(Reuters) -Uber unveiled a $20 billion stock buyback program and forecast its third-quarter bookings above Wall Street estimates on Wednesday, as the ride-hailing and delivery services company benefits from growing adoption of its paid loyalty program.
The company said members for its $9.99 “Uber One” program jumped 60% in June to more than 36 million from a year earlier, and more than one-third of its bookings were coming from them.
These users are crucial for Uber as they engage with both its services, generating more than three times the profit compared to that from users who use just one service.
To draw more people to the loyalty program, Uber held a week-long event in May that offered discounts and deals across rides, food delivery and groceries. The company added half a million users over the course of the week, Uber said on Wednesday.
Its shares were down about 1.5% in premarket trading after initial volatility following the results. The stock, which is one of the top performing stocks on the S&P 500 index , has surged 48% this year.
Both Uber and rival Lyft, which reports results after markets close, are under investor pressure to prove that they can maintain growth even as the North American ride-hailing market saturates.
Uber expects current-quarter gross bookings, a measure of the total dollar value of transactions, to be between $48.25 billion and $49.75 billion, while analysts’ estimate $47.3 billion, according to data compiled by LSEG.
The forecast followed a better-than-expected 18.2% jump in gross bookings in the second quarter that was powered by a 24.6% rise at Uber’s delivery business and an 18.8% growth in its mobility unit.
Uber benefited in the June quarter from increased commuter demand during weekdays, with riders using its “Price Lock Pass” to take over six additional monthly commute trips on average.
The subscription, which offers fixed pricing on selected routes for $2.99 a month, is part of Uber’s broader strategy to drive habitual usage, and is now available in more than 10 major cities across the U.S. and Brazil.
Uber’s second-quarter net income rose to 63 cents per share from 47 cents a year earlier, in line with estimates, according to data compiled by LSEG.
The company expects adjusted core profit of $2.19 billion to $2.29 billion for the current quarter, largely above analysts’ average estimate of $2.22 billion.
Uber, which does not own technology for robotaxis, is betting on partnerships in the sector to boost growth in its mobility segment in the coming years.
The company now has more than 20 tie-ups in the hotly contested self-driving technology space, including its latest partnership for self-driving vehicles with electric-vehicle maker Lucid and startup Nuro.
Uber’s latest buyback program adds to the $7 billion authorization announced in early 2024.
(Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli)
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