Lyft Inc. forecast revenue in the current quarter that was lower than analysts’ estimates, showing the challenges new Chief Executive Officer David Risher faces to turn around the struggling No. 2 ride-sharing company. The shares fell about 11% in extended trading.
(Bloomberg) — Lyft Inc. forecast revenue in the current quarter that was lower than analysts’ estimates, showing the challenges new Chief Executive Officer David Risher faces to turn around the struggling No. 2 ride-sharing company. The shares fell about 11% in extended trading.
Revenue will be about $1 billion to $1.02 billion in the second quarter, Lyft said in a statement Thursday. Analysts had expected $1.08 billion. Lyft also reported fewer-than-expected active riders on the platform, a sign that efforts to lower fares in order to stay competitive with Uber Technologies Inc. are falling short.
The San Francisco-based company saw 19.6 million active riders in the first quarter, below the 19.8 analysts were expecting. While that’s up almost 10% from a year ago, it’s still lagging the 22.9 million riders Lyft had before the pandemic.
Risher is presenting the company’s first earnings report since he took the helm April 17, replacing co-founder Logan Green. In that short time, Risher, a former Amazon.com Inc. executive, has already begun to shake things up. He has moved quickly to cut 1,072 jobs, or 26% of the workforce, in an effort to achieve profitability and compete with bigger cross-town rival Uber. Risher also has called staff back to the office at least three days a week, a stark turnaround from a “fully flexible” work policy implemented last year.
Lyft is “still growing” and expects to benefit from “staying competitive on pricing,” Risher said in an interview. While he didn’t specify whether Lyft would consider future layoffs, Risher said that “cost cuts are behind us.”
Sales rose 14% to $1 billion in the three months ended March 31. That beat the $977 billion Wall Street was expecting, helped in part by an increase in revenue per rider, which rose 4% from last year to $51.17.
Risher is assuming the job at a tenuous time for the company, which hasn’t fully recovered from the pandemic. When cities began reopening at the beginning of 2021 and customers began to return to the apps, Lyft and Uber struggled to attract enough drivers to meet demand. The labor shortage resulted in higher fares and wait times for riders and the companies spent millions in incentives to bring drivers back to their platforms.
That spending has taken a toll on Lyft, which isn’t profitable. Lyft is projecting adjusted earnings of $20 million to $30 million in the current quarter, lower than the $48.7 million average estimate in a Bloomberg survey. Risher has said he’s committed to being competitive on prices and plans to direct some of the cost savings to subsidize lower fares and boost driver earnings.
“Our focus right now is driving our ride volume,” he said. “We think it’s the right thing to do. We just cut costs to be able to afford that and are choosing to put those savings into better earnings for drivers and lower fares for riders,” he said. Lyft didn’t disclose the exact number of drivers on its platform but noted supply in the first quarter was the highest since early 2020.
Uber has largely moved past the pandemic setback and reported better-than-expected earnings earlier this week. Lyft has been slower to rebound, in part because its business model is primarily focused on ride-hailing and doesn’t have a food-delivery business that boomed during the pandemic like Uber.
Another distinction between the two, Lyft only operates in North America and a large portion of its business is concentrated in California, which has been slower to return to pre-pandemic commuting patterns.
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