Ride-hailing service Lyft has hit a milestone: It achieved profitability for the first time, but only after excluding all sorts of one-time costs like taxes and depreciation.
The company announced the news, along with the rest of its second-quarter earnings, on Tuesday afternoon. Lyft’s financial results beat analyst expectations on both top and bottom lines, following a tough year and a half for the company, which saw demand for rides plummet due to the pandemic.
In the most-recent quarter, Lyft brought in revenue of $765 million, an increase of 125% from the year before, and a 26% jump quarter-over-quarter. Its quarterly adjusted profit (again, excluding one-time costs) came in at $23.8 million. What’s more, the company grew its number of active riders by more than 3.6 million from the previous quarter, and says its drivers earned “record” hourly income—averaging $35 per hour in “top” markets.
But—and yes, there’s a but—Lyft still saw a net loss of $251.9 million in the quarter. And its number of active riders is still below pre-pandemic levels. What’s more, there is a risk that the most recent reported quarter, which ended June 30, was a blip. The Delta variant and the subsequent restrictions in many of Lyft’s top markets could make customers feel uneasy about getting out and about yet again.
Fortune spoke with Lyft co-founder and president, John Zimmer, to ask more about the most recent quarter, and the potential road bumps ahead.
What’s the significance of this profit milestone?
It’s an important milestone along our mission, but it’s not mission accomplished. This has demonstrated that we’ve built a stronger business.
What is the biggest reason for your rebound? Is there anything to it, other than people just getting out there again in this most recent quarter?
Yes, it’s more than that. When we say we built a much stronger business, it’s not just that demand has returned. We spent the last couple of years building better technology. The more demand there is, the more goes to the bottom line. Here’s a specific example: Over the last couple of years, we rebuilt all of our mapping and routing tech. What’s under the hood is sometimes not noticeable to the customer, but we’ve built a stronger business.
Is rider demand still outpacing driver supply? What kind of advances have you made here and what more do you plan to do?
Demand in the second quarter came back stronger than anticipated. We saw 50% more new drivers in Q2 than in Q1. The no. 1 factor [to getting more drivers on board] is safety. We retained mask mandates for drivers and riders, and this has proven to be helpful. And obviously the earnings, and being able to tell them how much drivers are earning now.
Your quarter ended June 30, before the Centers for Disease Control came out with more warnings and recommendations for renewed restrictions due to Delta. What impact do you expect this will have on your current and next few quarters?
We’re approaching this the same way we’ve approached the last year and a half. It has been challenging for everyone. We do intend to remain EBITDA profitable [earnings that exclude certain costs] on an ongoing basis, and we are confident in that. We’re not out of the woods, but the fundamentals have never been as strong and we’ll continue to see momentum. We’ve been methodical and focused, trying not to get distracted by near term trends. During the last year and a half, there were many opportunities to take tangents and we made strategic decisions to stay focused.
You haven’t yet returned to pre-pandemic active rider numbers. What will it take to get there?
It’s a matter of time, and it’s hard to predict because of the variants. Lyft is in many cases a reflection of the overall economy. As people are safe and feel safe, they’ll travel more and go the airport and return to work. It’s hard to predict exactly, but it’s a matter of time, and measured in months and quarter—not years.
