Nov 2 (Reuters) – Lyft Inc (LYFT.O) shares soared more than 13% in extended trading on Tuesday after the company reported an adjusted profit for the third quarter and outlined a path to sustained profitability on the back of drastic cost cuts and a return of riders and drivers.
Lyft’s leaner cost structure allowed it to increase ridership without incurring rising expenses and executives said they targeted even higher adjusted profit in the fourth quarter, outlining their conviction for a continued recovery from a bruising pandemic.
Shares of larger rival Uber Technologies Inc (UBER.N), which will report results on Thursday after the bell, rose 7% in after-market trading following Lyft’s release. Uber has said it expects to break even on an adjusted EBITDA basis for the first time.
The company also said business travel to offices had not yet resumed, with workers particularly on the U.S. West Coast continuing to work from home. But executives said they were hopeful office workers would return in the first half of 2022.
According to the California-based company’s own measure, Lyft was profitable for the second consecutive time in its nine-year history.
Lyft said it expected adjusted EBITDA of between $70 million and $75 million in the fourth quarter.
Revenue increased around 13% from last quarter, while total costs and expenses grew only 4% from the second quarter in a sign that Lyft is making do on its promise to cut both fixed and variable costs. Lyft’s contribution margin, indicating the company’s profitability excluding variable costs, rose to a record 59.4%.
The company posted surprise adjusted earnings per share of 5 cents in the quarter compared with a loss of 3 cents expected by Wall Street.
Zimmer said in an interview with Reuters that drivers were feeling safer thanks to the availability of COVID-19 vaccines and were returning to the road in greater numbers after enhanced federal unemployment payments ended in September.
Lyft and Uber have been spending heavily to lure drivers with big incentives as the pandemic opened up new jobs at Amazon.com Inc’s (AMZN.O) warehouses, Instacart’s grocery services and restaurant deliveries.
“I feel very good about the supply conditions, and our ability to compete in the marketplace for talent, given the type of work and earnings that we offer,” he said.