Grab Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 19, 2025
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Operator

Ladies and gentlemen, thank you for joining us today. My name is Faith, and I will be your conference operator for this session. Welcome to Grab's Fourth Quarter and Full Year twenty twenty four Earnings Results Call. After the speakers' remarks, there will be a question and answer session. I will turn it over to Douglas Hughes to start the call.

Douglas Eu
Douglas Eu
Head of Asia Investor Relations at Grab

Hi. Good day, everyone, and welcome to Grab's fourth quarter and full year twenty twenty four earnings call. I'm Douglas Yoo, Director, Investor Relations and Strategic Finance at Grab. And joining me today are Anthony Tong, Chief Executive Officer Alex Hungate, President and Chief Operating Officer and Peter Owey, Chief Financial Officer. During this call, we will be making forward looking statements about future events, including our future business and financial performance.

Douglas Eu
Douglas Eu
Head of Asia Investor Relations at Grab

These statements are based on our current beliefs and expectations. Actual results could differ materially due to a number of risks and uncertainties as described on this earnings call, in the earnings release and in our Form 20 F and other filings with the SEC. We do not undertake any duty to update any forward looking statements. We will also be discussing non IFRS financial measures on this call. These measures supplement but do not replace IFRS financial measures.

Douglas Eu
Douglas Eu
Head of Asia Investor Relations at Grab

Please refer to the earnings materials for a reconciliation of non IFRS to IFRS financial measures. For more information, please refer to our earnings press release, remarks and supplemental presentation available on our IR website. And with that, I will turn the call over to Anthony to deliver his opening remarks before we open it up for questions.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Thank you, Doug. Fourth quarter was our strongest quarter ever, closing out 2024 on a strong note as we relentlessly executed on our product and tech led initiatives. This drove an acceleration in our on demand GMV to 20% year on year. Product initiatives launched in 2024 targeted at improving the affordability and reliability of our on demand services resulted in a new record of transacting users on Grab. Today we have achieved strong product market fit with features such as saver rides and priority deliveries across all our markets.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

The strong top line growth coupled with ongoing cost discipline across our business units has enabled us to continue scaling the platform in a profitable manner. We achieved our first full year of positive group adjusted EBITDA of $313,000,000 coming in at the upper end of our upgraded guidance and positive full year adjusted free cash flow of RMB136 million, which improved by RMB370 million year on year. Building upon these strong foundations we've laid in 2024 to scale our platform, we see plenty of headroom to further out serve the millions of users and partners across Southeast Asia this year. We will continue to evolve our product strategy to harness the power of our ecosystem. As a result, we expect to maintain our on demand GMV growth momentum in 2025.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

And concurrently, we will take a balanced approach to drive a continued expansion of our adjusted EBITDA and adjusted free cash flow, while also being highly disciplined on our use of cash. With that, we now open the call for questions. Operator?

Operator

Our first question comes from Pang Viet from Goldman Sachs. Your line is open. Please ask your question.

Pang Vittayaamnuaykoon
Pang Vittayaamnuaykoon
Analyst at Goldman Sachs

Hi, good morning and thank you very much for the opportunities. Congratulations as well for another great set of results. Two questions for me. Firstly, just wanted to have a better understanding around your product mix shift. Sabre is already at birth of your deliveries and 26% of the mobility transactions.

Pang Vittayaamnuaykoon
Pang Vittayaamnuaykoon
Analyst at Goldman Sachs

How should we expect the mid shift to transform over the years? And how will this impact your margins, especially in mobility where we start to see your margins down dipping to 8.4%? That's question number one. Question number two on fintech. We see that the loan book grew to RMB536 million, revenue also grew nicely to RMB74 million.

Pang Vittayaamnuaykoon
Pang Vittayaamnuaykoon
Analyst at Goldman Sachs

However, EBITDA losses were slightly higher on a quarter on quarter basis. Help us understand where you are spending more and when will we see the inflection point towards profitability?

Alex Hungate
Alex Hungate
President & COO at Grab

Okay. Thanks, Pang, for the questions. This is Alex. Let me answer both of those. So first of all, on the dip in margins and deliveries this quarter, as you know, we don't operate the business on a short term margin optimization basis, but we are trying to drive absolute EBITDA and free cash flow growth.

Alex Hungate
Alex Hungate
President & COO at Grab

So you will see these kinds of fluctuations in our segment margins from quarter to quarter and then sometimes incentives go up, go down in order to make sure that the marketplace health is in the best possible state and that we're really driving improvements for our consumers. What's key though is like on a full year basis, if you look back, deliveries margins did expand 70 basis points zero.

