Lyft, the ride-hailing company, experienced a drop in its share price by as much as 12% after it released its Q1 2023 earnings report. Although the company surpassed its own and Wall Street’s revenue expectations, investors were more concerned with its outlook and lower revenue than other financial gains.
Lyft earned $1 billion in revenue in Q1, a 14% increase from the same quarter last year. However, this figure is lower than the $1.2 billion generated in the previous quarter. Analysts had expected $977 million for Q1, while the company had promised $975 million in February.
Lyft’s Q1 net loss was $187.6 million, which represents a 4.7% improvement from the $196.9 million it lost in the same period last year. It is also better than the $588.1 million in net losses it incurred in Q4 2022, which were attributed to stock-based compensation and related payroll tax expenses. On an adjusted basis, Lyft earned $22.7 million in Q1, compared to $54.9 million a year ago. This is an improvement from the adjusted loss of $248.3 million in Q4 2022.
Lyft’s operating cash flow was negative for Q1, with a loss of $188 million. The company ended the quarter with cash and cash equivalents of $509.6 million, up from $281 million in the previous quarter.
However, Lyft’s Q2 guidance of $1 billion to $1.02 billion indicates that it is not expecting significant growth in the coming quarter. On an adjusted EBITDA basis, Lyft expects to earn between $20 million and $30 million, with an adjusted margin of 2% to 3%. Notably, the company did not issue guidance for the full year, which suggests that it is uncertain about its future or expects changes to come.
Lyft’s Q1 was marked by the appointment of a new CEO and president, layoffs affecting 26% of its staff, and the discontinuation of some services such as shared rides. The company’s new CEO, David Risher, wants Lyft to focus on the basics of ride-hailing.
Lyft is also shutting down its Fleet products, which focus on personal car ownership, and spinning off Loop, its cloud infrastructure, into a standalone business. Lyft did not provide many updates about its bikeshare business, which is expected to see some cuts as it becomes “leaner and more focused.”
During Lyft’s earnings call, investors and analysts will want to know how the new CEO plans to help Lyft continue to compete with its main rival, Uber.
The latter company beat analysts’ expectations and demonstrated strong financial footing due to its business model that spans across ride-hail and delivery. Given Lyft’s cost-cutting measures and the coming of warmer seasons, which are usually a boon for the ride-hail industry, investors may be disappointed by the company’s Q2 revenue guidance, which mirrors Q1.
