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Lyft, Inc. (NASDAQ: LYFT) First Quarter 2019 Financial Results Conference Call, May 7, 2019, 5 pm ET
Company participants
Catherine Buan – Vice President Investor Relations
Logan Green – Co-Founder and Chief Executive Officer
John Zimmer – Co-Founder and President
Brian Roberts – Chief Financial Officer
Participants in the teleconference
Stephen Ju – Credit Suisse
Brent Thill – Jefferies
Doug Anmuth – JPMorgan
Mike Olson – Piper Jaffray
Eric Sheridan – UBS
John Blackledge – Cowen
Ron Josey – JMP Securities
Andy Hargreaves – KeyBanc
Michael Graham – Canaccord
Justin Patterson – Raymond James
Tom White – D.A. Davidson
Operator
Good morning ladies and gentlemen, and welcome to Lyft's first quarter 2019 financial results call. At this point, all participants are in listening mode only to avoid background noise. [Operator Instructions] As a reminder, this meeting is being recorded.
I would now like to pass the conference to Catherine Buan, Vice President of Investor Relations. You can start.
Catherine Buan
Thank you. Hello and welcome to Lyft's call for results for the quarter ended March 31, 2019. My name is Catherine Buan, Vice President Investor Relations at Lyft.
Logan Green, co-founder and CEO of Logan Green; Co-Founder and President, John Zimmer; and Brian Roberts, Chief Financial Officer. Logan and John will update our activities and key initiatives. Next, Brian will review our financial results and outlook for the first quarter. This teleconference will be available via webcast on our investor relations website at investor.lyft.com.
I would like to take this opportunity to remind you that during this call, we will make forward-looking statements, including statements regarding the expected performance of our business, future financial results, strategy, partnerships and product and service launches. , long-term growth and future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied in this call. In particular, those described in our risk factors included in our final outlook for our initial public offering filed with the SEC on March 29, 2019 and the risk factors included in our Form 10-Q that will be filed before May 15, 2019. should not rely on our forward-looking statements to predict future events. All forward-looking statements we make on this call are based on assumptions and beliefs as of today and we assume no obligation to update them except as required by applicable law.
Our discussions today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to the results of our GAAP, and not as a substitute or in isolation from them. A reconciliation of GAAP results to non-GAAP results is available in our earnings release and in the additional information provided with our Form 8-K filed today with the SEC. You can also find it on our Investor Relations website at investor.lyft.com. .
I would now like to give the teleconference to Logan Green, co-founder and CEO of Lyft. Logan?
Logan Green
Thank you, Catherine, and thank you all for participating in today's call for results. The Q1 was an incredible start for a great year for Lyft. We achieved a record first quarter with revenues of $ 776 million, representing a growth rate of 95% year-over-year. At the same time, Adjusted EBITDA margins improved significantly, reaching a 28% loss from 60% the previous year, representing an absolute improvement of 32 percentage points over the previous year. ;last year.
With strong and dynamic execution, we are excited about our investments and initiatives this year that will drive future growth. Our momentum was mainly motivated by three factors. The first was the product innovation. Second, market growth. and the third was the strong targeted execution.
The first factor, product innovation, has been highlighted by the deployment of the Lyft Matching Platform. In the first quarter, we deployed a service we have been working on for over a year, called the Lyft Correspondence Platform. This handles each driver / passenger pair on Lyft. The results were significant: better matches resulted in more flights with fewer cancellations, which increased revenues and improved margins.
The real magic is unlocking completely new product experiences like Shared Saver. There is a new, improved version of the shared routes that allows runners to get an even better price by walking a few blocks or waiting a few minutes. For example, if two runners are within two blocks of each other and they are both heading to the same location, Shared Saver would ask them to walk in a block and meet at the same location. corner. This would allow a driver to recover the two riders without making any further detour. Shared Saver is now active in three markets and more will be available soon.
In addition, we have developed high value modes Lux, Lux Black and Lux Black XL, twice as fast as the rest of our business from one year to the next. This is particularly exciting given the higher margin profile of these rides. These are just some of the big wins of the first quarter and we expect to continue to grow in the coming year.
The second factor was the continued growth of the market. The global transportation market as a service continues to grow as more and more users turn to Lyft. The world is at the beginning of a secular shift away from owning a car to turn to transportation as a service and carpool, it's just that the visible part of the iceberg. Transportation as a service replaces the possession of a car by a growing part of the population.
In fact, according to our latest economic impact report, 35% of Lyft users do not own a car. As part of this trend, we have seen active runners grow [ph] $ 20.5 million, up 46% in the first quarter from the previous year. That said, this is just the beginning. Regardless of the size of your market, it represents only a small fraction of the kilometers traveled by vehicles.
And now, I'll let John review the third factor in Lyft's growth, our well-targeted execution.
John Zimmer
Thank you, Logan. I want to highlight three areas of execution that help us grow rapidly on a large scale. First, we focus particularly on transportation. secondly, we invest in our community of drivers; and third, we are successfully executing our business strategy, which we call Lyft Business. It is our focus on consumer transportation that has allowed us to move forward and create competitive advantages throughout the product line.
For example, we have exclusive operating agreements for bikeshare in major cities, as well as exclusive motorcycle program contracts covering several key cities such as New York until 2029, Chicago until 2028, San Francisco until 2027, and Boston until 2026. We begin to bring together the full experience of our customers in transportation.
Just last week, many New Yorkers were given the opportunity to book Lyft's own city bikes directly in the Lyft app, and we will expand access to more users. in New York as well as other markets in the coming weeks. This targeted execution allows us to continue to offer our customers the best unified transport experience.
Then I want to tell you how we invest in our driver community. When you take care of drivers, they offer a better cycling experience. From the first day, we have pioneering innovations and key investments for our community of drivers. First with tips, then with same day pay, and more recently, Express Drive, our flexible vehicle rental program. In the first quarter, we introduced two major new programs, Lyft Direct and Lyft Driver Centers.
Lyft Direct is a no-fee bank account and debit card custom designed for our driver community. Drivers can instantly access their earnings after each ride, in addition to getting a cash back on their daily purchases, including gas and errands, regardless of their credit. In addition, the card includes access to financial planning tools and goal-setting features. Then we opened our first driving centers, offering significant discounts on maintenance, repairs and car wash. This is a great example of how we can use our scale to save drivers money and loyalty at Lyft.
Finally, I would like to talk about Lyft Business, our corporate channel. Our partnership encompasses several categories, including business partnerships for employee travel, health care partnerships for patients to travel to medical appointments, national partnerships with airlines such as Delta, SouthWest and JetBlue, university partnerships for student travel with major universities such as USC and UT Austin. and financial partners such as Mastercard and many others.
In the first quarter, we saw continued growth in all of these categories. Specifically, corporate partnerships for employee travel are growing even faster than less general activities. The quarterly Certify SpendSmart report, which analyzes the latest transactions on business expenses and supplier ratings, has yielded excellent results, providing valuable information on the travel and business management industry.
For the fifth consecutive quarter, Lyft was ranked # 1 in telephone tracking with an average rating of 4.9 stars, based on Certify's five-star rating system. And this has resulted in an important momentum. Since the first quarter of 2017, Lyft has increased its share of employee training expenses from 9% to almost 22%. Lyft is now linked to American Airlines and Delta as the fourth largest supplier to expense by business travelers. This is up from the fourth quarter of the fourth quarter of 2018, which is a further indication of the Lyft dynamic and the corporate space. This momentum with business T & E spending is significant, as it indicates that our brand awareness and preference is growing among many of the country's largest companies. Their decision to choose Lyft is often motivated by alignment with our corporate values of sustainable development and social impact as a key differentiator.
In November, Forbes cited a study of 1,000 Americans. In this document, 87% of consumers will buy a product because a company has advocated for a problem they care about. 88% will be more loyal to a company that supports social or environmental issues, and 92% will be more likely to trust a company that supports social or environmental issues. We are seeing this in many areas of our business. In particular, our corporate network, where corporate social responsibility is a strategic initiative for companies with which we work in partnership.
There is one more thing we are happy to talk about. Today, Waymo has announced that it is working on the deployment of Waymo vehicles on the Lyft platform. We expect this deployment to begin this quarter and reach 10 vehicles in the third quarter, which is an important step in the development of world-class autonomous driving technology and our leading transportation network.
With that, I give Brian the floor for our financial results.
Brian Roberts
Thank you John and good afternoon everyone. The first quarter results demonstrate our solid execution and our desire to generate growth while improving operational leverage. Total revenue for the quarter increased 95% over the previous year to $ 776 million, due to the increase in the number of active runners and revenue generated on our platform per active runner. The number of active quarterly passengers increased 46% year-over-year to a record $ 20.5 million, primarily due to the increased adoption of carpooling and our initiatives to attract and retain passengers. We also believe that the publicity and attention generated by the company's IPO have contributed to the sharp increase in the number of cyclists active quarterly.
While we continue to stimulate the use and monetization of our platform, the quarterly active cyclist turnover has increased by 34% over the previous year, reaching 37, $ 86. Before proceeding, I should note that the non-GAAP income statement measures that follow in my remarks exclude stock-based compensation and related payroll taxes of $ 894 million. Our Restricted Share Unit awards are a time-based vesting condition related to a Liquidity Event. At the inception of our IPO, our issues that previously met the vesting condition based on the vesting date also met the second requirement that immediately triggered the stock-based compensation expense. A reconciliation of GAAP results to non-GAAP results can be found in our earnings release.
Let me move on to the contribution. In the first quarter, the contribution margin reached a record 50%, compared to 35% in the same period last year. This increase in contribution margin can be attributed to strong revenue growth and good utilization of our expenses in the first quarter. These expenses include the insurance required by the STN's regulations, transaction processing and accommodation. the three costs decrease as a percentage of revenue compared to the same period last year as well as the fourth quarter of 2018. The historical change in insurance reserves is excluded from the calculation of the insurance charge of the STN for all periods.
Now let's go to operations and support. Operations and support for the first quarter were $ 133 million, or 17% of revenue, compared to 15% for the same period last year. The percentage increase in revenue comes from investments in motorcycles, scooters and expresses. Just like a data point, if our motorcycle and scooter initiative was excluded from our P & L operations, a percentage of the turnover would have been lower than that of the same period of the same period. last year.
R & D expenses accounted for $ 108 million, or 14% of revenues, compared to 16% over the same period last year. Our investments in R & D translate into essential improvements to our core platform and our autonomous future. The current period includes a $ 14 million repayment from our autonomous development partner. Without this rebate, adjusted R & D would have accounted for 16% of sales, compared to 16% over the same period of the previous year.
As we grow in size and promote brands, we optimize our investments in sales and marketing. In the first quarter, sales and marketing accounted for $ 227 million, or 29% of business revenue, a significant decrease from 42% in the same period of the previous year. and keep in mind that this 13 percentage point improvement was achieved while the company achieved a 95% growth in its business figure compared to the previous year.
