
Lyft Announces Q1 Earnings - derwiki
https://investor.lyft.com/news-releases/news-release-details/lyft-announces-record-first-quarter-results
======
acchow
Stunning.

Lyft is valued at $17bn on $776M revenue. Expenses for this revenue...

Cost of revenue: $462M Operations: $187M S&M: $275M Administrative: $376M

Total expenses: $1.3bn, i.e. 167% of revenue.

This is not a healthy company.

Uber's breakdown for quarter-ended March 31 isn't out yet. But looking at Dec
31 figures:

Revenue: $3.0bn Cost of revenue: $1.6bn Operations: $408M S&M: $974M
Administrative: $555M

Total expenses: $3.53bn, i.e. 118% of revenue.

(note: the above excludes R&D and interest, depreciation, amortization
expenses)

~~~
pbreit
This tweet demonstrates a lack of basic finance knowledge. Stock prices are
based on ==future== cash flows, not past. It's already a huge company still
growing very fast and printing money on core product (non-pool rides in mature
markets)(even overall contribution margin was a whopping 50%! And growing!).

~~~
mifeng
Stock prices are based on the present value of future profits, so pointing out
that Lyft is unlikely to be profitable for a long time is spot-on.

~~~
pbreit
It could be massively profitable tomorrow.

~~~
aetherson
For values of "could" that include "definitely will not be."

~~~
pbreit
"Tomorrow" was facetious, I apologize. But based on existing 50% contribution
margins it's quite clear it could achieve earnings in the near term.

But of course with such contribution margins and growth rates it would be
silly to hang on to cash.

------
muckrakerz
The net loss that they are running against revenue is staggering. It is also
telling that they bury that in the text and don't move it to the summary
infographic. What does a profitable Lyft/Uber look like? We haven't seen it
yet.

This also proves a bit of the lie that the drivers are getting screwed out of
earnings. The company as a whole isn't profitable and those drivers should be
carefully considering their future when, not if, the market losses patience
over these losses.

~~~
wavesounds
This is literally the top comment on every recently IPO'd companies earnings.
"Why are they spending so much money, why aren't they profitable yet." It's
like HN doesn't understand the purpose of going public is to raise money, and
the reason you raise money is because you see growth opportunities that are
worth spending money on instead of returning profits to investors.

~~~
icxa
"It's like HN doesn't understand of raising money on an existing valueless
proposition!"

No seriously, I don't understand. Explain to me. I grew up in and around small
businesses, I legit don't understand how this bulls __* flies. It 's all being
propped up for god knows what reason, and ultimately your average citizen is
going to have to pay for it when it all comes crashing down, like always. I
don't care if a group of "visionary VCs" "see value" in it. We've replaced a
sustainable industry (taxis) with Uber and Lyft, which only were able to
because they were able to skirt by regulation, and now if and when they vanish
because again, they have proven to be unable to _actually make profit to date_
, we will now have a crumbled public transit mode left to rebuild. Irrational
investments that negatively affect the public should be faced with this
intense scrutiny.

I am honestly obviously ignorant to whatever is going on here, so I am
allowing myself to be educated here.

~~~
cljs-js-eval
As someone who did not have a car for the better part of a decade, living in
one city known for a good taxi system and one without a good taxi system:

"sustainable industry" is not the term I would use to describe taxis. Their
dispatch systems __badly __needed replacing.

Things I saw in taxis pre-uber:

\- Calling a dispatcher and giving an intersection, to receive a "we don't
pick up at intersections, you need a valid street address" message. This was
in the city without a lot of taxis. Gee, wonder why.

\- Drivers speeding off once they realized you didn't mean to go to the
airport.

\- Drivers intentionally using both feet to drive, so they would stay well
below the speed limit. If confronted, it was in the name of "safety".
Dispatchers couldn't track locations so they had no idea how long the trip
should take, and weren't interested in you as a repeat customer enough to do
anything to the driver.

\- Multiple broken card readers.

\- Generally, it was impossible to understand dispatchers. Almost every one I
talked to had a thick accent beyond what I would expect from even a newer
first-generation immigrant.

~~~
jerkstate
sure, taxis were horrible _and_ expensive. however, they made enough money to
sustain themselves with their high prices, low margins, and crummy service. I
guess the question is, what would Uber/Lyft have to charge to break even? 10%
more? 50% more? What would they have to charge to justify their share price?
Do they make sense as businesses?

~~~
cljs-js-eval
Given the strides they've made in automated dispatching and the increased
demand for taxis that has come about as a response, I'm guessing the model
makes sense at a higher price than they currently charge.

I was literally the model customer for taxis. No car, disposable income, goes
out drinking a lot. Even so, I actively avoided taxis whenever I could before
uber hopped on the scene. It wasn't a question of money - their dispatch
services actively left money on the table with their terrible, terrible
quality.

Whether Uber/Lyft took out too much money remains to be seen. But the
dispatching technology is an immensely profitable business by itself.

