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By Akash Sriram
(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 nearly 8% 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 buyback will help to tamp down the supply of shares and make earnings per share look more attractive," said Andrew Rocco, stock strategist at Zacks Investment Research.
Lyft's 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 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.
Uber and Lyft have been sharpening their focus on smaller, car-dependent cities with limited public transit, marking a new phase of intense competition.
While Uber emphasized on the expansion efforts on Wednesday, Lyft highlighted a 37% surge in rides in Indianapolis in the quarter, underscoring an aggressive push into underserved markets in search of growth.
Lyft is also piloting taxi-hailing in St. Louis and said last month it would acquire mobility firm Freenow for about $200 million to enter European markets.
"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.
Lyft 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, largely in line with analysts' estimate.
(Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar)