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Lyft (LYFT) Up on Narrower-Than-Expected Q2 Loss, Upbeat View

Zacks Equity Research

Lyft LYFT incurred a loss of 68 cents per share in second-quarter 2019 (excluding $1.55 from non-recurring items), narrower than the Zacks Consensus Estimate of a loss of $1.03. Results were aided by solid revenues that grew 72% on a year-over-year basis to $867.3 million. The top line also surpassed the Zacks Consensus Estimate of $809.4 million. Notably, this was the second earnings report for Lyft since going public on Mar 29.

Apart from the favorable top and bottom-line performances, investors were pleased with this ride-hailing company’s decision to raise its revenue guidance for 2019. As a result, the stock gained 4% at the end of the after-hours trading session on Aug 7.

Revenues for 2019 are now expected between $3.47 billion and $3.5 billion (earlier guidance was between $3.275 billion and $3.3 billion). The mid-point (approximately $3.49 billion) of the guided range is above the Zacks Consensus Estimate of $3.31 billion.

Following the raised guidance, top-line growth is now expected in 61-62% range for 2019 (earlier forecast hinted at a 52-53% revenue growth). Anticipation of solid rider growth led to the company’s upbeat revenue forecast. Lyft now anticipates EBITDA loss (adjusted) for 2019 in the $850-$875 million band, mirroring an improvement from the earlier guidance of a loss of $1.175-$1.15 billion.

Q2 Highlights

Active Riders (riders who take at least one ride during a quarter on Lyft’s multimodal platform through its app) in the quarter under review increased 41% year over year to 21.8 million. Revenue per Active Rider increased 22% to $39.77 at this San Francisco-based company.

Adjusted EBITDA loss for second-quarter 2019 was $204.1 million compared with a loss of 190.5 million incurred a year ago. The adjusted EBITDA margin improved to 24% in the reported quarter from 38% in the second quarter of 2018.

Contribution improved 88% year over year to $398.9 million. Contribution margin expanded to 46% from 42.1% a year ago. Lyft exited the second quarter with unrestricted cash (cash and cash equivalents +short-term investments) of $3.3 billion compared with $2.03 billion at 2018 end.

Q3 Outlook

Lyft, which competes primarily with Uber Technologies UBER in the ride-hailing space, expects revenues between $900 million and $915 million, reflecting year-over-year growth between 54% and 56%. Adjusted EBITDA loss is anticipated in the $190-$210 million range.

Other Development

Lyft, in a disclosure with the Securities and Exchange Commission, stated that it was changing the lockup period (when insiders are prohibited from selling shares after an initial public offering) for its stock due to the blackout period around its third-quarter 2019 results. The period would now end at the commencement of trading on Aug 19 instead of Sep 24. Lyft expects around 257.6 million shares to be eligible for trading after the lock-up ends.

Consequently, the stock pulled back a bit in after-hour trading on Aug 7. Notably, the stock had gained as much as 11% at a point of time following Lyft’s buoyant second-quarter 2019 financial numbers and upbeat revenues outlook for 2019.

Zacks Rank & Key Picks

Lyft carries a Zacks Rank #3 (Hold). Better-ranked stocks in the broader Computer and Technology sector are LogMeIn LOGM and TiVo Corporation TIVO sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate (three to five years) for LogMeIn is estimated at 5%. The current-year earnings growth rate for TiVo is projected at 10.7%.

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