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The 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 infograph

The 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 ago
Unemployment hasn’t been this low in 40 years. Those drivers are gonna get sucked right up into the economy lickety-split.
- mevile 7y ago
  Unemployment 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 ago
    Nominal 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 ago
    The wage part is incorrect. Wages have been growing the past years
  - volkl48 7y ago
    Prime 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.
    - michaelmrose 7y ago
      Do we have the raw data to calculate the participation rate of 24-60 year olds over time?
- darawk 7y ago
  If that were true, and they were unhappy with their situation, they'd already have left.
  - sokoloff 7y ago
    The ones I've talked to are generally quite happy with their gigs with Uber and Lyft. (That should not be surprising, given how easy it is to drop out if they are unhappy with the deal, conditions, or other aspects of the task.)
- Shivetya 7y ago
  there are lots of people who take Uber/Lyft as second jobs to fill otherwise unproductive evenings.
JumpCrisscross 7y ago
> What does a profitable Lyft/Uber look like? Only city centres. Uber, at least, is healthily unit profitable in New York and San Francisco (the last time I checked). Given ARPU is growing at both companies, the boundaries within which they can be possible would conceivably grow.
- deleted 7y ago
  [deleted]
- ghaff 7y ago
  No need to limit it to city centers. Raise prices, throttle driver recruitment, and the market will adjust accordingly. More locations will naturally lack the density of a healthy driver and passenger network.
  - mgkimsal 7y ago
    > throttle driver recruitment maybe they could have uber drivers buy shiny medallions at a moderate cost, but then limit the supply of those medallions per market? drivers could sell their medallions for market value.
    - braythwayt 7y ago
      Underrated comment. Sometimes, we disrupt a business, but fail to disrupt the underlying market forces that shaped the business in the first place. I suspect that until we have robo-taxis, uber and Lyft can displace the existing taxi companies by being new and high-tech, but in the end they have the same market forces acting on their availability and pricing that act on taxi companies. So they will wind up being the new taxi companies.
      - icebraining 7y ago
        Taxi medallions weren't imposed by market forces.
Shank 7y ago
> Net loss for Q1 includes $894 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition in connection with our initial public offering. I could be reading this entirely wrong, but doesn't this suggest that the primary issue during this quarter was administrative and one-off costs that won't be recurring far into the future?
- JumpCrisscross 7y ago
  Operations burned $85mm in Q1 ‘19 versus $80mm last year. Given revenues grew 95%, that’s a step in the right direction. Lyft have half a billion dollars in cash on hand, however, which will only last another 6 quarters at this rate. At its core, that balance between unit profitability, growth and access to cash is the game.
  - meritt 7y ago
    Sorry I'm not following your math here. Which numbers allow you to back into $85mm and $80mm?
    - JumpCrisscross 7y ago
      > Which numbers allow you to back into $85mm and $80mm? Scroll down to their cash flow statement. Out of the three GAAP financial statements, cash flows are the easiest to interpret at a glance. (Fewer ways to screw around.)
  - adventured 7y ago
    > Lyft have half a billion dollars in cash on hand, however, which will only last another 6 quarters at this rate. I don't believe the balance sheet they're showing for Mar 31, 2019 includes the ~$2.2b in cash they just raised from the IPO. I can't get the figures to add up if it does. From the Q4 balance + the IPO cash, they'd have ~$4.2b in cash, then subtract what they burned in the latest quarter (they obviously didn't burn $3.6b in cash in Q1). Besides that, the Q1 balance sheet is showing $1.03b in cash on hand, not half a billion dollars (I'm not sure where you're coming up with that figure). I believe their actual cash position was closer to $3.2b as of the end of Q1, including the IPO cash.
wavesounds 7y ago
This is literally the top comment on every recently IPO'd companies earnings. "Why are they spending so much money, why aren't they profitable yet." It's like HN doesn't understand the purpose of going public is to raise money, and the reason you raise money is because you see growth opportunities that are worth spending money on instead of returning profits to investors.
