Erin Brewer : And Alec, I’ll take your question overall on insurance. And so in last quarter’s conference call, we talked a fair bit about insurance, but what I’d like to leave you with is insurance is priced per mile, right? So it’s not as if there’s a bulk discount as you think about that overall. And we continue to do a tremendous amount of work, implementing our strategy here at Lyft as it relates to increasingly building in features in our products, working across various policy initiatives and doing a number of things that we believe and we have demonstrated in the past, have a positive impact on what has been a rate of increase historically over time. I couldn’t comment on our competitors’ choice about how they structured their program, but what I can tell you is the thought that is behind how we’ve structured ours.
And so we do risk transfer a majority of our business, which means there’s a portion of it, a small portion that is self-insured. And we like that mix. We think it’s the right one for us. And let me tell you a little bit about why. So on the portion that we retain, we do that on a selective basis, where we think it makes sense. And so that’s a thoughtful approach. And then as it relates to the portion of the business that we risk transfer, there’s a benefit there in that there’s some certainty and cash flows that’s provided. We think that’s important. And then the second thing that I’d highlight is, we work very closely with partners. And partners are a really important word here because these are long-term partners that have been with us for a number of years.
And they have deep expertise in the states where they operate. And so as we continue to work increasingly sort of in a very collaborative way, we think this is the right way in terms of resolving claims in a timely fashion and in a reasonable fashion. So we like the mix of how we’re structured today and works for us. And beyond that, I couldn’t comment on what our competitor chooses.
David Risher: I’m going to say one more thing here too because this is the chance to brag on our team a little bit. So and actually give a little preview to Investor Day. We mentioned what they do in Investor Day. I think one of the things, this will sound strange, but if you come to Investor Day, and I hope you do, and you get a chance to meet Max Feldman, who is up for our Insurance and Risk Management, and the guy’s a rock star. And it’s just an incredible team we’ve got that focus on risk management. I think you’ll come away super, both impressed, but also educated about how we think about this. I’ll also point out one of the newest additions to our board, Jill Beggs who is the Head of North American and Global, especially Reinsurance for Everest Re brings an enormous amount of insurance expertise to the company, enormous amount.
And so Erin said, we really like the sort of the mix. And yes, we’ll be interested to see what the other guys do, but we feel pretty good about our strategy.
Operator: Your next question comes from the line of Deepak Mathivanan from Wolfe Research.
Deepak Mathivanan: Great. Thanks for taking the question. So first, David, with all the efforts to grow the portfolio of products and then bringing prices, service level on parity with this competition, can you talk about the trends in active riders? I know there is some seasonal elements in 4Q, but how should we think about the importance of growing [inaudible] users to hit the mid-teens and potentially compound run that into the future? And then sort of related to that, on the cost side, how should we think about the level of investments that’s required for headcount, maybe to expand on the scope of product initiatives as you think about kind of balancing the growth over the medium term? Thank you so much.
David Risher: So, Hey, Deepak. I’ll take the first part of then; Erin and I’ll tag team on or Erin will take the second. So, so first, yes, good question about active riders and definitely want to double down on something you alluded to, but it’s good for everyone to understand, which is because our active riders are the sum of ride share and bikes and scooters. You see a bit of a sort of a switch in Q4 where obviously when there’s snow on the ground and cold people don’t take bikes very much. So there’s a little bit of a switch that are going under the covers, but probably speaking, here’s the way we look at it. Then we sort of zoom out here a little bit like for us, every single time we get a rider and I mentioned that 25% of our riders were new last year.
It’s very, very important that we work on our service levels. We work on obsessing over that ride and over that rider. Because just to say the cliche thing, it’s almost easier, more efficient to hold onto an existing rider than to acquire a new book. And so our first order of business over the last couple of quarters has really been to focus on making sure that every time we get a rider new or existing, we take good care. What that translates to is higher frequency and particularly when you look at our high frequency riders again, riders come in all shapes and sizes and they’re all sorts of segments. But if you look at our high frequency riders, you actually see a meaningful increase in frequency there. We think that’s incredibly telling because it’s a really good leading indicator when your biggest fans will also tend to be your biggest critics are positively responding to the work you’ve done.
