Lyft, Inc. (LYFT) Q1 2023 Earnings Call Transcript

Good afternoon, and welcome to the Lyft First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode to prevent any background noise. Later, we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Sonya Banerjee, Head of Investor Relations. You may begin.

Thank you. Welcome to the Lyft earnings call for the first quarter of 2023. On the call today, we have our CEO, David Risher; our CFO, Elaine Paul; and our Co-Founder and Board Chair, Logan Green. In addition, John Zimmer; our Co-Founder, President and Vice Chair; and Kristin Sverchek, our President of Business Affairs are here for the Q&A session. We will make forward-looking statements on today’s call relating to our business strategy and performance, future financial results and guidance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. These factors and risks are described in our earnings slide deck and our recent SEC filings. All forward-looking statements that we make on today's call are based on our beliefs as of today and disclaim any obligation to update any forward-looking statements, except as required by law. Our discussion will include non-GAAP financial measures, which are not a substitute for our GAAP results. Reconciliations of our historical GAAP to non-GAAP results may be found in our earnings material, which are available on our IR website. And with that, I will pass the call to Logan.

Thanks, Sonya. Good afternoon, everyone and thank you for joining us. The team is going to address a few big developments on today’s call. I'm going to kick things off by talking about our leadership transition. I'm excited to pass the baton to David Risher, who is now Lyft's second-ever CEO. That change was effective on April 17. John will also be transitioning from his role as President early this summer. David is an incredible proven leader and he's going to be great for Lyft. His experience on our Board gives him a strong appreciation for the incredible opportunities ahead of us and a clear view of the challenges. He brings the right energy, ambition and experience to lead Lyft to the next chapter. David's customer obsession, purpose-driven mindset, and competitive spirit are exactly what Lyft needs. With the transition, this will be the last earnings call that John and I join. I'm now the Chair of Lyft's Board. John will continue to serve as President of Lyft until the end of June, at which time he will continue to serve as Lyft's Vice Chair. We're excited for David to be leading the company on the day-to-day basis and look forward to continuing to serve as Board members and to supporting the company on the next leg of its journey. Finally, I want to say thank you to the Lyft investor community. John and I are incredibly grateful to have had the opportunity to build this company with your support. Lyft is our life's work, and we are confident it's in great hands. Now I'm going to turn the call over to David.

Thank you, Logan. I appreciate you and John for leading the way in creating a new industry, forming a defining company, and establishing a memorable brand. Lyft has significantly influenced the lives of millions of riders, and drivers have earned billions. That's an impressive legacy. To those on the call today, if we haven't met yet, I want you to know that I am highly results-oriented and a builder at heart. At Microsoft, I recognized the importance of scale and competitive focus. At Amazon, I contributed to making the company extremely customer-centric. And at Worldreader, I learned how to maximize resources. That's what I bring to Lyft. My view is that Lyft fulfills two essential, enduring needs. We help riders get out and enjoy life together, as we are inherently social. We also offer drivers a means of earning income with control over their finances and schedules. One driver shared that driving with Lyft ensures they will never face financial hardship. These needs are constant and form the foundation for a robust and profitable business. However, Lyft is currently at a pivotal moment. As people return to work and leisure activities, we are placing renewed emphasis on providing an exceptional rideshare service. In the short term, we are focusing on effective execution for both riders and drivers. This dedicated approach will assist us in developing a growing and profitable business in the long run. Let me outline what we have been up to and what you can anticipate next. First, over the past ten weeks, we've been competitively pricing our rideshare service to meet rider expectations. It's crucial to remember that each year millions of riders opt for Lyft instead of Uber. We don’t want to give them any reason to switch. The outcome has been an increase in our year-on-year rideshare growth for the first time in nearly two years, as well as a reduction in rides at prime-time pricing. This has fortified our position within the category in terms of both bookings and rides. Second, to support these service enhancements, we have reduced costs and restructured our organization. These decisions regarding cost and headcount cuts were not made lightly, but they are essential for consistently providing attractive prices and quick pickup times. We anticipate that the changes announced last week will yield approximately $330 million in annual savings once fully implemented. Elaine will go into more detail about the financial implications of these changes. More importantly, we have restructured the organization and reduced the number of management layers from eight to five, streamlining teams for quicker decision-making. This new structure allows me direct communication with our rideshare leads, removing obstacles to faster innovation. Third, we need to increase awareness that Lyft is an excellent choice, which will encourage more people to open our app and notice our improved pricing and service. We have been too quiet for too long, so you will see us utilizing cost-effective, high-visibility methods to remind potential riders of our identity and highlight the real differences between us and Uber. I hope you caught our collaboration launched just yesterday with TikTok influencer Delaney Rowe; it's engaging, clever, and aimed at getting people to consider us. Finally, we are poised for growth again. Both riders and drivers want a competitive rideshare market with Lyft as a strong participant. While I cannot disclose our long-term growth strategies just yet, I am currently dedicating most of my time to initiatives regarding revenue and margins. In fact, this was the primary subject of my very first meeting on my first day as CEO three weeks ago. I am genuinely excited about what I perceive to be a significant untapped opportunity to innovate and expand the North American rideshare market. To conclude, I recognize that our current growth and profitability levels are unsatisfactory, and I understand investors are awaiting revised long-term targets. As I'm new in this role, I intend to hold off on sharing those targets until I am confident in our ability to achieve them. So, to recap the game plan: First, with demand on the rise, we are committed to execution. We are centering on the essentials that riders and drivers demand, especially competitive pricing that boosts our ride volumes. Second, we have established clear goals and are executing disciplined strategies. We have structurally reduced costs and organized ourselves to enhance execution speed while bringing genuine innovation to the industry. Third, my focus is on creating a great long-term business centered around riders and drivers. This is what I learned while building Amazon's retail business, and we’ve made a solid start. I am dedicated to growing Lyft into a substantial, sustainable, and profitable business that riders, drivers, and shareholders will cherish. I look forward to updating you on our progress. Elaine, the floor is yours.

