Grab crashes 37.3% after Q4 net loss nearly doubles

NASDAQ-LISTED Grab sank deeper into the red for the fourth quarter ended Dec 31, chalking up a net loss of US$1.1 billion compared with US$576 million a year ago after its ride-hailing business suffered from Covid-19 disruptions.

The loss included US$328 million related to listing expenses and US$311 million of non-cash interest expense related to convertible redeemable preference shares that ceased upon the public listing.

Revenue plunged 44 per cent to US$122 million, with declines in mobility and delivery revenue but an improvement in financial services revenue.

Shares in the company crashed 37.3 per cent on Thursday (Mar 3) after the results release to close at US$3.28 in New York, marking its largest single-day plunge. A total of 115.9 million shares changed hands. As of late Friday morning in New York, it was up 13 per cent at US$3.70 amid a wider market tumble.

Grab went public in the world's largest blank-cheque deal last December but its shares have been plummeting as investors take flight from loss-making companies. Over US$22 billion has been wiped from the group's market value after its share price fell more than 60 per cent.

Market watchers have flagged intensifying competition on all fronts, including in the emerging businesses of digital banking and grocery delivery.

The company's growth story could be losing favour with investors. For the fourth quarter, revenue from mobility slipped 27 per cent to US$105 million while gross merchandise value (GMV) fell 11 per cent to US$765 million.

Grab has been investing in incentives to pull drivers back to the platform. In the first earnings call since the group's listing, Grab chief executive Anthony Tan said the company's "driver supply base moderated down amid lower mobility demand" in the third quarter.

"We're pre-emptively investing to recalibrate driver supply to capture the strong recovery in mobility demand," he said.

Tan also said the company is investing in incentives to maintain its category position, and expects these investments to continue for the next 2 quarters. During the full year, consumer incentives soared 73 per cent to US$1.1 billion while driver and merchant incentives increased 15 per cent to US$717 million.

Although GMV in the delivery segment grew 52 per cent to hit a record US$2.4 billion in Q4, revenue plunged 98 per cent to US$1 million after heavy incentives investments.

Meanwhile, financial services revenue was negative at US$1 million, improving by US$3 million year on year. Grab's reported revenue is net of consumer, merchant and driver incentives, which differs from peers including Uber and Lyft.

The group's enterprise and new initiatives business also reported a fall in revenue, declining 39 per cent to US$16 million.

On a full-year basis, net loss deepened to US$3.4 billion from US$2.6 billion, despite revenue increasing 43.9 per cent to US$675 million.

GMV grew by 29 per cent to hit a record US$16.1 billion, exceeding Grab's projection of US$15 billion to US$15.5 billion. Average monthly transacting users for 2021 were 24.1 million, 2 per cent lower primarily due to severe lockdowns in Q3.

The company said it is progressing towards core food delivery segment adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) breakeven by the first half of 2023 and deliveries segment adjusted Ebitda breakeven by the end of 2023.

In the longer term, Grab is targeting a "steady state" adjusted Ebitda to GMV margins of 12 per cent in mobility and 3 per cent in deliveries.

Full-year adjusted Ebitda for mobility was US$345 million, translating to a margin of 12.4 per cent on GMV for 2021, which improved from 9.5 per cent in 2020.

In the delivery segment, adjusted Ebitda of US$130 million represented a margin of -1.5 per cent as a percentage of GMV, an improvement from -3.9 per cent in 2020.

READ MORE:

• Valuation metrics favoured by digital economy firms going public need a long, hard look
• Sea faces prospect of depleting fuel for Shopee dream