Lyft Increased Revenue, Trimmed Loss During Tumultuous Quarter

Lyft raised its revenue and trimmed its loss last quarter, a tumultuous period that marked the departure of its co-founders from day-to-day management, the appointment of a new chief executive and the layoff of 24% of its staff.

The company increased its revenue and active riders in line with analysts’ projections while reporting a better-than-expected net loss and adjusted earnings. It also beat analysts’ projections in its outlook for the current quarter that ends Sept. 30.

The ride-sharing company has struggled with eroding market share, a sliding stock price and low employee morale. Since taking the reins as Lyft’s CEO in mid-April, David Risher has cut hundreds of jobs, introduced new features for riders and drivers, and mandated that employees return to the office. 

He is also shedding noncore operations. Risher is now looking to sell Lyft’s bikes fleet or forge a partnership with an investor that infuses cash into the division. 

Lyft recently clawed back some market share from larger rival Uber Technologies, according to market-research firm YipitData. Lyft’s gains came after the company used the money it saved from the latest layoffs to cut ride prices and bring them in line with Uber’s. 

That has helped lift the company’s stock price in recent weeks, though investors are watching to see how soon Risher can set long-term targets including projecting when the business can turn a profit. Uber reported its first operating profit in the most recent quarter.

In an interview, Risher said he expects to outline such targets by the fourth quarter. His team, he said, is gearing up to “reintroduce Lyft to the world.”

Lyft shares fell 6% in after-hours trading following the results. Through Tuesday’s close, they had risen less than 5% so far this year. Uber’s shares have climbed more than 80% over the same period.

How did Lyft perform?

• Revenue grew 3% to $1.02 billion. Lyft ended the quarter with 21.49 million active riders, up from 19.86 million in the same period a year earlier. Both figures were in line with the average estimates of analysts polled by FactSet.
• Net loss narrowed to $114.3 million, compared with $377.2 million in the same period a year earlier. The loss was better than Wall Street’s projections.
• Lyft’s recorded adjusted earnings before interest, tax, depreciation and amortization of $41 million, better than analysts’ forecast of $28 million. Lyft reported a loss of $196.3 million by that measure for the same period a year earlier. That metric strips the business of some costs outside a company’s core operations. Executives and investors often point to this figure to signal a path to future profits.

What drove results

CEO Risher said Lyft experienced strong demand for its ride-share business, as active riders reached their highest levels since the start of the pandemic. Riders on the platform rode more frequently than they did during the past two years and the number of rides grew 18% year-over-year.

Revenue per active rider declined year-over-year as Lyft cut prices for riders. Lyft had become more expensive for consumers than rival Uber because it was slower to respond to a yearslong driver shortage after the U.S. reopened from Covid-19 lockdowns. The short supply of drivers pushed up the prices for its rides. The company has said it is now priced broadly in line with Uber.

Risher said the company ended the quarter with the most number of drivers it has had since the start of the pandemic. The number of drivers grew 20% from the same period a year earlier, he said. 

Lyft’s net loss included $52.3 million in restructuring charges related to the latest staff cuts.

What is the company projecting?

• Lyft projected third-quarter revenue between $1.13 billion to $1.15 billion, beating the $1.09 billion that analysts had expected.
• It also projected better-than-expected adjusted earnings. Lyft said it expects adjusted earnings before interest, taxes and other costs between $75 million and $85 million. Analysts had expected $50 million.
• While Lyft drivers aren’t employees, the company pays for insurance to protect them while they are using the app. The company expects those costs to rise after its insurance contracts renew on Oct. 1. It said the increase will be at a lower rate than in 2022 and will affect its fourth-quarter results. Lyft added a small fee for riders to make up for rising insurance premiums last year.

Write to Preetika Rana at [email protected]