Singapore’s Grab Holdings Ltd has reported a plunge in revenue that missed estimates as massive promotional offers and higher driver incentives hurt the largest ride-hailing and food delivery firm in Southeast Asia.
Shares of Grab, which reported its first quarterly earnings since going public in December, fell 10% to $4.71 in pre-market trading in New York. They have more than halved in value since their debut.
Grab said it invested aggressively in improving incentives for drivers to boost supply as ride-share demand recovered from pandemic lows.
That led to a 27% decline in the unit’s fourth-quarter revenue.
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Chief Financial Officer Peter Oey said in an interview that driver demand has shot up and the company was still catching up in terms of supply.
Founded in 2012 as a regional taxi app in Malaysia, SoftBank Group-backed Grab operates a “super app,” which provides ride-hailing, food and grocery delivery, mobile banking and payments in Southeast Asia.
The delivery unit, which focuses on food delivery services in countries including Singapore and Malaysia, recorded a 98% drop in revenue as it poured money into incentives to retain its market leader position, and increased dining out hurt.
“All those elements [investments] will pay off in the long term,” Oey said, adding that its two biggest units – mobility and delivery – were strong going into the first quarter.
Grab, which combined with blank cheque firm Altimeter Growth Corp in a $40 billion merger last year and went public in December, is facing rising competition from other “super apps” such as Gojek in Indonesia.
Grab’s revenue fell 44% to $122 million for the three months ended December 31, below the average analyst estimate of $167 million, according to Refinitiv data.
Its loss was $1.1 billion, which included expenses related to Grab’s listing, versus a loss of $635 million a year earlier.
- Reuters with additional editing by Sean O’Meara
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