Understanding Lyft’s Recent Financial Performance

This afternoon, The Information, a technology news publication, published a host of metrics relating to Lyft’s recent financial performance.

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The data includes a wealth of information regarding the American mobility company’s growth, revenues, and losses. The figures come in the wake of Uber’s regular disclosures of its own financial performance. The competing ridesharing companies are in something of a race to the public markets.

Lyft’s numbers make plain two facts: it remains vastly unprofitable,and Uber is far larger. However, Lyft’s unprofitability is shrinking and its growth rate is impressive.

The Figures

The Information’s piece allows us to stitch together a picture of Lyft’s growth. Collecting, this is what emerges from a revenue perspective:

• Lyft H1’17 net revenue: $412 million.
• Lyft H1’18 net revenue: $909 million.
• Implied year-over-year growth rate: 120.6 percent.

At Lyft’s revenue scale, that pace of growth is astounding. However, the growth came at a rising dollar cost regarding losses. Here are Lyft’s net losses over the same periods:

• Lyft H1’17 net loss: $255 million.
• Lyft H1’18 net loss: $373 million.

The company’s H1’17 net loss was 61.9 percent of its revenue, while its H1’18 net loss was just 41 percent of its net revenue. That’s the sort of improvement you want to see, although the firm’s deficits are still large, even in proportion to its top line.

That said, Lyft’s H2’17 results show that the firm has made some progress against unprofitability, even if it lost more total dollars in the first half of 2018 compared to the first half of 2017. Lyft’s given full-year 2017 results of $1.06 billion in net revenue and net loss of $688 million imply that the firm lost $433 million against $648 million in revenue in the second half of the year, after we subtract its H1’17 results.

We can, therefore, map Lyft’s financial performance as follows:

• H1’17: $412 million net revenue, $255 million net loss, negative 61.9 percent net margin.
• H2’17: $648 million net revenue, $433 million net loss, negative 66.8 percent net margin.
• H1’18: $909 million net revenue, $373 million net loss, negative 41.0 percent net margin.

That paints a better picture than the flat H1’17 to H1’18 image, as it indicates that Lyft is curtailing its net loss as it grows net revenue. That’s a path to profitability.

For contrast, Uber’s second quarter alone saw $2.8 billion in net revenue (+63.3 percent year-over-year, +8.2 percent sequential quarter) and a net loss of $891 million.

(At this point, I want to point out that we are not dealing with SEC-ready GAAP financials in aggregate, so please take all of the above as at least directionally and likely pretty close to accurate. We’ll know more when the two companies file.)

To sum: Lyft has lots of growth and lessening unprofitability. That’s a good mixture for a growing company. For a public company, however, you probably want a bit more.