Grab shares jump after company raises earnings, revenue forecast

SINGAPORE - Grab Holdings shares jumped as much as 15 per cent in late US trading after the South-east Asia ride-hailing and delivery leader boosted its earnings forecast for the year, helped by cost cuts to tackle intense competition.

The company predicted US$308 million (S$410.6 million) to US$313 million in adjusted full-year earnings before interest, taxes, depreciation and amortisation, more than the US$270 million it had forecast earlier.

Earnings for the third quarter ended September on that basis were US$90 million, exceeding the US$66.2 million analysts predicted, and Grab also posted its second net income.

Revenue in 2024 will be as much as US$2.78 billion, Grab said, rather than the up to US$2.75 billion it predicted earlier. Third-quarter revenue rose 17 per cent to US$716 million, compared with the US$697 million that analysts were expecting.

“We remain bullish on the long-term growth outlook of South-east Asia and are firing on all cylinders to capture the strong user demand trends,” said Grab chief executive Anthony Tan.

Grab is trying to prove its cost-cutting drive is yielding results. The Singapore-based company is focused on profits after years of spending to grow its market share and fend off competition.

Yet, the firm also needs to show it can maintain a healthy balance between profits and growth even as tough competition from rivals including GoTo Group weighs on its ride-share and food delivery margins.

The stock climbed as high as US$5.04 in extended trading in New York on Nov 11, after closing the regular session at US$4.38.

Shares of Grab, which was one of South-east Asia’s hottest start-ups, are down about 60 per cent since it went public through a US blank cheque company in late 2021.

Still, it has advanced in 2024 as its losses narrowed, outperforming its main regional competitor, Indonesia’s GoTo.

Grab has seen growth slow dramatically from triple-digit rates in years past as customers in the region curb spending to cope with elevated inflation and interest rates. Demand is increasing at a slower pace as Grab’s customer base expands and consumers are less eager to hail a ride or order food delivery in a challenging macroeconomic climate.

Grab said it remains optimistic on South-east Asia’s long-term growth outlook. The company reached 42 million monthly users, still leaving it room to expand in the region of about 650 million people.

“We continue to remain bullish as we arrive at the last couple of months of the year,” chief financial officer Peter Oey said.

“We’re seeing good conversion, from Ebitda (earnings before interest, taxes, depreciation and amortisation) to free cash flow, which is another critical piece of metric that we look at.” BLOOMBERG