Our Adjusted EBITDA for the quarter was $ 216 million compared to a loss of $ 239 million for the same period last year. Adjusted EBITDA margin improved significantly, reaching a loss of 28% from 60% last year, a 32 percentage point improvement over the previous year.
Let's move on to cash balances. We maintain an extremely solid cash position. As of March 31, Lyft had more than $ 1 billion in cash, cash equivalents and unrestricted short-term investments. on a pro forma basis for the net proceeds of $ 2.5 billion from our IPO, which was closed in the first part of April. we have $ 3.5 billion without debt.
So, let's go to the orientation. Let me start with the income. For the second quarter of 2019, we expect revenue to be in the range of $ 800 to $ 810 million, which represents a 58% to 60% growth rate over the previous year. This strong growth is achieved in the light of a difficult problem as we double the price increases generated by the sector as a whole in the second quarter of last year. For FY 2019, we expect revenues to be in the range of $ 3.275 to $ 3.3 billion, an annual growth rate of 52% to 53%.
Now let's move on to the operational leverage. We are delighted with our success, which generated costs in the first quarter. We now believe that the strength and efficiency we achieve in a carpool business will allow us to offset an even larger portion of our strategic initiatives than we expected. Due to the success of the second quarter, we expect the loss in our adjusted EBITDA to be between $ 270 million and $ 280 million.
For the full year, we expect our adjusted EBITDA to be in the range of $ 1.15 to $ 1.175 billion, which includes the impact of the investments we make in motorcycles, scooters and stand-alone centers. We are encouraged by the strength of our core business and clearly see the path to profitability in carpooling. We expect 2019 to be our year of maximum loss, as we will then progress steadily towards profitability on a consolidated basis.
I will now give the floor to Logan for the last word.
Logan Green
D & # 39; agreement. thanks, Brian. To conclude, we had an excellent first quarter and we are excited for another great year. Our results continue to demonstrate the strength of our large-scale platform, the successful implementation of our strategies and the discipline in our financial plan. This is the beginning of our company and our industry, and we are all excited about the innovations and the resulting impact on the market. We are proud of this momentum and even more excited by what awaits us.
Before I go to questions and answers, I would like to tell a little story about why we are so inspired to bring our mission to life. One of our riders is 76 years old and lives alone in New York. She was recently diagnosed with kidney failure and had no family to take her to the many appointments she has every week. His story is not unique. Every year, 3.6 million Americans missed doctor appointments due to lack of transportation means, which has adverse health consequences and a $ 150 billion loss. dollars for improving the health ecosystem. Lyft has partnered with the largest health care systems in the United States to better serve the country's patients, with our health care platform and the incredible community of drivers; patients like this runner are now able to receive the care they need. This is just one of the many impacts that motivate our work.
And now, I would like to ask questions. Operator?
Question and answer session
Operator
Thank you. [Operator Instructions] Our first question comes from the Stephen Ju line of Credit Suisse. Your line is now open.
Stephen Ju
D & # 39; agreement. Thank you guys and congratulations. During the IPO process, one of the frequently asked questions related to the addressable market and how users can use carpooling in general in relation to the choice to own a car. I think you mentioned 45% of Lyft users who do not own a car. So, all you can share about the cohorts of users that you have observed over the years, for which this may have started with this ride to the airport initially, but Lyft becomes a case of Daily use to bring them from work to the office. . And second, how long does it usually take to go from time to time to perhaps every day. Thank you.
John Zimmer
Yes. Thank you. So, that is John. Brian can comment on year-to-year trends in runner frequency. Nothing else to share with the cohorts than to say that to the growing number of users of Lyft, the most recent estimate is 300,000 people who got rid of their car because of Lyft. And so, these are trends that we see continue to increase.
Brian Roberts
Yes. To talk about it at a high level, we – Lyft is much more than a carpool company. And in the United States alone, the consumer transportation market is worth $ 1.2 trillion, and of that $ 1.2 trillion, more than $ 1 trillion is spent on car ownership. And we see this unique opportunity to move this market of more than $ 1 trillion of passenger cars into the world of transportation as a service. And I think that has already been the case in other industries, such as entertainment, or in companies like Spotify, Netflix, or in sectors like the cloud. When you can provide a product as a service instead of asking people to own it, you can often offer a better customer experience at a lower price.
And so this piece is turning for more and more of our runners and our customers. mainly, we see the biggest recovery of this phenomenon and the very dense urban areas today, where a person lives and works in a city. Lyft is often the most convenient and economical choice, especially when you're looking for high insurance rates and high parking costs in a big city. We see people changing their general order and getting rid of their cars. When you look further into the suburbs, you see the trends of families moving from two cars to one car.
And we believe that the range of services we offer continues to expand some of the introductory remarks we talked about about Shared Saver, further lowering the price level. We are also talking about the introduction of bikes and scooters. and there will be more to come. So, while we continue to introduce more products that fit more use cases, I think we'll continue to see an acceleration of this trend toward service over the property.
Logan Green
And just to add a data point, in Lyft's history, we've never experienced a quarterly decline in terms of the number of quarterly active runners. During the last quarter, we grew 46% year-on-year and 10% over the quarter, reaching $ 20.5 million, so growth is very strong.
Stephen Ju
Thank you.
Operator
Thank you. And our next question comes from Brent Thill's line with Jefferies. Your line is now open.
Brent Thill
Good morning, Logan and John, if you could perhaps talk a little more about the Google-Waymo partnership, as far as the targeted approach and the areas in which you plan to go first, it will be great. And for any quick follow-up for Brian, maybe you could talk a little bit about your path to profitability. The investments you make this year have raised many questions. I think you said, you continue to believe that these losses will tend to decrease and if you could provide a little more color, that would be helpful. Thank you.
