Lyft Showing Strong Growth and Profitability in First Quarter Results

4 Reasons Why Lyft Is on the Right Track

Lyft's first-quarter results show the company is getting past its early growing pains and figuring out how to make its operations profitable. Lyft's (NASDAQ: LYFT) 28% year-over-year jump in Q1 revenue is a strong indication that after a full year as CEO, David Risher has the company headed in the right direction. There are four key improvements worth noting from the company's recent quarterly report.

1. More revenue and free cash flow

Revenue rose 28% to $1.3 billion thanks to a 21% increase in gross bookings. For Q2, Lyft expects to see gross bookings jump from $3.7 billion in the first quarter to as much as $4.1 billion in the current quarter. Meanwhile, the company's adjusted EBITDA margin was 1.6% of gross bookings, more than doubling year over year. Lyft believes it can improve that number to around 2.4% in the current quarter. According to the earnings report, the company is confident it will have a year of positive cash flow, with a minimum of 70% of its adjusted EBITDA converting to cash.

Q1 was the second consecutive quarter Lyft has had positive free cash flow. It was also only the third time since its inception the company has reported positive cash flow.

2. Canadian expansion

The earnings report showed Lyft's sizable growth in the Canadian market, with a 100%-plus increase in new customers and driver hours. There was also a doubling of the number of Canadian rides.

Lyft operates across Canada, including in the major metropolitan areas of Calgary, Edmonton, Ottawa, Toronto, and Vancouver. However, the growth is even more remarkable considering that Calgary and Edmonton weren't accepting driver applications until April. Lyft currently operates in about 18 Canadian cities.

3. Transparent payment policy for drivers

Lyft initiated a new pay policy in February. Drivers receive at least 70% of a fare minus expenses. The company says it has received positive feedback from three-quarters of its drivers, who state they now have a better grasp of how Lyft determines their pay.

Greater transparency can help Lyft attract more drivers and keep the ones it has, as well as entice drivers to spend more time behind the wheel.

4. Safety policy for women and nonbinary drivers and riders

Safety for drivers and riders has always been a concern in the ride-hailing industry. In response, Lyft created its Women+ Connect program, empowering women and nonbinary drivers to prioritize matches with women and nonbinary riders.

Participation is voluntary and does not mean that women and nonbinary people will never be matched with men. Drivers can choose when to activate the feature on their app. Likewise, riders can edit their profiles to participate in the program. They can also update their gender identification at any time.

The company hopes the initiative will help drivers and riders feel safer while attracting more women and nonbinary drivers.