Good afternoon, ladies and gentlemen, and welcome to the Lyft Second Quarter 2019 Earnings Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Catherine Buan, VP of Investor Relations. You may begin.

Thank you. Good afternoon, and welcome to the Lyft earnings call for the quarter ended June 30, 2019. I'm Catherine Buan, VP of Investor Relations. Joining me today to discuss Lyft's results are Co-Founder and CEO, Logan Green; Co-Founder and President, John Zimmer; and Chief Financial Officer, Brian Roberts. Logan and John will give an update on our business and key initiatives, and then Brian will review our Q2 financial results as well as provide updated guidance. This conference call will be available via webcast on our Investor Relations website at investor.lyft.com. I'd like to take this opportunity to remind you that during this call, we will be making forward-looking statements, including statements relating to the expected performance of our business, future financial results, strategy, long-term growth and overall 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 during this call, in particular, those described in our risk factors included in our final prospectus for our initial public offering filed with the SEC on March 29, 2019, and the risk factors included in our Form 10-Q for the first quarter of 2019 filed on May 14, 2019, and our Form 10-Q for the second quarter of 2019 that will be filed by August 14, 2019. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of the date hereof, and Lyft disclaims any obligation to update any forward-looking statements, except as required by law. Our discussion today will include non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Information regarding our non-GAAP financial measures, including a reconciliation of our historical GAAP to non-GAAP results, may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC, and may also be found on our Investor Relations website at investor.lyft.com. I would now like to turn the conference call over to Lyft's Co-Founder and Chief Executive Officer, Logan Green. Logan?

Thanks, Catherine. Good afternoon, everyone, and thank you for joining our call today. We're pleased to report another very strong quarter. The market conditions continue to be increasingly favorable, and we're successfully executing on our plans to drive operating leverage and progress towards sustainable earnings. Revenue growth of 72% year-over-year was driven by healthy demand in the market and better monetization of our leading transportation platform. Growth in both Active Riders and revenue per Active Rider exceeded our expectations. The number of Active Riders grew 41% year-over-year to 21.8 million, while revenue per Active Rider grew 22% year-over-year. As a result of our strong top line growth and an improving market environment, we generated significant operating leverage. This was a milestone quarter on our path to profitability. For more and more of our riders, Lyft is becoming a bigger part of how they get from point A to point B. From more affordable and efficient Shared Saver rides to bikes that allow our riders to glide past rush hour traffic, we're rapidly building a world where you can trade in your car keys and ride with Lyft. We believe that Lyft will be the fastest and most accurate way to compare time and money across all relevant modes of transportation and frictionlessly complete the transaction. This quarter's results are another significant step towards realizing that long-term vision. During our last earnings call, I talked about our Shared Saver product. As a reminder, Shared Saver offers a more affordable option to riders who are willing to wait a little longer or walk a short distance. In Q2, we launched Shared Saver in 6 new markets bringing our total coverage to 9 markets. As we scale up this roll out, we're seeing improvements to system-wide efficiency and monetization. In Q2, we doubled…

Thanks Logan. I'm excited to highlight some of the great progress we made this quarter. Our driver community enables us to deliver on our mission to improve people's lives with the world's best transportation. By delivering more value to drivers, we're able to maintain strong retention and foster the best possible experience for our riders. Our teams are constantly working on ways to improve the driver experience and help drivers earn more. We have added features that help drivers maximize their earnings by providing information about when and where it's best to drive. Average hourly driver earnings are up more than 5% over the last 2 years. This quarter, we also began implementing work that will make driver earnings even more consistent on a week-to-week basis. We'll be closely monitoring the results of these improvements as we work to best serve our driver community. For drivers on the Lyft platform, navigating between personal auto insurance and Lyft insurance can be complicated. We've rolled out a partnership with GEICO that helps reduce this friction. With GEICO's rideshare policy, Lyft drivers can buy coverage through GEICO that covers them whether the Lyft app is on or off. In addition to giving drivers more peace of mind, drivers who sign up with this rideshare policy may receive an additional $0.25 per ride on eligible rides. This program is a win-win. Both drivers and Lyft save money. Another opportunity to provide increased value to our driver community is helping them find affordable, convenient service and maintenance for their vehicles. We're expanding our driver centers in order to provide the best maintenance experience at the best price. While it's still very early days, our initial NPS scores are industry leading. In addition to helping drivers with their personal vehicles, we're continuing to grow our Express…

