Lyft rides on post-COVID recovery to record earnings, but faces inflationary headwinds – Meczyki.Net

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

lift right now Beating Wall Street revenue expectations, brought in second-quarter revenue of $990.7 million, up from $765 million in the same quarter last year. That’s a 13% quarter-over-quarter increase from Lyft Q1’s revenue of $875.6 million.

The net loss for the second quarter saw a year-on-year spike and quarter by quarter, Lyft lost $377.2 million in the quarter, compared to $251.9 million in Q2 2021 and $196.9 million in the first quarter of this year. The additional burden is attributable to $179.1 million of stock-based compensation and related payroll tax expenses.

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

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

While shares of Lyft have traded more or less flat over the past month, shares are down 16% following favorable quarterly results from rival Uber. At the time of this writing, Lyft was trading at $17.39, up 4.07% after hours.

belt tightening effect

During Q2, Lyft restructured and re-prioritized in an effort to counter inflation and rising economic pressures. While it won’t appear on Q2’s balance sheet, such belt-tightening can be seen in Lyft’s recent decision to wind down its in-house car rental business and consolidate some of its driver support locations. , which resulted in layoffs of about 60 employees.

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

After a brief and somewhat obscure foray into the shared e-scooter industry, Lyft also decided to pull out of its scooter operations in San Diego, which suggests it may expand out to other cities in the future. Similar to Lyft’s decision to keep its third-party car rental program, Lyft partnered with a third-party, micromobility company Spin, to continue its toes in the choppy waters of scooter-share Is.

What is Lyft doing for it?

Despite a jump in revenue after COVID lows, Lyft’s performance was one of the main things that soured investors last quarter quarter by quarter Decline in revenue per rider and active ridership. From Q1 to Q2, the number of active riders increased from 17.8 million to 19.7 million. Revenue-per-rider, however, remained relatively flat at $49.89 per rider, compared to $49.18 in Q1 2022.

That said, even the small profit is a record high for Lyft. Part of that increased revenue-per-rider can be attributed to increased airport ridership as travel comes back post-COVID. In fact, Lyft said its airport use case reached a historic high of 10.2% of total rideshares. The company also said that bike and scooter rides have more than doubled in Q2 versus Q1.

Lyft shared rides are still at pre-COVID levels, but the company continues to roll out affordable offerings in more cities and will continue to do so to increase ride frequency and loyalty.

Night outs represent another growth opportunity for Lyft, as people begin to leave their isolation caves and rejoin society. Not only does this drive demand for riders, but it should also help drive organic driver acquisition, Lyft said. In fact, according to the company, the total active drivers were the highest in two years. Of course, the peak of the pandemic was two years ago, so it doesn’t say much, but it shows a recovery.

To attract and retain more drivers, Lyft is testing new features, such as Upfront Pay — that allows drivers to view a rider’s pickup location, route details, and expected earnings before accepting a ride request. It’s unclear whether Lyft will impose any sort of punishment for drivers who still don’t accept rides, but Lyft says that offering those knowledge hits to the number of drivers who use Lyft. as well as increasing the time spent driving.

Lyft’s updated guidance

While Lyft saw rides increase 4% in July, and the company expects that to stabilize in the summer and September, the company quieted its view on the pace of the recovery, resulting in Q3 and full-year revenue. Guidance for . growth.

“We expect Q3 Revenue of among $1.040 One billion And $1.060 Arab, Which one? meaning growth of among 5% And 7% Vs Q2, And growth of 20% And 23% Vs Q3 lIn reality years,” said Paul.

Lyft expects full-year 2022 revenue growth to be slower than the 36% it achieved in 2021. The company also expects operating expenses to be slightly below cost of revenue in Q3. As a result, Lyft expects Q3 adjusted EBITDA to grow from $55 million to $65 million and $1 billion of adjusted EBITDA in 2024.

In explaining the updated guidance, Lyft pointed to some macro headwinds such as an increase in insurance costs that are impacted by inflationary pressures. The company expects this to impact its contribution margin in the third quarter.

“We believe that over time, we can offset higher insurance costs through both pricing and product and engineering efforts that deliver superior per-ride unit economics and that advance the security of our network, ” said Paul.

For example, Lyft is leaning forward in its mapping technology to provide safer and more cost-optimized routes that can drive insurance savings, as well as its in-house risk models to assess behavioral and environmental risk factors. could take advantage of, Paul continued.

Lyft will also continue to closely monitor its corporate overhead, checking every cost line item to ensure that rentals, travel and expenses budgets are cut and generally as disciplined as possible. In other words, the days of gross overspending and moonshot projects are gone, and comebacks are the days of working like a lean startup.