Thanks, David. To start, I want to say a big thank you to Logan and John for building Lyft and for having the vision to pioneer this industry. I'm also excited to welcome David. He's already bringing a lot of energy and vision to the team and I'm energized about the path forward. Before I review our financial results, I want to remind everyone that unless otherwise indicated, all income statement measures are non-GAAP and exclude select items that are detailed in our earnings release. Turning to Q1, our focus on pricing competitively produced solid early results. Our year-over-year rideshare ride growth rate accelerated in Q1 for the first time in nearly 2 years. Q1 was a partial quarter of operating with this renewed focus. And with a full quarter impact in Q2, we expect rideshare ride growth to accelerate further. Our Q1 financial results were better than guidance driven by rideshare strength. Q1 revenue was roughly $1 billion, up 14% year-over-year, and was $26 million better than our guidance. We had 19.6 million active riders in Q1, up 10% year-over-year, which represents an acceleration from 9% year-over-year growth in Q4. Revenue per active rider was $51.17 in Q1, up 4% year-over-year versus an 11% year-over-year growth in Q4 '22. The decelerating growth rate was primarily driven by our pricing changes. Contribution was $465 million in Q1, down 7% year-over-year. As a percentage of revenue, contribution margin was 47%, in line with guidance and down 11 percentage points from Q1 of 2022. The decrease versus last year is primarily due to higher insurance costs as well as lower per ride unit economics. Operating expenses were $465 million in Q1, down 2% year-over-year. As a result of our cost-cutting efforts to date, operating expenses were 46% of revenue, an improvement of 8 percentage points from Q1 of '22. Q1 adjusted EBITDA was $23 million, exceeding the high end of guidance of $15 million. Our adjusted EBITDA margin in Q1 was 2%. We ended Q1 with a strong cash balance. Unrestricted cash, cash equivalents and short-term investments were $1.8 billion, flat with the level at the end of 2022. Next, I'm going to address the financial impact of our latest cost-saving initiatives. When our headcount and operating cost savings are in full effect, we expect to generate approximately $330 million in annual savings. This is made up of approximately $215 million related to headcount and $115 million of operating cost reduction. We expect to realize roughly $40 million, $50 million and $70 million of savings in each of Q2, Q3, and Q4, respectively. As David explained, in the near-term, we expect to use these savings to pay for our continued service improvements, so the savings will not materially flow to adjusted EBITDA. Over time, the lower operating costs will position us well for improved long-term profitability. We are also further bringing down our stock-based compensation expense. We've changed our compensation plans and when combined with the impact of the staff reductions, we expect our stock-based compensation costs will be roughly $550 million in 2023 and $350 million in 2024, down from approximately $750 million in 2022. Our reduction in force will result in a one-time charge of approximately $41 million to $47 million in Q2, which we are excluding from adjusted EBITDA. Before I share our Q2 outlook, let me provide some framing. Q1 was a partial quarter of adjusting our prices to be competitive with the market. Q2 will be a full quarter with this continued focus, and we expect our rideshare ride growth to accelerate further. While this will result in lower per ride unit economics in the quarter, we are actively offsetting the impact with our cost saving initiatives. As a result, we expect our Q2 adjusted EBITDA and adjusted EBITDA margin will be roughly flat with Q1. With that, let me share our Q2 guidance. We expect revenues of between $1 billion and $1.02 billion, which is up 1% to 3% year-over-year. This assumes rideshare ride growth accelerates to at least 15% year-over-year in Q2. We anticipate contribution margin to be approximately 42%, reflecting the full quarter impact of lower per ride unit economics. We expect operating expenses as a percentage of revenue to be between 42% and 43%, which includes roughly $40 million of restructuring-related savings. Finally, we expect adjusted EBITDA of between $20 million to $30 million, and an adjusted EBITDA margin of 2% to 3%. At the midpoint, both would be roughly flat with Q1. Before I open the call up to Q&A, let me share three closing thoughts. First, we have a renewed focus on the basics of what riders and drivers expect. This is accelerating our ride growth. Second, we're executing in a disciplined way. We've moved decisively to cut our operating costs and we'll use the savings to pay for continued service level improvements in the near-term. Third, over time, with higher ride volume, and as we mix in higher margin opportunities, our economics can improve, and we can achieve greater operating leverage. As David mentioned, we expect to provide an update on our long-term financial targets in the coming months.

