30-04-2025
Grab raises full-year adjusted Ebitda guidance after posting US$24 million profit in Q1
[SINGAPORE] Grab on Wednesday (Apr 30) reported net profit of US$24 million for the first quarter ended Mar 31, 2025, reversing from a US$104 million loss in the previous corresponding period.
The turnaround was driven by higher revenue across all segments, improved operating loss and higher net finance income which included US$33 million in foreign exchange gains, it said
Revenue for the three months was US$773 million, up 18 per cent from US$653 million, surpassing the average analyst estimate of US$766 million in a Bloomberg poll.
On-demand gross merchandise value grew 16 per cent year on year to US$4.9 billion from US$4.2 billion, due to on-demand monthly transacting users increasing by 18 per cent, as well as the total number of on-demand transactions growing 21 per cent.
The Nasdaq-listed group's on-demand businesses cover its mobility and deliveries segments.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter came in at US$106 million, up 71 per cent from US$62 million.
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In an earnings briefing after the results release, group chief executive officer Anthony Tan said the group will raise its adjusted Ebitda forecast for FY2025 to between US$460 million and US$480 million. This represents an expected 47 to 53 per cent on-year climb from the group's adjusted Ebitda in FY2024.
It previously guided for adjusted full-year Ebitda of US$440 million to US$470 million, which represented a 41 to 50 per cent on-year growth.
Chief operating officer Alex Hungate noted that the Singapore-based group saw strong demand under online grocery delivery arm GrabMart in March and April, resulting in monthly transacting users growing sequentially in the first quarter.
The growth came despite the first quarter being seasonally soft, coupled with impact from the Chinese New Year celebrations and Ramadan fasting period.
GrabMart's strong performance comes as the group was able to 'operationalise' the platform to provide groceries and food for people at home during Ramadan, replacing dining out, he said.
For the first quarter, the mobility segment posted revenue of US$282 million, up 15 per cent from US$247 million.
Meanwhile, the deliveries segment added 18 per cent to its top line at US$415 million, from US$350 million in the corresponding year-ago period.
The group is 'trending healthily' in line with expectations, and anticipates a rebound in quarter-on-quarter growth rates across mobility and deliveries segments in the second quarter, said Hungate.
Counter-cyclical approach
Hungate noted that Grab does not yet see signs of consumer weakness, noting that the platform 'works on a self-adjusting basis' during a downturn in economic conditions.
'A number of new drivers will join the platform as a cushion against potential job losses, (so) we tend to get an improvement in supply conditions, which in turn reduce surge at key moments,' he said.
This will then encourage more consumption and a higher use of the platform by consumers, he said.
'It's kind of a self-correcting, almost counter-cyclical approach that we see from the platform during those types of downturns,' he added.
In April, the Land Transport Authority issued a 10-year street-hail service operator licence to the company through GrabCab, a subsidiary of the company's rental business GrabRentals. The company said that the increased supply of vehicles would improve efficiency of ride hailing for passengers.
Meanwhile, Grab does not anticipate margin losses from recently announced new products to its platform, as it focuses on making the marketplace more efficient.
For example, Shared Saver, which allows users to start a group order with people nearby, offers a lower cost of delivery for the consumer while also driving volume improvements as it amortises the same delivery cost across multiple consumers, said Hungate.
'So it's actually no extra cost to Grab, or to the marketplace,' he said.
The group also received 'productivity gains' in this quarter from artificial intelligence (AI) through its management of direct marketing costs, he said. 'I think the way in which we can fine-tune our promotions and our incentives using AI is demonstrably better than it was even six months ago,' he said.
Hungate highlighted that the group's monthly transacting users make up around 6 per cent of the total population of South-east Asia, and the management team is 'very focused on the other 94 per cent'.
'We think there is a lot of opportunity, and particularly with these new, affordable products, we intend to keep expanding the perimeter of our ecosystem as our main focus,' he said.
Under Grab's financial services, its loan portfolio for the quarter increased 56 per cent to US$566 million, from US$363 million.
Revenue for the segment grew 36 per cent to $75 million in Q1 FY2025, from US$55 million in Q1 FY2024. This growth was 'primarily driven by increased contributions mainly from lending across GrabFin and digital banks, and further optimisation of payments incentive spend', said the group.
Shares of Grab last traded at US$4.79 on Tuesday in the US, up US$0.03 or 0.6 per cent, before the results were announced.
