2/23/2024
Business

Grab Achieves Profit Milestone with $11 Million in Q4 Earnings

In a landmark announcement, Grab, the Southeast Asian ride-hailing behemoth, declared its first-ever profitable quarter, reporting an $11 million profit in its fourth-quarter earnings. This marks a significant turnaround from the $391 million loss recorded in the same period the previous year, highlighting substantial improvements in the company's financial health.

The profit boost is attributed to the improvement in Group adjusted EBITDA, favorable changes in the fair value of investments, and a reduction in share-based compensation expenses. With revenue reaching $653 million, Grab exceeded the expectations of LSEG analysts, who had projected $634.86 million for the quarter.

Despite a challenging year, the full-year losses for 2023 were significantly reduced to $485 million, down 72% from the $1.74 billion loss reported in 2022. This improvement reflects Grab's strategic adjustments and operational efficiencies across its diversified services, which, beyond ride-hailing, include financial services like payments and insurance, as well as food, groceries, and package deliveries.

In an interview with CNBC’s "Squawk Box Asia," Grab CFO Peter Oey expressed optimism about the company's trajectory, noting that mobility services had surpassed pre-Covid levels and highlighted a 13% year-over-year growth in the deliveries business. The CFO also revealed that Grab is gearing up for a year of investment in 2024, indicating the company's commitment to further expansion and innovation.

A significant development accompanying the earnings announcement was Grab's decision to repurchase up to $500 million worth of Class A ordinary shares, signaling confidence in the company's future prospects.

This financial milestone comes after years of prioritizing growth over profitability, a common strategy among tech startups, which often results in substantial cash burn. However, amid global macroeconomic uncertainties, Grab has successfully pivoted towards profitability, demonstrating prudent cost management and operational efficiency.

Despite this positive development, Grab's shares closed 8.41% lower on Thursday, reflecting the volatile nature of the market and possibly adjusting expectations for the company's projected revenue of between $2.70 billion and $2.75 billion for 2024, slightly lower than LSEG analysts' consensus of $2.8 billion.

Grab's journey to profitability, coupled with its strategic focus on cost management and diversified service offerings, sets a precedent for the tech industry in Southeast Asia, showcasing the potential for sustainable growth amidst challenging economic conditions.

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