Opinion: Lyft stops providing key data after IPO, then insults investors’ intelligence
Lyft Inc. began life as a public company by taking away crucial information for investors, and insultingly insisted that it was for their own good.
Lyft’s first-quarter results were not an auspicious beginning for the ride-hailing company, as it reported quarterly losses that topped $1 billion thanks to the stock-based compensation that is always an issue in the first quarter after initial public offerings. Even after adjustments, Lyft claimed losses of more than $200 million, or $9.02 a share — a figure that is inflated because shares related to the IPO were not used in its share count, which was captured at the end of the quarter and before the IPO closed. Shares bounced around in after-hours action, finishing the extended session down 1.8%.
Lyft reported first-quarter revenue of $776 million, better than analysts’ expectations, but Lyft’s revenue does not tell the entire story. As MarketWatch has detailed with both Lyft and rival Uber Technologies Inc., ride-hailing companies are reporting only part of each transaction, the amount of money that goes to the company instead of the driver.
Both companies had been offering potential investors numbers that gave a look at the full operations. Lyft offered total bookings information in its pre-IPO regulatory filings for 2016, 2017 and 2018, which is the total revenue generated by the ride-hailing app including the total paid to drivers. That information gives investors a better feel for pricing trends, the size of the ride-hailing market and offers insight into how much of the money is going to drivers, with Lyft even breaking down revenue as a percentage of bookings to provide information on the latter.
When earnings arrived Tuesday, however, bookings and all the related information were nowhere to be found. When asked about it at the end of the company’s conference call, Chief Financial Officer Brian Roberts said that because Lyft is expanding beyond ride-hailing into bikes and scooters, investors just wouldn’t be able to understand the bookings data.
“Our historical business was virtually entirely a ride-sharing marketplace, and so we included bookings and take so investors could understand the monetization trends. We are now aggressively investing in new areas including those where revenue equals bookings and so we really wanted to try to avoid investor confusion,” Roberts said, while insisting that bookings were “absolutely a positive metric for us in the first quarter.”
While Lyft suggested that investors’ poor little brains just couldn’t handle a separate figure outlining the actual size of its business, that certainly wasn’t the case with the bottom line. Lyft offered investors several different versions of profitability, including GAAP and non-GAAP net income, GAAP and non-GAAP operating income, and adjusted Ebitda, with vast differences in all those numbers. Lyft even offered an extremely nontraditional “adjusted cash” figure in supplemental materials, so that it could add in the IPO proceeds even though the company received them after the quarter was over.
Lyft did not offer any other numbers that could provide visibility into the revenue breakdown, though. No separate revenue on its forays into shared bikes and scooters, nor expected financial information on its just-announced relationship with Waymo, the self-driving car business owned by Alphabet Inc.
The company said that it expects 2019 will be its peak year of losses, estimating adjusted Ebitda of more than $1.1 billion for the year, which means all its other ways of counting losses will lead to much higher totals. While Roberts said Lyft will then move “steadily toward profitability on a consolidated basis,” he did not detail exactly how Lyft executives expect it to become profitable.
Maybe that information would have been just too confusing for investors as well.
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