Overview

In an exciting development for investors and consumers alike, Singapore-based Grab Holdings has raised its revenue forecast for fiscal 2024. On November 11, the tech giant announced that it anticipates robust growth in its food delivery and ride-hailing services during the bustling holiday season, prompting a staggering 10% surge in its US-listed shares during after-hours trading.

Recovery in Food Delivery

The company's food delivery sector is witnessing a significant recovery, bouncing back from a post-pandemic slump as consumers boost their discretionary spending. This trend signals a broader economic recovery across Southeast Asia. CEO Anthony Tan expressed optimism, stating, "We remain bullish on the long-term growth outlook of Southeast Asia, and are firing on all cylinders to capture the strong user demand trends."

Revised Revenue Estimates

Grab's revised revenue estimate now stands between US$2.76 billion and US$2.78 billion, a notable increase from the previous expectation of US$2.70 billion to US$2.75 billion.

Attracting a Wider Customer Base

In a bid to attract a wider customer base, Grab has introduced lower-priced options for its ride-hailing services, targeting budget-conscious customers without sacrificing service quality. Simultaneously, it is pushing its premium offerings, which boast significantly higher margins—about 1.2 times greater than standard rides, according to CFO Peter Oey.

Financial Results

The latest financial results reveal that Grab reported third-quarter revenue of US$716 million, surpassing Visible Alpha estimates of US$700.8 million. Transactions from customers also climbed 22% compared to the previous year, indicating a solid increase in user engagement. Impressively, subscribers of Grab's services are spending four times more than non-subscribers, showcasing the value of loyalty in the company's business model.

Annual Core Profit Forecast

Furthermore, the firm has raised its annual core profit forecast to between US$308 million and US$313 million, a significant increase from the prior guidance of US$250 million to US$270 million. In the delivery segment alone, revenue surged by 16% to US$380 million, exceeding predictions of US$374.2 million.

Adjusted Free Cash Flow

While Grab maintains its annual adjusted free cash flow forecast, the company's financial performance continues to impress, suggesting a bullish outlook for growth in the competitive Southeast Asian market. Impressively, on an adjusted basis, Grab earned one cent per share for the quarter—defying expectations of a break-even performance, as recorded by LSEG data.

Looking Ahead

As holiday demand ramps up, all eyes will be on Grab to see if it can sustain this momentum and further capitalize on the growing trends of food delivery and ride-hailing in the region. Will Grab continue to dominate the market, or are challengers waiting in the wings? Stay tuned for more updates!