Logan Green
Awesome.
John Zimmer
For example, in the Waymo partnership, as we mentioned in the second quarter, Waymo and Lyft would launch this new public partnership and their Waymo self-propelled vehicles would be integrated into the Phoenix Lyft platform. So, being in the Phoenix metro area and we expect there will be a dozen vehicles by the end of the third quarter that will serve thousands of passengers in appearance over time. There will be a safety driver in these vehicles. It is therefore the first time that Waymo provides autonomous vehicles to a partner outside of its own service. The way it will work for a passenger however is to be able to book this ride in the Lyft app. and if nearby Waymo vehicles served to serve their origin and destination, they could be paired with that vehicle.
Brian Roberts
So, just to follow up in terms of the question on the path to profitability. We are the first day of a $ 1.2 trillion market opportunity. We have just announced a quarter with revenue growth of 95% from one year to the next. Our main carpool activity today drives our income statement and has a strong trend. We are also investing in stand-alone bikes, scooters and other strategic initiatives because we believe we will strengthen the core business and create long-term shareholder value.
Now, in terms of profitability, our strong results show not only world-class growth, but also our success in controlling costs and margin of contribution from 35% to 50% in the same period of the year. last year. Non-GAAP sales and marketing increased from 42% to 29%. Now, investments in autonomous motorcycles, scooters and driving centers are behind the underlying carpool improvements, but even with these investments the adjusted EBITDA margin has improved. up to 28%, compared with a loss of 60%, an improvement of 32 percentage points. Absolute adjusted EBITDA improved in the first quarter.
We are therefore really encouraged by the strength of our core business and clearly see the path to profitability in terms of carpooling. We have company-wide teams dedicated to initiatives that will help us increase our profitability in the core carpooling sector by changing both cost curves and increasing the efficiency of growth drivers. Enfin, comme je l'ai mentionné dans mes remarques préparées, nous prévoyons que l'année 2019 sera notre année de pertes maximale, à mesure que nous progresserons ensuite progressivement vers la rentabilité sur une base consolidée.
Brent Thill
Thank you.
Opérateur
Thank you. Notre prochaine question vient de Doug Anmuth et JPMorgan. Votre ligne est maintenant ouverte.
Doug Anmuth
Merci d'avoir pris les questions. Je voulais demander à deux. Tout d’abord, vous voyez l’effet de levier et les incitations en pourcentage des revenus des deux dernières années. Il y a eu beaucoup de discussions sur le degré de promotion et d'incitation au 1Q. Pouvez-vous nous donner votre vision de l'environnement actuel des incitations? Comment pensez-vous qu'il se compare aux périodes précédentes? Ensuite, Brian, vous avez parlé de plier les courbes de coûts. Pouvez-vous nous donner plus de détails, en particulier sur l'assurance et sur la manière dont vous pouvez modifier cette courbe des coûts et vous rapprocher de la marge de contribution de 70% envisagée pour le long terme? Merci.
Brian Roberts
Absolument. Alors, laissez-moi commencer par votre première question. Encore une fois, nous avons enregistré une croissance de nos revenus de 95% au premier trimestre, tandis que les ventes et le marketing non conformes aux PCGR, exprimés en pourcentage des produits d’affaires, sont passés de 42% à 29%. Nous sommes extrêmement satisfaits de notre élan. Je veux dire juste pour contexte historique, les ventes et le marketing non conformes aux PCGR représentaient 127% du chiffre d'affaires en 2016, 54% en 2017 et 37% en 2018. Les 29% réalisés au premier trimestre ne sont qu'une preuve supplémentaire de notre succès. dans la promotion des préférences de marque, et l'efficacité des ventes et du marketing. Maintenant, en ce qui concerne votre question sur l’environnement concurrentiel actuel, je dirais que la pression concurrentielle en termes d’incitations aux usagers a récemment diminué. Nous sommes simplement encouragés par le fait que l’industrie va dans la bonne direction et devient de plus en plus rationnelle. Notre stratégie consiste à gagner sur l'expérience et non sur le prix.
Et pour répondre à votre question sur l’assurance, nous avons diverses initiatives pour réduire le coût de l’assurance. Deux facteurs déterminent les coûts d’assurance: la fréquence et la gravité des accidents. Et nous investissons dans la technologie, la science des données et nous ne faisons que modifier les flux de travail pour réduire ces deux facteurs. Vous devrez peut-être m'interrompre, car je suis très excité lorsque je parle d'assurance. Mais nous pensons que les initiatives liées à l’assurance peuvent générer un retour sur investissement très élevé et je ne citerai que trois exemples rapides. Nous investissons dans la télématique pour pouvoir surveiller le comportement des conducteurs et évaluer la vitesse ou le chagrin. Nous investissons dans l’analyse prédictive pour atténuer les demandes d’indemnisation frauduleuses.
Enfin, au cours du premier trimestre, nous sommes passés à un nouvel administrateur tiers des réclamations pour nous aider à gérer les nouvelles réclamations d’assurance. L'objectif ici est de réduire les temps de cycle des demandes, améliorant ainsi les résultats du règlement. Cela concerne à la fois la rapidité avec laquelle nous communiquons avec quelqu'un et le règlement de la réclamation elle-même.
Doug Anmuth
Thank you. J'apprécie la couleur
John Zimmer
Sure.
Opérateur
Thank you. Et notre prochaine question vient de la ligne de Mike Olson avec Piper Jaffray. Votre ligne est maintenant ouverte.
