By Tina Bellon and Nivedita Balu
NEW YORK (Reuters) -Lyft Inc on Tuesday reported an adjusted profit for the third quarter as a bruising year of pandemic-related cost cuts paid off and more drivers and riders returned to the company’s ride-hailing platform.
The Uber Technologies Inc rival said consumers were traveling again after being homebound for more than a year in a sign of a broader U.S. economic recovery.
Rides to airports, which are among the most profitable routes, tripled from a year ago, Lyft President John Zimmer told Reuters. Active riders overall rose 11% to 18.9 million in the quarter ended Sept. 30.
Lyft shares rose 4% in after-hours trading following the results.
According to the California-based company’s own measure, Lyft was profitable for the second time in its nine-year history.
Lyft reported adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs, primarily stock-based compensation, of $67.3 million. The metric came in significantly ahead of a Wall Street estimate for $30.7 million, according to Refinitiv data.
Lyft’s net loss narrowed to $71.5 million, or 21 cents per share, from $459.5 million, or $1.46 per share last year, but Zimmer declined to say whether or when the company would target net profit.
Uber, which will report results on Thursday after the bell, at the end of September said it expected adjusted EBITDA to break even in the third quarter for the first time.
Overall, Lyft’s third-quarter revenue rose about 73% on a yearly basis to $864.4 million, beating the Wall Street estimate of $862.68 million, according to Refinitv IBES data.
Revenue increased around 13% from last quarter, while total costs and expenses grew only 4% from the second quarter in a sign that Lyft is making do on its promise to cut both fixed and variable costs. Lyft’s contribution margin, indicating the company’s profitability excluding variable costs, rose to a record 59.4%.
Lyft said driver supply was up 45% compared with last year, but did not share how far off driver numbers remained from pre-pandemic levels.
Zimmer said in an interview with Reuters that drivers were feeling safer thanks to the availability of COVID-19 vaccines and were returning to the road in greater numbers after enhanced federal unemployment payments ended in September.
“We’re seeing the right things happening in the market and will begin to taper incentives in the quarter ahead,” he said.
Lyft and Uber have been spending heavily to lure drivers with big incentives as the pandemic opened up new jobs at Amazon.com Inc’s warehouses, Instacart’s grocery services and restaurant deliveries.
But Zimmer said most ride-hail drivers worked on the platform part-time as a way to supplement income from other jobs, enjoying the flexibility provided by gig work.
“I feel very good about the supply conditions, and our ability to compete in the marketplace for talent, given the type of work and earnings that we offer,” he said.
(Reporting by Tina Bellon in Austin, Texas, and Nivedita Balu in BangaluruEditing by Matthew Lewis)
