# Bring back the Surge multiplier to attract drivers



## nosurgenodrive (May 13, 2019)

Drivers can then know that they are getting a certain rate and Lyft doesn’t have to worry about taking a loss on certain fares. If Lyft promised to only take 25% of the fare, they would own the drivers’ loyalty and attention. Rental drivers should be given a different algorithm or increase their rental costs.


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## EagleWolfSparrow (Aug 7, 2021)

nosurgenodrive said:


> Drivers can then know that they are getting a certain rate and Lyft doesn’t have to worry about taking a loss on certain fares. If Lyft promised to only take 25% of the fare, they would own the drivers’ loyalty and attention. Rental drivers should be given a different algorithm or increase their rental costs.


Totally agree with you. But look at this lol. Even with 0.6 $ a mile (5$ a Gallon for 87 gas). You have tons Uber X drivers waiting at Airport. Lyft in other hands bunch Lux and Lux black driver waiting at Airport. Lyft Lux is already 2.1 $ a mile. 
Which isn't bad. 

Meanwhile Uber is 0.6 $ a mile and 0.66 $ a mile for Uber Comfort and Uber Premier is only 1.1 $ a mile... 
So many drivers willing to drive 0.6 $ a mile... There's no reason for greedy Uber and Lyft to take less. They might even want to take more %.


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## nosurgenodrive (May 13, 2019)

EagleWolfSparrow said:


> Totally agree with you. But look at this lol. Even with 0.6 $ a mile (5$ a Gallon for 87 gas). You have tons Uber X drivers waiting at Airport. Lyft in other hands bunch Lux and Lux black driver waiting at Airport. Lyft Lux is already 2.1 $ a mile.
> Which isn't bad.
> 
> Meanwhile Uber is 0.6 $ a mile and 0.66 $ a mile for Uber Comfort and Uber Premier is only 1.1 $ a mile...
> ...


In my region, they are leaving a ton of money on the table with stranded passengers because there are not any drivers willing to drive at that rate. Additionally, at bar close there should always be a five dollar premium added to every ride for the drivers just for the risk and challenge. However, Lyft will often underprice all of these rides and leave passengers stranded who would be willing to pay extra if they just had a driver and the driver would be willing to drive if they were just willing to pay extra. The disconnect is happening on Lyft’s end or with them trying to take the premium that is legally the property of the drivers.


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## elelegido (Sep 24, 2014)

nosurgenodrive said:


> If Lyft promised to only take 25% of the fare, they would own the drivers’ loyalty and attention.


They tried this revenue model for several years but they could not make it work - they lost billions of investor dollars. They won't be going back to it.


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## kdyrpr (Apr 23, 2016)

Ahhh, yes, the Thanksgiving Eve 12-mile $75 dollar trip. We'll never see it again.


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## Seamus (Jun 21, 2018)

Lyft has very clearly decided to focus on profitability at the expense of market share. It appears they are willing to give less rides and cede marketshare to Uber as long as they make money on the rides they give.

A small piece of a good article in _Bloomberg_.

_Lyft reported first-quarter revenue of $875.6 million on Tuesday, up 44% from a year earlier. That was more than the $844.5 million analysts were expecting, according to data compiled by Bloomberg. Lyft’s adjusted earnings before interest, tax, depreciation and amortization were $54.8 million in the quarter, far surpassing the $14.4 million analysts were expecting. 

The *boost in profits* is attributed to strong ride volumes but also from the* increase in revenue Lyft extracted from each passenger. *Lyft generated $49.18 per active rider in the first quarter, the second-highest on record and 9% higher than the same period last year, partly due to higher fares._

Summing it up.....drivers will not be getting any increases or incentives as long as they are profitable and exceeding expectations. They seem content to let Uber have some market share.

P.S. " _*increase in revenue Lyft extracted from each passenger."*_ Also means "paying drivers less of the take" so they will continue to increase their % of what they charge pax. To not accept reality and hope for better is foolish. It is what it is.


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## Seamus (Jun 21, 2018)

kdyrpr said:


> Ahhh, yes, the Thanksgiving Eve 12-mile $75 dollar trip.  We'll never see it again.


Pax will, not drivers.


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## Buckiemohawk (Jun 23, 2015)

Yesterday, Cinco de Mayonnaise, i only drove at the airport for Uber while it surged 6 riders in fours hours, two had surge and they all tipped me, 135 dollars in 4 hours. Lyft I would have to do a long trip to make that because if you go and pick up every lyft customer in this area, its all under ten dollar rides almost never tip. There are exceptions but usually longer waits at the airport less tips. In one of Spartenburg there is huge demand but the people dont go anywhere and those ride dont pay enough.


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## Buckiemohawk (Jun 23, 2015)

elelegido said:


> They tried this revenue model for several years but they could not make it work - they lost billions of investor dollars. They won't be going back to it.


Because they are not charging enough and expect millionaire salaries....