Thanks, John, and good afternoon, everyone. Our Q2 results reflect the health of the market and our ongoing success driving product, platform and operational excellence. Total revenue for the quarter increased 72% year-over-year to $867 million. Growth in revenue was driven by both an increase in Active Riders and revenue per Active Rider. We ended Q2 with a record 21.8 million Active Riders, up 41% year-over-year, with the majority of new rider growth driven organically. We believe publicity surrounding Lyft's IPO positively impacted the number of Active Riders in the first half of 2019. Revenue per Active Rider was $39.77, up 22% year-over-year. Both of these growth drivers exceeded our expectations. It is important to note that we drove this exceptional growth while significantly leveraging sales and marketing expense. I'll come back to this leverage later, but this is a huge signal of Lyft's growing brand preference and the improving market dynamics in the U.S. ridesharing industry. Now before I move on, I want to note that unless otherwise indicated, all income statement measures that follow are non-GAAP and exclude stock-based compensation and other select items. A reconciliation of historical GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and is available on our Investor Relations website. This includes contribution, which is defined as revenue less cost of revenue adjusted to exclude amortization of intangible assets, stock-based compensation and related expenses and changes to liabilities for insurance required by regulatory agencies attributable to historical periods. Contribution in Q2 was $399 million, up 88% year-over-year. Contribution margin for Q2 was 46%, up from 42% from the same period a year ago as a result of monetization increases and our continued focus on expense leverage. Contribution increased in…

All right. Thanks, Brian. We're excited about our strong performance this quarter, built on incredible effort across all of our teams. Our 72% revenue growth rate this quarter is exceptional at our scale. We are increasingly confident in the market outlook for U.S. ridesharing as the competitive environment continues to show signs of improvement. We're making terrific progress on improving the efficiency of our business and generating operating leverage, as Brian indicated. Our Lyft Business team is building partnerships with world-leading brands like Disney, leveraging our technology and expertise to deliver tailored solutions at scale. Finally, we're setting ourselves up for decades to come by solidifying our position as the platform of choice for self-driving technology companies. Before moving on to questions, I want to spend a moment on our mission, which is to improve people's lives with the world's best transportation. We're committed to building cities around people and addressing key problems our communities are facing through better access to transportation. It's estimated that over 23 million people in the U.S. live in food deserts, areas where access to affordable healthy food options is limited or nonexistent because grocery stores are too far away. To help address this serious challenge, we're significantly expanding the Lyft Grocery Access Program. Through this program, we're partnering with local organizations and nonprofits to provide flat-fare rides to get low-income families and seniors to and from grocery stores. We've expanded this program to more than a dozen cities, including Atlanta and Miami, and we're looking forward to rolling it out to more cities in the near future. And now we'd like to open it up for questions. Operator?

[Operator Instructions]. Our first question comes from Doug Anmuth of JPMorgan.

Brian, you talked about 2019 as the peak loss year. Is that still the case? And then can you just help us understand how you think about the path to profitability over the next few years? We have 2022 breakeven, for example. And can you also just give us an update on core ridesharing loss improvement relative to the losses in investments you're seeing in bikes and scooters and then also autonomous?

Sure. Thanks, Doug. So, in terms of the investments we're making, we have previously said that 2019 would be our peak investment year. I think what's really important to get out of this call is that we have changed our guidance for 2019 in terms of the adjusted EBITDA loss. We now expect it to be $300 million smaller. So, if you compare our guidance of $850 million to $875 million against last year's $943 million, it turned out last year was likely the peak loss in terms of adjusted EBITDA. So, we're super excited in terms of the momentum we have right now, and the overall platform that is driving that, the smaller losses. In terms of breakeven, we'll be updating folks by later this year in terms of our longer-term model in terms of breakeven points. But I will say that we expect 2020 adjusted EBITDA to be smaller than 2019 as well.

