Lyft Earnings: Growth and Margin Expansion on Track; Maintaining Fair Value, Shares Undervalued

We are maintaining our $25 per share fair value estimate for narrow-moat Lyft, and believe shares remain undervalued. We’ll know more once rival Uber reports; however, initial numbers for Lyft appear solid. Gross bookings increased 21% year over year, ahead of guidance, while adjusted EBITDA was also impressive, coming in at $59.4 million compared with the high end of guidance of $55 million. Full-year guidance was reaffirmed, and the expected full-year percentage of EBITDA converting to free cash flow was increased to 70% from 50%. As such, Lyft remains well on track to meet our full-year expectations for 17% growth in gross bookings, and improving margins and cash flow generation. We continue to think that Lyft can achieve consistent low-teens revenue growth in the coming years and gradually improve margins and cash generation, becoming free cash flow positive this year.