Lyft Focuses on Profitability as Cash-Burning Companies Lose Luster

SAN FRANCISCO — Lyft on Wednesday emphasized a new mantra — profitability — over and over again.

In its latest earnings results, the ride-hailing service’s chief executive, Logan Green, said that the company had made progress “on our path to profitability.” He added that Lyft would be profitable, if it excluded a bunch of costs, by late 2021. Other Lyft executives, such as its chief financial officer, also highlighted how operating profitability was in its sights.

The focus on profit came as Lyft reported a 63 percent jump in revenue to $955.6 million for the third quarter from a year earlier, while its net loss nearly doubled to $463.5 million. The loss was driven by stock-based compensation costs and payroll tax expenses, the company said. Excluding those, Lyft’s operating loss was $121.6 million for the quarter, which was not as steep as Wall Street estimates.

Lyft’s stock rose nearly 1.5 percent in after-hours trading on Wednesday.

“We crushed revenue expectations,” Brian Roberts, Lyft’s chief financial officer, said in an interview. “We have put out a firm date to achieve profitability. I think that is unique.”

Lyft had said earlier this year that it would lose record amounts of money as it focused on growth. But it changed its tune more recently as the sentiment toward prominent technology start-ups has soured.

Lyft, Uber and the office rental company WeWork, among others — known as unicorns for their high valuations by private investors, a rarity — have faced growing skepticism this year over whether they can actually make money. The questions have weighed on Lyft’s and Uber’s stocks, which have plummeted since the companies went public earlier this year.

More recently, WeWork failed to go through with an initial public offering as Wall Street investors raised questions about the company’s economics. WeWork ousted its chief executive and its valuation was slashed to $7 billion from $47 billion as its biggest shareholder, SoftBank, stepped in with a financial plan to keep the start-up from running out of cash.

In this environment, profits are now what many investors want to hear about. And so Mr. Green and Lyft’s president, John Zimmer, said at a technology conference this month that the company would become profitable on an operating basis in late 2021, a year ahead of schedule.

“The market as a whole has changed,” Mr. Green said at the conference. “There has been a major shift from investors valuing growth to going to value stocks. That shift has had very broad implications that have impacted us.”

Uber, which is scheduled to report its third-quarter earnings next week, has also struggled and its stock has declined about 26 percent since its I.P.O. Alphabet, the parent company of Google and an investor in Uber and Lyft, incurred a $1.5 billion loss this quarter when it wrote down its investments in both companies.

Lyft faces other challenges, including legislation in California that effectively requires it to treat drivers as employees rather than independent contractors. The reclassification would be expensive for Lyft, which currently does not need to offer full-time benefits to its drivers.

On Tuesday, companies including Lyft, Uber and food delivery start-up DoorDash started a ballot initiative to allow them to continue classifying drivers as contractors. The initiative offers drivers 120 percent of the minimum wage in the city where they are giving rides and 30 cents per mile in compensation for expenses, less than the 58 cent-per-mile compensation they would receive as employees.

The companies have pledged to spend at least $90 million on the ballot initiative, and have told analysts that they still expect to reach a compromise with state officials that would exempt them from the law.

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