward as well as we think about the overall equation. In terms of the margin targets, again, we're focused on making investments in support of long-term bookings growth and adjusted EBITDA margin expansion.

So we view this -- we've been able to do this effectively this quarter, and we expect to do that going forward as well.

John Risher:And Brad, I actually want to add on to something here because I think it's maybe kind of a foundational point. Incentives work best -- 2 ways to think about incentives [indiscernible]. So incentives have to be efficient, right? We know that. But they also work best when your marketplace is strong, right? So if you have very fast ETAs -- if you have very slow ETAs, let's take the counter factor, very slow ETAs or very high prices or sort of inconsistent service or all sorts of things, and you're sort of -- you're band-aiding over a problem.

But if you've got those things nailed and we have those things nailed, I mean we were picking people up faster than we have ever picked them up before. We -- there are markets where we are picking people up 4 or 5, even 6 minutes faster than our big competitors. It's pretty extraordinary payback for quarter after quarter of customer session. So that's to Brous' point, when you then see yourself having an opportunity on insurance to sort of redeploy some of that incentives, you say, now is the moment, particularly if incentives are very efficient.

Francesca Ford-Filandro:Our next question comes from John Blackledge with TD Cowen.

John Blackledge:Just wanted to ask about the rides. If you can talk about the 3Q rides growth and the key drivers of the North America acceleration and maybe how we should think about rides growth trending in 4Q? And any color on 2027 rides volume?

Michael Brous:Yes. John, great to meet you. Thanks for the question. So just to reiterate what we talked about here, record rides growth in the third quarter. We grew 10% year-over-year, 273.5 million, and we saw strength across the board. In North America, first, accelerating rides growth for the second straight quarter with growth accelerating in both the U.S. and Canada in Q3. It'd be a major failure if I didn't talk about our bike sharing business here, having run it for the last couple of years, we had a record-breaking quarter as we continue to expand our e-bike footprint and operating them with excellence.

And last, in Europe, for now, we grew on an organic basis, bookings, Active Riders and rides for the period, and we delivered in line with our expectations in a seasonally impacted quarter. So geographically, strength across the board. When you really start to unpack the success in the third quarter, many drivers, not just one thing that's contributing. As David just talked about, our marketplace has never been healthier, record driver hours, supplied faster ETAs, which contributed all-time high Active Riders.

And we're continuing to deepen our penetration in our partnership portfolio while driving frequency in that rider base, led to record partnership rides for the quarter and our customer obsessed products that continue to deliver and improve like Lyft Teen, Lyft Silver, et cetera, are delivering in line with expectations. So this is not just a one-part story here for the quarter. Lots of things, I think, really clicking for us right now, and that's what really driving these record results for the company.

Francesca Ford-Filandro:Our next question comes from Nikhil Devnani with Bernstein.

Nikhil Devnani:I appreciate the call out on San Francisco growth. I think the other AV market everyone is focused on right now is Austin and Texas more broadly, given Tesla's expansion into the region. Anything you can share on the impact? Or are you seeing continued signs of incrementality here? Just early signals would be really helpful. And then, David, as you think about your general strategy on commercializing AVs, is the playbook still to go deep with select partners? Or do you see room to start expanding the portfolio of AV companies you're working with?

John Risher:Nikhil, it's David. Yes, let's -- maybe I'll kind of tag team on this a little bit as well. Do you want to go first Mr. Brous?

Michael Brous:I think you can start.

John Risher:Okay. Cool. Awesome. Okay. So the first question was about market share and then you asked specifically about Austin. The second one, maybe more generally about the partnership strategy. Cool. Okay. So you probably won't say too much about any particular market. AV, of course, as you know, as you just said, Austin is getting some press. But still, we're talking about fairly small numbers in the grand scheme of things. So no material impact there. I think the bigger thing, and maybe this is, of course, what you're getting at is what we continue to see is that in the markets, the ODDs where we see AVs across the board, Lyft is actually growing. It is actually growing.

And that's really important because it kind of underscores the thesis we've had that AVs are going to be incremental to your exact point. And again, I know I've said this before, but it's kind of easy to understand why. There are product people like. Once they get in them, they sort of find after initial hesitation, people find them -- they feel safe, they feel very private and so on and so forth. And so they sort of open people's minds to what rideshare can do.

