Lyft Posts Record Earnings As Ride-Hailing Rebounds
Lyft reported its highest earnings ever, a sign that strong ridership and cost-cutting measures offset increased investments.
(Bloomberg) -- Lyft Inc. jumped as much as 8.6% Friday and is on track for its best week in nearly two years on after reporting the highest earnings in its history.
The San Francisco-based ride-hailing company reported adjusted earnings, which strip out some costs, of $79.1 million in the second quarter, far surpassing the $18.1 million average analysts were expecting, according to data compiled by Bloomberg. Revenue rose 30% from a year earlier to $991 million.
The results are a sign that Lyft is approaching a full recovery from the pandemic amid a broad-based rebound in ride-hailing that also buoyed rival Uber Technologies Inc. in the period. Record adjusted earnings and plans to reduce spending on driver incentives assuaged investor concern about costs that sparked a rout in Lyft shares when it reported first-quarter results in May.
“The worst seems to be behind Lyft overall after last quarter’s stumble,” Barclays analysts wrote in a note to investors after the results.
Lyft saw a 16% increase in active riders from the same period last year to 19.9 million, the highest since the start of the pandemic.
Read more to see what analysts are saying about the results.
Chief Executive Officer Logan Green said on a call with analysts that Lyft would reach pre-pandemic ride-share volumes in the medium term.
Like other gig economy peers, Lyft is confronting investor pressure to rein in its cash burn amid a gloomy economic outlook. The company hived off its rental car business in July and said it would slow hiring to cut back on costs.
“We re-prioritized our R&D initiatives and reorganized teams to ensure laser focus on driving profitable growth,” Green said. Lyft is forecasting revenue of $1.04 billion to $1.06 billion and Ebitda of $55 million to $65 million for the third quarter.
A key challenge for Lyft and rival Uber Technologies Inc. has been matching surging customer demand with sufficient drivers on the ride-share apps. The imbalance has led to higher fares and wait times for passengers. Despite spending millions in incentives to get more cars on the road, Lyft’s and Uber’s efforts have been undercut by soaring gas prices that whittled down driver earnings and made it harder for companies to lure them back.
The number of active drivers on Lyft grew about 25% from a year earlier, while new signups rose nearly 35%. That’s improved wait times and the cost-per-ride is gradually declining. “The driver situation is materially improving and it’s not as much of a concern as previously,” co-founder and President John Zimmer said in an interview.
On Tuesday, Uber said it would be paring back spending on incentives and instead has focused on adding driver-friendly like the ability to see fares and destinations before accepting a trip to “build trust and transparency.” The company said new driver signups in the US were up 76% compared to last year.
Lyft, which rolled out its own version of upfront fares earlier this year, will be expanding the feature to other markets, Zimmer said.
But while both ride-hailing giants face some of the same pressures, Lyft shares have fallen about 60% since the beginning of the year, a much bigger hit than the 24% decline at Uber. Unlike Uber, which offers food delivery through Uber Eats, Lyft’s core business is ride-hailing. The company has explored tapping other revenue streams like facilitating last-mile delivery for businesses.
(Updates with share price in first paragraph, analyst commentary in fifth paragraph)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.