- tyingq 7y ago
  "instead of returning profits to investors" Adjusted net loss was $211.5 million. What profits are you talking about?
- icxa 7y ago
  "It's like HN doesn't understand of raising money on an existing valueless proposition!" No seriously, I don't understand. Explain to me. I grew up in and around small businesses, I legit don't understand how this bulls* flies. It's all being propped up for god knows what reason, and ultimately your average citizen is going to have to pay for it when it all comes crashing down, like always. I don't care if a group of "visionary VCs" "see value" in it. We've replaced a sustainable industry (taxis) with Uber and Lyft, which only were able to because they were able to skirt by regulation, and now if and when they vanish because again, they have proven to be unable to actually make profit to date, we will now have a crumbled public transit mode left to rebuild. Irrational investments that negatively affect the public should be faced with this intense scrutiny. I am honestly obviously ignorant to whatever is going on here, so I am allowing myself to be educated here.
  - ralph84 7y ago
    If Lyft and (particularly) Uber can’t achieve profitability, they won’t just vanish. They’ll reorganize under Chapter 11 and shareholders will be mostly wiped out and creditors will become the new shareholders. Sure some people will lose money, but it’s not the disaster you’re making it out to be.
    - moorhosj 7y ago
dralley 7y ago
The fact that ride sharing companies aren't making money does not mean that drivers are not getting screwed. They are. Fundamentally, the service is being sold below market value in hopes of pricing the competition out of the market.
- sokoloff 7y ago
  I'm not so sure about that. Lyft and Uber in the Boston area seem priced at a "fair price" (one which encourages substantial use and one which pays a substantial multiple of the marginal cost of operating a motor vehicle).
  - albertshin 7y ago
    In boston. A few months ago, my phone died on me when I was just about to call an Uber. While debating walking instead, I checked with a passing taxi to see if he could take me to Central and asked how much it might cost around and quoted him the Uber rate (which had some surge baked in) that I had seen as a comparison. He laughed at me and said, "that's really cheap. This isn't an Uber!" So, I'd say in Boston, 1) taxis are still somehow charging above competitive prices and getting customers, and 2) silicon valley/Saudi Arabia are still subsidizing my rides. The "fair price" probably lies in between the two. Also, as an aside, it's surprising that given this extensive competition from all types of drive share services for the last few years, the taxi industry haven't found ways to reduce prices. Instead, it seems to be spending resources on figuring out ways to block the competition. For example, the new Logan airport rules seem ridiculous and just reinforces the notion that the taxi industry is surviving only by rent collecting through lobbying. [1] [1]:https://boston.cbslocal.com/2019/04/25/uber-lyft-logan-airport-boston-ride-sharing-changes-massport-board-vote/ https://boston.cbslocal.com/2019/04/25/uber-lyft-logan-airpo...
    - Jommi 7y ago
      Remember that that price also included commission from UBER, so you were already offering him 25-35% extra.
pbreit 7y ago
$211m loss on $776m in sales is not staggering. The company is decreasing losses and still doubling sales!
gypsypunk 7y ago
>What does a profitable Lyft/Uber look like. I imagine it looks like what the traditional cab companies have been doing forever in every city for the last whatever many years. I am spitballing here, but here is my vision. Please feel free to correct anything deemed infeasible. Decentralize the platform and open Lyft hubs in every major city as their own business unit. Use the same model of contract drivers/use of their vehicle. Pay them better wages which is now possible through greatly reduced operational costs to increase driver loyalty and keep them on the road. I just don’t think this business model works at this scale. There are two major players with an insane amount of capital who both are failing every single metric of a going concern.
- icebraining 7y ago
  > greatly reduced operational costs How would this work?
  - acct1771 7y ago
    Much easier for management at that level to know they need to, for example, reduce staff from 15 to 12 or 10 than it is to know they need to reduce 1500 people to 1200.