But then sort of unsurprisingly, sometimes because the fleets tend to be fairly small and spread out, the ETA is a little bit slow, and so they switch back to a lift or maybe someone else's car. So anyway, we're seeing -- continuing to see that and Austin is no exception to that. About that partnership strategy, yes, no, I would say we're very consistent on this. We're looking for a small number of partners to go deep on. Baidu and Waymo are the 2 that we're the most focused on right now. There will be others for sure.

If you don't mind, maybe I'll spend a minute just talking about the nature of that, the Waymo partnership, in particular in Nashville. I'm sure if you hadn't asked it, someone else would, so I'll just kind of jump into it for a second and talk about the depth of it. It has 2 parts. It's got a sort of fleet management side and then it has a marketplace supply chain side. I think what's so interesting about it is when you put these together, you get a [ whole ] which is greater than sum of the parts. And I think you can think about it this way.

Imagine a car out on the road and all of a sudden, it needs to come in for service. It could be an alignment service, battery is running low, it could be a sensor cleaning, whatever it is. Okay, that's just another ride. That's just another ride. And so if you have a healthy marketplace and you have a marketplace machinery that works well 24/7, 7 days a week at huge scale, you just send effectively a ride request to that and you bring the car in at exactly the time when your tech is ready, when your system is ready, when your charging capability is the best, electricity is the cheapest.

I'm not saying we do this all day, every day yet, but this is what we're building to. Now the early indications in Nashville are super, super good. So on the fleet management side, we're operating this 80,000 square foot facility, which we opened about a month ago. It's going super well. We've got very, very good feedback from our partner. We're learning a ton, of course, still very early days, but off to a very, very good start there.

And what a good start means is we need to keep the availability of those cars high, that means because on the other side, you have to be able to match demand and a car sitting around, not ready to go or a car not getting demand is not making any money. And maybe the last thing, very quickly I'll say there is we're increasing the fleet size in Nashville fairly significantly just through between now and the end of the year. So you put all those together, and you can probably understand 2 things. Number one, things are going well. That's good. But number two, that's a deep partnership.

You don't do that with 20 different partners because that's a lot of integration back and forth on many, many different. Our Baidu partnership is -- the particular is a little different in London. I can get into that if we're interested, but maybe that gives you a sense of why our strategy is to go deep with folks. The last thing I'll say, we're a partnership-driven company. Over 30% of our rides are tagged to partners. Obviously, we just reopened this DoorDash partnership and deepen that. I think that also gives you a sense that -- and that's one we've built on for a couple of years.

It gives you a sense that when we find a partner we like, we tend to go pretty deep. Brous, anything you want to add or?

Michael Brous:Nothing to add.

Francesca Ford-Filandro:Excuse me. Our next question comes from Michael Morton with MoffettNathanson.

Michael Morton:I wanted to follow up on the discussion a little bit earlier about rides growth. I think in the letter, you talked about specifically an acceleration in U.S. rides in the fourth quarter. And Michael had specifically called out bikes being a big contributor in the third quarter. So just if you could decompose the acceleration for us because, David, as you like to say, like that growth rate is outperforming the other guys. So kind of just like what the levers are moving that? And then if I could sneak in another quick one. Just you've got a lot of insurance savings this year, and you've been able to get margin expansion while you invest more in incentives.

In the letter, you talked about insurance renewal kind of growing moderately. So how do you think about marrying that now in '27 where you might not have a significant insurance savings?

Michael Brous:So maybe I'll start with insurance first. We just went through our 10/1 renewal, incredibly pleased with the outcome that the team was able to deliver. It's probably a year-long process. I think I saw the team getting ready for the 2027 renewal at this point. And -- but this is one of many pieces of a multi-year strategy that we're focused on to bend this major cost curve. So yes, the renewal itself, very modest growth impact quarter-on-quarter. We expect it to be well below the industry average. But there are other major things that are helping us get leverage here. So policy reform, we've talked about a lot previously with California.

But there are product initiatives and innovation where we're trying to drive better safety outcomes on the platform that leads to better insurance cost outcomes as well. So while the renewal this year was favorable, while we've been able to see favorable development in policy reform, this is not just going to be a onetime thing, and we have teams of people focused on continuing to bend this curve, and we expect continued leverage here into the future. To your first question on rides and unpacking the acceleration. So just to reiterate this. So in North America, we saw accelerated growth in the second straight quarter. We actually expect the third straight acceleration in Q4.