Alex Hungate
Alex Hungate
President & COO at Grab

And the mobility margins also remain stable. And obviously, you've seen now this acceleration in growth, which is a bigger objective for us. As we look forward to 2025, now trying to address your question on mix, we will continue to grow this momentum and you will see us focus equally on the high end of our price laddering as we are on the affordability end of the price laddering to make sure that we keep that balanced approach to margin growth as well as overall GMV growth. And I just I could take this opportunity to reconfirm our commitment that the long term steady state delivery margins will be 4% plus in line with the prior guidance that we've given. And then the mobility margin is 9% plus so we're still very confident that that's where this business will end up.

Alex Hungate
Alex Hungate
President & COO at Grab

In terms of some of the growth drivers for our high value services to better serve that segment and to make sure that we keep the margins balanced, I think our partner strategy is very important for that. So we have supply partners like, Bluebird in Indonesia, for example. We have grocery partners, examples of SM and Robinsons in The Philippines. Brand partners like Coke, where we've done the Coke and Go initiatives, to drive benefits for consumers together and then, of course, we've got a great set of partners for the banks in each of the three markets: Singtel, Quoc, and Emtek, totally blue chip with great customer bases for us to expand our ecosystems. Maybe I'll turn to your second question now, which is on the financial services loan book and the increase in costs as we grow.

Alex Hungate
Alex Hungate
President & COO at Grab

So firstly, just to recap for everyone on the call, we've got two different businesses within the Financial Services segment. We've got the Digibank and we've got the GFIN. So on the Digibank Lending first, the loan products were launched very recently in the fourth quarter, and so we're really growing those fast and scaling well within the credit risk appetite that we've set out. So we do expect the DigiBanks to continue to see increase in direct costs with these new launches. Firstly, the flexi loans in Malaysia is just launching for the first time for consumers and then the MSME products for small businesses also just launching in Malaysia and Singapore.

Alex Hungate
Alex Hungate
President & COO at Grab

So we're supporting those launches currently, and that obviously brings some increase in direct expenses. But probably more significantly, as you understand, with the loan growth at this rate, for example, GXS in Singapore doubled their loans year on year, we do need to build up balance sheet provision. So we're running these, ECL through the expense lines of the P and L as we grow. And, obviously, as the credit models develop, etcetera, it's good to have a strong balance sheet. But as those credit models develop, we'll be able to sharpen our pencils on that overall.

Alex Hungate
Alex Hungate
President & COO at Grab

And that will be a driver of the return to profitability because we are confirming what we've told you before that Financial Services overall will be profitable by the second half of next year and the banks, overall will be profitable by the fourth quarter of next year. On the GFIN side so that's the bank side on the GFIN side, it's already providing good risk adjusted returns on capital, in fact, comfortably, above the Grab's own cost of capital. So that's a strongly performing business with good returns. So we'll continue to do that across our ecosystem. Hopefully, that's helpful.

Alex Hungate
Alex Hungate
President & COO at Grab

Gives you some character of the way financial services is growing and continuing to improve. Thank you.

Pang Vittayaamnuaykoon
Pang Vittayaamnuaykoon
Analyst at Goldman Sachs

Thank you.

Operator

Thank you. Our next question comes from Vinogupal Ghar from Bernstein. Your line is open.

Venugopal Garre
Analyst at Bernstein

Hi. Good morning, management, and thanks for this opportunity. I have two questions. The first one is a question on management's guidance philosophy entering into this year. Now we've seen prior years that we have demonstrated a track record of beating and raising your numbers through the year.

Venugopal Garre
Analyst at Bernstein

And of course, the implication of that is that you typically start with a softer guide at the start of the year. Now my question is that while this time around your guidance for sales and EBITDA is pretty much in line with consensus. And of course, I'm ignoring Bloomberg's incorrect reporting on sales guidance versus estimates. Do you really see at this juncture a room for upside to your guidance? And what have you broadly baked into the assumptions?

Venugopal Garre
Analyst at Bernstein

So that's the first question. The second question that I would like to ask is a bit more medium to long term in nature. If I want to take a step back and look at the bigger picture, how do you plan to balance your priorities and the capital allocation between various initiatives, which I guess are put out there for you? Specifically, I would like to sort of discuss autonomous vehicles versus say the speculated widely speculated innovation M and A as well as your expansion into Digibanks. So how do you balance between these, I would probably say exciting but relatively more resource intensive bets? Thanks.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Hey, Venuti, this is Peter. Let me take the first one around guidance philosophy. And I'm going to ask Alex and Anthony also just to chime in around your second part of the questions around where we think we'll we'll put your question around priorities and capital allocation. So let me take on the first one on revenue on guidance itself. The 2025 EBITDA guidance is a 40% to 50% growth relative to 2024 levels.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

And the revenue growth that we're forecasting also is somewhere between nineteen percent and twenty percent, 20 two percent. It's a strong top line growth. If you look at where we landed in 2024, we landed revenue somewhere around the 21% mark on a constant currency basis. Now around guidance philosophy, and if you look at since we went public two to three years ago now, there is a pattern that you're seeing. And as a management team, we embrace the philosophy of bin rates when it comes to our guidance, especially on the EBITDA side as well as on the revenue.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

