Lyft says losses to drop next year, sees path to profitability in ride-sharing

FILE PHOTO: An illuminated sign appears in a Lyft ride-hailing car in Los Angeles, California, U.S. September 21, 2017. REUTERS/Chris Helgren

Lyft Inc on Tuesday forecast that 2019 would be the peak year for losses after the ride service company lost $1.1 billion in its first quarter, just days ahead of rival Uber’s IPO.

“We are encouraged by our strength of our core business and see a clear path to profitability in ride sharing,” said Chief Financial Officer Brian Roberts, 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 offering on Thursday.

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

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

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

Since Lyft‘s IPO on March 29, shares had fallen 23%.

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 $270 million to $280 million.

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

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

A net loss widened to $1.14 billion, or $48.53 per share, in the first quarter ended March 31 from $234.3 million, or $11.69 per share, a year earlier. Stock-based compensation and payroll tax made up $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 United States and Canada. In comparison, Uber – which could be valued at about $90 billion – had 75 million riders and 3.9 million drivers in 65 countries.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.