Lyft (NASDAQ:LYFT) announced a target of 15% annual growth in gross bookings through 2027 during its inaugural investor day event. Additionally, the company expects its advertising business to expand eight-fold over the same period. This optimistic forecast led to a nearly 10% rise in Lyft’s shares, closing at $17.03 on Thursday.
The projection suggests that Lyft could sustain its competitive position in the North American ride-sharing market, where it currently trails Uber (NYSE:UBER). Both companies are diversifying their revenue streams with new ventures such as advertising and user subscriptions.
Zach Greenberger, Lyft’s executive vice president of the Partnership Ecosystem, revealed that the company anticipates $400 million in gross bookings from its advertising segment by 2027, up from a projected $50 million for this year. This was the first detailed disclosure of the unit’s financial outlook. Lyft’s advertising business, launched in 2022, saw a 250% increase in revenue in the most recent quarter ending in March. The company offers advertisements within its app, on in-vehicle tablets, and on digital screens atop its cars.
“Advertisers are seeking more targeted and measurable solutions,” Greenberger stated, noting that the retail and hospitality sectors are utilizing Lyft’s advertising platforms.
Uber, with a broader global reach and diverse business lines including food delivery and freight services, is aiming for $1 billion in annual ad revenue.
Lyft is targeting a compound annual growth rate of approximately 15% in gross bookings for the entire company from 2024 to 2027. The company also aims to achieve an adjusted core profit margin of about 4% by 2027. In 2023, Lyft reported a 14% increase in overall gross bookings, which includes the total dollar value of transactions billed to ride-share riders, excluding tips to drivers. The adjusted core profit margin for 2023 was 1.6%.
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