Mike Olson
Bonjour, bonjour. En suivant la question de Waymo plus tôt, peut-être un peu plus haut que les détails spécifiques de la transaction. Pourriez-vous peut-être nous dire ce que vous pensez de votre effort de développement technologique autonome interne tout en établissant un partenariat avec des développeurs de technologies externes tels que Waymo, et devrions-nous potentiellement nous attendre à d'autres partenariats futurs comme celui-ci?
John Zimmer
Yes. Nous avons donc deux éléments de notre stratégie autonome. on est la première partie, qui est notre groupe de niveau 5. Nous pensons que nous sommes dans une position idéale, compte tenu de notre plate-forme, de notre accès aux données et de notre équipe talentueuse pour créer nos propres composants de conduite autonome. Et il est important de noter que les investissements que nous réalisons aujourd’hui et notre système de tiers partie peuvent être avantageux pour les entreprises existantes, même avant que les véhicules autonomes ne soient créés, en créant une meilleure ETA et donc une utilisation et une efficacité accrues sur le marché. mais nous sommes indifférents à l’origine de cette technologie. Nous avons donc une partie tierce de notre stratégie. et Waymo est un partenaire phénoménal doté d'une technologie audiovisuelle de pointe. Et donc cela fait partie de cette stratégie à deux volets, et cela n’affecte pas les autres relations que nous avons. Et vous pouvez vous attendre à davantage de développements des deux côtés de cette stratégie.
Mike Olson
D & # 39; agreement. Et puis vous avez mentionné que vous portiez une attention particulière au transport, mais je ne pense pas que vous ayez dit que le transport en était à nouveau le propriétaire, l’Amérique du Nord, je me rends compte que, avec 1 200 milliards de dollars dépensés pour le transport, il y a beaucoup de bois à couper sur le marché nord-américain, mais Pensez-vous que l'expansion internationale est une option à long terme pour la croissance, du moins pour se concentrer réellement sur l'Amérique du Nord? Thank you.
John Zimmer
Yes. Nous nous concentrons aujourd'hui à 100% sur les États-Unis et le Canada. Nous considérons l'international comme une opportunité future potentielle. Mais pour le moment, nous sommes absolument concentrés sur les États-Unis et le Canada et n’avons aucun plan en cours.
Mike Olson
Merci.
Opérateur
Thank you. Et notre prochaine question vient de la ligne d'Eric Sheridan avec UBS. Votre ligne est maintenant ouverte.
Eric Sheridan
Merci beaucoup d'avoir pris la question. Les ventes et le marketing, de toute évidence le principal moteur de l'amélioration en glissement annuel de la structure de coûts inférieure à la marge brute. Je voulais juste savoir un peu mieux si les canaux de vente et de marketing sur lesquels vous vous penchez rapportent des rendements potentiellement plus élevés par rapport aux budgets de marketing et comment cela devrait être pris en compte dans notre conception de l'efficacité du marketing, pas seulement en 2019. , mais à plus long terme? Thank you so much.
Logan Green
Sure. Permettez-moi de commencer, puis je céderai la parole à John pour ajouter de la couleur supplémentaire. Je dirais, peut-être, où j'ai commencé dans ma dernière réponse, à savoir que le marché concurrentiel actuel s'améliore. Nous constatons une réduction des incitations aux usagers. Nous pensons donc que l’industrie va dans la bonne direction. Pour nous, nous nous concentrons sur la construction de la marque qui définit notre génération.
John Zimmer
Yes. Et du point de vue des perspectives, Logan et moi sommes maintenant sur le marché – Lyft a environ sept ans. Et si vous regardez les données économiques, vous pouvez voir en pourcentage du revenu que c’est le plus rationnel du marché. Je pense que c’est une livraison très importante. Et comme cela se produit, cela se produit, car il y a maintenant deux joueurs forts, non? Et les deux acteurs peuvent fournir des ETA de trois minutes et des temps de récupération de trois minutes sur les principaux marchés. Et alors, la raison pour laquelle les gens choisissent une entreprise plutôt que l’autre tient à la marque. Et c’est là que quelque chose que nous avons toujours cru important. Quelque chose que nous avons toujours apprécié et toujours, je crois, fait mieux que l’industrie.
Ainsi, dans cette marque, nous ne voulons pas dire d’ajouter, nous voulons dire chaque point de contact que vous avez avec nous et notre entreprise. Et cela concerne les actions que nous menons localement. Cela se passe dans l'application elle-même, qui prend soin des produits que nous construisons pour nos chauffeurs. And we think that will be the biggest opportunity for leverage against that sales and marketing line, so that it can continue to come down.
Eric Sheridan
Thank you.
Opérateur
Thank you. And our next question comes from the line of John Blackledge with Cowen. Your line is now open.
John Blackledge
Great, thanks. Just a couple of questions, on the driver center rollout, could you just provide an update on the number of driver centers that have been rolled out thus far this year and perhaps how the drivers are responding to these centers. And then the second question on bikes and scooters, just how is this initiative ramping thus far this year? How many markets are you in now with bikes and scooters and color on how you – how incremental it was or a percent of revenue from bikes and scooters that you saw in the quarter? Thank you.