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## Lord Summerisle (Aug 15, 2015)

Seamus said:


> Lyft has very clearly decided to focus on profitability at the expense of market share. It appears they are willing to give less rides and cede marketshare to Uber as long as they make money on the rides they give.
> 
> A small piece of a good article in _Bloomberg_.
> 
> ...


Works well until passengers get fed up with paying 3 - 4 times the normal rate and switch permanently to Uber. Seems like the recipe for a dying business to me.


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## Seamus (Jun 21, 2018)

Lord Summerisle said:


> Works well until passengers get fed up with paying 3 - 4 times the normal rate and switch permanently to Uber. Seems like the recipe for a dying business to me.


Sounds like what people used to say about Taxi's. Yup, they're still around.


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## Nats121 (Jul 19, 2017)

nosurgenodrive said:


> Rental drivers should be given a different algorithm or increase their rental costs.


Rental drivers are basically sharecroppers and you want to beat them down even more?

Wow.


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## Nats121 (Jul 19, 2017)

elelegido said:


> They tried this revenue model for several years but they could not make it work - they lost billions of investor dollars. They won't be going back to it.


You overlook the fact that the fares were dirt cheap in those days.


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## Nats121 (Jul 19, 2017)

In so many ways the gig economy (as well as the independent contractor employment model itself) is a buck naked emperor insisting he's fully clothed.

The Bloomberg article is one of a zillion examples of that.

Uber and Lyft have always maintained that the DRIVERS are their primary source of revenue via the service fees they "charge" drivers for "connecting" us to the pax. The secondary source has always been the "booking fees" they charge the pax.

Yet here's Bloomberg once again talking about how much money Lyft is extracting from the PAX, not the drivers.

Like virtually everyone who's not a Kool Aid drinker or liar, Bloomberg knows the whole "drivers pay Lyft/Uber" narrative is a lie. Nobody buys it yet the gig companies have been able to get away with lying about it for 10 years.


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## elelegido (Sep 24, 2014)

Nats121 said:


> You overlook the fact that the fares were dirt cheap in those days.


You overlook the fact that the conversation is about the revenue split model.

The point you are alluding to; that Lyft could still be profitable if it charged 25% of its current fares including the very high unicorn fares it charges now, is a different matter. You also overlook that average fares have decreased heavily since the days of 2013 and before, and it is doubtful that pax are being charged more now on average. For example, Lyft charged its passengers $2.00 per mile and 50c per minute, on every fare.

My point remains, and if you think that Lyft is going back to the revenue split model, you're seriously out of touch with the rideshare industry.


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## Buckiemohawk (Jun 23, 2015)

elelegido said:


> You overlook the fact that the conversation is about the revenue split model.
> 
> The point you are alluding to; that Lyft could still be profitable if it charged 25% of its current fares including the very high unicorn fares it charges now, is a different matter. You also overlook that average fares have decreased heavily since the days of 2013 and before, and it is doubtful that pax are being charged more now on average. For example, Lyft charged its passengers $2.00 per mile and 50c per minute, on every fare.
> 
> My point remains, and if you think that Lyft is going back to the revenue split model, you're seriously out of touch with the rideshare industry.


They will be forced into it. The whole idea was to finish off the taxi industry and the raise rates to three times as much and get people addicted to Uber with the low rates


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## elelegido (Sep 24, 2014)

Buckiemohawk said:


> They will be forced into it.


By whom?

Rideshare has moved away from the fixed percentage revenue share model to a much more flexible (for the companies) system of dynamic driver pay in which driver rates are adjusted in real time via incentives. The companies can adjust pay upwards whenever they like without shackling themselves to a fixed revenue split percentage. There is absolutely no reason for them to go back to that model.


> The whole idea was to finish off the taxi industry


Which they have failed to do.


> and the raise rates to three times as much and get people addicted to Uber with the low rates


I wouldn't say that rideshare was an addiction for people. 

U/L are increasing prices, and the trade-off for that will be ride volumes. Time will tell if that strategy will finally result in profit.


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## nosurgenodrive (May 13, 2019)

Nats121 said:


> Rental drivers are basically sharecroppers and you want to beat them down even more?
> 
> Wow.


Yes. They ruin the platform accepting every ride thrown at them. The system preys on their need for 130 rides a week at any cost.


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## Nats121 (Jul 19, 2017)

elelegido said:


> You overlook the fact that the conversation is about the revenue split model.


It doesn't matter what the conversation was about because my post was a rebuttal to your post.

I disagree with your definitive statement that the 25% split can't work and caused the loss of billions of dollars. It didn't. 

First there were the startup costs in getting the companies off the ground. Then the companies in their maniacal pursuit of growth (especially Uber) as well as the elimination of the taxi industry engaged in a scorched earth policy of massive fare cuts and ride giveaways. Even after the fares had been slashed to rediculously cheap levels that destroyed driver earnings, the companies STILL gave away lots of free or nearly free rides. 

On top of the fare cuts, both companies (especially Uber) spent a fortune on acquisitions and "advanced technologies" including SDCs, flying cars, and who knows what else.

