Lyft Inc. gave an earnings outlook that significantly missed analysts’ estimates as the ride-hailing company prepares to absorb rising insurance costs instead of passing them on to customers.
The company projected adjusted earnings before interest, tax, depreciation and amortization in the current quarter of US$5 million to US$15 million, missing the US$83.6 million average estimate in a Bloomberg survey. Lyft reported adjusted Ebitda was a loss of US$248 million during the final three months of 2022.
Lyft’s projection for revenue of US$975 million in the current period also fell below expectations. Zimmer said the slower growth is primarily due to seasonality and the fact that a large portion of its rider base counts bikes and scooters, which customers use less frequently in colder months. Zimmer added that the outlook also reflects Lyft generating less revenue from higher fares from surge pricing, a product of more drivers on the platform to meet rider demand.
Unlike Uber, Lyft only operates in North America and does not have a food delivery business. To increase customer retention, the company has worked to expand its subscription product, Lyft Pink, and has partnered with Grubhub to offer members a complimentary subscription to the food-delivery platform. The San Francisco-based company also launched an advertising unit last year to tap higher-margin revenue, a strategy other on-demand platforms including Uber, Instacart Inc. and DoorDash Inc.
There were some bright spots in the fourth quarter for Lyft. It said revenue rose 21 per cent to US$1.18 billion, its highest ever, beating the US$1.16 billion Wall Street was expecting. Revenue per rider rose 11.5 per cent from last year to US$57.72. The 20.4 million active riders in the fourth quarter was in line with estimates, though was still more than two million customers below Lyft’s base of 22.9 million active riders at the end of 2019.
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