Grab announces $500m share buyback after posting first quarterly profit in Q4

Grab announces $500m share buyback after posting first quarterly profit in Q4

Source: Grab

Southeast Asian super app Grab Holdings Ltd—which has trimmed its workforce and cut back on incentives and other costs in recent years—booked its first quarterly profit in Oct-Dec 2023.

The Nasdaq-listed company also announced on Thursday that it would repurchase up to $500 million worth of its Class A ordinary shares.

Singapore-based Grab booked a profit of $11 million for the fourth quarter (Q4) of 2023, a turnaround from the $391 million net loss reported a year ago.

The turnaround was mainly attributed to enhancements in the company’s Group Adjusted EBITDA, adjustments in fair value investments, and reduced expenses related to share-based compensation. Additionally, the profit for the quarter was boosted by the reversal of an unnecessary accounting accrual.

Revenues in Q4 reached $653 million, which is a 30% year-on-year (YoY) increase from $502 million in Q4 2022. The firm said this growth was driven by strong performance across all business segments and optimisation of incentives.

Grab also announced positive group adjusted EBITDA of $35 million for the quarter, an enhancement from the negative $111 million reported in Q4 2022.

This was driven by sustained growth in Gross Merchandise Value (GMV), enhanced profitability on a segment-adjusted EBITDA basis, and decreased regional corporate costs, which totalled $193 million for the quarter, down from $223 million in the same period last year.

The company’s group adjusted EBITDA had turned positive for the first time, at $29 million, in Q3 2023.

“2023 was a pivotal year for us. We generated over $11 billion of earnings for our partners, achieved strong top- line growth as we exited the year with Mobility GMV above pre-COVID levels and Deliveries GMV growth re- accelerating, while also reaching Adjusted EBITDA profitability in the year,” said Anthony Tan, Group Chief Executive Officer and Co-Founder, Grab, in a statement.

Total GMV experienced a 9% year-over-year growth for Q4 2023 to $5.4 billion, primarily fueled by increases in Mobility and Deliveries GMV. Concurrently, group monthly transacting users (MTUs) saw a 12% year-over-year rise to 37.7 million.

At the end of fourth quarter, Grab had $5.9 billion of cash liquidity and $5.2 billion of net cash liquidity.

Annual loss narrows, revenue beats guidance

For the full year, Grab recorded a 65% revenue growth to $2.36 billion, exceeding the guidance range of $2.31 billion to $2.33 billion.

The company reported a loss of $485 million for the year, a 72% reduction from 2022, driven by enhancements in Group Adjusted EBITDA, reductions in fair value losses on investments, and decreases in interest expenses and share-based compensation expenses.

Full-year Group Adjusted EBITDA surged by 97% to negative $22 million, aligning with the guidance range of negative $25 million to negative $20 million.

 

For the financial year 2024, Grab projects revenue of $2.70-2.75 billion, representing 14-17% YoY. While its adjusted EBITDA is estimated to be between $180-200 million.

“As we execute on our strategies in  2024, we expect to drive continued improvements in adjusted EBITDA and adjusted Free Cash Flow. In the medium term, we see between 100-200 basis points of upside to our Segment Adjusted EBITDA margins for  Deliveries, as we continue to drive growth in On-Demand GMV and accelerate year-over-year revenue growth rates beyond 2024. With our robust balance sheet position, we are pleased to announce that our Board of  Directors has authorised our first share repurchase programme of up to $500 million and the repayment of the outstanding balance of our Term Loan B,” said Grab CFO Peter Oey.

Deliveries segment

In Q4 2023, deliveries revenue surged to $321 million from $268 million in Q4 2022, and grew 80% YoY for the full year. Deliveries GMV grew by 13% YoY to $2.6 billion in Q4 2023.

Segment adjusted EBITDA as a percentage of GMV expanded to 3.6% in Q4 from 2% in the same period last year. In 2023, the Deliveries segment adjusted EBITDA reached $313 million, an improvement from negative $35 million in 2022.

Last year, Grab enhanced service affordability and boosted Saver deliveries adoption rates. By Q4 2023, Saver deliveries comprised 23% of Deliveries transactions, with Saver users showing 1.6x higher average order frequencies in food deliveries compared to non-Saver users.

Mobility

Mobility revenues surged 26% YoY (or 24% YoY on a constant currency basis) in Q4 2023 and 36% YoY for the full year. Meanwhile, GMV in the segment increased by 28% YoY in the quarter and 32% YoY for the full year 2023, fuelled by higher Mobility MTUs and average order frequency.

Mobility segment adjusted EBITDA as a percentage of GMV was 12.3% in Q4 2023 and 12.5% for the full year.

Grab also noted that its monthly active driver supply increased by 11% YoY in Q4 2023, while earnings per transit hour of driver-partners rose by 14% YoY.

Financial services

Revenue for Financial Services doubled to $56 million in Q4 2023 from $28 million in Q4 2022, marking a 159% year-over-year increase for the full year.

On the other hand, financial services GMV declined by 14% YoY in the quarter and by 11% YoY for the full year, aligning with its focus on ecosystem transactions, the company said.

Segment-adjusted EBITDA improved by 13% YoY for the quarter and 29% YoY for the full year, driven by streamlined overhead expenses in our GrabFin cost base. However, segment-adjusted EBITDA declined quarter-over-quarter to negative $81 million, mainly due to the launch of GX Bank Berhad (GXBank) in Malaysia, while GrabFin costs remained stable.

Loans disbursed to ecosystem partners grew by 57% YoY in 2023, totalling $1.5 billion for the year. Total loans outstanding amounted to $326 million as of December 31, 2023, while customer deposits in GXS Bank and GXBank stood at $374 million.

Enterprise and new initiatives

Revenue for this segment surged by 124% YoY in Q4 2023 and by 86% YoY for the full year 2023, driven largely by growing contributions from advertising. In Q4, the total number of monthly active advertisers on Grab’s self-serve platform increased by 54% YoY, while the average spend by these advertisers rose by 129% YoY, the company reported.

Segment adjusted EBITDA soared by 378% YoY in Q4 2023 and by 267% YoY for the full year, primarily fueled by the increase in revenue.

Edited by: Pramod Mathew

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