Lyft Provides 2027 Financial Targets at First Investor Day

Rhea-AI Summary

Lyft held its first Investor Day to announce its financial targets for 2027. The company expects a 15% compound annual growth rate in Gross Bookings from 2024 to 2027, a 4% Adjusted EBITDA margin by 2027, and over 90% free cash flow conversion annually from 2025 to 2027. Presentations were made by CEO David Risher and CFO Erin Brewer, emphasizing Lyft's focus on customer satisfaction and innovation. The company reaffirmed its 2024 financial outlook, without changes to its Q2 2024 guidance or full-year 2024 directional commentary.

Positive

• Lyft expects a 15% compound annual growth rate in Gross Bookings from 2024 to 2027.
• The company anticipates an Adjusted EBITDA margin of approximately 4% by 2027.
• Lyft projects over 90% free cash flow conversion annually from 2025 to 2027.
• The company emphasizes improvement in profitability and cash flow.
• Lyft reaffirms its financial outlook for 2024, showing confidence in its current strategy.

Negative

• The company did not provide specific financial targets beyond 2027, leaving long-term growth unclear.
• Lyft's reliance on Adjusted EBITDA may obscure true profitability.
• The focus on margin expansion and free cash flow conversion may imply potential cost-cutting measures that could affect service quality.

Insights

Financial Analyst

Lyft's announcement of its 2027 financial targets is significant for investors, especially those focused on long-term growth. The company projects a Gross Bookings compound annual growth rate (CAGR) of 15% from 2024 to 2027, indicating strong revenue potential. This growth is underpinned by the company's focus on innovation and partnerships, aiming to enhance the customer experience.

Additionally, Lyft aims for an Adjusted EBITDA margin of 4% by 2027. While this margin is modest compared to industry giants like Uber, it represents a solid improvement, given Lyft's historical profitability challenges. A important aspect here is the emphasis on free cash flow conversion, expected to exceed 90% annually from 2025 to 2027. Free cash flow is vital as it indicates the company's ability to generate surplus cash, which can be reinvested in the business or used to return value to shareholders.

Investors should note that while these targets are ambitious, they come with execution risks. Achieving such growth and margin expansion requires sustained operational efficiency, market share gains and potentially, favorable economic conditions. As Lyft has reaffirmed its 2024 financial outlook, stability in the near term could provide a foundation for these longer-term goals.

Market Research Analyst

From a market perspective, Lyft's projections reflect an optimistic view of its competitive positioning in the ride-sharing industry. The mention of 'customer obsession' and 'industry-leading innovation' hints at strategic initiatives that could differentiate Lyft from its competitors. For retail investors, it's important to understand that market dynamics, including regulatory changes, shifts in consumer behavior and competitive actions, can significantly impact Lyft's ability to meet these targets.

The ride-sharing industry is highly dynamic, with players constantly innovating around pricing, service offerings and user experience. Investors should watch for how Lyft's initiatives translate into customer acquisition and retention. The company's success will largely depend on its ability to attract and maintain a loyal customer base while managing costs effectively.

Given the competitive nature of the industry and the potential for market disruption, Lyft's ambitious targets will require not just internal efficiency but also external market conditions that are conducive to growth. Investors should remain vigilant about monitoring industry trends and Lyft's competitive strategies.

Tech Expert

Lyft's emphasis on 'industry-leading innovation' suggests that technology will play a pivotal role in achieving its 2027 targets. This could involve advancements in areas such as autonomous driving, data analytics and platform enhancements. For investors, the ability of Lyft to stay ahead technologically could be a key differentiator. Innovations can lead to operational efficiencies, better customer experiences and potentially new revenue streams.

Technological investments, however, come with risks. Capital expenditure on R&D can be quite high and the return on these investments is not always guaranteed. Furthermore, technology-driven initiatives often face regulatory scrutiny, which can delay implementation and add to costs. Investors should consider Lyft's track record in technological innovation and how it stacks up against peers like Uber and Waymo.

Understanding the technological landscape and Lyft's place within it will be important for assessing the feasibility of these financial targets. If Lyft can effectively leverage technology to enhance its service offering and operational efficiency, it could realize significant competitive advantages.

Margin Expansion and Increasing Cash Flows Expected

Customer Obsession Drives Profitable Growth

SAN FRANCISCO--(BUSINESS WIRE)-- Lyft, Inc. (NASDAQ: LYFT) (the “Company” or “Lyft”) will host its first Investor Day today. The event will feature presentations by Lyft’s CEO David Risher, CFO Erin Brewer, and other leaders from across the Company, who will discuss Lyft’s plans for its next phase of profitable growth. The event will conclude with a live Q&A session.

“Lyft’s customer-obsessed strategy is working. Our execution keeps getting better, we’re delivering industry-leading innovation, and we are working closely with partners to create great shared customer experiences,” said CEO David Risher. “We’re excited to share our vision for Lyft’s road ahead.”

“Over the last year we’ve transformed our business and established a strong foundation for improving profitability and cash flow,” said CFO Erin Brewer. “The financial targets we are announcing today reflect our expectations of healthy top-line growth and margin expansion as we deliver on our strategic priorities. I’m excited about Lyft’s next chapter as we continue building a financially healthy and customer-obsessed Lyft.”

2027 Financial Targets

The Company expects:

• A Gross Bookings compound annual growth rate of approximately 15% between full-year 2024 and full-year 2027;
• An Adjusted EBITDA margin (measured as a percentage of Gross Bookings) of approximately 4% on a full-year basis in 2027; and
• Free cash flow conversion (measured as a percentage of Adjusted EBITDA) of more than 90% annually each year between 2025 and 2027.

