Lyft says it will spend more to bring drivers back;  revenue forecasts are lagging Wall Street

Lyft says it will spend more to bring drivers back; revenue forecasts are lagging Wall Street

The Lyft Driver Hub is seen in Los Angeles, California, U.S., March 20, 2019. REUTERS/Lucy Nicholson

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May 3 (Reuters) – Lyft Inc (LYFT.O) on Tuesday forecast second-quarter revenue below Wall Street expectations and said it would spend more to boost driver supply, signaling higher costs to hand over cars on the road.

The shares fell 25% in after-hours trading.

First-quarter active ridership fell 4.8% from the previous quarter in the first three months of the year, eclipsing revenue and operating profits that beat Wall Street targets on Tuesday.

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Transportation company Lyft expects revenue of $950 million to $1 billion, lower than analysts’ average estimate of $1.02 billion, according to IBES data from Refinitiv.

Active runners were 17.8 million, down from 18.7 million in the prior quarter and 13.5 million a year earlier. Ridership is generally lower in the first quarter, with demand for ride-hailing, bicycles and scooters decreasing during the colder months.

Consumers hungry for post-pandemic normality shrugged off rising prices to keep spending on Lyft rides, Chairman John Zimmer said in an interview with Reuters.

“This tailwind coming out of the pandemic is having a much bigger impact on our business … than the impact of inflation,” Zimmer said.

The number of drivers, many of whom left as demand dwindled during the pandemic, remained below pre-pandemic levels and a full recovery in driver supply was taking longer than Lyft had hoped. Zimmer said. Lyft and rival Uber Technologies Inc (UBER.N) have tried to bring drivers back with additional incentives in recent quarters.

Shares of Uber, which will report results on Wednesday, were down 12% in after-hours trading.

Lyft executives on Tuesday’s earnings call said the company plans to invest more in driver incentives in the second quarter, but declined to provide a concrete dollar figure.

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Lyft reported first-quarter revenue of $875.6 million, beating average analyst expectations of $846 million, according to Refinitiv data.

At $54.8 million, the company’s operating profit, a measure known as Adjusted EBITDA which excludes stock-based compensation and certain other costs, far exceeded its own guidance and expectations. analysts. Analysts had expected $17.8 million in adjusted EBITDA after Lyft guided an upper range of $15 million.

Lyft executives have repeatedly spoken about the company’s pricing power, a trend Zimmer expects to continue even as consumers face larger price increases for goods and services across the board. the economy. Read more

“We’ll keep an eye on it, but we’re very confident in our ability to balance supply and demand,” Zimmer said.

Average U.S. ride prices for Lyft and Uber were 37% higher in March than in the same month in 2019, according to research firm YipitData.

Zimmer said overall demand still remained 30% below pre-pandemic levels in the fourth quarter of 2019, giving the company “good headroom.”

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Reporting by Tina Bellon in Austin, Texas Editing by Peter Henderson and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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