And we did see growth across -- accelerated growth across U.S. and Canada. Canada rides more than doubled in the quarter, incredible strength there as we continue to further penetrate the country. Toronto now is one of our largest markets in the portfolio, actually. So really happy with the success that we're seeing there. And then in the U.S., also kind of strength across the board in our top markets, we saw improvements quarter-on-quarter. Low-scale markets, which has been a very deliberate strategy of ours to really grow those markets, double-digit growth again for another quarter. And then in places like California with insurance reform, we've talked about change in consumer behavior over time.

And in the third quarter, we actually saw from a consumer perspective, higher rides growth than the average. So when I look across the portfolio, we kind of see strength everywhere. I'm really happy with the investments that we're making and the innovation that we're making on the product side, our partnership portfolio, it's all kind of coming to fruition and what we've seen for the quarter, which, again, was a record in terms of rides.

Francesca Ford-Filandro:Your next question will come from Chad Larkin with Oppenheimer.

Charles Larkin:Maybe could you just -- as we kind of wrap up the year here and start looking at 2027, can we talk about the growth drivers for gross bookings? And I know you kind of hit on rides a little bit already, but between North America, the acceleration you're seeing now, how that continues into '27 between investments in premiums, bars markets, partners, insurance pass-through savings. Anything else you can add to that?

Michael Brous:Yes. Thanks for the question, Chad. So look, yes, foundation, incredibly strong right now. Again, we sort of saw that in the third quarter with all the records that we hit kind of across the board. Q4 guide, we feel really good about in terms of where gross bookings is going and year-on-year margin expansion from an adjusted EBITDA perspective. And then I think we're really well-positioned with some of our focus areas, in our up, out, and forward strategy.

So premium, in the premium segment, you called out, TBR, which has been sort of a foundational piece of our premium offering, combining that with a best-in-class technology solution, forming Alcove, really excited about what we think that's going to be able to deliver in '27. Lyft Go is going to be a real cornerstone for growth as well in 2027. Again, David mentioned this earlier, the results so far today alone have just been absolutely incredible. International, which in our out strategy, we're still really in the early innings of right now. It's been a year since the FREENOW acquisition. Again, Q3 organic growth on bookings, Active Riders and rides.

The teams have been integrated, so we're able to actually deliver some of these outcomes more -- much more efficiently. From a technology perspective, now, we have a roaming feature now where if you're a U.S. Lyft customer and you land in Europe, you can hail a ride through the Lyft app. But we're sort of mid-innings here from an integration perspective. So we have -- we see a lot more opportunity as we bring these teams and these technology stacks a lot closer together. And then you have AVs, obviously, David talked about the Waymo partnership earlier, incredible proof points really early on.

We're really focused on the details right now because the scale is so small, but I think it speaks volumes that Waymo is expanding the service area before the end of the year. We're bringing significantly more fleet to the market, and we're finally going to be able to get to the airport as well pretty soon there. So a lot of really good proof points here at the end of 2026 to get us really excited about '27 and our ability to continue on this journey.

Francesca Ford-Filandro:Our next question comes from Shweta Khajuria with Wolfe Research.

Shweta Khajuria:The first one is, could you please talk to how the competitive landscape has evolved as you've seen some sort of share shifts through the quarter? How do you see that evolve by -- between now and year-end? I ask because there is a lot of chatter around perhaps you guys being a bit more aggressive in the market, potentially gaining share, and there is this question around durability on that. So if you could please talk to that, that would be great. And then the second question I have is around fuel prices. Did you -- are you seeing any impact from elevated fuel prices at all? And did you see that in Q3?

John Risher:Shweta, it's David. I'll take a stab at both of those. I think -- well, maybe I'll start this way. I think it's -- consumer behavior actually takes a while to shift. And so I think -- of course, you can see sometimes short-term things happen. A competitor might do something and get super aggressive one way or the other. But I'd say, in general, a lot of the strength comes from a real resilience we've built into this platform and the strength of the team and the strength of technology.

And so when you see acceleration and maybe some share shifts and so forth, it's not -- it's tempting to sort of look at things that happened in quarter, but I think it's probably more explanatory to look at things that have been happening over years. And again, our customer obsession, I think, is really paying off. I'll give you maybe one example that I think tells the story. If you look at our driver hours right now, they are at all-time highs, all-time highs. And that's not something that you sort of get to do overnight. It's something that takes years and years to develop. It's a relationship.

It's the fee cap we've put in place that limits the fee that Lyft takes from drivers' bookings over the course of a week. It's the loyalty program that we have. To maybe touch on your fuel point for a second, we established a really strong fuel rebate program, which I think if you combine with other program this year, saved us about, I think, $20 million, something like this, save drivers about $20 million, largely co-funded by the way, by partners. So those are things that you do month after month, day after day and so forth, and that pay off over time.