John Zimmer
Yes. On driver centers, this is part of our broader strategy to go above and beyond to take care of our drivers. So, we have a history of leading the industry with driver facing initiatives. We’ve had tipping from day one. We were the first to launch Express Pay, which provided a same day pay option for drivers. We were also the first to launch Express Drive, which is a weekly rental program for drivers, all of which have helped build and sustain driver preference over the years. We’re very excited about the driver service centers, vehicle operating expenses, our drivers top cost, and service is a big component of that. And so we’ve had hubs, we refer to them as hubs in the market for a number of years.
and that’s where drivers can show up to get a sort of to do some of their onboarding activities and get imprisoned help. So it’s sort of like a genius bar type experience. What we realized was we had an opportunity to provide, really low-cost, essentially at cost vehicle service for drivers instead of just answering basic questions. So, we’ve now opened up and are operating our first two driver service centers with a number of more that it’ll continue to scale this year. it’s still early days, but we’re – the anecdotal feedback from drivers has been very positive. And we’ve really focused on speed at these driver centers. So we’re able to turn cars around quite quickly, help get drivers back on the road and making money. As a driver on the platform, if your car’s in the shop for a number of days, that can be very tough financially, because you use and depend on that car to make money. So, we’ve focused on helping high-quality service with record speeds. So, it’s – anyway, it’s still very early, but we’re excited about the initiative.
Logan Green
And then on bikes and scooters, we have approximately nine markets with bikes, 15 with scooters. We’re not going to be breaking that out separately, on the economic side. but as I said in the prepared remarks, it’s something that we will continue to invest in, with those relationships we have with local cities. And we’re excited that now, in New York, the first few customers will be able to actually book a city bike within the Lyft app.
John Blackledge
Thanks.
Opérateur
Thank you. And our next question comes from the line of Ron Josey with JMP Securities. Your line is now open.
Ron Josey
Great. Thanks for taking the question. one of the folks a little bit more on rider growth, the 40% to $20.5 million. Brian, you mentioned initiatives to attract and retain riders here. Just can you provide a little more details on those initiatives you mentioned and while we’re at it, any insights or lessons learned on the testing of prescription or loyalty programs and how that’s helping the service? Thank you.
Logan Green
Yes. this is Logan. I’ll just go back into a couple of the big initiatives that we launched in Q1 that we attribute a decent portion of our growth curve; one was the investment in the Lyft matching platform that we’ve been working on for over a year. That reduces cancels, increases the reliability of the service and the unlock of new rider experiences. So, Shared Saver now live in three markets and that’s able to provide a lower cost shared ride by driving further efficiency in the system. and like John was just talking about our first rollouts of the bikes and scooter integration into the Lyft app. So, as a whole we are trying and striving to continually provide a better multimodal experience for all of our customers, a more reliable experience and we see those afterwards stack over time.
Ron Josey
Great. Thank you.
Opérateur
Thank you. And our next question comes from the line of Andy Hargreaves with KeyBanc. Your line is now open.
Andy Hargreaves
Thanks. I just want to ask you a question on sort of the share gain and the brand, it seems like bit share gain is persistent. So, just wanted to get your thoughts on the underlying drivers there and what you’re doing to reinforce that? And then just a follow-up on the insurance, if you could give us any help on – should we see those – the benefits there sort of scale smoothly overtime or are there stair steps that we might hit a different milestone?
Logan Green
Great. Just on the brand front. One of the advantages, we’ve always had in the market has been on a driver preference. So when you ask drivers, who drive for both Lyft and Uber, which service they prefer? Historically, to this day, drivers – the majority of drivers prefer driving on Lyft. And like we talked about the Lyft Driver Centers are one of the latest initiatives as well as Lyft Direct. So, we had launched Express Pay, which is a same-day pay service a number of years ago, and it’s been extremely popular. And the new Lyft Direct Debit Card actually puts money after every ride directly on that driver’s debit card.
In addition, drivers – a lot of our drivers yet hit with a ton of banking fees. And so by launching a no fee bank account, we think we can drive a lot of additional economic value. And at the end of the day, all of this adds up to providing a better hospitality experience. Our goal is for – when you get in a Lyft for that, Lyft to take care of the driver and the driver in turn to take care of the rider in the car. So that’s part of our broader hospitality experience. Additionally, we’ve made some significant investments to really showcase our values. So last year, we became one of the largest voluntary purchasers of carbon offsets, and we made every single ride on the Lyft platform, carbon neutral through the purchase of those offsets.
Additionally, we have a program, we’re really proud of called RoundUp and Donate. And through RoundUp and Donate, riders can optionally opt into this program and round up the fair at the end of the ride to the nearest dollar with the difference being donated to one of a handful of non-profits that we’ve partnered with. So, collectively, we’ve raised, since launching the program a little over a year ago, we’ve raised over $14 million for a number of different causes. And I think really, living our values and finding ways to harness the power of the platform for change has been a big part of building this differentiated brand.
John Zimmer
Thanks, Logan. Let me answer part two of your question around insurance. We have a range of initiatives and I should say, what gets me so excited about insurance is just the opportunity, because it is both business spectrum, there’s short-term opportunities and then there’s really exciting long-term opportunities. I can say when I look back though the last five quarters, every single quarter; we’ve reduced the cost of TNC insurance as a percentage of revenue excluding any adverse development. So, this is an opportunity for us to continue to try to really leverage one of the largest costs on our income statement.
Opérateur
Thank you. And our next question comes from the line of Ron Josey with JMP Securities. Your line is now open.
Ron Josey
Hey guys, it’s me again. Just real quick, I’m in to also ask Brian, can you just give us a little more detail on 2Q expense guidance, I noticed that definitely coming down relative to where we were on an EBITDA basis? That’d be helpful. Thank you for that. And I’ll get back in.
