Uber has announced it will buy back $20 billion of its shares, signalling confidence in its future growth. The ride-hailing and delivery giant also expects its third-quarter bookings to be well above Wall Street’s estimates, driven by increased use of its paid loyalty programme.
The company revealed that membership in its “Uber One” subscription service, costing $9.99 per month, jumped 60% in June to over 36 million members compared to the previous year. More than a third of Uber’s bookings now come from these members.
These loyal customers are vital for Uber, as they tend to use both the ride and delivery services more frequently, generating over three times the profit of users who only engage with one service. To attract more members, Uber held a weeklong promotion in May, offering discounts across rides, food delivery, and groceries. During this event, the company gained an additional 500,000 users.
Uber’s shares have performed strongly this year, rising 48% and making it one of the top performers on the S&P 500. Despite a slight dip of about 1% in early trading, the company remains optimistic about its growth prospects.
Ahead of rival Lyft’s upcoming financial report, Uber is under pressure from investors to demonstrate it can maintain its momentum, especially as the North American ride-hailing market becomes increasingly saturated.
Looking ahead, Uber expects its gross bookings — the total dollar value of all transactions — to be between $48.25 billion and $49.75 billion in the current quarter, surpassing analyst estimates of $47.3 billion. This forecast follows a strong 18.2% increase in gross bookings in the second quarter, driven by a 24.6% rise in its delivery business and an 18.8% growth in mobility services.
During the June quarter, Uber benefited from higher weekday commuter demand, with riders using its “Price Lock Pass” subscription, which offers fixed prices on selected routes for $2.99 a month. This service is now available in over ten major cities across the US and Brazil, helping to foster regular usage.
Uber’s net income for the second quarter increased to 63 cents per share from 47 cents a year earlier, meeting expectations. The company also forecasted an adjusted core profit of between $2.19 billion and $2.29 billion for the current quarter, exceeding analyst estimates of $2.22 billion.
Although Uber doesn’t own its own self-driving technology, it is forming partnerships to expand in the autonomous vehicle sector. The company has more than 20 collaborations, including recent deals with electric vehicle maker Lucid and autonomous start-up Nuro.
This latest buyback programme adds to the $7 billion authorised in early 2024, highlighting Uber’s commitment to returning value to shareholders amid its growth ambitions.