Grab Holdings (GRAB) Progress Toward Sustained Profitability In Focus

$Grab Holdings(GRAB)$ would be releasing its Q4 2024 earnings for the quarter ending 31 Dec 2024. The recent uptrend was catalysed by the Singapore Prime Minister and Finance Minister announcing that companies in Singapore will receive a 50% corporate income tax rebate in 2025.

I am holding Grab in another broker as I used Grab when travelling in the region and locally when we do not feel like driving. Needless to say, Grab food delivery have become a part of lifestyle.

And the Q4 2024 earnings are likely to reflect a mix of progress in its path to profitability, competitive pressures, and evolving consumer trends in Southeast Asia. This announcement might be good news for Grab.

Analysts estimate Grab to post revenue of USD760.92M for 2024Q4, up 16.53% YOY; EPS is estimated to be USD-<0.01, swings to loss YoY.

Before we go into looking at the structured analysis of key factors influencing the results and their implications. I think we can look at how Grab have performed after its previous earnings on 11 Nov 2024 sentiment came in positive which helped Grab to see a 21% change to its stock price.

Grab Holdings (GRAB) Guidance On Strategic Positioning To Look Out

The earnings call showcased strong financial performance with record adjusted EBITDA, growth in monthly transacting users, and significant progress in financial services. However, increased competitive spend in Indonesia and rising incentive costs were noted as challenges. Overall, the positive aspects outweigh the concerns, indicating robust growth and strategic positioning.

We are seeing that analysts are expecting revenue consensus likely anticipated mid-teens YoY growth (~12–15%), driven by delivery and fintech. EBITA is expected sustained profitability, with adjusted EBITDA margins improving to 2–3%.

During Grab's Third Quarter 2024 earnings call, the company provided a positive outlook on its financial performance, highlighting several key metrics. Group adjusted EBITDA reached a record high of $90 million, more than tripling year-on-year, marking the 11th consecutive quarter of improvement. Monthly transacting users grew by 16% year-on-year, reaching 42 million, indicating robust future platform growth. The delivery business exhibited a 16% year-on-year growth in GMV, while the mobility segment saw a 30% increase in high-value rides. Grab's advertising revenue also rose, contributing to a 1.8% segment margin in deliveries.

The company maintained its guidance of $308 million to $313 million in adjusted EBITDA for the full year, emphasizing its commitment to profitable growth and sustainable free cash flow generation. Additionally, Grab reported significant progress in its financial services, with loan disbursals up 38% year-on-year, and the company highlighted its strategic use of AI to enhance operational efficiency and customer engagement.

So the guidance is likely to focus on 2025 targets for EBITDA expansion and capital allocation (e.g., reducing cash burn).

Now we will look at how some factors would affect Grab, the last quarter, we saw Record Adjusted EBITDA when the Group adjusted EBITDA more than tripled year-on-year to reach a record high of $90 million, marking the 11th consecutive quarter of adjusted EBITDA improvement.

Grab Monthly transacting users grew 16% year-on-year to 42 million, recording the sixth consecutive quarter of growth. Mobility segment achieved a 30% year-on-year GMV growth, driven by high-value mobility rides and new services like advanced booking.

Loan disbursals grew 38% year-on-year and 13% quarter-on-quarter, with non-performing loan ratio at around 2%. Deposits from GXS Bank and GXBank grew 50% quarter-on-quarter. Advertising revenue increased to $185 million, with percentage of deliveries GMV rising from 1.1% to 1.6% year-on-year.

Macroeconomic and Regional Factors

• Southeast Asian Recovery: Post-pandemic economic normalization likely continued, with steady demand for ride-hailing and food delivery. However, inflationary pressures in markets like Indonesia and Thailand may have tempered discretionary spending.

• We have seen increased competitive spend in Indonesia in the previous quarter, n

oted increased competitive spend from main competitor in Indonesia, potentially impacting market dynamics.

• Consumer incentives increased to drive new product adoption and consumer behavior changes, affecting margins.

• Currency Volatility: Weakness in currencies such as the Indonesian Rupiah (IDR) or Malaysian Ringgit (MYR) against the USD could pressure reported revenues, as Grab reports in USD.