Brian Roberts
Sure. So, I may provide some extended comments on guidance. Just want to have everyone on the phone. So, this may be a relatively long answer. And I’ll actually – let me start with the revenue. And then I’ll go into your expense question. So, as I mentioned in my prepared remarks, we’re really pleased with a momentum underscored by the positive trends of both active riders and revenue per active rider. The strong increase in Q1 active riders was a positive surprise for us. The number of quarterly active riders jumped 10% quarter-on-quarter.
That being said, we do believe in the first quarter, we benefited from some unprecedented publicity about Lyft given where the first major tech company to go public in 2019. In terms of Q2, we want to remind investors that there was an industry wide price increase introduced in the second quarter of last year. This significant increase – this increased significantly boosted revenue in the second quarter of 2018. Just as a data point, revenue per active rider jumped 16% quarter-on-quarter in the second quarter of last year, which led to 27% quarterly revenue growth and a 111% annual revenue growth. So, this obviously creates a challenging comp this year. Our revenue guides of $800 million to $810 million for Q2 implies annual revenue growth of 58% to 60% off of last year’s exceptional Q2. So, this is still a super strong quarter for us coming up.
Additionally, as we continue to grow our bike and scooter business, it’s worth noting seasonality. This is really going to be our first summer and fall with both bikes and scooters. We anticipate that revenue per active rider may be more flat over this period, especially, if there’s a positive surprise the number of active riders from new bike and scooter customers. Also, as we look out later in the year, we anticipate that the seasonality from bikes and scooters may have a more pronounced impact on consolidated revenue trends.
More specifically, we expect that bikes and scooter revenue will decline between Q3 and Q4 given snow and other seasonality. This may cause our consolidated quarter-on-quarter revenue growth in Q4 to exhibit more meaningful seasonality in it and impact revenue per active rider for the same reason.
Now, let me switch gears to answer the question you asked on expenses. We are extremely pleased that we were able to leverage expenses in important areas of our P&L in the first quarter. We now believe that the strength and efficiencies we’re realizing in our core ride-sharing business will help offset and even larger portion of our strategic initiatives than we originally expected. Notwithstanding this benefit, the investments and bikes and scooters, autonomous and driver centers will increase operating expenses.
And so let me just spend a moment to provide some highlights. In terms of contribution margin, we reached a 50% record in the first quarter versus 35% the same period a year ago, as we leveraged key expenses. For the remainder of 2019, contribution margin will be negatively impacted by two to three percentage points versus Q1 as we expand our shared network of bikes and scooters. I want everyone to remember that depreciation is in contribution. We’re also able to leverage the efficiency of operations and support excluding our new strategic investments.
Now, over the remainder of 2019, we expect to increase our investments in our shared network of bikes and scooters, Express Drive and Driver Centers. So, notwithstanding the efficiencies we’re unlocking and core ride-sharing, we anticipate that non-GAAP operations and support as a percentage of revenue will increase from Q1 levels as a result of these investments. This is baked into the guidance that we’ve provided. In the remaining quarters of 2019, we anticipate an increase of three to five percentage points relative to Q1 level with an expected peak in the third quarter.
Moving to R&D, as we invest fuel key improvements in our multimodal platform and our autonomous future, non-GAAP R&D as a percentage of revenue will increase over the remainder of 2019. We anticipate that Q2 non-GAAP R&D will increase two percentage points versus Q1 with Q3 and Q4 up two percentage points from the Q2 levels.
Now, in terms of sales and marketing, again, we are extraordinarily excited about the leverage we’ve delivered. We expect that sales and marketing will decline to 28% as a percentage of revenue in the second quarter, down from 35% in the year-ago period and really hold there for the remainder of 2019 as we launched and expand our network of shared bikes and scooters as well as Driver Centers across the country.
Finally, we anticipate that non-GAAP G&A expense as a percentage of revenue will increase approximately four percentage points in Q2 from Q1 and peak at 26% in Q3 and Q4 as part of the build out required to support our new strategic initiatives as well as SOX readiness. We anticipate that we can unlock G&A leverage beginning in 2020.
And I just want to end with repeating what I said in my prepared remarks. We are really encouraged by the strength of our core business and we see a clear path to profitability in ride-sharing. We anticipate the 2019 will be our peak last year and then we move – then we’ll move steadily towards profitability at a consolidated basis. And again, all of the remarks I just said were baked into the guidance we provided on EBITDA.
Opérateur
Thank you. And our next question comes from the line of Michael Graham with Canaccord. Your line is now open.
Michael Graham
Thanks a lot. Just two. First on shared rides, just maybe, can you talk a little bit about the KPIs and shared rides as it is straightforward as a three-minute arrival time or what else do you think about there is obviously a more complex proposition. And then just wonder if you could spend a minute on the government and regulatory landscape, what are some of the key things you’re focused on as you look to cement relationships with local and state governments? Thank you.
Logan Green
Yes, this is Logan. So on shared rides; we do have a lot of internal KPIs that we use to measure the quality of the service. We don’t disclose any of those, but I can sort of talk through at a high level of what we look for. The first is around the efficiency generated by the system overall. So, we look at based – what’s the match rate? What’s the quality of those matches? So what’s the overlap of those rides? And what type of efficiency does that generate in the system? Because then we can pass that efficiency back to our riders. And then we look at – in addition to pickup times, there’s also a matching window, and there’s an obvious tradeoff, the longer the matching window, the more opportunities there are for higher quality matches and that lets just pass on lower prices.
So, we’re not always trying to just optimize on price or pickup time. There’s a tradeoff between the two and we’re really working to find the right balance for our users. And then lastly, the quality of the match, so not just how fast the car comes to pick up the rider, but how quickly do you get to your destination and what’s the sort of detour on the route. And obviously, we try to minimize the detours as much as possible. So those, hopefully that gives you a little bit of a sense of the kind of high level areas that we look at internally. But again, we don’t break out shared ride numbers or disclose those other KPIs.
