(Reuters) – Lyft Inc (LYFT.O) on Tuesday forecast slower growth in the new year as ridership growth stagnated in the second half of 2019, disappointing investors and sending shares down 3.7% after hours.
FILE PHOTO: A Lyft bicycle is shown at the Lyft listing on the Nasdaq during an IPO event in Los Angeles, California, U.S., March 29, 2019. REUTERS/Mike Blake
While the ride-hailing company reported record quarterly revenue of more than $1 billion, it failed to change its target to achieve profitability on an adjusted basis by the end of 2021. This was in contrast to its larger rival Uber Technologies Inc (UBER.N), which last week moved forward by a year its own profitability target.
Lyft reported revenue of $1.02 billion in the fourth quarter, ahead of analysts who expected $984 million in quarterly revenue, according to IBES data from Refinitiv.
For now, the company continues to make losses, reporting a fourth-quarter net loss of $356 million, or a loss of $1.19 per share, narrower than analyst estimates for a $1.38 loss per share.
Lyft operates only in the United States and some Canadian cities. Its active rider customer base in the fourth quarter grew to 22.9 million from 22.3 million the previous quarter. That compares with Uber’s global 111 million active platform users in the same period.
While Lyft’s ridership grew by more than 6% in the first half of 2019, growth in the second half slowed to around 2.5%.
The company said it expects revenue in the first quarter of between $1.05 billion and $1.06 billion.
Uber originally echoed Lyft in saying it would be profitable on an adjusted EBITDA basis by the end of 2021. But the company last week moved that target forward by a year, now promising investors it would be profitable on that metric in the fourth quarter of 2020.
The adjusted EBITDA metric at both companies excludes expenses for stock-based compensation and other items. Share-based payments at Uber in all of 2019 amounted to nearly $4.6 billion, or roughly a third of revenue.
Lyft’s stock-based compensation came in at $1.6 billion for all of 2019, or 44% of full-year revenue.
Both companies went public last year, Lyft in March, Uber in May, with many early employees and investors selling their shares.
Lyft Chief Financial Officer Brian Roberts in an interview with Reuters on Tuesday said 2020 created the foundation for “more durable growth” in 2021 and beyond.
Uber and Lyft, both based in San Francisco, are pursuing different roads in search of profitability, with Uber pouring money into side businesses which have so far lost money and Lyft remaining focused solely on moving people around.
Lyft in January cut 2% of its workforce in its sales and marketing department to achieve its profitability target, but said it plans to hire more people this year.
The company is still spending heavily, with total costs in 2019 growing to $6.3 billion.
Uber and Lyft have historically relied on heavy subsidies to attract riders.
Lyft in October said a growing number of customers were paying full price, with discounts and promotional incentives decreasing.
Roberts on Tuesday said Lyft would focus on profitable growth.
“We want to win on innovation, customer experience and brand reputation, not on coupons or discounts,” he said.
But Uber Chief Executive Dara Khosrowshahi told investors during an earnings call on Thursday that Lyft over the past month or so had been more aggressive in giving out discounts to attract customers.
Reporting by Tina Bellon in New York and Akanksha Rana in Bangalore; Editing by Matthew Lewis