Grab reports first ever quarterly profit of US$11 million for Q4 2023; announces share buybacks 

NASDAQ-LISTED Grab is reporting its first profitable quarter since business combination, with a profit of US$11 million.

Revenue for the quarter grew 30 per cent to US$653 million from US$502 million a year prior. This exceeded analysts’ consensus of US$638.6 million for the quarter.

Revenue growth was attributed to improved performance across all business segments as well as reductions in incentives. Incentives for the fourth quarter of 2023 were cut to 7.3 per cent of gross merchandise value (GMV), from 8.2 per cent of GMV in Q4 2022.

Group adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for Q4 2023 was US$35 million, a reversal from a negative group adjusted Ebitda of US$111 million in Q4 2022. The quarter’s group adjusted Ebitda is also higher than Q3 2023’s Ebitda of US$29 million.

Profit was driven by improvements to group adjusted Ebitda, fair-value changes in investments, and lowered share-based compensation expenses. A reversal of an accounting accrual being no longer required also aided the group in turning profitable.

Share-based compensation expenses for Q4 2023 fell to US$66 million, from US$90 million in Q4 2022.

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Loans disbursed for Q4 2023 were up 57 per cent year on year to US$1.5 billion, with US$326 million loans outstanding. The loan growth was driven by ecosystem lending and GrabFin, and the FlexiLoan growth from GXS Bank in Singapore.

Grab disclosed that non-performing loan ratios remain at a low single-digit, without elaborating further. Customer deposits across Grab’s digital banks stood at US$374 million at the end of 2023.

Meanwhile, GX Bank in Malaysia has seen over 100,000 customer signups in the first two weeks of launch, with 79 per cent of depositors being existing Grab users.

Over 80 per cent of GXS customers are linked to Grab’s ecosystem.  (* see amendment note below)

Losses for FY2023 narrowed to US$485 million, down 72 per cent from US$1.7 billion a year prior. Revenue for the year rose 65 per cent to US$2.4 billion, up from US$1.4 billion in FY2022. Revenue for FY2023 exceeded analysts’ consensus of US$2.3 billion.

Grab is forecasting revenue for FY2024 to range between US$2.7 billion and US$2.75 billion, with an adjusted Ebitda of between US$180 million and US$200 million.

Delivery margins are also expected to grow beyond 2024, with headroom for 100 to 200 basis points in the midterm. 

Chief executive officer Anthony Tan said: “We will continue to execute towards sustainable and profitable growth in 2024, as we deepen engagement with our users through affordable and high-value offerings, grow our financial services business, while continuing to outserve our driver and merchant-partners.”

The board of directors has authorised a share repurchase programme of up to US$500 million and repayment of an outstanding debt facility. The early repayment will save about US$50 million in interest expenses annually.

The share repurchase programme is in line with Grab’s updated capital allocation framework. The original framework emphasised prudent investment and discipline on spending, with an update now to return excess capital to shareholders after liquidity needs are met.

“This also underscores our commitment in driving shareholder value creation and only the highest return on investment opportunities when deploying our cash,” said Peter Oey, chief financial officer, Grab.

Following Delivery Hero’s statement about termination of talks to sell its South-east Asian food delivery business, Grab now confirms that it is not pursuing any acquisition of that business.

The decision not to move forward with the acquisition is based on confidence Grab has in its organic growth strategy, said Alex Hungate, chief operating officer, Grab.

“Therefore, the bar for any inorganic use of shareholder funds has to be very high in comparison with that. Any asset that we would acquire would have to be available at a very attractive price to cross that bar,” he said.

* Amendment note: This article previously stated that over 80 per cent of GXS customers are not linked to Grab’s ecosystem.