(Bloomberg) – Grab Holdings Ltd. announced a third-quarter loss that was weaker than analysts had estimated, helped by cost cuts from the Southeast Asian ride-sharing and delivery giant.
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Net loss for the quarter through September narrowed to $327 million from $970 million a year earlier, the Singapore-based company said on Wednesday. Analysts estimated an average loss of $360 million. Revenue more than doubled to $382 million, allaying fears that rising inflation and a gloomy economic outlook will dampen customer spending. Grab also slightly raised its revenue forecast for the year.
Like technology companies around the world, Grab is dealing with the effects of a deteriorating economic climate and increased investor focus on profitability. The company, which was one of Southeast Asia’s hottest startups, has struggled since going public via a merger with a US blank check company last year. Its shares, which have since fallen about 70%, rose 0.6% in New York trading.
The company is trying to balance growth spending with its drive to achieve profitability as worries about a recession trigger layoffs, business unit closures and other moves to rein in spending in the tech industry. Regional rivals GoTo Group and Sea Ltd. – both also loss-making – are implementing job cuts and said they would cut spending to stem costs.
Grab said it has slowed hiring, streamlined functions, and reduced incentive spending and business costs as a percentage of the value of the goods and services it provides. The company plans to reduce its “regional headcount”, Chief Financial Officer Peter Oey said on a conference call, without providing numbers.
Its deliveries business unit broke even on an adjusted earnings before interest, tax, depreciation and amortization basis, three-quarters ahead of target. Revenues and Adjusted Ebitda of the carpooling unit doubled.
Grab’s continued recovery in the mobility segment and stable margins are “encouraging,” Citigroup analyst Alicia Yap said in a note.
The company has focused on its core services, distancing itself from the longstanding strategy of becoming the region’s “super app”. The superapp vision was aggressive, but resulted in significant losses. Grab lost $3.4 billion in 2021 and had racked up nearly $1 billion in losses in the first two quarters of this year.
Grab sees slower growth as it pursues profitability in 2024
Grab also expressed confidence in customer demand even as the tech industry faces economic challenges. He said he expects annual revenue of $1.32 billion to $1.35 billion, down from his previous forecast of $1.25 billion to $1.3 billion.
Grab’s cash and cash equivalents fell to $2.4 billion at the end of September, from around $2.8 billion at the end of June.
(Updates with analyst comment in seventh paragraph)
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