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Lyft Announces Q1 Earnings
- data_spy 7y agoIf that R&D doesn't pan out they essentially will go bankrupt quickly as their R&D spending was 81% of their revenue.
- deanmoriarty 7y agoWhy couldn't they issue bonds and get access to cheap debt like Netflix or Tesla?
- b_tterc_p 7y agoThey can issue bonds. Although they’ll probably pay a much bigger risk premium than Netflix or Tesla. It would likely tank the stock price further though. They’ll need non trivial bonds to merit additional quarters of operations- and in the event of bankruptcy creditors get preference over shareholders
- YjSe2GMQ 7y agoUber issued bonds: https://www.bloomberg.com/news/articles/2018-10-16/uber-is-said-to-boost-bond-sale-to-2-billion-as-orders-swell https://www.bloomberg.com/news/articles/2018-10-16/uber-is-s... Rated by Moody's as B3 and by S&P as B-, which is the bottom of "Highly speculative": https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rating_tiers https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rati... For comparison, Uber bonds are one grade lower than Argentinian bonds: https://tradingeconomics.com/argentina/rating https://tradingeconomics.com/argentina/rating Such credit ain't cheap, especially now that interest rates are no longer zero.
- naveen99 7y agoThey sold $2billion in 8 year bonds at 8% yield. i think their cost of capital will go down now that their contribution margin is positive (9%)
- nwah1 7y agoWhat is included in that R&D category? If it is mainly just maintaining their infrastructure, then there isn't much research happening, and thus nothing to even hope for in terms of breakthroughs.
- adamson 7y agoIt grew by 10x, but I doubt Lyft's infrastructure or day-to-day engineering costs have grown anywhere near that much. That said, I have no idea what Lyft could spend $600MM on researching.
- nwah1 7y agoSelf-driving cars would be the only thing that makes sense, but it is a longshot and spending 80% of your revenue on that seems nuts.
- ramses0 7y ago$600MM/yr @ $200k/yr == ~3000 engineers?
- jackmodern 7y agoLyft has 2000 people in their tech org (maybe 1500 engineers) and the lowest paid engineers at Lyft are probably ~300 total comp.
- sct202 7y agoIt includes $500m in stock based compensation this quarter under R&D. IDK if this is a one time thing or what though.
- cozzyd 7y agoThey're experimenting with new ways to lose money, apparently.
- tzhenghao 7y agoProbably their Level 5 AV initiatives. Even that domain has long tails that might take more time to iron out than expected. I'm curious if they even have that long of a runway to make it happen.
- toomuchtodo 7y agoTheir runway is about six quarters. You decide.
- mlinsey 7y agoI believe it's common for tech companies to consider all engineering / product payroll as R&D, even if we might consider some eng work as maintenance. In this case a lot of it is stock-base compensation being recognized post IPO. In any case, this isn't just far-out tech stuff like self-driving cars.
- muckrakerz 7y agoThe net loss that they are running against revenue is staggering. It is also telling that they bury that in the text and don't move it to the summary infographic. What does a profitable Lyft/Uber look like? We haven't seen it yet. This also proves a bit of the lie that the drivers are getting screwed out of earnings. The company as a whole isn't profitable and those drivers should be carefully considering their future when, not if, the market losses patience over these losses.
- toomuchtodo 7y agoUnemployment hasn’t been this low in 40 years. Those drivers are gonna get sucked right up into the economy lickety-split.
- mevile 7y agoUnemployment is low, but workforce participation is also low. There are plenty of people not working, and those who are aren't being much more than they were ten years ago, despite inflation.
- sokoloff 7y agoNominal wages have risen enough over the past 1, 2, 3, 4, and 5 decades such that real wages have remained roughly flat across that time (and in last 2 decades real wages have risen in general). https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
- deleted 7y ago[deleted]
- DeonPenny 7y agoThe wage part is incorrect. Wages have been growing the past years
- volkl48 7y agoPrime age (25-54) labor participation has been climbing steadily since 2015, and while not 100% recovered, it is quite close to pre-08 numbers. https://fred.stlouisfed.org/series/LNS11300060 https://fred.stlouisfed.org/series/LNS11300060 The graph people like to cite when they say nothing has gotten better, the "plain" one: https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART , is fairly misleading without context. That one is calculated simply based on the non-instutionalized (prison/hospital) population over age 16. There's a number of major contributors to that one that make it unlikely to ever recover in my view. Some notable points: - Aging. The US might be aging slower than many other developed countries, but median age is climbing, there are more retirees as a % of the over 16 population each year. Each one of those counts against the labor participation rate. - Employment in the 16-19 age bracket has plummeted, down ~15% since the 90s. College attendance, societal changes, etc.
- acchow 7y agoStunning. Lyft is valued at $17bn on $776M revenue. Expenses for this revenue... Cost of revenue: $462M Operations: $187M S&M: $275M Administrative: $376M Total expenses: $1.3bn, i.e. 167% of revenue. This is not a healthy company. Uber's breakdown for quarter-ended March 31 isn't out yet. But looking at Dec 31 figures: Revenue: $3.0bn Cost of revenue: $1.6bn Operations: $408M S&M: $974M Administrative: $555M Total expenses: $3.53bn, i.e. 118% of revenue. (note: the above excludes R&D and interest, depreciation, amortization expenses)
- JumpCrisscross 7y agoUber's administrative expenses are 15% of revenue versus almost 50% for Lyft. Is this a difference in what goes into that bucket between the companies? Or is Lyft emulating the American university experience?
