Uber Technologies Inc. provided a better-than-expected forecast for bookings, signalling that robust demand from United States commuters and travellers will offset impact from geopolitical tensions in the Middle East.
The ride-hailing service guided total gross bookings to between US$56.25 billion and US$57.75 billion for the three-month period ending in June, while analysts on average looked for US$56.23 billion. Total gross bookings include ride hails, delivery orders and driver and merchant earnings but not tips.
Strong First-Quarter Performance
Total gross bookings grew 25 per cent to US$53.7 billion for the three months ended March 31, exceeding the Bloomberg-compiled analyst estimates of US$52.9 billion. Bookings expanded at the fastest pace since late 2022 thanks to strength in Uber's core U.S. business, delivery demand in international markets, as well as a return to growth by its freight unit.
Shares of Uber jumped more than nine per cent to US$79.69 at 7:06 a.m. in premarket trading in New York after the results were released. Rideshare peer Lyft Inc. also rose about four per cent.
US Rideshare Business Accelerating
Uber's core U.S. rideshare business will 'accelerate further' this year, chief executive Dara Khosrowshahi said in prepared remarks. Heightened insurance costs, which had contributed to higher fares and weighed on the U.S. business, have been moderating. That's led to meaningfully improved trip growth in the hardest-hit markets, such as San Francisco and Los Angeles, he said.
Industry Expectations
Uber's results will set expectations for the broader ride-hailing and food-delivery industries, as Wall Street is tracking closely the fallout of the war in Iran on gig-economy drivers and travel demand. Delivery rival DoorDash Inc. is scheduled to release its financials on Wednesday afternoon, while Lyft will report on Thursday.
Investment in Premium Offerings
Uber has also been investing to expand its higher-margin premium offerings, focusing on bigger-spending corporate travellers and providing luxury services with professional chauffeurs. It has set a target for its business-to-business operations to serve as many as one million organizations and exceed US$10 billion in gross bookings by 2028, chief financial officer Balaji Krishnamurthy said in prepared remarks. That segment currently generates more than US$5 billion annualized bookings and works with more than 300,000 organizations globally, he added.
That enterprise push could lead to incremental sales headcount in select growth markets, but overall the company will moderate the pace of hiring relative to its plans entering the year, Krishnamurthy said. That's due to the productivity gains it has seen from the internal use of generative AI tools, according to the executive.
