Grab Holdings’ shares slid the most in more than nine months after the ride-hailing leader forecast 2024 revenue below analysts’ estimates, suggesting a deeper-than-anticipated slowdown in its core online business.
The Singapore-based company, which competes with GoTo in mobility and services such as meal delivery, expects a 14 per cent to 17 per cent rise in sales to US$2.7 billion (S$3.6 billion) to US$2.75 billion in 2024. That lags behind the US$2.8 billion average analyst projection.
The disappointing forecast overshadowed plans to buy back as much as US$500 million of stock and its second straight quarterly profit on an adjusted basis. Its shares fell 8.4 per cent in New York, the biggest decline since May.
After years of spending to gain market share and fend off competition, Grab is taking steps to become a more financially mature company. It is focusing on the bottom line following a period of swift expansion into markets from Malaysia to Thailand.
Like its backer, Uber Technologies, it has slashed jobs and reined in spending to pivot towards profitability. Uber also announced its first buyback in February.
The effort coincides with a dramatic slowdown in growth from past years, underscoring the impact of economic uncertainty and competition. Revenue rose 30 per cent in the December quarter, its slowest pace of growth since at least 2022.
The challenging market has forced Grab and its rivals to consider aggressive options. Grab and GoTo have in 2024 revived discussions about a merger of their core businesses, Bloomberg News has reported, an alliance that could help stem spending to chase consumers across the region.
Grab had also been linked to talks to take over the foodpanda brand in several markets, but negotiations fell through because parties could not agree on deal terms.
On Feb 22, it reported US$35 million in adjusted earnings before interest, taxes, depreciation and amortisation, lagging estimates for US$38.9 million. The company posted its first profit on that basis for the September quarter.
Grab also reported positive free cash flow for the December quarter, though again on an adjusted basis. And it reported a US$11 million net income – its first – though much of that stemmed from a one-time accounting gain.
Executives expect revenue to accelerate from 2025 as new initiatives they are developing take hold, in areas from digital finance to their core delivery services.
Grab, which has partnered with financial services firms for online lending and banking in Malaysia and Singapore, expects revenues from that slice of the business to ramp up in coming years.
Grab chief executive Anthony Tan told analysts on a conference call: “We’ll see improvements in the cost structure of our business as they start to generate revenue, especially from our banking, and as we start to scale loans even further.
“We are incubating growth with a lot of initiatives.” BLOOMBERG