I've always believed that once the startup costs became amortized and the technology matured (both of which occurred a long time ago), and if both companies stuck to the basics of transporting people they'd have no problem turning a profit with a 25% cut, even at 60 cents per mile, especially when surges are thrown in the mix.

Base rate fares are now at their highest since 2014 while the drivers' cut percentage is the lowest it's ever been.



elelegido said:


> My point remains, and if you think that Lyft is going back to the revenue split model, you're seriously out of touch with the rideshare industry.


You've got the wrong guy. I've said on a zillion occasions that govt regulation is the only way driver exploitation will end. Neither company will ever accept a 25% cut unless they are forced to by law.


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## elelegido (Sep 24, 2014)

Nats121 said:


> It doesn't matter what the conversation was about because my post was a rebuttal to your post.
> 
> I disagree with your definitive statement that the 25% split can't work and caused the loss of billions of dollars. It didn't.
> 
> ...


The facts of this are as follows:

-- Lyft was unable to make a profit by giving 75% of its revenue to drivers in the past
-- Lyft is still unable to make a profit now, in 2022, by giving away _less _than 75% of its revenue to drivers
-- Therefore, Lyft would not make a profit now, in 2022, by increasing the revenue given to drivers back up to 75%

This is just very, very simple logic and common sense. This does _not_ mean, however, that Lyft could never make a 75/25 revenue split work in the future. However, there would be no reason for Lyft to reintroduce it.

It's as simple as that. I'm not sure why this causes people such difficulty.


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## nosurgenodrive (May 13, 2019)

elelegido said:


> The facts of this are as follows:
> 
> -- Lyft was unable to make a profit by giving 75% of its revenue to drivers in the past
> -- Lyft is still unable to make a profit now, in 2022, by giving away _less _than 75% of its revenue to drivers
> ...


False. Lyft was losing money because that’s what startups are supposed to do in their first few years. Both Uber and Lyft dumped billions of dollars on wasteful spending.


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## elelegido (Sep 24, 2014)

nosurgenodrive said:


> False. Lyft was losing money because that’s what startups are supposed to do in their first few years. Both Uber and Lyft dumped billions of dollars on wasteful spending.


Nope. It is 100% true that Lyft did not make a profit while it paid its drivers 75% of its revenue.

It is 100% true that Lyft has not made a profit in 2022, while giving its drivers less than 75% of its revenue.

It is 100% true that, had Lyft given its drivers more of its revenue in Q1 2022 then it would not have made a profit.

It sounds to me like you need to have another look at Lyft's published accounts if you think any of the above is false!


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## nosurgenodrive (May 13, 2019)

elelegido said:


> Nope. It is 100% true that Lyft did not make a profit while it paid its drivers 75% of its revenue.
> 
> It is 100% true that Lyft has not made a profit in 2022, while giving its drivers less than 75% of its revenue.
> 
> ...


Any “broker” that takes more than 25% of the fare is no longer a broker but an employer.
They easily make a profit off 25% of the fare and 60%! of the cancellation fee.


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## Nats121 (Jul 19, 2017)

elelegido said:


> -- Lyft was unable to make a profit by giving 75% of its revenue to drivers in the past


Correlation is not causation.

The fact that the 75/25 split was in use during a period when Lyft was supposedly losing money doesn't mean it CAUSED the losses. I've already pointed out other things Lyft was doing that were the causes.




elelegido said:


> -- Lyft is still unable to make a profit now, in 2022, by giving away _less _than 75% of its revenue to drivers


It appears Lyft IS making a profit.



elelegido said:


> -- Therefore, Lyft would not make a profit now, in 2022, by increasing the revenue given to drivers back up to 75%


There's no question that switching to a 75/25 model would cost both companies a fortune and would require major changes on the companies' part in order to survive but it could be done.

As I said previously, if the companies were to stick to the basics of transporting people they could probably avoid raising fares. When you cut away all the extravagant spending (acquisitions, foreign investment adventures, "advanced technologies", exorbitant salaries, etc.), these organizations are little more than dispatch and payment transfer companies using very mature technology and long ago amortized startup costs.

But if they don't stick to the basics then fares would have to go up.


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## Nats121 (Jul 19, 2017)

elelegido said:


> Nope. It is 100% true that Lyft did not make a profit while it paid its drivers 75% of its revenue.


Correlation is not causation.


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## elelegido (Sep 24, 2014)

Nats121 said:


> Correlation is not causation.


Clearly; but I never said it was. For some strange reason you keep misquoting me and mischaracterising what I say.

I will lay this out for you one last time. Lyft's use of the 75/25 revenue split was a contributing factor to Lyft's losses while it employed that model. To make this easier to understand, let's go back to basics, and examine the equation:

_profit = revenue - costs_

From this, we can see that when revenue exceeds costs then there will be a profit. When costs exceed revenue there will be a loss. We can also see that, when there is a loss, that loss will be made larger as we take revenue away. Thus we can see that Lyft's giving away of a large 75% of its revenue contributed to its losses.


