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The headquarters of Grab Holdings Ltd., in Singapore. Grab Holdings Ltd., reported its latest earnings on Feb. 23, 2023.
Bryan van der Beek | Bloomberg | Getty Images
Singapore-based ride-hailing and food delivery giant Grab on Thursday posted strong revenue growth and narrowed losses in its latest earnings report.
The company reported that revenue for the whole of 2022 and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) for the second half of 2022 exceeded guidance.
Revenue for the fourth quarter of 2022 grew 310% to $502 million, up from $122 million a year ago. Full-year revenue came in at $1.43 billion, up 112% from $675 million in 2021 and exceeding guidance of $1.32 billion to $1.35 billion.
“We achieved these results by focusing on capturing the rebound in mobility demand, optimizing our costs, reducing our cost-to-serve and innovating on products and services that drive stickiness and engagement within our ecosystem,” said Anthony Tan, Grab’s co-founder and group CEO.
Our mobility business is still at about 74% of pre-Covid levels. We should be getting back to pre-Covid levels by fourth quarter this year.
Peter Oey
Chief financial officer
Grab offers a range of services from ride-hailing, food delivery, parcel delivery to mobile payments through GrabPay.
“Lockdowns were being released in the second half of last year. We have seen a lot more traffic. People are going back to work, people are starting to travel, et cetera,” said Peter Oey, chief financial officer of Grab, in a CNBC interview ahead of the earnings call.
“But our mobility business is still at about 74% of pre-Covid levels. We still have ways to go in mobility,” said Oey, adding that Grab expects levels to return to normal by the fourth quarter of this year.
The company said that it is bringing forward its group adjusted EBITDA breakeven guidance to the fourth quarter of 2023, half a year earlier than its previous guidance.
The group’s adjusted EBITDA for the quarter was negative $111 million, down from a negative $305 million a year ago. Adjusted EBITDA shows a company’s profitability and removes various one-time, irregular, and non-recurring items from EBITDA.
Meanwhile, losses for the quarter also narrowed 64% to $391 million from $1.1 billion a year ago. Full year losses came in at $1.7 billion, down 51% from $3.5 billion in 2021.
Grab is gearing up to capitalize on opportunities in Southeast Asia, such as launching an updated version of GrabShare in the Philippines or partnering with WeChat to provide enhanced services to Chinese travelers, said Alex Hungate, chief operating officer, in the earnings call.
Deliveries rebound
Deliveries revenue increased to $268 million in fourth quarter 2022, up from $1 million in the same period in 2021.
The increase was mainly due to contributions from Malaysian mass-premium supermarket chain Jaya Grocer, which Grab acquired a year ago, as well as incentive cuts and a licensing requirement in one market leading to a change in business model of certain deliveries offerings.
We will continue to cut incentives and look at areas of discretionary spending, whether it is facilities, travel, entertainment or cloud costs.
Peter Oey
Chief financial officer
Grab said that it transitioned from “being an agent arranging for delivery services provided by drivers, to being contractually responsible for the delivery services provided to users.” The change contributed $68 million in deliveries revenues in the quarter, said Grab.
Without factoring the business model change, revenue growth would have been 255% year-over-year and 14% quarter-over-quarter, according to the report.
Continued cost cuts
The tech giant, as well as Sea Limited and GoTo, have pledged to stem losses and embark on cost-cutting measures.
Incentives dropped to 8.2% of gross merchandise volume in the fourth quarter from 9.4% in the previous quarter.
We are making sure we can grow the business sustainably and also deliver the margin improvement as we continue to reinvest in other areas. So it’s a delicate balance that we are making.
Peter Oey
Chief financial officer
“We will continue to cut incentives and look at areas of discretionary spending, whether it is facilities, travel, entertainment or cloud costs,” said Oey, adding that the firm expects cloud costs to be reduced by 5% to 10% year-on-year, driven by efforts to optimize processing speeds and improve network costs.
“We have also frozen hiring across most of our regional functions. As such, we anticipate headcount and our regional corporate costs to be lower in 2023,” said Oey.
He added that the company has shortened drivers’ waiting time by 27% year-on-year. “That’s another big lever for us in terms of improving our cost to serve. The drivers are earning 13% more on a year-over-year basis.”
“We are making sure we can grow the business sustainably and also deliver the margin improvement as we continue to reinvest in other areas. So it’s a delicate balance that we’re making. And we feel that the execution playbook that we have, gets us to the ultimate goal of profitability by the end of this year,” said Oey.
Grab expects revenue for 2023 to range between $2.20 billion and $2.30 billion. Grab listed on Nasdaq in December 2021. Its stock has plummeted 72% since then.
Performance of Grab’s stock
