Lyft shares jump 15% as company reports more riders than last year despite coronavirus
- On Wednesday, Lyft reported losses of $398.1 million, and revenue of $955.7 million for Q1 2020.
- Citing Covid-19 impacts to its business, Lyft recently laid off about 17% of its workforce, and slashed pay for remaining employees by 10% to 30%.
- Heading into Q2, Lyft is facing a new lawsuit in the state of California, which alleged that the ride-hail company is misclassifying drivers as contractors, and should categorize them as employees instead.
Lyft shares shot up as much as 17% after hours as the company reported Q1 revenue and rider numbers that beat expectations.
Here's how the company did:
- Loss per share: $1.31
- Revenue: $955.7 million
- Active riders: 21.2 million
- Revenue per active rider: $45.06
Wall Street was expecting an adjusted loss of 62 cents per share and revenue of $893 million for Q1, according to a survey of analysts by Refinitiv. However, estimates ranged widely. Comparing Lyft's actual results with estimates isn't straightforward either, given the difficulty of predicting the impact of the Covid-19 pandemic.
Lyft's losses marked a dramatic improvement from the year-ago quarter, its first as a public company, when Lyft reported losses per share of a staggering $9.02.
But GAAP net losses expanded from last quarter, coming in at $398 million vs $356 million in Q4.
However, its active rider number represented a 3% year-over-year improvement, despite the impact of Covid-19 to travel and transportation in the U.S.
During a Wednesday earnings call, CEO and co-founder Logan Green acknowledged that Covid-19 had a "profound impact" on Lyft's customers and core business; he revealed that for the month of April, rides were down around 75% year-over-year, and were still down 70% last week.
The CEO listed ways in which the company has tried to promptly control costs.
For example, last Friday, Lyft cut headcount by 17%, laying off nearly 1,000 employees and furloughing around 300 others. The company also slashed pay for its non-hourly employees by 10% to 30% and said its board of directors would give up 30% of their cash compensation during the second quarter of 2020.
The company does not anticipate a need for further workforce reductions, executives said on the Wednesday call.
In another effort to save money, Lyft has turned off "virtually all" ride coupons, and stopped spending on recruiting new drivers to its platform, at least until rider demand rebounds.
While Lyft's autonomous vehicle division, Level 5, was impacted by the layoffs, Green said the company would continue to invest in research and development of self-driving technology. "Our investments in AV are critical to Lyft's future and we expect they'll deliver strong returns in the future despite Covid," the CEO said. Analysts have suggested that self-driving cars could make Lyft and other ride-hailing businesses profitable on a long-term, consistent basis.
On Tuesday, Lyft and its biggest competitor, Uber, faced a new lawsuit in the state of California.
Three California cities, and the state's Attorney General Xavier Becerra sued Lyft and Uber alleging that they wrongly categorized drivers as contractors, but should be classifying them as employees under a new "gig economy" law (Assembly Bill 5) that went into effect in California earlier this year.
Like other ride-hailing companies, Lyft pays a significant portion of revenue to its drivers but has not generally provided them with employee benefits like paid sick leave, a matter of greater urgency for drivers affected by Covid-19.