So when we put out numbers at the beginning of each year, we do bake in some potential uncertainties that we can't predict and I'll give you a couple of examples of that. We looked at from a seasonality perspective, especially in the first quarter. The first quarter is a very important quarter for us where we look at the Ramadan and the Lunar New Year where this year it's a little bit odd where we do have a convergence of those two festivities all in the same quarter versus last year or the previous years where the Ramadan actually extends to the second quarter of the business. The good news is we're seeing a very strong January so far, but it's too early to tell. So there is some uncertainty that we're baking in on the revenue guidance and the EBITDA guidance.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Now as the year progresses and you've seen this in the last couple of years as the outlook improves and we make those adjustments to reflect the latest outcomes in the business. And also we always remind our investors to take that lens when it comes to considering our guidance especially at the beginning of the year when we put out there. Let me just finish off here. Most importantly, we always take as a management team a balanced approach when we are driving two things. We're driving top line growth and you're seeing that momentum in the business.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Second half was critical for us to exit strongly because that will set us up for 2025 and you saw that on demand GMV growth at 20% on a quarter on a year over year basis and also maximizing adjusted EBITDA and free cash flow on an absolute basis. And we're very committed in growing that EBITDA and free cash flow in 2025. So, Vanu, hopefully that will give you some picture and also how we think about our guided philosophy. On your second part of the question, there's an area here where I think we would need to address, which I'll ask Alex and Anthony to chime in.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Yes. Thanks, Peter.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

I totally agree with Peter. And hey, Venu. So first of all, with regards to what Peter shared, I think we are very bullish. We believe that there is plenty of headroom to drive organic growth in Southeast Asia, specifically in mobility, in food, in groceries, the addressable market is still significantly under tapped. We've shown and proven we've hit an all time high of 44,000,000 MTUs and this represents about 17% growth year on year, but we are still only serving one in 20 Southeast Asians.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

So we are actually just scraping the surface in terms of users that we can out serve across this region. So what does that mean for us? We are going to double down on the core because the core is still expected to grow strongly and on top of this, we're also looking into new growth areas. Now specifically you called out AV or autonomous ride hailing. For me personally, AI and robotics are top of mind. As you know when large language models were first released, we leaned in very early last year to drive Gen AI adoption across the org.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Now on AVs, we've been watching this space closely and are very excited about the long term opportunity related to this tech. I personally and our leadership has actually taken many rides across the world across various brands just to understand and be forward leaning in this space. We believe we are in prime position in supporting the AV transition over the next few years and we have a very significant role to play in this region via a hybrid AV human fleet. When we think about our right to win, we have strong relationships with players around the world as well as OEMs. We have the highest utilization across the whole region.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

We have a long track record of working hand in hand with regulators and governments to ensure passenger and driver safety. So as we think about this AV transition, we're also proactively thinking about how can we play a part on upskilling our driver partners as part of this shift because that is core to our mission and an important aspect of our strategy. As we've shown before we've collaborated with global partners like Mastercard and Microsoft and have a track record of working governments and regulators to upskill workers, to upskill our driver partners and to equip them for more tech enabled future. So going forward, I can confirm we are in active discussions with regulators. We intend to work closely with every government in Southeast Asia to drive this forward.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

We do anticipate a longer road to mainstream AV adoption in other parts of Southeast Asia and this is because road infra is different, regulations are different, but we are very excited about this space. So in the meantime, we are actively pursuing several partnerships and we'll look to share more updates in the coming weeks. Alex, go ahead.

Alex Hungate
Alex Hungate
President & COO at Grab

Thanks, Anthony. Yes. And on the question of allocation towards organic growth, particularly Indonesia, we're very happy with the acceleration of our on demand GMV overall as a group. In Indonesia, in particular, on demand GMV grew 10% quarter on quarter, so faster than our overall group average actually. It was an important focus for us in 2024, and Indonesia will remain a key focus for us to serve our drivers and merchants in 2025.

Alex Hungate
Alex Hungate
President & COO at Grab

I mentioned the partnership with Bluebird earlier and we're also expanding our EV fleet with BYD. So we're adding more drivers and more merchants in the quarter. The online earnings for those drivers per hour and the average deliveries merchants earnings have also increased. So I think we have a very healthy and fast growing marketplace. And we continue to invest not just in Indonesia but across the region on some of our tech advantages like mapping, hyper batching, just in time allocation as well.

