Lyft Tries to Assure Investors That Losses Will Drop in 2020

(Bloomberg) -- In its first financial report since going public, Lyft Inc. exceeded analysts’ sales expectations and assured investors that its hefty losses will decrease next year.

The San Francisco-based company projected second-quarter revenue of $800 million to $810 million. Analysts were expecting $782 million, according to data compiled by Bloomberg. Sales grew 95 percent to $776 million in the first quarter, beating estimates by $38 million.

Lyft, the second-largest ride-hailing service in North America, also reported an eye-popping net loss of $1.14 billion in the quarter, which was larger than the company’s loss for the entire year of 2018. Most of the costs were attributed to stock-based compensation and expenses tied to the initial public offering, but the numbers still unnerved some investors.

Shares are down 18 percent from the March IPO price. On a conference call after the report, Chief Financial Officer Brian Roberts said 2019 would be the peak year for losses, reiterating what executives said during the IPO roadshow.

The report suggests intense competition with Uber Technologies Inc. in the ride-hailing market will continue, at least through the end of the year. Lyft projected a loss before interest, taxes and other expenses of as much as $1.18 billion for 2019. It anticipates sales of $3.28 billion to $3.3 billion for the year, which is above estimates.

Uber had estimated about $3 billion in revenue in the first quarter, up 19 percent from a year before. On Tuesday, Bloomberg reported that Uber has enough demand to price its IPO shares at the top of its current range. Uber is expected to price Thursday and begin trading Friday on the New York Stock Exchange, in what’s expected to be the biggest U.S. IPO in years.

Lyft had warned investors that 2019 will be a costly year. Uber has similarly signaled that competition has further extended its losses. Investors are watching for an eventual cease-fire, but the battle for market share remains the priority for the time being, according to analysts.

The sales growth rate of about 60 percent for Lyft in the second quarter would be a major slowdown from the previous period, but investors shouldn’t worry, said Thomas White, an analyst at D.A. Davidson. “This is a large business, and revenue growth is going to decelerate,” he said. “It’s not decelerating nearly as rapidly as Uber’s revenue is.”

In its financial statement, Lyft said active riders climbed 46 percent to 20.5 million. Meanwhile, revenue per active rider increased 34 percent to $37.86. Lyft didn’t disclose gross bookings this quarter, eliminating one measure investors have used to compare the business to Uber’s. Lyft had shared an annual number in its IPO filing.

Lyft used the occasion to tout a new agreement with Waymo. The Alphabet Inc. unit will deploy 10 autonomous vehicles near Phoenix in the next few months for customers to book through the Lyft app.

--With assistance from Ian King.

To contact the reporter on this story: Eric Newcomer in San Francisco at enewcomer@bloomberg.net

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Alistair Barr

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