Lyft reports historically record quarterly revenue of $1,175mn, up 21% YoY 4Q22 driven by higher revenue per active rider. The company reported 20.4mn active riders in 4Q, up 9% YoY; however, nearly flat QoQ. The revenue per active rider reached $57.72, up 11% QoQ and YoY. Adjusted EBITDA loss for 4Q22 was $248.3mn following the $375mn negative impact from the increase of insurance reserves including $225mn reflected in the cost of revenue and $150mn in G&A. We assumed a negative impact of $82mn from insurance reserves adjustments following 3Q22 results call. We believe reserves adjustments are one of the negative surprises resulting in a share price drop on the results announcement. Lyft reported a net loss of $588mn in 4Q22 compared with $283mn in 4Q21. 4Q Adjusted EBITDA was a positive $126.7mn before adjustment. Apart from reserves adjustment, the company managed to keep expenses under control. The share of operating costs in revenue improved for operations and support from 11.3% in 3Q22 to 8.1% in 4Q22, for R&D (from 21.6% to 8.8%), for S&M from 12.7% to 9.7%, however, it was still difficult to compensate the increased cost of revenue (54.2% in 3Q to 64.7% in 4Q) and G&A (27.8% in 3Q to 32.3% in 4Q). The adjusted EBITDA calculated in line with the new practices was a negative $416.5mn compared to the adjusted EBITDA of a negative $157.5mn in FY2021. Lyft changed the contribution calculation, including reserve adjustments in the range of $204mn-$368mn per year for each year from 2019 to 2022. As a result, reported contribution changes down and the contribution margin was updated to the range from a 4-year minimum of 42.6% in 2019 to 50.8% in 2021. The contribution was $640mn in 4Q22 before the adjustments with a contribution margin of 54.4% while reaching $415mn after the adjustment (35.3% margin). The unrestricted cash, cash equivalents, and short-term investments were $1.8bn on 31 December 2022. The full-year 2022 results include revenue of $4.1bn, up 28% YoY, a net loss of $1.6bn compared with a $1.1bn loss a year ago. The FY2022 net loss includes $751mn of stock-based compensation.
Lyft provides weaker QoQ revenue guidance of $975mn on the back of seasonality, Prime Time cut, and slightly reduced base pricing to maintain the platform competitiveness. Lyft expects $5-15mn for Adjusted EBITDA. The seasonal reduction of airport rides and shorter rides in 1Q as well as lower base price will affect the revenue mix, while the improving driver supply results in less Prime Time, negatively affecting the revenue per rider and total revenue. Lyft demonstrated a good overall cut in operating expenses, excluding the adjustment of the reserves. We believe, cost-cutting measures by Lyft are timely and shall potentially include the reduction of stock-based compensation. The company plans to cut it to $400mn in 2024. The reserve adjustment came on a sizable scale for the company; however, conservative guidance raises more concerns. The price competition may be a rather negative factor for the sector on the back of inflationary pressure and the slowdown in business travel seen in the post-Covid environment. We revise our model cutting down revenue and adj EBITDA projections before the consistency of the cost side and revenue stream is confirmed with 1Q and 2Q results. We adjust our 12-month target price to $17.8 from $24.2 per share. The stock lost 33% on publishing 4Q22 results and now represents a limited downside, in our view. We reiterate our Buy rating for the stock.
15 Feb 2023
Lyft 4Q22: whirlpool on weaker guidance, higher reserves
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Lyft 4Q22: whirlpool on weaker guidance, higher reserves
- Published:
15 Feb 2023 -
Author:
Marina Alekseenkova -
Pages:
5
Lyft reports historically record quarterly revenue of $1,175mn, up 21% YoY 4Q22 driven by higher revenue per active rider. The company reported 20.4mn active riders in 4Q, up 9% YoY; however, nearly flat QoQ. The revenue per active rider reached $57.72, up 11% QoQ and YoY. Adjusted EBITDA loss for 4Q22 was $248.3mn following the $375mn negative impact from the increase of insurance reserves including $225mn reflected in the cost of revenue and $150mn in G&A. We assumed a negative impact of $82mn from insurance reserves adjustments following 3Q22 results call. We believe reserves adjustments are one of the negative surprises resulting in a share price drop on the results announcement. Lyft reported a net loss of $588mn in 4Q22 compared with $283mn in 4Q21. 4Q Adjusted EBITDA was a positive $126.7mn before adjustment. Apart from reserves adjustment, the company managed to keep expenses under control. The share of operating costs in revenue improved for operations and support from 11.3% in 3Q22 to 8.1% in 4Q22, for R&D (from 21.6% to 8.8%), for S&M from 12.7% to 9.7%, however, it was still difficult to compensate the increased cost of revenue (54.2% in 3Q to 64.7% in 4Q) and G&A (27.8% in 3Q to 32.3% in 4Q). The adjusted EBITDA calculated in line with the new practices was a negative $416.5mn compared to the adjusted EBITDA of a negative $157.5mn in FY2021. Lyft changed the contribution calculation, including reserve adjustments in the range of $204mn-$368mn per year for each year from 2019 to 2022. As a result, reported contribution changes down and the contribution margin was updated to the range from a 4-year minimum of 42.6% in 2019 to 50.8% in 2021. The contribution was $640mn in 4Q22 before the adjustments with a contribution margin of 54.4% while reaching $415mn after the adjustment (35.3% margin). The unrestricted cash, cash equivalents, and short-term investments were $1.8bn on 31 December 2022. The full-year 2022 results include revenue of $4.1bn, up 28% YoY, a net loss of $1.6bn compared with a $1.1bn loss a year ago. The FY2022 net loss includes $751mn of stock-based compensation.
Lyft provides weaker QoQ revenue guidance of $975mn on the back of seasonality, Prime Time cut, and slightly reduced base pricing to maintain the platform competitiveness. Lyft expects $5-15mn for Adjusted EBITDA. The seasonal reduction of airport rides and shorter rides in 1Q as well as lower base price will affect the revenue mix, while the improving driver supply results in less Prime Time, negatively affecting the revenue per rider and total revenue. Lyft demonstrated a good overall cut in operating expenses, excluding the adjustment of the reserves. We believe, cost-cutting measures by Lyft are timely and shall potentially include the reduction of stock-based compensation. The company plans to cut it to $400mn in 2024. The reserve adjustment came on a sizable scale for the company; however, conservative guidance raises more concerns. The price competition may be a rather negative factor for the sector on the back of inflationary pressure and the slowdown in business travel seen in the post-Covid environment. We revise our model cutting down revenue and adj EBITDA projections before the consistency of the cost side and revenue stream is confirmed with 1Q and 2Q results. We adjust our 12-month target price to $17.8 from $24.2 per share. The stock lost 33% on publishing 4Q22 results and now represents a limited downside, in our view. We reiterate our Buy rating for the stock.