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Lyft (LYFT) Down Despite Narrower-Than-Expected Q4 Loss

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Lyft LYFT incurred a loss (excluding 78 cents from non-recurring items) of 41 cents per share in fourth-quarter 2019, narrower than the Zacks Consensus Estimate of a loss of 57 cents. Results were aided by solid revenues that soared 51.9% on a year-over-year basis to $1,017.1 million, courtesy of robust growth in Active Riders and Revenue per Active Rider. The top line also surpassed the Zacks Consensus Estimate of $984.5 million. Notably, this was the fourth earnings report for Lyft since going public on Mar 29.

Despite this better-than-expected performance, shares of Lyft declined more than 5% in after-hours trading on Feb 11 due to its conservative approach to earn profits. Only a few days back when its rival Uber technologies UBER released earnings numbers, it made an announcement that it hopes to reap profits on an adjusted basis by the fourth quarter of 2020. This is sooner than its previous expectation to earn profits for 2021.

Given the bullish sentiment surrounding Uber, investors expected a similar move by Lyft. However, Lyft maintains its stance to earn profits on an adjusted EBITDA basis in the fourth quarter of 2021.
Coming back to Lyft’s earnings report, Active Riders (riders who take at least one ride during a quarter on Lyft’s multimodal platform through its app) in the quarter under review increased 23% year over year to 22.91 million. This San Francisco-based company’s Revenue per Active Rider also rose 23% to $44.4 million.

Adjusted EBITDA loss for the fourth quarter was $130.7 million compared with $251.1 million loss incurred a year ago. The adjusted EBITDA margin came in at -12.9% in the reported quarter compared with -37.5% in the fourth quarter of 2018.

Contribution improved 80% year over year to $549.5 million. Contribution margin expanded to 54% from 45.5% a year ago. Lyft exited the fourth quarter with unrestricted cash (cash and cash equivalents +short-term investments) of $2.85 billion compared with $2.04 billion at 2018 end.

Q120 Outlook

For the first quarter of 2020, the company anticipates revenues between $1,055 million and $1,060 million, indicating a year over year surge of 36-37%. The midpoint ($1.06 billion) of the guided range is marginally above the Zacks Consensus Estimate of $1.05 billion. Adjusted EBITDA loss is expected in the range of $140-$145 million.

2020 Outlook

For the current year, revenues are estimated in the $4,575-$4,650 million band, implying a rise of 27-29%. The midpoint ($4.61 billion) of this guided range is above the Zacks Consensus Estimate of $4.6 billion. Additionally, adjusted EBITDA loss is forecast in the bracket of $450-$490 million.

Zacks Rank & Other Key Picks

Lyft carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are Autohome Inc. ATHM and Match Group, Inc. (MTCH - Free Report) , both carrying the same Zacks Rank as Lyft. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Autohome and Match Group have gained more than 5% and 29%, respectively, in a year.

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