Lyft reveals big growth but no profits as it readies for IPO - Phys.org
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Lyft reveals big growth but no profits as it
readies for IPO
1 March 2019, by Cathy Bussewitz, Tom Krisher And Michael Liedtke
last year, about $223 million more than in 2017.
Its cash balance also is shrinking. Lyft had
$517,690 in cash and equivalents at the end of last
year, about half of what it had at the end of 2017.
And although Lyft is taking in more cash, it's also
spending more on initiatives such as programs to
retain drivers and discounts to lure riders.
Lyft has been in a race with Uber to be first to offer
its stock to the public, and has positioned itself as
the affable alternative to its larger and more
ubiquitous rival. Uber, which struggled with public
relations setbacks in the past, expects to file its IPO
later this year.
In this May 5, 2015, file photo, Lyft co-founder Logan
Green speaks at TechCrunch Disrupt NY event, in New Together, the two could raise billions of dollars to
York. Ride-hailing giant Lyft is releasing financial details
fuel their expansions and give investors an
about the company in a federal filing before it begins
selling its stock to the public. (AP Photo/Richard Drew,
opportunity to see how the companies plan to
File) become sustainable.
Lyft's filing says that its co-founders—CEO Logan
Green, 35, and President John Zimmer, 34—will
Lyft revealed that it is growing quickly ahead of its keep significant control of the company after it goes
initial public offering but continues to bleed money public and "will be able to significantly influence any
and may struggle to turn a profit, according to a action requiring the approval of our stockholders,"
federal filing. including the election of board members, a merger,
asset sales or other major corporate transactions.
The company released its financial details for the
first time on Friday, giving the public a glimpse into The company's U.S. market share was 39 percent
its performance before deciding whether to buy in December 2018, up from 22 percent in
into the ride-hailing phenomenon. December 2016, according to the filing, citing
growth from new drivers and riders as well as
Lyft reported $2.2 billion in revenue last year—more increased ride frequency. It reported 30.7 million
than double its $1.1 billion in revenue in 2017. That riders and 1.9 million drivers in more than 300 cities
continued a growth trajectory that saw revenue in 2018, and has given more than 1 billion rides
skyrocket more than 200 percent in 2017 since its inception in 2012, according to the filing.
compared with 2016, when the company brought
in $343.3 million. Lyft had been increasing its share of the market in
recent years while Uber was dogged by reports that
But Lyft is still losing money and its executives drivers accosted passengers and that the company
warned it may struggle to turn a profit, according to allowed rampant sexual harassment
Friday's filing. The company lost $911.33 million internally—revelations that ultimately led its co-
founder Travis Kalanick to resign. Uber has been
1/3
working to repair its image under CEO Dara investors who want to get in on the sector, said
Khosrowshahi. Rohit Kulkarni, senior vice president of research at
Forge. It also gives Lyft the chance to define what
Lyft allowed customers to tip drivers earlier than metrics the industry will be measured on because it
Uber, building into its brand the sense that it treats can choose which details to disclose, such as the
drivers better than its main competitor. The number of rides or drivers, or whether it will break
company's drivers have earned a total of $10 billion down revenues by geography or product, putting
since 2012, according to Friday's filing, and 91 pressure on competitors to reveal the same
percent of them drive fewer than 20 hours per information, he said.
week.
Lyft, known for the pink moustaches that used to
adorn car grilles, was valued at just over $15 billion
last year. In addition to ride-hailing, it offers shared
car, bike and scooter rides. The company
purchased Motivate, the largest bike-sharing
company in the country, in November.
Based on the figures in the filing, and assuming
steady revenue growth of more than 50 percent in
the next year, institutional investors are likely to
value Lyft at $20 billion to $25 billion, Kulkarni said.
The next step is for Lyft managers to go on the
road to woo investors, presenting details and
fielding questions from potential buyers in hopes of
drumming up interest. That will help the company
determine the price of its shares when it eventually
In this Jan. 26, 2015, file photo, Lyft co-founder John
goes public.
Zimmer displays his company's "glowstache" following a
launch event in San Francisco. Ride-hailing giant Lyft is
releasing financial details about the company in a federal "Lyft has clearly demonstrated progress along its
filing before it begins selling its stock to the public. (AP pathway to profitability ... but the key question is
Photo/Noah Berger, File) whether Lyft can accelerate its pathway to
profitability," Kulkarni said. "On its upcoming
roadshow, public equity investors would have a lot
of tough questions for Lyft's management on this
Bookings—the amount of money spent by topic."
customers—are rising dramatically, which Lyft will try
to emphasize for investors. The company had just In its risk assessments, Lyft outlined the difficulty of
over $8 billion in bookings last year, 76 percent attracting and retaining drivers and riders "in a cost-
more than in 2017 and more than four times the effective manner," complying with laws and
number from 2016. regulations, and being able to manage growth and
expand beyond the U.S. and part of Canada.
"We believe this is a key indicator of the utility of
transportation solutions provided through our The company conceded that it has lost money
multimodal platform, as well as the scale and since it started in mid-2012, its expenses are
growth in our business," the company said in the increasing as it launches new services, and it may
filing. never turn a profit.
By being the first company in ride-hailing category "We have incurred net losses each year since our
to go public, Lyft is likely to attract institutional inception and we may not be able to achieve or
2/3
maintain profitability in the future," the company
said.
Lyft also said it faces intense competition and could
lose market share to competitors.
It also acknowledged the importance of developing
autonomous vehicle technology on its own or with
partners. Uber, as well as Google spinoff Waymo,
General Motors and others, is working on self-
driving vehicles and expect to enter the ride-hailing
business. If they are able to do that, and Lyft is still
relying on drivers, its cost of giving rides likely
would be far higher.
© 2019 The Associated Press. All rights reserved.
APA citation: Lyft reveals big growth but no profits as it readies for IPO (2019, March 1) retrieved 20 April
2019 from https://phys.org/news/2019-03-lyft-reveals-financial-ipo.html
This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.
3/3
Powered by TCPDF (www.tcpdf.org)You can also read
