Lyft's operating profit surges on rideshare demand, hiring slowdown

© Reuters. FILE PHOTO: The Lyft Driver Hub is seen in Los Angeles, California, U.S., March 20, 2019. REUTERS/Lucy Nicholson/File Photo

By Nivedita Balu

(Reuters) - Ride-hailing firm Lyft Inc (NASDAQ:LYFT) on Thursday reported a record adjusted operating profit, benefiting from a surge in demand for rides and a dramatic slowdown in company-wide hiring that helped manage costs, sending its shares up 5%.

Earlier this week, bigger rival Uber (NYSE:UBER) Inc reported upbeat quarterly results and turned cash flow positive for the first time, signaling demand for rideshare even as high inflation forces several consumers to cut back on spending.

Lyft last quarter said it would make investments to attract drivers as ride-hailing companies struggled with fewer cars on the road when consumers were returning to offices and taking more airport trips. Both Uber and Lyft are seeing more driver sign-up, as cost of living increases.

"We had the majority of new drivers come in organically ... There is a tailwind as more and more people are enjoying this supplemental income," Lyft President John Zimmer said in an interview with Reuters.

Zimmer said the growth also came as it focused on product and engineering to improve marketplace efficiency.

He said the company sees more room for growth as it works on how it matches riders and drivers and introduces new programs for users that come at different price points.

Lyft was also among a slew of tech companies that slowed hiring to cope with an economic slowdown.

The company's adjusted EBITDA, a metric that excludes stock-based compensation and some other costs, was $79.1 million for the second quarter and surpassed its own forecast of a range between $10 million and $20 million.

Active riders were 19.9 million in the second quarter, up 12% from the prior quarter, and the highest on Lyft's platform since COVID-19 began. Airport trips made up 10.2% of total rides, a historic high, Zimmer said, adding that there was strong demand for rideshares.

Revenue grew 30% to $990.7 million in the quarter ended June 30 from a year ago. Analysts on average had expected $990.5 million, according to IBES data from Refinitiv.