Lyft’s revenue growth masks active riders slippage

U.S. ride-hailing company Lyft dropped its fourth-quarter financial results Tuesday, a report that showed a mixed bag of growth — that in the area of active riders failed to meet analysts’ expectations.

The public company had Q4 2021 revenues of $969.9 million, up around 70% from its year-ago quarter that was hit hard by the pandemic and its economic disruptions. On a sequential basis, Lyft grew 12% from its Q3 top line result.

In the fourth quarter, Lyft’s net loss came to $258.6 million, inclusive, the company is quick to point out, of “$164.2 million of stock-based compensation and related payroll tax expenses and $122.3 million expense related to changes to the liabilities for insurance required by regulatory agencies attributable to historical periods.”

Depending if you are willing to allow that to all slide off the back of the company’s net results, Lyft’s adjusted net income came to $32.1 million for the final three months of 2021, or adjusted earnings per share of $0.09.

Analysts had expected the former unicorn and startup to report revenues of $938.9 million, and adjusted earnings per share of $0.09, per averages shared by our sister-publication Yahoo Finance. Lyft also bested its guidance, but that matters less than meeting analyst projections.

In Q2 and Q3 2021, Lyft reported its first adjusted EBITDA positivity, an adjusted method of calculating profit. It bested those results in Q4 2021, with $74.7 million in adjusted earnings before interest, taxes, depreciation and amortization.

Shares of Lyft were off more than 3% in after-hours trading.

Leading commentary concerning the company’s results in the quarter seem to indicate that softer-than-expected unique rider numbers could be at fault for Lyft’s share price decline; the company reported 18.728 million active riders in the fourth quarter, up from Lyft’s year-ago result of 12.552 million.

However, the street had expected a number just over 20 million for Q4 2021, perhaps indicating softer-than-expected demand for Lyft and related services. Critically, the company’s active rider number fell in the fourth quarter of last year, when compared to its third-quarter result, and remains under pre-pandemic levels:

Screenshot of Lyft’s active riders and revenue per active rider for 2020 and 2021, taken from Lyft’s investor deck

Despite the fact that rider levels are still much lower than expected, Lyft’s full-year revenues grew 36% versus 2020 due to general increased ridership. In 2020, there was an average of 13.75 million active riders per quarter, versus an average of 17 million per quarter in 2021.

Higher revenue per active rider is mainly attributable for the growth in revenue overall. There’s been an increase in revenue per ride due to, in large part, longer rides, many of which went to and from airports. In addition, Lyft says pickup and ride frequency also drove the high.

While Omicron had a significant impact on ride volumes causing a reduced demand for rideshare, Lyft expects demand to begin to recover.

“In fact, in the last week of January, we saw a pickup in rideshare rides that we see as a positive signal,” said CFO Elaine Paul during Lyft’s 2021 Q4 and full-year earnings call on Tuesday.

“Ultimately, given the expected impact of Omicron on Q1 and the unknown shape of the recovery which could carry into Q2, our near term revenue growth acceleration will likely be affected. On our last earnings call, we said that we expected revenue growth for full year 2022 to accelerate versus 2021. We’re cautiously optimistic that this will continue to be the case.”