Alex Hungate
Alex Hungate
President & COO at Grab

These are very difficult for competitors to replicate. So, we're doubling down on organic opportunities in Indonesia and across the region.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Hey, Evan, just to add to Alex. From an inorganic perspective because your question is around capital allocation and also where do we balance priorities, But I've been just chime in here a little bit just to give context. So as you know, we as a management team, we have a very high bar when it comes to inorganic opportunities. And these opportunities we evaluate on a case by case basis, but the bar is very high. We have to make sure that key synergies and value add is instrumental in these inorganic opportunities.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

And this is very consistent with our capital allocation policy that we've shared many times with all of the investors. In terms of the capital allocation framework, it's always been very consistent. Organic growth comes first in the business and that's to drive EBITDA growth and free cash flow. And second is having that high bar on M and A that I just talked about. And then third, there is excess capital as a priority, we will return it to our shareholders.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

So we're continuing to deploy those capital allocation framework and 2025 is no different for us. So hopefully that's helpful in addressing your questions.

Venugopal Garre
Analyst at Bernstein

Thanks a lot. Yes, it does.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thanks. Next question please.

Operator

Thank you. Our next question comes from Alicia Yap from Citigroup. Your line is open.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Hi, thank you. Good morning, management.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Congrats on the solid results and thanks for taking my questions. Two questions. First is that, can you share the updates on the cross selling of the delivery business with Food and Mart? Can you compare and contrast the AOV for user that use both versus the user who only use food delivery? And how do you anticipate the increase in the AOV and the wallet spend growth of user on your platform over the next couple of years?

Alicia Yap
Alicia Yap
Analyst at Citigroup

Second question is, can management elaborate on how you foresee AI further enhancing your cost optimization efforts and the demand generation capabilities? Specifically, what is management view on China's DeepSeek model versus your experience working with OpenAI as your lighthouse partner? Thank you.

Alex Hungate
Alex Hungate
President & COO at Grab

Thanks for your questions, Alicia. Let me take the first one on the ecosystem and cross sell because that's at the core of our strategy. You're right, cross sold users continue to show improving uplifts Q on Q. So, let me see. Users who transacted in both Food and Mart have average spend which is four times higher and then frequency uplifts are 2.5 times higher.

Alex Hungate
Alex Hungate
President & COO at Grab

So this is a really key linkage in our strategy and it gives us an advantage versus vertical single vertical competitors in On Demand. The retention rate is also twice as high than the food owner uses. So that's super important as we continue to grow and look for efficiencies with the scale. The ecosystem doesn't end with on demand though. As you know, we the growth of financial services is giving us lots of opportunities too.

Alex Hungate
Alex Hungate
President & COO at Grab

And I don't know if I should maybe I'll flag also that the groceries growth, grocery deliveries is actually faster than the food delivery growth for the second quarter in a row. We're very excited about the potential here. The penetration of groceries is still very low in our ecosystem, and we intend to continue to grow this with strong partnerships market by market. I think what we've done with Jaiya in Malaysia demonstrates what can be done to, to grow online deliveries as a share of overall revenue. And the tech that we've developed there very closely in Malaysia, we're now sharing with some partners like SM and Robinsons in Philippines and Transmart in Indonesia.

Alex Hungate
Alex Hungate
President & COO at Grab

And that is powering this exceptional growth that we're seeing on the mart side. So for the first time now we're actually instead of selling from food into mart, we're now looking at selling the other direction from mart back into food from, these new users who are coming into our ecosystem from partnerships. And then the financial services side, I think you can see from some of the slides that we sent out this morning, there's great acquisition opportunities. You know, 90% of the GX Bank customers in Malaysia came from Grab, and the acquisition cost is minimal. The speed at which we've been able to gather deposits and open new accounts went up to 4,000,000 accounts across the three banks.

Alex Hungate
Alex Hungate
President & COO at Grab

It's very, very pleasing indeed, and it shows the power of the ecosystem and the brand in low customer acquisition and cross sell.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Maybe if I can just jump in and talk about the GAI and specifically you referred to OpenAI, DeepSeek and other cost optimization efforts. So I think, Alicia, as a company, we've been actively leaning in really leaning in, I would say, in embracing GAI right from the beginning. OpenAI is one where we've been very blessed with being the first lighthouse partner that they chose in Southeast Asia. And we built a strong partnership with them to solve complex problems that drive benefits for ecosystem users and partners. But we also work with other multimodal foundational models across the world.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

And let me share one example where we use our multimodal models. Our merchant AI assistant, you know, our merchant AI assistant today, you know, really addresses a major pain point. Today many merchants especially long tail merchants they don't have account managers and they need help. These merchants always crave more insights especially insights on how to boost sales, how to target users and they are really starving for these solutions. So what do we do?

