What Uber’s first-ever GAAP profit suggests about Grab’s path to profitability

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Hello reader,

I remember the first time I used the Uber (UBER, NYSE) app. It felt like magic. I was sold on the clean interface, convenience, and – back then – relatively cheap fares. It sure beat the uncertainty of waiting on the street to hail a taxi.

Much has changed since then. Uber left Singapore – and the wider Southeast Asian market – in 2018, selling its business in the region to local player Grab (GRAB, NDAQ).

Yet, Uber is very much alive and kicking in other parts of the world. Last week, it announced its first quarter of GAAP operating profit for the second quarter of 2023.

It’s been a long time coming.

Uber CEO Dara Khosrowshahi attributed this achievement to “a combination of disciplined execution, record audience, and strong engagement.”

Given the similarities in their businesses, it’s natural to wonder what this means for Uber’s erstwhile rival Grab. Comparing the two isn’t as straightforward as it seems – apart from having different business units and operating in different geographies, the companies also account for various financial metrics differently.

Yes, this includes even basic items like revenue.

However, Uber’s journey to profitability is still a decent guide to what Grab’s path ahead may look like. If the Southeast Asian super app does follow in the footsteps of its US counterpart, we can expect it to achieve quarterly operating profit sometime in 2025. This is an analysis I run through in this week’s big story.

With share prices down over 70% since Grab went public via a SPAC transaction, early shareholders will certainly be hoping that a steadily improving bottom line will flow through to the value of their holdings.

— Simon

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Image credit: Timmy Loen

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