Your first question is from Doug Anmuth with JPMorgan. Your line is open.

Thanks so much for taking the questions. One for David and one for Elaine. David, you talked about pricing more competitively and providing great service and both of those being big focus areas going forward. But can you just talk about how you think Lyft can really differentiate in the market over time? And then also provide when you talk about pricing more competitively, is that pricing kind of in line with the market and with parity? And then Elaine on contribution margin, reflecting the lower levels of revenue per ride, how does that play out across both insurance and pricing and can we expect it around that low 40s level going forward that you have talked about for Q2? Thanks.

Hey, Doug, it's David. Thanks for the question. So on differentiation, it's a great issue. Right now, our real focus is on execution on the basics. And as you said, it's really on pricing and getting service levels in line with where the market is and where the competition is. And it's just table stakes. Now, when you start to zoom out, then you have to start to tell people who you are. And in our case, I think we've been a little quiet on that. So even before significant differentiation, I think just reminding people of who we are is really important. Now we get to differentiation; we do have different models. And again, I don't know if you've seen the TikTok ad, but that gives you a little bit of an indication of one way we can differentiate in the short term. But medium and long-term, there are so many ways where I think this category has sort of treated all drivers and all rides more similarly than different. And we've got a lot of ideas on how we can create products and services that our riders and drivers both like that are really differentiated against Uber. And maybe we can talk later in the conversation about some of the approaches we've taken around shared ride versus Wait & Save as an example. But that'll be for the future. Let me turn it over to Elaine for the second part of the question.

Hi, Doug. Thanks for the question. With respect to your question on contribution margin and lower revenue per ride versus what's driving things in terms of insurance versus pricing. So year-on-year, the increase in insurance rates that we experienced in Q4, that's impacting the contribution margin year-on-year, as is with pricing. From Q4 to Q1 and Q1 to our Q2 guide, the deterioration in contribution margin is driven entirely by our lower revenue per ride driven by pricing and operating competitively. To be specific, with lower prices on average, we're generating less revenue per ride. Our cost per ride has not changed materially subsequent to Q4, and thus our per unit economics are compressing, which is driving the change in contribution margin. In terms of long-term margin, we are not giving go-forward guidance at this point. But as we alluded to on the call, we'll be providing long-term guidance at a future time this year. Thanks for the question, Doug.

Great. Thank you both.

Your next question is from the line of Stephen Ju with Credit Suisse. Your line is open.

Okay. Thank you so much. So, David, and Elaine, if we could dig in a little bit on your commentary in regards to the accelerating unit growth. Does this imply that we have been decelerating, I guess, pretty much linearly since the peak in early 2021, and we are starting to see, I guess, what is an inflection point? And secondarily, I think you guys have been talking about closing the service gap versus Uber. So as you are doing that, are you finding that consumers are coming back straight away given the affinity with the Lyft brand? Or are you finding that you have to go back and rewind your business? Thank you.