> The fact that the 75/25 split was in use during a period when Lyft was supposedly losing money doesn't mean it CAUSED the losses.


Again, I did not say they were the cause but a contributing factor. I don't know why you keep misquoting me.


> It appears Lyft IS making a profit.


No, lol. Have a look at the recent Q1 2022 earnings statement from Lyft, in which they detail their net loss of $196.9m for the period.










It looks like you're confusing EBITDA with profit. EBITDA is a smoke-and-mirrors figure that is used by companies to fool the uninititiated into thinking that the company is actually profitable. I would recommend spending a few moments to familiarise yourself with the terms used in financial statements so that you will be better able to interpret financial statements and data.


> There's no question that switching to a 75/25 model would cost both companies a fortune and would require major changes on the companies' part in order to survive but it could be done.


Reverting to 75/25 split would mean an increase in driver costs for the company. And, as stated earlier, given that Lyft has so far made a loss in 2022 with lower driver costs, it would incur a larger loss if it gave itself higher driver costs. Let me give a very simple example in order to illustrate this:

I have a lemonade stand. I sell $10 worth of lemonade per day. I spend $7 per day on lemons and I pay an employee $6 per day. I make a loss of $3 per day. If I increase my employee costs to 75% of revenue, then my employee costs would rise to $7.50 per day, and my daily loss increases from $3 per day to $4.50 per day. Do you see? When a business is making a loss and it increases its costs, the loss gets bigger.

Could Lyft decide to increase its driver costs and thereby incur larger losses? Sure. But obviously there is no reason to do that, which goes without saying.



> As I said previously, if the companies were to stick to the basics of transporting people they could probably avoid raising fares. When you cut away all the extravagant spending (acquisitions, foreign investment adventures, "advanced technologies", exorbitant salaries, etc.), these organizations are little more than dispatch and payment transfer companies using very mature technology and long ago amortized startup costs.


Lyft has had no recent acquisitions, foreign investments and it has sold its self-driving car division. They are focussing on rides, as you say. Yet they are still making losses. Will they make a profit just focussing on transportation? Time will tell. Will they make a profit doing this with a 75/25 revenue split? We will never know.

Anyway, I have explained to you (a) why the 75/25 revenue split contributed to Lyft's losses, (b) why they will not be going back to that model, (c) the difference between EBITDA and profit, and (d) how increased costs negatively affect profitability. If you _still_ don't get it then you'll need to ask others for help; my explanations are now complete.


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## Seamus (Jun 21, 2018)

elelegido said:


> _profit = revenue - costs_


I hesitate to even jump into this but you guys are both right.....in different ways.

To understand why and where profit and loss are occurring you really have to break Profit/Loss down into 3 different scenarios.

*Gross margin/profit* Cost of Goods sold or in this case the cost of giving rides. In This isn't smoke and mirrors to fool people, but FASBI Accounting standards that publicly traded corporations must adhere to so stockholders and analysts can truly understand a company's financial picture.
The second scenario is then *Operating income *or loss. the correct formula for this is Gross margin/IFO - remaining costs. (SGA, Fixed OH, Support, charges). 
*Net Income *Corporations can and do easily game this part of the P/L statement for their own reasons. If you look at Lyft's Q1 financials, of their NET loss, *83%* was simply due to stock compensation write offs! If you read enough of these you constantly see the legal Accounting gimmicks. This is why so many American Corporations show such a tiny taxable income (or loss) relative to a massive revenue stream.
Bottom line, Lyft made an operating profit off of giving pax rides. The losses come from the overhead and at least in Q1 2022, 83% from stock compensation charges.

Before 2019 when L/U became public, any and all financials released are all to be taken with a grain of salt because they weren't owned by shareholders and only released the information that they wanted to.

Thankfully, since they're now public they have to produce financials and SEC filings that are "truthful" for accurate analysis.


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## elelegido (Sep 24, 2014)

Seamus said:


> *Gross margin, IFO (income from operations) and Operating profit* all mean the same thing.



No, this is 100% wrong. Gross margin and operating profit are not the same thing. Gross margin is revenue minus cost of sales. It is the gross profit that is left after variable, direct costs of production are subracted from revenue. Operating profit, on the other hand, is gross profit minus fixed costs (overheads). The difference between them is simply, but importantly, overheads. See this explanation of them and of this difference from Investopedia:












> In this scenario the correct formula would be Revenue - _Operating_ costs (Cost of Goods sold or in this case the cost of giving rides).


_Profit = revenue - costs_ is a correct formula. If you want to add the word "operating", then that's fine, but you would need to add it to both sides - the correct formula would be _Operating profit = revenue from operations - operating costs_.



> In Q1 Lyft had an _Operating_ profit.


No, Lyft had an operating loss of $199.3m in Q1:











> This isn't smoke and mirrors to fool people, but FASBI Accounting standards that publicly traded corporations must adhere to so stockholders and analysts can truly understand a company's financial picture.


