Lyft during the past 10 weeks has been pricing rideshare services more competitively, and the move is producing “solid early results,” executives noted on a late Thursday earnings call.
“This is key and really important to remember: Every year millions of riders choose Lyft over Uber,” new Lyft CEO David Risher said on the call. “We don’t want to give them a reason to go the other direction. The results have been an acceleration in our year-on-year rideshare growth for the first time in nearly two years, and a smaller percentage of rides with primetime pricing. In this way, we have strengthened our category position on both bookings and ride basis.”
The quarter’s focus on pricing competitively produced “solid early results,” Lyft CFO Elaine Paul said, noting the rideshare growth. “[It] was a partial quarter of operating with this renewed focus, and with a full quarter impact in Q2, we expect rideshare ride growth to accelerate further,” she said.
Both executives noted Lyft’s recently announced layoffs and cost reductions. “We didn’t make these decisions to cut costs and headcount lightly, but it is critical to consistently being able to offer good prices and fast pick-up times,” Risher said. “Even more importantly, we have restructured the organization and nearly halved the number of management layers from eight to five, flattening teams and enabling for faster decision making.”
Paul added that when the headcount and operating cost savings are in full effect, “we expect to generate approximately $330 million in annual savings,” she said. “This is made up of approximately $215 million related to headcount and $115 million of operating costs reduction. … In the near term, we expect to use these savings to pay for our continued service improvements.”
Lyft Q1 Metrics
Lyft reported a first-quarter net loss of $187.6 million on $1 billion of revenue. That compares with a $196.9 million loss one year prior and a $588.1 million loss in Q4 2022. Revenue was up 14.3 percent year over year, however it was down from the $1.2 billion reported in the fourth quarter.
First-quarter active riders rose 10 percent year over year to 19.6 million, representing accelerated growth from 9 percent year over year in Q4 2022. Revenue per active rider was up 4 percent to $51.17, though that was below the fourth-quarter level of $57.72 which also had 11 percent growth. The decelerating growth primarily was driven by the pricing changes, Paul said.
The company projected second-quarter revenue of $1 billion to $1.02 billion, for a 1 percent to 3 percent increase year over year. “This assumes rideshare growth accelerates to at least 15 percent year over year in Q2,” Paul said.
