Lyft Inc. overcame investors’ worst expectations Wednesday when it pushed closer to profitability and reported moderate growth of the ride-hailing business in a quarter partly marred by the effects of the coronavirus pandemic.
The San Francisco-based company reported a loss excluding interest, taxes and other costs of $85.2 million for the first quarter. That was a 61 percent reduction from a year ago. After the report, the stock gained as much as 18 percent in after-hours trading.
However, the virus significantly slowed Lyft’s growth machine. The company, accustomed to growth rates of more than 50 percent a quarter, said adjusted sales climbed 23 percent from last year, to $956 million.
Lyft only operates in the U.S. and Canada, which were largely spared from the virus until March. The situation in those countries worsened rapidly, and their governments issued guidance saying people should significantly curb travel. Transportation businesses, including Lyft’s, were jolted. Last month, Lyft pulled its 2020 forecast and said it would reduce its workforce by 17 percent, furlough another 5 percent and slice salaries for everyone left.
CFO Brian Roberts said in a statement Wednesday that the company would cut spending for the year beyond its previous expectations by about $300 million. “In these uncertain times, we are building on that progress by taking decisive action to reduce costs and further improve our operating efficiency,” he said.
On top of the pandemic, Lyft was dealt another major setback this week. California sued the company and its larger rival, Uber Technologies Inc., claiming they’re in violation of a law that went into effect this year that makes many contract workers eligible for employee benefits. Although the companies are seeking to overturn the law through a ballot measure in November, investors were unsettled by the suit. Lyft’s stock was down 2.1 percent at the close of trading Wednesday.
Unlike Uber, which reports results Thursday, Lyft cannot fall back on an array of other businesses to help offset declines in transportation. Lyft’s network is built around moving people in cars and on bicycles and scooters, all of which were underutilized late in the first quarter and are poised to face even greater challenges in the second. Lyft said it ended the first quarter with $2.7 billion in cash.