Grab expects growth to slow while it pursues 2024 profitability

Grab Holdings expects slower revenue growth of 45 per cent to 55 per cent in 2023 as the South-east Asian Internet giant adjusts to a market downturn and speeds up efforts to reverse years of losses.

executive officer Anthony Tan kicked off the company’s first investor day by trying to reassure shareholders that Grab was on the rebound. The company anticipates breaking even in the second half of 2024 on a conditional basis, and excluding one-time items.

Grab, long considered one of the rising stars of South-east Asia, has struggled since it went public through a merger with a purpose acquisition company (Spac) in December 2021. Shares have tumbled more than 70 per cent as the company racked up losses in the post-Covid-19 era and the stock market soured on unprofitable tech ventures.

Grab, which went public by merging with Altimeter Capital Management’s Spac in what was originally a US$40 billion (S$57.4 billion) deal, is now worth about US$10.8 billion.

“Looking ahead, we’re firing on all cylinders to improve our profitability trajectory,” Mr Tan said at the company’s event in Singapore on Tuesday. “Grab is trying to achieve this by growing our top line in a sustainable manner.”

Grab, which counts Japan’s SoftBank Group and Uber Technologies as its two biggest shareholders, expects losses to narrow to US$380 million on an adjusted basis in the second half of 2022.

Executives said it now aims to break even by the latter half of 2024 on an adjusted earnings basis before interest, taxes, depreciation and amortization. That excludes as many as a dozen exceptional items, from fair value losses in investments to “ costs”.

In the meantime, the company said it has about US$6 billion of cash and liquid items on hand, giving it time to turn its on-demand and fintech services around.

Mr Tan’s vision of creating a so-called super app for South-east Asia was aggressive, but led to extensive losses. Grab lost US$3.4 billion in 2021 and has piled up almost US$1 billion of losses in the first two quarters of this year. Revenue this year is set to roughly double to as much as US$1.3 billion, Grab said last month.

The company started out focused on the ride-hailing business and competed effectively against Uber. The US company ended up selling Grab its business in South-east Asia in return for a stake in its Singapore rival. Grab then launched an ambitious – and expensive – campaign to expand into adjacent businesses, including food delivery and finance. It also added everything from hotel bookings and health services to gifts and entertainment experiences to its app.

operating officer Alex Hungate said Grab will now have a more defined strategy, outlining an effort to make the company “South-east Asia’s largest and most efficient on-demand platform that enables local commerce and mobility”.

“This is not just a bunch of words on a page,” he said. “This defines our strategy in a more focused way than we’ve ever defined before.”

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