Our next question comes from the line of Ross Sandler of Barclays.

Guys, just two questions and then maybe a quick housekeeping one. Some of the data we've seen suggests that your utilization rate's gone up about 200 basis points over the last two years and still trails your larger competitor by a little bit. So how quickly do you think you can close that gap? And then what kind of financial impact would that have on the business? And then the second question is you mentioned the pricing changes that went through in June. Can you talk about at a high level how these changes might impact volume growth and take rate going forward? And then the housekeeping question is just on stock-based comp. How should we think about that given the movement in the stock and that going forward?

Brian, do you want to take the pricing question and then we can comment on utilization.

Sure. So, in terms of pricing, the price adjustments that I described went into effect at the very end of June. So, there was limited impact in Q2. And so, I think the question, what happened in Q2, and I think it's really a continuation of our strategy. We are focused on driving profitable growth, not growth at all costs. And we've been investing to grow our share of the more valuable rides such as premium modes and airport rides, and that's why Lyft Business is so important to us. We also enjoy success improving the financial efficiency of shared rides in Q2. And finally, we were able to increase the efficiency and the effectiveness of driver incentives as well as improve the algorithms that power pricing. So, in terms of Q2, it was really execution of our prior strategic initiatives that drove that monetization increase. Again, revenue per Active Rider grew 22% year-on-year to $39.77. In terms of the future, what I would say is we made modest price adjustments that went live towards the end of June, and we really began to adjust prices on select routes and in select markets based on cost and demand elasticities, and we try to pick routes in cities where the demand impact would be the smallest. And as I mentioned, we believe these price adjustments reflect an industry trend. So, we expect that both the mix shift as well as the price adjustments will increase revenue per Active Rider in Q3 and in Q4, and we expect that revenue per Active Rider could accelerate in Q3 up to 1% versus Q2. So Q2 was up 22% year-on-year, and we think Q3 could go up to about 23% year-on-year. Let me answer the stock-based comp question, and then we'll address your utilization question. Virtually, all of our RSUs or restricted stock units granted before the IPO contained a performance-based and service-based vesting condition, including 15 million RSUs granted on March 27 that were valued for GAAP purposes at the IPO price. For accounting purposes, the company is required to use the accelerated attribution method to recognize SBC expense for RSUs with a performance-based condition in addition to a service one. So, in plain English, SBC is front-loaded under the accelerated attribution method, and this is different from the treatment of RSUs with just a simple service condition. The vast majority of our Q2 stock-based compensation expense is related to RSUs granted before the IPO. As I mentioned, the expense related to RSUs granted before the IPO was front-loaded. So that portion of our SBC expense will come down as we go forward. For the next two quarters, we expect stock-based comp to decline by roughly $25 million each quarter.

And this is Logan. In terms of driver utilization, there are a lot of factors that influence what that is. On the last call, we talked about our global matching platform. That has resulted in some significant efficiencies across the business. Other things that influence that number are improvements in our mapping platform. So, as we improve ETA at road speeds, city maps, and how we match rides, those all drive utilization as well as the driver experience that we're building. So, we're building better tools to show drivers make suggestions on when and where to drive. And so, when drivers are driving in the busiest areas at the busiest time, utilization naturally increases. That said, there are seasonal effects to that number, and so you'll see that move back and forth a little bit as demand changes across the season.

Our next question comes from the line of Brent Thill of Jefferies.

Brian, given the significant raise, it would be helpful if you could give more granularity on the line items in Q3. And then a couple of quick follow-up questions about the true-up in insurance costs. I'm curious if you could just address that.

