Lyft Tumbles as Profit Outlook Misses Wall Street Estimates

Bloomberg2023-02-10

Projections for adjusted earnings fell well short of estimatesLyft President Zimmer says focused on price, wait timesPhotographer: Jeenah Moon/BloombergLyft Inc. shares sank after giving an earnings ...

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Lyft reported adjusted Ebitda was a loss of $248 million during the final three months of 2022. The San Francisco-based company attributed the loss to a regulatory disclosure change which requires companies to count insurance reserves, cash set aside to pay for claims and other insurance expenses, in financial measures.The shares fell more than 29% in extended trading in New York.“We’re making sure we match competitive service levels of both price and wait time,” Lyft co-founder and President John Zimmer said in an interview. In October, Lyft increased the service fee riders pay directly to cover higher insurance costs. Those expenses are expected to continue to rise. Rather than have riders bear the burden, Lyft is willing to take the hit to profits instead, Zimmer said, adding the company expects the factors leading to the fourth-quarter earnings loss to be a one-time hit.Lyft’s projection for revenue of $975 million in the current period also fell below expectations. Zimmer said the slower growth is primarily due to seasonality and the fact that a large portion of its rider base counts bikes and scooters, which customers use less frequently in colder months. Zimmer added that the outlook also reflects Lyft generating less revenue from higher fares from surge pricing, a product of more drivers on the platform to meet rider demand.Thursday’s report marks the second consecutive quarter in which Lyft has lagged rival Uber Technologies Inc. in demonstrating it’s able to keep customers coming back to the platform and return ridership to pre-pandemic levels. Uber reported mobility bookings grew 31% to $14.9 billion in the fourth quarter, surpassing delivery segment bookings for the first time since the pandemic hit. Uber’s strong demand for ride-share services illustrates customers are still willing to pay more to order a ride, even as inflation pinches budgets and economic uncertainty looms.Unlike Uber, Lyft only operates in North America and does not have a food delivery business. To increase customer retention, the company has worked to expand its subscription product, Lyft Pink, and has partnered with Grubhub to offer members a complimentary subscription to the food-delivery platform. The San Francisco-based company also launched an advertising unit last year to tap higher-margin revenue, a strategy other on-demand platforms including Uber, Instacart Inc. and DoorDash Inc. have implemented.Zimmer said driver supply in the fourth quarter was “the best in three years” but declined to say if Lyft would be paring back spending on incentives.“I think the market is large enough, we are talking about ride sharing and mobility as a service, to support two large players,” said D.A. Davidson senior analyst Tom White. “I think Lyft can be a number two, but its increasingly looking like its a distant number two.”There were some bright spots in the fourth quarter for Lyft. It said revenue rose 21% to $1.18 billion, its highest ever, beating the $1.16 billion Wall Street was expecting. Revenue per rider rose 11.5% from last year to $57.72. The 20.4 million active riders in the fourth quarter was in line with estimates, though was still more than two million customers below Lyft’s base of 22.9 million active riders at the end of 2019.“We’re seeing it go in the right direction,” Zimmer said. He did not say whether the company was losing share to Uber but added that Lyft has “a larger portion of our market share on the west coast which has been slower to recover.”In November, Lyft eliminated 13% of its workforce, its second round of layoffs in 2022, to rein in costs as it tries to cope with a difficult economic backdrop. Uber said on Wednesday it expects headcount to be “flat” in 2023.“The difference in active rider changes between the two major players will be a leading indicator of future revenue and market share changes for both Uber and Lyft,” said Nicholas Cauley, analyst at global research firm Third Bridge, said before the report.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":50,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2310866338"}