Lyft has finally pulled back the curtain on its business prior to the final push toward its initial public offering (IPO). The company first revealed its intent with a confidential filing with the Securities and Exchange Commission (SEC) back in December, and rumors have been flying as to when the company would finally make a move to go public.
Now Lyft has taken the important step of publicly releasing the information from its S-1 filing with the SEC, which indicates the stock may begin trading as soon as next month. Let's look at some of the most important details revealed to investors in Lyft's regulatory filing.
1. The basics
Looking to make life easy, Lyft chose a stock ticker that will be easy for investors to remember. The company plans to list on the NASDAQ using the ticker LYFT.
The company is not sure how much it actually wants to raise in the IPO, so it used a placeholder amount of $100 million for now. The final amount will depend on investor demand for the shares. Previous reports indicated Lyft was expecting to be valued at between $20 billion and $25 billion in its IPO.
Lyft's filing says the company's co-founders, CEO Logan Green and President John Zimmer, will keep significant control of the company after it goes public through the use of dual-class shares.
2. Revenue is skyrocketing
Lyft revealed that its revenue in 2018 soared to $2.2 billion, more than double the $1.06 billion it generated in the prior year. Lyft said the revenue came from serving over 30 million riders using nearly 2 million independent drivers. The company had $8.1 billion in bookings.
Another contributor to Lyft's increasing financial success is that each ride is generating more revenue. Revenue as a percentage of bookings -- the amount riders pay -- has grown to 26.8%, up from 23.1% in 2017 and 18% in 2016.
3. But losses are growing, too
The ride-hailing company reported losses of $911 million in 2018, up 32% from the $688 million lost in 2017. This is the result of costs that grew to $3.13 billion, up 77% year over year. Executives warned in the filing that the company may never turn a profit.
To help gauge losses, Lyft will be tracking a metric it calls contribution margin, which is defined as revenue, less the cost of revenue, and adjusted for amortization and stock-based compensation. Contribution margin grew to 45.5% in the fourth quarter, up from 39.7% in the prior-year quarter. It has also risen fairly steadily from 23.1% in the first quarter of 2016.
4. Rider metrics
Lyft reported rider metrics that give insight into the company's quickly growing business. Lyft will use three metrics that will revolve around the customers that use its service. Active riders -- which the company defines as anyone that takes at least one ride during the quarter -- rose to 18.6 million in the December quarter, up 48% year over year. Revenue per active rider -- total revenue divided by active riders -- grew to $36.04, up 32% year over year. The number of rides topped 178 million, up 53% compared to the prior-year quarter. This shows that not only is the number of riders increasing, but each customer is becoming more lucrative.
Lyft also said it commanded about 39% of the U.S. market in the fourth quarter, up from a 22% share it reported in December 2016.
5. Rewarding drivers
Lyft will be allowing a number of its drivers to participate in the IPO, permitting them to buy shares of the company at the IPO price. Only drivers who have accumulated at least 10,000 rides as of Feb. 25 will be allowed to participate.
Lyft also plans to reward some of its top drivers with one-time bonuses of as much as $10,000, which they can take in cash or use to invest directly in the company. Drivers with more than 20,000 rides will receive $10,000 cash, while those with 10,000 rides will get $1,000. The company will also pay $1,000 to drivers who have served on its Driver Advisory Council. These bonuses will be paid out on or about March 19.
6. High-profile shareholders
Those investing in Lyft will have some big-name companies along for the ride. Japanese tech giant Rakuten holds a 13% stake, General Motors owns 7.76%, investment manager Fidelity is in for 7.71%, venture capital titan Andreessen Horowitz owns 6.25%, and Google-parent Alphabet has a 5.33% stake.
Check out the latest earnings call transcripts for the companies we cover.
Lyft and its main competitor, Uber, have been working to be first to go public. Uber, which has had public relations setbacks in recent years, expects to file its IPO later this year. Each is hoping to raise billions and fuel expansions that will allow them to become sustainable businesses.
We don't yet know the exact date of Lyft's IPO or the pricing of its shares. It will probably be a couple of weeks until Lyft finalizes the date it will go public. At some point soon the company will release a price range for its shares, but the final price likely won't be decided until the day before the IPO.