Grab updated FY22 GMV growth outlook to 22% - 25% Y/Y and raised revenue to $1.32 billion - $1.35 billion. However, JPMorgan, Deutsche Bank and Bank of America posted mixed views.
Grab is scheduled to announce Q4 earnings results before the U.S. market opens on February 23, 2023.
Latest Results
Revenue rose 143% YoY to $382 million, total GMV grew 26% YoY or 32% YoY on a constant currency basis, and loss for the quarter was $342 million.
Q4 Guidance
Grab sees Q4 Deliveries GMV of $2.40 billion - $2.50 billion, Mobility GMV of $1.10 billion - $1.15 billion, and Financial Services Pre-InterCo TPV of $3.60 billion - $3.70 billion.
It updated FY22 GMV growth outlook to 22% - 25% Y/Y from the previous 21% - 25% Y/Y,and raised revenue to $1.32 billion - $1.35 billion, up from the last $1.25 billion - $1.30 billion.
Grab Introduced Cost-Cutting Measures to Beat the Macro Headwinds
Grab's measures included a freeze on most hirings, salary freezes for senior managers, and cuts in travel and expense budgets.
Southeast Asia has not, and will not, be spared from rising prices and interest rates and the consequent effects on growth, CEO Anthony Tan said.
The company tried to stem losses by focusing on higher-paying customers and lowering incentive spending.
Grab Reaffirmed Its Pathway to Profitability
During its investor day in September this year, the company shared its goal to reach group-adjusted EBITDA breakeven in the second half of 2024.
The company reaffirmed this target during the most recent earnings call, saying it remains confident that the $5.3 billion of net cash liquidity as of the third quarter should be a big enough buffer to allow the company to reach its expected group adjusted EBITDA breakeven in the second half of 2024.
Analyst Opinions
JPMorgan analyst Ranjan Sharma downgraded Grab Holdings to Underweight from Neutral with a price target of $2.80, down from $3.20. MobilityGMV could fall short of aggressive Street expectations and will be $5.2bn in 2023 and may reach $6bn in 2024.
Deutsche Bank maintained a Buy rating with a price target of $3.80. The company may improve degrees of freedom for 2024 breakeven. GMV growth in 2023 will likely remain sober (+9% YoY), and overall revenue growth is forecast at 43%YoY reflecting monetization efforts via lower incentives and better commissions.
Bank of America analyst Sachin Sagoankar upgraded a Buy rating from Neutral with a price target of $4.20 from $3.60. For mobility, in 2023 they expect the driver supply issue to be resolved. They also expect Grab to reduce its overall pricing to ensure no negative elasticity impact on consumer demand. In delivery, they expect Grab to scale up in grocery and quick commerce to benefit from increasing demand there and offset any slowdown in food. They don’t expect a higher cash burn as the focus appears to be on mid-to-high-end users.