EBITDA is permitted to be stated in financial statements by FASB, however, when given, it must always be reconciled back to the GAAP net income figure.

Just because presenting numbers in a certain way is legally allowed does not mean that it gives an accurate representation of a company's financial performance. There are many, many criticisms of EBITDA including its arbitrary nature as allowed by the discretion with which each company's management has in deciding what to deduct and what to include in it, the impact of capex, changes in working capital and the impact of depreciation and amortisation. Among others.

It's all very well saying that a company has gross profit and operating profit, but the bottom-line question is, "Is this company actually making any money?". And the answer to that in Lyft's case is no, as stated by its net loss, which is why the market has been giving its stock such a drubbing.


> The second scenario is then NET income or loss. the correct formula for this is Gross margin/IFO - remaining costs. (SGA, Fixed OH, Support, charges).



Gross profit - fixed costs = operating profit. Operating profit less non-operating expenses = net profit/income.



> Corporations can and do easily game this part of the P/L statement for their own reasons. If you look at Lyft's Q1 financials, of their NET loss, *83%* was simply due to stock compensation write offs!


Companies may prefer to compensate employees via stock, however GAAP states that this compensation be deducted when calculating net income. It is still an expense, as it is the transfer of value out of the company to the employee.



> Bottom line, Lyft made an operating profit off of giving pax rides. The losses come from the overhead and at least in Q1 2022, 83% from stock compensation charges.


Again, no. You are confused by the term "operating profit" - it is the result of deducting overheads from gross profit and therefore takes overheads into account and includes them.

Once again, _Profit = revenue - costs_. Very simply, Lyft made a loss in Q1 2022 because its costs exceeded its revenue.


> Before 2019 when L/U became public, any and all financials released are all to be taken with a grain of salt because they weren't owned by shareholders and only released the information that they wanted to.


If you have any evidence of false accounting by Lyft prior to them going public then feel free to post it. Otherwise, if there is no evidence of false accounting, I would tend to believe Lyft's accounts, especially considering that they admit thumping great losses year after year, the presentation of which would have been detrimental to Lyft both in terms of attracting further private investment and in the valuation of the company for the IPO.


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## Buckiemohawk (Jun 23, 2015)

There is a reason why taxi cabs had regulations on them and this is the inevitable outcome of deregulation that comes from anybody can do anything. The bottoms drops in driver pay. Because A there are still too many driver and then anyone can pick up anywhere. One of the reasons behind taxi regulation (some of it good most of it bad) was to prevent over crowding areas such as airports and down towns. They less people out their driving rideshare would mean more money for those drivers. Yet there is no cap to how many drivers are out there. one of the days I always drove was EID as a taxi driver because part of the fleet was gone. And everyone loaded immediately. I made 600 dollars in ten hours. The problem with rideshare it was made by people who hated driver making money or didnt understand the drivers made great money


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## Seamus (Jun 21, 2018)

elelegido said:


> No, this is 100% wrong. Gross margin and operating profit are not the same thing. Gross margin is revenue minus cost of sales. It is the gross profit that is left after variable, direct costs of production are subracted from revenue. Operating profit, on the other hand, is gross profit minus fixed costs (overheads). The difference between them is simply, but importantly, overheads.


I reread my post and You're correct, I misspoke the term Operating Profit by carelessly lumping it in with Gross Profit. I have amended my post to reflect that.

Everything but that is 100% correct. Again from Bloomberg:

A small piece of a good article in _Bloomberg_.

_Lyft reported first-quarter revenue of $875.6 million on Tuesday, up 44% from a year earlier. That was more than the $844.5 million analysts were expecting, according to data compiled by Bloomberg. Lyft’s adjusted earnings before interest, tax, depreciation and amortization were $54.8 million in the quarter, far surpassing the $14.4 million analysts were expecting. 

The boost in profits is attributed to strong ride volumes but also from the increase in revenue Lyft extracted from each passenger. Lyft generated $49.18 per active rider in the first quarter, the second-highest on record and 9% higher than the same period last year, partly due to higher fares._


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## Seamus (Jun 21, 2018)

elelegido said:


> If you have any evidence of false accounting by Lyft prior to them going public then feel free to post it.


You are parsing words again. I never said it was fraudulent, I said as a privately held company they released ONLY what they chose to release, simple. Publicly traded companies have reporting requirements and SEC filings for analysts to see the complete picture. They did not do that as a privately held company.

This is why I don't like to get into these things. You are literally googling accounting terms and word-smithing to take away from the meat of what's being said.

It's factual and undeniable that Lyft had an operating profit in Q1 of 2022. To imply otherwise tis just sheer stubbornness .

I'm done.


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## elelegido (Sep 24, 2014)

Seamus said:


> You are parsing words again. I never said it was fraudulent,


I never said you did.

You said that Lyft financials before 2019 "should be taken with a grain of salt because they weren't owned by shareholders and only released the information that they wanted to.", implying that they may not be accurate. However, regardless of public / private status, published company accounts must be truthful and accurate. Again, if you have evidence that Lyft's accounts prior to 2019 are not accurate then please post it.


