Lyft, Inc.

LYFT Details
 
Third-Quarter Revenue up by 63%: Based in San Francisco, CA, Lyft, Inc. (NASDAQ: LYFT) completed its IPO on Apr 2, 2019. The company has over 2 million drivers and 30 million riders. The company focuses on enhancing people’s lives with developing trustworthy, reasonable and sustainable transportation. On 12 December 2019, Lyft, Inc. launched its car rental services in the San Francisco Bay Area and Los Angeles. 
 
Financial Highlights for Third Quarter Ended 30 September 2019: Revenue for the quarter increased by 63% on a year-over-year basis to $955.6 million. The increase was primarily due to strong growth in Active Riders and Revenue per Active Rider. Active Riders during the quarter came in at 17.39 million, up 28% on a year-over year basis. Revenue per Active Rider soared 27% during the quarter and came in at $33.63 million.
 

Q3 Financial Highlights (Source: Company Reports)
 
Operating Highlights: Adjusted EBITDA loss for the quarter stood at $128.1 million, narrower than the loss of $263.2 million incurred in the year-ago quarter. Contributions during the quarter came in at $479.2 million, up 82% year over year. Contribution margin came in at 50% as compared to 45% in the year-ago quarter.
 
Outlook:Lyft, Inc. expects revenues for the fourth quarter to be in the range of $975 million and $985 million, representing an increase of 46-47% year over year. The company lowered its EBITDA loss guidance range to $160 million - $170 million as compared to the previous guidance of $240 million and $245 million. For 2019, the company expects revenue to be between $3.57-$3.58 billion, indicating a growth range of 61% to 62%. The company expects adjusted EBITDA loss for FY19 to be in the range of $708-$718 million.
 
Valuation Methodology: EV to Sales Multiple Approach

EV to Sales Multiple Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
Stock Recommendation: As per NASDAQ, the stock is trading below the average of its 52-week high and low of $88.6 and $37.07, respectively. As on 30^th December 2019, the company’s market capitalization stood at ~$13 billion. The company stands to benefit from substantial increase in Active Riders.  In the last three months, the stock went up by ~6.5%. Considering the above factors, we have valued the stock using one relative valuation methods, i.e., EV/Sales multiple and arrived at a target price with lower double-digit upside in % terms. Hence, we give a “Buy” rating on the stock at the closed price of $43.50 per share, down by 5.1% on 30^th December 2019.
 
 
LYFT Daily Technical Chart (Source: Thomson Reuters)
 
 
 

Dropbox, Inc.

 

DBX Details
 
Third-Quarter Revenues up by 19%: Headquartered in San Francisco, California, Dropbox, Inc. (NASDAQ: DBX) is a service company, which provides a platform that allows customers to store and share files, photos, videos, spreadsheets and songs. The company has over 500 million registered users in more than 180 countries.
 
Financial Highlights for the Third Quarter Ended 30 September 2019: In the second quarter, the company reported non-GAAP earnings of 13 cents per share as compared to 11 cents reported in the year-ago quarter.The company reported revenues of $428.2 million, up 19% on a yearly basis. During the third quarter, the company’s total paying users came in at 14 million, up from 12.3 million in the year-ago quarter. Average revenue per paying user for the quarter stood at $123.15, up from $118.60 reported in the year-ago quarter.
 

Q3 Financial Highlights (Source: Company Reports)
 
Operating Highlights: Non-GAAP gross margin stood at 76.7%. Non-GAAP operating margin during the quarter (excluding stock-based compensation, acquisition-related expenses, and amortization of acquired intangible assets) expanded to 13.1%, from 12.8% in the previous corresponding quarter. The company reported non-GAAP net income of $55.9 million, up from $45.0 million reported in the year-ago quarter.
 
Balance Sheet & Cash Flow Details: Dropbox, Inc. ended the third-quarter with cash and cash equivalentsof $443.2 million as compared to $519.3 million as of 31 December 2018.The company carries no long-term debt.Cash flow from operations came in at $149.7 million during the quarter, up from $128 million in the year-ago quarter. Free cash flow was $102.5 million in the reported quarter compared with $120 million in the year-ago quarter.
 
Valuation Methodologies:
 
Method 1: Price to Earnings Value-Based Approach

Price to Earnings Valuation (Source: Thomson Reuters)

Method 2: Price to Book Multiple Approach

Price to Book Value Valuation (Source: Thomson Reuters)

Method 3: Price to Cash Flow Multiple Approach

Price to Cash Flow Valuation (Source: Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
Stock Recommendation: As per NASDAQ, the stock is trading below the average of its 52-week high and low of $26.49 and $16.08, respectively. As on 30^th December 2019, the company’s market capitalization stood at ~$7.31 billion. Dropbox’s efforts to enhance cloud-based and AI technologies is expected to aid the company in the near-term. The company’s emphasis on assisting users’ access and coordinate files and use applications via numerous devices have been improving user experience. Additionally, the company is focused on innovating existing products and launching new ones, which will give it a competitive advantage over the peers. Dropbox’s synergies from buyouts and robust expansion add to the positives. Considering the above factors, we have valued the stock using three relative valuation methods, i.e., Price to Earnings, Price to Book Value and Price to Cash Flow multiples and arrived at a target price with an upside of higher single-digit to lower double-digit (in % terms). Hence, we recommend a “Buy” rating on the stock at the closed price of $17.60 per share, down by 0.68% on 30^th December 2019.
 
 
DBX Daily Technical Chart (Source: Thomson Reuters)

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