Signages at the Grab Holdings Ltd. headquarters in Singapore, on Sunday, Aug. 20, 2023. Grab released earnings results on Aug. 23. Photographer: Ore Huiying/Bloomberg via Getty Images
Ore Huiying | Bloomberg | Getty Images
Singapore-based Grab said on Wednesday that its ride-hailing unit is on track to hit pre-Covid levels by the end of this year.
In its second-quarter earnings release, Grab reported that its mobility gross merchandise value for the quarter was $1.32 billion, a 28% increase from $1.03 billion in the same period a year ago. Grab, which also offers food delivery and mobile payments, said that its mobility GMV has recovered to 85% of pre-Covid levels.
“International traveler demand continues to recover. We increased airport rides by 64% year on year to reach 77% of pre-Covid levels,” COO Alex Hungate said during an earnings call Wednesday.
“Domestic demand also further normalized across our markets with mobility GMV now 85% of pre-Covid levels. When we compare mobility GMV levels between second quarter 2023 and the same period in 2019, several of our core markets such as Malaysia, Singapore and Thailand have either reached or surpassed these levels,” said Hungate.
Pandemic lockdowns and restrictions hit Grab’s ride-hailing business. In the third quarter of 2021, its mobility business fell behind its deliveries unit, recording $88 million in revenue for a 26% year-over-year decrease while the latter’s revenue soared 58%. Singapore lifted most of its Covid-19 restrictions in April 2022 and all remaining pandemic-era border measures in February this year.
We remain on track to exit 2023 at pre-Covid GMV levels.
Peter Oey
CFO, Grab
In February, Grab CFO Peter Oey told CNBC the company has “seen a lot more traffic” as people head back to offices and resume travel.
“We remain on track to exit 2023 at pre-Covid GMV levels,” Oey said during Grab’s earnings call on Wednesday.
At the start of 2023, Grab also resumed GrabShare — its car-pooling service which was suspended during the pandemic.
“GMV growth was attributed to the growth in mobility and deliveries GMV, and group monthly transacting users,” Sachin Mittal, head of telecom, media and technology research at DBS Bank, said in a note.
Deliveries GMV grew 4% year on year due to an expanding subscriber base for GrabUnlimited, a monthly subscription plan that offers users discounts and deals.
DBS said Grab is fully valued and that “we do not see a big room for margin upliftment in the long-term.”
Grab’s Hungate said driver supply levels are currently at 84% of pre-Covid levels and that the firm will “continue to focus on improving driver supply.” Singapore has faced a shortage of drivers since the pandemic, resulting in higher fares and longer waiting times.
In July, Grab said it would acquire Trans-cab to grow its driver base and digitize Trans-cab’s fleet operations. Trans-cab is Singapore’s third largest taxi operator and has a combined fleet of more than 2,500 vehicles. The deal is expected to be completed by the fourth quarter.
“The company flexed its competitive strength this quarter by acquiring Trans-cab. We believe the acquisition provides inroads to car leasing and expands the fleet for Grab, which should further bolster its mobility services in Singapore,” Kai Wang, senior equity analyst at Morningstar Asia, said in a Aug. 24 report.
Pulls forward profitability timeline
On Wednesday, Grab posted revenue and net loss figures that beat estimates. Revenue for the second quarter was $567 million, up 77% from a year ago. Its net loss was $135 million, an improvement of 75.3% from the $547 million logged in the second quarter of 2022.
Grab’s U.S.-listed shares closed 10.78% higher on Wednesday.
“Overall, it is quite a positive set of numbers,” said Jonathan Woo, senior research analyst at Phillip Securities Research.
“At least there is some end in sight for profitability. We think that Grab could turn a net profit as soon as early 2025 if costs continue to improve,” said Woo.
Grab is largely unprofitable, amassing billions of dollars in losses since its inception. But on Wednesday, Grab pushed forward its breakeven target to the third quarter. It previously forecast it would hit break even in the fourth quarter. For 2023, Grab expects revenue between $2.2 billion and $2.3 billion.
Over the past few months, Grab cut costs in response to macroeconomic headwinds, reducing customer incentives and discretionary spending, as well as conducting mass layoffs. Other regional tech giants like Sea and GoTo similarly slashed costs through methods such as mass layoffs and freezing salaries.
In June, Grab announced it would cut over 1,000 jobs in order to “adapt to the environment” and a higher cost of capital. It was the group’s largest round of layoffs since 2020, when it laid off 360 employees in the face of pandemic challenges.