'It's on me': Lyft CEO takes blame for earnings error
Shares of Lyft (LYFT) jumped over 60% after the company reported its fourth-quarter earnings on Tuesday, which in the initial report, said Lyft would see margin expansion of 500 basis points, which was a clerical error. During a call with investors, Lyft CFO Erin Brewer said the figure was incorrect and that the actual increase will be 50 basis points.
Lyft CEO David Risher joins Yahoo Finance to discuss the company's performance, the error in the quarterly report, and metrics for the company moving forward.
Commenting on the error from the company, Risher says: "Listen, it was an error. It was a clerical error, and as I've said before, this is on me. The buck stops with me. There are a lot of eyes that go on these sorts of press releases before they go out. Somehow, all of our eyes got a little bit cloudy and didn't see this one extra zero creep in. I would say the good news is as soon as we found it, we were able to issue a correction very quickly... First thing this morning, the team got together and did a preliminary postmortem. We're doing another one this afternoon on how it happened and how it's never going to happen again."
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
- Lyft shares climbing today after a roller coaster 24 hours for that stock. Lyft shares rocketing up nearly 70% in the after hours trading yesterday after an error on a key profitability metric and Lyft's fourth quarter earnings report. But listen, a strong earnings report there, including progress made toward profitability seems to have offset any worries over that error.
And joining me now to talk about all this is Lyft CEO David Risher. David, it's always great to have you on the show. I've got a lot to talk about, David.
I want to get to the earnings report. I got questions about Taylor Swift and Beyonce. We need to get to that.
But first, David, let's talk about listen this error, this typo that occurred David. Can you walk us through what happened? Can you pinpoint why it happened? And how are you going to make sure that it doesn't happen again?
DAVID RISHER: Yeah, hey, Josh, it's good to see you. Listen, it was an error. It was a clerical error.
And as I've said before, this is on me. The buck stops with me. There are a lot of I's that go on these sorts of press releases before they go out.
Somehow all of our I's got a little bit cloudy and didn't see this one extra zero creep in. But I'd say the good news is as soon as we found it, we were able to issue a correction very quickly. Obviously, all this happened after market hours.
And then actually first thing this morning, the team got together and did a preliminary postmortem. We're doing another one this afternoon on how it happened and how it's never going to happen again. So it's an error, you know, frankly embarrassing. Never want to see this happen. But I'm thrilled about how fast the team has gotten on fixing it and making sure it didn't happen again.
- And, David, one more question on this. When you saw, we broke that print on air, and you saw this move. I mean, money was--
Listen, David, it was made and lost on that typo. You wouldn't be surprised if regulators were looking at this, if lawsuits could start flying. For investors, listening to this right now, David, how should they think about those possible risks?
DAVID RISHER: It's hard for me to comment on this. I don't think it's material. But that's not my-- I'm not talking about the typo. But I'm talking about the risk after. But it's really not my area of expertise.
All I can say is we're doing everything we possibly can. And mistakes do happen, of course. Press releases get issued the wrong time.
These things have happened before. I'm sure there's a precedent. I'm just not an expert in it.
- All right, David, let's turn to what you are, an expert in which is Lyft's business results. Let's go through that print, David. Listen, you reported and clearly investors like what they see. Can you walk us, David, through what drove the quarter?
DAVID RISHER: Yeah, I mean, for me, what's so exciting is it validates our thesis, which is that customer obsession can drive profitable growth. I mean, look at the numbers. We're talking about the highest bookings ever $13.8 billion in bookings.
Highest ridership ever over the course of the year, I'm talking about over 40 million riders. 25% of whom were new to the platform, which is fantastic. 700 million rides.
And I always like to remind people, every single ride is a thing, right? It's going to your school. It's going to work.
It's going to see your friend. It's going to see your family. It's going to the airport.
By the way for the driver, it's an earnings opportunity. And we paid out $8 billion in driver earnings last year. So if you just look check, check, check, check, and check in terms of taking that customer obsession and dropping money to the bottom line.
We were free cash flow positive last year. And we project that we'll be all through 2024.
