Grab advances break-even timeline on boost from cost cuts, strong demand

Grab advances break-even timeline on boost from cost cuts, strong demand

Grab Holdings, the prominent Southeast Asian internet company, has revised its outlook, predicting a reduced operating loss for the current year and advancing its timeline for achieving profitability. The company’s strategic shift, along with recent workforce reductions, is contributing to these positive projections, bolstered by robust demand for its food delivery and ride-sharing services.

In the latest quarter, Grab delivered results that exceeded expectations, resulting in a 9% surge in its US-listed shares. The company now anticipates breaking even on an adjusted core earnings basis in the current quarter, ahead of its initial target set for the fourth quarter. This development comes in conjunction with an estimated $80 million in annualized cost savings stemming from the recent changes, including workforce layoffs.

Grab’s ongoing restructuring initiative aims to curtail expenses, involving measures such as trimming its cloud-related costs and refining consumer and worker incentives. The company recently streamlined its workforce by reducing around 1,000 positions, equating to roughly 11% of its workforce. This marked its most substantial round of layoffs since early 2020, when the pandemic commenced.

The company’s adjusted loss before interest, taxes, depreciation, and amortization is now expected to fall between $30 million and $40 million, a significant improvement from its previous projection of $195 million to $235 million.

“Whilst we’ve been optimizing our bottom line, we’re also ensuring that we can sustain business growth,” commented Grab CFO Peter Oey in an interview. He further emphasized the potential in the mobility sector, noting that pre-Covid operational levels are still a target.

For the quarter concluded on June 30, Grab reported a remarkable 77% surge in revenue to $567 million, surpassing analysts’ consensus estimate of $546.1 million, according to Refinitiv data. Sales from its food delivery segment, the largest arm of its operations, more than doubled, while its ride-sharing business witnessed a 29% growth. However, delivery sales slightly missed Refinitiv’s estimates.

The company also acknowledged a $50 million charge primarily attributed to the June layoffs. On an adjusted basis, Grab’s loss per share was 3 cents, outperforming the estimated 5 cents.

This shift in strategy coupled with robust financial performance indicates that Grab’s multifaceted approach to adapting to market conditions and optimizing its operations is steering the company toward a more promising future.

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