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Stunning. Lyft is valued at $17bn on $776M revenue. Expenses for this revenue... Cost of revenue: $462M Operations: $187M S&M: $275M Administrative: $376M To
by acchow 8y ago
Stunning.
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 8y 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 8y agoHow do these numbers look over time?
- pbreit 8y 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!).
- mifeng 8y agoStock prices are based on the present value of future profits, so pointing out that Lyft is unlikely to be profitable for a long time is spot-on.
- pbreit 8y agoIt could be massively profitable tomorrow.
- aetherson 8y agoFor values of "could" that include "definitely will not be."
- pbreit 8y ago"Tomorrow" was facetious, I apologize. But based on existing 50% contribution margins it's quite clear it could achieve earnings in the near term. But of course with such contribution margins and growth rates it would be silly to hang on to cash.
- rogers65 8y agoThe idea that Lyft will not close the gap of its administrative expenses is unlikely. Especially if Uber is operating at a lower administrative cost.
- smaug7 8y agoHi Mike!
- mbesto 8y agoSince we're all being pedantic here... stock prices are based on the value in which investors place bids on the equity value per share of the company. Investors typically value that number on the present value of expected future profits, but like all complex systems, it's never that simple. pbreit is also potentially correct - software companies have the capability of producing massive windfall cashflows (and therefore profits) and hence why the market cap is so high. What isn't being talked about is that a path to profitability isn't clear. All of us armchair financial analysts don't have any insight into: - What are the unit economics of a car ride and what elasticity of pricing is there in the market? - Is the fundamental thesis of future value all based on self-driving cars? - Once particular markets mature, what operating expenses can effectively be "turned off"? Has the company already proven this in their mature markets? Personally I think uber and lyft are doomed as companies and will go the way of Groupon, but deriving that analysis by reading quarterly financial statements on net income is a fool's errand. PS - And yes the parent commenter clearly lacks basic public market equity acumen as $775M was a quarterly revenue...smh
- acchow 8y agoI agree, valuation is forward looking. But I just wanted to point out how risky Lyft is compared to Uber. In some sense, Lyft is selling $1.67 for $1. But Uber is selling $1.18 for $1, which seems way easier to recoup and become profitable quite quickly. I excluded R&D because I just wanted to focus on "selling $1.67 for $1". I excluded the other expenses because that's just financial structure which isn't relevant to this picture either.
- deleted 8y ago[deleted]
- Sujan 8y agoWhat tweet are you referring to?
- sytelus 8y agoYou are not being fair by purposely avoiding to include their growth numbers. Their revenue increased almost twice in a year and number of riders increased by almost 50%. Although loss has increased by 4X so things does remain ugly. This is something I don’t understand. Even if you bought revenues, loss should have increased by only 2X. Why is it 4X? Things are not adding up and I suspect Mr Market is going to be very upset.
- NotPaidToPost 8y agoIncluding growth number makes the whole picture even worse because losses increase faster than revenue. I.e. they're "buying" new revenue on credit for an ever increasing price.
- pcl 8y agoThat's $776M for the quarter, not for the year. Typically, when doing the "multiples of revenue" valuation comparison, that's done on yearly numbers, not quarterly numbers. I have no idea how constant their revenue figures are quarter-by-quarter, so won't even guess about what a yearly revenue figure might look like. But "$17B on 776M" isn't doing the comparison the way I typically see it.
- Nimitz14 8y agoHow can one spend so much on administration? Do lawyers go in that column?
- cosmie 8y agoLooking at their 8K[1], $215mm (57%) of the expenses in that category are related to stock-based compensation. In fact, 45% of all of their quarterly expenses are attributed to stock-based compensation. R&D has $506mm in stock-based compensation (80% of all R&D expenses), which both dwarfs the entire size of the G&A expense category and is more than 2x the stock-based compensation component of G&A. To your question, lawyers do generally go under G&A. But I don't think you can blame the lawyers for the inflated admin costs - all of their cost segments seem to be inflated by the exorbitant amount of stock that's incorporated into the pay structures for tech and SV-based companies. [1] https://investor.lyft.com/node/6711/html https://investor.lyft.com/node/6711/html
- _Codemonkeyism 8y agoAll these expense numbers mean nothing, when in 10y all revenue for Lyft and Uber comes from robo taxis, expenses will be totally different. The current idea is to grow and survive until robo taxis are rolled out.
- thatoneuser 8y agoThere's your problem right there. The people at the top are costing almost as much as the people who actually provide the service.