Uber has reported its first full year of operating profits as expectations grow that the ride-sharing company will announce a share buyback programme as early as next week.
Reporting earnings that beat analyst expectations on Wednesday, chief financial officer Prashanth Mahendra-Rajah pledged to provide an update on “returning capital to shareholders” next week, adding that “disciplined investment” had helped bolster the company’s fourth-quarter results.
Analysts at Citi said this month that they expected Uber to unveil a share buyback programme and “wouldn’t rule out” its first ever dividend announcement. However, less than three months ago in November, Uber said it did not expect to pay a dividend “in the foreseeable future”.
Uber’s signals to shareholders on Wednesday come after recent announcements from tech companies keen to keep investors on side. Last week Meta announced a surprise dividend and buyback, joining Apple and Microsoft which have long paid dividends. Tech groups had previously leaned towards preserving large cash piles to reinvest.
However, Uber’s potential move comes after it racked up a total of more than $30bn in operating losses since 2014, the first year for which it disclosed details of its finances. The company had raised huge amounts of capital in an aggressive global push to dominate the ride-sharing market.
Uber said operating profits swung from a loss in 2022 to $1.1bn in the year to December 31. Net income also moved from a loss of $9.1bn to a gain of $1.9bn. Fourth-quarter operating income was $652mn, well ahead of analysts’ forecasts of $517mn.
The final quarter of the year — typically the strongest for rideshare companies — was “a standout quarter to cap off a standout year”, said chief executive Dara Khosrowshahi.
Last year marked an “inflection point for Uber, proving that we can continue to generate strong, profitable growth at scale”, he added.
Forecasts for the first quarter of 2024 were in line with analysts’ estimates, with gross bookings — or the value of fares paid — expected to jump to between $37bn-$38.5bn from the same period a year earlier.
Uber’s user base was “bigger and more engaged than ever”, said Khosrowshahi, with the number of monthly active users reaching a record high of 150mn. “We remain well positioned to sustainably generate leading shareholder value over the long-term,” he added.
Improving financials were helped by strong consumer demand for both ride hailing and deliveries in the final quarter, combined with cost discipline and a growing high margin advertising business, the company said.
That helped push Uber’s quarterly gross bookings up 22 per cent to $37.6bn, just ahead of analyst expectations and an acceleration from the 21 per cent growth in the previous quarter.
Uber worked last year to rein in costs as investors demanded that tech companies do more to boost margins and demonstrate profitability.
The number of Uber trips in the fourth quarter rose 24 per cent to 2.6bn, while adjusted profit margins for both the ride hailing and the restaurant, grocery and retail delivery businesses improved year on year.
The grocery and retail delivery sector, which Uber has sought to push further into, accounted for a fifth of annual growth in the delivery segment, the company said.
Uber also recorded a jump in post-tax earnings to $1.4bn, well ahead of forecasts for $380.4mn, and earnings per share of 66 cents compared with expectations for 17 cents.
However, $1bn of the earnings boost was due to a rise in the carrying value of the company’s equity investments — largely an increase in the value of its stakes in self driving car company Aurora and Chinese ride-hailing group DiDi.
Uber’s adjusted earnings rose by $618mn year on year to $1.3bn, exceeding expectations for $1.2bn.