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

How did we leverage AI? We saw this as a perfect option for GenAI to enhance the earnings potential for our partners on our platform. By leveraging GenAI, we developed a self serve chatbot providing our merchant partners with personalized recommendations answering whether it's business related, example, top selling menu items to how to be a even better chef to how to be even a packaging master for their customers and really gives them ways to optimize for example their recommendations, their ad spend and their user targeting. As a result, we saw a 24% uplift in ad spend among merchants who engage with our merchant AI assistant versus merchants who did not and we saw sales uplift among those merchants as well. Now for all our merchant partners who hear this, we highly encourage you to try this solution and hope that you will find it a useful tool to generate stronger sales and let's continue to innovate together. But in short, I would say this, we are going to continue leaning heavily, Alicia, in GenAI and we're exploring ways where we can further integrate these solutions that drive higher sales, more productivity improvements for our workforce. 2025 is the year of AgenTek AI and I foresee or we all as a leadership foresee that we will be rolling out even greater personalized solutions for our ecosystem partners.

Alicia Yap
Alicia Yap
Analyst at Citigroup

Thanks, Anthony. Thanks, Alex.

Operator

Thank you. Our next question comes from Mark Mahaney from Evercore. Your line is

Mark Mahaney
Senior Managing Director at Evercore ISI

open. Okay. Thanks. Two questions please. First, MTU net adds were relatively high.

Mark Mahaney
Senior Managing Director at Evercore ISI

Just talk about the source of where you're bringing in new users and anything you can tell about their engagement levels versus prior cohorts. And then I'll ask about consumer incentives. So they have jumped up both on mobility and the delivery side as a percentage of GMV to pretty high levels, especially versus the last year or two. I'm trying to understand is, is that something structural or is that consumer incentive spend in advance or in alignment or in support of this some of the newer products that you're rolling out on the value side, high end, low end? So just talk about what the how we should think about those consumer incentives that they're to support these sort of relatively new product launches and therefore over time they should step down in intensity or whether that we are structurally at a higher level? Thank you.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Hey, Mark. Let me take the MTU the incentive questions and I'll ask Alex to chime in on the MTU front. It's a key focus area for Alex and we're seeing some really good fruits coming out of that. So on the incentives, you'll see that our incentives, mobility and deliveries move up and down quarter on quarter. And that's deliberate and that's intentional and it's in line with our expectations.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

A lot of that is driving product adoption in our business and you see you referred to the MTU growth for an example as a question of that, but also we're driving frequency in terms of our products. Now we as you know we as a business don't operate to short term margin percentages, but really focus on that dollar EBITDA free cash flow and we reinvest in those areas to get product adoption. So there is a function of really going to market and using that lever to drive growth in the business. But you'll see that incentives move up and down. If you step back actually, if you look at our mobility incentives and margin, it's actually stable on a year over year basis at 8.6%.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

And if you look at our deliveries margin on a full twelve months, it was up 90 basis points also. So we use that deliver as a critical factor on especially on product adoption. Alex, do you want to just chime in on the MTU side?

Alex Hungate
Alex Hungate
President & COO at Grab

Yes. Marc, you're right. The MTU growth, exact acceleration is something we've been really focused on. One of the big drivers is the affordability products, both for deliveries and mobility.

Alex Hungate
Alex Hungate
President & COO at Grab

A third of the new MTUs this quarter were either new or reactivated users, and a lot of that's coming from the affordable products. We are balancing that with high LTV users, as I mentioned earlier, particularly travelers, which has been a big driver of new MTUs as well, typically spending something like more than two times what a domestic user would spend. So we have high value premium users growth as well. I can confirm that the product holdings of two or more is still more than two thirds of our users. And so you speaking to Alicia's question earlier, we still got really good cross sell ecosystem performance.

Alex Hungate
Alex Hungate
President & COO at Grab

And then the older cohorts are also still spending more. So we're seeing, deliveries are seeing growth across all cohorts even for the pre COVID cohorts of 2018, '20 '19. So I think, what you're seeing is that our product led strategy, more than our incentives, is what's enabling us to grow MTUs faster than the market. And although, as Peter said, we need incentives from time to time to launch new products, and we have been launching some really significant new products. For example, group orders and family accounts are viral products where the ecosystem starts to grow itself.

Alex Hungate
Alex Hungate
President & COO at Grab

That's a quarter to quarter feature rather than a structural change. Thank you.

Mark Mahaney
Senior Managing Director at Evercore ISI

All right. Thank you very much.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Thanks, Mark.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thank you. Our next question, operator.

Operator

Thank you. Our next question comes from Zhong Hao from Barclays. Your line is open.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

Thank you very much for taking my questions. I have two questions, but firstly, I have a follow-up on what Peter mentioned earlier on the guide. It's great, Peter, you said you started off the year with something conservative and the base case is beat and raised. That's all we like to hear. Your guidance indicated the although you didn't guide on GMV, but only guide on revenue, but it appears to indicate acceleration in growth in '25 vis a vis '24.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

And your GMV and revenue have indeed accelerated over the last two quarters in a row. I just want to confirm, that's still kind of the expectation reasonable to expect the accelerating growth in both food and rice going to continue in 2025 vis a vis 2024? That's my first follow-up and I have two separate questions later.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Sure, Jeong. So we are seeing good momentum on demand GMV growth. As we put it, it's been a momentum that been intentional on our part and driving growth. We just talked about MTUs for an example. But at the same time also we're also watching the dollar EBITDA and the free cash flow that we can generate from the on demand business.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