Sure. So let start with sort of a detailed follow-up on our guidance, and then I'll talk about insurance. And before I jump into the details on the guidance, I just want to reiterate how pleased we are with the performance of the business. I mean Q2 was a milestone quarter, and the substantial increase in our guidance reflects the tremendous momentum we have. I'll just start at the top. As you know, we have 2 revenue drivers, and I'll begin with revenue per Active Rider. We had previously indicated that revenue per Active Rider would be relatively flat in 2019. We now expect revenue per Active Rider will grow sequentially in Q3 and Q4. And as I just mentioned, we anticipate that revenue per Active Rider could accelerate in Q3 by up to 1 full point to 23% growth year-over-year. This guidance incorporates the modest price adjustments that went live towards the end of June as we began to adjust prices, again, on select routes and in select cities based on cost and demand elasticities. The price adjustments are modest, but we anticipate that these changes will increase revenue per Active Rider on both a quarter-over-quarter and year-over-year basis, and we expect that these changes will accelerate our path to profitability. And further, as I mentioned, we believe these price adjustments are an industry trend. In terms of Active Riders, we've enjoyed a huge benefit in the first half of 2019 related to the publicity from our IPO. We believe we pulled forward a portion of rider activation, so we are maintaining our prior implied Q3 and Q4 targets for Active Riders, notwithstanding the Q2 beat. I think it's worth mentioning that there are also some unique factors impacting Q3 and Q4. For Q3, we anticipate that Active Rider…

Our next question comes from Stephen Ju of Credit Suisse.

So Logan, John, will you add more color around your efforts to increase the use cases for Lyft and ridesharing in general? And in particular, I'm talking about the business that you brought up several times during the call. You brought up education and health care as verticals before. Where are we now in terms of getting more schools and providers and other enterprises to adopt Lyft as a designated service provider? Secondarily, I know this is but one market, but given a lot of investors live in New York City, there is a heavy amount of a focus here. So can you talk about the state of that particular market, what the regulatory framework may be doing to consumers' willingness to use the service and what you may be doing in the background to offset?

Sure. Thanks for the question. This is John. So first on Lyft Business, at a high level between corporate travel and nonemergency medical transportation, including education that you mentioned, we think the overall addressable opportunity is at least $25 billion. We are not breaking out the relative sizes of each aspect of our business or specifically within Lyft Business, which include those categories. Some highlights that we've established in the industry, we have exclusive deals with various health care brokers that give us a fantastic pipeline into those markets. There was news out of Arizona that allows us to provide a better transportation for Arizona Medicaid participants, which covers about 1.5 million participants. So a lot of great momentum there in all those categories. We also mentioned the Disney partnership expanding, and the Hilton partnership, which will address different portions of that market. Moving to New York. So specifically on the new regulations, the thing that's important to understand is at the highest level, we are actually aligned with the stated goals, the policy goals that policymakers have of increasing driver earnings and lowering congestion. But we don't believe the rules as they're written today do the best for those 2 aspects and that they actually create negative consequences for both drivers and riders. And so we're working really hard with them to find those policy goals without the negative consequences. So any increase in prices can lead to a decrease in driver work opportunities because of less rides, and that's the point that we're trying to get across there. And then at a high level for overall context, policy, whether it's New York or any other market, is nothing new as part of our business. Actually, the origin of the company was working with policymakers to create a new category, to adjust the category. We take it really seriously. We built a phenomenal team around former Secretary of Transportation, Anthony Foxx. And so we will keep working to address those policy goals but with policy that has a positive impact on the overall market.

Our next question comes from Benjamin Black of Evercore ISI.

I was wondering if you can talk about the underlying core ridesharing contribution margin trends, excluding bikes and scooter investments, and how you view that shaping up for the rest of the year. And secondly, I was wondering if you could talk about engagement trends across your Active Rider base. How has that trended? And how do you see it progressing going forward, particularly in the face of the price increase?

