Lyft estimates positive earnings as ride-hailing demand rises

Ride-hailing company Lyft estimated higher-than-expected gross bookings and core profit for the current quarter on Tuesday, driven by robust demand for its services and benefits from new user and driver features.

It also reported first-quarter revenue and profit above expectations, sending its share up 5 percent in extended trading.

Since CEO David Risher took charge last April, the company has cut hundreds of jobs, reduced the firm's losses, and managed to keep fare increases in check.

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Lyft has been winning over consumers with shortened wait times for a few pre-scheduled rides, and drivers with minimum wage guarantees while trimming costs in order to boost profitability.

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Lyft reducedcosts by 13 per cent and narrowed its net loss by 78 percent in 2023. The company's shares rose 36 percent over the last year. The company estimated gross bookings, representing the total value of transactions on its platform, to range from $4.0 billion to $4.1 billion in the current quarter ending June, compared to estimates of $3.96 billion, per LSEG data.

Lyft forecast adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) between $95 million and $100 million, surpassing analysts' average expectations of $81.1 million.
The company’s primary competitor, Uber Technologies, is scheduled to release its quarterly earnings before the market opens on Wednesday.

For the quarter ending March 31, Lyft's revenue increased 28 percent to $1.28 billion, outperforming analysts' expectations of $1.16 billion. It earned 15 cents per share on an adjusted basis, higher than a 3 cent per share estimate.

Lyft will host its first-ever investor day event on June 6.

The San Francisco, California-based firm said it had benefited from increaseddemand during morning work commutes and weekend evening trips. It also gained from further expanding its service in Canada and growth in its advertising business.

In March, Uber and Lyft announced that they would discontinue their services in Minneapolis, U.S. effective from May 1 as the city council voted to enforce a minimum wage of $15.57 per hour for rideshare drivers. The council's 10-3 vote created controversy, with the companies claiming that it will lead to several job losses and leave people stranded.

The new law came into effect on May 1, and it requires rideshare companies to pay drivers a minimum of $1.40 per mile and 51 cents per minute while transporting a rider or $5 per ride, whichever is greater, excluding tips.

The decision was taken after a state-commissioned study by the Minnesota Department of Labor and Industry, which found that drivers could earn the equivalent of minimum wage with lower rates, even after accounting for benefits such as health insurance and paid time off.

(With inputs from Reuters)