(Reuters) -Lyft beat estimates for quarterly profit on Tuesday and said it would generate positive free cash flow for the first time in 2024, as it benefits from cost cuts and pushes back against competition from larger rideshare rival Uber.
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Lyft’s shares surged 61% after the bell, adding about $3 billion in market capitalization. They then shed gains to trade up 17% after the company’s chief financial officer Erin Brewer said on a conference call that core margin was expected to expand by 50 basis points this year to 2.1% of gross bookings, not 500 basis points like the company had said in a statement earlier.
“In 2024, we’ll prove that Lyft’s customer obsession will drive profitable growth,” new CEO David Risher said in a statement.
Under Risher, the company implemented an aggressive restructuring plan last year, including layoffs and elimination of management layers in pursuit of profitability.
The company said on Tuesday it cut total costs last year by 12%, from a year earlier, compared with a 28% surge in expenses in 2022.
“As we can drive our scale North and hold our costs flat, we’re going to drop more money to the bottom line,” Risher told Reuters, adding that improving airport pickups and implementing other features helped growth last year.
Last week, Lyft, which has a strong presence in the West Coast, announced it would pay the difference if drivers made less than 70% of what riders paid after external fees every week.
Concerns about safety, job security, and risks of artificial intelligence has made the sentiment around autonomous vehicles more hostile. Lyft, in partnership with Motional, has provided over 100,000 self-driving rides across the U.S.
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“It is going to take us a long time to get to the point where people feel comfortable with the technology,” Risher said. “We’re also always in discussions with the other big players to see how we can partner with them.”
Lyft said rides to stadiums grew more than 35% last year from 2022, mainly driven by Taylor Swift’s Eras Tour, Beyoncé’s Renaissance World Tour and other sporting events.
Risher said growth this year will be driven by partnerships with companies like LinkedIn and Starbucks among others.
It forecast current-quarter adjusted earnings before interest, taxes, depreciation and amortization of $50 million to $55 million, higher than expectations of $46.3 million.
The company’s adjusted core earnings of $66.6 million in the fourth quarter beat expectations of $56.2 million. Revenue rose 4% to $1.22 billion in the quarter ended Dec. 31, in line with analysts’ estimates.
(Reporting by Akash Sriram in Bengaluru, Additional reporting by Noel Randewich in San Francisco and Lance Tupper in New York; Editing by Anil D’Silva and Sayantani Ghosh)
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