John Zimmer
On the policy and local policy front, some of you know, we hired Secretary Anthony Fox, who used to run the Department of Transportation for President Obama to leave policy at Lyft; he was also the Mayor of Charlotte, North Carolina. So, he understands both local and federal politics and opportunities in transportation. And so with him and his team, we’re continuing to build the local relationships that have served us well. We’re investing locally, and we’re listening to make sure that the actions we’re taking are aligned with the interests of the local officials.
Michael Graham
Thanks very much.
Opérateur
Thank you. And our next question comes from the line of Justin Patterson with Raymond James. Your line is now open.
Justin Patterson
Great. Thanks. On enterprise, it sounds like you had some continued success there during the quarter. Could you talk about the factors driving that growth? What do you need to do to get further traction within the healthcare vertical? Thanks.
John Zimmer
Yes. So, a part of it is just changing over how an industry has done things in the past. And I think the first critical thing that the team did is they built relationships with I believe nine, the top nine transportation, healthcare brokers. So historically, when someone like the rider, Logan mentioned in his remarks with needing a non-emergency medical transportation, they would call into a call center, and then that call center would call out to a taxi dispatcher. And then they would do their best to have that taxi show up, which would happen sometimes. And other times if that taxi was held from the street, it wouldn’t show up for that patient. And so we’ve worked directly with those call centers, which are run by those brokers to build a service that’s called Lyft Concierge. And it’s a web platform that allows – and there’s an API that allows us to basically, have a deep integration with these large transportation brokers.
And order rides, multiple than the rides when needed and for the book – the customer in some cases and the broker in other cases to be able to track the success of that pickup and drop off. So, first was establishing those relationships. Second was building the technology platform to scale that. And then third will be more work on the policy front, because these are new ways of bringing non-emergency medical transportation patients to their appointments and in some cases, laws didn’t account for this new form of transportation and will need to be adjusted.
Opérateur
Thank you. And our last question comes from the line of Tom White with D.A. Davidson. Your line is now open.
Tom White
Great. Thanks for taking my question. So first off, congrats on the IPO. Brian, since you like talking about insurance so much, maybe just a follow-up there. You’ve highlighted three specific drivers kind of leverage related to insurance. Could you maybe, give us a sense of the magnitude of the efficiencies that you guys can think – do you think you can get there over the next 12 to 24 months maybe you put it in terms of kind of insurance costs per driver, per day, today versus maybe where you think that can go?
And then just on the Waymo announcement, realize it’s early, but if we were to look out five to 10 years and partnership was a big part of your autonomous strategy, how should we think about kind of how the economics get split? And I’m also curious if it’s cheaper for a Phoenix based person to grab a Waymo ride versus a Lyft ride and maybe by how much roughly?
Brian Roberts
Sure. So, this is Brian. Let me tackle the first question. The reason I get so excited about insurance is there’s just so many different initiatives. For the company, we have different goals for the company. And so in the first half reducing the cost of insurance is actually the number one goal companywide. And so, I mentioned three, we probably have a list of probably 10 to 20 different programs and initiatives that we could discuss.
What’s really powerful is each initiative has a different timeline in terms of unlocking benefits. And so this is one, and again, we work with third-party actuaries. and so we may know internally something it’s going to be a stat sig in terms of having an impact, but it will take time for the actuaries then to give credit in terms of loss reserves et cetera. So, this is one where we see, we have years of opportunities in terms of unlocking costs on the platform.
Logan Green
And for the Waymo relationship, we can’t comment on the economics. But again, we are very excited about the opportunity to work with them and to get Waymo’s on the Lyft platform.
Tom White
Okay, great. Maybe just one last one. Sorry, slip it in. Could you guys give us any sense about, gross booking trends that I see? It’s not – I don’t think it was in the press release and also rides as well. I’m just curious why – maybe, you guys aren’t going to be sharing that quarterly going forward?
Logan Green
Sure. Thank you. So, our historical business was virtually entirely a ride-sharing marketplace. And so we included bookings and take rate in the S1. So, investors could understand the monetization trends. We’re now aggressively investing in new areas including those were revenue equals bookings. So, we really want to try to avoid investor confusion. Lyft take rates could increase solely based on the relative proportion of initiatives, where revenue equals bookings. We believe it’s more appropriate for investors to use revenue as the best top-line growth metric since revenue drives our P&L across all initiatives.
And just so that there is absolutely no confusion on this call, this is absolutely a positive metric for us in the first quarter. Revenue as a percentage of bookings increased in the first quarter on both a year-over-year and quarter-over-quarter basis. We just believe it’s more important for investors to analyze the performance using revenue going forward.
In terms of rides, we will report important ride milestones from time to time. But as we begin to expand our shared networks up bikes and scooters and really lean into related subscriptions, we don’t think the ride metric is the best way to understand our business going forward. For example, we offer a bike subscription right now in New York, where rider has access to unlimited bikes for a fixed dollar amount. We believe it’s better for investors to understand trends in our business based on active riders and revenue per active rider.
Tom White
Great. Thank you.
Opérateur
Thank you. And I would now like to turn the call back over to Co-Founder and CEO, Mr. Logan Green for any further remarks.
Logan Green
D & # 39; agreement. Thanks so much everybody for joining our very first earnings call. And thanks for all the great questions. We look forward to seeing you all soon. All right, take care. Bye.
Opérateur
Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.
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