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Grab announces a buyback plan and reports a profitable quarter but projects weak revenue in 2024.

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Grab Holdings, the top ride-sharing and food delivery company with headquarters in Singapore, reported its first-ever quarterly profit and the start of a share repurchase program in a historic move. But even with these encouraging signs, worries about further expansion surfaced when the business revealed a cautious estimate for its yearly revenues in 2024.

With the economy recovering from the pandemic, Grab’s ride-sharing business had growth in 2023 that was comparable to pre-pandemic levels. On the other hand, its food delivery services experienced a deceleration after the extraordinary spike that was observed during the lockdown. CFO Peter Oey was upbeat in spite of this, saying, “There will be revenue acceleration in the years beyond 2024 as investments in our new products bear fruit.” In order to promote high-value transactions, Oey underlined Grab’s strategic focus on creating premium options within its delivery and mobility services.

Though opinions on Grab’s profitability were generally positive, the company’s U.S.-listed shares saw a little decline, which the market interpreted as a reflection of its low revenue projection for the upcoming fiscal year 2024. Grab predicts revenue for the year to be between $2.70 billion and $2.75 billion, which is below than experts’ average projection of $2.80 billion.

Grab expressed confidence in its long-term growth potential by announcing plans for a $500 million share repurchase program in response to these expectations. This action is in line with a comparable plan by rival company Uber, which just revealed its first-ever share repurchase.

Furthermore, Grab expects an adjusted core profit for the entire year of $180 million to $200 million, beyond the $135.2 million previously projected. The company’s $653 million fourth-quarter sales above analyst estimates of $629 million. The company’s mobility division had a significant 26% growth, which was attributable to higher travel demand during the Christmas season. In a similar vein, its distribution unit had a 20% increase in income during that time.

Notably, Grab’s fourth-quarter net income of $11 million was made possible, in part, by a “reversal of an accounting accrual.” For the business, which generated its first adjusted core profit in the third quarter of its fiscal year, this accomplishment represents a critical turning point. Strategic actions including personnel reduction and cost-cutting strategies in incentives and technology costs during the last two years have supported this success.

To sum up, Grab is happy with its first-ever quarterly profit and the start of a repurchase program, but its cautious revenue projection for 2024 is a cause for concern. However, Grab is confident about its long-term development trajectory beyond the anticipated period since it is making strategic investments and is committed to improving its service offerings.

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