Lyft is a popular ride-hailing app in the U.S., and you might have used it sometime. Ever since Lyft became public, it has been launching many new initiatives, and that might make one wonder Is Lyft profitable?
Launching new services could indicate two things: either the business is benefiting and investing in expansion, or it is making a loss and is finding out ways to make more money.
So what’s the case with Lyft? Is it a profitable company? Make sure you read this article till the end to find out some interesting insights.
Overview Of Lyft
Lyft is a ride-hailing company that was founded in San Francisco, California, in the year 2012 by Logan Green and John Zimmer.
During that time, Uber and Zimride were performing well in the market. To differentiate itself, the founders of Lyft quickly started to look for ways to increase daily engagement.
As a result, Lyft started expanding quickly and reached 300 cities by 2017.
However, Uber was much quicker in international expansion, dominating the market in almost every country. The dominance of Uber overshadowed Lyft and left it unknown to people outside of the U.S.
It wasn’t until the cancel Uber campaign that Lyft started eating Uber’s market share in the U.S., reaching 33% in 2018 from 22% in the previous year. That growth, however, cooled off, with the company achieving a 29% market share in the U.S. in 2020.
Unlike Uber, which had food delivery to rely on, Lyft did not have any backup. Consequently, during Covid, Lyft was heavily impacted, with its business declining by 36% and it completing 80% fewer rides.
To cope, Lyft has recently launched a subscription-based service that aims to offer riders faster pickup and assistance with vehicles and scheduling.
Lyft has definitely been on a roller coaster, and all this might make you wonder if Lyft is profitable. Keep on reading to find out!
| Launch date | 9 June 2012 |
| HQ | San Francisco, California |
| People | John Zimmer (co-founder, president), Logan Green (co-founder, CEO) |
| Business type | Public (NASDAQ: LYFT) |
| Industry | Ride hailing |
Lyft’s Growth Timeline
Lyft went public on the Nasdaq stock exchange in 2017. Here’s a timeline that highlights the growth of Lyft over the years:
- 2012: Lyft was founded during this time.
- 2013: The company started its ride-hailing service.
- 2014: The company expands to New York City, Los Angeles, and California.
- 2015: Lyft started its bike-sharing service.
- 2016: Launches its scooter-sharing service.
- 2017: Lyft lists itself on the NASDAQ stock exchange and goes public for $2.2 billion.
- 2018: It expands to 640 cities in Canada and the U.S.
- 2019: Lyft launches its car-sharing service called Lyft Express Drive.
- 2020: Launches a multi-modal app that lets users book all kinds of rides in a single place.
- 2021: Expands to 500 cities in both Canada and the U.S.
- 2022: Reports $4 billion in revenue and a net loss of $1.58 billion.
Lyft’s Financial Performance: Revenues, Profits and Expenses
Lyft’s Revenue
In 2022, Lyft’s revenue was $4,092.7 million, showing an increase of 27.8% from the previous year.
In the first quarter of 2023, Lyft generated $1,001.5 million in revenue, showing an increase of 14.0% year-over-year.
A majority of Lyft’s revenue (93%) comes from ride-share fares. Other sources of revenue include scooter-share and bike-share fees, subscriptions, and advertising.
In the first quarter of 2023, Lyft’s revenue from scooter and bike-share fees increased by 14.0% year-over-year, and that from subscriptions and advertising increased by 17.0% year-over-year.
Here’s what the revenue of Lyft looks like compared to the previous years.
Lyft’s Expenses
The major expenses for Lyft include the cost of paying the drivers, their insurance, and incentives. Apart from this, other major expenses include the cost of marketing and advertising and research and development.
In the first quarter of 2023, Lyft’s expenses amounted to $849.8 million, showing an increase of 19.7% compared to the previous years. Cost of goods sold was the major expense for Lyft, amounting to $486.1 million, followed by operating expenses, at $310.2 million.
As a part of operating expenses, Driver incentives took up the most, totaling $203.0 million,followed by marketing and sales expenses at $68.7 million and administrative and general expenses at $38.5 million.
Lyft’s Profit
Lyft reported a net loss of $1.58 billion in 2022 as compared to a net loss of $1 billion in 2021.
The high cost of research and development, the high cost of acquiring and retaining drivers, and advertising and marketing expenses are all reasons contributing to the losses made by Lyft.
Have a look at this chart to see the profit figure of Lyft for the previous years:
Is Lyft Profitable?
No, Lyft is not profitable and has, in fact, never reported a net profit.
Lyft reported a revenue of $4 billion in 2022, showing an increase as compared to the revenue of $3.2 billion in 2021. However, its net loss was $1.58 billion in 2022 as compared to the loss of $1 billion in 2021.
Despite continuous net losses, Lyft is a growing business, and it recently even saw an increase of 8.5% in its ridership.
If Lyft’s performance intrigues you, find out wether its rival Uber is profitable? Then, your head will spin to find out the answer!
Why Is Lyft Not Profitable?
Much like Uber, Lyft is not profitable because it spends more money than it brings in.
To cut short, Lyft’s operating expenses are more than its gross profit. This means that the money that is left after deducting the cost of revenue is not enough to cover the company’s expenses.
This is why Lyft runs in a deficit.
Will Lyft Ever Make a Profit?
Lyft is hoping to become profitable in the future, and for this, it is taking all the necessary steps to reduce its expenses and improve its efficiency.
In fact, it’s hoping to benefit a lot from its ride-hailing market. But will it succeed? Only time will tell!
Lyft Vs Uber Market Share
Wrap Up
Amidst tough competition from giants like Uber, Lyft has been able to maintain its strong footing. Although the company is yet to make a profit, it, nonetheless, continues to grow.
Plenty of expenses, such as advertisement and marketing costs, fees and incentives for drivers, etc., are all reasons why Lyft is struggling to make a profit. But for how long? This, only time will tell.
We hope you found this article on “Is Lyft Profitable” useful.
FAQs
What is Lyft's market share in the U.S.?
Lyft’s market share in the U.S. is 24% as of 2022.
In how many cities does Lyft operate?
Lyft operates in 644 cities in the United States and 12 Canadian cities or towns.
What is the total number of drivers that work for Lyft?
More than two million drivers work for Lyft.