Lyft on Tuesday reported that its losses narrowed in the fourth quarter, beating Wall Street's expectations as the ride-hailing company said it still expects to be profitable on an EBITDA basis by the end of the year.
The company generated $569.9 million in revenue in Q4 2020, down 44% year-on-year as the pandemic has ravaged its business. Lyft, which is almost entirely dependent on rideshare revenues, has been among the hardest-hit gig economy companies during the pandemic.
While Lyft said that rides were still down 51% year-over-year and active riders were down 45.2%, it also made more money off each of those riders: $45.40, up 2.3% year-over-year and up 13.7% from the previous quarter.
Lyft executives also said the company exceeded its cost-cutting goals and would be able to keep those costs down as the business rebounds.
"I believe we are now in a stronger position than at any time in the past, given the improvements we've made to our unit economics and our overall cost structure," CEO Logan Green told investors.
"We're like a tightly coiled spring positioned to drive strong organic growth and margin expansion as the recovery takes hold," he said, adding that the company expects to take advantage of "pent-up demand" among US consumers.
Lyft's stock climbed around 10% in after-hours trading Tuesday following its earnings report.
Here are the key numbers, as well as what Wall Street was expecting. Estimates are based on Yahoo Finance consensus data.
- Revenue: $569.9 million, down 44% year-on-year ($562.49 million expected)
- Loss Per Share (GAAP): $0.58 ($0.72 expected)
- Net loss: $458.2 million
- Active riders: 12.6 million, down 45.2%
- Revenue per active rider: $45.40, up 2.3%
Ride-hailing companies like Lyft and Uber saw earnings plummet in 2020 as COVID-19 lockdowns curbed travel for most of the year.
After reporting revenue $1.02 billion in GAAP revenues for Q4 2019, Lyft's revenue declined to $955.7 million in Q1 2020 and $339.3 million in Q2 2020. Lyft bounced back slightly with $499.7 million in revenue for Q3 2020, but ridership was still down 44% from the previous year quarter.
Lyft lacks significant revenue streams outside of ridesharing and only operates in North America, and has struggled amid the US' failures to contain the spread of the virus.
But Green said that Lyft is well-positioned for the recovery because he believes "the US could reach critical immunity levels earlier than many international destinations."
CFO Brian Roberts said Lyft could be profitable on an EBITDA basis by Q4 or possibly Q3 2021 if rides grow by an average of "high single digits" during the first half of the year.
As Lyft continues to search for a route to profitability, it dodged a major roadblock in November by persuading California voters to pass Proposition 22, a law Lyft helped author that exempts it from complying with the state's labor laws by allowing it to classify drivers as contractors.
Experts have previously told Insider being able to rely on contract workers may cut Lyft's labor costs by as much as 30%. But the company has received growing criticism from drivers, many of whom work full-time for rideshare and food-delivery companies, over shrinking wages, a lack of benefits, and an inability to address concerns with Lyft.
The classification issue likely won't go away anytime soon, as the Biden administration has signaled it wants to make many gig workers employees. Lyft and other companies in the industry have stepped up lobbying in anticipation of a major battle in Washington.
Source: Insider
Source: Insider
