Ride hailing and delivery group Uber Technologies (UBER:NYSE) ended its financial year (to 31 December) in profit for the first time ever after finally managing to make more money than it spent on its operations.

This was not the only surprise in store for investors with Uber also unveiling a shock $7 billion share buyback and a long-run commitment to positive free cash flow.

Uber reported an operating profit of $1.1 billion in 2023, compared to a $1.8 billion loss in 2022, chalking-up positive net income of $1.9 billion after losing as much as $9.1 billion in the previous year.

Fourth quarter earnings smashed consensus forecasts, coming in at $0.66 versus $0.16 pencilled in, on $9.94 billion revenues, which also beat Wall Street projections of $9.76 billion. Free cash flow in the fourth quarter came in at $768 million, down from $966 million in the September quarter, but offering investors hope that this not a flash in the pan.

‘Looking back, 2023 was an inflection point for Uber,’ said chief executive Dara Khosrowshahi on an earnings call, ‘proving that we can continue to generate strong profitable growth at scale.’

But investors were left stunned by news of the $7 billion share buyback, announced at a capital markets day just days after the earnings announcement.

‘Uber is hitting on all cylinders and has decided it’s time to return capital back to the owners,’ said Thomas Hayes, chair of hedge fund Great Hill Capital.

‘It’s a vote of confidence in demand for their services as well as operational discipline perfectly executed by CEO Dara Khosrowshahi.’

In 2024 Uber expects gross bookings growth to be in the ‘mid to high teens’ with earnings before interest, taxation, depreciation, and amortisation ranging from the ‘high 30% to 40%’ range.

Rival Lyft (LYFT:NASDAQ) also handed shareholders good news, although it’s initial 60% share price jump post its earnings report was largely due to a typo in the statement. This promised a 500-basis point margin boost. This was not the case, as chief financial officer Erin Brewer confirmed within an hour to analysts, admitting an erroneous 0 in the text; it should have been 50 basis points.

The shares pared a good chunk of their earlier gains but still ended up nearly 20% on the day (14 February), eventually hitting peaks not seen since summer 2022 as growth and free cash flow improve.

At time of writing, Uber shares are priced at $78.41, while Lyft stock trades at $17.91. 

‹ Previous2024-02-22Next ›