> I said as a privately held company they released ONLY what they chose to release, simple.


Of course; Lyft could have chosen to publicly release no accounts as a private company. But that's irrelevant - since they _did_ choose to publicly release their accounts including their profit, then their figures have to be accurate. Again, I have no reason to doubt the loss figures quoted over the years by Lyft pre-2019. If you don't either then we agree that Lyft's published loss figures are indeed accurate.


> This is why I don't like to get into these things. You are literally googling accounting terms and word-smithing to take away from the meat of what's being said.


False. I have used all of the financial terms correctly. For example, I corrected you in your mistaken understanding of what operating profit and gross profit are. You had incorrectly tried to word-smith those into completely different meanings and presented a _totally_ confused and muddled narrative claiming that gross profit was operating profit, from which overheads should then allegedly be deducted. (?) The different types of profit and which types of costs are involved in calculating each one are the basic building blocks of financial analysis. You try to pass off not knowing them as carelessness, but if you don't know what the terms mean then it's not carelessness but lack of knowledge.

As for Googling financial terms, no. I have a degree in finance and I am a member of the British Chartered Institute of Management Accounts (CIMA). I am fully conversant with reading financial statements and analysing them. In fact, I worked for several years as a financial analyst, before making a career change into the development of financial IT systems, mainly in the design of automated activity-based costing models and P&L production.

I'm not trying to make you look small, but if you go up against a finance professional who has years of experience and tell him he's wrong about financial matters, then you'd better have the knowledge to back up what you're saying. Which, unfortunately, as evidenced by the _very _basic errors you made above, you do not.


> It's factual and undeniable that Lyft had an operating profit in Q1 of 2022. To imply otherwise tis just sheer stubbornness .


Again, no, lol. It is written in black and white in Lyft's published accounts that they incurred an operating loss of $199.3m in Q1 2022. It's no use you insisting that Lyft made an operating profit in this period when Lyft's own published accounts state that they made an operating loss. Insisting against published proof is just being stubborn. Here it is again. _Loss from operations (199.3):_










There is no "taking away the meat of what's being said", "word-smithing" or "parsing" etc in the above numbers. You claim that Lyft made an operating profit last quarter yet Lyft's own figures in black and white show this to be false, and it's as simple as that. _Q1 Loss from Operations: $199.3m. _I'll assume that I do not need to bridge the gap by telling you that "loss from operations" means "operating loss".


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## elelegido (Sep 24, 2014)

Seamus said:


> A small piece of a good article in _Bloomberg_.
> 
> _Lyft reported first-quarter revenue of $875.6 million on Tuesday, up 44% from a year earlier. That was more than the $844.5 million analysts were expecting, according to data compiled by Bloomberg. Lyft’s adjusted earnings before interest, tax, depreciation and amortization were $54.8 million in the quarter, far surpassing the $14.4 million analysts were expecting.
> 
> The boost in profits is attributed to strong ride volumes but also from the increase in revenue Lyft extracted from each passenger. Lyft generated $49.18 per active rider in the first quarter, the second-highest on record and 9% higher than the same period last year, partly due to higher fares._


I would take issue with Bloomberg's reference to EBITDA as "profits". This is misleading. While EBITDA is a measure of profitability, EBITDA is not profit, and it's certainly not a GAAP metric. It is net income + interest, tax, depreciation and amortisation.

Overall, I consider Bloomberg to be a higher-quality media outlet although, as we all know with all of the error-laden articles they and other outlets have published on rideshare, none of them are infallible.


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## Seamus (Jun 21, 2018)

elelegido said:


> I would take issue with Bloomberg's reference to EBITDA as "profits". This is misleading. While EBITDA is a measure of profitability, EBITDA is not profit, and it's certainly not a GAAP metric. It is net income + interest, tax, depreciation and amortisation.
> 
> Overall, I consider Bloomberg to be a higher-quality media outlet although, as we all know with all of the error-laden articles they and other outlets have published on rideshare, none of them are infallible.


Ok so you take issue with Bloomberg's reference to EBITDA as "profits".

Do you take the same issue with Logan Green labelling it as such?

Straight from Lyft's 1st qtr announcement:
*Lyft Announces First Quarter Results*
May 3, 2022

_First quarter revenue of $875.6 million grew 44% year-over-year
Q1 net loss narrowed by $230 million year-over-year
Adjusted EBITDA* profit* of $55 million_

By the way, despite making an embarrassing gaffe carelessly commingling IFO and Gross Margin to which I have fully owned up to, I do have an MBA in Finance although not reflected in this post

Can I at least water this down to the point where you may actually agree with 2 of @Nats121 points?

