Grab sees faster adjusted EBITDA breakeven as revenues quadruple, losses narrow in Q4

Southeast Asian tech major Grab on Thursday reported a surge in revenues and lower losses for the December quarter as well as the full year 2022.

The Nasdaq-listed company’s revenue surged 310% year-on-year to $502 million in Q4 2022. For the full year, revenue grew by 112% YoY to $1.4 billion on the back of continuous growth in mobility and delivery segments.

A reduction in incentives and a change in the business model for certain delivery offerings in one of its key markets also contributed to the revenue growth.

Grab also reported a loss of $391 million for the fourth quarter of 2022 — which is 64% lower than the $1.1 billion loss it posted a year ago. Grab’s loss for the quarter includes a $119 million non-cash expense from fair value changes on investments and $90 million in non-cash stock-based compensation expense.

“In the fourth quarter, we recorded strong year-over-year growth in Mobility revenue of 78%, and in our Deliveries segment, we focused on driving a more profitable and sustainable business, which resulted in Deliveries Segment adjusted EBITDA margins improving substantially on a year-over-year and quarter-over-quarter basis,” said Peter Oey, Chief Financial Officer of Grab.

The company accelerated the timeline to achieve group breakeven on an adjusted EBITDA basis to the fourth quarter of 2023, Oey added. The earlier projection was that adjusted EBITDA breakeven will happen in the second half of 2024.

The company’s gross merchandise value (GMV) grew 11% YoY (20% YoY on a constant currency basis) due to the recovery in mobility and growth in financial services.

Grab cut incentives to 8.2% of GMV, compared with 13% for the same period in 2021, and 9.4% for the previous quarter.

Its group Adjusted EBITDA loss was $111 million for the quarter, an improvement of 63% compared to negative $305 million for the same period in 2021, while Group Adjusted EBITDA margin was (2.2)% for the quarter, an improvement from (6.8)% in the fourth quarter of 2021 and from (3.2)% in the third quarter of 2022.

Grab reported $223 million in regional corporate costs for the quarter, up about 16% from $192 million in the same period a year ago, and up about 7.2% compared to $208 million in the prior quarter. The QoQ increase was driven by an increase in direct marketing costs due higher spending in the fourth quarter amidst the festive period, among other reasons.

The company’s cash liquidity at the end of fourth quarter was $6.5 billion, down from $7.4 billion at the end of the prior quarter. This was due to the repurchase of its Term Loan B in the aggregate principal amount of $750 million for an aggregate consideration of $738 million completed in November 2022.

Meanwhile, Grab’s net cash liquidity was $5.1 billion at the end of the fourth quarter, as compared to $5.3 billion in the prior quarter. The company said that reduction in its net cash liquidity in H2 2022 was $430 million, which is 65% lower than the reduction in net cash liquidity of $1,22 billion in H1 2022.

Full-year report

Loss for the full year of 2022 was $1,740 million, a 51% improvement YoY, primarily due to the improvements in Adjusted EBITDA, with Total Segment Adjusted EBITDA turning profitable, and the elimination of the non-cash interest expense of Grab’s convertible redeemable preference shares that converted to ordinary shares in December 2021.

Non-cash expenses included a $412 million expense in stock-based compensation expenses, $294 million in fair value changes on investments, and $150 million in depreciation and amortization.

Meanwhile, the company’s revenue grew 112% YoY, or 125% YoY on a constant currency basis, to $1,433 million. Excluding the $68 million uplift in revenues from the change in business model in certain Deliveries offerings in one of our markets, full-year revenues would be $1,36 billion, which exceeded our guidance range of $1,32 billion to $1,35 billion.

Continued growth in deliveries

Grab reported delivery revenue of $268 million in the fourth quarter 2022, which was up significantly from $1 million in the same period in 2021, and by 349% YoY for the full year of 2022. The company claimed that this growth was driven by contributions from Jaya Grocer, as well as a reduction in incentives, and the change in the business model of certain delivery offerings in one of its markets.

However, the deliveries GMV declined 4% YoY in the fourth quarter of 2022 but grew 5% YoY on a constant currency basis. On a full-year basis, deliveries GMV grew 15% YoY, or 22% YoY on a constant currency basis.

Deliveries segment adjusted EBITDA as a percentage of GMV expanded to 2.0% in the fourth quarter of 2022 from negative 3.5% in the same period in 2021 and after achieving breakeven in the prior quarter. For the full-year 2022, the Deliveries segment adjusted EBITDA improved by 73% YoY.

Grab also claimed that the majority of its six markets were profitable on a deliveries segment adjusted EBITDA basis. Deliveries segment adjusted EBITDA as a percentage of GMV was nearing or exceeding 3%.

Recovery in mobility

Mobility revenues rose 78% YoY, or 91% YoY on a constant currency basis, in the fourth quarter 2022, and grew by 40% YoY, or 46% YoY on a constant currency basis, for the full year of 2022.

The company gave attribution to the continued recovery amidst the reopening with local commutes and airport rides are returning to normalcy.

Mobility GMV was up 50% YoY, or 62% YoY on a constant currency basis, in the fourth quarter of last year. It grew 47% YoY, or 54% YoY on a constant currency basis, on a full-year basis.

As part of its efforts in increasing active driver supply, the company has relaunched carpooling service GrabShare in the Philippines and Singapore.

Financial Services, high expenses from digital banks

Revenue in this segment grew to $28 million in the fourth quarter 2022, from negative $1 million in the same period in 2021. And it grew by 166% YoY or 185% YoY on a constant currency basis for the full year 2022, thanks to contributions from its lending business and lowered incentives as a percentage of GMV.

Segment-adjusted EBITDA loss for the quarter improved 16% YoY, but declined 19% YoY for the full year, primarily attributed to higher expenses from Digibank operations.

GMV for Financial Services was up 16% YoY in the quarter, or 25% YoY on a constant currency basis, and by 27% YoY, or 31% YoY on a constant currency basis for the full year.

The commission rate increased to 2.9% in the fourth quarter of 2022 from 2.4% in the same period in 2021, and to 2.8% in the full year of 2022 from 2.3% in 2021.

Enterprise and new initiatives

Revenue in this segment rose 10% YoY or 20% YoY on a constant currency basis for the fourth quarter of 2022, and by 37% YoY, or 46% YoY on a constant currency basis for the full year of 2022. The company claimed that this growth was mainly due to growing contributions from its ads business. 

GMV for the fourth quarter declined 11% YoY or 4% YoY on a constant currency basis. Meanwhile, on a full-year basis, GMV grew 30% YoY, or 35% YoY on a constant currency basis.

Segment-adjusted EBITDA grew 28% YoY in the quarter compared to the same period in 2021, and by 121% YoY for the full year, due to lowered incentives as a percentage of GMV.

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