So I think this is really more -- I think this is -- I think the shift you're seeing, and I do think there's a shift, we see it as well, I think, as a result of a long-term effort. Maybe one last data point. Halloween is typically the biggest year -- biggest day of the year. We prepared for it obsessively. We set records in terms of number of ride requests per minute, number of rides per day, number of rides the whole prior week.

By the way, we sort of had 2 Halloweens, Friday night and Saturday night, just because of the way the calendar worked, and we were prepared for both, and we didn't have 1 second of downtime. And we had all-time high driver hours and no problem with driver supply. So you look at all those together, that's not a decision that got made in a week or a month. That's a decision that got made over many years, and I think that's kind of it. On the fuel side, kind of the story is the same.

We didn't actually see a huge issue, unlike maybe prior fuel shocks where there has really been an issue, didn't really get in driver's way. We did put in place this driver kind of fuel relief program and then extended it, and that was much appreciated. But we haven't seen a huge impact.

Francesca Ford-Filandro:Our next question comes from Ken Gawrelski with Wells Fargo.

Kenneth Gawrelski:Can you hear me okay?

John Risher:Yes.

Kenneth Gawrelski:Okay. Great. Could you talk a little bit about supply and maybe the balance between driver and rider incentives and how you're seeing that evolve. One of your peers talked about more supply incentives necessary in 4Q and then maybe it -- that might continue into '27. But could you just give us a sense of how you're balancing today between driver and rider incentives? And then maybe the second one is, I'd love to get a little bit more thoughts from you on London. It's setting up to be a kind of a showdown market for -- with multiple AV providers. You're going to have one of those -- you'll be one of those providers.

Just talk to us a little bit about over what period of time we should be -- we should see kind of the full competitive set and what you're looking for?

Michael Brous:Okay. Ken, I'm going to take the first question, and Dave will take the second one. So in terms of the balance between riders and driver incentives, David has sort of talked about a lot around our focus on drivers. And I think this is one of his priorities when he came in and took over as CEO. So we focused on creating durable programs for them like fee cap and driver rewards, et cetera. And as a result of that, on the supply side, things are incredibly healthy. Third quarter, we had all-time high driver hours that led to improvements in ETAs year-over-year and quarter-on-quarter.

So the marketplace was super healthy in a way in order for us to meet the incredible demand that we saw in the quarter. So from an incentive perspective on the driver side, because of the durability of these programs, we're actually getting pretty significant leverage on the -- on our incentive investments. You kind of see this historically and through this quarter where the per ride economics look quite good. So really happy with those results. So a lot of our investment has been on the rider side. This has been a theme. Those investments have been incredibly efficient, and we've been able to invest at that scale in support of the durable top line growth and margin expansion.

John Risher:Yes. Ken, so we'll switch over to AVs in London for a second. So you're absolutely right. It is becoming sort of a kind of an intense market with a lot of activity for AVs. And I think maybe let's first talk about why and then what we see happening and what the future looks like. So the why is kind of simple. I mean, aside from, obviously, some of the world's great cities and has a very sort of intense transportation kind of infrastructure, cabs and so on and so forth. But also, it is relatively more open than the rest of Europe to technology that doesn't just come from the Western world.

So for that reason, of course, you're seeing Waymo there from the United States, but you're also seeing Baidu, who's our partner as well as European AV providers like Wayve and then other Chinese providers even as well. So it's made itself, let's say, available and open. And you can understand why. I think I've mentioned this before, but I mean, Geely actually produces the London cab. So they, some time ago, realized that Chinese tech was probably -- had a place there. Okay. So what are we seeing? So we're working with Baidu. For those of you who don't know, they're sort of the Alphabet of China. the car is called the RT6.

And it is right now in sort of safety driver mode, right? So in fact, I think we did a ride along a couple of weeks ago with the press in London to sort of show the product. It's a great product. It's sort of a custom built. It's their sixth generation kind of custom-built kind of robotaxi. And it's great. And so it's going through kind of safety and validation and so on and so forth this year. Next year, you'll see it, hopefully ,enter into commercial service with us. That's sort of the goal.

