17 February 2020
Lyft said increased demand helped push revenue to US$776 million in the first quarter, up 95 percent from a year earlier. Photo: AFP
Lyft said increased demand helped push revenue to US$776 million in the first quarter, up 95 percent from a year earlier. Photo: AFP

Lyft says revenue nearly doubles, growth to slow

Lyft Inc. forecast that 2019 would be the peak year for losses after the ride service company lost US$1.1 billion in its first quarter, Reuters reports.

“We are encouraged by [the] strength of our core business and see a clear path to profitability in ride-sharing,” chief financial officer Brian Roberts said on Tuesday, sending shares up 3 percent in after-hours trading.

Revenues nearly doubled in the quarter ended in March but Lyft forecast growth would slow in its first results as a public company. Lyft is watched as a bellwether for its larger rival Uber Technologies Inc., which will price its initial public offering on Thursday.

Lyft, which says it has nearly 40 percent of the US ride-hailing market, said increased demand helped push revenue to US$776 million in the quarter, up 95 percent from a year earlier and above analysts’ average estimate of US$739.4 million, according to IBES data from Refinitiv.

An outlook for second-quarter revenue of US$800 million to US$810 million was ahead of analysts’ expectations of US$783.1 million. The low end of that forecast would amount to revenue growth of 58 percent, however, far short of the growth Lyft has enjoyed recently.

For the full year, Lyft forecast revenue growth between 52 percent and 53 percent.

Since Lyft’s IPO on March 29, shares have fallen 23 percent.

Atlantic Equities analyst James Cordwell called the results “pretty strong”, with hints that Lyft was continuing to take market share from Uber. He cautioned, however, that Lyft’s outlook did suggest “a meaningful slowdown in revenue”.

“The question will be whether this is just conservatism, Uber starting to fight back, or the company hitting tougher comps,” Cordwell added.

In a snub to Uber, Lyft also announced a partnership with Alphabet Inc.’s Waymo in which Lyft will deploy 10 self-driving vehicles around the Arizona city of Phoenix. Uber has welcomed Waymo cars on its network.

For its second quarter, Lyft forecast an expected adjusted EBITDA loss of US$270 million to US$280 million.

Lyft posted revenue of US$37.86 from each of its 20.5 million active riders during the first quarter, a 34 percent increase in revenue and a 46 percent increase in riders over the same period in 2018.

Total costs and expenses rose more than 200 percent in the quarter as it stepped up its promotional activities to compete with rival Uber, although a contribution margin improvement to 49.6 percent from 35.4 percent pointed to greater efficiency.

Net loss widened to US$1.14 billion, or US$48.53 per share, in the first quarter ended March 31 from US$234.3 million, or US$11.69 per share, a year earlier. Stock-based compensation and payroll tax made up US$894 million of that amount.

Both Lyft and Uber have warned in regulatory filings that they may never make a profit and they face growing competition, friction with drivers and pricing pressure.

Unlike its larger, more international rival, Lyft focuses almost exclusively on ride-hailing in the United States.

One point of contention for some Lyft investors has been the company’s dual-class share structure, which gives founders outsized control of the company.

Last year, Lyft had 30.7 million riders and 1.9 million drivers in more than 300 cities in the US and Canada. In comparison, Uber, which could be valued at about US$90 billion, had 75 million riders and 3.9 million drivers in 65 countries.

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