Lyft vs. Uber: five new insights

Lyft vs. Uber: five new insights

In its much anticipated S-1 filing to IPO, Lyft revealed a wealth of financial detail. Finally, one of the most debated business models in venture capital is opening up to outsiders. And with Uber slowly releasing selected figures in the run-up to its own IPO it’s now possible to compare the two companies in more detail than ever before. More importantly, we can see what the path to profitability might look like.

Uber’s reporting has been scattered, so we’ve made some best-guesses to fill in the blanks and create a like-for-like comparison in the below table. The black numbers are either reported by the company’s or implied from those reported numbers. The grey numbers are estimated by Dealroom based on quarterly trends, benchmarks for similar companies and some reasonable guesswork.

- Insight #1: Lyft grew revenues 2X faster than Uber but…

Lyft grew revenues 100% to $2.2 billion, ahead of market expectations. Meanwhile, Uber grew revenues “only” 45% to $11 billion. Part of Lyft’s high revenue growth was driven by a jump in the take-rate (from 23% to 27%), which could be temporary. It’s better to look at gross bookings, where Lyft grew 76% YoY compared with 45% YoY for Uber. That’s a far less dramatic difference, especially taking into account the 5x difference in size.

Still, in Q4 Uber growth slowed down a bit further: Uber’s gross bookings increased 37% YoY and revenue increased 24% YoY.

- Insight #2: Winning market share in the U.S.

Lyft has been gaining market share in the U.S. and claims 39% market share as of December 2018 by number of rides in the U.S.. Data analytics firm Second Measure, which analyzes credit card data, estimates Lyft’s market share at 29% by sales, compared with 69% for Uber. Momentum seems to be in Lyft’s favor. Part of this could be attributable to Uber’s PR problems (e.g. the #DeleteUber campaign).

The company said it had 18.6 million quarterly active riders as of December 2018. For the full year Lyft counts 31 million active riders. By comparison, Uber reports 75 million *monthly* active riders, globally. Hard to say what that translates into per quarter or per year.

- Insight #3: average Lyft driver ≠ average Uber driver

Especially from the supply side (driver side), the two companies are quite different. The majority of Lyft’s drivers “drive in their free time to supplement their income.” Uber riders are mostly full-time. As a result, the average Lyft driver earns $4.3K per year, a number that’s been increasing. Meanwhile, the average Uber driver earns $16.7K per year, a number that’s been decreasing. The average Lyft driver does 1 ride per day (326 per year), whereas the average Uber driver does 5 rides per day (1,773 per year). Uber has only 1.5x more drivers than Lyft, despite Uber being 5x bigger (3 million vs 1.9 million drivers).

Also, Lyft’s revenue per ride is $13 per ride, whereas Uber’s $9 per ride. This is likely due to Uber’s presence in more densely populated areas, and its global footprint, which includes emerging markets. Lower revenue per ride isn’t better or worse per se. What matters more is overall efficiency. But it’s interesting to note nonetheless.

- Insight #4: roughly similar take-rates, trending upwards for Lyft, down for Uber

Both companies have roughly similar take-rates, i.e. the percentage net revenues of gross bookings. However, both numbers are heavily distorted. Lyft has eScooter and other services, where net revenues equal bookings. We therefore cannot conclude too much from this. The below chart from Lyft’s S-1 shows the increase of Lyft’s take-rate. In theory, it could go up for a long time, driven by eScooter services (near 100% take-rate) and in the longer-term autonomous vehicles (also potentially 100% take-rates, but still very far away). In the very long-term this could drastically change the profitability of the business.

- Insight #5: path to profitability

Back to the near term. Lyft’s margins have improved dramatically since 2016, as the following chart shows. Total costs now are 136% of revenues, down from 367% in 2016. But how many years will it take to become profitable?

Continue here (also for tables and statistics):

  • Which app will be truly profitable when?

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