toomuchtodo 7y ago

Unemployment hasn’t been this low in 40 years. Those drivers are gonna get sucked right up into the economy lickety-split.

mevile 7y ago
Unemployment 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 ago
  Nominal 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 ago
  The wage part is incorrect. Wages have been growing the past years
- volkl48 7y ago
  Prime 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.
  - michaelmrose 7y ago
    Do we have the raw data to calculate the participation rate of 24-60 year olds over time?
darawk 7y ago
If that were true, and they were unhappy with their situation, they'd already have left.
- sokoloff 7y ago
  The ones I've talked to are generally quite happy with their gigs with Uber and Lyft. (That should not be surprising, given how easy it is to drop out if they are unhappy with the deal, conditions, or other aspects of the task.)
Shivetya 7y ago
there are lots of people who take Uber/Lyft as second jobs to fill otherwise unproductive evenings.

JumpCrisscross 7y ago

> What does a profitable Lyft/Uber look like? Only city centres. Uber, at least, is healthily unit profitable in New York and San Francisco (the last time I checked). Given ARPU is growing at both companies, the boundaries within which they can be possible would conceivably grow.

deleted 7y ago
[deleted]
ghaff 7y ago
No need to limit it to city centers. Raise prices, throttle driver recruitment, and the market will adjust accordingly. More locations will naturally lack the density of a healthy driver and passenger network.
- mgkimsal 7y ago
  > throttle driver recruitment maybe they could have uber drivers buy shiny medallions at a moderate cost, but then limit the supply of those medallions per market? drivers could sell their medallions for market value.
  - braythwayt 7y ago
    Underrated comment. Sometimes, we disrupt a business, but fail to disrupt the underlying market forces that shaped the business in the first place. I suspect that until we have robo-taxis, uber and Lyft can displace the existing taxi companies by being new and high-tech, but in the end they have the same market forces acting on their availability and pricing that act on taxi companies. So they will wind up being the new taxi companies.
    - icebraining 7y ago
      Taxi medallions weren't imposed by market forces.

Shank 7y ago

> Net loss for Q1 includes $894 million of stock-based compensation and related payroll tax expenses, primarily due to RSU expense recognition in connection with our initial public offering. I could be reading this entirely wrong, but doesn't this suggest that the primary issue during this quarter was administrative and one-off costs that won't be recurring far into the future?

JumpCrisscross 7y ago
Operations burned $85mm in Q1 ‘19 versus $80mm last year. Given revenues grew 95%, that’s a step in the right direction. Lyft have half a billion dollars in cash on hand, however, which will only last another 6 quarters at this rate. At its core, that balance between unit profitability, growth and access to cash is the game.
- meritt 7y ago
  Sorry I'm not following your math here. Which numbers allow you to back into $85mm and $80mm?
  - JumpCrisscross 7y ago
    > Which numbers allow you to back into $85mm and $80mm? Scroll down to their cash flow statement. Out of the three GAAP financial statements, cash flows are the easiest to interpret at a glance. (Fewer ways to screw around.)
- adventured 7y ago
  > Lyft have half a billion dollars in cash on hand, however, which will only last another 6 quarters at this rate. I don't believe the balance sheet they're showing for Mar 31, 2019 includes the ~$2.2b in cash they just raised from the IPO. I can't get the figures to add up if it does. From the Q4 balance + the IPO cash, they'd have ~$4.2b in cash, then subtract what they burned in the latest quarter (they obviously didn't burn $3.6b in cash in Q1). Besides that, the Q1 balance sheet is showing $1.03b in cash on hand, not half a billion dollars (I'm not sure where you're coming up with that figure). I believe their actual cash position was closer to $3.2b as of the end of Q1, including the IPO cash.

wavesounds 7y ago

This is literally the top comment on every recently IPO'd companies earnings. "Why are they spending so much money, why aren't they profitable yet." It's like HN doesn't understand the purpose of going public is to raise money, and the reason you raise money is because you see growth opportunities that are worth spending money on instead of returning profits to investors.

