Following Uber's (UBER, Financial) impressive Q2 earnings report, expectations were high for Lyft (LYFT, Financial) to deliver strong results as well. While LYFT did surpass EPS and revenue estimates and posted its first-ever net profit on a GAAP basis, the stock is still dropping due to missed expectations on Gross Bookings and disappointing Q3 guidance.
- Gross Bookings for Q2 grew by 17% year-over-year to $4.0 billion, hitting the low end of its $4.0-$4.1 billion guidance range and slightly missing analysts' expectations. The Q3 Gross Bookings forecast of $4.0-$4.1 billion indicates flat quarter-over-quarter growth and falls short of estimates.
- UBER's Q3 Gross Bookings outlook of $40.25-$41.75 billion was also modestly below expectations, signaling that the rideshare market faces macro-related challenges.
- Investors have more confidence in UBER's diversified business model, which includes food delivery, advertising, and logistics. UBER's adjusted EBITDA surged by 71% to $1.570 billion in Q2, compared to LYFT's $102.9 million (+151% year-over-year).
- LYFT's adjusted EBITDA growth is impressive, bolstered by an increase in driver supply and cost-cutting measures. Driver hours hit an all-time high in Q2, and LYFT gained the most drivers in any quarter since 2019, allowing the company to keep fares low, improve pick-up times, and reduce driver incentives.
- As the rideshare market slows, LYFT is relying on lower prices to maintain Active Rider growth (+10% in Q2). This is reflected in its Q3 adjusted EBITDA guidance of $90-$95 million, which missed expectations. In contrast, UBER's Q3 adjusted EBITDA forecast of $1.58-$1.68 billion slightly beat estimates at the midpoint.
Overall, LYFT's Q2 results were solid given the tough macro conditions. However, its disappointing Q3 guidance compared to UBER's outlook highlights its greater vulnerability to a rideshare slowdown due to its singular market focus.
