Bicycles and scooters have multiplied in major US cities, and travel greeting services see them as growth opportunities. Rival Uber Technologies Inc. has acquired JUMP; other brands include Lime and Bird.
Lyft, which posted its second-quarter best results Wednesday in which revenue jumped 72%, said its costs more than doubled in part due to increased investments in its shared bike network and scooters.
Prior to its initial public offering in March, Lyft revealed that it had not generated revenue from that network for 2016 and 2017, while segment revenue in 2018 “was not material”.
A quarter of Lyft Inc’s customers who use its bicycles and scooters are new to the company, executives said Wednesday, describing how investing in expensive growth areas could ultimately benefit the main hail business.
With 25% of people using bicycles and scooters new to the Lyft ecosystem, according to co-founder John Zimmer, the company could tap into a new stream of users for its welcoming travel segment.
First, it has to take on an annual seasonal issue: winter.
“People don’t like using scooters in the snow” as much as they like greetings, Chief Financial Officer Brian Roberts said in a conference call with analysts.
For the fourth quarter of 2019, Lyft expects its contribution margin – which removes a lot of revenue costs, including share-based compensation – to drop 1 point to 49%, given seasonal trends, especially with bicycles and scooters.
The company acquired Citi Bike operator Motivate last year in a move to avoid competition from Uber’s acquisition of the start-up of the JUMP Bikes electric cycle division months ago./Investing.com