Lyft attracts fewer riders than expected, but co-founder tells MarketWatch that ‘a lot of challenging execution’ is ‘behind us’ after layoffs announced last week
Lyft Inc. attracted fewer customers in the third quarter than Wall Street expected, but record-high ride-hailing prices sent the company to its highest quarterly revenue ever anyway, executives said Monday.
Lyft LYFT, +2.91% shares fell 14% in after-hours trading, after rising almost 3% in the regular session to close at $14.14. Lyft stock has declined 67% so far this year and is on track for its worst year on record, while the S&P 500 index SPX, +0.96% has fallen about 20% year to date.
The ride-hailing company reported seeing its highest numbers of active riders, rides and drivers since the beginning of the COVID-19 pandemic, though its 20.3 million riders in the third quarter fell short of analysts’ expectation of 21.2 million. Revenue per active rider climbed to a record high of $51.88, up 4% from the previous quarter and an increase of 14% year over year, which the company attributed to an increase in long trips as airport rides continued to recover. That blew past analysts’ expectations of $49.40.
“We had a lot of challenging execution that we had to pull off over the last few years,” Lyft co-founder and President John Zimmer told MarketWatch in an interview Monday. “That’s behind us.”
The company’s main message is it is intent on combining what it expects will be continued growth and recovery from the pandemic with cutting its way to profitability. It announced last week that it was laying off 13% of its workforce, or almost 700 people, which Zimmer said was a “proactive move to make sure 2023 is a year we could focus on execution.” Lyft did not change its forecasts, is guiding for fourth-quarter results that are in line with analyst expectations and is saying it plans to achieve $1 billion in earnings before interest, taxes, depreciation and amortization (Ebitda) in 2024, along with $700 million free cash flow.
Lyft also cited economic uncertainty as a reason for the job cuts, so analysts on Monday’s earnings call asked whether the company has seen signs of a slowdown in its business.
Not at all, Lyft’s executives said.
“We are not seeing concerning macro trends in terms of growth in Q4,” Chief Executive Logan Green said. “We can’t predict exactly how 2023 is going to shape up, and we want to put ourselves in a position of maximum flexibility so that we can handle at any scenario.”
Other moves the company has made include reducing “various operating expenses” and its real-estate footprint as more employees work from home, Zimmer told MarketWatch, adding that the company has slashed real-estate costs by about half.
Lyft’s third-quarter revenue rose to $1.05 billion from $864 million in the year-ago quarter, though it reported a net loss of $422 million, or $1.18 a share, compared with a loss of $99 million, or 30 cents a share, in the year-ago period. Adjusted net income was $36.7 million, or 10 cents a share.
The company attributed much of its loss to $224.1 million in stock-based compensation and a $135.7 million charge related to the shutdown of Argo AI, the autonomous-vehicle startup that was backed by Ford Motor Co. F, +1.41% and Volkswagen AG VOW, 0.61%, in which Lyft had a small stake. Lyft and Argo had an agreement to test autonomous ride-hailing.
Analysts surveyed by FactSet had forecast a net loss of $171 million, or 49 cents a share, and adjusted earnings of 7 cents a share on revenue of $1.06 billion.
Adjusted Ebitda was $66.2 million compared with $67.3 million in the year-ago quarter, and above the $62 million analysts had expected. For Lyft, Ebitda excludes interest expenses, insurance-liability costs and more.
The company expects fourth-quarter revenue to be between $1.145 billion and $1.165 billion, and adjusted Ebitda of $80 million to $100 million. Analysts are forecasting a loss of 40 cents a share on revenue of $1.16 billion, and Ebitda of $85 million.
