Grab lifts forecast as earnings top estimates
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Grab lifts forecast as earnings top estimates

Cost cuts help Southeast Asian super-app operator report net profit

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A GrabFood driver makes his rounds in Bangkok. (Photo: Arnun Chonmahatrakool)
A GrabFood driver makes his rounds in Bangkok. (Photo: Arnun Chonmahatrakool)

The super-app operator Grab has raised its earnings forecast for the year after quarterly profit topped estimates, helped by cost cuts to tackle the effects of intense competition in Southeast Asia’s ride-hailing and delivery markets.

Grab Holdings Ltd predicted between US$308 million and $313 million in adjusted full-year earnings before interest, taxes, depreciation and amortisation, more than the $270 million it had forecast earlier.

Third-quarter earnings on that basis were $90 million, exceeding the $66.2 million analysts had predicted. Grab also posted its second net profit.

Grab, the largest of Southeast Asia’s ride-hailing and delivery firms, is trying to prove that 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.

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

Shares of Grab, which had been one of Southeast Asia’s hottest startups, are down by about 60% since it went public on Wall Street in late 2021. Still, they have advanced this year as its losses narrowed, outperforming those of GoTo.

Revenue this year would be as much as $2.78 billion, Grab said, rather than the $2.75 billion it predicted earlier. Third-quarter revenue rose 17% to $716 million, compared with the $697 million analysts were expecting.

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 get food delivered to their door in a challenging macroeconomic climate.

Looking ahead, analysts say user and transaction numbers might be driven by adoption of cheaper service tiers, meaning lower average spending per user could offset a higher user base to weigh on revenue.

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