Singapore-based ride-share and food-delivery giant Grab Holdings announced its inaugural quarterly profit, accompanied by a share repurchase plan. However, the optimism was overshadowed by a cautious annual sales forecast for fiscal 2024, triggering concerns about the company’s growth prospects and leading to a 5% drop in its U.S.-listed shares to $3.28 in premarket trading.
For fiscal 2024, Grab predicted revenue in the range of $2.70 billion to $2.75 billion, with the midpoint falling below analysts’ expectations of $2.80 billion. Despite forecasting an annual adjusted core profit, the weak revenue outlook tempered the positive impact of Grab’s first profitable quarter.
Grab’s CFO, Peter Oey, acknowledged the slow revenue growth in the near term but emphasized the anticipation of acceleration beyond 2024 as investments in new products yield results. The company, like many in the industry, experienced a surge in food-delivery demand during the pandemic, but growth rates have been moderating. Grab’s ride-share growth only recently reached pre-pandemic levels.
To navigate these challenges, Grab underwent workforce reductions, trimmed incentives, and cut technology costs over the past two years. Despite the weak revenue outlook, Grab revealed plans to repurchase $500 million worth of class A ordinary shares, echoing a trend seen with Uber, which initiated its first share buyback last week.
In terms of financial performance, Grab reported fourth-quarter revenue of $653 million, surpassing estimates of $629 million. Mobility revenue rose by 26%, driven by increased travel demand during the holiday quarter, while delivery revenue saw a 20% increase. The company expects full-year adjusted core profit to be in the range of $180 million to $200 million, surpassing estimates of $135.2 million.
Despite the positive quarterly profit and share repurchase initiatives, Grab’s cautious revenue outlook for 2024 raised questions among investors about the company’s ability to sustain robust growth in the face of evolving market dynamics.
