Lyft Inc surprised investors on Wednesday with higher-than-expected earnings, and the taxi company promised further cost cuts to become profitable as the U.S. coronavirus lock ravaged the economy.
Shares in Lyft were up over 18% in off-hours trading. Shares of bigger competitor Uber Technologies Inc were up 9%.
The first quarter results provide a first look at the impact of strict stay-at-home workers to counter the spread of the virus in many of the ride hailing industry’s largest markets.
Lyft’s earnings also serve as an indicator of Uber’s performance, which will report results on Thursday.
The company did not say whether it was adhering to its goal of being profitable on an adjusted basis by the end of 2021, but said on Wednesday that cost savings would help it along the “path to profitability.”
Lyft said on Wednesday that first-quarter sales were up 23% to $ 955.7 million from the previous year, well ahead of an estimate of 884.7 million by Refinitiv.
The loss-making Lyft had originally forecast sales of approximately $ 1 billion for the first three months of 2020.
The number of active drivers of the company increased by 3% to 21,200, while turnover per active driver increased by 19%.
In April, rides were down 75% year over year, but Chief Executive Logan Green said Lyft saw moderate weekly growth in ride requests from mid-April.
“We expect driver demand on our platform to decrease in the near future,” he said, adding that Lyft could reduce expensive driver incentives as many unemployed Americans were looking for income opportunities. About two-thirds of all costs are variable, he said, allowing the company to reduce losses as driver ship declines.
Unlike Uber, Lyft only operates in the United States and parts of Canada, where many states imposed lockdown restrictions in late March.
But while Lyft has a strict focus on moving people around, Uber may be able to recoup some lost ride revenue through its food delivery service.
Customers in the United States supply the bulk of sales to both companies, and the most damaging impact to the ride industry is expected in the second quarter of this year. Lyft did not provide a forecast for the second quarter on Wednesday.
Green said in a statement that the company was willing to weather the crisis.
“We are responding to the pandemic with an aggressive cost reduction plan that will give us an even leaner cost structure and allow us to grow stronger,” said Green.
The company said it had $ 2.7 billion in unlimited cash and said it would remove about $ 300 million in costs by the end of the year.
While total costs and expenses declined approximately 29% to $ 1.37 billion year-over-year, the cost of income in the first quarter increased by approximately 17%.
Lyft revoked its full-year guidance last week and announced a 17% cut in staff and implemented pay cuts in response to the crisis.