Nats's point is that Lyft actually makes money off of drivers giving pax rides. In Q1 with revenue of 876 million, minus CGS leads to a margin of 503 million or 57%. This is what in it's simplest terms is money contributed to Lyft from drivers giving rides to pax.
His second point is that if Lyft managed their business better they wouldn't flush away all the money. To illustrate this using your 199 million loss from operations, Lyft spent 193 million on R&D and 126 million on Sales & Marketing for a total of 319 million combined for just those 2 lines. Doesn't he have a point that if Lyft made different decisions they could be profitable?
Regardless of how anyone spins around the financials there can't possibly be any disagreement that Lyft (and Uber) burn through cash at an alarming an unsustainable rate. If you look at the year over year cash on hand anyone can see they are blowing thru their cash reserves like it's water and must make big changes to avoid simply not having enough cash to operate in the not so distant future.

By the way, I appreciate your civility. We can have genuine disagreements without resorting to name calling. In the big picture we are all closer than it may appear to a common understanding of Lyft!


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## Nats121 (Jul 19, 2017)

elelegido said:


> Clearly; but I never said it was. For some strange reason you keep misquoting me and mischaracterising what I say.


You repeatedly linked the two things together and now you're calling it a "contributing factor" which is interchangeable with "cause".

Check out an autopsy report of someone who died of a heart attack and you'll see the doctors use the terms "causes" and "contributing factors" interchangeably.

If you want to split hairs then yes, paying the drivers 75% was a "cause" or "contributing factor". Paying them anything contributed to the losses. Purchasing toilet paper for the company restrooms contributed to the company's losses.

Considering all the other expenses (reasonable and unreasonable) that were occurring at that time I disagree with your linking of the 75/25 with the losses. BTW, in January 2016 Travis told Tech Crunch that Uber was profitable in the US but major losses overseas put the company into the red. Uber was 75-80/20-25 at that time.

I've yet to see a single exec from either company ever say that 25% isn't enough of a cut for the companies. Travis never said it, Dara never said it, and neither has Zimmer or Green. Seeing how much importance you put on it as a factor for losses they should have used it as a justification for getting rid of it in 2016 but they never did. Rather, they've always maintained that getting rid of it was "revenue neutral".

I'm not gonna get into a debate about GAAP vs EBITDA.


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## elelegido (Sep 24, 2014)

Seamus said:


> Ok so you take issue with Bloomberg's reference to EBITDA as "profits".
> 
> Do you take the same issue with Logan Green labelling it as such?


Yes, I take issue with that too, as it's the same misrepresentation. I take issue with a lot of other labels that Green & Co. misuse too. Such as mislabelling driver revenue as driver earnings which, as we know, has the intention of diverting attention away from drivers' costs. I also don't like their mislabelling of their outfit as a "community". Nor do I like their mislabelling of drivers as independent contractors, when that's far from the case.

Green is such a fan of mislabelling that he probably buys 5-for-$10 Costco undershirts and sews Gucci labels into them.


> Can I at least water this down to the point where you may actually agree with 2 of @Nats121 points?
> 
> Nats's point is that Lyft actually makes money off of drivers giving pax rides. In Q1 with revenue of 876 million, minus CGS leads to a margin of 503 million or 57%. This is what in it's simplest terms is money contributed to Lyft from drivers giving rides to pax.



The fact that Uber is gross profit positive is not in dispute. If Lyft couldn't even achieve gross profitability but incurred gross losses then that would be totally laughable, and it would signal a _total_ non-starter of a business. Making a positive gross profit does not mean that a company is making money, for the simple reason that variable costs are not all costs - fixed costs must be deducted from gross profit in order to get to operating profit and then net income, which is the measure of whether or not money is being made.
However, the claim that Nats was making to me was that it would be possible for Lyft to make a profit now, with a 75/25% revenue split. My point was, of course, that Lyft can't make a profit now with its current driver costs (said losses as seen in Lyft's Q1 published accounts) and, by simple math, it would not have made a profit with higher driver costs. See the lemonade stand example above that I used to illustrate this to him. If you're making losses on a given revenue and then increase your costs with the same revenue, you make bigger losses. Not profit. Again, this is basic, basic 1-1=0 math level.


> His second point is that if Lyft managed their business better they wouldn't flush away all the money. To illustrate this using your 199 million loss from operations, Lyft spent 193 million on R&D and 126 million on Sales & Marketing for a total of 319 million combined for just those 2 lines. Doesn't he have a point that if Lyft made different decisions they could be profitable?


There are a lot of armchair CEOs who all say that they could run a business better than the real CEO. Nats claims that it would be possible for Lyft to be profitable with a 75/25% revenue split. That is, giving drivers 75% of its revenue, straight off the top, and then not only paying all its costs but also turning a profit from the remaining 25% of revenue. However, unless and until he provides a full analysis of whatever plan he envisages to achieve this, it's obviously impossible to evaluate his claim in terms of feasibility. In order to be able to do so, I would expect a full analysis from him including external market and internal company factors, weaknesses, strengths, threats and opportunities, as well as his pricing strategy and cost, revenue and cash flow forecasts for the next three years. In short, I would need to see his business plan. Simply saying, "They could pay 75% of their revenue to drivers _and _still turn a profit, if only they made better decisions" doesn't cut the mustard, I'm afraid. That's in no way convincing. He would obviously need to say exactly how, supported with detailed financial forecasts, he would achieve this as CEO in order for his ideas to be evaluated.


