So, it’s just, I think a good example of how the innovation we’re doing really does pay-back for riders and drivers in this case, giving drivers more business and riders more reliability. So, you can expect to see more of those. We mentioned in the earlier remarks, some as we go into the summer, some other interesting things with airports. Yes, this is where I just have to stop talking otherwise I’ll get myself in trouble. But that I hope gives you a little flavor what we’re working on.
Mark Mahaney: That’s great. Thank you very much, David. Thank you.
Operator: Your next question comes from John Blackledge with TD Cowen. Please go ahead.
John Blackledge: Great. Thank you. Two questions. First, you specifically mentioned Canada’s strong growth. Just curious any other geos you would call-out that drove the better-than-expected results? And then, the second question, just coming back on the free cash flow conversion. Just any further color on what drove that uptick to 70% from initially 50%? Thank you.
David Risher: Yes, let’s tag-team on this one. On the first, really nothing to report. We’re still seeing the West Coast is still kind of growing nicely just because in a sense, it was held back a little more than some of the rest of the country. But no, we’re really actually seeing nice growth kind of across-the-board, nothing significant there.
Erin Brewer: I’ll talk about free cash flow and sort of what drove the update to our outlook. So, fundamentally, as we went through Q1 and here at the start of Q2, we began to get better visibility into the expected payments that we’ll make related to our legacy book of insurance, and that coming in a little bit better than we had initially anticipated in our original plan when we talked about full-year free cash flow conversion. So, that’s what’s really behind the change in our improved outlook for the year, little bit better visibility into Q1 and Q2.
John Blackledge: Okay. Thank you very much.
Erin Brewer: You bet.
Operator: Your next question comes from Ken Gawrelski with Wells Fargo. Please go ahead.
Ken Gawrelski: Thank you so much. I want to touch on pricing and industry pricing. First, could you reiterate your strategy with respect to overall pricing and how you view that? And David, maybe could you just talk about any changes there may have been in the pricing environment in 1Q into 2Q? There’s been some speculation that one of your — that your competitor may have raised prices in conjunction with the annual insurance renewal at the end of 1Q. And then maybe on that same point, more broadly, could you talk about the elasticity that you see and maybe you could see this in your various modalities. Investors often debate the elasticity in this industry. And we would love to hear — any highlights or key anecdotes that you could provide. Thank you so much.
Erin Brewer: Thanks, Ken. You know, I’ll start-off here and sort of talk about pricing and what we’re seeing. So, you asked — you started your question just by wanting us to reiterate what our philosophy or approach is around pricing and that’s really that our goal is to operate in a healthy and competitive way. That’s how we think about it bottom-line. In Q1, we did see some higher pricing in the back-half of the quarter. However, I think what’s important to understand is that was partially offset by lower prime-time. David talked about it in his prepared remarks quite a bit, really driven by the health that we’re seeing in the marketplace. So, when you net the two of those together in Q1, the impact of pricing was really quite modest.
You know, it’s important to remember that the price a rider experiences is the combination of many factors, right? It’s mode, it’s mix, it’s distance. It can also include prime-time depending on the supply conditions in a certain geography or at a certain time. And I think it’s important to remember that primetime coming down is a good thing. It means that there’s more stable, more predictable price to the rider and that translates into more rides. So, on a full-year basis, again we talked about gross bookings growing slightly faster than rides, nothing has changed there. Nothing has changed in terms of the way we contemplate what informs that assumption. It’s a number of variables, including ride type, ride mix, the growing mix of non-rideshare businesses, and then competitive pricing, which is the foundation of our philosophy.
And David, you want to try the second part?
David Risher: Just a little bit. I mean, that is for sure 90% of it right there. You know, one, I would say, the strategy we have is that anytime a rider opens the app they can find a ride that works for them, right? And so, it could be a standard ride. Of course, that’s the majority of the business. It could be a wait and save ride, which I think is just a — I love it because it allows people who want to price shop, to sort of price shop right within our app and to save a little bit of money by giving up a little bit of time. And that actually works really well for a lot of people. It’s — a lot of people — some people are busy all the time. Some people have got a little bit more flexibility and they — and they trade that for a little extra money.
