Grab delivers the goods in its Q3 results, talks up ads business

Grab reported its third-quarter 2022 results on Wednesday.

Group revenue came in at US$382 million, up 143% from a year ago, while adjusted EBITDA loss stood at US$161 million, a 24% improvement from last year.

The results were well received by the market, and Grab’s shares ended the day up 1%, compared with the broader Nasdaq’s 2% decline. That came on top of a 6% gain from the previous day, with Grab likely being a beneficiary of the euphoria surrounding the results of regional peer Sea on Tuesday.

Here are our key takeaways from the results and earnings call.

Deliveries breakthrough

Perhaps Grab’s biggest win was in its deliveries segment: It broke even on a segment-adjusted EBITDA basis and did so three quarters ahead of its forecasts. Adjusted EBITDA came in at US$9 million, compared with a loss of US$34 million in the previous quarter.

Most of this income was contributed by Jaya Grocer, the Malaysian grocery chain Grab acquired last year, and a reduction in incentives across all segments, especially deliveries. Deliveries incentives were cut by US$34 million from the previous quarter.

In the company’s earnings call, Grab’s senior management repeatedly emphasized that turning EBITDA positive was a “milestone” that, according to CEO and co-founder Anthony Tan, places the company “on a stronger footing to pursue long-term growth opportunities within the delivery segment.”

Focus on organic growth

On the earnings call, a couple of analysts asked whether the company was considering potential M&A opportunities amid a fall in private-market valuations and the possible exit of some competitors from the region.

This could be a reference to Foodpanda cutting jobs in Singapore, the Philippines, and Thailand, and Deliveroo’s exit from Australia – announced on the same day as Grab’s Q3 results. The latter has operations in Singapore as well.

Photo credit: Lgh_9 / Pexels

However, both CFO Peter Oey and COO Alex Hungate stressed that Grab was “very focused on organic growth,” with Oey adding that the company’s “bar on M&A is extremely high.”

While this doesn’t rule out any big deals in the future, it seems unlikely that Grab will be making any substantial acquisitions for now.

Partnership with Trans Retail

The company is more likely to expand via partnerships.

Pickup in mobility

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