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Uber predicts strong bookings for the second quarter despite Middle East woes

Uber Technologies announced Wednesday that it would exceed Wall Street's expectations for the second quarter, despite the Middle East conflict.

The shares of the San Francisco based company increased by about 8% during premarket trading.

The company's strong forecast shows that its strategy to keep prices stable while moving into higher-margin fields such as the platform for business is paying off. It helps it navigate rising fuel costs and geopolitical tensions.

Growth has also been fueled by strong delivery demand on international markets such as Australia and the expansion of new geographies, like Denmark.

Uber expects gross bookings between $56.25 and $57.75 for the second quarter of 2016, which is above the analysts' average estimate?of $56.07, according to LSEG data.

The Middle East conflict is responsible for a 60 basis point drag.

The company forecasts a?second quarter adjusted earnings per share between 78 and 82 cents. This is slightly higher than the 79 cents estimate.

The first-quarter gross bookings exceeded expectations by $52.84 billion.

Uber has said that its increasing adoption of artificial-intelligence tools helps moderate the pace at which it hires by improving productivity in its operations. Uber is pushing to expand its platform beyond ride-hailing, into food delivery, groceries, travel, local commerce and more recently, hotel bookings.

Uber has been focusing on its Uber One membership, which has now surpassed 50,000,000 users and accounts for approximately half of its gross bookings.

The March quarter revenue was $13.2 billion. This is below the $13.62 billion estimate due to the Middle East conflict, severe winter storms and higher gasoline prices.

Even so, the adjusted profit per share in the first quarter of 72 cents beat expectations of 70 cents.

The ride-hailing sector missed the estimates by $6.8 billion in the first quarter. Sales from the delivery and freight segments, however, exceeded expectations. The latter division returned to growth after nearly two years.

Uber has opted for a partnership approach in the development of 'autonomous vehicles. It is working with over 20 companies to integrate robotaxis onto its platform, rather than developing it itself.

As it expands its partnerships with AV providers, the company expects to provide autonomous vehicle trips as many as 15 different cities worldwide by 2026. (Reporting and editing by Arun K. Koyyur in Bengaluru)

(source: Reuters)