Grab narrows losses for Q1 FY2022, driven by mobility, food and grocery verticals

NEW YORK-LISTED Grab narrowed losses for the first quarter ended Mar 31, reporting a loss of US$435 million from US$666 million a year prior.

Revenue grew 6 per cent to US$228 million from US$216 million; this came on the back of growth in its food and grocery business segment with the Jaya Grocer acquisition, as well as a rebound in the mobility segment. (*see amendment note)

Anthony Tan, the company’s chief executive officer, said: “Our first-quarter results are a testament to the resilience of South-east Asia’s economy as we moved past the worst of the pandemic restrictions. We are optimistic that our business will continue to strengthen as more countries pivot to living with Covid-19.”

The mobility segment revenue dropped 22 per cent in Q1 FY2022 to US$112 million from US$145 million, but losses for the segment’s adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) narrowed to US$82 million from US$115 million the year before. (*see amendment note)

Grab has seen recovery in both the demand and supply sides of the mobility marketplace, with the number of active drivers reaching the highest level since Q2 2020. The declines in revenue and segment earnings were due to costs in acquiring drivers to capture demand.

Inflationary pressures have yet to make an impact on consumer demand in the mobility segment, said Tan.

“We have not seen headwinds in demand from higher inflation rates. What is more evident and observable are the higher fuel prices. We have slightly increased prices due to higher fuel prices in Singapore and Vietnam, and yet to see an impact on mobility demand, in fact we have seen demand grow faster than supply,” he said.

The deliveries segment grew 70 per cent year on year in Q1 FY2022 to US$91 million from US$53 million; the commission rate grew to 19.9 per cent from 18.2 per cent in the year before. Segment-adjusted Ebitda saw losses widen from US$4 million to US$56 million, but Q4 FY2022 total incentives as a portion of deliveries gross merchandise value (GMV) fell to 16.3 per cent from 18.2 per cent in Q4 FY2021.

Revenue from the financial services segment grew 52 per cent for Q1 FY2022 to US$11 million from US$8 million, but segment adjusted Ebitda losses rose to US$102 million from US$78 million. Revenue was driven by off-platform GMV growth, while losses were driven by investment into the digital bank strategy and higher consumer incentives.

Asked about media reports on a potential acquisition of Malaysian bank, Ambank, Grab president Ming Maa reiterated the company’s stance of not commenting on market rumours.

Grab has a very conservative stance on [mergers and acquisitions]. Cash is king for us.” He added that the company is generally looking at opportunities that accelerate its path to profitability or meaningfully improve unit economics in its marketplace and ecosystem. “Absent these two criteria, we are going to be very disciplined around M&A,” he said.

Looking ahead, Grab is optimistic about the worst of pandemic restrictions in the region being behind them. FY2022 revenue guidance has been set at between US$1.2 billion and US$1.3 billion, as the mobility segment is set to stabilise supply and taper off driver incentives in the second-half of FY2022.

Grab is looking to tap into the growth of its delivery segment by expanding into under-penetrated outer cities and towns in the region, with complete integration with Jaya Grocer expected by the second half of 2022.

On the financial services front, the digital bank is expected to launch publicly in the second half of 2022, and Grab’s buy-now-pay-later product will be pushed into more markets this year and the next.

Peter Oey, Grab’s chief financial officer, said: “Looking ahead, we are focused on growing sustainably by being disciplined with our capital, optimising our fixed-cost base and tapering our incentive spend as the market rationalises. We believe these actions will put us on a path to achieving segment-adjusted Ebitda breakeven for deliveries by the end of 2023.”

*Amendment note: An earlier version of the story said that revenue growth grew 6 per cent to US$4.8 billion from US$3.6 billion rather than to US$228 million from US$216 million, and said that the mobility segment was not adjusted Ebitda postiive.