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Updates to add CEO quotes from interview, context about drivers
Lyft Class A Shares (NASDAQ:LYFT) skyrocketed in extended trading on Tuesday, after the ride-hailing company said it would generate positive cash flow for a full year for the first time.
LYFT stock rose to 66.9% after hours, and it was the last up by 15.8% at $13.70. It’s worth noting that LYFT has a short interest of 13.74% – 47.71 Million shares out of a public float of 332.63 Million shares.
The company’s forecast comes a week after larger rival Uber (UBER) reported its first profitable year. Results from the two market leaders show that demand for ride-sharing remains strong, despite concerns over regulatory scrutiny and higher wage demands from drivers.
For the fourth quarter of 2023, Lyft’s (LYFT) net loss narrowed to $26.3 million from a net loss of $588.1 million a year ago. Its revenue rose 4% y/y to $1.2 billion, helped by a 17% increase in gross bookings to $3.7 billion.
The company reported 191 million rides in the fourth quarter, its fourth consecutive quarter of rising growth, while its active passengers totaled 22.4 million. For the full year 2023, rides were 709 million, up 18% year over year.
Lyft’s (LYFT) findings come a day before a planned strike by drivers represented by Justice for App Workers, a national coalition of more than 130,000 drivers and delivery workers. Drivers will not take rides to and from any airports in the top 10 cities, as they seek fair wages, safety and more.
Incidentally, Lyft (LYFT) addressed complaints about pay transparency last week by announcing that its drivers would be guaranteed to earn at least 70% of passenger fares each week, net of outside commissions.
“(The Valentine’s Day strike) has been planned for many weeks now. The reason I say that is because it actually happened before (our) revenue guarantee, and if you look at that revenue guarantee… we’re actually responding to a lot of what they’re asking for ourselves. So, you know, we’ll see where it goes, hard to predict,” LYFT chief executive David Risher told Seeking Alpha in an interview.
“There are really two things I hear from drivers all the time… one is I want more transparency, I want to understand what the fault is and (two) I really don’t like it when drivers enter the car and say I paid 50 dollars and I feel like Lyft (LYFT) is taking too large a share,” Risher added.
According to the CEO, in the second half of last year the company paid its drivers $30.68 gross per hour for their time.
Turning to Lyft’s (LYFT) guidance, the company sees gross bookings in the first quarter of 2024 of approximately $3.5 billion to $3.6 billion and adjusted EBITDA of $50 million to $55 million.
However, it was the full-year guidance that caught the attention. Based on forecast ride growth in the mid-teens, slightly faster than gross bookings growth, and adjusted EBITDA margin expansion of about 50 basis points, Lyft (LYFT) expects to generate free cash flow positive for the full year 2024. This would be a first for the company.
When asked when Lyft (LYFT) will reach profitability, CEO Risher said, “I can’t give you a timeline on that, it’s just not something we’re discussing, but I can absolutely say it’s in the plan, it’s our goal is definitely our goal. And the fact that we will have positive free cash flow through 2024 is another great indicator that financially we are really strengthening our business quite a bit.
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Correction from source: LYFT corrected its press release to say “50 basis points” as part of its full-year adjusted EBITDA margin guidance instead of “500 basis points.” This story has been edited to reflect that correction.