So, that’s great. And then, we have various other modes that are sort of higher-value, extra comfort, which is actually relatively new mode. And then, we have, what we call the high-value modes, kind of the black side of things. Interesting, this is a little bit of a side point, but you might find it interesting. It’s actually our high-value modes that have grown slightly faster than the rest this quarter, which I think is just sort of interesting commentary on, I don’t know what, how people want to spend their money. But the real point here is our price sort of strategy has — is just like any retailer, let’s say, with multiple or maybe a manufacturer with sort of multiple product lines we want to have something that, kind of, works for everybody.
And so, we work the whole mix. And then, the end, where Erin ended — you know, in some cases, our job is to try to bring prices down, right? Most notably, around primetime. Anytime we have primetime, it’s a defect, right? It’s a defect. It means that we didn’t have exactly the right number of drivers where we needed them at exactly the right time. Some of them are unavoidable, right? It’s very hard to predict a flash storm, for example. That’s quite hard to predict. But there are other things that are not so hard to predict. And so, as we improve our forecasting internally, which is actually an enormous effort, we don’t talk too much about it externally, but enormous effort, we do it so that we can actually bring prices down in a funny way because what we want, of course, is riders and drivers to match at the highest-volume they can.
And that clearing price tends to be sort of our standard price at every mode.
Ken Gawrelski: Very comprehensive. Thank you.
Operator: Your next question comes from Michael Morton with MoffettNathanson. Please go ahead.
Michael Morton: Hi, thank you for the question. Could you talk a little bit about the opportunities around take rate and then maybe a deeper dive into the drivers behind it? You’ve spoken in the past about the health and efficiency of the marketplace being one driver, but would love if you could potentially quantify or maybe impact the contribution of the advertising business currently or going-forward? And then, if I could sneak in one, just like accounting one. For G&A, it was just a tad higher-than-expected and would love to hear if there was any onetime in nature related, maybe legal contingencies or insurance accruals or is this a reasonable run-rate for the year? Thank you so much.
Erin Brewer: Hi, Michael. This is Erin. I’ll talk a little bit about revenue margin and then your question on G&A. And I’ll ask David to join me and talk a little bit about the Media business. So, as it relates to revenue margin again, this is really the healthy outcome of operating competitively with a focus on customer experience. So, on the call, we talked about how we’re working to increase drivers preference for Lyft and then help them maximize their earnings by helping them identify when and where rider demand is going to be. And this is why drivers are earning more. And that is really driving why we’re able to be more efficient with rider, with, sorry, contra-revenue incentives per ride, even as drivers earn more. To give you a little flavor of how we see this playing out in Q2, we think that revenue margin will be reasonably similar as I talked a little bit about in my prepared remarks.
We are entering the quarter, continuing to see healthy marketplace trends. And then, of course, in the second-quarter and into the third, we see an increase in bike and scooter usage, building in Q2 — in Q2 and then really peaking in Q3. And that brings along with it a higher revenue margin. So hopefully, that reemphasizes a little bit of our prepared remarks and gives you — gives you some color for what we see here in Q2. As it relates to the G&A line, there’s a good portion of that G&A line that’s fixed. There is a portion where there are some corporate expenses and can be some accruals, for example, that can occasionally result in some lumpy behavior. And that’s really what you’re seeing between Q4 and Q1, the change in the tax accrual, in particular, is fundamentally what’s driving that.
And then, I’ll turn it over to David to address your — the third part of your question around media.
David Risher: Yes. And I’ll take — it is Michael, right? Yes. So, I’ll — yes, let’s — let me talk about two things kind of as they intersect. One is media, and then we’ll go back to drivers because I think that’s a great place to sort of settle on. So, on the media side, it’s — so, it’s such an interesting business. And the reason is because there are only so many Meta ads and Google AdWords and so forth that you can buy before you’ve sort of saturated that channel. And so, brands who increasing — and TikTok appearances and so on. So, your brands are so interested in trying to figure out new ways to connect with their consumers, their own customers, and in different ways, right? Because you know, again, same old, same old, everyone starts to get a little tired of that.
So, what’s so interesting to us is looking at the ways that the brands who have come to us are seeing results over fairly short periods of time such that they are already returning even though this business is still relatively new. And I’ll give you just a little bit of color and then we’ll tie-back to the driver in a second, but a little bit of color. So, we served — there are multiple ways you could be served up an ad in a Lyft experience. It might be on a tablet, it’s in the car, but most likely it’s on the app. And typically you’re a 15 minute ride, people actually check their app about nine times, right? Sort of the — you know, I guess it’s the adult equivalent of are we there yet kind of thing. So, anyway, you’re looking and then the question is, well, what are you doing?
