Lyft Inc. posted a narrower loss for 2020 even as the coronavirus pandemic hammered its business, signaling that the ride-hailing company is pivoting toward profitable growth despite the unprecedented crisis.
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The San Francisco-based company said its annual revenue declined 35% to $2.4 billion, while net loss narrowed to $1.8 billion from $2.6 billion a year earlier. Lyft’s bottom line was buoyed by aggressive cost cuts that included furloughing workers, trimming salaries and other operational changes, resulting in cost savings of $360 million last year, President John Zimmer said in an interview.
“We used an incredibly tough year to set us up for long-term growth,” Zimmer said Tuesday, reiterating that the money-losing company is on track to post a profitable quarter on an adjusted basis by the end of this year.
Lyft posted fourth-quarter revenue of $570 million, slightly higher than in the preceding three months, but down 44% from the year-earlier period. The company said a surge in COVID-19 cases in key markets and new lockdowns weighed on rides demand in the latter half of the quarter.
The fourth-quarter net loss widened to $458.2 million from $356 million in the year-earlier period on the subdued demand. Fourth-quarter revenue was broadly in line with Wall Street’s expectations, though the net loss was bigger than analysts had forecast. Analysts surveyed by FactSet had predicted on average a fourth-quarter net loss at $391 million.
Lyft’s adjusted loss before interest, taxes, depreciation and amortization also widened in the fourth quarter to $150 million from $130.7 million in the year-earlier period. But that was better than analysts’ average forecast of $184 million. Lyft hopes to become profitable by this measure at the end of this year.
While Lyft’s active riders nearly halved to 12.5 million in the fourth quarter compared with 23 million in the year-earlier quarter, average revenue per rider jumped to $45.40 from $44.40 over the period. That marked a record high for Lyft, according to Zimmer. Average revenue per rider stood at $40 in the previous three months, for example.
Zimmer said riders opted for longer and more premium rides in the fourth quarter. The company separately benefited from phasing out rider incentives and discounts.
Rival Uber Technologies Inc., which reports fourth-quarter results Wednesday, has offset the decline in its rides business with a massive uptick in its food-delivery business. Lyft’s Zimmer said late last year that the company was exploring partnering with restaurants and other businesses to deliver food and nonperishable items.
“For clarity, we’re not competing with a DoorDash or Uber Eats,” he said, but looking at ways in which Lyft can serve as a logistics partner to other businesses.
“Food will be one potential use case,” he said, adding that “nonperishables will be more interesting.”
Zimmer said he expects the rides business to pick up in the second quarter of this year, as vaccine distribution accelerates. “With vaccine distribution ramping up, so are we,” he said.