Singapore's Grab cuts losses in Q1 as tourism demand returns

Singapore News Published 10 months ago on 19 May 2023 | Author TIN Media

Grab, a Singapore-based digital business, is cutting losses as it continues its aggressive cost- cutting efforts and attracts more tourists to its Southeast Asian markets.

The company, which is listed on the Nasdaq, posted a net loss of $250 million for the January- March quarter on Thursday, down 43% from a loss of $435 million in the same quarter last year.

During an earnings call, CEO Anthony Tan stated, "This quarter, we reported another solid set of results, which reflects our disciplined focus to drive sustainable growth and profitability."

The entire revenue for the group increased by 130% to $525 million. Grab's primary source of revenue, ride-hailing, increased by 72% to $194 million as the company hired more drivers in the area and profited from the uptick in tourist demand.

"Mobility demand continues on a positive trajectory," Tan stated. "With China's reopening, we are optimistic about further recovery in the tourism segment."

With "ample room to recover further," according to the business, as airport rides are still just 69% of their pre-pandemic level, Grab's chief operating officer, Alex Hungate, reported that airport rides increased 133% year over year and 7% quarter over quarter.

By the quarter between October and December, the business anticipates the mobility segment's gross merchandise value (GMV), or the sum of all transactions conducted on Grab's platform, to return to pre-pandemic levels.

Grab has sought to abandon a strategy that relied on high sales and promotion costs to attract clients and usage, which resulted in years of losses, even before it went public in December 2021.

On Thursday, Grab reaffirmed its forecast that the company will achieve adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) breakeven in the year's final quarter.

However, the company's major business division, delivery, is facing further challenges. Since local economies started to revive last year, the transaction value is decreasing as more individuals eat out.

Grab's revenue from deliveries increased by 203% to $275 million. But the main reason for this was the acquisition of the upscale supermarket chain Jaya Grocer in Malaysia.

The segment's GMV was $2.34 billion, which is 9% less than it was a year ago when demand was higher because of pandemic limitations. Grab also mentioned seasonal challenges brought on by the earliest Ramadan fasting season and the first Lunar New Year without pandemic limitations.

Grab's chief financial officer, Peter Oey, predicted that as the firm extends its service offerings, delivery transactions will increase starting in the second quarter. To provide users with a lower

Through GrabUnlimited, its month-to-month subscription service, the firm also hopes to increase the number of active users. According to Grab, these consumers made up almost 25% of deliveries during the January–March quarter and spent 270% more than non-subscribers.

Early trading in New York saw a 12% decline in the price of Grab's stock.