Lyft’s first report since IPO shows strong growth and huge loss
Lyft Inc., in its first financial report since going public in March, exceeded analysts’ revenue expectations but signaled no end to its spending spree.
The second-largest ride-hailing service in North America projected second-quarter revenue of $800 million to $810 million. Analysts were expecting $782 million, according to data compiled by Bloomberg. Lyft expects sales of $3.28 billion to $3.3 billion for the year, also above estimates.
Lyft used the occasion to tout a new agreement with Waymo. The Alphabet Inc. unit will deploy 10 autonomous vehicles near Phoenix in the next few months for customers to book through the Lyft app.
In the first quarter, Lyft’s sales grew 95% to $776 million, beating estimates by $38 million.
Lyft reported a net loss of $1.14 billion in the quarter, which was larger than the San Francisco company’s loss for the entire year of 2018. Most of the costs were attributed to stock-based compensation and expenses tied to the initial public offering, but the numbers still unnerved some investors.
Lyft shares fell 2% to $59.34 on Tuesday, down 18% from the IPO price of $72. They soared in after-hours trading and then quickly gave up those gains, as investors weighed strong growth against the giant losses to come. The stock slid as much as 3.9% in extended trading.
The report suggests that intense competition with Uber Technologies Inc. in the ride-hailing market will continue. Lyft projected a loss before interest, taxes and other expenses of as much as $1.18 billion for 2019.
Uber had estimated about $3 billion in revenue in the first quarter, up 19% from a year earlier. On Tuesday, Bloomberg reported that Uber has enough demand to price its IPO shares at the top of its current range. Uber is expected to price Thursday and begin trading Friday on the New York Stock Exchange in what is expected to be the biggest U.S. IPO in years.
Lyft had warned investors that 2019 will be a costly year. Uber has similarly signaled that competition has further extended its losses. Investors are watching for an eventual cease-fire, but the battle for market share remains the priority for the time being, according to analysts.
The sales growth rate of about 60% for Lyft in the second quarter would be a major slowdown from the previous period, but investors shouldn’t worry, said Tom White, an analyst at D.A. Davidson. “This is a large business, and revenue growth is going to decelerate,” he said. “It’s not decelerating nearly as rapidly as Uber’s revenue is.”
In its financial statement, Lyft said that active riders increased 46% to 20.5 million and that revenue per active rider increased 34% to $37.86. Lyft didn’t disclose gross bookings this quarter, eliminating one measure investors have used to compare its business with Uber’s. Lyft had shared an annual number in its IPO filing.
