Lyft's weak forecast overshadows strong first quarter, shares slump
By Akash Sriram
Reuters
May 4, 2023
Summary
-- Lyft beats Q1 core profit, revenue expectations
-- Sees Q2 adj profit, revenue below estimates
-- CEO Risher expects $330 mln a year savings from cost cuts
May 4 (Reuters) - Lyft Inc (LYFT.O) forecast a disappointing second quarter on Thursday despite a strong performance in the January-March period, fanning doubts about its effort to turnaround its ride-share business amid competition from Uber.
Shares fell about 11% in trading after the bell as both revenue and core earnings forecasts for the current quarter were below expectations.
Uber has outpaced Lyft's revenue growth for several quarters using its larger presence in other parts of the world and diversified revenue sources such as freight and delivery services.
The dismal forecast follows job cuts by Lyft, which is trying to cut costs under new CEO David Risher who took charge last month.
"We view the guidance on the bottom line to be extremely disappointing after the announced cost cuts and given recent execution from larger peer Uber," said CFRA Research analyst Angelo Zino.
However, Risher said the company should be a "strong second player" in the North American rideshare market by the end of the year and expected to save about $330 million a year from cost cuts.
"We've seen really nice growth, our share is now north of 30% and earlier this year it was sort of in the mid-to-high 20s," he said in an interview to Reuters.
Lyft added 10% more riders to its platform in the first three months of 2023 as its strategy to cut prices paid off.
Revenue rose 14% to $1 billion and beat estimates of $981.4 million, but lagged the 72% surge posted by Uber's ride-sharing business.
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As a dominant player in key global markets, Uber has been making the most of this year's rebound in travel demand from pandemic-induced lull.
Lyft's adjusted core earnings of $22.7 million also exceeded expectations of $12 million, according to Refinitiv data, despite a 13.2% rise in costs to $1.22 billion from a year ago.
But its revenue as well as core earnings forecast for the current quarter was below market expectations.
The company said it expected revenue of $1 billion to $1.02 billion, below estimates of $1.08 billion and core earnings of $20 million to $30 million, way behind expectations of $49.3 million.
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Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur
Lyft's weak forecast overshadows strong first quarter, shares slump | Reuters |
