In a surprising turn of events, Lyft Inc. has swung to a profit in the second quarter compared to the previous year, driven by robust demand for its ride-hailing services. Despite this positive outcome, the company’s guidance for core profitability in the ongoing third quarter suggests a sequential decline from its previous performance. The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the upcoming third quarter is anticipated to fall between $90 million to $95 million.
This projection is notably lower than the second quarter's performance, which reported an adjusted EBITDA of $102.9 million. The adjusted EBITDA margin, calculated as a percentage of gross bookings, is also expected to decline to approximately 2.3%, a slip from the 2.6% reported in the June quarter. Gross bookings, a crucial metric reflecting the scale and impact of Lyft’s platform, is projected to reach between $4 billion and $4.1 billion during the third quarter.
For context, in the June quarter, this metric surged 17% year over year, tallying $4.02 billion. On the trading front, Lyft’s stock faced a downturn, declining 12% during trading on Wednesday. This downturn occurred despite the company reiterating its expectations for the full year of 2024. Chief Financial Officer Erin Brewer provided insights during an earnings call, projecting that total rides growth will be in the mid-teens on a year-over-year basis, with gross bookings expected to grow slightly faster than rides. The company reported a modest earnings figure of $0.01 per share for the second quarter, a notable recovery compared to a loss of $0.30 per share from the same quarter last year.
Analysts had predicted a loss of $0.03 per share according to Generally Accepted Accounting Principles (GAAP). Revenue for the quarter soared by an impressive 41% year over year, reaching $1.44 billion, thus exceeding the consensus estimate of $1.39 billion gathered by Capital IQ. CEO David Risher noted in the earnings call that the company experienced record numbers of rides during the second quarter, including the highest number of scheduled rides in the company’s history.
Furthermore, there was a significant increase in bike and scooter rides, particularly in e-bikes within New York City, which remains Lyft’s largest market. In summary, Lyft's active riders increased by 10% year over year, reaching 23.7 million during the recent quarter. The total number of rides also rose, climbing by 15% to a staggering 205.3 million.
Despite the impressive growth metrics, the market's reaction has been cautious, acknowledging the projected decline in profitability for the upcoming period..