Lyft president: Ride-sharing industry 'has quite a bit of pricing power'

Lyft President and Co-Founder John Zimmer joins Yahoo Finance Live to discuss the company's fourth-quarter earnings, price increases as driver shortages increase, its partnership with Google, and the outlook for the ride-sharing industry.

Video Transcript

BRIAN SOZZI: Lyft has one of the hottest ticker pages on Yahoo Finance this morning in the wake of the ride hailing giant's latest earnings. While the company beat analyst sales estimates, it fell a bit short of expectations for active riders and adjusted operating profits. The company also guided cautiously for the first quarter in large part due to effects from the pandemic.

Let's welcome on Lyft co-founder and president John Zimmer for more on the results. Sean, always nice to get some time with you. Good morning here. Perhaps let's just swab the deck on some of the things you're seeing in the business today because I think that's what the market is reacting to. Have you seen any stabilization in ride sharing volumes to kick off this year?

JOHN ZIMMER: I'd say if you look at the case count for omicron, it really spiked in January and has since come down. And so we're, as we've said, cautiously optimistic for our full year. It's super hard to predict the pace of the recovery. We have seen from the driver's side of things much improvement since Q2 of last year. ETAs improved by 30%, which is a good balance-- good measure of the balance between drivers and riders. So we are feeling great about the year ahead. Near-term, still a little bit of headwind from the pandemic.

JULIE HYMAN: Hey, John, it's Julie here. I know that your revenue per active rider was at a record, $51.79. And some of that, as you all talked about, was longer rides, for example. I'm curious what's happening on the pricing front, especially since as you just talked about, the driver supply, if you will, has sort of normalized, to some extent.

JOHN ZIMMER: Yeah, as you mentioned, I think that that primary driver there is the right mix. We see a lot longer rides in Q4, as people are going to airports, and shorter rides in Q1, as people are pulling back on their spending and those trips. And another thing to keep in mind is bike share is becoming a decent part of our business. Citi Bike in New York is now the 25th largest transit network in terms of rides. And people don't ride bikes in the snow.

BRIAN SOZZI: No, even though I'm sure they do try, John. One thing we were talking about a little bit earlier on in the show is just this pricing power. And the revenue per rider has improved for Lyft. Is that more a function of demand starting to come back, or is there still a labor shortage impacting the business?

JOHN ZIMMER: Again, the labor side of things on drivers has improved dramatically. We saw 50% year over year improvement in driver activations for Q4. So, again, I think it's primarily around the longer rides. There's still some rebalancing, but nothing material in that Q4 around base pricing.

JULIE HYMAN: And so, John, I'm sorry, I-- maybe it's in here, and I'm missing it. So what is happening with pricing? Are you seeing-- have you been seeing an increase? And are you guys going to plan to raise fares as we head in further into this quarter and then further into the year?

JOHN ZIMMER: So a bike ride costs, let's say, on average, $3, $4. People aren't taking them as much, so there's less of the short rides. There's less of the within city rides that are shorter. And there's more of the expensive $30, $40 airport rides in Q4. Therefore, the average is pushed up. That is one of the primary contributors.

In terms of go forward, I'd say that the industry itself has quite a bit of pricing power. I'm not going to predict what happens or say what happens in terms of our pricing. But it doesn't need to be increased in order to have a great business [INAUDIBLE] great unit economics.

BRIAN SOZZI: Interested a little bit, John, in what you were talking about on the call last night with your Google Maps integration. What is that, and what are your plans for it?

JOHN ZIMMER: So one of the things we talked about on the call is that, yeah, we have an Android Auto and integration so that drivers can now actually operate their Lyft experience from Android Auto have a much larger screen, not need to have multiple phones with navigation and things like that. So we believe that improves safety in the overall driver and rider experience. We're quite excited about that. That's a first of its kind. We're going to look to other platforms as well to make that easier on drivers.

Additionally on the call, we talked about building our own maps, so Lyft maps built by Lyft for Lyft for our use case. And we believe we can provide a better experience for drivers through our own navigation system and improve the overall marketplace using rideshare specific maps.

JULIE HYMAN: Hey, John, I'm curious as you're talking about making the experience better for drivers, I'm curious how your drivers have changed through the pandemic and now as we get to perhaps another phase of it. In terms of whether these are side gigs for people, whether they're professional drivers, demographics, I'm just curious what the character of the drivers is like right now versus how it was.

JOHN ZIMMER: Yeah, I mean, certain folks that were using this for supplemental income when they were getting money from the government pulled back, particularly when they had health concerns before vaccines and things like that.

The overall mix of our drivers at this point remains quite similar to where it was prior, where now more of those individuals looking for that supplemental income have come back. The average driver drives under 20 hours a week and adds this on top of other work that they're doing. So I'd say, in the pandemic, there were changes in demographics. As we start coming out of it, it looks quite similar to when we entered.

BRIAN SOZZI: All right, we'll leave it there for now. Lyft co-founder and president John Zimmer, always good to see you. Stay safe. We'll talk to you soon.