Ride sharing service Lyft (NASDAQ: LYFT) reported Q2 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 40.6% year on year to $1.44 billion. It made a GAAP profit of $0.01 per share, improving from its loss of $0.28 per share in the same quarter last year.
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Lyft (LYFT) Q2 CY2024 Highlights:
- Revenue: $1.44 billion vs analyst estimates of $1.39 billion (3.6% beat)
- Adj EBITDA: $102.9 million vs analyst estimates of $99.1 million (3.9% beat)
- EPS: $0.01 vs analyst estimates of -$0.03 ($0.04 beat)
- Q3 Guidance: $4.05 billion of gross bookings (miss), $93 million of adj EBITDA (miss)
- Gross Margin (GAAP): 42.9%, up from 31.3% in the same quarter last year
- EBITDA Margin: 7.2%, up from 4% in the same quarter last year
- Free Cash Flow of $256.4 million, up 102% from the previous quarter
- Active Riders: 23.7 million, up 2.21 million year on year
- Market Capitalization: $4.43 billion
“For over a year you've heard us say that customer obsession drives profitable growth," said CEO David Risher.
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.
Gig Economy
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 strong, averaging 29.9% annually. This quarter, Lyft beat analysts' estimates and reported impressive 40.6% year-on-year revenue growth.
Ahead of the earnings results, analysts were projecting sales to grow 16.3% over the next 12 months.
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Usage Growth
As a gig economy marketplace, Lyft generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, Lyft's users, a key performance metric for the company, grew 9.6% annually to 23.7 million. This is decent growth for a consumer internet company.
In Q2, Lyft added 2.21 million users, translating into 10.3% year-on-year growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Lyft because it measures how much the company earns in transaction fees from each user. This number also informs us about Lyft's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction.
Lyft's ARPU growth has been decent over the last two years, averaging 7.5%. The company's ability to increase prices while growing its users demonstrates the value of its platform. This quarter, ARPU grew 27.5% year on year to $60.58 per user.
Key Takeaways from Lyft's Q2 Results
We enjoyed seeing Lyft's impressive revenue growth this quarter. We were also glad its revenue and adjusted EBITDA both outperformed Wall Street's estimates. However, Q3 guidance was below expectations for both gross bookings and adjusted EBITDA, which is weighing on the stock. Shares traded down 3.6% to $10.58 immediately after reporting.
So should you invest in Lyft right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.