Grab posts first profitable quarter, announces share buyback

SINGAPORE – Grab it posted its first profitable quarter, posting a profit of $11 million, the Southeast Asian shipping giant said in its fourth quarter earnings report Thursday.

This compares with a loss of $391 million recorded in the same period a year ago. The increase was “mainly due to the improvement in group adjusted EBITDA, changes in the fair value of investments and reduced share-based remuneration expense,” the company said.

Revenue for the quarter came in at $653 million, beating LSEG analysts’ estimates of $634.86 million.

Losses for the full year 2023 totaled $485 million, down 72% from $1.74 billion a year ago.

In addition to arranging transportation, the company also provides financial services such as payments and insurance, as well as food, grocery and package deliveries.

“We got out [2023 with] mobility exceeding pre-Covid levels. We’re seeing very strong demand in the mobility space,” Grab CFO Peter Owey told CNBC in an exclusive interview on Friday, adding that tourism is “growing a lot.”

“If you look at the supply business, we have another record year-on-year growth of 13%. Now we have more users on our platform also at the same time. So we have really strong momentum,” he said on CNBC’s “Squawk” Box Asia.”

Grab announced on Thursday that it will buy back up to $500 million worth of Class A ordinary shares for the first time.

Grab has been largely unprofitable over its years of operation, racking up billions of dollars in losses since its inception in 2012.

In the early years of business, tech startups tend to prioritize growth over profitability, which usually means burning through a lot of cash. But with global macro uncertainty slowing growth, they have been forced to renew their focus on profitability and be more cautious with spending.

In the fourth quarter, total incentives – which include partner and user incentives – were further reduced to 7.3% of the total value of goods sold, Grab said in its report. That compares with 8.2% in the same period a year ago, “as we continued to improve the health of our market.”

Grab used to hand out incentives to attract drivers and passengers to its platform, but these are now being reduced as the company seeks to increase profitability.

On whether Grab will reach a point where it doesn’t need to incentivize people to stay on the platform, Owi said incentives will “always be leverage” for the business.

“I don’t think we’ll see a world where there aren’t any incentives,” he told CNBC, adding that the incentives help “make sure we have an adequate supply” of drivers and attract price-sensitive customers.

For 2024 Grab expects revenue to come in between $2.70 billion and $2.75 billion, below the LSEG analyst consensus of $2.8 billion.

Shares of Grab closed down 8.41% on Thursday. Its share price has plunged 75.8% from its opening price of $13.06 in December 2021, when the firm first listed on the Nasdaq.