Even With The Corrected Typo, Lyft Delivered Better-Than-Expected 2023 Financials That Paved The Way For Profitable Growth

Lyft Inc (NASDAQ: LYFT) was among the companies that defined last week. The ride hailing company stock surged more than 60% on Tuesday, but before sharply falling back as the mistake from its quarterly earnings release was corrected. The release initially showed a margin growth 2024 outlook that was exaggerated by as many as 10 times. Although the major error sent it on a wild ride, Lyft still provided strong financials, while also relying on strategic corporate partnerships with companies such as Starbucks Corporation (NASDAQ: SBUX) and Microsoft Corporation (NASDAQ: MSFT)-owned LinkedIn to pave the way for profitable growth this year.

David Risher, who took over less than a year ago, set ambitious goals for 2023 and emphasized on the fact that Lyft delivered over 700 million rides and helped drivers take home more than $8 billion, while recording the highest level of annual riders in its history. But, its biggest and much bigger rival, Uber Technologies Inc (NYSE: UBER) reported its first-ever annual profit a week before Lyft’s latest quarterly report, with its market value approaching $150 billion as a result.

Uber reported a solid quarter that smashed estimates, despite high expectations.

Uber revealed its gross bookings during the last three months of 2023 rose 22% YoY to $37.6 billion. Along with its gross bookings, revenue saw double digit growth, with revenue rising 15% YoY to $9.94 billion, topping LSEG’s consensus estimate of $9.76 billion. Uber made a net income of $1.4 billion or 66 cents per share, leaving LSEG’s estimate of 17 cents far behind. In the last quarter of 2023, Uber reached 150 million active consumers which translates to a 15% YoY increase. During the fourth quarter, Uber’s mobility business brought in revenue of $5.5 billion which represents a 34% YoY rise with mobility gross bookings rising 29% YoY to $19.3 billion. Moreover, Uber wrapped up a year of sustainable and profitable growth.

Lyft reported a solid quarter.

Lyft’s gross bookings increased 17% YoY to $3.7 billion. adjusted earnings of 18 cents a share, topping analyst estimates 8 cents a share. Revenue of $1.2 billion aligned with analysts’ expectations. Lyft narrowed its net losses to $26.3 million, while reporting a positive free cash flow of $14.9 million.

Lyft paved the way for a strong year ahead.

For the current quarter, Lyft guided for gross bookings between $3.5 billion to $3.6 billion and adjusted EBITDA between $50 billion and $55 million. This year, Lyft expects to generate full-year positive free cash flow for the first time.

Lyft’s shares have lost about 80% of their value since the company’s initial IPO in 2019. The major typo from the initial earnings report gave hope that Lyft has finally succeeded to challenge its much bigger rival Uber that profited as consumer spending continues to shift from retail to services. Unfortunately, Lyft hasn’t succeeded to narrow the gap with Uber on the number of users and its margin growth outlook isn’t as mind-blowing, but it paved the way for profitable growth in 2024.

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