Lyft (LYFT) Announces Positive Update; Average Daily Rideshare Ride Volume in February rose 5.4%, Sees Improved EBITDA Loss in Q1
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Lyft (NASDAQ: LYFT) provided an update on business trends for the month of February 2021 relative to updates provided on the Company’s fourth quarter earnings call on February 9, 2021.
In February, average daily rideshare rides increased 4.0% month-over-month relative to the average daily rideshare ride volume in January 2021. As described on Lyft’s fourth quarter earnings call, weather in the first quarter is highly unpredictable and severe storms can shut down cities and impact rides. In particular, the week ending February 21, 2021 was impacted by severe winter storms affecting multiple US states. Average daily rideshare ride volume in February, excluding the week ending February 21st, increased 5.4% vs. the average daily rideshare ride volume in January 2021. Rideshare ride volume during the week ending February 28th reached a new record level for 2021 and was the Company’s best week since March 2020.
Using actual rideshare ride volume for January and February and applying February’s average daily rideshare ride volume to the 31 days in March implies first quarter rideshare ride volume would be down 1.2% quarter-on-quarter. As a point of comparison, on its most recent earnings call the Company noted that just applying January’s average daily rideshare ride volume to the 90 days in the first quarter would imply a 4% decline in rideshare rides quarter-on-quarter.
The Company continues to expect average daily rideshare ride volume in the first quarter of 2021 will exceed average daily rideshare ride volume in the fourth quarter of 2020. Lyft also expects that the first quarter will show three consecutive months of average daily rideshare ride growth. This would be a positive contrast to the fourth quarter of 2020 when average daily rideshare ride volume decreased sequentially in the months of November and December. Finally, the Company expects rideshare ride volume beginning the week ending March 21, 2021 to show positive year-on-year growth. This growth trend is expected to continue through the duration of 2021 barring a significant worsening of COVID-19 conditions.
Consistent with Lyft’s prior outlook and given the continued pandemic overhang, Lyft expects that first quarter rideshare rides could be flat or slightly down relative to the fourth quarter of 2020. In terms of the quarterly comparison, it’s worth noting that the first quarter ending March 31, 2021 has two fewer days than the quarter ending December 31, 2020 (90 vs. 92 days). If the first quarter had the same number of days as the fourth quarter of 2020, this outlook would translate to a slight increase in rideshare ride volume quarter-over-quarter.
The Company continues to demonstrate strong cost control within its previously provided revenue range for the first quarter of 2021. Lyft now expects it can manage its Adjusted EBITDA loss in the first quarter of 2021 to $135 million, an improvement from the prior outlook of between $145 and $150 million. The Company attributes the improvement in its Adjusted EBITDA outlook to reduced operating expenses and to Contribution Margin, which is expected to be at the top end of the previously provided range. In spite of this improved Adjusted EBITDA outlook, Lyft is continuing to fund strategic investments in new initiatives to expand its total addressable market over time and drive long-term growth.
The Company’s outlook for the first quarter of 2021 assumes the operating environment does not materially deteriorate.
Lyft plans to release financial results for the first quarter ended March 31, 2021 in early May.
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