Emily McCormick | Reporter | Yahoo Finance | May 8, 2019
Lyft (LYFT), in its first quarterly report as a public company, exceeded Wall Street’s expectations for top-line growth while guiding toward a widening loss.
The San Francisco-based ride sharing company posted an adjusted loss of $9.02 per share on revenue of $776 million for the quarter, nearly doubling revenues from the year-ago quarter. A consensus estimate of Wall Street analysts expected Lyft to post an adjusted loss of $3.97 per share share on revenue of $738.5 million, according to Bloomberg-compiled estimates. However, expectations for Lyft’s first-quarter adjusted loss fluctuated widely in the days leading up to the report.
Shares of Lyft fell 7.15% to $55.16 each as of 11:17 a.m. on Wednesday.
“The first quarter was a strong start to an important year, our first as a public company,” Logan Green, Lyft co-founder and CEO, said in a statement. “Our performance was driven by the increased demand for our network and multi-modal platform, as Active Riders grew 46% and revenue grew 95% year-over-year. Transportation is one of the largest segments of our economy and we are still in the very early stages of an enormous secular shift from personal car ownership to Transportation-as-a-Service.”
Active riders and revenue per active rider – two proxies of growth for the ride-hailing company – each exceeded expectations in the first quarter. Active riders grew 46% year-over-year to 20.5 million, and revenue per active rider increased 34% to $37.86.
Lyft’s guidance for the current quarter and full year also jumped ahead of Wall Street’s expectations. The company sees full-year revenue totaling $3.27 billion to $3.3 billion, beating consensus estimates of $3.26 billion. For the fiscal second quarter, Lyft sees revenues of $800 million and $810 million, higher than the $782.2 million expected.
However, the guidance implies a slowdown in revenue growth, with second-quarter guidance indicating just a 60% year-over-year increase on the high end. Revenue grew 111% in the second quarter of 2018, but company management noted during a call with investors Tuesday that last year’s second quarter results received a boost from the timing of an industry-wide price increase.
Lyft is also guiding toward steeper losses in the quarters to come. Lyft sees adjusted operating losses of between $270 million and $280 million for the fiscal second quarter, wider than the $216 million loss in the first quarter. For the full-year, adjusting operating losses are expected to total between $1.15 billion and $1.175 billion.
On a call with investors Tuesday, Lyft CFO Brian Roberts said the company is on a “clear path to profitability” and anticipates that 2019 will be the company’s “peak loss year” before moving steadily toward a profit on a consolidated basis.
‘Head-scratching train wreck’
Since floating an initial public offering in March, Lyft has endured a rough ride over the past 39 days.
Shares of Lyft have fallen about 20% from its IPO price since it began trading on the Nasdaq on March 29. The company has been hit with class-action complaints filed by investors who allege Lyft exaggerated claims and obscured some details in its go-public prospectus.
Meanwhile, drivers across the country – for Lyft as well as for Uber – are set to go on strike to protest the companies’ labor practices.
Lyft has been an outlier among other household tech names hitting the markets this year. The stocks for other highly anticipated tech companies Pinterest and Zoom – which made their initial public offerings after Lyft’s debut – are up about 50% and 100% to date, respectively.
“Let’s not sugarcoat it, Lyft’s stock has been a head-scratching train wreck since the IPO” with its stock badly underperforming other key tech IPOs like Pinterest and Zoom, Wedbush analyst Dan Ives wrote in a note on Friday, prior to the release of earnings results. He rates Lyft at “neutral.”
The company reports just two days ahead of what is expected to be Uber’s IPO pricing. The leading ride-sharing giant is looking to raise as much as $9 billion in an IPO that could give it a market valuation of about $91 billion on a fully diluted basis.
Lyft went public at a valuation of about $24 billion.
“We continue to believe that ride-sharing will become more rational and profitable over time as the industry scales, but Lyft will need to prove that to investors,” J.P. Morgan analyst Doug Anmuth, who rates Lyft’s stock as Overweight, wrote in a note Sunday.
Cowen analyst John Blackledge wrote in a note Friday that he believes ride sharing is a “massive addressable market, and we believe Lyft is well positioned to capitalize on this multiyear transition.” He rates the stock as “outperform.”
Lyft, like its major competitor Uber, is vying to seize a slice of what analysts are expecting will be a $1.2 trillion ride-hailing market over the coming decade. Lyft said in its prospectus that it had captured 39% of the ride-share market as of the end of December 2018.