Lyft's Q4 and the multi-billion dollar typo
3min read Lyft, a leading rideshare company, reported its Q4 financial results, which exceeded market expectations. The company demonstrated strong growth in gross bookings, revenue, and adjusted EBITDA. Lyft also provided its outlook for Q1 and FY24, indicating that it expects to achieve positive free cash flow for the first time in its history. However, it was a typo that led to a $3 billion surge in its market cap that garnered the most attention.
Key Financial Highlights:
* Gross Bookings of $3.7 billion grew 17% year-over-year.
* Revenue of $1.2 billion grew 4% year-over-year.
* Adjusted EBITDA of $66.6 million compares with $(248.3) million in 4Q22.
* Rides of 191 million in Q4: Grew 26% year-over-year, the fourth consecutive quarter of accelerating growth.
* Active Riders of 22.4 million in Q4: Grew 10% year-over-year.
Revenue saw a 4% year-over-year growth, reaching $1.2 billion. The company's net loss for the quarter was $26.3 million, a significant improvement compared to the net loss of $588.1 million in Q4'22. This reduction in net loss was driven by Lyft's focus on cost management and operational efficiency.
The adjusted EBITDA for the fourth quarter stood at $66.6 million, an impressive improvement from the loss of $248.3 million in the prior year's quarter. Lyft's adjusted EBITDA margin, calculated as a percentage of gross bookings, reached 1.8% in Q4'23, compared to a negative margin of 7.8% in the same quarter last year. This demonstrates Lyft's ability to achieve profitability and improve its financial performance.
The company's strong Q4 performance can be attributed to its focus on growth and operational efficiency. Lyft's revenue and adjusted EBITDA for the quarter were higher than expected, indicating that the company is on track to achieve its financial targets for the year. The company's active rider base also grew by 10% year-over-year, demonstrating the strength of its platform and the continued demand for its services.
For the first quarter of 2024, the company projects its gross bookings to be in the range of approximately $3.5 billion to $3.6 billion, with an Adjusted EBITDA between $50 million to $55 million. This forecast suggests an Adjusted EBITDA margin of about 1.4% to 1.5%, indicating the company's operational efficiency and profitability measures for the period.
Looking further ahead into the full year of 2024, the company anticipates a robust growth trajectory. It expects rides growth in the mid-teens on a year-over-year basis, with gross bookings growth slightly outpacing the rides growth during the same period. Moreover, the company is aiming for a significant expansion in its Adjusted EBITDA margin, targeting an approximate 500 basis points increase year-over-year, as a percentage of gross bookings. This directional commentary underscores the company's optimistic outlook on its operational performance and financial health for the upcoming year.
One of the bigger stories in the after hours was around a typo in the LYFT presentation. The document stated that LYFT expected to see its EBITDA margins expand 500 basis points in 2024. This was a key driver behind the stock"s 60% surge to $20.25. The error was corrected on the conference call as the new CFO, much to her embarrassment, confirmed that the outlook should be 50 and not 500 basis points. This caused the stock to pullback to the $14 level.
Lyft's Q1 outlook indicates that the company expects to maintain its momentum in the coming months. The company forecasts gross bookings of approximately $3.5 billion to $3.6 billion, with adjusted EBITDA of $50 million to $55 million and an adjusted EBITDA margin of approximately 1.4% to 1.5%. These figures suggest that Lyft is well-positioned to generate positive free cash flow for the first time in its history.
In addition to its strong financial performance, Lyft has also made significant strides in improving its customer experience. The company's on-time pick-up promise for airport rides has been well-received, and its Women+ Connect feature has been a hit with customers. Lyft Media, the company's in-app video ads platform, has also seen strong results, indicating that the company's advertising business is on track for continued growth.
Lyft's FY2024 directional commentary indicates that the company expects to achieve strong growth in rides and gross bookings in the coming year. The company also expects to see continued expansion of its adjusted EBITDA margin, suggesting that it is well-positioned to achieve its financial targets for the year.
Overall, Lyft's Q4 financial results and outlook for Q1 and FY2024 indicate that the company is well-positioned to continue its momentum in the coming year. The company's strong financial performance, focus on operational efficiency, and commitment to improving its customer experience all bode well for its prospects.