Yes. So let me take the first comment first. The question around contribution margin for core ridesharing, again, we are a single-segment company, but we have publicly stated we're making large investments, building out our network of shared bikes and scooters. And so the guidance raise on contribution margin, 50% in Q3 and 49% in Q4, it is in light of the investments we're making. So you should assume that there is very strong contribution margin trend in core ridesharing. And that's just based on our strong execution as well as the improving market environment. I think in terms of your question in terms of engagement, in Q2, rides grew faster than our growth in Active Riders. But I think it's important that folks understand that all rides are not created equally. We're, again, focused on driving profitable growth, not growth at all cost. And that's why we've been investing to grow our share of the most valuable rides such as premium modes and airport rides, and that's why Lyft Business that John talked about is so important. So in terms of how this translates, again, the 22% increase in revenue per Active Rider year-over-year is a really good indicator of the monetization trends and -- on top of that, and we grew Active Riders by 41% year-over-year in Q2.

Our next question comes from Mark Mahaney of RBC.

I'll ask two questions. Just on this -- again on this revenue per Active Rider. So clearly, you had some pricing that helped that. Can you just talk about the other part of that? The prior person was asking about engagement. Like how did you get the activity per rider to rise? And it looks like that happened for most of the quarter, so just spend a little time on that. And then the second question is more of a snatching defeat from the jaws of victory. It looks like the business is really doing well here, and you may well have a milestone, and you raised your guidance, et cetera. So why bring up the lockup expiration? Just put some color around that.

Sure. So let me take the first question. And we have been trying to grow our share of the more valuable rides, as I mentioned, in terms of the premium modes and those airport rides. We also were very successful in Q2 on increasing the financial efficiency of Shared rides. And Logan mentioned last time the progress we made on the global matching platform. So that unlocks the monetization benefits in Q2. And then finally, we're able to increase the efficiency and effectiveness of driver incentives as well as improve the underlying algorithms that power pricing. And all of this is before the adjustments in price that happened at the very end of the quarter. So the progress in Q2 and that growth in rides is we have strong core growth in the U.S. ridesharing industry. I'm sure you look at the same surveys that we do in terms of what percentage of the U.S. population have never tried ridesharing. And as we described, and I think as you can see in our S-1, it's one of those products that people will try it for the first time. Maybe they've had a drink too many on a weekend, and they tried ridesharing, and then they just discovered how much easier it is to use Lyft to go to the airport or use Lyft to go to a medical appointment, et cetera. And it just -- we tend to see usage go up over time, but I think Q2 is a really nice combination of driving usage as well as really prioritizing the more valuable rides.

Can you repeat the other part of the question?

Yes. Why bring up the lockup expiration?

Yes, I mean, the lockup agreement was disclosed in the S-1. It just turned out the time period was during the blackout period, and per the language, it just pulls forward.

Our next question comes from John Blackledge of Cowen.

Just given the sales and marketing leverage, could you discuss your thoughts on Lyft's competitive position in the U.S.? And would you expect this more rational trend in sales and marketing, particularly the decline in rider incentives, to persist over the longer term? And then second question, just a quick update on the rollout of driver centers. How many are out there? And how many may be in there by the end of the year?

This is Brian. I'll take both of those questions. I think in terms of sales and marketing, one of the most important takeaways people should take from this call, if you look at sales and marketing as a percentage of revenue in Q1, it was 29%. And in Q2, it dropped to 19%. Nearly -- and the key driver of that is looking at incentives that are classified as sales and marketing, generally better known as coupons. If you look at between Q1 and Q2, incentives classified as sales and marketing as a percentage of revenue declined nearly 40%. And so when you look at our guide for later this year, by Q4, we expect that sales and marketing will be roughly 20%. Now that's an 8% -- or 8 percentage point improvement versus our prior guidance. So we expect this environment has improved. And again, we're just -- we're focused on trying to win on brand preference and experience, not coupons. And I think our actions in the market environment support that. Shifting to your question on driver centers. We're still in the early period here. We're testing, and we're learning, but we do plan to ramp this up in the second half of 2019. But it will still be probably to a handful of sites. We just want to make sure we're really executing and getting the exact formula right.