- Yeah, and that was a big metric that got a lot of attention, David. So I want to go into that. You are guiding to be free cash flow positive this year.
How are you doing that, David? What levers are you pulling over there at Lyft?
DAVID RISHER: Yeah, again, a lot of it is customer obsession. You know, Lyft is a scale business. And by that, I mean, we have a certain fixed cost base. And we've been very disciplined about managing that.
You might remember shortly after I joined that we cut cost, which is very painful because that means headcount. But it sets us at a position where we can start to make money as we drive more volume across the platform. So the more drivers we get, by the way, the faster ETAs, that's pickup time, the shorter the wait.
Therefore, the more riders take what take a Lyft ride. The more riders who take a Lyft ride, that's more money into the system. And as we grow that volume from 700 million rides to 750 million rides to 800 million rides, that's how we start making money.
- And, David, another thing that got my attention. Taylor Swift and Beyonce, David. You actually called this out.
And the idea was there's a lot of people, they're going to these stadiums. They're catching these shows, these concerts. And we know they're taking Lyft to get there.
DAVID RISHER: Yeah. Yeah, it's so interesting, Josh. I mean, look, I think in a sense, like the big thing here, it's even bigger than what you're-- bigger than Taylor Swift. And now we're talking big.
It's almost the physical world fights back, right? For every new digital device, for every new app on the phone, for every new goggle or whatever that shows up, there's just as much of a longing if not more so for going out and having real world experiences. So if you look at stadiums year on year, we're up 37% just trips to stadiums.
And then when you Zoom in, and now we'll talk directly about Taylor, it's incredible. And Nashville, our rides were up 25% when she comes to town.
If you look in Cincinnati, rides to the hotel, because a lot of people are visiting from out of town, were up 60%. And then here's a crazy stat that blows my mind. I think it's actually speaks very highly of Taylor Swift fans.
They tend to tipped three times higher than average. So there's this whole ecosystem that goes along with travel in general events and specific. And then Taylor is kind of her own thing.
- All right, so Taylor Swift fans, that's some insight. There more generous perhaps than some may think. They're incredible.
Let me ask you this, though, on the other side of it, David. Would you be concerned about slower growth if there weren't let's say in the quarters ahead as many concerts from these kind of superstars?
DAVID RISHER: You know, I'm not. And here's why. It's not just concerts, it's not just NFL games, it's not-- it's the Seattle Storm And Seattle a great WNBA franchise. It's the Kraken also in Seattle. It's the thorn in Portland.
We can do something interesting here in San Francisco. We haven't talked yet about publicly. So we won't talk about that today.
But so between sporting events, concert events, and then just frankly, humans desire to get out and about. I mean, that's a real thing. And this is what Jeff Bezos always used to tell me.
He said, don't make bets on short-term things. Make bets on long-term things. And we're social.
And so you can see everything from back to the office. Some of it voluntary. Some of it involuntary. But still concerts travel and all the rest. Over the long-term, these things will only grow.
- And, David, another show. I want to get your take on drivers for Lyft and Uber expected to strike today. Issues over pay and treatment. What's your message to those drivers, David?
DAVID RISHER: So my message is we're obsessing over you just like we're obsessing over riders. And here's the evidence. Last week, we put out a new driver earnings release. It was our early 2024 release, and had three components.
Super fast. The first one is transparency. Every single week, you see how much riders paid and how much you're taking home. Super important to drivers.
Number two, a guarantee. That take rate for a driver will never be less than 70% after external fees. And I mean, never. We will chew you up at the end of the week if it's less.
And then the third is quicker deactivation appeals, which is sort of technical, but it involves how a driver can effectively appeal the fact that we may have temporarily taken them off the platform. By the way, 77% of deactivations are now reactivated within 24 hours. So we're making really strong moves on all the areas that drivers tell me.
And they're very vocal about their needs. But our view is driving is a great, great way to earn money. And we want to make it fantastic for drivers. We really do.
- David, thank you so much for taking the time to join us today. As always, very much appreciate your time and insight.
DAVID RISHER: Of course. Thanks, Josh. I appreciate it.
