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Lyft (NASDAQ:LYFT) Reports Upbeat Q4, But Riders Growth Misses Expectations


Radek Strnad /
2022/02/08 4:26 pm EST
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Ride sharing service Lyft (NASDAQ: LYFT) reported Q4 FY2021 results beating Wall St's expectations, with revenue up 70.1% year on year to $969.9 million. Lyft made a GAAP loss of $2.58 billion, down on its loss of $458.1 million, in the same quarter last year.

Is now the time to buy Lyft? Access our full analysis of the earnings results here, it's free.

Lyft (LYFT) Q4 FY2021 Highlights:

  • Revenue: $969.9 million vs analyst estimates of $940.8 million (3.08% beat)
  • EPS (GAAP): -$0.74
  • Free cash flow was negative $48.7 million, down from positive free cash flow of $5.36 million in previous quarter
  • Gross Margin (GAAP): 154%, up from 13.9% same quarter last year
  • Active Riders: 18.7 million, up 6.17 million year on year, slightly under analyst estimates
  • Guidance: The company didn't provide guidance for Q1, but is expected to discuss outlook in its earnings call

Founded by Logan Green and John Zimmer as a long-distance intercity carpooling company Zimride, Lyft (NASDAQ: LYFT) operates a ridesharing network in the US and Canada.

“2021 was a big year. We strengthened our financial position and continued investing in exciting growth initiatives. I’m proud of the team for what we’ve accomplished together and I’m looking forward to building on our momentum,” said Logan Green, co-founder and chief executive officer of Lyft.

The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.

Sales Growth

Lyft's revenue growth over the last three years has been very strong, averaging 32.1% annually. The company took a hit during the covid pandemic but the revenue has rebounded since.

Lyft Total Revenue

This quarter, Lyft beat analyst estimates and reported a very impressive 70.1% year on year revenue growth.

There are others doing even better than Lyft. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.

Usage Growth

As a gig economy marketplace, Lyft generates revenue growth by a combination of the volume of services users order and how much commission it earns.

Over the last two years the number of Lyft's paying users, a key usage metric for the company, grew 1.96% annually to 18.7 million users. This is a bit slower growth than what we see in some of the hottest consumer apps and Lyft is lagging a bit behind Uber in getting users back after the forced break.

Lyft Active Riders

In Q4 the company added 6.17 million paying users, translating to a 49.2% growth year on year, slightly under what analysts were expecting.

Key Takeaways from Lyft's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Lyft’s balance sheet, but we note that with a market capitalization of $13.3 billion and more than $2.25 billion in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by the exceptional revenue growth Lyft delivered this quarter. And we were also glad to see the user growth. Zooming out, we think this was an ok quarter. But investors might have been expecting more and the company is down 3.28% on the results and currently trades at $39.91 per share.

Lyft may have had a good quarter, so should you invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.