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Lyft makes post-COVID recovery to record earnings, but faces inflation headwinds TechCrunch


Ride-hailing giant Lyft reported strong second-quarter earnings on Thursday. Earlier this year, investors were skeptical about Lyft’s ability to offset the cost of increased investments to attract and retain drivers. However, Lyft was able to leverage severe internal cost-cutting measures combined with the post-COVID boom in travel to help it achieve its highest-ever quarter.

Lyft only beat Wall Street’s revenue expectations, delivering second-quarter revenue of $990.7 million, up from $765 million in the same quarter last year. It also grew 13% QoQ from Lyft Q1 revenue of $875.6 million.

The net loss in the second quarter increased sharply compared to the same period last year and more precious than precious. Lyft lost $377.2 million this quarter compared with $251.9 million in Q2 2021 and $196.9 million in the first quarter of this year. The extra weight is due to $179.1 million in stock-based compensation and related payroll tax costs.

Although Lyft posted an unprofitable quarter, in adjusted terms it is seeing some improvement over last year. The company’s adjusted EBITDA for Q2 was $79.1 million, up $55.3 million from Q2 2021 and up $24.3 million from the previous quarter.

The company ended the quarter with $1.8 billion in cash.

While Lyft’s stock has traded more or less unchanged last month, shares make up 16% following rival Uber’s favorable quarterly results. At the time of this writing, Lyft is trading at $17.39, up 4.07% after hours.

The effect of belts

During the second quarter, Lyft restructured and reoriented itself to try to cope with rising inflation and economic pressures. While it won’t show up on the Q2 balance sheet, this kind of austerity can be seen in Lyft’s recent decision to close its home car rental business and consolidate some driver assistance locations, which leads to lay off nearly 60 employees.

Elaine Paul, Lyft’s chief financial officer, said on Thursday’s call that Lyft revised its operating plan, pulled back on discretionary spending and significantly slowed hiring. Instead, Lyft will prioritize R&D initiatives and reorganize teams to stay focused on driving profitable growth.

After a brief and somewhat obscure entry into the shared e-scooter industry, Lyft also decided to exit its scooter operation in San Diego, which suggests it may be moving out of the cities. another city in the future. Similar to Lyft’s decision to keep its third-party car rental program, Lyft has partnered with a third-party, micro-mobile device company Spin, to continue to retain its footing in the vibrant waters of Singapore. scooter sharing.

What did Lyft do for it?

One of the main things that upset investors last quarter about Lyft’s performance, despite the revenue increase after the COVID low, was that more precious than precious reduce revenue per rider and active passenger count. From Q1 to Q2, the number of active passengers increased from 17.8 million to 19.7 million. However, revenue per rider remained relatively flat at $49.89 per person, compared with $49.18 in Q1 2022.

That said, even that small increase is a record high for Lyft. Part of that increase in revenue per rider could be due to increased airport trips as travel returns post-COVID. In fact, Lyft says its airport use case hit an all-time high of 10.2% of total shares. The company also said that bicycle and scooter sales more than doubled in Q2 compared to Q1.

Lyft shared rides remain at pre-COVID levels, but the company has consistently introduced cheaper service to more cities and will continue to do so to increase ride frequency and loyalty.

The nights away from home represent another growth opportunity for Lyft, as people begin to move out of isolation caves and re-enter society. Not only will this increase demand for riders, but it will also help attract organic drivers, Lyft said. In fact, the total number of active drivers is a two-year high, according to the company. Of course, two years ago was the height of the pandemic, so that doesn’t say too much, but it does show a recovery.

To attract and retain more drivers, Lyft has been experimenting with new features, like Prepay – this allows drivers to see a rider’s pickup location, route details, and projected earnings in advance when they accept the ride request. It’s not clear whether Lyft will implement any kind of punishment for drivers who still don’t accept rides, but Lyft says providing that knowledge to drivers could increase the number of motorists using Lyft, as well as the amount of time they drive.

Lyft Update Guide

Although Lyft saw a 4% gain in July, and the company is expecting that to stabilize through the summer and into September, the company has reconsidered its stance on the pace of recovery. , which led to a decrease in direction for the third quarter and full-year revenue. evolution.

“We wait Q3 turnover of the Between $1,040 Billion and $1,060 Billion, which implied evolution of the Between 5% and 7% fight with Q2, and evolution of the 20% and 23% fight with Q3ast years,” Paul said.

Lyft expects full-year revenue growth in 2022 to be slower than the 36% achieved in 2021. The company also expects sub-COGS operating expenses to decline slightly in Q3. Therefore, Lyft projects Q3 adjusted EBITDA of $55 million to $65 million and $1 billion of adjusted EBITDA in 2024.

In explaining the updated guidance, Lyft pointed to some macro constraints such as rising insurance costs affected by inflationary pressures. The company expects this to affect contribution margin in Q3.

“We believe that over time we can offset the higher cost of insurance through both pricing as well as product and engineering efforts that deliver unit economics,” says Paul. better on every ride and further promote the safety of our network.”

For example, Lyft is delving deeper into its mapping technology to provide safer and more cost-optimized routes that can drive insurance savings, as well as leveraging models its internal risk factors to assess behavioral and environmental risk factors, Paul continued.

Lyft will also continue to keep a close eye on the company’s total costs by pulling back on hiring, cutting travel and expense budgets, and scrutinizing every expense line item to be as disciplined as possible. . In other words, the days of overspending and big projects are gone, and back is the days of operating like a lean startup.



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