Grab’s cost cuts help ride-hailing company weather tough times

GRAB Holdings Ltd reported a narrower third-quarter loss than analysts had estimated, helped by cost cuts by the South-East Asian ride-hailing and delivery giant.

The net loss for the quarter through September narrowed to US$327 million from US$970 million (RM4.42 billion) a year earlier, the Singapore-based company said on Wednesday. Analysts estimated a US$360 million loss on average. Revenue more than doubled to US$382 million, dispelling some fears that rising inflation and a gloomy economic outlook would damp customer spending. Grab also slightly raised its revenue forecast for the year.

Like technology companies worldwide, Grab is contending with the effects of a deteriorating economic climate and a heightened investor focus on profitability. The company, which had been one of South-East Asia’s hottest start-ups, has struggled since it went public via a merger with a US blank-cheque company last year. Its shares, which have fallen about 70% since, rose 0.6% in New York trading.

The company is trying to balance spending on growth with its effort to reach profitability as concerns about a recession trigger layoffs, closures of business units and other measures to rein in expenses across the tech industry. Regional rivals GoTo Group and Sea Ltd — both also loss-making — are implementing job cuts and said they would reduce expenses to stem costs.

Grab said it slowed hiring, streamlined functions and reduced incentive spending and corporate costs as a percentage of the value of the goods and services it provides. The company plans to bring down its “regional headcount,” CFO Peter Oey said on a conference call, without providing numbers.

Its deliveries business unit reached breakeven on the basis of adjusted Ebitda, three quarters ahead of the target. Revenue and adjusted Ebitda at the ride-hailing unit doubled.

Grab’s continued recovery in the mobility segment and steady margins are “encouraging,” Citigroup analyst Alicia Yap said in a note.

The company has sharpened its focus on its core services, distancing itself from the long-held strategy to become the region’s “superapp.” The superapp vision was aggressive, but led to extensive losses. Grab lost US$3.4 billion in 2021 and had piled up almost US$1 billion in losses in the first two quarters of this year.

Grab also expressed confidence in customer demand even as the tech industry faces economic challenges. It said it expects annual revenue of US$1.32 billion to US$1.35 billion, compared to its previous guidance of US$1.25 billion to US$1.3 billion.

Grab’s cash and cash equivalents fell to US$2.4 billion at the end of September from about $2.8 billion at the end of June. – BLOOMBERG