> Regardless of how anyone spins around the financials there can't possibly be any disagreement that Lyft (and Uber) burn through cash at an alarming an unsustainable rate. If you look at the year over year cash on hand anyone can see they are blowing thru their cash reserves like it's water and must make big changes to avoid simply not having enough cash to operate in the not so distant future.


Again, their financial statements are prepared to GAAP and, in the absence of allegations of dishonesty, the results are the results. And, as said above, those results are still negative profit, aka loss, hence the mauling Lyft is receiving from the market.

It's true that Lyft and Uber are spending large amounts of money. More than they're taking in. The question is whether they can turn things around. Is it possible to make money by offering cut-price taxi rides? Not as they are going on now, I think. I believe that they will be forced to limit their activities to high-demand, high volume areas and feature lower availability of cars coupled with higher prices. They will also need to continue to control all of their costs, including driver costs, aggressively. That is, they become just another cab company, only with an automated dispatch app instead of human dispatch. We're seeing signs that that is indeed the direction they're moving in already - higher prices, longer wait times and/or low driver availability, and lower driver pay.



> By the way, I appreciate your civility. We can have genuine disagreements without resorting to name calling.


Many forum participants believe that it adds to their position and credibility if they engage in personal attacks and insults against the other people in a discussion but, as we know, doing this achieves the opposite.


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## elelegido (Sep 24, 2014)

Nats121 said:


> You repeatedly linked the two things together and now you're calling it a "contributing factor" which is interchangeable with "cause".
> 
> Check out an autopsy report of someone who died of a heart attack and you'll see the doctors use the terms "causes" and "contributing factors" interchangeably.
> 
> ...


Sorry, as I mentioned, my explanation to you is now complete, and no more appeals from you will be entertained.


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## nosurgenodrive (May 13, 2019)

elelegido said:


> Sorry, as I mentioned, my explanation to you is now complete, and no more appeals from you will be entertained.


I gave rides regularly during those quarters where Lyft lost money. The 25% model was not the factor in losing money. Promos and drunken spending were the factors in losing quarters. Their IPO was at $80 a share based on growth, projections of removing promos and raising the rates competitive with Taxis. Perhaps they factored in 5-10% increase in commissions, but never 50%+ in commissions, because that isn’t legally tenable.


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## pberrios1982 (8 mo ago)

Lord Summerisle said:


> Works well until passengers get fed up with paying 3 - 4 times the normal rate and switch permanently to Uber. Seems like the recipe for a dying business to me.


Nah, people know Uber needs a competitor.


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## elelegido (Sep 24, 2014)

nosurgenodrive said:


> I gave rides regularly during those quarters where Lyft lost money.


There's no need to say that you drove the quarters when Lyft lost money. Lyft has lost money every quarter. You drove regularly.


> The 25% model was not the factor in losing money.


See above for the explanations of how high driver costs contributed to the losses.


> Promos and drunken spending were the factors in losing quarters.


Again, Lyft has lost money every quarter.

Yes, passenger and driver promo expenditure by Lyft to purchase market share were also contributing factors to the losses. Remember, in a loss-making business, all expenses and costs contribute to the losses.

And, in any business, expenses pull the company towards loss and revenue pulls it towards profit. It's just like a big ol' tug of war. If expenses win then the result is loss. If revenue wins, then the result is profit.


> Their IPO was at $80 a share based on growth, projections of removing promos and raising the rates competitive with Taxis.


I'm sure that Lyft had long planned to reduce driver pay and increase pax prices. And your point is?


> Perhaps they factored in 5-10% increase in commissions, but never 50%+ in commissions, because that isn’t legally tenable.


Lyft had indeed already planned a decrease in driver pay (an increase in commissions, in Lyft speak) by the time of the IPO. This, from page 31 of Lyft's IPO prospectus:










In other words, "we have implemented, and are planning more, driver pay cuts (commission increases) and drivers aren't going to like them". The amounts of the pay cuts were not published. Any attempt at guessing when Lyft started planning to regularly take the 50%+ that they now do would simply be guesswork. We simply don't know at what point they thought this up, although we clearly do know when they implemented it.

As far as legality goes, no, there is no law that caps the commission that companies can charge the workers it claims are independent contractors. Clearly, since you claim that charging 50%+ commission isn't "legally tenable", you believe that there is such a law and that Lyft is breaking it. Feel free to specify the exact piece of legislation that you think Lyft is breaking.


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## nosurgenodrive (May 13, 2019)

elelegido said:


> There's no need to say that you drove the quarters when Lyft lost money. Lyft has lost money every quarter. You drove regularly.
> See above for the explanations of how high driver costs contributed to the losses.
> Again, Lyft has lost money every quarter.
> 
> ...


Bro, they’ve made money for two of the past three quarters. Do you even stock market?


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