Uber And Lyft Earnings Tell Tales Of Two Strategies

In what seems to be shaping up to be a modern-day version of The Beatles vs. The Rolling Stones, Uber and Lyft have put out their numbers for the latest quarter, and depending on where you look, or what niche you examine, or what line item you favor, one or the other is a winner.

The initial reaction, at least from investors, is akin to voting with feet. As of this writing, shares of Uber were down 10 percent in intraday trading Friday (Aug. 9). In terms of headline numbers, Uber logged its biggest quarterly loss, at $5 billion, and where sales were up 14 percent, costs were up 150 percent. Revenues were $3.2 billion; the Street had expected $3.3 billion. The loss per share came in at $4.72, quite a bit worse than the $3.12 expected. Stripping out stock-based comp shows that the company lost $1.3 billion in the quarter.

Here’s a mirror image: Lyft beat on those stats, at least as measured against the Street. The company said earlier in the week that revenues were up 72 percent to $867.3 million, better than the $809.4 million Wall Street expected. The adjusted loss per share was better than Wall Street had seen, too, at 68 cents, while the Street had forecast $1 a share in losses.

Drill down a bit and there are some commonalities among business models that are diverging (more on this in a moment). Ridership is up amid a shift away from vehicle ownership. For Uber, bookings were up 35 percent, active users were up 30 percent and trips taken gained 35 percent to 1.7 billion. Lyft said in its own statement that active riders gained 41 percent, and revenues per active rider were up 22 percent.

The competitive environment, too, got a nod from executives at both companies. Lyft CFO Brian Roberts said that the company has been able to institute pricing increases in a few select markets, beginning in June. Lyft said its guidance for sales and marketing was coming down a full 800 basis points, which speaks volumes to a ride-hailing landscape that is becoming more rational. Uber said for its own part that promotional expenses were also down. Said the Uber CEO: “We are seeing the competitive environment in general, be more constructive and … that always helps as well. The combination of better science, better marketing, and a more constructive environment, we think, makes for a decent to hopefully better than decent second half for us.”

For Lyft, the strategy crystalizes along transport and management has said that revenue per active rider remains a key driver of results. New use cases may emerge with, say, uptake in using Lyft for non-emergency medical transportation.

Lyft CEO Logan Green said during this week’s call that “for more and more of our riders, Lyft is becoming a bigger part of how they get from point A to point B,” spanning “shared saver rides” and bikes and scooters. On this last front, he said, scooters are live in 16 markets. The company’s transport focus also is evident from commentary that it is putting more effort into Lyft Business, and on the strategy that the end-user may change but the needs are the same.

As CFO Roberts said on the call, in general, “we have strong core growth in the U.S. ridesharing industry. I’m sure you look at the same surveys that we do in terms of what percentage of the U.S. population have never tried ridesharing. And as we described, and I think as you can see in our S-1, it’s one of those products that people will try it for the first time. Maybe they’ve had a drink too many on a weekend, and they tried ridesharing, and then they just discovered how much easier it is to use Lyft to go to the airport or use Lyft to go to a medical appointment, et cetera. And it just — we tend to see usage go up over time.”

The difference in strategy is spotlighted across a few metrics. Lyft uses revenue per rider (again, its existence is based on riders), while Uber measures its progress in terms of platform user results.

As has been well documented, Uber has been busy developing a platform model — beyond the core platform of ridesharing and Uber Eats. Some observers may have, as of Friday, been concerned with slowing growth, at 22 percent in the latest quarter (constant currency) where once it had been about 54 percent in the second quarter last year, but it has accelerated through the last few sequential quarters. Of course as with any platform model, scale matters. Gross bookings were up 37 percent, the company said.

“In July, the Uber platform reached over 100 million monthly active platform Consumers for the first time, as we become a more and more integral part of everyday life in cities around the world,” CEO Dara Khosrowshahi said on the call. Management also illuminated cross-pollination, where Uber Eats and Uber Ridesharing by rewards spurred consumers enrolled in the program to be twice as likely as to be active on both Rides and Eats. Eats has showed particular traction, up 140 percent, with 40 percent of individuals never having previously tried the services before. The company also said that Uber Freight is making headway but did not disclose numbers on the call.

The multi-pronged approach also requires continued investment, management said.

For Uber and Lyft, the road stretches ahead, marked by divergent paths and strategies.