Lyft Achieves Adjusted Profitability

Lyft Reports Second Quarter Financial Results, Demonstrates Strong Rebound

Following the market close today, U.S. ride-hailing provider Lyft released its financial performance data for the second quarter. The company’s overall results indicated a significant recovery compared to the same quarter last year, which was substantially affected by the initial impact of the COVID-19 pandemic and subsequent lockdowns across the United States.

Positive Adjusted EBITDA Achieved

Lyft successfully generated positive adjusted EBITDA during the quarter, a key profitability measure often favored by emerging technology companies that are still working towards achieving net income. The adjusted EBITDA for the second quarter totaled $23.8 million.

Company leadership highlighted this achievement during Tuesday’s earnings conference call. Co-founder and CEO Logan Green stated, “This quarter marked a significant milestone we have been focused on for some time,” adding that a year prior, the company was navigating a “once-in-a-century global pandemic that effectively stopped travel, coinciding with the Proposition 22 proceedings in California.”

Lyft’s adjusted EBITDA reached its lowest point in Q2 2020, registering at -$280 million. Since then, the company has consistently shown sequential improvements in adjusted EBITDA each quarter. The adjusted EBITDA margin for the recent quarter reached 3%, signifying the delivery on promises made to investors.

Stock Performance and Revenue Growth

Lyft’s shares experienced a nearly 7% increase in after-hours trading following the release of the financial report.

The company reported $765 million in revenue for the second quarter, exceeding the $339.3 million generated during the corresponding period last year by more than double. However, it’s important to note that last year’s figures were heavily impacted by the COVID-19 pandemic’s disruption of the economy and ride-hailing services. This level of growth was anticipated.

Notably, Lyft’s Q2 revenue increased by 25.6% compared to the previous quarter’s $609 million. This demonstrates continued growth despite the rise in COVID-19 cases in the United States due to the Delta variant.

Key Metrics and Rider Engagement

Lyft reported 17.1 million active riders in the second quarter, a 97% increase from the 8.68 million riders using the network during the same period last year.

In the first quarter, the company reported 13.49 million active riders. Revenue per active user also increased to $44.63 in the second quarter, compared to $39.06 in the year-ago quarter. This metric saw a slight decrease from the Q1 2021 result of $45.13.

Financial Performance and Losses

Lyft’s revenue performance exceeded street expectations, which, according to Yahoo Finance data, predicted revenues of $696.2 million. Despite this growth, the company continues to experience a net loss. A net loss of $251.9 million was reported for the second quarter, representing a 42% improvement from the $437.1 million loss in the same period last year, though it remains a substantial negative figure.

The company clarified that the net loss for the second quarter includes $207.8 million in stock-based compensation and related payroll taxes, as well as a $20.4 million expense related to the previously announced agreement to reinsure certain legacy auto insurance liabilities.

Cost Management and Cash Flow

Aggregate spending on cost of revenue-related expenses increased in the second quarter, which was expected given the significant revenue expansion. The company successfully managed to reduce G&A costs, as well as expenses related to “operations and support.” However, both R&D and S&M expenses increased compared to the year-ago quarter.

Despite generating positive adjusted EBITDA in the last three months, Lyft’s operations consumed $37.5 million in cash during the quarter. The company has not generated positive cash flow from operations since Q3 2019. However, Lyft maintains a strong cash position with over $2 billion available to support its growth initiatives.

Contribution Margin and Level 5 Sale

There are indications that Lyft’s business model is evolving towards greater profitability. The company’s contribution margin, a non-GAAP metric used to assess the profitability of its ride-hailing services excluding corporate costs, rose to 59.1% in the second quarter, reaching an all-time high. This contrasts with the 34.6% recorded in the year-ago period, which was its lowest since Q1 2017.

Lyft has divested itself of its costly autonomous vehicle technology program, Level 5, selling it to Toyota’s Woven Planet Holdings. The deal was finalized on July 13. The company anticipates removing approximately $20 million in related costs in the third quarter compared to the second quarter.

Future of Autonomous Vehicles

Despite the sale of Level 5, Lyft remains interested in participating in the robotaxi market.

Last month, Lyft announced a partnership with Argo AI and Ford to deploy at least 1,000 self-driving vehicles on its ride-hailing network across several cities over the next five years, beginning with Miami and Austin. The first Ford self-driving vehicles, equipped with Argo’s autonomous vehicle technology, are expected to be available on the Lyft app in Miami later this year.

TechCrunch is monitoring the Lyft call and will provide updates as necessary.