In its first-ever earnings report as a public company, Lyft (NASDAQ: LYFT) failed to display progress toward profitability.
The ride-hailing business, which raised $2 billion in a March initial public offering, posted first-quarter revenues of $776 million on losses of $1.14 billion, including $894 million of stock-based compensation and related payroll tax expenses. The company’s earnings surpassed Wall Street estimates of $740 million while losses came in much higher as a result of IPO-related expenses.
“The first quarter was a strong start to an important year, our first as a public company,” Lyft co-founder and chief executive officer Logan Green said in a statement. “Our performance was driven by the increased demand for our network and multi-modal platform, as Active Riders grew 46 percent and revenue grew 95 percent 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.”
The company said adjusted net losses came in at $211.5 million compared to $228.4 million in the first quarter of 2018. Next quarter, Lyft expects revenue of more than $800 million on adjusted EBITDA losses of between $270 million and $280 million. For the entire year, Lyft projects roughly $3.3 billion in total revenue on adjusted EBITDA losses of about $1.2 billion.
Lyft was the first of a cohort of venture-backed ‘unicorns,’ including Pinterest, Zoom and soon, Uber — which will make its long-overdue debut on the New York Stock Exchange later this week — to complete a public offering in 2019. Despite a sizeable IPO pop, Lyft shares have sunk since its first appearance on the Nasdaq. Lyft hit a share price of $87 on its first day of trading, up from a $74 IPO price. However, in the weeks post-IPO it’s floated closer to the $60 mark, closing Tuesday down 2 percent at $59.41 per share.
Lyft has never posted a profit and its founders John Zimmer and Green have made it clear they expect to invest in the company’s growth for the next several years as it expands its multimodal offerings and ultimately launches operations overseas.
“The road ahead represents a massive opportunity to serve our communities and drive value for our stockholders,” Lyft’s co-founders wrote in the company’s IPO prospectus. “We take this responsibility to serve our communities and stockholders seriously, and we look forward to proving that with actions and results. If we told you we were building the world’s best canal, railroad or highway infrastructure, you’d understand that this would take time. In that same light, the opportunity ahead requires continued long-term thinking, focus and execution.”
Given Lyft’s unprofitable history, analysts are likely keeping a watchful eye on top-line revenue, active riders and revenue per rider. According to its earnings report, Lyft’s revenue per active rider has grown 34 percent year-over-year to $37.86, while active riders, generally, expanded nearly 50 percent to 20.5 million.
The earnings report comes just three days before Uber is expected to begin trading on the NYSE. The company is set to price between $44 and $50 per share for a fully-diluted market cap of about $90 billion if it prices at the high end. Selling 180 million common shares, Uber plans to raise between $7.9 billion and $9 billion, 4x that of Lyft’s IPO bounty.
Given Lyft’s performance on the stock exchange, investors are likely hesitant to go all-in on Uber’s offering. Reports indicate that Uber slashed targets ahead of its IPO, citing Lyft’s stock nose-dive, with Uber executives “eager to avoid the pitfalls that sunk” Lyft, according to The Wall Street Journal.
“Because Lyft and Uber compete heavily in the US, Lyft’s first earnings report will provide insights into Uber’s prospects,” Goodwater Capital managing director Eric Kim told TechCrunch. “At the same time, each company has shown its own unique differentiation. For example, [Uber has] shown very strong unit economics with sub 4-month paybacks and very valuable international stakes worth billions.”