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Lyft reported revenue of $1.02 billion in the fourth quarter results announced on Tuesday.

Rich Pedroncelli/The Associated Press

Lyft Inc on Tuesday forecast slower revenue growth in the new year and the company refused to match larger rival Uber, which recently moved up a key profit target by a year, sticking to its later date of projected profitability.

Investors were left disappointed, sending shares down 5.5% after hours.

While Lyft reported record quarterly revenue of more than $1 billion, it failed to change its target to achieve profitability on an adjusted basis by the end of 2021. This was in contrast to its larger rival Uber Technologies Inc, which last week moved its own profitability target, previously the same as Lyft’s, to the fourth quarter of 2020.

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Analysts during an investor call repeatedly pressed the company on prospects for profitability, leading Lyft executives to defend their target and insist the company was on the right track.

“We remain truly confident we can achieve our Q4 ‘21 target,” Chief Financial Officer Brian Roberts said.

Lyft reported revenue of $1.02 billion in the fourth quarter, ahead of analysts who expected $984 million in quarterly revenue, according to IBES data from Refinitiv.

For now, the company continues to make losses, reporting a fourth-quarter net loss of $356 million, or a loss of $1.19 per share, narrower than analyst estimates for a $1.38 loss per share.

Lyft operates only in the United States and some Canadian cities. Its active rider customer base in the fourth quarter grew to 22.9 million from 22.3 million the previous quarter. That compares with Uber’s global 111 million active platform users in the same period.

While Lyft’s ridership grew by more than 6% in the first half of 2019, growth in the second half slowed to around 2.5%.

The company said it expects an adjusted EBITDA loss of between $450 million and $490 million for all of 2020.

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“Lyft’s problem is that its smaller scale means that profitability is harder to achieve than it is for Uber,” said Atlantic Equities analyst James Cordwell.

’DURABLE GROWTH’

The adjusted EBITDA profitability metric at both companies excludes expenses for stock-based compensation and other items. Share-based payments at Uber in all of 2019 amounted to nearly $4.6 billion, or roughly a third of revenue.

Lyft’s stock-based compensation came in at $1.6 billion for all of 2019, or 44% of full-year revenue.

Both companies went public last year, Lyft in March, Uber in May, with many early employees and investors selling their shares.

CFO Roberts in an interview with Reuters on Tuesday said 2020 created the foundation for “more durable growth” in 2021 and beyond.

Uber and Lyft, both based in San Francisco, are pursuing different roads in search of profitability, with Uber pouring money into side businesses which have so far lost money and Lyft remaining focused solely on moving people around.

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Lyft in January cut 2% of its workforce in its sales and marketing department to achieve its profitability target, but said it plans to hire more people this year.

The company is still spending heavily, with total costs in 2019 growing to $6.3 billion. Lyft executives said on Tuesday the company was committed to its “low-cost culture” with employees, including executives and board members, flying in coach class.

Uber and Lyft have historically relied on heavy subsidies to attract riders.

Lyft in October said a growing number of customers were paying full price, with discounts and promotional incentives decreasing.

Roberts on Tuesday said Lyft aimed for further cuts to marketing spending as a percentage of revenue in 2020.

“We want to win on innovation, customer experience and brand reputation, not on coupons or discounts,” he said.

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But Uber Chief Executive Dara Khosrowshahi told investors during an earnings call on Thursday that Lyft over the past month or so had been more aggressive in giving out discounts to attract customers.

Lyft also said a restructuring of its insurance policies would improve contribution margins, but did not elaborate. Cost of revenue, which includes insurance expenses, accounted for roughly 37% of Lyft’s 2019 costs.

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