Lyft shares get crushed on weak steerage for first quarter •

Lyft beat the road on income within the fourth quarter, but it surely wasn’t sufficient to assuage buyers who reacted to the ride-hailing firm’s weak steerage for the primary three months of 2023.

Lyft lowered expectations for income within the first quarter to $975 million, a decline of about $200 million. Analysts had anticipated the corporate to vow $1.09 billion in income. That steerage despatched shares plummeting 25% in after-hours buying and selling Thursday to $12.13.

Logan Inexperienced, Lyft’s CEO and co-founder, stated the colder climate would result in a drop in ride-hail and bike and scooter utilization, placing strain on the corporate’s Q1 steerage.

“Prime time is coming down dramatically quarter-over-quarter due to elevated driver provide,” Inexperienced added, noting that having extra drivers is nice for maintaining Lyft’s service ranges aggressive, which might result in higher long-term development. Inexperienced additionally attributed Lyft’s lowered Q1 steerage to a barely decreased base pricing “to stay aggressive with the business.”

Lyft surpasses income expectations

Lyft reported Thursday $1.2 billion in income within the fourth quarter, a 21% improve from the $969.9 million it generated in the identical year-ago interval. Income for all of 2022 reached $4.1 billion, a 28% year-over-year versus $3.2 billion in 2021.

Lyft’s income, energetic rider and income per energetic rider outcomes beat analyst expectations, closing out the yr with 20.36 million energetic riders and $57.72 in income per energetic rider, which is up 8.7% and 11.5% from final yr.

Nonetheless, shareholders have been extra affected by the corporate steerage for the primary quarter.

Lyft wanted a win after its third quarter earnings report, when the corporate missed Wall Road estimates for income and energetic riders, inflicting its inventory to tank 22%. Regardless of the beat, Lyft shares dropped 3.16% at market shut, and are buying and selling practically 24% decrease in after hours. 

Lyft’s web loss was $588.1 million within the fourth quarter, in comparison with $283.2 million the yr prior. Lyft attributes a lot of that loss to $201.3 million of stock-based compensation and associated payroll tax bills.

The corporate additionally reported a lack of $29.5 million in employe severance and different worker prices, in addition to $9.5 million in web stock-based compensation expense, on account of layoffs within the fourth quarter. In November, Lyft lower 13% of its workforce in an try to cut back working bills. On the time, the corporate had estimated it could incur $27 million to $32 million because of the restructuring.

All of these losses compounded to convey Lyft to a full yr web lack of $1.6 billion, which is up from a web lack of $1.1 billion in 2021.

The corporate closed out the quarter with $1.8 billion in money.

The state of the ride-hail business

Uber, Lyft’s primary competitor and oft-described “older sibling,” posted sturdy quarterly outcomes Wednesday, persevering with its post-lockdown streak of bookings and income development. Uber stated it hit file journeys, surpassing 2 billion journeys globally within the fourth quarter, which averages virtually 1 million journeys per hour. Gross bookings, or the worth of fares paid, grew 31% year-over-year.

Uber’s total gross bookings, which embrace supply and freight, grew 19% to $30.7 billion. This helped Uber get to This fall income of $8.6 billion, a 50% year-over-year improve that beat Wall Road estimates. And with earnings-per-share of $0.29, the ride-hail big destroyed EPS estimates by 240%.

This indicators that the state of the ride-hail market is enhancing as riders put the COVID-19 interval firmly of their rearview mirrors. That has additionally led to a extra aggressive panorama that’s placing strain on Lyft’s Q1 income expectations.

“The higher market stability we see at present creates important alternatives for long-term worthwhile development,” stated Inexperienced in a press release. “To reap the benefits of this chance we should guarantee aggressive service ranges.”

Inexperienced stated to ship sturdy shareholder returns, Lyft would want to strengthen its aggressive place, service extra demand and cut back its mounted and variable prices. Which may imply extra layoffs sooner or later, and Lyft’s chief monetary officer Elaine Paul did trace on the earnings name at potential reductions in workforce and a shift to hiring a extra worldwide workforce. It might additionally imply Lyft dropping different enterprise strains.

Final July, Lyft shuttered its in-house rental automotive service and laid off 60 staff. One in all Lyft’s different verticals is micromobility, particularly bike and scooter share operations, but it surely doesn’t seem like Lyft is backing away from that simply but. The corporate final week revealed its new dockable e-scooter, which it hopes to have the ability to scale quicker than its small dockless scooter enterprise. Lyft’s stability sheet reveals the corporate spent $115 million on shopping for property, tools and scooter fleet, however the firm doesn’t break down income by its completely different mobility choices.

Lyft additionally needs to attempt to seize extra of the buyer transportation spend by way of, for instance, its Lyft Pink membership, which the corporate re-launched final November at half the worth. The corporate stated it doubled its variety of members within the fourth quarter. Lyft additionally partnered with Chase to ship Sapphire Reserve card holders two years of free Lyft Pink membership standing.

“Moreover, by integrating companies for automotive house owners into the Lyft app, like roadside help parking and upkeep, we will ship much more worth to the roughly 75% of Lyft riders who’ve a automotive,” stated Inexperienced.

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