Grab Holdings Ltd reported first-quarter profit that exceeded analysts’ estimates, helped by resilient demand for ride hailing and delivery in a Southeast Asian market rattled by economic and political challenges.
Adjusted earnings before interest, taxes, depreciation and amortisation rose to US$154 million in the quarter ended March 31, the Singapore-based company said Tuesday. Analysts estimated US$146.3 million on average, according to data compiled by Bloomberg. Revenue increased 24% to US$955 million, also beating projections.
The company didn’t change its annual forecast, maintaining an annual sales outlook of US$4.04 billion to US$4.10 billion. It expects adjusted Ebitda of US$700 million to US$720 million. Grab’s shares gained about 2% in late US trading.
After years of spending to gain market share in Southeast Asia, Grab still faces tough competition from rivals led by Indonesian champion GoTo Group. Grab is attracting users with products such as shared rides and deliveries in a sluggish economy, while curtailing a once-frenetic pace of expansion.
In a speech last week, Indonesian president Prabowo Subianto outlined a surprise plan to cap the ride-hailing commissions that companies like Grab and GoTo collect from drivers and riders in the region’s largest economy.
The companies’ cut will be set at a maximum of 8% of fares, compared with about 20% previously, potentially squeezing margins and crimping revenue.
Indonesia is Southeast Asia’s biggest ride-hailing market, with millions of drivers relying on app-based transport and delivery services. Protests over pay and working conditions have intensified in recent years, with many drivers unhappy with what they’ve described as exploitative app policies and regulatory negligence.
Grab, backed by Uber Technologies Inc, has seen growth slow dramatically from triple-digit rates in years past as it takes steps to focus on profitability.
An increased customer base has left the company with less room for user gains, prompting it to introduce novel offerings – including AI-powered concierge tools and ways to split ride fares with friends – to entice consumers in a challenging economy.
In a bid to alleviate the cutthroat competition, Grab has also been exploring a combination with Jakarta-based GoTo. The yearslong effort has been delayed by regulatory scrutiny as well as differences over perceived valuation.
In the latest hurdle for a deal, negotiations have snagged over wireless carrier Telkomsel’s roughly 2% stake in GoTo.
Shares of Grab remain far below their initial price in its 2021 listing. The company has also taken steps to expand beyond ride hailing and delivery, betting on new initiatives in areas such as digital finance.
