Grab Holdings Ltd (NASDAQ:GRAB) stock rallies 11.87% (As on November 12, 11:12:47 AM UTC-4, Source: Google Finance) after the company raised its forecast for fiscal 2024 revenue, as it anticipates robust growth in its food delivery and ride-hailing businesses. Third-quarter earnings on that basis were US$90 million, exceeding the US$66.2 million analysts predicted, and Grab also posted its second net income ever. Grab, the largest of Southeast Asia’s ride-hailing and delivery firms, 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 healthy balance between profits and growth even as tough competition from rivals including GoTo Group weighs on its ride-share and food delivery margins.
Further, Grab, backed by Uber Technologies Inc, 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. Grab said it remains optimistic about Southeast 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. According to Bloomberg Intelligence, Grab’s revenue growth might slow slightly in the third quarter before potentially accelerating in the fourth quarter, supported by an expected rise in ride-hailing demand from Chinese travellers during China’s Golden Week holiday. Sensor Tower data suggests Grab’s transacting users could increase by over 10% compared to last year in Q3, although the adoption of lower-cost service tiers might dilute average spending per user, impacting overall revenue in mobility and food delivery.
The company had reported the adjusted revenue growth of 17 percent to $716 million in the third quarter of FY 24, beating the analysts’ estimates for revenue of $700.8 million.
The company expects revenue in the range of $2.76 billion to $2.78 billion, compared with its prior projection of between $2.70 billion and $2.75 billion. The company still expects positive free cash flow for the full year. The company predicted US$308 million (RM1.36 billion) to US$313 million in adjusted full-year earnings earnings before interest, taxes, depreciation and amortisation (Ebitda), more than as much as US$270 million it had forecast earlier.