SINGAPORE: While Grab’s shares rose after the 50 per cent corporate income tax rebate Budget 2025 announcement for Singapore companies, they soon plummeted 11 per cent in US postmarket trading after the company projected full-year revenue below analyst expectations.
According to The Straits Times, the Singapore-based ride-hailing and food delivery giant anticipates revenue growth of 19 to 22 per cent in 2024, reaching between US$3.33 billion (S$4.46 billion) and US$3.4 billion (S$4.56 billion). That’s lower than the US$3.5 billion (S$4.69 billion) average forecast from analysts surveyed by Bloomberg.”
Despite posting a 23 per cent decline in quarterly net income, Grab increased spending on incentives by nearly 30 per cent to increase usage of its ride-hailing, food delivery, and financial services, intensifying competition with GoTo Group and other rivals.
Competition and spending weigh on growth
Chief financial officer Peter Oey acknowledged the cautious forecast in an interview but remained optimistic. “We always take more of a conservative view when we give guidance at the beginning of the year,” he said, adding that the outlook has historically improved as the year progresses.
He added, “We should be positive net income in 2025.” In response to the recent rise in incentives, Mr Oey later explained on an earnings call that the fluctuations in such costs were intentional.
Bloomberg Intelligence analyst Nathan Naidu noted that Grab’s 2025 guidance points to a steady 19 per cent revenue growth rate, with a wider earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin despite intensified competition.
He added that Grab’s well-established user and rider ecosystems will be key in defending against competitors like ShopeeFood, which recently overtook Gojek as the third-largest food delivery app in the region, as per Momentum Works.
Market challenges and potential merger talks
As it competes with foodpanda and GoTo, Grab faces added challenges from weak consumer sentiment, as inflation and interest rates impact customer spending.
Earlier this month, Grab Holdings and GoTo Group reportedly restarted merger talks, with Grab considering acquiring GoTo for over US$7 billion (S$9.38 billion). However, regulatory hurdles remain a major obstacle, with both companies still in early discussions.
In the fourth quarter of 2024, Grab’s revenue rose 17 per cent to US$764 million (S$1.023 billion), exceeding analysts’ forecast of US$757.6 million (S$1.015 billion). Net profit for the quarter was US$27 million (S$36.18 million), down from US$35 million (S$46.90 million) a year earlier but above the US$10.3 million (S$13.80 million) estimate.
For the full year, Grab reduced its net loss to US$105 million (S$140.69 million), lower than the US$434 million (S$581.50 million) loss in 2023, while revenue grew 18.6 per cent to US$2.8 billion (S$3.75 billion).
Grab co-founder and CEO Anthony Tan highlighted the company’s fourth quarter was its “strongest quarter ever”. He said, “We finished 2024 with on-demand GMV (gross merchandise value) growth accelerating to 20 per cent year on year, and as we continue to generate profitability at scale.”
He added that the platform has more users than ever and believes it will help the company’s growth momentum in 2025 while increasing user engagement. /TISG