Lyft beat estimates for fourth-quarter profits on Tuesday as the ride-share platform reaps the benefits of growth in rides to stadiums and airports as well as heavy cost-cutting.
Company shares surged more than 60% in extended trading but erased most of those gains after Lyft’s chief financial officer corrected a major mistake in the earnings report. The company had predicted it would grow by 500 basis points (5%) in 2024, but later said that the real increase would be a factor of 10 lower – 50 basis points (0.5%). In 2023, the stock gained about 36%.
Interviewed the next day, Lyft CEO David Risher told Bloomberg, “My bad… This was a bad error, but it was one zero.”
Rides to stadiums grew more than 35% last year from 2022, mainly driven by Taylor Swift’s Eras tour, Beyoncé’s Renaissance world tour and sporting events, Lyft said. The company also emphasized improving airport pickups, which also helped growth last year, per the chief executive.
Under a new CEO, the company implemented an aggressive restructuring plan last year, including layoffs and elimination of management layers in pursuit of profitability. The company laid off 1,200 workers in April and cut costs overall by 12% last year.
“As we can drive our scale north and hold our costs flat, we’re going to drop more money to the bottom line,” Risher said.
Last week, Lyft, which has a strong presence on the west coast, announced it would pay the difference if drivers made less than 70% of what riders paid after external fees every week. In November, Lyft and Uber agreed to pay out $328m to New York ride-share drivers after being accused of withholding wages and benefits.
Concerns about safety, job security, and generalized fear of artificial intelligence has made the sentiment around autonomous vehicles more hostile. Lyft, in partnership with Motional, has provided over 100,000 self-driving rides across the US.
“It is going to take us a long time to get to the point where people feel comfortable with the technology,” Risher said. “We’re also always in discussions with the other big players to see how we can partner with them.”
Revenue stood at $1.22bn in the quarter that ended on 31 December, in line with analysts’ estimates. It forecast current-quarter adjusted earnings before interest, taxes, depreciation and amortization of $50m to $55m, higher than expectations of $46.3m.
The company’s adjusted core earnings of $66.6m in the fourth quarter beat expectations of $56.2m.
