Lyft Inc. reported the highest earnings in its history, a sign that strong ridership, coupled with cost-cutting measures, was able to offset increased investments aimed at stemming a shortage of drivers.
The second-quarter performance “was the result of us really taking decisive actions and seeing better business performance from active riders to driver supply,” Lyft co-founder and President John Zimmer said in an interview. “The driver situation is materially improving and it’s not as much of a concern as previously.”
The number of active drivers on Lyft grew about 25 per cent from a year earlier, while new signups rose nearly 35 per cent. One reason is because of improvements to Lyft’s mapping technology and matching algorithm that enabled drivers to spend more hours completing rides instead of idle time waiting to be paired with a passenger. Zimmer said that the cost of driver incentives were largely being passed on to customers in the form of higher fares and that the cost per ride was steadily declining.
“Both platforms have to be driver-centric,” said D.A. Davidson analyst Tom White. “If Uber is making changes that resonate with drivers, that puts the spotlight on Lyft to get creative too. With the inflation impact hitting drivers, especially with gas prices, those investments may not be enough,” he said.