Uber boosts buybacks by US$20 billion after upbeat forecast

[SAN FRANCISCO] Uber Technologies announced US$20 billion in new stock buybacks after sharing a better-than-expected third-quarter forecast and quarterly results, suggesting that growth at its core rideshare and delivery units still has room to pick up steam.

Gross bookings – which include ride hails, delivery orders and driver and merchant earnings but not tips – will range from US$48.25 billion to US$49.75 billion for the three months ending September, Uber said in a statement on Wednesday (Aug 6). Wall Street was projecting US$47.6 billion, according to Bloomberg-compiled estimates.

That would represent an 18-to-21 per cent growth rate, according to Bloomberg calculations, faster than the 17 per cent gain in second-quarter bookings.

Adjusted earnings before interest, taxes, depreciation and amortisation for the second-quarter were a record US$2.12 billion, ahead of the US$2.09 billion that analysts had forecast. For the third quarter, Uber sees adjusted Ebitda from US$2.19 billion to US$2.29 billion, the mid-point of which also beats estimates.

Shares of Uber rose 4.9 per cent in premarket trading after the company posted the results and increased its share repurchase by US$20 billion. It has US$3 billion remaining from its prior buyback authorisation.

Uber’s results are likely to set expectations for the broader ride-hailing and food-delivery industries, with rideshare peer Lyft and delivery rival DoorDash both scheduled to report results after the close on Wednesday.

Total second-quarter bookings came in at US$46.8 billion, ahead of expectations, with a robust showing from Uber’s delivery unit outweighing a small miss in rideshare bookings. More users were placing delivery orders in the US, Australia, Canada and Mexico. He also cited an uptick in grocery and retail merchants on the platform, chief executive officer Dara Khosrowshahi said in a statement.

The company completed its acquisition of Turkish delivery app Trendyol Go at the end of the second quarter, which will help boost business in the country, he added.

The company’s signature rideshare unit recorded US$23.8 billion in gross bookings in the second quarter, shy of the US$23.9 billion analysts were expecting. Uber has been offering more types of trip types to cater to different user needs.

While ride prices have been increasing less sharply as of late thanks to moderating insurance costs, the firm said its efforts to improve affordability in the US are also helping boost trip growth in the current period.

In May, for example, it launched cheaper pooled rides and a monthly ride pass allowing commuters to lock in prices on frequently taken routes.

Uber partially attributed the results to the cross-selling advantage it has for the two core services it offers. Khosrowshahi said that 12 per cent of annualised delivery bookings – translating to US$10 billion – are generated via the Eats tab within the Uber rideshare app.

Subscribers for Uber One, the company’s paid membership programme, jumped about 60 per cent from the year-earlier period, topping 36 million. Those members now generate 40 per cent of total gross bookings.

Internationally, Uber said it’s “redoubling” efforts to increase its presence outside large European cities, as well as in new markets through taxi partnerships. Competition is set to heat up in the continent after rival Lyft entered new European countries through its acquisition of the taxi app Freenow.

The company is also looking to monetise more of its US$8.7 billion equity stakes – most of which are publicly listed – to help seed investments related to the commercialisation of autonomous vehicles, said chief financial officer Prashanth Mahendra-Rajah in prepared remarks. BLOOMBERG