Our next question is from Itay Michaeli from Citi.

Just two questions. I was hoping you can firstly talk about the Active Rider growth this year in terms of regional distribution. How much are you seeing in some of your top markets relative to newer markets? And second, would love to hear an update on just the autonomous vehicle development efforts at Lyft internally as well as with some of your partners.

Sure. This is Brian. I'll take the first part of the question around Active Rider. So we don't provide -- we don't segment that by city, but I will say it's really important to realize that we're focused on winning the most valuable riders. And that's why we're making the investments we are in the Lyft Business. We want road warriors on the platform, and this is exactly why it's important to look at both of our drivers of revenue growth. Revenue per Active Rider provides a really good signal of the value of the Active Rider population. And additionally, we're investing in our multimodal platform because we believe we can increase our addressable market and really build a more complete transportation-as-a-service solution. So we're excited in terms of how we are expanding our addressable market and in terms of our execution focus on really trying to win those really highly profitable business travelers.

And then this is Logan. In terms of AV, autonomous vehicles, we have 2 major initiatives. One is our open platform strategy. And there's a couple of great partnerships that are live and out in the wild now. So we talked about earlier on the call, the first vehicles are live from the Waymo platform in the Phoenix area. We're very excited about that. The 2 teams have been working closely together and created, I think, a really exciting experience. Bottom line, we're both learning a lot from that partnership and very excited about it. We also have had a long-standing partnership with Aptiv, which has been great. That's been live in Las Vegas for over a year. Now of course, both of those, there's still a safety driver in the car. We're early in the testing process. Want to make sure everybody understands this is -- autonomous vehicle development is a very long game. It's the future of the business, but it's, of course, many years out. And we've done well over 50,000 rides on the Aptiv platform in Vegas. And then back to us, Lyft has a Level 5 engineering center down in Palo Alto. And what we think is really unique about our opportunity is twofold. One, driverless vehicles will first roll out on ridesharing platforms. These are the first generation of autonomous vehicles. We'll only be able to do a small percentage of trips, and it will be critical that they're rolled out on a platform such as Lyft so that the rest of the rides that aren't able to be served by an autonomous vehicle can be fulfilled by a driver. So we think that gives us a significant advantage. And second is all of the data from the miles traveled on the Lyft platform. We're launching some really exciting tests using data collected from cameras on some Lyft vehicles and using that, feeding that into the training of our own autonomous system. So we think given the position we sit in, in the market, all the data that we can collect can really play to our advantage.

Our next question comes from Eric Sheridan of UBS.

Maybe two questions, if I can. You highlighted some of the product innovation you're doing in a handful of markets. Wanted to understand a little bit better what you've seen from the consumer behavior as you've given the consumer more choice in the app and more transportation choices, what that might do to stimulate usage. And sort of anecdotally, I'm in the Smart Savings Plan. How widely deployed is that as a product to users? And what do you see in terms of the elasticity of people once they're getting 10% off but they become a subscriber to your platform and what that does to drive incremental demand and incremental spend versus how widely deployed it might be?

Yes. Thanks. That's a great question. This is Logan. First is we see a lot of incremental activity as we add new modes of transportation. We see very little cannibalism across modes, and we see a lot of incremental activity. So by adding different modes that people may want to trade off against, it brings them into the Lyft app a lot more often. And I think being top of mind and being the first app that's open is very, very important from a strategic position. On subscriptions, in the long run, we view a lot of the market moving to subscriptions. We think it will play an incredible role in the future. We often use the analogy of the wireless companies where you subscribe to a certain sort of bundle of minutes or maybe even an unlimited package. And we've launched hundreds of experiments across the country. A couple that we've rolled out a little more broadly. One is our All-Access pass. That is as close as sort of we've gone to that unlimited package. And then the Smart Savings Plan was the other one. That's $14.99 a month for 10% off all rides. And each package caters to a different type of user. I would say there's a lot of variability in terms of frequency across our users when you dig into the different cohorts. And so there's not kind of a one-size-fits-all plan. But when we get some of these subscription packages that hit a particular cohort and provide great value to them, we do see incremental activity from that cohort. So we're optimistic about it, and we're going to continue testing and rolling out new initiatives in that space.

