According to Bloomberg, Grab Holdings Ltd., the Southeast Asian ride-hailing and food delivery company, has seen its users pulling back due to slowing spending by customers grappling with a higher rate of inflation and rising interest rates.
The company reported a narrower quarterly loss, but it said its gross merchandise value grew just 3% in the three months through March to US$4.96 billion. That’s down from 24% for the full-year 2022 and missed the US$5.22 billion analysts estimated. The US-listed shares closed 15% lower at $2.75 Thursday, the biggest drop since March 2022.
Grab’s adjusted losses before interest, taxes, depreciation and amortization in the first quarter narrowed to US$66 million. That compares with the US$118 million loss analysts estimated. On that basis, the annual loss is set to be as small as US$195 million, compared with US$275 million forecast previously, Grab said. Quarterly revenue more than doubled and topped estimates.
Grab’s user growth also slowed as competition in Southeast Asia’s ride-hailing and delivery markets intensified, with the contenders luring customers with promotions and lower prices.
Grab also has been slower to reduce expenses than regional competitors — as Singapore’s Sea Ltd. and Indonesia’s GoTo Group eliminated thousands of jobs last year, Grab refrained from mass layoffs.
After years of losses, Grab has predicted a breakeven on an adjusted basis in the last quarter of this year. But on a net income basis, it is far from profitability. In the first quarter, its net loss narrowed to US$244 million from US$423 million a year earlier.
Revenue from Grab’s deliveries segment tripled to US$275 million. Sales at its mobility arm rose 72% to US$194 million, while revenue from its financial services unit more than tripled to US$38 million.
“Grab’s fifth consecutive improving-Ebitda margin quarter shows that it’s on track for its goal to break even in 4Q. Further scaling back of incentive spending, or targeting them at active spenders, should increase revenue earned per dollar of gross merchandise value (GMV) without compromising user retention, but that will likely come at the expense of GMV growth.” according to Bloomberg Intelligence.