June 26, 2022

Ride hailing company, Lyft Inc. reported adjusted profit for the third quarter and outlined path to sustained profitability over drastic cost cuts and a return of riders and drivers led its shares to soar over 13 percent in extended trading on Tuesday.

As the company decided to adopt leaner cost structure, its ridership increased without incurring rising expenses. While executives have mentioned to target even higher adjusted profit in the fourth quarter.

According to the company executives, rides to airports, which are among the most profitable routes, nearly tripled from a year ago, in a sign of a broader U.S. economic recovery.

Its rival company, Uber Technologies Inc shares rose 7 percent in after-market trading following Lyft’s release.

According to Lyft, overall its active riders increased 11 percent to 18.9 million in the quarter ended Sept. 30. However, ridership remains 35 percent below peak levels before the pandemic.

The company’s adjusted earnings before interest, taxes, depreciation and amortization, primarily stock-based compensation came to $67.3 million. While Wall Street had estimated the same to be $30.7 million.

It is expecting an adjustment in its EBITDA between $70 million and $75 million in the fourth quarter.

According to Refinitiv IBES data, the cab company’s third-quarter revenue rose about 73 percent to $864.4 million on a yearly basis, whilst beating the Wall Street estimate of $862.68 million.

Company earnings summary
• Its revenue rose around 13 percent from last quarter.
• The total costs and expenses rose only 4% from the second quarter.
• The company’s contribution margin, indicating the company’s profitability excluding variable costs, rose to a record 59.4 percent.
• Its net loss narrowed to $71.5 million, or 21 cents per share, from $459.5 million, or $1.46 per share last year.
• Its adjusted earnings per share in the quarter came to 5 cents from a loss of 3 cents expected by Wall Street.
• Its driver supply rose 45 percent compared with last year.

According to reports, Lyft and Uber have been spending heavily to lure drivers with big incentives as the pandemic opened up new jobs at Amazon.com Inc’s warehouses, Instacart’s grocery services and restaurant deliveries.