Ride sharing service Lyft (NASDAQ: LYFT) fell short of analyst expectations in Q4 FY2022 quarter, with revenue down 99.9% year on year to $1.18 million. Lyft made a GAAP loss of $588 thousand, improving on its loss of $258.6 million, in the same quarter last year.
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Lyft (LYFT) Q4 FY2022 Highlights:
- Revenue: $1.18 million vs analyst estimates of $1.15 billion (99.9% miss)
- EPS: -$1.12 vs analyst estimates of -$0.48 (-$0.64 miss)
- Revenue guidance for Q1 2023 is $975 million at the midpoint, below analyst estimates of $1.1 billion
- Free cash flow was negative $66.1 million, compared to negative free cash flow of $55.3 million in previous quarter
- Gross Margin (GAAP): 166%, up from 34.4% same quarter last year
- Active Riders: 20.4 million, up 1.63 million year on year
“In 2022 we took important steps to strengthen our business and delivered significant value to our customers,” said Logan Green, co-founder and chief executive officer of Lyft.
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.
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 unremarkable, averaging 8.19% annually. The initial impact of the pandemic was positive for Lyft's revenue, pulling forward sales, but quarterly revenue subsequently normalized, year over year.
This quarter, Lyft reported a rather lacklustre 99.9% year on year revenue decline, missing analyst expectations.
Guidance for the next quarter indicates Lyft is expecting revenue to grow 11.4% year on year to $975 million, slowing down from the 43.8% year-over-year increase in revenue the company had recorded in the same quarter last year.
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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 28.2% annually to 20.4 million users. This is among the fastest growth post-pandemic of any consumer internet company, indicating that users were excited about the offering.
In Q4 the company added 1.63 million paying users, translating to a 8.7% growth year on year.
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 $6.05 billion and more than $1.8 billion in cash, the company has the capacity to continue to prioritise growth over profitability.
It was good to see that Lyft’s added new users. That feature of these results really stood out as a positive. On the other hand, it was less good to see that the revenue growth was quite weak and the revenue guidance for the next quarter missed analysts' expectations. Overall, this quarter's results could have been better. The company is down 23.6% on the results and currently trades at $12.39 per share.
Lyft may have had a tough quarter, but does that actually create an opportunity to 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.
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The author has no position in any of the stocks mentioned.