Tue, 11/10/2020 – 16:35
Unlike its biggest competitor Uber, which in addition to depressed ride-sharing segment (which has been crippled by the pandemic) is increasingly relying on its delivery business to keep the company afloat until things return to normal, Lyft is a pure-play ride hailing company and as such its fate is determined entirely by how many people use its cars to go from point A to point B without the benefits of diversification.
Which is why despite beating on both the top and bottom line, Lyft stock is flat after hours after a brief kneejerk response higher, then lower, as traders focus on the continued weakness in its core business which reported a substantial miss on the number of active riders in Q3.
Here is what Uber’s smaller competitor just reported. First, the good news:
- Q3 revenue $499.7 million, beating the ext. of $495.8 million
- Q3 adjusted EBITDA loss $239.7 million, beating the estimate loss $251.1 million and better than the company’s own outlook of an EBITDA loss of $260 million.
- Q3 adjusted net loss $280.4 million, right on top of the estimated loss of $281.0 million
Now the not so good numbers:
- The company reported that in Q3 it had 12.5 million active riders, which while better than the 8.7 million riders in Q2, missed estimate of 12.8 million
So if riders declined how did the company beat on reveue? Because the revenue per active rider beat the $38.87 estimate, at $39.94, which while better than Q2 was well below the $45.06 in Q1.
That said, there is certainly some modest improvement in ridesharing since covid, with the latest month down “only” 47.4% from a year ago, even though the rate of improvement appears to have slowed substantially.
The company also said that it is on track to realize annualized fixed cost savings of $300 million by Q4’20, and still expects to achieve Adjusted EBITDA profitability by Q4’21 even with a slower ride recovery, although one look at the company’s income statement reveals that profitability is hardly in the stars for the company that has burned over $3 billion in the past 4 years, even as it generated almost $9 billion in revenues.
Lyft Chief Financial Officer Brian Roberts reiterated the company’s goal to turn an adjusted profit by the end of 2021, “even with a slower recovery.”
As with Uber, Lyft scored a key legislative win this month, when California voters approved Proposition 22, a ballot measure exempting it and other ride-sharing/delivery companies from a state law designed to make drivers employees. Winning the California vote was critical to Lyft, which had said it could be forced to temporarily pull out of California if the measure did not go its way.
And as Lyft scrambles to recover its historical ridership – a challenge that is dependent entirely on the arrival of a vaccine – Uber, its largest competitor, has a growing food delivery business that has helped offset steep declines in ridership. Uber has suggested that by the time the virus recedes, that business could be even bigger than its ride-hailing unit. Lyft, meanwhile, has a partnership with Grubhub, but doesn’t have a standalone consumer delivery operation. Lyft also has no exposure to markets that are recovering more quickly from the coronavirus, with the vast majority of its business concentrated in the U.S..
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Author: Tyler Durden