Lyft on Tuesday (Aug 3) posted an adjusted quarterly profit three months ahead of target, as it kept costs down while rides rebounded.
The company made an adjusted profit before interest, taxes, depreciation and amortization for the first time in its nine-year history. For the three months ending in June it posted adjusted earnings of US$23.8 million. The adjustments exclude one-time costs, primarily stock-based compensation, which drove a US$252 million net loss.
Shares rose 4 per cent in after-hours trading following the announcement.
Analysts had expected an adjusted EBITDA loss of nearly US$50 million, according to Refinitiv data. Lyft originally had said it would achieve the profitability goal by the end of this year, then moved the target ahead to the third quarter.
"Our business model has never been more healthy," Lyft President John Zimmer said in an interview with Reuters, citing greater profitability from technology and efficiency improvements the company has made over the last couple of years.
Zimmer said the company would be able to keep costs down even when ridership returns to pre-pandemic levels.
"We expect to remain profitable on an adjusted basis going forward and are hopeful that the country will continue to come back," Zimmer added.
Lyft on Tuesday said its platform had continued to grow in July despite increasing concerns over the more contagious Delta variant of the coronavirus spreading throughout the United States.
The earlier-than-expected profitability announcement came as ridership grew by more than 3.6 million from the first three months of the year to more than 17 million riders during the second quarter - a time when US cities lifted pandemic-related restrictions and more Americans returned to the road.
Second-quarter revenue came in at US$765 million, above analyst estimates for US$697 million.
Lyft was able to take advantage of its leaner cost structure thanks to drastic cost cuts over the last year. The company slashed around US$2.5 billion from its expenses in 2020, including through widespread layoffs.
On a yearly basis, Lyft has nearly halved total cost as a share of revenue in the second quarter. Costs as a percentage of revenue were also down significantly compared with the second quarter in 2019.
Lyft and its larger rival Uber Technologies Inc have struggled to ramp up driver supply as consumers return to their platforms, providing large incentives and payment guarantees in an effort to attract drivers. Uber reports quarterly results on Wednesday.
Zimmer said the company had welcomed 50 per cent more new drivers in the second quarter compared with the first and said driver earnings remain at elevated levels across the country.
Lyft previously said it expects more drivers to return in the third quarter, when enhanced US unemployment pay is phased out in all states.
But driver earnings could remain higher long-term compared with pre-pandemic times, Zimmer said, with more efficient routing software reducing the overall number of drivers and the miles drivers spend cruising around without a passenger in the backseat.
"The idea is that we can be more efficient, we can do more with less, we can help drivers earn more," Zimmer said.
Lyft in July also resumed its shared rides offer, suspended at the start of the pandemic. It allows multiple passengers to split a car traveling in the same direction, but Lyft currently limits shared rides to two passengers, with the middle and front seats remaining empty.