Shares of Lyft (LYFT 2.65%) were surging today after the ride-hailing company posted better-than-expected results in the first quarter, showing significant improvement on the bottom line, and as management reassured investors that the company should be able to manage through the pandemic.
The stock was up 23.2% as of 10:41 a.m. EDT on Thursday.
Despite a sharp decline in rides starting in mid-March, Lyft's revenue rose 23% to $955.7 million, easily beating estimates at $897.9 million. Revenue per active rider rose 19% to $45.06, while active riders were up just 3% to 21.2 million as the company lost a pool of low-frequency riders who likely would have come in at the end of the month.
More impressive was Lyft's strong improvement further down the income statement as its adjusted EBITDA loss narrowed from $216 million to $85.2 million, which was better than the company's own guidance before the pandemic for a loss of $140 million to $145 million. On the bottom line, Lyft reported an adjusted loss of $0.32 per share, much better than the consensus for a loss of $0.64 per share.
CEO Logan Green said: "While the COVID-19 pandemic poses a formidable challenge to our business, we are prepared to weather this crisis. We are responding to the pandemic with an aggressive cost reduction plan that will give us an even leaner expense structure and allow us to emerge stronger."
Despite the better-than-expected numbers in the first quarter, Lyft is clearly being challenged by the pandemic. The company said that rides had fallen as much as 75% during the crisis and were still down by 70% in the most recent week. To cut costs, the company laid off about 17% of its employees last week, furloughed a few hundred others, and cut pay for the rest of its salaried employees. Those moves will help trim operating expenses by a run rate of $300 million this year, and Lyft is also slashing $250 million from capital expenditures.
CFO Brian Roberts said that with the help of those moves, its second-quarter adjusted EBITDA loss would be lower than $360 million, and that its improved cost structure meant that it can reach breakeven with 15% to 20% fewer rides than before. While those numbers show how the ridesharing company's business has seen a sharp drop during the crisis, investors still seemed impressed with the cost management. If the economy bounces back, Lyft should as well.