Ride-hailing firm Lyft said Wednesday (Aug. 12) that its active ridership plunged 60 percent year over year during Q2 due to the coronavirus pandemic, but said signs of recovery are emerging.
“While rideshare rides in the quarter were down significantly year over year, we are encouraged by the recovery trends we are beginning to see, with monthly rideshare rides in July up 78% compared to April,” Chief Executive Logan Green said in a news release.
The company said the July gains came after active ridership fell to 8.7 million during Q2 vs. 21.8 million in the same period last year.
Such declines hit Lyft particularly hard because unlike competing ride-hailing firm Uber, Lyft doesn’t have a side hustle to fall back on like the Uber Eats food-delivery service. Lyft also only operates in the United States and Canada, which means it’s been particularly affected by the uneven pace of North America’s COVID-19 recovery to date.
Analysts had expected the company to report tough times for Q2, but cost-cutting measures that included mass layoffs earlier in the year reduced the damage.
“We continued to take aggressive actions to reduce costs and increase our underlying unit economics in the quarter, which has put Lyft on track to achieve $300 million of annualized fixed cost savings by the end of the year,” Chief Financial Officer Brian Roberts said in the company’s earnings release. “These steps position the company to achieve adjusted EBITDA profitability with 20%-25% fewer rides than originally contemplated in our fourth-quarter 2021 target.”
By the numbers, Lyft lost 86 cents per share — better than the 99 cents of red ink that analysts had forecast, but worse than the 68-cent-per-share loss the company recorded at this time last year. Revenue came in at $339 million, slightly ahead of analysts’ predicted $337 million, although down considerably from the $867 million the company clocked in a year ago.
Lyft also briefly addressed the CA court ruling that would force them to reclassify their drivers as employees not independent contractors.
As for what’s coming next, Lyft joined the recent trend of companies offering no predictions for Q3, citing marketplace instability and uncertainty. Green asserted Lyft's intention to appeal, its support of Prop 22 in November, a ballot question that would release ride sharing firms like Lyft from Assembly Bill 5 and the reality that if it is not successful, it will have to discontinue its service in the state of California.
"Drivers have said they want to remain independent contractors over being employees by a 4:1 margin. Economic studies in California have shown that 80 percent to 90 percent of drivers entire regions of the state would lose access to Lyft and Uber platforms, if drivers were forced to become employees," Green told investors. "We will continue to fight for drivers' independence. Our plans and forecasts are currently based on the assumption that efforts to challenge the injunction will yield favorable results. Still, as you know, we cannot provide assurances on the timing and ultimate outcome."