Buyback follows Engine Capital's proposal for strategic alternatives
Lyft's Q1 revenue slightly misses expectations
Company targets smaller, car-dependent cities for growth
May 8 (Reuters) - Lyft LYFT.O increased its stock buyback program to $750 million and posted a 14% rise in first-quarter revenue on Thursday, signaling steady demand for its ride-hailing services.
The company, which is expanding beyond major U.S. cities into smaller markets, said it intends to use $500 million of the authorization within the next 12 months. It disclosed its first share repurchase program in February, but did not specify a timeline.
Last week, activist investor Engine Capital urged Lyft to undertake a $750 million accelerated repurchase and said it wanted the company to consider strategic alternatives, including a sale.
The ride-hailing platform forecast second-quarter gross bookings and adjusted core profit largely in line with analysts' estimates.
Its first-quarter revenue of $1.45 billion, however, was slightly below analysts' average estimate of $1.47 billion, according to data compiled by LSEG.
The company posted adjusted core earnings of $106.5 million during the first quarter, above the estimate of $92.4 million.
Larger rival Uber UBER.N, with a global food and grocery delivery business, offered an upbeat second-quarter forecast on Wednesday, but attributed its lower-than-expected first-quarter revenue to sluggish U.S. travel demand.
U.S. spending on both lodging and tourism-related activity in March was down about 2.5%, according to Bank of America data, signaling souring consumer sentiment amid economic volatility.
With growth rates stagnating in major U.S. metropolitan areas, ride-hailing companies are increasingly focusing their expansion efforts on less densely populated cities with limited public transport options to capture new markets and drive growth.
Lyft is targeting smaller, car-dependent markets such as Indianapolis, where rides grew 37% in the first quarter.
The company expects gross bookings between $4.41 billion and $4.57 billion for the second quarter, compared with the estimate of $4.5 billion.
It forecast current-quarter adjusted earnings before interest, tax, depreciation and amortization at $115 million to $130 million.
(Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar)
((Akash.Sriram@thomsonreuters.com; On X as @HoodieOnVeshti; +91-99017-77617;))
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.