Raises Q2 2020 revenue

Lyft just reported revenue in the second quarter including a drop of 61% revenue versus the same period last year, but a glimmer of hope for its core business for companies with monthly rides increasing 78% in July, compared to April.

Lyft president and co-founder John Zimmer said in a call Wednesday that the company may have to suspend operations in California if a court does not reverse its recent ruling, which requires the company and rival it, Uber, to to classify drivers as employees eligible for benefits, rather than independent contractors. The riding hail companies have about a week left to appeal the preliminary injunction.

Here’s how the company acted against Wall Street’s expectations for the period ending June 30, 2020:

• Loss per share: 86 cents, adjusted vs. an expected 99 cents, adjusted, according to analysts researched by Refinitiv.
• Income: $ 339 million, vs. $ 337 million expected per Refinitive.
• Active riders: 8.7 million
• Income per active rider: $ 39.06

Analysts’ estimates ranged from a loss of 50 cents per share to $ 1.15 per share, adjusted for Lyft, and $ 269.5 million to $ 572.7 million in quarterly revenue.

Shares rose as much as 6% on the news.

Net loss for Lyft was $ 437.1 million in the second quarter, compared to $ 644.2 million in the same period last year.

The company has not provided detailed guidance, but said it is on track to achieve profitability on an adjusted basis in the fourth quarter of next year. It expects to be profitable with 20% to 25% fewer rides than it had predicted with effect from October 2019.

Lyft makes money through ride-healing, scooter and bike parts, and its relatively new business rental for car rental. Unlike its primary competitor, Uber, the company does not have food, freight or investment and operations abroad to help make up for losses in travel and transportation.

In an effort to make drivers and riders comfortable again with ride-healing, despite the persistence of Covid-19 in the US, Lyft made it an obligation for riders and drivers to wear a mask during tours beginning in May , and after that began distributing masks and sanitizer for hands to drivers. Last month, the company announced that it was distributing tens of thousands of car distribution signs to its top drivers as protection against the new coronavirus. Now, the company is also selling its protective barriers to drivers they want.

But California state regulators want Lyft to do even more for drivers – treat them like employees, not freelancers.

On Monday, a California court issued a preliminary injunction requiring both Uber and Lyft to classify drivers as full-time employees with benefits in the state, at least pending further action by the court. Doing so would mean drivers are eligible for benefits such as health insurance, paid sick leave and more. The companies that drive rides have requested a short stay during the appeal process, and now have until August 20 to make this change.

Uber CEO Dara Khosrowshahi said in an interview with MSNBC on Wednesday that the company may have to stop service in California if the court does not reverse the ruling.

Lyft and Uber face multiple lawsuits in the U.S. over alleged drivers’ statements and payroll theft. They have previously treated drivers strictly as self-employed contractors. Like others in the “gig economy”, Uber and Lyft have argued that workers want freedom and flexibility that they cannot get when they are classified as employees.

Critics including UC Hastings professor of employment law, Veena Dubal, say a desire for flexibility should not be confused with a desire to remain an independent contractor. During interviewing drivers, Dubal found that they wanted overwhelming benefits from employees, even because they were afraid of how companies (including Uber, Lyft and others) might behave as employers.

This story unfolds.