Lyft’s Losses Continue, but Company Says They Will Abate
SAN FRANCISCO — Lyft had warned this year that it would lose record amounts of money as it expanded its business.
But on Wednesday, the ride-hailing company walked that prediction back.
With its number of ride-hailing passengers growing and its trip commissions also increasing, Lyft said its revenue for the year would be better than it had expected, rising to a range of $3.47 billion to $3.5 billion. That growth would also help crimp its losses, Lyft said, with its expected adjusted losses totaling around $875 million for the year instead of a previous projection of $1.17 billion.
“We anticipate 2019 losses to be better than previously expected, and we are pleased to have updated our outlook,” Logan Green, a co-founder and the chief executive of Lyft, said in a statement.
Yet the improved prospects do not mean that Lyft was close to making a profit. It lost $644.2 million in the second quarter, Lyft said, far more than the $178.9 million it lost a year earlier. A large chunk of that loss — about $296.6 million — was due to expenses related to the stock compensation that Lyft pays its employees. Revenue rose 72 percent from a year earlier, to $867.3 million.
In an interview, Lyft’s chief financial officer, Brian Roberts, said a fierce price war with Uber had abated, allowing Lyft to cut back on the amount it spends on discounted rides. The company spent $180 million on sales and marketing in the quarter, about 19 percent of its revenue. Last year, it spent almost 35 percent of its revenue on sales and marketing.
That was a “mic-drop moment” for Lyft and would be “music to Wall Street,” Mr. Roberts said. “We want to win on brand preference and customer experience, not on coupons. We are trying to drive profitable growth, not growth at all costs.”
Lyft’s financial performance has been in the spotlight since it went public in March. Ride-hailing is a costly business because providers continually pay large sums to recruit drivers and passengers. As investors questioned whether Lyft could turn a profit, its shares stumbled quickly after its initial public offering, sliding below their offering price of $72. On Wednesday, shares closed at $60.29, before rising in after-hours trading.
“This is still a category that investors approach a little warily because of how dynamic and fast-moving it is,” said Tom White, a senior vice president at the financial firm D.A. Davidson
In May, Mr. Roberts said 2019 would be the height of Lyft’s losses as it invested in its bicycle and scooter businesses, maintenance centers for drivers and the development of self-driving cars.
Lyft’s earnings followed a management change at the company. Its chief operating officer, Jon McNeill, announced his departure last week, and Lyft said it would not fill the role.
Lyft and Uber are also facing regulatory challenges in California, where a bill in the State Legislature could force them to treat drivers as employees rather than independent contractors. A change would be costly to Lyft and could tempt other state legislatures to draft similar laws.
“We are deep in conversations with various labor groups and lawmakers,” John Zimmer, Lyft’s president and co-founder, said of the California bill during a conference call. “There are broader societal issues that certainly affect our industry.”
The ride-hailing companies also are grappling with a new minimum wage for drivers in New York.
“Any increase in prices can lead to a decrease in driver work opportunities because of less rides,” Mr. Zimmer said.
Uber is scheduled to report its quarterly earnings on Thursday.
Post a Comment