SINGAPORE - Grab Holdings shares jumped 11 per cent after the South-east Asian ride-hailing and food-delivery provider brought forward its profitability target and posted a narrower quarterly loss, buoyed by extensive cost cuts at the firm.
The stock had its biggest gain in three months in New York after Grab said on Wednesday it expects to break even in the third quarter, rather than the fourth as previously projected. Second-quarter adjusted losses narrowed more than analysts had predicted, and sales topped estimates.
Grab’s Nasdaq-listed shares closed up 10.8 per cent to US$3.70 on Wednesday.
The company has grown rapidly since its founding in 2012, but losses mounted as it spent on expansion and luring customers amid intense competition from rivals such as GoTo Group and Sea. A recent focus on cost curbs – including more than 1,000 job cuts in June – has brought the Singapore-based company on the brink of profitability for the first time.
The results are “a clean and solid beat, especially on improving momentum in mobility and delivery”, analysts at Citigroup said in a note. The outlook reflects “effective cost control and clear execution direction”.
Grab said its adjusted full-year loss before interest, taxes, depreciation and amortisation will be US$30 million (S$40.5 million) to US$40 million, rather than the loss of US$195 million to US$235 million it forecast in May. Loss on that basis shrank to US$20 million in the second quarter, versus analysts’ average estimate for a loss of US$64.6 million.
Revenue rose 77 per cent to US$567 million, dispelling some fears that rising inflation and a gloomy economic outlook would damp customer spending.
Grab is among South-east Asian Internet giants that are treading a fine balance between spending on growth and focusing on profitability. Investors rewarded GoTo last week after it cut its 2023 loss projection, while punishing Sea after it reported disappointing revenue and outlined plans to increase investment in e-commerce.
While Grab leads the region’s ride-hailing and delivery markets, it has stayed in the red as it spends on growth and competition from rivals like Indonesia’s GoTo weighs on prices. Grab shares have struggled since it went public via a merger with a US blank-cheque company less than two years ago.
Grab said in June it was cutting more than 1,000 jobs in its biggest round of layoffs since the pandemic, in a sign of growing pressure from investors for the firm to slash expenses further. Rivals Sea and GoTo eliminated thousands of jobs in 2022.
Grab chief executive Anthony Tan has said the job reductions were not a “shortcut to profitability”. He has said the company was on track to become profitable even without the cuts.
Grab’s gross merchandise value (GMV), or the total value of goods and services it provides, grew 4 per cent to US$5.24 billion in the second quarter. While that is down from double-digit rates in past years, growth accelerated from the 3 per cent pace in the previous quarter.
Users of the company’s subscription programme, GrabUnlimited, rose by 43 per cent from a year earlier. Subscribers spent 3.8 times more on food orders than other users, accounting for almost a third of Grab’s deliveries GMV. BLOOMBERG
