Lyft missed Q3 earnings badly—11 cents per share versus 28 cents expected. That's a 60% miss. The stock went up 7% in extended trading.

Wall Street looked past the EPS miss completely because Lyft hit $1.03 billion in free cash flow on a trailing twelve-month basis for the first time in company history. Free cash flow tells you if a business can sustain itself long-term. EPS can get gamed with buybacks, accounting tricks, and one-time charges. Cash doesn't lie.

Three years ago Lyft was burning $329 million in cash per quarter. Board changes in 2023 signaled the pressure to fix that. Now they're generating over $1 billion annually. That's not incremental improvement—that's a complete transformation of the business model.

The operational metrics back it up. Lyft posted 248.8 million rides in Q3, up 15%—an all-time high. Active riders hit 28.7 million, up 18%—also an all-time high. Revenue reached $1.7 billion. Gross bookings hit $4.8 billion. That's the tenth consecutive quarter of double-digit ride growth.

So the EPS miss came from timing differences and one-time expenses, not structural problems. When you're generating record cash flow and record rides, quarterly EPS is noise.

Why This Matters vs. Uber's Strategy

Compare this to Uber's Q3, where operating income missed by nearly $500 million because they're pouring money into autonomous vehicle partnerships—$300 million with Lucid-Nuro, ongoing deals with Waymo, May Mobility, and others. Uber's sacrificing margins now to build AV infrastructure for later.

Lyft's taking the opposite approach: optimize profitability first, then deploy capital strategically. That's why they could afford the $110 million TBR Global acquisition for luxury chauffeur services. It's a smart pivot—they shut down their in-house rental business back in 2022 to focus on core ride-hailing profitability first. Now they have cash to spend because they're not betting the company on building proprietary AV tech.

Both strategies work. Uber's betting labor costs force everyone toward autonomy. Lyft's betting premium human-driven services command enough margin to offset higher labor costs. Uber's strategy requires massive upfront investment with payoff years away. Lyft's is less capital-intensive and shows results now.

Lyft's still hedging on autonomous vehicles through partnerships—Waymo in Nashville, Tensor Auto in Atlanta, May Mobility for suburbs. But they're integrating other companies' fleets, not building their own stack. Let someone else spend billions on R&D. Focus on the platform.

That's the smart play if you don't have Tesla or Waymo-level resources.

Lyft expects to maintain free cash flow "well above $1 billion" for both 2026 and 2027, with conversion rates from adjusted EBITDA between 150-175%. That's not just sustaining it—that's improving it.

The timing matters too. California's AB 1340 giving drivers collective bargaining rights takes effect January 2026. Lyft's hitting this milestone right before potential labor cost increases. They've got margin to absorb higher costs now. Three years ago when they were burning cash, any increase would've been catastrophic.

I'm bullish on Lyft's strategy. They're not trying to out-spend Uber on moonshots. They're carving out defensible segments—premium rides, suburban partnerships, selective AV integrations—while generating real cash that proves the gig economy model works sustainably.

The stock market got this one right. Free cash flow and operational momentum matter more than quarterly accounting. That's why shares went up despite the miss.

Source: Lyft Q3 2025 Financial Results
Source: Lyft Q3 2025 Earnings Analysis