Segment Performance

• Mobility (Ride-Hailing):

Demand likely remained robust due to urban recovery and holiday travel (e.g., year-end festivities).

Competition from Gojek (Indonesia) and regional taxi apps may have capped pricing power.

• Delivery (Food/Grocery):

Q4 typically sees seasonal strength (holiday orders, promotions). Grab’s focus on premium partnerships and quick-commerce (e.g., 15-minute delivery) may have driven volume.

Margins could improve with reduced driver incentives and higher order density.

• Financial Services:

Growth in GrabFin (digital wallets, loans, insurance) likely accelerated, supported by Southeast Asia’s underbanked population. Regulatory scrutiny in markets like Singapore may have tempered aggressive expansion.

Profitability Metrics

• Adjusted EBITDA: Grab has prioritized breakeven timelines. Analysts will assess whether it sustained positive adjusted EBITDA (achieved in recent quarters) and improved margins via cost discipline.

• Loss Reduction: Progress in narrowing net losses, driven by lower sales/marketing spend and operational leverage.

Competitive Dynamics

• Food Delivery: Intense competition from Foodpanda (owned by Delivery Hero) and ShopeeFood (Sea Ltd.) in key markets like Thailand and Vietnam.

• Superapp Strategy: Grab’s ability to cross-sell services (e.g., ride-hailing users adopting payments) remains critical to fend off rivals like GoTo (Gojek + Tokopedia).

User and Engagement Trends

• Monthly Transacting Users (MTUs): Stable or slight growth, with focus on retention in saturated urban markets.

• Average Order Value (AOV): Inflation may have boosted AOV in delivery, but price-sensitive consumers could trade down to cheaper options.

Cost Management and Investments

• Driver Incentives: Reduced subsidies as supply-demand balance improves.

• Tech Investments: AI-driven routing optimization and customer personalization may lower costs and improve efficiency.

• Regulatory Costs: Compliance with gig-worker regulations (e.g., minimum wage laws in Malaysia) may have increased operational expenses.

While we looked at the factors influencing Grab earnings, we also need to understand and be aware of the risks and challenges that Grab is currently facing.

Regulatory Pressures: Ongoing scrutiny over gig-worker rights and antitrust concerns in key markets.

Consumer Fatigue: Overlap in discounts/promotions across ride-hailing and delivery could erode brand loyalty.

Fintech Risks: Credit defaults in microloan portfolios (if any) and slower-than-expected adoption of financial products.

Technical Analysis - Exponential Moving Average (EMA)

We are seeing a potential crossover on the RSI when the RSI cross above the RSI MA on 05 Feb, during that time we can see that the bulls are trying to push for a daily uptrend, but did not succeed until late last week (Friday).

But Grab was trading sideways while the bulls attempt again for a daily uptrend expansion, and finally we saw a significant surge of more than 7% on Tuesday (18 Feb), this should give investors confidence that we are going to see Grab on the right path to profitability.

I am looking forward to an EPS beat with surprise to profitability.

Summary

Grab’s Q4 2024 earnings are expected to show steady progress toward sustained profitability, supported by cost controls and resilient demand in its core markets.

There are some areas we can look at for potential earnings surprise, there might be delivery growth which could show seasonal strength and margin improvements. From Grab fintech business which is gaining momentum, where there have been rising contributions from high-margin financial services.

I am expecting Grab to try for profitability milestones where Grab is likely in meeting or exceeding adjusted EBITDA targets.

However, we also need to be aware of the challenges Grab is grappling like currency headwinds, regulatory costs, and competition could dampen upside potential.

I will be watching Grab management’s 2025 guidance for any further reductions in net losses, also the expansion of fintech monetization. The most important one would be the market share retention in mobility/delivery.

So if Grab can demonstrate disciplined growth and stronger-than-expected fintech adoption, we could see Grab giving a rally, conversely, any signs of margin stagnation or regulatory setbacks may weigh on sentiment.

Appreciate if you could share your thoughts in the comment section whether you think Grab could provide an earnings surprise and give a small rally.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.