Singapore’s Grab Holdings raised its revenue forecast for fiscal 2024, signaling expectations of strong performance in its food delivery and ride-hailing sectors, particularly during the holiday season. The Southeast Asian tech company’s U.S.-listed shares surged over 10% in after-hours trading following the announcement.
Grab’s core food delivery segment has been bouncing back from a drop in demand seen post-pandemic, as consumers increase their discretionary spending. This shift in consumer behavior points to an economic rebound in the region, according to the company’s report. CEO Anthony Tan highlighted a positive outlook for Southeast Asia’s long-term growth, emphasizing that Grab is strategically positioned to harness rising user demand trends.
The company’s updated revenue forecast now stands at between $2.76 billion and $2.78 billion, slightly up from its previous range of $2.70 billion to $2.75 billion. In its ride-hailing sector, Grab has been targeting a broader customer base by introducing more budget-friendly options, aimed at price-conscious users, while also promoting premium services to enhance earnings. According to CFO Peter Oey, premium rides generate margins 1.2 times higher than standard rides.
Grab reported third-quarter revenue of $716 million, surpassing Visible Alpha’s expectations of $700.8 million. Oey also noted a 22% increase in customer transactions for the quarter and observed that subscribers tend to spend four times as much as non-subscribers. Consequently, Grab raised its annual core profit forecast to a range of $308 million to $313 million, up from an earlier forecast of $250 million to $270 million.
Revenue from Grab’s delivery services grew by 16%, reaching $380 million and beating analysts’ expectations of $374.2 million. The firm’s financial segment also outperformed estimates, while its adjusted free cash flow projection remains unchanged. On an adjusted basis, Grab earned 1 cent per share, surpassing analysts’ break-even forecast according to data from LSEG.
Featured image courtesy of Asia Fund Managers
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