Shares of Lyft (NASDAQ:LYFT) jumped yesterday following remarks CEO Logan Green made at the WSJ Tech Live conference. One key concern that public investors have had since the ridesharing company went public in March is profitability, or lack thereof. Co-founder John Zimmer outlined a path to profitability over the summer, noting that rides are profitable in many markets while variable costs such as insurance continue to decline.

Still, lingering doubts have weighed on investor sentiment, with Lyft stock hitting fresh lows -- close to half the IPO price of $72 -- earlier this month. Here's what Green had to say.

Lyft sign

Image source: Lyft.

Black ink in two years

"We've never laid out our path to profitability, and we know that's a question on a lot of investors' minds," Green said. "So we are excited to now go on the record and say that we're going to be profitable on an adjusted EBITDA basis a year before analysts expect us to." The chief executive is confident that Lyft can hit that target in the fourth quarter of 2021 -- just two years away.

Green also noted that Lyft has over $3 billion in cash sitting on the balance sheet and that the team is executing well. "We need to build trust with a new class of investors and with two quarters beating expectations, we're excited for the next few quarters," Green added.

Both Lyft and chief rival Uber (NYSE:UBER) have been pulling back on incentives in recent months, a rare acknowledgment that competing solely on price has hurt the unit economics of the industry.

After excluding a bunch of stuff

It's worth noting that Green is referring to Lyft's adjusted EBITDA, a non-GAAP metric that only paints part of the financial picture. The company burned through over $2.3 billion in adjusted EBITDA losses from 2016 to 2018, although to Lyft's credit, its adjusted EBITDA margin did improve.






$1.9 billion

$4.6 billion

$8.1 billion

Adjusted EBITDA

($665.5 million)

($696.1 million)

($943.5 million)

Adjusted EBITDA margin




Data source: Prospectus.

Compared to GAAP net losses, adjusted EBITDA excludes things like depreciation, amortization, stock-based compensation expense, income tax provisions, and changes to insurance reserves, among others. Stock-based compensation expenses in particular have jumped significantly following Lyft's IPO and now represent the biggest line item in that equation. Lyft has incurred over $1.15 billion in stock-based compensation expense in the first half of 2019, compared to $27.5 million from 2016 to 2018 combined.

The tech company posted adjusted EBITDA losses of $420.1 million in the first half of 2019 and expects full-year adjusted EBITDA losses of $850 million to $875 million.

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