Lyft slides 16% as outlook disappoints investors
AInvestWednesday, Aug 7, 2024 8:35 am ET
2min read
LYFT --

Lyft reported its Q2 2024 earnings with a mixed bag of results, beginning with an unexpected positive adjusted EPS of $1.00, significantly above the expected loss of $4.30 per share, and a stark improvement from the loss of $0.30 per share in the previous year. Revenue for the quarter came in at $1.44 billion, a 41% year-over-year increase, and slightly above analyst expectations of $1.39 billion. Despite these positive figures, Lyft's shares fell sharply in premarket trading, dropping as much as 18%.

For Q3 2024, Lyft provided guidance that fell short of analyst expectations, forecasting gross bookings between $4.0 billion and $4.1 billion, compared to the estimated $4.14 billion. The company also projected adjusted EBITDA between $90 million and $95 million, below the consensus estimate of $104 million. This conservative guidance contributed to the negative market reaction, highlighting investor concerns over the company's future growth trajectory.

Breaking down the segments, Lyft's gross bookings for Q2 reached $4.02 billion, slightly below the estimated $4.07 billion. The company reported adjusted EBITDA of $102.9 million, surpassing the expected $99.1 million and showing significant improvement from $41 million in the previous year. Adjusted net income was $98.9 million, a 66% year-over-year increase and well above the expected $67.3 million. These figures underscore strong operational performance, though not without areas needing improvement.

Key drivers of Lyft's performance included an all-time high in active riders, reaching 23.7 million, just slightly above the estimated 23.68 million. The number of rides provided was 205 million, slightly below the estimated 206.74 million, yet still marking a company record and a 15% year-over-year increase. Driver hours also hit an all-time high, with the company welcoming the most new drivers since 2019, driven by initiatives such as the Driver Earnings Commitment.

Lyft's operational highlights revealed positive trends, including a 17% increase in rides in cities with Pride celebrations and a 23% increase in rides during spring graduation weekends in top college towns. Additionally, rides in Canada doubled year-over-year, with Toronto becoming the company's eighth-largest market. These metrics highlight the company's ability to capitalize on seasonal and regional events to boost ride volume.

Looking forward, Lyft's guidance for Q3 2024 includes gross bookings of approximately $4.0 billion to $4.1 billion and adjusted EBITDA of $90 million to $95 million, translating to an adjusted EBITDA margin of approximately 2.3%. For the full year, Lyft expects rides growth in the mid-teens year-over-year and gross bookings growth slightly faster than rides growth. The company also remains on track to generate positive free cash flow for the year, with a long-term conversion target of over 90% for 2024.

In summary, while Lyft's Q2 2024 earnings showed robust revenue growth and an unexpected positive adjusted EPS, the company's conservative guidance for Q3 and slightly missed booking expectations led to a sharp decline in share price. Despite the market's reaction, Lyft demonstrated strong operational metrics and remains focused on long-term growth, with positive free cash flow and an improving adjusted EBITDA margin as key priorities.

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