Lyft puts up another quarter of positive free cash flow, following jump in rides

By Bill Peters

The company logged 188 million rides during the first quarter, up 23%, as more people use the platform for commutes and nights out

A previous version of this story misstated the direction of Lyft stock after the results were released.

Ride-hailing service Lyft Inc. on Tuesday said it put up its second straight quarter of positive free cash flow, and said it expected higher cash generation for the year after a jump in rides and active riders.

The company reported the results as Wall Street looks for a firmer path to profitability for the large gig-economy players, and as larger rival Uber Technologies Inc. steadies its bottom line while continuing to expand into local economies - some of which have sought higher pay for app workers.

Shares of Lyft (LYFT) rallied 6% in premarket trade. During the regular session, they closed down 5.3%.

"If you look at just about every metric, things are going in the right direction from a customer's perspective, riders and drivers," Chief Executive David Risher said in an interview. "And that translates into profitable growth. And it translates into strong cash flow."

For the first quarter, Lyft still reported a net loss of $31.5 million, or 8 cents a share. But that was narrower than the $187.6 million, or 50 cents a share, loss in the same quarter last year. Adjusted earnings per share were 15 cents.

Revenue jumped 28% to $1.3 billion.

Those results were above Wall Street's expectations. Analysts polled by FactSet expected Lyft to report adjusted earnings per share of 8 cents, on revenue of $1.16 billion.

The company logged 188 million rides during the first quarter, a 23% increase from a year ago, as more people use the platform for commutes and nights out. Lyft saw bumps in demand on St. Patrick's Day and last month's eclipse. More regular "active" riders rose 12% to 21.9 million. The company said it doubled its rides in Canada, an area where it first launched in Toronto in 2017 and where it has recently put more focus.

Similar to other big online platforms, Lyft has also tried to sell more ads. Revenue in its still-small media segment, which handles the ads that appear on its app and elsewhere, jumped 250%, helped by customers like Comcast's (CMCSA) NBCUniversal, Zillow (ZG) and Mastercard (MA).

Lyft said it expected gross bookings of around $4 billion to $4.1 billion in the second quarter. That was a bit above Wall Street's forecasts for $3.98 billion.

For the full year, it said it was still "on track" to generate positive free cash flow. And it said that it now expected "at least 70%" of its adjusted Ebitda - or earnings before interest, taxes, depreciation and amortization - to convert to free cash flow over that time. Lyft stuck with its expectations for "mid-teens" percentage growth in rides, and gross bookings growth that is "slightly faster" than rides this year.

Lyft shares have climbed 94% so far this year, as its financial outlook brightens. However, the company and its gig-economy peers have faced criticisms, from some drivers and city lawmakers, that pay is too low for their workers.

Uber (UBER) and Lyft have threatened to pull out of Minneapolis - and possibly all of Minnesota - by July if a city measure raising driver pay takes hold at the beginning of that month. City lawmakers this week, in an effort to compromise, offered to lower the pay rate proposed in that rule to $1.27 per mile and 49 cents per minute.

"Both riders and drivers will be annoyed, as prices will be so high, and drivers will be making less money," Risher said. "It'll be so not-customer-focused that we don't want to operate in that environment."

Risher said that area made up a "very small" portion of business. And he said the company could "live with" rates closer to the low end of a proposal offered by the state, under which the pay would be more modest than levels guaranteed by the rule in Minneapolis.

Uber and Lyft pulled service out of Austin, Texas, in 2016, following objections to a city rule requiring fingerprints from drivers for background checks, saying the measure was excessive and would limit driver numbers and make service worse. The companies returned roughly a year later, after state lawmakers overrode the city's rule with a measure that didn't require fingerprinting.

Meanwhile, Uber on Tuesday said it had partnered with grocery-delivery app Instacart (CART), a move that will allow Instacart's customers order from restaurants on Uber Eats via the Instacart app. Lyft, unlike Uber, has yet to move into food delivery.

Risher said the move hadn't changed the company's stance.

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-08-24 0503ET

Copyright (c) 2024 Dow Jones & Company, Inc.