I want to say one other thing, which is part of the role we play there, and this is a little bit of aside, but you asked about different things to look at. So of course, we're matching supply and demand, and we're also going to be doing fleet management there. They also have, let's say, relatively fewer capabilities than, for example, Waymo. And so we take on some more of the technical capabilities and so forth. But the other sort of interesting role that we have to play there is a regulatory one. It's very important to regulators that they'd be working with credible partners. This is expensive technology. It's potentially dangerous technology and so forth and so on.

And so -- and by the way, there are privacy concerns for all the obvious reasons. So we actually take on quite a significant role there. I bring this up only because I think it's important to understand this is real work, and this is very early days in the AV space and different partners are going to have different requirements. Our goal is to be the absolute best partner around. And so we sort of try to morph ourselves a little bit to be that partner that the partner needs us to be in different geographies.

Francesca Ford-Filandro:Our next question comes from Youssef Squali with Truist.

Youssef Squali:Maybe just as a follow-up to that question, David. As you think about expanding the AV rollout with partners, can you maybe talk about the investments associated with that, particularly maybe around CapEx around some of these facilities that you may need to open in London? Or any way to kind of quantify that? And then just staying with London, for -- with Europe for a second. Did you guys see any impact from the European unrest going on in October and any impact from the war?

John Risher:On the second, look -- Youssef, let me start with the second and maybe hand to Brous the first. On the second, and Brous, you want me to tee up the first at all.

Michael Brous:No, you can start with the second.

John Risher:I'll start with the second Yes. No, nothing significant. I appreciate your asking. It's something we have our eyes on. Yes, it's very interesting. There are all sorts of different things that impact our business that are maybe a little bit unexpected, let's say international unrest is one. Weather obviously has a big impact as well. But anyway, no, nothing significant. Thank you for asking on that. And then, let's talk about the capital needs for AV.

Michael Brous:Yes. So right now, we're funding all of the AV capital needs off the balance sheet today, relatively immaterial in the context of our broader free cash flow profile. We are, for the fifth consecutive quarter, delivering over $1 billion of trailing 12-month free cash flow. So for right now, we feel comfortable given the scale of what we're doing right now, to fund it off the balance sheet. And over time, as that scale grows, we do expect third-party capital to come in and support the overall build-out. But for right now, given what we're doing, all of that we think we can absorb within the current cash flow profile of the business.

Francesca Ford-Filandro:Our last question comes from John Colantuoni with Jefferies.

Vincent Kardos:This is Vincent Kardos on for John. So with bikes and scooters performing really well in the U.S. and then the ongoing mix shift to higher-value rides and then insurance relief in California driving lower prices on a big chunk of rideshare rides there. Can you just sort of walk us through how we should be thinking about bookings per ride in the U.S. just in terms of the various puts and takes that are sort of coming together there?

Michael Brous:Yes. So to your point -- thanks for the question. So to your point, a lot of puts and takes kind of happening under the scenes from -- seasonally, bikes and scooters will scale down in the fourth quarter, which should be a tailwind from a gross bookings per ride perspective. We have our premium modes as we scale those out will be a tailwind as well. So I'm not going to -- I don't think we're going to be able to give any specific guidance on this going forward, but lots of things happening behind the scenes that are going to support this going forward.

John Risher:Let me -- Brous, I'll add a little bit more. And since I'm not going to answer your question any more precisely, but just to sort of give you a little bit more dynamics even. If you look in Europe, bookings per ride tend to be a little bit larger, right, because the taxi marketplace, let's say -- and I'm going to use these numbers very illustrative, let's say, a $20 ride in the U.S. might be a $25 to $30 ride, so maybe EUR 25 ride in Europe. Canada tends to be a little bit less expensive. Low scale markets to be a little less expensive.

So maybe helping you, if not with the outputs of the model or if not with the exact numbers of the model, you can kind of see those are some of the different components and use your best judgment and best guesses on kind of how those are going to go.

Francesca Ford-Filandro:This concludes the question-and-answer session. We will now turn the call over to David Risher for final remarks.

John Risher:Thank you so much. Thank you, everyone. Really appreciate your interest and your questions. They're super perceptive as always, and appreciate your time, of course. I think you've heard both Brous and me say, we've got a very, very strong core business right now that's performing extremely well, and that gives us the fuel to power ourselves up, out, and forward. So that's what we're going to do. We're going to become the world's best AV-ready mobility platform. That's the goal. Excited for another strong quarter, both Q3 and Q4, and we will see you next time. Thank you all.

Francesca Ford-Filandro:Thank you. You may now disconnect.

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Lyft (LYFT) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool