- Lyft Inc posted an adjusted quarterly profit on Tuesday with three months ahead of target as it maintained costs down while rides rebounded.
The company made an adjusted profit before interest, taxes, depreciation and amortization for the first time in its nine-year history. For the three months after June, it posted adjusted earnings of $23.8 million. The adjustments exclude one-time costs, primarily stock-based compensation, that drove a $22 million net loss.
Shares increased 4% in trading after-hours following the announcement.
Analysts have expected an adjusted EBITDA loss of nearly $50 million, according to Refinitiv data. Lyft originally had said it would reach the profitability goal by the end of this year and then moved the target ahead to the third quarter.
My business model has never been more advanced than Lyft CEO John Zimmer in an interview with Reuters. He said superior profitability was made by new technology and efficient systems the company has made over the last couple of years.
Zimmer said the company would be able to keep costs down even when ridership returns to pre-pandemic levels.
We expect to continue to stay profitable on an adjusted basis moving forward and are hopeful that the country will continue to come back, Zimmer added.
Lyft on Tuesday said its platform had continued to grow in July despite growing concerns over the more contagious Delta variant of the coronavirus spreading all across the United States.
The earlier-than-expected profitability announcement came as ridership grew by more than 3.6 million riders in the second quarter of the year to more than 17 million riders in the first three months - a time when U.S. cities lifted pandemic-related restrictions and more Americans returned to the road.
Revenue was $765 million in the second quarter, above analyst estimates of $697 million.
Lyft was able to take advantage of its drastic cost structure thanks to leaner cost cuts over the last year. In 2020, the company slashed around $2.5 billion from its expenses, including through widespread layoffs.
In the second quarter, Lyft has nearly halved total cost as share of revenue. Costs as a percentage of revenue were significantly down compared with the second quarter of 2019.
Lyft and its larger rival Uber Technologies Inc have struggled to ramp up driver supply as consumers return to their platforms, providing large incentives and payment guarantees in an effort to attract drivers. Daily YES reports quarterly financial results of Uber.
Zimmer said the company had welcomed 50% more new drivers in the first quarter compared to the second and said driver earnings remain at elevated levels across the country.
Lyft previously said it expects more drivers to return in the third quarter, when enhanced U.S. unemployment pay is phased out in all states.
But driver earnings could remain higher long-term compared to pre-pandemic times, Zimmer said. A more effective routing software could reduce the overall number of drivers and the miles drivers travel without a passenger in the backseat.
The idea is that we can be more efficient, we can do more with less, and we can help drivers earn more, Zimmer said.
Lyft, in July, resumed its shared ride offer, suspended at the start of the pandemic. It allows multiple passengers to split a car traveling in the same direction, but Lyft currently limits shared rides to two passengers, with the middle and front seats remaining empty.