Lyft beat revenue estimates for the first quarter, but cautioned that the current quarter is bound to be much worse.
Beginning in late March, Lyft saw a steep drop-off in demand for rides, which bottomed out the week of April 12, according to company executives. Lyft estimated a 75% drop in rides in April, foreshadowing a punishing second quarter. Lyft (LYFT) - Get Report shares were up 17% in after-hours trading Wednesday after it reported 23% revenue growth in Q1.
Lyft CEO Logan Green described a slight recovery in rides since mid-April, but said the pandemic and overall consumer environment will remain "significant" headwinds for Lyft.
"Ride levels appear to have stabilized, seeming to have reached the bottom in the second week of April. We have since seen three consecutive weeks of week-on-week growth, but, clearly, this is from a low absolute ride base. And rides last week were still down more than 70% year on year," Green said.
For the quarter ending in March, Lyft reported $955.7 million in total revenue, an increase of 23% year over year and higher than analyst consensus estimates calling for $882 million.
Reiterating Lyft's earlier withdrawal of 2020 guidance, Green said it was impossible to predict the exact timing of a recovery in its rides business. And for the foreseeable future, the supply and demand dynamics of the platform will also be thrown out of whack.
"We expect that rider demand on our platform will be down for the foreseeable future. At the same time, with record unemployment, we expect driver supply to outstrip rider demand, which will reduce our required spend on driver acquisition and engagement," Green added, noting its balance sheet. Lyft ended the quarter with $2.7 billion in cash and cash equivalents.
To mitigate the hit on its revenue, Lyft is taking a number of dramatic cost-cutting measures.
The company recently laid off 982 employees, equivalent to 17% of its workforce, and is trimming expenses in a variety of other ways, such as by yanking ride coupons and pausing onboarding of new drivers. Overall, Lyft expects to slash its capital expenditures by 63% to $150 million this year.
"No stone will be left unturned,” in managing Lyft's expenses, Green said.
If rides remain at April levels for the rest of the current quarter, Lyft CFO Brian Roberts said the company can limit adjusted EBIDTA loss to $360 million in Q2.
Lyft is seeing "what may be the beginning signs of a recovery in certain cities," Roberts said, while cautioning the recovery is from a low base of rides.
Comparing the week ending April 5 and the week ending May 3, Roberts said rides increased by 25% in Atlanta, 35% in Chicago, 29% in Houston, 39% in New Orleans, 22% in New York City and 25% in Seattle. The overall rideshare platform saw a 13% increase in rides in that time frame.
Excluding Wednesday's after-hours trading activity, Lyft shares are down 39% year to date.