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Lyft turns in 2nd consecutive EBITDA-profitable quarter

Company set all-time highs in average revenue per rider, contribution margin

Lyft pulled in an adjusted-EBITDA profit in Q3, just the second time the company has done so (Photo: Lyft)

Ride-hailing platform Lyft announced its earnings for Q3 2021 after the bell on Tuesday,  reporting a 73% increase in year-over-year revenue and a 13% gain on last quarter’s revenue, while recording a profitable adjusted earnings before interest, taxes, depreciation and amortization for a second consecutive quarter. Q2 and Q3 2021 are the first adjusted-EBITDA-profitable quarters for Lyft.

Adjusted EBITDA for Q3 2021 exceeded Lyft’s outlook, coming in at $67.3 million, up from losses of $239.7 million in Q3 2020 and a $43.5 million improvement over Q2 2021. The adjusted-EBITDA margin for Q3 2021 was 7.8% versus negative 48% in the third quarter of 2020 and 3.1% in the second quarter of 2021.

Adjusted net income was $17.8 million for Q3 2021, versus a loss of $280.4 million a year ago.

Lyft (NASDAQ: LYFT) also reported an increase in its active rider base of more than 50% year-over-year. The company reported a total of about 18.9 million active riders in Q3 2021. Average revenue for active riders also reached a record high of $45.63, up from $44.63 in Q2 2021 and up 14% year-over-year from $39.94 in Q3 2020.

“In Q3 we achieved record Revenue Per Active Rider as ride frequency increased,” said Brian Roberts, chief financial officer, in a press release.

“During each month of the quarter, we set a new pandemic record for rideshare rides,” he added on the company’s Q3 earnings call.

Lyft reported a contribution (defined by revenue less cost of revenue minus several metrics) for Q3 2021 of $513.6 million versus $248.8 million in the third quarter of 2020, up 106% year-over-year and up 14% from $452 million in Q2 2021. Contribution margin for Q3 2021 was 59.4%, a record high, up nearly 10 percentage points year-over-year and surpassing the company’s outlook.

The contribution margin and adjusted-EBITDA profitability are “a demonstration of the strong leverage in our operating model,” Roberts said. “Given our success onboarding new drivers and expected supply tailwinds, we anticipate our service levels will naturally improve in Q4 and lead to lower prices.”

Also of note, Lyft set a record high in bike rides for the quarter as it attempts to move into other forms of transportation.

The company’s third-quarter net loss of 21 cents per diluted share came in below the analyst consensus estimate of a loss of 3 cents per diluted share. Last quarter, the company posted a net loss of 5 cents per diluted share.

The company brought in $864.4 million in revenue for the quarter compared to $499.7 million last year. Meanwhile, its net loss decreased to $71.5 million, compared to $459.5 million in 2020. The net loss margin for Q3 2021 was 8.3%, improving heavily on the 92% figure from Q3 2020. Q3 2021’s losses included $203.3 million in stock-based compensation and related payroll tax expenses.

Read: Lyft achieves adjusted-EBITDA profitability, sets sights on continued growth

Lyft reported $2.4 billion of unrestricted cash, cash equivalents and short-term investments at the end of the third quarter of 2021, compared to $2.5 billion a year prior.

Additionally, co-founder and CEO Logan Green said the company improved its supply of drivers: “Driver supply materially improved in Q3, up nearly 45% versus last year, reflecting strong new driver trends. We are well-positioned for a continued recovery and I’m excited to build on the momentum in our business.”

“In Q3, drivers gave 20% more rides on average than they did in 2019,” Green added on the earnings call.

2021 outlook

The company believes it’s on a trajectory to be profitable for the entire 2021 fiscal year after its first two quarters of adjusted-EBITDA profitability.

“We are extremely pleased with the significant impact and results of our Q3 driver supply investments,” Roberts said during the earnings call. “In Q3, new driver activations jumped 33% quarter over quarter.”

The company feels confident enough in its driver base that it says it plans “to taper supply investments in the fourth quarter,” but it will reintroduce certain measures if needed during busy periods.

Despite forecasting a delayed return to normal transportation due to COVID-19 and expecting October to be the peak month for rideshare trips, Lyft anticipates an adjusted-EBITDA profit of $70 million-$75 million for Q4 2021. It forecasts revenue in the range of $930 million-$940 million and a contribution margin of 59%, accounting for rideshare seasonality, the impacts of the pandemic and the tailwind of people returning to work.

Lyft also says it plans to overhaul its user interface for drivers. On the earnings call, President John Zimmer said the company has been testing improvements to its app that so far have led to increased engagement from drivers.

The strong quarter for Lyft is somewhat marred by the news that it and several other gig economy companies were placed “on notice” by the Federal Trade Commission for allegedly misleading drivers about their potential earnings. An official ruling has yet to come down, but the FTC sent notices to Uber (NYSE: UBER), Lyft, DoorDash (NYSE: DASH), Amazon (NASDAQ: AMZN) and others.

If the company can avoid any negative fallout from that entanglement, it looks poised for a strong Q4 buoyed by the return of drivers and the easing of COVID-19 restrictions.

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Jack Daleo

Jack is a staff writer for FreightWaves and Modern Shipper covering topics like last mile delivery and e-commerce fulfillment. He studied at Northwestern University, majoring in journalism with a certificate in integrated marketing communications. Previously, Jack has written for Backpacker Magazine and enjoys travel, the outdoors, and all things basketball.