Our next question comes from Andy Hargreaves of KeyBanc.

I wanted to ask a couple of questions on sort of the driver side. One, I'm just wondering with all the volume you guys -- all the volume growth you've had and sort of where we are from a driver incentive efficiency standpoint, if there's more room for further efficiency there. And then on driver pay, you guys mentioned it being up. But it's obviously an area of a lot of controversy, so I'm wondering if you can comment on CA AB5 and what the impact from that could be but also just sort of how your sort of philosophy on driver pay, I guess, is evolving right now.

Sounds good. This is John. I'll take most of that. So the on the driver side, as we said in the prepared remarks, our earnings are up 5% the last 2 years. More even, if you look back year-over-year. And overall, we continue to make a ton of investments to support the driver experience and are seeing continued increased demand for interest in signing up to drive on the platform. I think society has -- there's broader societal issues that certainly affect our industry as we have millions of people working on ridesharing platforms, and AB5 is an opportunity, I believe, for California to create a new model and one that provides worker protections while also providing flexibility. So we are deep in conversations with various labor groups and lawmakers. And as I said, policy has always been a big part of our business and an opportunity for us to continue to do more for drivers. And our philosophy from the beginning has been when you take care of drivers, that drivers take care of passengers, and that's good for the business. So there's a lot of coverage about driver earnings. That's why we wanted to share the facts because we think the facts are important. But there's always opportunity to improve. Now, when we're serving millions of people, any small thing on the platform that needs improvement affects thousands of people, and that's very important.

And this is Brian. Let me comment on some of the trends in driver incentives. As a percentage of revenue, incentives that are classified as contra revenue declined in Q2 versus Q1 as well as the year ago period. However, I'm going to take this opportunity to encourage investors to avoid analyzing absolute driver incentives in isolation because doing so ignores the economics of rides at high-demand periods. So in terms of our strategy, we try to limit driver incentives to periods when rides are most valuable on the platform. So during peak times, when drivers can typically earn bonuses or incentives, Lyft is also benefiting from higher rider demand, which can lead to higher prices. And our service fee and commission is generally calculated as the difference between what a rider pays and what a driver earns based on time and distance of the ride. So revenue, which is calculated after subtracting contra revenue incentives, is a really clean metric to calculate the value of rides net of driver payments.

Our final question will be from Ron Josey of JMP Securities.

Just maybe I want to follow up on Eric's question earlier on just multimodal benefits. And given what we heard about expanding usage, any more details on the time frame or how you're thinking about expanding the 9 or so bikeshare markets and 15 or so scooter markets? And then just on the GEICO partnership, are other insurance partners willing to offer a similar program? And just curious on your thoughts there. Great quarter.

Thank you. This is John. We're not going to comment on the specific expansion plan for bikes and scooters except to say that we're very happy with this growing part of our business. We are focused on the largest metro areas, the areas that will see the most rides because we do think that scale when you're building infrastructure, physical infrastructure especially, is incredibly important. One more stat that I think is exciting is that -- around bikes and scooters is that users that are new -- people that are using our bikes and scooters, about 25% are actually new to the Lyft ecosystem, which is an exciting way for us to both create a new business and get broader new passenger, new rider acquisition. And then what we see, as Logan talked about, is that then they use Lyft for more and more of their transportation needs as they find that we have transit, rideshare and bikes and scooters. So overall, that's something that we think goes with our overall mission of getting people away from car ownership and into transportation-as-a-service.

All right. So thanks again for joining us today. It was a milestone quarter for Lyft, and we look forward to seeing you all soon. Thanks so much.

Thank you.

Thank you.

Ladies and gentlemen, that does conclude our program. Thank you for your participation and have a wonderful day. You may disconnect your lines at this time.