(Reuters) -Lyft increased its stock buyback program to $750 million and beat first-quarter profit estimates on Thursday, signaling steady demand for its ride-hailing services, sending its shares up more than 7% in extended trading.
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 estimates.
First-quarter revenue rose 13.5% to $1.45 billion, while analysts estimated $1.47 billion, according to data compiled by LSEG.
Its adjusted per-share profit during the January to March period stood at 24 cents, beating expectations of 19 cents.
Larger rival Uber, 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.
Uber and Lyft 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.
“Building on our strong foundation in core areas, we’re now turning our attention to regions with high car dependency and limited public transportation, presenting significant growth opportunities,” the company said.
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)
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