Grab Holdings Limited (GRAB) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call highlights strong growth in on-demand GMV, increased high-value rides, and success in affordability strategies. Management's guidance is optimistic, expecting sequential growth and improved margins. Investments in strategic areas like autonomous vehicles and financial services, along with a countercyclical strategy, bolster resilience. However, management's lack of specific guidance details and competitive landscape insights slightly temper optimism. Overall, the positive outlook on growth and strategic investments suggest a positive stock price movement.

Key Financial Performance

Monthly Transacting Users 48 million, a nearly 6 million year-over-year increase. This growth was driven by product-led innovations.

On-demand GMV 24% year-on-year increase (20% on a constant currency basis). Growth attributed to product-led innovations and increased user engagement.

Group Adjusted EBITDA $136 million, a 51% year-on-year increase. This marks the 15th consecutive quarter of sequential profitability improvement, driven by cost discipline and ecosystem scale.

Adjusted Free Cash Flow $283 million on a trailing 12-month basis, an improvement of $185 million year-on-year. This improvement is attributed to a focus on accessibility, affordability, and reliability.

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Operating Highlights

Monthly Transacting Users: Increased by nearly 6 million year-over-year to 48 million, driven by product-led innovations.

On-demand GMV: Grew 24% year-on-year (20% on a constant currency basis), reflecting strong product performance.

Marketplace Expansion: Expanded user base and deepened engagement and loyalty among users.

Group Adjusted EBITDA: Increased 51% year-on-year to $136 million, marking 15 consecutive quarters of profitability improvement.

Adjusted Free Cash Flow: Improved by $185 million year-on-year to $283 million on a trailing 12-month basis.

Financial Services Loan Portfolio: Expected to exceed $1 billion by year-end, showcasing strategic growth in financial services.

AI Integration: AI is unlocking new growth and efficiency opportunities at unprecedented speed.

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Risk or Challenges

Market Conditions: Potential risks from economic uncertainties that could impact consumer spending and demand for services.

Regulatory Hurdles: Possible challenges related to compliance with evolving regulations in different markets.

Strategic Execution Risks: Dependence on AI and technology-driven innovations to sustain growth, which may face implementation or adoption challenges.

Competitive Pressures: Intense competition in the mobility and delivery sectors that could impact market share and profitability.

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Guidance & Outlook

Financial services loan portfolio: Expected to exceed $1 billion by the end of 2025.

On-demand GMV growth: Full year growth expected to accelerate from 2024 levels, with Mobility and Delivery segments on track to exit the year at record GMV levels.

AI-driven growth and efficiency: AI is expected to unlock new growth and efficiency frontiers at unprecedented speed, contributing to sustainable long-term value.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Can you discuss the competitive landscape in Indonesia and the factors behind your strong performance there?

A:Indonesia is a key market for us, and our product-led growth strategy is driving an increase in MTUs for both deliveries and mobility. The affordability strategy is attracting users at the lower end, while high-value services like GrabExecutive and priority food delivery are growing. Domestic tourism and business travel are also contributing to high-value rides. GrabMart is growing, driving delivery GMV growth. Overall, we see strong growth and sequential margin improvement in Indonesia.

Q:What led to the increase in your guidance, and can you break it down by segment?

A:The increase in guidance is driven by strong top-line growth across segments: deliveries growing at 26%, mobility at 20%, and financial services at 40%. Regional corporate costs increased only 8% year-over-year, with a 150 basis points improvement in operating leverage. We expect strong top-line growth to continue into Q4, traditionally our strongest quarter, and have raised our EBITDA guidance to $490-$500 million for 2025. However, Q1 is expected to be softer due to seasonality.

Q:Can you elaborate on MTU growth and user profile changes this quarter?

