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Tina Beron and Akan Kusha Lana
Lyft Inc on Tuesday posted adjusted quarterly profits three months earlier than its target, gaining a slimmer cost structure as the vehicle rebounded, but warned of continued driver shortages and the spread of delta coronavirus variants. Did.
For the first time in nine years of history, the company reported interest, taxes, depreciation and pre-amortization adjusted profits, and said it would continue to maintain profits on that basis.
Lyft’s stock initially rose 6% in after-hours trading after the announcement, but the rise was curtailed as executives said in a quarterly earnings announcement that quarterly earnings per ride were expected to decline. Was done.
The company said continued investment in driver incentives and falling rider prices will weigh on earnings in the third quarter.
“The roads are still bumpy given the Delta variants and consumer concerns,” said Paolo Pescatore, an analyst at PP Foresight.
Lyft said on Tuesday that the platform continued to grow in July, despite growing concerns about the more contagious Delta variant across the United States.
Company executives are watching the spread of Delta variants.
“We are keeping a close eye on new developments and look forward to continued volatility and variability between cities,” Chief Financial Officer Brian Roberts said in a conference call. “The future situation can change rapidly and can affect our outlook.”
On Tuesday, Lyft posted an adjusted EBITDA of $ 23.8 million over the three months to June. The adjustment does not include one-time costs that resulted in a net loss of $ 252 million, primarily stock-based compensation.
Shares of larger rival Uber Technologies Inc, reporting results on Wednesday, held back the first rise in overtime trading. Ridehale is only part of Uber’s business, but the company is increasingly dependent on its growing food delivery sector.
Lyft said technology and efficiency improvements over the last two years have helped reduce both fixed and variable costs, even when passenger numbers rise to pre-pandemic levels. ..
The company saved about $ 2.5 billion from 2020 expenses, including extensive layoffs.
On an annual basis, Lyft halved its total cost as a share of revenue in the second quarter, and costs were also significantly lower compared to 2019.
“Our business model is healthier than ever,” Lyft President John Zimmer said in an interview with Reuters.
Tuesday executives said midnight and weekend trips, and airport rides increased significantly in the second quarter, indicating that the company’s most profitable rides are back.
Overall, ridership increased by more than 3.6 million from the first three months of this year to more than 17 million in the second quarter. This is the time when US cities lifted pandemic-related restrictions and more Americans returned to the road.
Second-quarter revenue was $ 765 million, ahead of analysts’ estimated $ 679 million.
The increase in COVID-19 infections created uncertainty, but Lyft’s business provided room for growth, said James Codewell, an analyst at Atlantic Equity.
“The fact that the company is making money while active riders are still 20% below pre-COVID levels suggests that there are still many benefits in terms of Lyft’s potential profits. “Cordwell added.
However, Lyft and Uber are struggling to increase driver supply when consumers return to the platform, offering great incentives and payment guarantees to attract drivers.
According to Zimmer, the company welcomed 50% more new drivers in the second quarter compared to the first quarter, and said driver revenues remained high nationwide.
Executives on Tuesday said they expect more drivers to return in the third quarter, when US unemployment benefits will be phased out in all states. The number of drivers is skyrocketing in US states, which have already stopped raising unemployment benefits, according to executives.
However, driver earnings could remain high in the long run compared to pre-pandemic levels, Zimmer said.
“The idea is that we can be more efficient, do more at less cost, and help drivers earn more,” Zimmer said. rice field.
Lyft in July also resumed the carpooling offer that was suspended at the start of the pandemic. Although multiple passengers can split a car traveling in the same direction, Lyft currently limits carpooling to two passengers, leaving the center and front seats empty.read more
Lyft executives on Tuesday said the amount of carpooling was still too small to determine if the company’s new routing algorithm was working as planned.
Report by Tina Bellon in Austin, Texas and Akanksha Rana in Bangalore Additional report by Danielle Kaye in New York Edited by Peter Henderson and Matthew Lewis.