To The Moon

$Grab Holdings(GRAB)$ After more than 10 Quarter of loss in EPS, finally Grab have a breakthrough in Q3 2024, question is can this continues?

Grab’s stock surged by up to 15% in late U.S. trading after the Southeast Asian ride-hailing and delivery giant raised its earnings forecast, citing benefits from cost-cutting measures to manage stiff competition. The company now projects adjusted full-year EBITDA of US$308 million to US$313 million, up from its previous high estimate of US$270 million.

In the third quarter, Grab achieved US$90 million in adjusted earnings, beating analysts’ predictions of US$66.2 million, and recorded its second-ever net income.

As Southeast Asia’s largest ride-hailing and delivery provider, the Singapore-based Grab is now prioritizing profitability after years of investing heavily to gain market share. Still, it faces ongoing pressure to balance growth with profits, as competitors like GoTo Group continue to impact margins across both ride-hailing and food delivery.

Following its earnings announcement, Grab’s stock reached a high of US$5.04 in after-hours trading, up from the regular close of US$4.38. Although its shares have declined nearly 60% since going public via a U.S. SPAC in late 2021, they have rebounded this year due to narrowing losses, outperforming Indonesia’s GoTo.

Grab has revised its full-year revenue projection to a maximum of US$2.78 billion, slightly up from its earlier forecast of US$2.75 billion. Third-quarter revenue rose 17% to US$716 million, exceeding the analyst forecast of US$697 million.

Financial Performance:

Grab had a strong Q3 2024, reporting a profit of US$15 million, a significant turnaround from a loss of US$99 million in the same quarter last year2. The company's revenue grew by 17% year-over-year to US$716 million, driven by growth across all segments. Group-adjusted EBITDA improved by 224% year-over-year to US$90 million. The company also raised its full-year 2024 revenue forecast, expecting continued strong growth. Monthly Transacting Users increased around 16% year-on-year reaching 42 million Monthly Transacting Users, reflecting strong user engagement. The revenue growth is supported by various profitable segments including Mobility, Deliveries, and financial services.

Business Progress:

Grab introduction of new products has improved order frequency and retention rates, supporting revenue generation. Investment in AI and machine learning has improved operational efficiency and customer engagement.

The company is venturing further into financial services by launching lending products across all markets offering Digital Banking Deposits in Grab's digital banking business tripled year-over-year to US$1.1 billion, compared to US$362 million during the same period last year

Risks:

Competition in key markets like Indonesia, Singapore, Vietnam, and Thailand is intensifying, with potential implications on market share and margins.

Gojek: An Indonesian-based super app offering services similar to Grab, including ride-hailing, food delivery, and digital payments.

ComfortDelGro: A major taxi operator in Singapore that also offers ride-hailing services.

Uber Technologies: Although Uber sold its Southeast Asian operations to Grab, it remains a significant competitor globally.

DiDi Global: A Chinese ride-hailing giant that operates in various countries and poses a competitive threat.

Lyft: Another global ride-hailing service that competes with Grab in various markets4.

These companies, along with others like Gett, iCarsClub, oBike, and Neuron Mobility, create a competitive landscape for Grab in the region. Incentive spends necessary to drive new user behavior which could impact short-term profitability.

Grab's growth has slowed from its earlier triple-digit rates as rising inflation and interest rates dampen consumer spending in Southeast Asia. While demand remains on the rise, it’s doing so at a slower pace, with customers becoming more cautious about using ride-hailing and food delivery services amid the challenging economic climate.

Bloomberg Intelligence suggests Grab’s revenue growth may decelerate slightly in the third quarter but could pick up in the fourth, driven by an anticipated increase in ride-hailing demand from Chinese travelers during China's Golden Week holiday. Data from Sensor Tower indicates that Grab’s active users may grow by over 10% year-over-year in Q3, though the shift toward lower-cost service tiers might reduce average spending per user, impacting revenue in both its mobility and food delivery segments.

Despite these headwinds, Grab remains optimistic about Southeast Asia's long-term growth potential, with a current base of 42 million monthly users in a region of approximately 650 million people.