A:On-demand MTUs grew 14% year-on-year, with daily transactions growing faster than monthly ones. New users are being acquired through Saver deliveries and transport services, with high-value rides growing 66% year-on-year. Growth is distributed across big and small cities, skewing towards younger customers for Saver products. GMV per MTU grew 7% year-on-year, showing the success of the affordability strategy and cross-selling efforts.

Q:How should we think about delivery business growth rates for Q4 and 2026?

A:We expect on-demand GMV to grow sequentially in Q4 and maintain strong growth into 2026. Growth is driven by product-led viral growth, GrabUnlimited subscriptions, and the GrabMart opportunity. Margins are expected to improve for deliveries and mobility, even as we invest in new product initiatives and grocery growth.

Q:How do you plan to use your strong cash balance over the next 12-18 months?

A:Our capital allocation focuses on three pillars: investing in organic growth (e.g., loan book expansion, new products), selective M&A with a high bar for synergies, and returning excess capital to shareholders. We are also investing in long-term bets like autonomous vehicles to secure technology supply chains and maintain leadership in Southeast Asia.

Q:How do you view the macro environment and its impact on growth?

A:We are not seeing a broad-based slowdown in consumption. Our countercyclical strategy is proving resilient, with increased partner supply improving affordability and reliability. Our focus on affordability through products like Saver delivery and transport is paying off, making our services essential for users. We are also partnering with governments to support small businesses and digital upskilling.

Q:What regions are driving GrabMart growth, and what initiatives are planned to scale this segment?

A:GrabMart is growing across all markets, driven by the GrabMore feature that allows users to add groceries to food orders. It is growing 1.5x faster than food delivery. We are experimenting with quick commerce models in Malaysia and Indonesia to unlock more TAM and drive growth.

Q:What is the nature of your investments in autonomous vehicles, and what progress has been made?

A:Our AV investments are strategic, aimed at leading adoption in Southeast Asia and securing technology supply chains. We expect a longer ramp-up to mainstream adoption due to lower labor costs and the need for AVs to become safer and cheaper. We are maintaining a hybrid fleet approach and working with regulators to upskill driver partners for new roles in a hybrid transport world.

Q:What have you learned about newly acquired financial services customers, and how are you managing risk provisions?

A:We are accelerating financial services growth, with a $3.5 billion annualized loan dispersal run rate. Provisions for expected credit losses are a natural consequence of growth. We use data science to underwrite unbanked and underbanked segments, with repayment records showing strong performance. Our credit models are maturing, and we are confident in achieving a $1 billion loan book by 2025.

Q:What is the outlook for consumer incentives and advertising revenue growth?

A:Consumer incentives have decreased slightly and are expected to remain stable. Driver incentives may fluctuate based on demand. Advertising revenue is growing, with a 15% increase in active advertisers and a 41% increase in average spend. GrabMart's growth is expected to attract more FMCG advertisers, driving long-term margin growth.

Q:What is the path to 4% delivery margins, and how do country-level dynamics play a role?

A:Delivery margins are improving, with some markets like Malaysia already achieving 4%. Growth in GrabMart and other delivery products may dilute margins initially but are expected to drive long-term growth. Advertising revenue and country-level strategies will also contribute to margin improvement.

Q:What milestones are needed to achieve financial services breakeven, and what are the key risks?

A:Key milestones include accelerating loan dispersal growth and maturing credit models. Risks include managing expected credit losses and maintaining operating leverage. We are confident in breakeven by the second half of 2026, driven by strong growth in SME and gig worker lending.

Q:What is the outlook for delivery margins in 2026, and what factors could influence their pace of expansion?

A:Delivery margins are expected to improve steadily, driven by growth in advertising revenue, GrabMart, and other delivery products. Factors influencing the pace include product launches, country-level dynamics, and the mix of delivery services.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the competitive landscape in Indonesia, such as exact growth figures or market share data. Additionally, they did not provide a detailed breakdown of guidance by segment or specific metrics for MTU growth by user demographics.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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Grab Holdings Limited (GRAB) Q3 2025 Earnings Call Transcript

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