Yes, that's a great question. Thank you, Stephen. Regarding the first part, I agree with your characterization of it as an inflection point. That's exactly what we are observing. We have been focused on our execution strategy for about 10 weeks now, and you may have noticed our overall market share has increased to 30%, up from the mid to high 20s. In certain markets, we are experiencing even stronger growth. For instance, in Portland, Oregon, we are almost neck and neck with our competitors, and the same goes for Phoenix, Arizona. This indicates that effective execution can rapidly enhance our market share, and consumers are responding positively to our services. I'll pause there, and we can discuss this in more detail later.

Your next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Thanks. Thanks so much for taking the questions. Maybe I can follow-up on some of the topics that were touched upon already. In terms of driving incremental rider growth, what are you sort of investing behind to continue to build rider scale, where maybe there's an ability to have a differentiated market share dynamic among newer riders or riders coming back to the product versus a pre-pandemic period as opposed to possible market share dynamics among existing riders? I'm curious your sort of framework around that. And then I know we're going to wait for a period on longer-term guidance. But I did want to understand a little bit better philosophically how you think about the pricing lever versus the margin lever in terms of striking the right balance in the business over the medium to long-term and how you think about sort of striking that balance against the broader goals? Thank you.

Yes, great question. And my apologies I didn't catch the name at the beginning.

It's Eric Sheridan from Goldman Sachs.

It's nice to talk to you, Eric. Let me start by addressing the pricing strategy. We are currently pricing in alignment with the market, and that's where we intend to remain. I believe pricing becomes an important focus only when you're already aligned with the market. The real question then is how to compete in other aspects. Fortunately, we have an iconic brand that resonates with people. This factor might be easy to overlook, but it’s significant; riders make choices each time they use our app, influenced by various factors including brand perception and distinct services we offer. We're actively developing innovative products that will enhance the rider experience, especially with the upcoming summer travel season. Next week, we have an event planned where we’ll make announcements aimed at easing the ride experience for summer travelers. Additionally, as companies encourage employees to return to the office, we at Lyft view this as a chance to transform unproductive commutes into productive ones. We are just beginning to explore these growth areas. Our strategy includes keeping prices in line with the market, emphasizing our brand, and introducing services that cater to the needs of riders in 2023, which may differ from those in 2019.

Your next question is from the line of Nikhil Devnani with Bernstein. Your line is open.

Hi, there. Thank you for taking the question. I had a couple please. Just on the Q2 revenue outlook, could you please unpack some of the underlying pieces there and maybe provide some color around trip growth or bookings growth? Just trying to understand how much of this low single-digit revenue outlook is really a function of pricing and incentives, maybe which are some near-term drags on revenue that you can lap at some point down the road? And then maybe, David, on the back of the recent cost cuts, could you talk about some of the trade-offs you might be making going forward or had to make between kind of driving incremental efficiency and maybe giving up some longer-term growth opportunities like locks or shared rides? Thank you.

Yes, let's proceed, Nikhil. Thank you for the question. Elaine will address the first part, and I will handle the second part.

Hi, Nikhil, thanks for the question. In terms of what is behind our Q2 revenue guide, let me give you some more color there. We're assuming significant acceleration of the rides growth in Q2 to at least 15% year-on-year. So significant acceleration of our growth. And we anticipate that that's faster than the overall market growth. In terms of bookings, we're assuming in our Q2 guidance that gross bookings grow at a faster rate quarter-on-quarter and year-on-year than revenue. And as a result, that means that our take rate is moderating quarter-on-quarter and year-on-year. So hopefully that gives you some color behind our single-digit revenue growth. Thanks for the question.

