Lyft Exceeds Estimates and Forecasts Shrinking Losses for the Year
Lyft reported second-quarter results that were better than expected and boosted its forecast for the year, according to Bloomberg. The performance was somewhat overshadowed, however, by the company’s decision to allow shareholders under lockup restrictions to sell earlier than anticipated.
The company projects at least $3.47 billion in sales for the year, compared with an average analyst estimate of $3.32 billion, according to data compiled by Bloomberg. While sales growth is slowing, it’s doing so less rapidly than previously anticipated. Revenue in the second quarter reached $867.3 million, up 72% from the year before. Analysts had expected 60% growth.
Lyft also improved its forecast for adjusted losses, which excludes debt, interest and other costs. Lyft said the loss for the year will be as much as $875 million, a $300 million decrease from an earlier projection. It would mean Lyft will lose less this year than in 2018.
In a separate disclosure, Lyft said it will allow shareholders who are currently unable to sell stock to do so starting Aug. 19. The financial results initially sent shares surging 13% in extended trading, before the regulatory filing about the lockup period.
Wall Street remains optimistic about the companies’ prospects despite persistent losses. Most analysts have buy ratings for the stocks. Lyft and Uber investors are betting they can upend the transportation industry and eventually find a path to profitability.
Both companies recently began to raise fares around the U.S., which is a main battleground accounting for almost all of Lyft’s sales. The price increases should help narrow losses. Lyft’s second-quarter loss increased 12% to $197 million. For the third quarter, it projects a reduction of as much as 29%, at $190 million to $210 million.
“The price adjustments that have been reported went into effect at the very end of June, so there was limited impact in Q2,” Brian Roberts, the chief financial officer at Lyft, said in a phone interview. Investors will watch closely whether Lyft can continue to cut costs while maintaining revenue growth.
The financial report follows news last week that Lyft’s chief operating officer, Jon McNeill, was leaving after less than two years. The company provided few details about the reason for his departure. Lyft is currently facing public scrutiny over the safety of its service after the Washington Post and NBC’s Today show reported on allegations of harassment from female customers.
For Lyft’s critics, there are still warning signs. When accounting for stock-based compensation, insurance costs and other expenses, Lyft’s net loss in the second quarter plummeted to $644.2 million, from $178.9 million a year earlier. Lyft reported a $1.14 billion net loss in the first quarter, which was largely due to costs associated with the initial public offering in March.