Lyft, a ride-hailing firm, suffered a loss of $135.7 million in the third quarter as a result of Argo AI, a company that made autonomous vehicles, and in which Lyft had
tiny ownership.
Late last month, Argo AI closed its doors as a result of its primary investors, Ford and Volkswagen, withdrawing their support in order to concentrate on more immediate objectives, such as enhanced driver assistance systems for passenger cars.
Together, Lyft and Argo were testing autonomous ride-hailing on the Lyft platform using Argo's technology. In September and December of last year, respectively, the two businesses introduced public robotaxi services in Austin, Texas, and Miami, Florida. According to a Lyft spokesman, both of those services have since been discontinued.
Just over one-third of Lyft's overall losses for the quarter may be attributed to the Argo closure. In Q2, Lyft suffered a loss of $422.2 million, more than double the $99.7 million in the same quarter of 2021 and the net loss of $377.2 million in Q2 of this year.
The $224.1 million in stock-based compensation and associated payroll costs, up from the $179.1 million in the second quarter, account for a larger percentage of Lyft's losses. According to a Lyft spokeswoman, the increase is connected to the top-up that the company gave to its staff when its stock price dropped earlier this year.
According to Lyft, the rise is not yet connected to the company's waves of layoffs, the first of which took place in July and the second just last week as Lyft attempts to reduce operational costs.
Lyft's chief financial officer, Elaine Paul, stated on Monday's earnings call that the company expects to "incur a charge of between $27 million and $32 million" in Q4 as a result of the workforce reduction, as well as "a stock-based compensation charge and corresponding payroll tax expense related to affected team members, as well as restructuring charges related to a decision to exit and sublease, or cease use, of certain facilities." However, because they are dependent in part on our future stock price, we are unable to predict these costs at this time.
Additionally, Paul claimed that Lyft has been attempting to lower stock-based compensation for the upcoming quarter by ceasing new hires in the United States and shifting the hiring focus away from the United States and toward international markets like Canada and Eastern Europe where "there's a different compensation model with low or no equity."
Lyft underperforms Q3 forecasts
Lyft reported revenue of $1.05 billion for the third quarter, slightly behind Wall Street projections of $1.06 billion. The company's profits per share came in at -$1.18 as opposed to the $0.09 forecast. The Street had planned for 21.1 million active riders, but even that number only reached 20.3 million, despite a quarter over quarter gain. Nevertheless, Lyft's income per active rider, which was $51.88, was above forecasts of $49.94.
After Uber last week posted solid results, Lyft's stock had begun to rise, but it dropped 14.36% on Monday in after-hours trade. Shares of the corporation have decreased 69.29% from the year's beginning.
In cash at the end of the quarter, Lyft had $143.7 million.
In the next fourth quarter, Lyft anticipates sales to be between $1.145 billion and $1.165 billion, with revenue growth of between 9% and 11% from one quarter to the next and 18% to 20% from one year to the next. The recent move by Lyft to raise service fees for users will support some of that growth in the form of higher income per rider. According to Paul, Lyft plans to reduce its operational costs by around $20 million in Q4 compared to Q3, which is partly because of the reduction in force.
Regardless of the macro climate, Lyft's president, John Zimmer, expressed confidence that the company will be able to meet its Q4 targets.
"Internally, we've been using two major cases. One is the growth case, which counts on market bookings increasing by around 20% year over year while the labor market remains as tight as it is now, according to Zimmer, who spoke on the Q3 results call. Then, if unemployment increases, we have operating leverage through decreased driver engagement and acquisition expenses, which is what we refer to internally as a "recession case," when market growth slows. Therefore, we are very sure that we will reach the billion dollar threshold in both situations, and we will keep directing our R&D spending toward market innovation that helps to raise the cost base of the company.