Grab Loss Swells on Spending to Lure Drivers, Customers

(Bloomberg) -- Grab Holdings Inc., Southeast Asia's ride-hailing and delivery giant, reported a wider loss after the company spent more on incentives to lure drivers and customers as the pandemic eases.

The Singapore-based company's net loss almost doubled to $1.1 billion for the quarter ended Dec. 31, also hurt by non-cash interest costs and expenses related to its public listing, it said on Thursday. Analysts estimated a loss of $645 million on average. Revenue fell 44% to $122 million, affected by the incentives offered to users and drivers.

Grab -- which counts SoftBank Group Corp. and Uber Technologies Inc. as its two biggest shareholders -- has struggled to gain a steady footing since it became a publicly listed company in the U.S. through a deal with a blank-check company in December. Its shares have lost about half their value since, wiping more than $15 billion from its market capitalization.

Grab has racked up losses since its founding and has yet to prove it can reach profitability. Its fortunes have ebbed and flowed along with Covid-19 infection rates and restrictions, which affect demand for rides and meal deliveries.

In all of 2021, its loss widened to $3.4 billion from $2.6 billion the previous year. Gross merchandise value, the sum of transactions across its platforms, totaled $16.1 billion, compared with its projection of $15 billion to $15.5 billion.

Key Insights

Grab is trying to capture broader opportunities in the food services market to drive user growth. The online grocery market in Southeast Asia is expected to almost triple to $11.9 billion in 2025 from $4.1 billion in 2020, according to Euromonitor International.
Average spend per user -- GMV per monthly transaction user -- on Grab platform grew 23% in the fourth quarter from a year earlier.
Yet the growth isn't yet translating to earnings. Revenue booked from delivery last quarter was just $1 million. Grab deducts incentives that it offers to drivers and consumers from sales, and its quarterly revenue number fluctuates wildly depending on how much it spends on such efforts. It spent $443.3 million on delivery incentives in the quarter, almost double from a year earlier.
Grab is also facing growing competition, including from Sea Ltd., Southeast Asia's biggest internet company. More directly, its Indonesian ride-hailing rival, Gojek, merged with e-commerce provider PT Tokopedia to become GoTo. The combined entity is preparing for an initial public offering at home and in the U.S. this year.

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Grab expects first-quarter deliveries GMV of $2.4 billion to $2.5 billion
Grab expects first-quarter mobility GMV of $750 million to $800 million
Company sees GMV growth from the second quarter through fourth quarter expanding by 30% to 35% year-on-year, subject to shifts in the pandemic
Grab said it's “progressing towards” breakeven in food delivery segment adjusted Ebitda by the first half of 2023 and in deliveries segment by the end of 2023
Revenue from delivery business multiplied to $148 million in 2021
Revenue from mobility business rose 4% to $456 million last year
Full-year revenue from financial services rose to $37 million