The stock fell as much as 5% after hours, likely because the company did not give an update on its profitability timeline as Uber did during its earnings report last week.
Here are the key numbers Wall Street expects:
- Loss per share: $1.19 vs. $1.39 expected, according to Refinitiv
- Adjusted EBITDA loss: $130.7 million reported, vs. $164 million estimated, according to Refinitiv consensus estimate
- Revenue: $1.02 billion reported vs. $984 million expected, according to Refinitiv consensus estimate
- Active riders: 22.9 million vs. 22.8 million estimated, according to StreetAccount
- Revenue per active rider: $44.40 vs. $43.19 estimated, according to StreetAccount
- Contribution margin: 54% vs, 52% estimated, according to StreetAccount
Investors have renewed attention on Lyft after Uber smashed expectations on its profitability timeline. In its fourth quarter 2019 earnings report last week, Uber CEO Dara Khosrowshahi said the company was moving its EBITDA profitability target to Q4 2020, earlier than its original promise of becoming profitable for the full year 2021.
Lyft has previously said it expects to be profitable on an adjusted EBITDA basis by the fourth quarter of 2021. It did not address its profitability target in its earnings press release, and CFO Brian Roberts told CNBC’s Deirdre Bosa that he would address profitability on the call with analysts Tuesday afternoon but would not answer CNBC’s questions about a timeline.
On the call, Roberts reiterated Lyft’s profitability target of the fourth quarter of 2021 and executives focused on Lyft’s strategic partnerships and research and development efforts. They emphasized the company is investing heavily in innovative products and “stretching every dollar” when it comes to operating the business.
Lyft provided Q1 2020 revenue guidance between $1.055 billion and $1.060 billion, higher than the Refinitiv consensus estimate of $1.05 billion. It expects an adjusted EBITDA loss between $145 million and $140 million. Analysts were expecting an adjusted EBITDA loss of $161 million for the first quarter, according to Refinitiv.
For the full year 2020, Lyft expects revenues to fall between $4.575 billion and $4.650 billion compared to estimates of $4.59 billion, according to Refinitiv. Lyft expects an adjusted EBITDA loss of $490 million to $450 million compared to $503 million analysts were expecting, according to Refinitiv.
Uber’s quickened timeline has brought both more optimism and pressure to Lyft’s report. Raymond James analysts said in a note Monday that Uber’s strong earnings means “Lyft arguably has a higher bar.”
“We expect Lyft starts with conservative revenue guidance and raises the range as results dictate,” the analysts wrote, maintaining an outperform rating and $85 price target.
Analysts at Guggenheim Securities, who have a buy rating on the stock with a $60 price target, said with Uber’s new profitability goal, “the race is on, but we are not sure that LYFT wants or needs to win.”
“We see it as acceptable for a #2 player like LYFT to tilt strategically more towards growth and market share, as long as it is still on track and progressing towards EBITDA positive at some point in 2021,” the Guggenheim analysts wrote in a Monday note.
Analysts also said they’ll be paying attention to any updates on how Lyft will navigate new regulations like California’s new gig worker law, Assembly Bill 5 (AB5). Roberts told CNBC it is now focused on ballot initiatives around regulation. On the earnings call, Roberts said the company is “prepared to invest” an incremental $75 million year over year on “policy initiatives” including in California.
“We believe this is the right approach to help protect the flexibility that our drivers value today,” Roberts said.