(Bloomberg) — It was definitely a strong earnings report.
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Lyft expects adjusted earnings to beat analyst estimates by up to 11% and reported stronger-than-expected bookings. And there was also the prospect of profitability. The ride-hailing company said in its first press release on Tuesday that its margins are on track to widen by an eye-popping 500 basis points this year. The stock soared, rising 67% in after-hours trading.
But the projection was off. It's quite far away.
Less than an hour after the statement was released, Lyft Chief Financial Officer Erin Brewer said on a conference call with analysts that the adjusted profit margin calculated as a percentage of bookings was 50 basis points instead of 500 basis points. He said the company does indeed expect it to increase by a basis point. In response to a question from an analyst, he said the press release was incorrect. A company spokesperson later attributed the mistake to an “administrative error,” and the company ultimately corrected its statement and regulatory filings.
The stock price gave up some of those gains almost immediately. But the stock was still up 38% in New York on Wednesday, the biggest intraday gain ever and the highest in a year.
Dan Ives, an analyst at Wedbush Securities, called this a “eye-opening moment” for Lyft and an “epic failure.” “In nearly 25 years of street work, I have never seen a mistake like this,” he said in an email.
The mistake comes at a time when plans that would have solidly boosted profit and booking estimates suggest that years of efforts to increase ridership and challenge Uber Technologies Inc. may be paying off. cast a shadow on
In fact, Lyft and Uber both posted strong earnings reports this quarter, suggesting that overall ridership demand continues to rise since the pandemic-induced plunge nationwide. Both companies have spent significant amounts of money recruiting and retaining enough drivers to handle the increase in orders. Less than a year after he took over, Lyft CEO David Risher announced a return to basics to focus on customer satisfaction and close the gap with Uber. emphasized. Lyft has spent millions of dollars to attract drivers but has struggled to grow its rider base.
“Lyft clearly did the right thing by correcting its mistake quickly and decisively,” said Brad Foster, a partner specializing in securities litigation at corporate law firm Haynes Boone. “The reality is that people make mistakes, but mistakes are not securities fraud.”
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Under Risher, Lyft has cut hundreds of jobs starting in 2022 as part of a reorganization, including positions in corporate communications, policy and employee affairs.
Lyft said gross bookings in the fourth quarter rose 17% year-over-year to $3.72 billion, beating expectations of $3.67 billion. Sales were in line with expectations, he said, at $1.22 billion, an increase of 4% over the previous year. Adjusted profit for the first three months of the year is expected to be up to $55 million, beating analysts' expectations of $49.5 million.
Lyft said the number of active passengers on its platform increased 10% year-over-year to 22.4 million in the fourth quarter. Last year, Lyft's annual ridership exceeded 40 million, an all-time high.
“We enter 2024 with great momentum and a clear focus on operational excellence,” Chief Financial Officer Brewer said, calling the company “significant margin expansion and our first full year of positive free shipping.” “Promote cash flow.”
However, Lyft still lags behind Uber. Since the second quarter of 2022, the company has held about 30% of the U.S. ride-sharing market, compared to Uber's 70%, according to market research firm YipitData. Last week, Uber reported full-year profits as a publicly traded company and announced an increase in ridership. Sales increased 24% to $2.6 billion in the quarter.
Analysts at Jefferies Financial Group said prior to the company's earnings release that stabilizing market share is an important first step for Lyft in building investor confidence “in the long-term story.” is written in.
Lyft said its fourth-quarter profit before interest, taxes, depreciation and amortization was $66.6 million, beating analysts' expectations of $56 million. Net loss was reported at $26.3 million.
Lyft has been working to recruit more drivers and riders to its platform. One of her high-profile projects is the Women + Connect program, which matches women and non-binary drivers and riders. Lyft says that since the initiative began in September, 67% of eligible drivers have opted in and continue to turn on the feature 99% of the time.
The company launched in-app video ads in the fourth quarter and said its media revenue for the period was higher than it achieved in all of 2022, although it declined to provide exact amounts.
And like many sectors of the U.S. economy, Lyft has seen the rise of Taylor Swift. Lyft said crowded stadium events such as Swift and Beyoncé concerts, the U.S. Open and football games contributed to a 35% increase in ride ridership.
As part of its efforts to keep drivers employed and promote pay transparency, Lyft announced earlier this month that drivers will earn at least 70% of what riders pay each week, excluding outside commissions.
But workers say that's not enough. Uber and Lyft drivers are preparing to strike on Valentine's Day Wednesday to call attention to low pay and poor treatment by app companies, according to a coalition representing drivers.
Both Uber and Lyft drivers are considered independent contractors rather than employees, which has drawn criticism from states such as New York, Massachusetts and California. Last November, the companies agreed to pay New York drivers a total of $328 million to prevent further litigation over whether they should be classified as employees with traditional legal protections.
–With assistance from Natalie Lung and Bailey Lipschultz.
(Updated to add previous layoffs and update stock. Previous version of article corrected spelling of Jefferies Financial Group)
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