This weekly newsletter chronicles top digital themes and trends playing out in SE Asia, especially Indonesia. We will decode policy and regulatory changes affecting digital economy sectors, crunch earnings data of top players, track developments related to gig economy workers and attempt to piece together ecosystem buildouts in some of the fastest-growing, venture-backed plays. You can access the previous editions of the Vantage Point weekly posts here.
- Grab strikes healthy balance between growth and profitability
- With a strong show in Q3 2023, Alfamart shows big promise
- SEA e-Conomy report shows clear shift in focus to profitability
- Cimory — packing a protein punch amid FMCG slowdown
Grab strikes healthy balance between growth and profitability
The third quarter 2023 (Q3) earnings of Grab Holdings demonstrate the success of the Southeast Asian tech giant in striking a healthy balance between GMV and revenue growth while making significant progress towards profitability—the company achieved group-adjusted EBITDA breakeven in the three-month period.
Grab’s net loss shrunk 71% year-on-year to $99 million in Q3 2023, mainly due to the improvement in group-adjusted EBITDA, and a reduction in interest expenses, fair value losses on investments, and share-based compensation.
The sheer magnitude of this improvement in net loss suggests that Grab could move more rapidly towards a net profit if the company chose to do so, with the next target being becoming free cash flow positive.
Grab booked a 5% growth in headline GMV, but revenues grew by a much larger 61% YoY to $615 million in Q3. What stood out was that on-demand GMV grew by 14% YoY and 3% QoQ. The growth in overall monthly transacting users, which rose 7% YoY to a new all-time high of 36 million, also helped.
Notably, Grab achieved this growth while reducing incentive spending. Total incentives as a share of GMV fell to 7.1% in Q3 2023 from 9.4% in Q3 2022. Driver partner incentives were reduced by 17 % YoY, whereas consumer incentives came down by 22 % YoY in Q3 2023.
Grab’s group adjusted EBITDA—$29m in Q3 2023—turned positive for the first time. This was the result of improving segmented EBITDA and a lowering of regional corporate costs.
Grab’s regional corporate costs fell to $192 million in Q3 2023 from $208 million in Q3 2022, through improving cost efficiencies. Meanwhile, overhead expenses were down 9% as staff costs shrunk 6% YoY in Q3 2023.