To The Moon

Grab expects break-even adjusted EBITDA for Q4 and revenue will be from $2.20 billion to $2.30 billion in 2023, Maybank estimated the adjusted ebitda loss likely further narrowed to $106 million in H1 2023.

Grab is scheduled to announce Q2 earnings results after the market opens on Wednesday, August 23.

Latest Results

It reported a $250 million net loss for the January-March quarter, narrowing 43% from a $435 million loss for the year-ago period.

Group revenue totaled $525 million, up 130% on the year. Its core ride-hailing business rose 72% to $194 million, as the company added drivers across the region and benefited from the recovery in traveler demand.

Stocks tumbled 14.6% on May 18 after posting its Q1 financial results.

Q2 Guidance

It continues to expect 2023 revenue of $2.20 billion to $2.30 billion, adjusted loss before interest, taxes, depreciation and amortization during the year of $195 million to $235 million. The company also said it expects break-even adjusted EBITDA for Q4.

Grab Cut 1,000 Jobs, Its Biggest Round of Layoffs Since the Pandemic

It is cutting over 1,000 jobs in a bid to manage costs and reorganize the company in a competitive landscape. This is the group’s largest round of layoffs since 2020 when it cut 360 jobs in response to Covid-19 pandemic challenges.

This is the latest round of layoffs from a major Southeast Asian tech company. In March, Indonesia’s GoTo announced it was laying off 600 employees to boost profitability, while Sea cut more than 7,000 jobs in the last six months of 2022.

Will Acquiring Trans-Cab and Cooperating With Foodpanda Cheer up Its Services?

The company’s Grab Rentals Pte. Ltd. unit will acquire taxi operator Trans-Cab and the transaction has been approved by the board of Grab and Trans-Cab, and is expected to close in Q4.

The latest news is that CCCS said it accepted an Aug 7 application by Grab and Trans-cab. The public consultation will close at 5 pm on Aug 25.

Another thing to mention is that Grab and Foodpanda are expanding into the dine-in space, as consumers look to eat out more post-pandemic.

Phillip Securities Research analyst Jonathan Woo said that with dining out costs increasing with higher inflation, consumers are also looking for deals to save costs wherever they can, and there’s almost no better feeling than having a good meal at a discount.

He said Grab can indirectly generate incremental revenue from dine-in services. In this instance, revenues are derived from commission fees for each dine-in voucher purchase.

Analyst Opinions

Bloomberg analyst Nathan Naidu said Grab's adjusted Ebitda margin appears set to narrow for a sixth consecutive quarter in Q2. Further scaling back on incentive spending, or targeting them at active spenders, should increase revenue earned per dollar of GMV without compromising user retention. However, that will probably come at the expense of GMV growth, particularly as food delivery demand normalizes. Such growth risks should ease in H2 amid easier year-ago comparisons. A sharper focus on profitability will naturally come at the expense of GMV growth, which could be a fraction of the 41% yearly pace achieved in 2018-21 amid pandemic-era lockdowns.

CGS-CIMB Research analysts Ong Khang Chuen and Kenneth Tan have reiterated “add” on Grab with a target price of $4.50. They expect the company’s on-demand GMV to reaccelerate to $3.8 billion, an 8% growth y-o-y; and a GAAP net loss of $213 million with net revenue/adjusted ebitda at $566 million/-$38 million.

Maybank Securities analyst Kelvin Tan is keeping “buy” on Grab Holdings at a target price of $4.00. He estimated the adjusted ebitda loss likely further narrowed to $106 million in 1HFY2023 and expected narrower 1HFY2023 GMV losses of 2% y-o-y as normalisation post-Covid 19 and a healthy showing of off-platform financial services with focuses on buy now, pay later, aids recovery in the mobility business, offsetting weakness in delivery.