Lyft, Inc. (LYFT.US) reported its fourth-quarter and full-year 2025 financial results on February 10, 2026, revealing a dramatic financial picture. While the company posted a record quarterly net profit of $2.76 billion, this substantial figure was primarily driven by the release of a $2.9 billion valuation allowance for deferred tax assets, rather than pure operational growth. In terms of core business performance, Lyft's Q4 revenue reached $1.59 billion, representing a 2.6% year-over-year increase but falling short of the analyst consensus estimate of $1.76 billion. Due to the revenue miss and a weak outlook for the first quarter of 2026, the company's stock plummeted approximately 15% in after-hours trading.
Operational metrics for 2025 demonstrated Lyft's strong market penetration. Active riders in the fourth quarter grew 18% year-over-year to a record 29.2 million. Full-year gross bookings reached $18.5 billion, a 15% increase from the previous year. Despite this surge in activity, revenue was directly impacted by $168 million in legal and regulatory accruals. Furthermore, the company generated $1.12 billion in free cash flow for 2025, providing the foundation for its board to authorize a new $1 billion stock repurchase program, aimed at signaling management's confidence in the company's long-term value.
Looking ahead to 2026, Lyft's CEO David Risher has labeled it a "year of transformation," with a strategic pivot towards the deep deployment of Autonomous Vehicle (AV) technology. The company plans to build a "hybrid network" combining human drivers and autonomous vehicles through partnerships with companies like Waymo, targeting a roughly 20% reduction in cost-per-mile by 2030. However, near-term challenges remain significant, including order disruptions from winter storms in the Eastern US and a sharp increase in insurance costs due to driver-related legislation in California. These pressures contributed to the company's Q1 2026 adjusted EBITDA guidance of $120 to $140 million, which fell slightly below market expectations.
Lyft's stock closed Tuesday at $16.85. As of the latest update, it was down over 17% in after-hours trading. Notably, the stock has declined 13% year-to-date as of Tuesday's close. Despite near-term stock price pressure, Lyft executives remain optimistic. CEO David Risher stated in a release, "2025 was an incredible year in Lyft's comeback journey." He added, "Looking ahead, we are entering Lyft's transformation phase—2026 will be the year of the AV, with deployments in the U.S. and abroad," referring to planned AV collaborations with Waymo in Nashville and with other partners in the UK.
The company's performance may disappoint some investors who were looking for signs that reduced insurance costs in California would translate into lower prices and subsequently drive demand growth. Lyft noted on Tuesday that "broad consumer adoption will take time to materialize, and we now expect this to be weighted toward the second half of the year." CFO Erin Brewer stated that the company's "rigorous operational excellence" lays the foundation for "further growth" and that it is "on track" to achieve its long-term financial goals.
This subdued guidance overshadowed healthier booking performance during the holiday period. Lyft's Q4 gross bookings increased 19% to $5.1 billion, exceeding the analyst forecast of $5.06 billion. This marked the largest increase since early 2024. It was also the first full quarter including results from the European ride-hailing app Freenow, acquired last year. During the period, Lyft's base of senior riders nearly doubled with the rollout of Lyft Silver, a simplified version of its app for older users, which has now facilitated hundreds of thousands of rides according to the company. Lyft is also launching a new service allowing teenagers to ride without an adult present.
The company is further deepening its partnership strategy to attract more customers. In November, it began allowing United Airlines (UAL.US) passengers to earn mileage credits by taking Lyft rides. Lyft also announced plans to introduce higher-value ride types, such as black car and chauffeured services, through its recent acquisition of TBR Global Chauffeuring. The company stated it expects growth in gross bookings to continue outpacing growth in ride volume during the first half of the year.