Yes, and then on sort of the cost-cutting and kind of where does that lead, I guess, was sort of the question. Let me start with two things. The first is, why did we cut costs? We cut costs so that we could be more competitive for riders and drivers and pass along great prices and great earnings. So that was the rationale. The second piece was accelerating decision-making. So it's maybe a little counterintuitive, but sometimes less is more. And in this case, we think we can move faster now that we've right-sized the organization, which I think sort of gets to the other point. I didn’t so much think of it as a trade-off. And I certainly did not, let me say it just affirmatively. I am very focused on the long-term health of this business, very focused on the long-term health of this business. So I'm really not so interested in making short-term trade-offs that jeopardize the long-term health and growth of the business. It doesn't make any sense to me at all. Now, if you look very specifically, you kind of alluded to a couple of things like, for example, Wait & Save. And I want to actually bring this up even a little proactively because I think it's an interesting case study. So Wait & Save is our mechanism for giving riders something they really like, a segment of our riders, which is a way to save money, and it's something we've leaned into. We're quite excited about it. It's a different approach than what Uber is taking. We can talk about that if that's of interest, but I bring that up as an example of we're very focused on what our riders and our drivers want. And that's really the primary lens I used to make the cuts.

Great. Thank you both for the color.

Your next question is from the line of Mark Mahaney with Evercore ISI. Your line is open.

Hi, guys. This is Ian Peterson on for Mark. One quick question here. Great if you could provide an update on how Lyft Pink is tracking? I know membership growth doubled in Q4; if you could just provide us an update there. And any progress in some of your new key segments including enterprise, universities, and health care? Thanks.

Sure. I'll be a bit general here. I'm not entirely sure if we have much to report in detail, but we can look into it. What's really interesting about Lyft Pink is that members take more than double the rides on average. This indicates that if you are loyal to Lyft for any reason, you are very valuable to us. Therefore, we plan to focus more on that. I might approach this a bit differently than we have in the past. I see it as a way to build a strong and dedicated base of Lyft loyal customers, which includes both riders and drivers. This will be a key area of focus for us moving forward because while acquiring riders and drivers is one aspect, retaining them is quite another. That's just a theoretical perspective; I really appreciate what I see, but we have more work ahead, and I value our loyal riders. Elaine, should we delve into any details about the other segments, or perhaps not today? I can share that on our B2B side, we’ve experienced strong growth in health care. As I've mentioned, we see significant opportunities to increase enterprise usage on our network, so stay tuned for more on that. That's all we have for now.

Your next question is from the line of Benjamin Black with Deutsche Bank. Your line is open.

Hey, David, perhaps this is a bit of a follow-up. You spoke about in your blog, this narrow focus, discontinued share locks; what gives you the confidence this narrow focus or narrow rideshare offering can fuel growth? And also, is there any way that you can help us size the revenue contribution of shared or locks? And then from a marketplace bounce perspective, how do you feel positioned today? And where do you feel the need to grow incentives on either side of the marketplace, either being on the consumer side or on the driver side? Thank you.

Thank you for the question, Benjamin. Let’s break this down. I want to talk about shared rides, as you mentioned. We brought back shared rides before COVID, but we found it became a bit complicated during the pandemic when interest in that offering dropped. However, there was a strong demand for cost savings, which led us to create a new product called Wait & Save. This product has quickly gained more popularity than shared rides ever did. From the rider's perspective, it allows them to save money without having to go out of their way, which is crucial since riders often dislike the inconvenience of diverting to pick someone else up. Drivers also prefer having control over their route and dislike the frequent pick-up and drop-off cycles, as they prefer engaging with passengers during the ride. We're pleased with the swift customer adoption of Wait & Save and see it as a prime example of how we're examining new opportunities to differentiate ourselves from competitors while meeting the desires of our riders and drivers.

Your next question is from Rohit Kulkarni with ROTH MKM. Your line is open.

Hey, thank you for taking my questions. A couple of them. Maybe talk about driver incentives and how that feeds into your that algorithm of profitability versus growth over the near-term, as there has been history of kind of how driver incentives have sometimes been very short-term oriented, and drivers tend to be quite fickle. So we'd love to hear how you are thinking over the next, call it, critical period of summer to incentivize drivers to drive more on Lyft. And then just on bikes and scooters, maybe the latest thinking beyond the restructuring on how bikes and scooters fit into the portfolio. If you think strategically, you need to make any changes because sometimes it may lead to more seasonality than what some of the investors tend to compare you with Uber and have somewhat of a different approach.

Rohit, sorry, we can't hear you.

Rohit, it seems there was a bit of a disruption at the end of your statement, but I believe we understood the main idea of your question. Let me share a brief update regarding drivers. Elaine will further discuss the incentive aspect, which connects to the previous question, and then we will touch on bikes and scooters. On the driver front, a significant point to highlight is that an increasing number of drivers are selecting Lyft over other options. In fact, for the first time in about three years, we recorded the highest number of drivers in Q1, which is quite encouraging. Furthermore, we have observed a growth acceleration in driver supply during Q1, the first such increase in a year. This is crucial for our business and beneficial for our riders as well. Elaine will provide additional insights regarding the incentives.

