Lyft posts another big loss but says profitability will come sooner than it had anticipated.
Lyft is continuing to lose staggering sums of money as it barrels ahead with impressive revenue growth, but its executives said they believe the company will turn a corner and reach profitability in about two years.
The ridehailing heavyweight posted revenue of $955.6 million in the third quarter, up 63% from the same time last year, the company said Wednesday. That beat expectations of analysts.
But the company lost $463.5 million in the quarter, compared with a $249.2 million loss a year ago. More than half of the loss came from stockbased compensation and payroll tax expenses related to its initial public offering.
On the bright side, Lyft’s executives emphasized that they believe the company will turn a profit in the fourth quarter of 2021, a year earlier than they had previously projected.
One reason for optimism: The company is providing far fewer discounted rides than it did a year ago, Brian Roberts, Lyft’s chief financial officer, said in an interview.
Lyft is also trying to boost the number of moreprofitable rides, such as airport or business trips, he said.
“We are very focused on profitable growth, not growth at all costs,” Roberts said.
The moneylosing San Francisco company has struggled to demonstrate a path to profitability, just like its larger rival Uber.
Its share price, which neared $45 in afterhours trading, has lost about 39% of its value since its stock market debut in March.
But Roberts said Lyft has a narrower focus that Uber. “We’re not doing food. We’re not doing trucking. We are 100% focused on our transportation network,” he said.
The number of active riders grew 28% in the quarter to surpass 22 million.
Lyft is pursuing more partnerships with businesses, universities and medical organizations to provide rides for their customers and employees, which lead to highvalue rides and more growth opportunities, said John Zimmer, president and cofounder, in a conference call with investors.
The revenue growth was solid, but the cost of generating that revenue — expenses such as paying drivers — reached $580.7 million, meaning the cost as a percentage of revenue grew compared with the same time last year, said Dan Morgan, vice president and senior portfolio manager for Synovus Trust Company.
“Not to pick at a good report, but obviously the goal is to get costs and expenses down as much as possible so they can drive a profit,” Morgan said. “You want those numbers to be going the other way.”
Lyft’s quarterly losses included $86.6 million related to changes in how much insurance regulatory agencies require. After accounting for those and other expenses such as those related to the IPO, Lyft’s adjusted net loss was $121.6 million in the third quarter, compared with $245.3 million a year ago.
Lyft is committed to hitting its new profitability timeline despite passage of a state law that requires ridehailing companies to treat drivers as employees, Roberts said. That costly change could entitle its drivers to minimum wage, benefits and workers’ compensation, among other things. Uber and Lyft proposed a ballot initiative Tuesday to exempt ridehailing companies from the new law.
“We are very focused on profitable growth, not growth at all costs.” Brian Roberts, chief financial officer, Lyft