Grab’s sales beat estimates, but falls behind GoTo in market value

Grab still counts Singapore as its largest market even as it tries to expand in countries including Indonesia, South-east Asia's largest economy. PHOTO: ST FILE

SINGAPORE (BLOOMBERG) - Grab Holdings reported a better-than-expected 79 per cent revenue increase, buoyed by resilient demand from consumers who continued to hail rides and order food despite rising inflation.

Revenue climbed to US$321 million in the second quarter, the Singapore-based company said in a statement Thursday. That beat the US$273.1 million average of analysts’ estimates compiled by Bloomberg.

Grab’s net loss narrowed to about US$547 million as it fights to reduce cash burn after spending several years locked in an expensive battle for dominance in the region.

Grab, led by Anthony Tan, has struggled since it went public via a merger with a US blank-check company last year.

Its shares have lost more than 60 per cent of their value since then as losses piled up during pandemic-era lockdowns and money-losing companies have fallen out of favor with investors.

Now Mr Tan must navigate through an era of rising inflation that could dampen demand just as Grab is trying to emerge from the Covid challenges.

Grab said revenue this year is expected to be US$1.25 billion to US$1.3 billion, compared with its previous forecast of US$1.2 billion to US$1.3 billion. 

The company said its gross merchandise value will expand 21 per cent to 25 per cent this year, compared with 30 per cent to 35 per cent it had projected previously.

Once South-east Asia’s most valuable start-up, Grab is faltering behind GoTo Group in the stock markets as it fights to gain ground on its Indonesian ride-hailing rival’s home turf.

The unprofitable companies are both struggling to convince investors of their moneymaking potential after staging their stock market debuts in recent months.

Yet GoTo has fallen less than its competitor and its market value of about US$26 billion is now twice that of its Singaporean peer.

Grab and GoTo have been locked in an expensive battle for dominance over the past several years.

Grab still counts Singapore as its largest market even as it tries to expand in countries including Indonesia, South-east Asia’s largest economy. 

GoTo is enjoying a leadership position in its home nation of more than 270 million people whose mobile-savvy consumers are shopping on its online-retail platform Tokopedia and ordering rides and food via its Gojek app.

The growth potential of Indonesia has helped GoTo outperform Grab, which became a publicly traded company through a merger with Brad Gerstner’s Altimeter Growth in December. GoTo has lost about 3 per cent since its initial public offering in Jakarta in April, while Grab is down more than 60 per cent since combining with the US blank-cheque company.

While Gojek has a strong grasp of the crucial Indonesia market, Grab has made inroads in food delivery. 

Grab had 49 per cent of the Indonesian food delivery market last year, compared with GoTo’s 43 per cent, according to Momentum Works.

GoTo is set to release results on Aug 30.  

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