What we expect going into 2025 is for that on demand GMV growth momentum to continue. Alex talked a lot about product features and investments that we're making. Anthony talked about AI also as part of that. So it's a combination of all these things that we feel that we want to continue to fuel growth in our business. And we saw a very strong exit in Q4 that really sets us up nicely as we go into 2025. Hopefully that gives you a better picture.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

Perfect. Thanks, Peter. My first question is that I know you talked about autonomous driving, robotaxi and EVs in your press release, access to 50,000 BYD EVs. I want to I know also Anthony mentioned those topics earlier as well. I want to understand a couple of things here.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

One, by using EVs, naturally they don't burn gas. Would that matter? How does that affect your margins? Like does that make any difference for your long term EBITDA margins for your rides business, for the mobility business? And then back to the robotaxi, I know you are focusing on sort of autonomous driving slash robotaxi.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

But on a high level, just for me to understand that, well, driver's costs are kind of low in Asia. How the calculus work? Does that make sense at all to have real tax in places like South Asia or even in China? Just want to pick your brain on this. So that's my first question. Let me stop here.

Alex Hungate
Alex Hungate
President & COO at Grab

Hi, John. This is Alex. Let me take that. Firstly, EVs, you know, we're a triple bottom line company, so we want to encourage cleaner transportation. But we are also seeing that it reduces the drivers' running costs.

Alex Hungate
Alex Hungate
President & COO at Grab

And that's important to us because our objective over time is to push out the price reliability boundary every day improving bit by bit. And that means that we can take a larger share of the overall transportation TAM in Southeast Asia. We've been doing that successfully with a lot of tech improvements as we've talked about on this call. But one of the drivers is the cost of ownership of the vehicles for our drivers. So we know that EVs, particularly with the price point being coming down rapidly over the last couple of years, are one of the ways to unlock even better affordability.

Alex Hungate
Alex Hungate
President & COO at Grab

The infrastructure in Southeast Asia is improving. A lot of governments are leaning into this. So that's why we want to encourage EVs and work with some of these big partners like BYD. On AV, unit economics will also continue to improve. We know that the supply chain for AVs is built on top of the supply chain for EVs.

Alex Hungate
Alex Hungate
President & COO at Grab

So a lot of what I just said about the improving unit costs will translate through into EVs over time. This is not going to happen overnight, particularly in Southeast Asia where labor costs are lower than places like The U. S, but it will happen. So as Anthony said earlier, we're really intensely leaning in, making sure that we're proactive and we're one of the key players in leading how it is introduced safely into this region.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

Yes, I'll just add to Alex. Alex is totally right, Jeong. The key as we think about AVs is not just AVs, it's AVs as a hybrid fleet complemented by human fleet. And we see a very nice symphony where there are areas that are poorly served, say there are parts in Singapore. If you do live in Singapore, you will see the areas that are, I would say, harder to serve by humans, drivers.

Anthony Tan
Anthony Tan
Chief Executive Officer, Co-Founder & Chairman at Grab

And this is where robotaxi would really keep improving fulfillment rate and customer satisfaction. So those are places that are ripe for, I would say, introduction and pilots in the future.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

Okay, great. Thank you, guys. And actually my second question is about Singapore. We have seen the news today or maybe yesterday, what about a corporate tax rebates, which is fine, but it's more interesting or relevant to you guys. We have seen some like talking about vouchers, pretty sizable vouchers for individuals and family to spend.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

For those of us don't live in Singapore in this case, could you sort of elaborate on exactly what are some of those incentives? How long is that for the whole year? How does that affect Grab's business? I remember a couple of years ago or maybe longer ago when you went IPO Singapore's sizable part of the business 40% or maybe even higher. So what is Singapore now as a revenue contribution to Grab's overall revenue now?

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Yes, Jean, let me take that. Look, the budget just came out a couple of days ago. We're still going through it. We're assessing it.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

I have to commend to the Singapore government in how they're supporting the economy and also for the everyday Singaporeans out there. We were excited in terms of what they're doing in terms of vouchers as you mentioned, tax rebates also for the businesses. Those are the right things. And again, Singapore is a very thriving economy where there's a lot of very strong businesses here which is growing. And we believe that these things on tax rebate actually will benefit a lot of our small merchants that we operate with in Singapore today.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

We want to see more merchants in Singapore that we can actually support. For the vouchers, I think it's great for the economy overall for the everyday Singaporeans. Again, they'll benefit from that. And also we see that as hopefully as a beneficiary of that as they use transport services and also use our food services. So I think overall Singapore is thriving.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Singapore is advancing. We're in lock and step with the Singapore government on many areas and we feel that with all the services that we have including the banks we're set up to continue to grow Singapore.

