Ride-sharing service Lyft, Uber’s biggest competitor in the US, surpassed $1bn in quarterly revenue for the first time in the last three months of 2019 but it said it still expects to lose money until the end of next year, sending its shares lower.
Despite exceeding Wall Street expectations for the past quarter, Lyft’s reluctance to follow Uber’s lead and move forward its goal of profitability left its stock down more than 5 per cent in after-hours trading.
Lyft’s fourth-quarter loss widened to $356m from $249m in the same period the year before. With stock compensation removed, the loss for the fourth quarter totalled $149m.
Nevertheless, the red ink was not as bad as analysts had feared. The loss per share was $1.19 versus a consensus estimate of $1.38, according to S&P Capital IQ.
Lyft’s total revenue for the quarter, $1.02bn comfortably beat Wall Street’s prediction of $984m.
The company said it had also increased the number of “active riders” by 23 per cent to 23m in the quarter, and was now achieving revenue of $44.40 per rider compared to $36.02 in the same period a year earlier.
But the after-hours trading performance of the share price indicated how Wall Street was looking for a change to Lyft’s profit target after Uber last week told investors it hoped to have its first profitable quarter, based on adjusted earnings before interest, tax, depreciation and amortisation, by the end of 2020.
Lyft’s goal for adjusted ebitda profitability was the end of 2021, unchanged from earlier guidance.
“The entire industry is focused on profit growth which we think is healthy,” said Brian Roberts, chief financial officer, speaking to the Financial Times. “In terms of the fourth quarter we exceeded our outlook and finished 2019 with conviction.”
The company’s total costs and expenses in the fourth quarter rose to $1.4bn from $940m a year earlier.
Lyft in January announced it was laying off 2 per cent of its workforce and pulling back regional spending on sales and marketing. The company said its headcount would grow this year.
Dan Ives, of Wedbush, maintained his “outperform” rating for Lyft as the shares swooned. “Lyft’s guidance has proven to be conservative to date,” he said. “This US ride-share market is clearly continuing to improve.”
The company downplayed any threat from a new law in California designed to give contractors, such as its drivers, more employment rights. The state’s AB5 law prompted rival Uber to make changes to its app, such as letting a small number of drivers set their own prices.
“We obviously look at the impacts and are always evaluating,” Lyft chief executive Logan Green told investors. “But we have no additional product features to report at this time.”
Lyft is part of a consortium of gig economy firms — along with Uber, DoorDash, Postmates and Instacart — to have pooled $100m to back a new ballot measure to replace AB5.