Lyft Surges After Strong Quarterly Results Show Demand for Rides

(Bloomberg) -- Lyft Inc. reported third-quarter revenue 73% higher than last year, boosted by demand for ride-hailing services amid improving Covid-19 conditions. The company also projected that it would turn a profit before tax, depreciation and other expenses for the full year. 

The shares jumped 14% as the market opened in New York on Wednesday. Uber Technologies Inc. shares rose 5.5%. 

Lyft reported adjusted earnings of $67.3 million, beating Wall Street estimates of $33 million, and marking Lyft’s second quarterly adjusted profit. 

Lyft co-founder and President John Zimmer said airport rides, which were up threefold compared to a year earlier, coupled with a rise in weekend and evening trips, was a positive sign that customers are reverting back to pre-pandemic habits. “We feel great about rider demand,” Zimmer told Bloomberg. “And since the release of booster shots, and children’s vaccinations becoming available, I feel good about the road ahead.”

In an earnings call Tuesday, Lyft executives projected revenue between $930 and $940 million for the current quarter. The company also said it plans to pay less in driver incentives during the fourth quarter, and that ridership trends for the current quarter appear positive.

“We expect to exit the pandemic more profitable per ride than we were going in,” said Lyft Chief Financial Officer Brian Roberts.

Revenue hit $864 million in the three months ended Sept. 30, the San Francisco-based company said in a statement Tuesday. That beat the $862 million analysts had projected, according to data compiled by Bloomberg. 

Lyft reported 18.9 million active riders, a 51% increase from the same period last year, but short of the 19.3 million analysts predicted. The company’s revenue per active rider reached a record $45.63 -- an increase driven by customers taking rides more frequently. The company’s stock price has fallen 7.8% this year through Tuesday’s close. 

While the delta variant kept more people indoors and out of Lyfts over the summer, Covid-19 vaccination rates have continued to rise in the U.S., with President Joe Biden’s directive spurring more private employers to mandate shots or testing. Falling numbers of cases in the U.S. have boosted Lyft, which only operates in North America. 

But even as riders return, Lyft and its larger rival Uber have struggled to find enough drivers. Lyft has poured millions of dollars into incentives and bonuses to entice drivers who are hesitant to return, sometimes because they have unemployment benefits or health concerns. 

Driver supply increased 45% in the third quarter versus the same period last year. “We’ve seen [driver supply] levels improve materially and see a path for less dynamic pricing as we get the marketplace balance stabilized,” Zimmer said. 

While higher fares will take time to even out, Lyft’s results were “a profitable step in the right direction,” Wedbush analyst Daniel Ives wrote in a note. “The driver shortage fears heading into this print were reaching a feverish pitch but yet Lyft was able to overcome with demand rebounding and good momentum heading into 2022.” 

Lyft has worked to become profitable, slashing costs with a wave of layoffs and budget cuts at the height of the pandemic, and agreeing to offload its self-driving division to a subsidiary of Toyota Motor Corp. in April, cutting costly autonomous car research expenses. 

Lyft reported its net loss narrowed to $71.5 million, or a loss of 21 cents a share, from a loss of $459.5 million, or $1.46 a share, a year earlier.

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