Lyft Reports Record Gross Bookings but Misses Revenue and EPS Estimates; Shares Tumble
Shares of LYFT INC-A (NASDAQ:LYFT) fell sharply in after-hours trading on Tuesday, dropping over 15%, following the release of the company's fourth-quarter and full-year 2025 financial results. While the rideshare platform reported record annual gross bookings and strong user growth, its quarterly revenue and earnings per share fell short of Wall Street's expectations, driving a significant negative market reaction.
Earnings and Revenue Versus Estimates
The core of the market's disappointment lies in Lyft's performance against key analyst forecasts for the fourth quarter. The company reported revenue of $1.59 billion, which notably includes a $168 million impact from certain legal, tax, and regulatory reserve changes. Excluding this item, revenue would have been approximately $1.8 billion. However, this adjusted figure still came in below the analyst consensus estimate of $1.79 billion.
The miss on the bottom line was more pronounced. Lyft reported a net income of $2.76 billion for the quarter, a figure massively inflated by a one-time, non-cash benefit of $2.9 billion from the release of a valuation allowance on deferred tax assets. Stripping away this accounting benefit and other adjustments, the company's operational performance, as measured by non-GAAP earnings per share (EPS), was a loss of $0.20 per share. This result fell well short of the analyst estimate for a profit of $0.12 per share.
Key Q4 2025 Results vs. Estimates:
- Reported Revenue: $1.59 billion
- Adjusted Revenue (ex-reserve impact): ~$1.8 billion
- Analyst Revenue Estimate: $1.79 billion
- Reported Non-GAAP EPS: -$0.20
- Analyst EPS Estimate: +$0.12
Market Reaction and Press Release Highlights
The immediate double miss on both top and bottom-line expectations triggered a swift sell-off. Headlines citing "disappointing fourth-quarter results" and noting the stock's steep decline accurately captured the after-hours sentiment. This reaction overshadowed several positive operational milestones highlighted in Lyft's press release.
CEO David Risher framed 2025 as an "incredible year in Lyft’s comeback story," pointing to a strategic shift towards becoming a "global, hybrid transportation platform." CFO Erin Brewer emphasized "record financial performance" and "all-time-high cash flow generation exceeding $1.1 billion."
The operational data supports the narrative of growth:
- Gross Bookings grew 19% year-over-year in Q4 to $5.1 billion, reaching $18.5 billion for the full year.
- Active Riders accelerated to 29.2 million in Q4, up 18% from the prior year.
- Adjusted EBITDA increased 37% year-over-year to $154.1 million for the quarter, with the margin expanding to 3.0% of Gross Bookings.
Forward Outlook and Analyst Expectations
Looking ahead, Lyft provided guidance for the first quarter of 2026, which appears to be a point of concern when held against longer-term analyst models. The company expects:
- Q1 2026 Gross Bookings: $4.86 billion to $5.00 billion (up 17%-20% year-over-year)
- Q1 2026 Adjusted EBITDA: $120 million to $140 million
While this outlook indicates continued growth in its core booking metric, the projected revenue implied by these bookings—alongside the provided EBITDA range—may be factoring in a slower-than-anticipated ramp. This is particularly relevant when compared to the full-year 2026 analyst sales estimate of $7.52 billion. To meet that annual target, Lyft would need to see accelerating growth throughout the remainder of the year, a trajectory the market is now questioning based on the Q1 guide and the Q4 earnings miss.
Conclusion
Lyft's fourth-quarter report presents a mixed picture: robust growth in user engagement and gross bookings is juxtaposed with a failure to meet quarterly profit and revenue expectations. The market's punitive reaction reflects investor prioritization of earnings and revenue misses over operational growth metrics in the near term. The company's focus for the coming year, dubbed "the year of the AV" (autonomous vehicle) by CEO Risher, alongside a new $1 billion share repurchase program, outlines a forward-looking strategy. However, investors will be looking for clearer signs of translating top-line growth into consistent bottom-line profitability that meets or exceeds forecasts.
For a detailed breakdown of historical earnings and future analyst estimates for Lyft, visit the earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. The author has no position in the stock mentioned. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