- ndesaulniers 7y agoHow do these numbers look over time?
- pbreit 7y agoThis tweet demonstrates a lack of basic finance knowledge. Stock prices are based on ==future== cash flows, not past. It's already a huge company still growing very fast and printing money on core product (non-pool rides in mature markets)(even overall contribution margin was a whopping 50%! And growing!).
- koolba 7y ago> For FY 2019, we anticipate: > Total revenue to be between $3.275 billion and $3.3 billion > Adjusted EBITDA loss to be between $1.15 billion and $1.175 billion What’s the size of their war chest? At $1+B/year of net loss this party can’t continue forever.
- naveen99 7y agoContribution margin is 50%. With fixed costs around $3billion / year. They need to double revenue to $6 billion to get to profitability. Edit: By comparison Uber’s contribution margin is only 9%. With fixed costs around 4 billion , it can probably get to profitability by increasing contribution margin to 40% with the same revenue, or by growing revenue 3x. Probably both contribution margin and revenue will go up 3x eventually.
- w8rbt 7y agoI just recently used Lyft while visiting Atlanta. I'd never used Lyft or Uber before. The app and service were both fantastic. I hope they keep it up. Awesome service at a reasonable price.
- gus_massa 7y agoIt is cheap because they are loosing money. (Trying to capture the market or something.) Let's wait until they are profitable to see the real price.
- w8rbt 7y agoI did not mean to imply it was cheap, only reasonable. I would have paid more. Nice cars, polite drivers and quick service.
- gypsypunk 7y agoDo you usually just use Uber? I’m surprised you haven’t signed up for Lyft for this long. Pretty commonplace to bump price estimates against each other. I also prefer Lyft over Uber too though.
- w8rbt 7y agoI've never used either. I seldom travel to large cities. I was in Atlanta for GT's commencement. I live in a more rural college town and I don't really need the service routinely, but I can see the value when traveling. It was great.
- Reedx 7y agoLyft's reply re: profitability from the conference call: "We anticipate 2019 will be our peak loss year as we then move steadily towards profitably on a consolidated basis," CFO Brian Roberts said... https://www.businessinsider.com/lyft-cfo-says-2019-will-be-peak-financial-loss-year-2019-5 https://www.businessinsider.com/lyft-cfo-says-2019-will-be-p...
- trevor-e 7y agoAre developers in San Francisco really worth the cost? According to Paysa data on Lyft the average Software Engineer makes 263k and the average Senior Software Engineer makes 354k (I believe these numbers are total comp). If I'm reading the earnings correctly then $506,206,000 of stock compensation is going towards R&D. Unless you are hiring someone into a highly specialized role I don't see how these numbers make sense. Are these developers really worth multiples of developers in other cities? https://www.paysa.com/salaries/lyft https://www.paysa.com/salaries/lyft
- closetCS 7y agoThis isn't completely on topic but ... I wonder what happens to a company's culture once the employees see the stock absolutely tanking. The probably aren't fully vested, and so are just watching their payday shrink and shrink.
- sokoloff 7y agoEven if they are vested, they are almost certainly subject to a 180 day "lockup" period where they can't sell for that long post-IPO.
- ebg13 7y agoWould they be profitable if they fired all of their engineers and just let the already working product keep working? I mean...it works. It already works. It does everything that it's supposed to do. Millions of people use it happily. Could they just ride it into money?
- aetherson 7y agoIt's hard to say. They recorded $630M of expenses into R&D this quarter, but I think they're including a lot of their one time items from the IPO there. Year ago quarter was $60M ish. Hard to believe that they've 10x'd their ongoing expenses on development in one year. If their ongoing expenses in R&D are only 2x what they were last year, then no, they could cut those expenses to zero and still not be profitable.
- alkonaut 7y agoThis strikes me as odd also for Uber. I mean I get that they are a large high-tech company, but I don't get how they are developing huge js frameworks and similar. They are a taxi company. Don't they basically just need a reasonably simple web app, a mobile app and some infrastructure that runs on a (relatively) small AWS bill? Why is Uber and Lyft trying to reinvent the web? Is it to attract talent, because good talent really wants to develop cutting edge stuff? That's an argument I can understand. But how can Uber have 2000 developers who make 1000 microservices?
- aetherson 7y agoAfter hours investors don't seem particularly spooked, they're down about 3% as of this writing.
- aetherson 7y ago(Though now they're down 6% during the day, so that's more material.)
- thisisit 7y ago> Lyft reported Q1 revenue of $776.0 million versus $397.2 million in the first quarter of 2018, an increase of 95 percent year-over-year. 95% growth year-over-year? On first reading this sounds incredible. But then on the other hand, if they still had 100% growth left in them, why couldn't they raise another round of funding? One theory is that they held back some revenue from their IPO documents to show a spurt. So, I really want to see their 10-Q to understand what really is happening here.
- zzleeper 7y ago> why couldn't they raise another round of funding? Isn't an IPO just that? A better round of funding that also provides liquidity to shareholders?
- thisisit 7y agoIt depends. If the company uses the proceeds for operations of the company it is another rounding of funding. There are times when the company IPOs specifically to provide exit to the existing shareholder and not adding any money to operations. That being said, public offerings get slightly restrictive on how the company can raise future capital. If Lyft can still grow nearly 100% then I am sure they could have found a VC willing to fund them. And they could have gone public at say 30-50% growth rate.
- gigatexal 7y agoLots of millionaires being minted. Congrats to the early engineers.
- bfrog 7y agoWow, this company is burning cash in a bonfire as fast as they can get it.