2024 Financial Outlook Reaffirmed

There is no change to Lyft’s previously announced outlook for Q2 2024 or to the Company’s directional commentary for full-year 2024, which were updated during the company’s first quarter 2024 earnings call on May 7, 2024.

We have not provided the forward-looking GAAP equivalents to our non-GAAP financial targets or outlook or GAAP reconciliations as a result of the uncertainty regarding, and the potential variability of reconciling items such as stock-based compensation and income tax. Accordingly, a reconciliation of these non-GAAP guidance metrics to their corresponding GAAP equivalent is not available without unreasonable effort. However, it is important to note that the reconciling items could have a significant effect on future GAAP results. For more information regarding the non-GAAP financial measures discussed in this press release, please see “Non-GAAP Financial Measures” below.

Investor Day: How To Participate

The event will begin at 9:00 AM ET and will be webcast live on Lyft’s Investor Relations page: investor.lyft.com. A replay and the presentation materials will be available at the same webpage.

About Lyft

Lyft is one of the largest transportation networks in North America, bringing together rideshare, bikes, and scooters all in one app. We are customer-obsessed and driven by our purpose: getting riders out into the world so they can live their lives together and providing drivers a way to work that gives them control over their time and money.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or Lyft's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates,” “going to,” "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern Lyft's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to, Lyft’s guidance and outlook, including for the second quarter and full fiscal year 2024, Lyft’s financial targets through 2027, the trends and assumptions underlying such guidance, outlook and targets, and statements about profitable growth. The financial targets presented here are based on Lyft’s current roadmap and are contingent upon many factors, including Lyft’s execution, various market conditions and legal and regulatory factors. These financial targets and any other forward-looking statements illustrate Lyft’s current thinking and are subject to various risks and uncertainties. Over time, Lyft may also modify its financial targets and goals or pursue alternative objectives and strategies. Lyft’s expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including risks related to the macroeconomic environment and risks regarding our ability to forecast our performance due to our limited operating history and the macroeconomic environment. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in Lyft's filings with the Securities and Exchange Commission (“SEC”), including in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 that was filed with the SEC on May 9, 2024. The forward-looking statements in this release are based on information available to Lyft as of the date hereof, and Lyft disclaims any obligation to update any forward-looking statements, except as required by law. This press release discusses "customers." For rideshare, there are two customers in every car - the driver is Lyft's customer, and the rider is the driver's customer. We care about both.

Non-GAAP Financial Measures

To supplement Lyft's financial information presented in accordance with generally accepted accounting principles in the United States of America, or GAAP, Lyft considers certain financial measures that are not prepared in accordance with GAAP, including Adjusted EBITDA, Adjusted EBITDA margin (calculated as a percentage of Gross Bookings), free cash flow and free cash flow conversion (calculated as a percentage of Adjusted EBITDA). Lyft defines Adjusted EBITDA as net loss adjusted for interest expense, other income (expense), net, provision for (benefit from) income taxes, depreciation and amortization, stock-based compensation expense, payroll tax expense related to stock-based compensation and sublease income, as well as, if applicable, restructuring charges, costs related to acquisitions and divestitures and costs from transactions related to certain legacy auto insurance liabilities. Adjusted EBITDA margin (calculated as a percentage of Gross Bookings) is calculated by dividing Adjusted EBITDA for a period by Gross Bookings for the same period and is considered a key metric. Lyft defines free cash flow as GAAP net cash provided by (used in) operating activities less purchases of property and equipment and scooter fleet. Free cash flow conversion (calculated as a percentage of Adjusted EBITDA) is calculated by dividing free cash flow for a period by Adjusted EBITDA for the same period.

Lyft uses its non-GAAP financial measures in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our board of directors concerning our financial performance. Free cash flow and free cash flow conversion are measures used by our management to understand and evaluate our operating performance and trends. We believe these measures are a useful indicator of liquidity that provides our management with information about our ability to generate or use cash to enhance the strength of our balance sheet, further invest in our business and pursue potential strategic initiatives. Free cash flow and free cash flow conversion have certain limitations, including that these measures do not reflect our future contractual commitments and do not represent the total increase or decrease in our cash balance for a given period. Free cash flow does not necessarily represent funds available for discretionary use and is not necessarily a measure of our ability to fund our cash needs.

Lyft’s definitions may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Furthermore, these measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Thus, our non-GAAP financial measures should be considered in addition to, not as substitutes for, or in isolation from, measures prepared in accordance with GAAP.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240606350279/en/

Investor Contact:

Aurélien Nolf

investor@lyft.com

Media Contact:

Stephanie Rice

press@lyft.com

Source: Lyft, Inc.

FAQ

What are Lyft's 2027 financial targets?

Lyft targets a 15% compound annual growth rate in Gross Bookings, a 4% Adjusted EBITDA margin, and over 90% free cash flow conversion annually from 2025 to 2027.

What did Lyft announce at its first Investor Day?

Lyft announced its 2027 financial targets, including growth in Gross Bookings, EBITDA margin, and free cash flow conversion, and reaffirmed its 2024 financial outlook.

What is Lyft's expected Adjusted EBITDA margin for 2027?

Lyft expects an Adjusted EBITDA margin of approximately 4% by 2027.

How does Lyft plan to improve profitability?

Lyft plans to improve profitability through a customer-focused strategy, industry-leading innovation, and strong partnerships.

Did Lyft update its financial outlook for 2024?

No, Lyft reaffirmed its previously announced financial outlook for 2024, with no changes to its Q2 2024 guidance or full-year 2024 directional commentary.