Behind the friendly pink mustaches and fist bumps, Lyft is spending furiously to maintain second place in the U.S. ride-sharing industry, and steal market share from the distant leader, Uber Technologies. The expensive battle plan helped Lyft claim a fourfold increase in active passengers on 2.2 million rides in December 2014, but growth is beginning to slow, according to a company presentation to investors that was obtained by Bloomberg. Lyft estimates $130 million in revenue for 2014, according to the document.
The presentation offers a revealing look inside a company that's sweeping U.S. cities, and attracting the attention of venture capitalists and regulators. The presentation, compiled for its $530 million fundraising round announced on March 12, includes recent and projected revenue, ridership figures, marketing costs, and other data about the business. Lyft and Uber aren't publicly traded, and neither company discloses financial information about its operations. Lyft and Uber declined to comment.
In addition to providing a window into its business, Lyft had some choice words for its chief rival. The presentation describes Uber as a "top-down model," with an "exclusive mentality" and "anti-social culture." It says Lyft's growth is led by drivers—32 percent of whom are female—and has a "trusted brand" and "social experience." The companies compete vigorously to woo investors who can fund their operations. Uber's $40 billion valuation dwarfs that of Lyft, which counts Japan's Rakuten, China's Alibaba and the Silicon Valley venture capital firm Andreessen Horowitz among its investors. Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.
While the 40-page document does not detail Lyft's operating expenses or losses, it does illustrate the mounting costs of marketing the service. Lyft estimates that the company spends a combined $530 on marketing to each driver and 22 passengers in San Francisco, and it takes about nine months to recoup those costs through its Lyft Classic service—not to be confused with the carpooling option, Lyft Line. The company expects to spend 60.5 percent of its revenue on marketing in December 2015, the document says. A ride booked in San Francisco through the Classic service generates a 92-cent profit for Lyft, including marketing costs but excluding corporate expenses, such as software developers and office space. Lyft co-founder John Zimmer told Bloomberg in January that the company is profitable in San Francisco and its other most established markets.
The $130 million in revenue for 2014 is based on the combined net revenue from Lyft Classic and gross revenue from Lyft Line during the month of December, which implies $10.8 million in revenue during that month. Using the same calculation, Lyft reports revenue of $12 million in 2013. (Tallying gross revenue from Lyft Line, which includes money paid out to drivers, has the potential to significantly distort the company's 2014 revenue and growth, as well as projections, because the service didn't exist in 2013. However, the document says it does so for the purposes of generally accepted accounting principles.) Lyft projects $796 million for 2015, a slowdown in growth but still an impressive 512 percent jump from 2014. In the interview from January, Zimmer said the company's revenue and rides rose fivefold last year.
Despite ride-sharing companies' attempts to guard financial details, Uber has faced similar leaks. The company generated $22 million in revenue during a one-week period in November 2013, according to an internal dashboard posted to the blog Valleywag. Uber drivers were completing more than 100,000 trips per week in each of its largest cities, and San Francisco had about 70,000 active users a week in December 2013, according to a separate report in Business Insider. Uber said on Jan. 22 that it has more than 160,000 active drivers in the U.S. who give more than a million rides a day.
Lyft has seen similarly staggering growth in the number of drivers and riders using the service. In December 2012, Lyft had 400 drivers giving 40,000 rides a month; by 2013, it had 7,000 drivers and 488,000 rides a month; in 2014, it was 51,000 drivers and 2.2 million monthly rides, according to the document. The number of people booking rides through the app each month rose from 9,000 in 2012 to 631,000 last year.
Though currently unprofitable, Lyft's ride economics appear to be going in the right direction. The company increased its share of each fare from 6.7 percent in July 2014 to 25.7 percent in December, the document says. The increase is expected to be less dramatic this year, reaching 26.2 percent in December 2015, according to the company's forecast. The investor presentation also touts its progress with city officials, citing 28 new regulations in six states last year.
The document illustrates Lyft's obsession with quick pickups. In San Francisco, the time between a ride request and the car's arrival in December 2014 was 2.62 minutes, an improvement from 3.1 minutes in August. The average time in all of Lyft's markets fell to 3.9 minutes from 4.18 minutes during the same period. It seems the war with Uber could be measured in seconds.