Grab(GRAB.US) reported better-than-expected third-quarter earnings, leading to a significant increase in stock price after raising full-year expectations.

Southeast Asian ride-hailing and delivery company Grab Holdings (GRAB.US) released its third-quarter financial report after the market closed on November 11th, US Eastern Time. The data showed that revenue in the third quarter grew by 17% to $716 million, higher than analysts' expectations of $697 million. Earnings per share were $0.01, exceeding the market average expectations. Due to cost-cutting measures taken to address intense competition, the company raised its revenue forecast for the year, causing its stock to surge nearly 15% in after-hours trading on the US stock market. Grab stated that revenue for the year could reach $2.78 billion, higher than the earlier forecast of $2.75 billion. Adjusted full-year earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be between $308 million and $313 million, higher than the previous forecast of $270 million. Grab is the largest ride-hailing and delivery company in Southeast Asia, and the company is trying to demonstrate that its cost-cutting efforts are paying off. The company, headquartered in Singapore, has been focused on increasing market share and defending against competition for years, but is now focusing on profitability. However, Grab still needs to prove that it can maintain a healthy balance between profit and growth, even as intense competition from rivals like GoTo Group puts pressure on its carpooling and delivery profits. The stock briefly rose to $5.04 in after-hours trading, closing at $4.38 during regular trading hours. Grab was once one of the hottest startups in Southeast Asia, but since going public through a US blank-check company at the end of 2021, its stock has fallen by around 60%. However, as the company's losses narrow, its stock has risen this year, surpassing its main regional competitor, GoTo in Indonesia. As customers in the region curb spending in response to rising inflation and interest rates, the growth rate of Grab and other companies supported by Uber Technologies, Inc. (UBER.US) has slowed significantly from the triple digits of the past few years. In the challenging macroeconomic environment, as Grab's customer base expands, the pace of demand growth has slowed, and consumers are less willing to book rides or order deliveries to their door. Bloomberg Intelligence analyst Nathan Naidu stated that Grab's revenue growth may have slightly slowed in the third quarter, but is expected to rebound in the fourth quarter, as Chinese tourists from China National Gold Group Gold Jewellery may boost Grab's ride-hailing orders during the upcoming China holiday period to Southeast Asia. Sensor Tower estimates that Grab's transaction user base in the third quarter may have grown by more than 10% compared to the same period last year, with a slight increase on a month-over-month basis. However, this may be due to the adoption of cheaper service levels, which means that the dilution of average user spending may offset the impact of the increase in user base on revenue, putting pressure on its ride-hailing and delivery businesses. Grab remains optimistic about the long-term growth prospects in Southeast Asia. The company has 42 million monthly active users and sees room for expansion in a region with a population of approximately 650 million. Chief Financial Officer Peter Oey stated in an interview, "As we head into the last few months of the year, we remain optimistic. We see good conversion from EBITDA to free cash flow, which is another key metric we focus on."