Lyft shares plunged as much as 12% moments after the company reported first-quarter earnings as investors gave more weight to a gloomy outlook and lower quarterly revenue than other financial gains.
Since then, shares have stabilized in after-hours trading, and are now trading around 10% lower.
Lyft beat both its own revenue expectations and those of Wall Street, but it wasn’t enough to reassure investors focused on the ride-sharing company’s future.
The company closed the first quarter of the year with $1 billion in revenue, up 14% from the same quarter last year. It should be noted that its first-quarter revenue is less than the $1.2 billion it generated in the fourth quarter. Analysts were expecting $977 million for the first quarter, and the company pledged 975 million dollars in February.
That revenue gain adds to a net loss of $187.6 million, an improvement of 4.7% from the $196.9 million it lost in the same period last year. It’s also significantly better than the $588.1 million in net loss posted in the fourth quarter of 2022. Lyft attributed much of that fourth-quarter loss to $201.3 million of stock-based compensation and related payroll tax expense. .
On an adjusted basis, Lyft earned $22.7 million, compared with $54.9 million a year ago. This is an improvement from the adjusted loss of $248.3 million in the fourth quarter of 2022.
The company’s operating cash flow was in negative territory during the quarter with a loss of $188 million. Lyft closed the quarter with cash and cash equivalents of $509.6 million, up from $281 million in the prior quarter.
Lyft issued guidance for the second quarter of around $1 billion to $1.02 billion, an indication that the company is not expecting much 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 full-year guidance, a move that may suggest the company is unsure of its future or expects changes to come.
The first quarter has been tumultuous for Lyft as the company sparked a new CEO and Presidentissued layoffs of 26% of its workforce and dropped certain offers like shared rides. David Risher, the former Amazon executive who replaced co-founders Logan Green and John Zimmer, said he wanted Lyft to focus on hail basics. Given these cost-cutting measures and the arrival of warmer seasons, which are generally a boon for the rideshare industry, investors could be put off by second-quarter revenue guidance mirroring first-quarter.
During Lyft’s earnings call on Thursday, analysts and investors will want to know how the new leader will help Lyft continue to compete with Uber. The hail competitor exceeded analyst expectations and demonstrated a solid financial footing due to its business model that spans transportation and delivery.
Meanwhile, Lyft has been trimming the extra fat from its business since last year when closed your car rental plan. This quarter, the company is also winding down its Fleet products focused on personal car ownership and transforming Loop, the company’s cloud infrastructure, into a standalone business. Loop was operating in stealth mode and had a team in the single digits, according to a Lyft spokesperson.
Lyft didn’t share many updates about its bike-sharing business. Risher only reiterated the company’s plan to create more of a cross-pollinated ecosystem between bike-sharing and ride-sharing, but didn’t go into details. That side of the business is also expected to see some cuts as it becomes “leaner and more focused,” according to a April blog post Of the company.
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