Shares of Lyft Inc rose more than 13% in extended trading on Tuesday after the company reported adjusted profit for the third quarter and outlined a path to continued profitability on the back of huge cost cuts and a return to riders and drivers. Prepared.
Lyft’s lean cost structure allowed it to increase ridership without mounting expenses, and executives said they targeted an even higher adjusted profit in the fourth quarter, underscoring their punishment for a continued recovery from a grueling pandemic.
In a sign of a broader US economic recovery, rides to airports, which are one of the most profitable routes, nearly tripled from a year ago, officials said on an earnings call with analysts.
Shares of larger rival Uber Technologies Inc., which will report results Thursday after the bell, rose 7% in market trading following the release of Lyft. Uber has said it expects to break even on an adjusted EBITDA basis for the first time.
Overall, Lyft’s active riders increased 11% to 18.9 million for the quarter ended September 30. But with ridership remaining 35% below peak levels before the pandemic, Lyft executives say many consumers were waiting for COVID-19 vaccine booster shots or were hesitant to travel with unvaccinated children.
The company also said that business travel to offices has not yet resumed, especially as workers on the US West Coast continue to work from home. But officials said they expect office workers to return in the first half of 2022.
“It’s a matter of when, if not,” Chief Financial Officer Brian Roberts said.
By its measure, the California-based company was profitable for the second time in a row in its nine-year history.
Lyft reported adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs, primarily stock-based compensation, of $67.3 million. According to Refinitiv data, the metric came in well ahead of Wall Street estimates of $30.7 million.
Lyft said it expects adjusted EBITDA in the fourth quarter to be between $70 million and $75 million.
Overall, Lyft’s third-quarter revenue rose nearly 73% year-on-year to $864.4 million, beating Wall Street’s estimate of $862.68 million, according to data from Refinitiv IBES.
Revenue increased about 13% from the previous quarter, while total costs and expenses grew only 4% from the second quarter, which is a sign that Lyft is delivering on its promise to cut both fixed and variable costs. Lyft’s contribution margin, reflecting the company’s profitability excluding variable costs, rose to a record 59.4%.
Lyft’s net loss narrowed to $71.5 million, or 21 cents per share, from last year’s $459.5 million, or $1.46 per share, but President John Zimmer declined to say whether the company would target a net profit.
The company posted an astonishing adjusted earnings per share of 5 cents in the quarter, compared to a loss of 3 cents expected by Wall Street.
Lyft said driver supply was up 45% over last year, but did not share how far driver numbers are from pre-pandemic levels.
Zimmer said in an interview with Reuters that drivers were feeling safer thanks to the availability of COVID-19 vaccines and returning to the road in greater numbers after federal unemployment payments ended in September.
“We are seeing the right things happening in the market and will start reducing the incentives in the coming quarters,” he said.
Lyft and Uber are spending heavily to entice drivers with big incentives as the pandemic opens up new jobs at Amazon.com Inc’s warehouses, Instacart’s grocery services and restaurant delivery.
But Zimmer said most ride-hail drivers who worked part-time on the platform to supplement income from other jobs enjoyed the flexibility provided by gig work.
“I feel very good about the position of the supply, and our ability to compete in the marketplace for talent, the type of work and earnings we provide,” he said.
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