Jiong Shao
Jiong Shao
Analyst at Barclays Capital

Okay. Thank you, Peter.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thanks, Yong. Next question?

Operator

Thank you. Our next question comes from Divya Katyal from Morgan Stanley. Your line is open.

Divya Kothiyal
Divya Kothiyal
Analyst at Morgan Stanley

Thank you very much. Two questions from me. Just maybe it's a follow-up on the mobility margin. Product mix is definitely one of the reasons as we noticed that the saver rides is 300 basis points higher. But just curious to know if there are other factors that have also affected the mobility margin in the fourth quarter.

Divya Kothiyal
Divya Kothiyal
Analyst at Morgan Stanley

Maybe if you can comment on the competitive landscape and how our market shares have evolved in various countries in 2024 versus 2023. And my second question is on corporate costs. They fell another 13% year on year in the fourth quarter. So we've been executing pretty well on corporate costs despite the tremendous growth we've seen in orders. Could you comment on the outlook for 2025 and if we can continue seeing this kind of savings? Thank you.

Alex Hungate
Alex Hungate
President & COO at Grab

Thanks, Divya. Let me take the first one on the mobility business. We are very focused on growing affordability and you can see that has helped us expand MTUs. It's also helped us to improve frequency across all cohorts. So we know this is a good strategy.

Alex Hungate
Alex Hungate
President & COO at Grab

We've launched some new capabilities in this sense. We've got family accounts for mobility, which is, I think, going to help us with frequency and retention. We've also got high value rides and some new partnerships like Bluebird. Advanced booking for those critical, like, airport type rides is also a new launch across all regions. There are always competitive factors from time to time in various markets.

Alex Hungate
Alex Hungate
President & COO at Grab

I can confirm that in every market, we remain the competitive choice leader for our for mobility across all of our markets. Overall, across the region, we maintained or grew our CP position. So I think we're highly competitive, particularly with these new markets. We are the only multi vertical competitor across all markets in the region. So that gives us cross sell benefits, it gives us scale benefits and it allows us to continue to invest in some of the new technology like AI where we can amortize those costs across a much larger user base.

Alex Hungate
Alex Hungate
President & COO at Grab

So, I think on that basis, we're well set up, I think, for continued mobility growth. And I would as I mentioned earlier, but I'll say it again reiterate that we believe that our mobility business will reach 9% plus margins in the steady state.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Hey, Divya on your corporate cost question, you're right. We've made a lot of progress in optimizing our cost base as we exit 2024. And what you saw in the fourth quarter was a combination actually of reductions in variable costs and staff costs also as we continue to tune our cost structure in the business. Now as we think about 2025, with the strong on demand GMV that we expect, the variable there are variable cost components, things like cloud, direct marketing costs, which are housed in the central costs bucket actually will increase. That's natural.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

But will offset those by operating leverage also which we'll expect to realize from the continued volume growth that we're going to see in 2025. But Stepping back, we expect to see more efficiency gains in our cost base as a percentage of revenue, but we do anticipate copper cost to increase just naturally because on a year over year basis on an absolute dollar basis as we make those investments in on demand GMV growth as well as also as we make into investments like what we talked about earlier in the call regarding AI for an example, continued IoT investments, mapping infrastructure, which are all important pillars in making sure the foundation of our business continues to be solid. So we're making also those long term growth investments as part of our regional corporate costs. But stepping back, what I can say is if you look at our group EBITDA to revenue margins, what we expect in 2025 as a revenue margin, we look to improve that by about 200 basis points to 300 basis points in 2025. And that's because we're driving more operating leverage also in the business.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

So hopefully that gives you a bit of a picture in terms of how we think about operating leverage and cost structure of our business.

Divya Kothiyal
Divya Kothiyal
Analyst at Morgan Stanley

Thank you very much.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thanks, Divya. Operator, next question.

Operator

Thank you. Our next question comes from Thomas Chong from Jefferies. Your line is open.

Thomas Chong
Thomas Chong
Managing Director at Jefferies

Hi, good morning. Thanks management for taking my question. My question is about our advertising monetization. Given our focus in technology and AI, can management share about the percentage of our merchants using our advertising solution? And how are we actually seeing their business performance versus those without advertising?

Thomas Chong
Thomas Chong
Managing Director at Jefferies

And my second question is about our 2025 guidance, in particular, about the Forex trend. Given that the U. S. Dollar, I think, appreciate, appreciate from time to time, Should we expect there will be a two sets of year on year growth numbers taking into account what it is for local currency versus those in U. S. Dollars on a quarterly basis? Thank you.

