Grab announced a landmark achievement in its latest financial report, marking its inaugural profitable quarter with a notable $11 million in profit. This impressive turnaround contrasts starkly with the $391 million loss recorded during the same period the previous year.
The company attributed this substantial improvement to several key factors, including enhanced Group adjusted EBITDA, fair value alterations in investments, and decreased share-based compensation expenses.
Revenue for the quarter soared to $653 million, surpassing the predictions of LSEG analysts, who had estimated it would reach $634.86 million. Meanwhile, the losses for the entirety of 2023 amounted to $485 million, marking a remarkable 72% decrease from the $1.74 billion loss reported the previous year.
Beyond its core ride-hailing services, Grab diversifies its offerings by venturing into financial services such as payments and insurance, as well as providing delivery services for food, groceries, and packages.
Grab’s CFO, shared insights during an exclusive interview with CNBC, highlighting the resurgence of demand in the mobility sector and the impressive growth in the delivery business. He noted that the company has experienced a surge in user numbers and maintained strong momentum across its various services.
In a significant move, Grab announced its intention to repurchase up to $500 million worth of class A ordinary shares, marking the first such buyback in its history. This initiative underscores Grab’s commitment to enhancing shareholder value. Despite its historic profitability, Grab has faced significant losses throughout its operational history, accumulating billions of dollars in deficits since its inception in 2012.
This trajectory is typical for many tech startups, which often prioritize expansion over immediate profitability, resulting in substantial cash burn. However, with global economic uncertainties dampening growth prospects, there has been a renewed emphasis on achieving profitability and exercising fiscal prudence.
During the fourth quarter, Grab made notable strides in reducing total incentives, including partner and consumer incentives, which decreased to 7.3% of the total value of goods sold compared to 8.2% in the same period the previous year. This reduction reflects Grab’s ongoing efforts to bolster the health of its marketplace and move towards sustainable profitability.
While incentives have historically been pivotal in attracting both drivers and passengers to the platform, Grab is gradually tapering off such incentives to prioritize profitability. However, Grab’s CFO, Peter Oey, emphasized that incentives would remain a strategic tool for the business to ensure an adequate supply of drivers and appeal to price-sensitive customers.
Looking ahead, Grab anticipates revenue for 2024 to range between $2.70 billion and $2.75 billion, slightly below the consensus forecast of $2.8 billion by LSEG analysts. Despite these optimistic projections, Grab’s shares experienced an 8.41% decline in value on Thursday, reflecting ongoing market volatility. Since its listing on the Nasdaq in December 2021 at an opening price of $13.06 per share, Grab’s stock price has plummeted by 75.8%.
