Lyft Inc.
said belt tightening amid rising inflation and slowing economic growth helped deliver a stronger-than-expected adjusted operating result.
The ride-hailing company on Thursday posted an adjusted operating profit for the second quarter, which strips out some items, of $79.1 million, well ahead of its own projection three months ago and Wall Street’s forecasts. Lyft still posted a wider net loss at $377.2 million compared with the year prior.
“We controlled costs, and we had better business performance than we expected, and we focused a lot of our R&D efforts on driving near-term and long-term profits,” Lyft President
John Zimmer
said in an interview. The company’s moves to slow hiring and spend more carefully on driver incentives helped the operating result, he said.
The company now is targeting $1 billion in adjusted operating profit in 2024 and $700 million of free cash flow, Lyft Chief Executive
Logan Green
said on an earnings call.
Shares in the company had rallied around 25% through Thursday after rival
Uber Technologies Inc.
days earlier posted strong results. Lyft’s stock rose more than 8% further in after-hours trading on its quarterly figures.
The San Francisco-based company is among a large group of tech businesses that have curtailed spending amid economic upheaval and concerns high inflation will prompt consumers to become more frugal. Lyft slowed some recruitment, and last month laid off about 60 people—under 2% of its staff—and told employees it would curtail renting its cars to consumers.
Lyft said revenue for April through June was $990.7 million, up 30% from the year-prior period, and narrowly ahead of what analysts surveyed by FactSet expected. The pace of growth was lower than the most recent quarters that saw a sharp rebound from pandemic lows.
The top-line growth reflected strong demand for rides, high fuel costs and a protracted driver shortage that combined to lift ride prices in recent months. Average U.S. fares peaked in May and were nearly a dollar higher than in the year-earlier month, according to YipitData. Prices began retreating in June, the market-research firm said.
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For the current quarter, Lyft projects sales of $1.04 billion to $1.06 billion, or 20% to 23% growth over the year-ago figure, and an adjusted operating profit of $55 million to $65 million, Chief Financial Officer
Elaine Paul
said on the earnings call.
Revenue for the full year will grow more slowly than the 36% increase the company saw last year, she added, citing economic headwinds. “We tempered our view on the pace of the recovery,” she said.
Mr. Zimmer said inflation so far didn’t appear to be denting demand, though added that absent the financial pressure on consumers, the recovery in ridership from pandemic lows might have been stronger.
Uber Chief Executive
Dara Khosrowshahi
this week said demand remained strong. Some people feeling inflationary pressures on their wallets were turning to driving for Uber, he added.
Lyft and Uber in recent months have scrambled to attract drivers to their platforms after the drop in ridership during the pandemic caused many of them to stop offering rides. Lyft said it grew its number of active drivers in the second quarter by 25% from the year-earlier period.
Mr. Zimmer said that rider demand and driver supply was the most balanced it has been since the pandemic started.
Uber is rolling out new perks this month for them, including allowing drivers to see their expected earnings before accepting a drive and to pick from potential rides rather than just accepting the ride the app matches them with.
Mr. Zimmer said Lyft also plans to introduce additional features to appeal to drivers.
Lyft is also contending with a new challenge: higher insurance costs linked to high inflation, Ms. Paul said, calling it an industrywide issue. The company aims to offset those through pricing and other measures, she said, including improving the economics on each ride and introducing product upgrades to make rides safer.
Write to Sarah Donaldson at sarah.donaldson@wsj.com
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