That has massive ripple effects. And so it means that over time, as we focus even more energy on rider acquisition through new product initiatives like Women+ Connect some of these other things we do. Every single one of those riders that comes in is effectively a more profitable rider for us, right, because what we expect them to be a heavier user of Lyft. So that’s sort of the focus. The focus is on really increasing. Working on those basics, that creates some good frequency things. If you do a good job of it, you see it earliest in high frequency riders, because that’s obviously as for the data is the densest. And then you can sort of, over time, to the extent you want to or need to, you can do more customer acquisition, even in terms of product innovation, or even marketing efforts, or some combination of both.
So that’s kind of the structure. And then I’ll turn it over to Erin to talk about the cost.
Erin Brewer : Yes, so you’re asking a little bit about cost overall, and sort of how to think about initiatives into 2024. So I think you’ve specifically chatted about headcount. We’ve talked about a real focus on operational excellence, and that absolutely includes a focus on cost discipline. And so we are not anticipating any material changes, if you will, in the overall level of headcount, et cetera. Although, I would point out that even on flat headcount, you’re going to expect some increases for merit and some inflation and cost to benefits, et cetera year-over-year. But outside of things like that, we’re very, very disciplined as it relates to our sort of base cost structure. You asked about the cost of initiatives and frankly, I think I’m going to go back to the driver earnings commitment because I think it’s a really good framework in the way that we think about investing in these types of initiatives.
So first and foremost, just want to emphasize, even though it’s probably obvious that everything associated with the driver earnings commitment is included in our outlook for 2024. But if you think about that at the heart, we’ve published a lot of information here. Some of those things include things like on average drivers are taking about 88% and then we announced this 70% that you can think of as a floor. So another way to consider this are, these are edge cases that are really a pain point for drivers. And so while there is a cost to the promotion, the really important premise is that we’re taking some of the biggest pain points for drivers off the table. And if you step way back that really allows us to engage with drivers overall in a much more efficient way.
And so hopefully that gives you a framework for the way that we think about investing in things. This is a clear sort of customer obsession way to do that and how for our total business, it ends up being over time, just a really efficient thing to do. So good for the customer. Good for our business.
Operator: Your next question comes from the line of Benjamin Black from Deutsche Bank.
Benjamin Black: Thank you for the question. Erin, maybe perhaps, I think you mentioned that the improvements in marketplace balance were able to offset 75% of your incremental insurance costs. So can you dig into that a little bit more? Was that mostly a function of the driver incentives coming down? And then secondly, so for your directional guidance to 2024 implies that you faster bookings growth versus trip growth. So should we be expecting pricing to potentially a lever in 2024 as well? Thank you.
Erin Brewer : Yes, so thanks for that. You were talking about Q4, where we had the full impact of our third party insurance renewals. And so you’re correct. If I mentioned, if you think about that, along with ride growth, as we had anticipated and guided to cost of revenue increased substantially in Q1. And so, yes, we were largely able to offset that operating more efficiently as you think about driving increased driver preference for Lyft and I talked about the increase that we saw in driver hours, which have been, which were meaningful both in Q3 and Q4. That really allows us again to engage with that driver community in a much more efficient way. And it’s good for riders as well, right? Our ETAs go down, et cetera. So it becomes a sort of virtuous cycle, if you will, overall in the business. You’re going to have to repeat the second question for me, Benjamin.
Benjamin Black: Yes, gross booking, growing faster than trip growth in 2024. So curious if there’s an assumption for pricing to be a catalyst in ‘24.
Erin Brewer : Yes. Thanks. Sorry. Thanks for repeating the question. Yes. So we did guide for gross bookings to grow slightly faster than rides growth in 2024. I think it’s important to remind everyone that gross bookings, while a significant majority of that number is our core ride share business, important to remind that thing like our bikes and scooter business, media, et cetera, are also flowing through our gross bookings line. So I’d point that out. As it relates to pricing, it’s not a driving assumption in our 2024 guide. And so hopefully that all just gives you some context. Our strategy remains to be price competitive overall.
