San Francisco Chronicle - (Sunday)
Where Lyft will spend its windfall
Hours after pink confetti fell from the rafters at a Lyft party and the last bottle of bubbly disappeared, something remained from Lyft’s initial public offering of stock: the $2.3 billion it made from selling shares at $72 apiece.
Now, the San Francisco ride-hailing company has the pleasure — or challenge — of spending that pot. Here’s what we know about where that money will go.
Drivers: Lyft lost $911 million in 2018. Even taking out noncash charges, its daily operations burned through $281 million in cash last year. Lyft’s new billions will be used in part for keeping the service running day to day, it said in a filing.
That includes signing up new drivers and riders. Lyft said it spent $352.3 million on sales and marketing along with passenger and driver incentives in 2018, a figure that has doubled since 2016. Bikes and scooters: Lyft wants to expand from ridehailing to bike and scooter rentals. It bought bike-rental operator Motivate last year and said it has committed to invest $100 million in the business in New York City over the next five years. It said its contractual obligations in other areas, including the Bay Area where Motivate runs Ford GoBike rentals, weren’t material to its results.
Its scooter spending is harder to divine, but a line in Lyft’s consolidated statement of cash flows shows a category labeled “purchases of property and equipment and scooter fleet” rising from $7.5 million in 2017 to $68.7 million in 2018, the first year it started offering electric scooter rides in cities like Denver. (Lyft applied for a scooter permit in San Francisco but was rejected by the city.)
Servers: One of Lyft’s bigger expenses is its Amazon bill — Amazon Web Services, that is. Lyft rents computing power and storage from Amazon, unlike rival Uber, which has chosen to build its own data centers. The company has agreed to spend $300 million on Amazon services through 2021. Hiring: Lyft had 4,791 employees as of December, the company said in the prospectus for its initial public offering. More are coming: The company has about 500 job openings on Glassdoor.
Two areas where Lyft is hiring furiously are in legal work — the company has many jurisdictions, including its hometown of San Francisco, looking to regulate it — and self-driving car development.
As the company looks to put autonomous vehicles on the road, Lyft is seeking engineers, product developers and attorneys to help with the effort, according to data-analysis startup Thinknum, which scours job openings to find hiring trends.
Real estate: Though its San Francisco headquarters and Nashville operations center are its largest offices, other Lyft employees are scattered across some 50 offices and driver hubs. Leases on space in its Berry Street headquarters in San Francisco
run as long as 2030. The company has at least $538.3 million in lease obligations, including a New York City office it leased in February.
Philanthropy: Lyft executives chose an unusual location to ring the bell signaling the start of trading: a Los Angeles car dealership thousands of miles away from Wall Street and hundreds of miles from its headquarters.
That’s because it wanted to call attention to a plan to spend $50 million or 1 percent of profits, whichever number is higher, on projects that make a positive impact in cities where its drivers live and work.
The program, called City Works, starts in Los Angeles and includes electric vehicle charging stations; discounted scooter rides for low-income residents; and tree planting on nearly 100,000 acres that burned in recent fires.