Yes. So on the incentive side, we are being helped by tailwinds to organic supply. To give you some color, in Q1, in absolute terms, incentives and contra revenue were $304 million. On a per ride basis, incentives were down 13% quarter-on-quarter. This is consistent with what we were anticipating. It's also consistent with what we said in February that we'd be down quarter-on-quarter in absolute terms and on a per ride basis. And then looking forward to Q2, we currently anticipate that contra revenue incentives will be roughly flat with the level in Q1 and also down quarter-on-quarter on a per ride basis. So, of course, the extent of our investment is dependent on what we see with real-time market conditions. But that's our outlook. And one other point of color to add; we're seeing that our driver investments are more efficient. The cost per incremental driver hour was the lowest that it's been in 2 years in Q1. And again that's helped by tailwinds we see to organic supply.

I want to add a quick point before addressing your question about bikes. This is a bit more philosophical. Driver incentives are important as they help balance supply and demand in the short term. I want to emphasize that drivers enjoy the work because it offers them flexibility and control over their time and earnings. One driver mentioned that they love driving for Lyft because they know they won't run out of money; they can always drive more. While incentives matter, they can detract from the overall driver experience by reducing visibility and earnings. We will use incentives strategically and tactically, but they don't define our approach. Our priority remains to create a great experience for drivers. Now regarding bikes and scooters. Our focus is a key strength; we are effectively a pure play on rideshare, which is vital for us. To this end, we have scaled back some car services such as our garage and consumer rental business. We are also spinning off Loop, which is the infrastructure we developed in-house. While this isn't a major economic change, it's significant for our concentration. As for bikes, e-bikes are popular and riders appreciate them. However, we haven't fully integrated bike rides into the Lyft ecosystem as well as we should. We need to ensure that every rider feels welcomed in both the bike and rideshare experiences. We also need to improve the economics of our bike operations, as this segment requires substantial capital investment. There's room for optimization, and I believe we can enhance our performance in this area.

Your next question comes from the line of Steven Fox with Fox Advisors. Your line is open.

Hi, good afternoon. You've mentioned making new decisions regarding product offerings, and I believe the company has a solid track record of successfully introducing products. I'm trying to understand what you see that needs to change in how you launch products in the rideshare sector. What past mistakes were identified, and what selectivity is being applied now under the new structure? Thank you.

Yes, thank you, Steven, and I appreciate your comments about the past. I agree with you. In terms of changes, I believe we need to think bigger and act faster. There are significant opportunities ahead of us that were somewhat hindered by COVID, but now that we are moving past that, we can think boldly again. Internally, we have been focusing on how to move more quickly because the expectations of both riders and drivers are constantly changing. Our primary focus is on building a profitable business, which will largely depend on whether we can create products and services that our drivers and riders truly enjoy. We have a strong brand and a rich history to draw from, and there's a lot of work to be done, and we want to pursue it with urgency.

That's helpful. And then just any comments on sort of how you think autonomy eventually fits into your network going forward?

I have a lot to say about this, but I'll be brief. Autonomy is significant. The reason it's significant is that the companies investing in it have poured billions of dollars into their platforms. For them to have any chance of achieving a decent return on investment, they must effectively utilize fleets with a broad range of operators who can deliver the necessary volume, as consumer adoption will take time. These services will likely be expensive and niche for a while. It is crucial for us to position ourselves as an exceptional partner. We are currently conducting experiments in Las Vegas with vehicles on the road as part of this initiative. The goal is to be fully prepared to collaborate effectively with the autonomous vehicle companies. I believe that, similar to AI, there will come a day when we marvel at how quickly autonomous vehicles emerged. Right now, the perception is that it's always just around the corner, which has been true. However, if you're in San Francisco, you can see several driverless cars on the streets within minutes. This illustrates that while the advancements may seem subtle to many for a while, when the shift occurs, it will happen rapidly, and we are getting ready for that.

Great. That’s very helpful. Thank you.

Sure.

There are no more questions at this time. Ladies and gentlemen, thank you for participating. This does conclude today's conference call. You may now disconnect.