Ride-hailing company Lyft , Inc. (NASDAQ: NASDAQ:LYFT) has revealed plans to offer $400 million in Convertible Senior Notes due 2029, subject to market conditions.
The notes will be senior, unsecured obligations of Lyft, with interest payable semi-annually. Upon conversion, Lyft will pay cash up to the principal amount of the notes being converted, and the remainder, if any, will be paid or delivered in cash, shares of Lyft’s Class A common stock, or a combination of both, at Lyft’s election.
Lyft intends to use the net proceeds from the offering for several purposes, including repurchasing a portion of its 1.50% Convertible Senior Notes due 2025, paying for capped call transactions, and purchasing Class A common stock from institutional investors. The company also plans to use any remaining proceeds for general corporate purposes, which may include repurchases of additional 2025 notes, working capital, capital expenditures, and potential acquisitions and strategic transactions.
Last week was eventful for Lyft Inc (NASDAQ: LYFT) and Uber Technologies Inc (NYSE: UBER), two giants in the ride-hailing industry. Lyft’s stock surged over 60% on Tuesday, only to sharply fall back due to a mistake in its quarterly earnings release, which initially showed an exaggerated margin growth outlook for 2024. Despite this error, Lyft showcased strong financials and highlighted strategic partnerships with companies like Starbucks Corporation (NASDAQ: SBUX) and Microsoft Corporation’s (NASDAQ: MSFT) LinkedIn, aiming for profitable growth in 2024.
Under the leadership of David Risher, who took over less than a year ago, Lyft set ambitious goals for 2023. The company emphasized its achievements, including over 700 million rides and over $8 billion in earnings for drivers, along with recording its highest annual ridership. However, its competitor Uber stole some of the limelight by reporting its first-ever annual profit a week earlier, with a market value approaching $150 billion.
Uber’s solid quarter included impressive figures, surpassing estimates with gross bookings rising 22% YoY to $37.6 billion. Revenue also saw double-digit growth, reaching $9.94 billion, well above estimates. Uber’s net income of $1.4 billion or 66 cents per share far exceeded expectations. The company reported 150 million active consumers in Q4 2023, a 15% YoY increase. Uber’s mobility business contributed significantly to revenue, with a 34% YoY rise to $5.5 billion.
On the other hand, Lyft reported a solid quarter with gross bookings increasing 17% YoY to $3.7 billion. The company reported adjusted earnings of 18 cents per share, surpassing analyst estimates of 8 cents per share. Lyft’s revenue of $1.2 billion aligned with expectations, while the company narrowed its net losses to $26.3 million and reported positive free cash flow of $14.9 million.
Looking ahead, Lyft guided for gross bookings between $3.5 billion to $3.6 billion and adjusted EBITDA between $50 million and $55 million for the current quarter. The company also expects to achieve full-year positive free cash flow for the first time in 2024.
While Lyft’s shares have declined significantly since its IPO in 2019, the recent typo in its earnings report raised hopes for the company’s ability to challenge Uber. However, Lyft still lags behind Uber in user numbers and its margin growth outlook is not as impressive. Nonetheless, Lyft’s strategic moves and strong financial performance suggest a path to profitable growth in 2024.