tyingq 7y ago
"instead of returning profits to investors" Adjusted net loss was $211.5 million. What profits are you talking about?
icxa 7y ago
"It's like HN doesn't understand of raising money on an existing valueless proposition!" No seriously, I don't understand. Explain to me. I grew up in and around small businesses, I legit don't understand how this bulls* flies. It's all being propped up for god knows what reason, and ultimately your average citizen is going to have to pay for it when it all comes crashing down, like always. I don't care if a group of "visionary VCs" "see value" in it. We've replaced a sustainable industry (taxis) with Uber and Lyft, which only were able to because they were able to skirt by regulation, and now if and when they vanish because again, they have proven to be unable to actually make profit to date, we will now have a crumbled public transit mode left to rebuild. Irrational investments that negatively affect the public should be faced with this intense scrutiny. I am honestly obviously ignorant to whatever is going on here, so I am allowing myself to be educated here.
- ralph84 7y ago
  If Lyft and (particularly) Uber can’t achieve profitability, they won’t just vanish. They’ll reorganize under Chapter 11 and shareholders will be mostly wiped out and creditors will become the new shareholders. Sure some people will lose money, but it’s not the disaster you’re making it out to be.
  - moorhosj 7y ago

dralley 7y ago

The fact that ride sharing companies aren't making money does not mean that drivers are not getting screwed. They are. Fundamentally, the service is being sold below market value in hopes of pricing the competition out of the market.

sokoloff 7y ago
I'm not so sure about that. Lyft and Uber in the Boston area seem priced at a "fair price" (one which encourages substantial use and one which pays a substantial multiple of the marginal cost of operating a motor vehicle).
- albertshin 7y ago
  In boston. A few months ago, my phone died on me when I was just about to call an Uber. While debating walking instead, I checked with a passing taxi to see if he could take me to Central and asked how much it might cost around and quoted him the Uber rate (which had some surge baked in) that I had seen as a comparison. He laughed at me and said, "that's really cheap. This isn't an Uber!" So, I'd say in Boston, 1) taxis are still somehow charging above competitive prices and getting customers, and 2) silicon valley/Saudi Arabia are still subsidizing my rides. The "fair price" probably lies in between the two. Also, as an aside, it's surprising that given this extensive competition from all types of drive share services for the last few years, the taxi industry haven't found ways to reduce prices. Instead, it seems to be spending resources on figuring out ways to block the competition. For example, the new Logan airport rules seem ridiculous and just reinforces the notion that the taxi industry is surviving only by rent collecting through lobbying. [1] [1]:https://boston.cbslocal.com/2019/04/25/uber-lyft-logan-airport-boston-ride-sharing-changes-massport-board-vote/ https://boston.cbslocal.com/2019/04/25/uber-lyft-logan-airpo...
  - Jommi 7y ago
    Remember that that price also included commission from UBER, so you were already offering him 25-35% extra.

pbreit 7y ago

$211m loss on $776m in sales is not staggering. The company is decreasing losses and still doubling sales!

gypsypunk 7y ago

>What does a profitable Lyft/Uber look like. I imagine it looks like what the traditional cab companies have been doing forever in every city for the last whatever many years. I am spitballing here, but here is my vision. Please feel free to correct anything deemed infeasible. Decentralize the platform and open Lyft hubs in every major city as their own business unit. Use the same model of contract drivers/use of their vehicle. Pay them better wages which is now possible through greatly reduced operational costs to increase driver loyalty and keep them on the road. I just don’t think this business model works at this scale. There are two major players with an insane amount of capital who both are failing every single metric of a going concern.

icebraining 7y ago
> greatly reduced operational costs How would this work?
- acct1771 7y ago
  Much easier for management at that level to know they need to, for example, reduce staff from 15 to 12 or 10 than it is to know they need to reduce 1500 people to 1200.