In today’s fast-paced world, the lines between different business models are becoming increasingly blurred. One such case is Lyft, a major player in the ride-sharing industry. Is Lyft a SaaS (Software as a Service) company or a software company?
Is Lyft a SaaS Company?
No, Lyft is not a SaaS or software-as-a-service company. Lyft is a transportation network company that operates a mobile app and website that connects passengers with drivers and vehicles for hire. As opposed to a SaaS company that earns revenue from software subscriptions and licensing, Lyft earns revenue from the fares charged for each ride.
Lyft’s Business Model
Lyft’s business model is based on connecting passengers and drivers through their mobile app and website. Passengers request a ride through the Lyft app and are matched with a nearby driver. At the end of the ride, the fare is automatically charged to the passenger’s credit card on file. Lyft then takes a percentage of the fare as revenue, typically around 20-25%. The remainder of the fare goes to the driver as payment.
This business model differs from a typical SaaS company that generates revenue through monthly or annual software subscriptions and licensing fees. As a transportation service, Lyft does not charge any subscription fees to use its app or website. Revenue is generated on a per-ride basis through the fares that passengers pay.
While Lyft’s mobile app and website are integral parts of their business, they function solely to connect passengers and drivers. The software itself is not the primary revenue generator, unlike a SaaS company. Lyft’s revenue comes from the service they provide, not the software or app they have built. For this reason, Lyft cannot be considered a true SaaS or software company. They are first and foremost a transportation service.
How Much Revenue Does Lyft Generate?
According to Lyft’s IPO filing, their revenue for 2018 was $2.2 billion, up from $1.5 billion in 2017 and $343.3 million in 2016. The vast majority of revenue comes from the fares passengers pay for rides. In 2018, rideshare revenue accounted for $2.1 billion, or 95% of total revenue. The remaining 5% came from Lyft’s new subscription model and rental programs.
Lyft has experienced substantial growth over the past few years. Some key stats include:
•Lyft expanded into over 600 new cities between 2016 to 2019. They now operate in over 625 cities in the U.S. and 9 cities in Canada.
•The number of active riders increased from 18.6 million in 2016 to over 30.7 million in 2019.
•Lyft completed over 1 billion total rides by the end of 2019. This is up from 315 million rides in 2017 and 70 million in 2016.
•The number of drivers on the Lyft platform has grown to over 2 million people across North America.
•Lyft raised over $5 billion in funding from investors like General Motors, Rakuten, and Alphabet. Their IPO in March 2019 raised an additional $2.2 billion.
•According to estimates, Lyft controls about one-third of the U.S. ridesharing market behind Uber which controls a 69% market share. But Lyft’s market share is growing steadily.
•Lyft’s gross profit increased from $1.7 billion in 2017 to $3.6 billion in 2019, indicating strong growth in revenue and improved efficiency.
While Lyft is not a SaaS company, its transportation service and mobile technology have enabled them to scale rapidly across North America. Their growth trajectory points to Lyft becoming a major player in the future of transportation and mobility.
However, as a ridesharing service, they will always earn revenue primarily from the fares paid by passengers for each ride. In that sense, Lyft will never be a true enterprise software as a service or SaaS company.