$Grab Holdings (GRAB.US)$ saw its shares climb as much as 15% in late US trading after the Southeast Asian ride-hailing and delivery giant raised its earnings forecast, benefiting from cost-cutting measures to navigate intense competition. The company now anticipates US$308 million to US$313 million in adjusted full-year earnings before interest, taxes, depreciation, and amortisation (EBITDA), an increase from its previous projection of up to US$270 million.

Grab's third-quarter earnings on this basis reached US$90 million, surpassing analysts' expectations of US$66.2 million, and it also posted its second net income to date.

As the largest ride-hailing and delivery firm in Southeast Asia, Singapore-based Grab is focused on profitability following years of spending to capture market share and stave off competitors. However, it faces ongoing pressure to balance growth with profitability as rivals such as GoTo Group continue to affect margins in both its ride-hailing and food delivery sectors.

Following the earnings announcement, Grab's stock peaked at US$5.04 in after-hours trading, up from its regular close at US$4.38. Despite a nearly 60% decline since its public debut via a U.S. blank-check company in late 2021, Grab shares have rebounded this year due to narrowing losses, outpacing Indonesia-based GoTo.

Grab has revised its revenue outlook to a maximum of US$2.78 billion for the year, slightly higher than the US$2.75 billion forecasted previously. Third-quarter revenue rose by 17% to US$716 million, above the US$697 million estimated by analysts.

Backed by $Uber Technologies (UBER.US)$, Grab's growth has slowed from past triple-digit rates as rising inflation and interest rates weigh on consumer spending in Southeast Asia. While demand continues to grow, it does so at a more tempered pace, with customers increasingly cautious about using ride-hailing and food delivery services in the current macroeconomic environment.

According to Bloomberg Intelligence, Grab's revenue growth might slow slightly in the third quarter before potentially accelerating in the fourth quarter, supported by an expected rise in ride-hailing demand from Chinese travellers during China's Golden Week holiday. Sensor Tower data suggests Grab's transacting users could increase by over 10% compared to last year in Q3, although the adoption of lower-cost service tiers might dilute average spending per user, impacting overall revenue in mobility and food delivery.

Despite these challenges, Grab remains positive about Southeast Asia's long-term growth, having reached 42 million monthly users across a region with a population of approximately 650 million.

"We remain optimistic as we approach the end of the year," Chief Financial Officer Peter Oey said. "We're seeing strong conversion from EBITDA to free cash flow, a key metric we closely monitor."

Reuters