------
Reedx
Lyft's reply re: profitability from the conference call:

 _" We anticipate 2019 will be our peak loss year as we then move steadily
towards profitably on a consolidated basis," CFO Brian Roberts said..._

[https://www.businessinsider.com/lyft-cfo-says-2019-will-
be-p...](https://www.businessinsider.com/lyft-cfo-says-2019-will-be-peak-
financial-loss-year-2019-5)

------
koolba
> For FY 2019, we anticipate:

> Total revenue to be between $3.275 billion and $3.3 billion

> Adjusted EBITDA loss to be between $1.15 billion and $1.175 billion

What’s the size of their war chest? At $1+B/year of net loss this party can’t
continue forever.

------
w8rbt
I just recently used Lyft while visiting Atlanta. I'd never used Lyft or Uber
before. The app and service were both fantastic. I hope they keep it up.
Awesome service at a reasonable price.

~~~
gus_massa
It is cheap because they are loosing money. (Trying to capture the market or
something.) Let's wait until they are profitable to see the real price.

~~~
w8rbt
I did not mean to imply it was cheap, only reasonable. I would have paid more.
Nice cars, polite drivers and quick service.

------
closetCS
This isn't completely on topic but ...

I wonder what happens to a company's culture once the employees see the stock
absolutely tanking. The probably aren't fully vested, and so are just watching
their payday shrink and shrink.

~~~
sokoloff
Even if they are vested, they are almost certainly subject to a 180 day
"lockup" period where they can't sell for that long post-IPO.

------
thisisit
> Lyft reported Q1 revenue of $776.0 million versus $397.2 million in the
> first quarter of 2018, an increase of 95 percent year-over-year.

95% growth year-over-year? On first reading this sounds incredible. But then
on the other hand, if they still had 100% growth left in them, why couldn't
they raise another round of funding?

One theory is that they held back some revenue from their IPO documents to
show a spurt. So, I really want to see their 10-Q to understand what really is
happening here.

~~~
zzleeper
> why couldn't they raise another round of funding?

Isn't an IPO just that? A better round of funding that also provides liquidity
to shareholders?

~~~
thisisit
It depends.

If the company uses the proceeds for operations of the company it is another
rounding of funding.

There are times when the company IPOs specifically to provide exit to the
existing shareholder and not adding any money to operations.

That being said, public offerings get slightly restrictive on how the company
can raise future capital.

If Lyft can still grow nearly 100% then I am sure they could have found a VC
willing to fund them. And they could have gone public at say 30-50% growth
rate.

------
data_spy
If that R&D doesn't pan out they essentially will go bankrupt quickly as their
R&D spending was 81% of their revenue.

~~~
deanmoriarty
Why couldn't they issue bonds and get access to cheap debt like Netflix or
Tesla?

~~~
YjSe2GMQ
Uber issued bonds: [https://www.bloomberg.com/news/articles/2018-10-16/uber-
is-s...](https://www.bloomberg.com/news/articles/2018-10-16/uber-is-said-to-
boost-bond-sale-to-2-billion-as-orders-swell)

Rated by Moody's as B3 and by S&P as B-, which is the bottom of "Highly
speculative":
[https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rati...](https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rating_tiers)

For comparison, Uber bonds are one grade lower than Argentinian bonds:
[https://tradingeconomics.com/argentina/rating](https://tradingeconomics.com/argentina/rating)

Such credit ain't cheap, especially now that interest rates are no longer
zero.

~~~
naveen99
They sold $2billion in 8 year bonds at 8% yield. i think their cost of capital
will go down now that their contribution margin is positive (9%)

------
naveen99
Contribution margin is 50%. With fixed costs around $3billion / year. They
need to double revenue to $6 billion to get to profitability.

Edit: By comparison Uber’s contribution margin is only 9%. With fixed costs
around 4 billion , it can probably get to profitability by increasing
contribution margin to 40% with the same revenue, or by growing revenue 3x.
Probably both contribution margin and revenue will go up 3x eventually.

------
trevor-e
Are developers in San Francisco really worth the cost? According to Paysa data
on Lyft the average Software Engineer makes 263k and the average Senior
Software Engineer makes 354k (I believe these numbers are total comp). If I'm
reading the earnings correctly then $506,206,000 of stock compensation is
going towards R&D. Unless you are hiring someone into a highly specialized
role I don't see how these numbers make sense. Are these developers really
worth multiples of developers in other cities?

[https://www.paysa.com/salaries/lyft](https://www.paysa.com/salaries/lyft)

------
aetherson
After hours investors don't seem particularly spooked, they're down about 3%
as of this writing.

~~~
aetherson
(Though now they're down 6% during the day, so that's more material.)

------
ebg13
Would they be profitable if they fired all of their engineers and just let the
already working product keep working? I mean...it works. It already works. It
does everything that it's supposed to do. Millions of people use it happily.
Could they just ride it into money?

~~~
alkonaut
This strikes me as odd also for Uber. I mean I get that they are a large high-
tech company, but I don't get how they are developing huge js frameworks and
similar. They are a taxi company. Don't they basically just need a reasonably
simple web app, a mobile app and some infrastructure that runs on a
(relatively) small AWS bill? Why is Uber and Lyft trying to reinvent the web?
Is it to attract talent, because good talent really wants to develop cutting
edge stuff? That's an argument I can understand. But how can Uber have 2000
developers who make 1000 microservices?

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gigatexal
Lots of millionaires being minted. Congrats to the early engineers.

------
bfrog
Wow, this company is burning cash in a bonfire as fast as they can get it.

