(Reuters) -Grab Holdings Ltd, Southeast Asia’s biggest ride-hailing and food delivery firm, on Thursday forecast upbeat 2023 revenue and pulled forward its profitability timeline, betting on strong demand for its services and as cost cuts pay off.
Higher demand for delivery services during the COVID-19 pandemic benefited Grab, a household name in eight Southeast Asian countries, which is still gaining as consumers rely on its app for daily commute as offices reopened.
Grab is hoping the rebound in tourism will help its ride-hailing business return to pre-pandemic levels by the end of the year.
The Singapore-based company, which has spent heavily on incentives and promotions to gain traction among customers, is offering more affordable service options, while taking other measures to cut costs such as pausing hiring.
A wider-than-expected loss for the fourth quarter, however, sent the company’s shares down about 9% on Thursday.
Grab now projects its 2023 revenue between $2.20 billion and $2.30 billion, compared with an estimate of $1.97 billion, according to Refinitiv data.
“There is growing consumption in the (Southeast Asia) region, a population that craves on-demand digital services,” Chief Executive Officer Anthony Tan told analysts.
Grab brought forward its forecast for group break-even on an adjusted core earnings or EBITDA basis to fourth quarter this year from the second half of 2024.
For 2023, Grab forecast loss before interest, taxes, depreciation, and amortization between $275 million and $325 million. The metric, keenly watched by investors as a measure of profitability, was $793 million for 2022.
Adjusted loss of 10 cents per share in the reported quarter was wider than the expectation of 7 cents.
“At the end of the day, this is not the market environment for businesses losing money … The market wants to see free-cash-flow and profit,” said Thomas Hayes, chairman at Great Hill Capital in New York.
“It’s solid overall, but losing money is a problem.”
(Reporting by Nivedita Balu in Bengaluru; Editing by Sherry Jacob-Phillips and Shinjini Ganguli)
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