Alex Hungate
Alex Hungate
President & COO at Grab

Hi, Thomas. It's Alex. Let me take a question on advertising, which obviously is one of the big drivers of our long term deliveries margin target and is increasingly also contributing to mobility as well. The penetration of GMV for advertising did increase again, improved again to 1.7% in the fourth quarter from 1.4% in the same period last year. So that is a proof point of our continued traction we're getting on advertising.

Alex Hungate
Alex Hungate
President & COO at Grab

One of the big drivers for that is the penetration of our merchant base, which I think was part of your question. I can confirm that the penetration of the merchant base increased significantly over the course of that year. So more of our merchants are using our demand generation tools. The retention of those merchants on the advertising platform is very high, something around 75 percentage points. So this is working for them.

Alex Hungate
Alex Hungate
President & COO at Grab

Return on advertising sales is between five and eight times on the platform, so depending upon the size of the merchant and the strength of their brand. So, our and yet the penetration of our merchants is still less than half. So I think over the medium term and in fact throughout 2025 we will continue to drive the penetration. We will continue to improve the capabilities of the self serve tools in particular so that the very large merchant base that's on the Grab ecosystem, these tools available so that they can continue to grow their business and become successful growth businesses on the Grab platform.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thomas on your FX question, I think it was around how FX was impacting to our current guidance. Let me give you a few data points. On a year to date basis, we're facing about a year over year headwinds of roughly about 30 basis points. And on a Q on Q basis FX headwind is roughly about 140 basis points on a year to date. And for the rest of 2025, what we from a guidance perspective internally here we're using our prevailing spot rate in determining our current outlook for full year GMV and revenue.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

And we'll continue to monitor that spot rate. Obviously it moves around quite a fair bit. Again part of that going back to couple of questions around our guidance philosophy. And at the beginning of the year, we tend to be a little bit more conservative on the FX side also, but that's how we're thinking about the FX movements.

Thomas Chong
Thomas Chong
Managing Director at Jefferies

Thank you.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Thank you.

Operator

Thank you.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Let me just wrap it up. Let me just wrap it up.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Great. Thanks very much. Hey, thanks everyone for listening and investing the time for us today. In closing, Anthony, Alex and I would just like to express our sincere appreciation to all our drivers and merchant partners. We had a great 2024.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

All of that was not being able to be accomplished without the support from all our drivers around Southeast Asia and to our merchant partners that we serve. Also to all our customers out there, who is vividly continuing passionately to use our products. Thank you very much. And also for our shareholders for their continued trust in Grab and also for the Grabbers out there who's really been spearheading the growth of our business in the last twelve months and really just supporting the business. So thank you to all these folks.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

Together with the IR team, Ken, Doug and I will be on the road over the next few weeks. We'll be attending various IR conferences across The U. S. West Coast and also in Asia in the coming weeks. We'd love to see you, meet up with you and approach us any of us the IR team if you wish to meet up as we spend some time meeting investors over the next few weeks.

Peter Oey
Peter Oey
Chief Financial Officer at Grab

So thanks again everyone and have an awesome day. All right, until next quarter.

Operator

This concludes Graf's fourth quarter and full year twenty twenty four earnings results call. Thank you for your participation. You may now disconnect.

Executives
    • Douglas Eu
      Douglas Eu
      Head of Asia Investor Relations
    • Anthony Tan
      Anthony Tan
      Chief Executive Officer, Co-Founder & Chairman
    • Alex Hungate
      Alex Hungate
      President & COO
    • Peter Oey
      Peter Oey
      Chief Financial Officer
Analysts
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Key Takeaways

  • Record Q4 and full-year profitability: Q4 on-demand GMV rose 20% YoY, transacting users hit an all-time high, and Grab delivered its first full-year positive Group Adjusted EBITDA of $313 million and positive free cash flow of RMB 136 million.
  • Balanced 2025 growth and margin targets: Management guides 19–22% revenue expansion and 40–50% adjusted EBITDA growth in 2025, expects sustained on-demand GMV momentum, while targeting long-term steady-state margins of 4%+ for deliveries and 9%+ for mobility and disciplined cash use.
  • Ecosystem cross-sell power: Users active in both Food and Mart channels spend 4× more and order 2.5× more frequently, with grocery delivery growing faster than food, underpinned by partnerships with Jaiya in Malaysia, SM and Robinsons in The Philippines, and Transmart in Indonesia.
  • Tech-led innovations and AI adoption: Grab’s Merchant AI assistant boosted ad spend by 24% for participating merchants, and the company is integrating generative AI (with OpenAI and other models) across operations—plus investing in mapping, hyper-batching and just-in-time allocation to optimize costs and improve user experience.
  • EV and AV strategy: A deal for up to 50,000 BYD EVs aims to lower drivers’ costs and enhance affordability, while Grab is proactively engaging regulators and partners on a hybrid autonomous-vehicle/human ride-hailing fleet, with driver upskilling programs to prepare for future robotaxi adoption.
AI Generated. May Contain Errors.
Earnings Conference Call
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