Grab Holdings Limited Q2 FY2025 earnings call

• Product and tech-led innovations driving the ecosystem flywheel. - Focus on affordability and expanding the addressable market with price-sensitive users. - Scaled financial services prudently with loan disbursals near $3B annualized. - Collaborated with governments in Indonesia (Makan Bergizi Gratis) and Thailand (tourism task force) for initiatives. - In Mobility, leveraged scale economies to drive growth, with higher-margin rides increasing and margin approaching target. - In Deliveries, used product-led growth with affordable and viral products, ads penetration growing. - Actively involved in AV initiatives with pilots in Singapore and Philippines, partnerships with AV players.

Group MTUs reached an all-time high. On-demand GMV accelerated to 21% year-on-year in U.S. dollars and 18% constant currency. Adjusted EBITDA saw 14th consecutive quarter of growth, with trailing 12 months adjusted free cash flow at $229 million. Mobility: Transactions grew 23% year-on-year, MTUs grew 16%, GMV grew 19% constant currency; higher-margin rides reached double-digit of Mobility GMV, margin for Mobility was 8.7% this quarter, close to 9% target. Deliveries: GMV accelerated to 19% constant currency; Saver contributed 34% of Deliveries transactions; ads penetration was 1.7% GMV; Mart grew faster than core business. Financial Services: Total loan disbursals across GrabFin and digital banks reached close to $3 billion on an annualized run rate basis in Q2.

• Expect on-demand GMV growth to accelerate in 2025 relative to 2024. - Adjusted EBITDA in second half to be substantially stronger than first half. - Deliveries margin expected to improve sequentially in the rest of 2025. - Financial Services aiming to reach $1B loan book by end of 2025, with break even expected in 2026 for Financial Services overall and in Q4 2026 for 3 banks.

• Macro environment uncertainties affecting consumption. - Competitive pressures in markets operated. - Regulatory and operational challenges with AV rollouts in different regions.

Q: With the uncertainty in the macro environment and what's happening in Thailand and Indonesia as well as Trump tariffs being implemented and negotiated, how are you thinking about the outlook for Grab and for the countries you operate in? Are you seeing any weakness in consumption right now?

A: Good news is we have been leaning into affordability since 2023 with product launches like Saver delivery, Saver transport rides. We're well positioned as a countercyclical company, working closely with government and regulators. For example, in Indonesia participated in Makan Bergizi Gratis, and in Thailand established a private-public tourism task force.

Q: In Mobility, number of transaction was 23% with significantly outpacing growth in MTUs. What strategies have you successfully implemented to drive this increase in frequency of usage? How should we anticipate this trend evolving in the future?

A: We chose to reinvest the benefits of our scale economies to drive broader accessibility and increase platform usage. Mobility MTUs grew 16%, GMV grew 19% constant currency. The growth attracts new user cohorts and improves retention, with benefits extending to the broader Grab ecosystem for cross-selling. Margin trade-offs are not considerable, and we think this is a sustainable strategy.

Q: Given the growth of the GrabFood for One, the Shared Saver, all will result in potentially lower blended AOV. Will this volume have lower margins? So if excluding the contribution from the advertising revenue, can you walk us through how you balance between the faster volume driver of the GMV growth versus the lower ASP and the margin trend?

A: We really believe ASEAN has still so much upside in digital consumption. Deliveries GMV accelerated due to product-led initiatives. We've got a combination of affordable and viral products bringing in new MTUs. Segment margins have continued to expand, and we expect sequential improvement in margin for the rest of 2025. Ads penetration will contribute, and we're bullish on advertising as a retail media network.

Q: With the launch of your autonomous vehicle shuttles in Singapore recently, how soon do you think a commercial rollout of the AV vehicles in your market across the Southeast Asia will take? Any updates also on the partnership front to boost your innovations in this space?

A: We are in a prime position for AV transition. We have pilots in Singapore and Philippines. We're talking to a number of partners and will announce more when ready, working closely with regulators. You can foresee more announcements in the next few months.

Q: My first question is just getting some more details on competition by market and segment. Specifically, if you can comment maybe on the Mobility GMV growth was a bit slower in second quarter versus first quarter, and the trip fares were down about 4%. Which market specifically are we seeing some slowdown in? And if you can help us contextualize the trip fares being down 4% and how to think of it going forward?

A: We have chosen to lean into reinvesting the scale economies from our ecosystem back into volume. The AOV drop in Mobility is by choice, creating future growth pipeline. We're 3x-3.5x larger than next largest competitor, with scale economies allowing us to reinvest in AI and pass on savings to consumers, making it a sustainable competitive strategy.

Q: On your capital allocation question, our stance has always been consistent. We take a very prudent approach when it comes to capital allocation. So what do we look at? We always want to create, generate shareholder value on a long-term basis. And if you look at where we've been deploying our capital, it's really fueling the growth of our business through organic growth. And that's going to be P0 for us. It's going to be high top of the list for us, and you're seeing that playing out in this result, which is fueled by the previous deployment of capital towards all the product innovations and the tech innovation that we've been doing. And that will continue. That will continue to fuel the growth that we're going to see in our business as we move forward. Now with that being said, with M&A, we're always on the lookout. With a strong balance sheet and with the recent capital raise, it does give us that strategic flexibility. And that flexibility is important because M&A comes and goes. So we'll be continuing to scout the market in terms of what's available. But at the same time also, the bar is just so much higher when you compare it to the organic growth that we continue to prioritize over our business today. Now in terms of buyback, we did complete the $500 million buyback. It was done concurrently with the recent convertible note that we raised. There's no plans for new buyback programs. That's something that we'll continue to explore with our Board. But in this quarterly earnings, there's nothing for us to announce. Again, it's all about, for us, prioritizing the right sort of capital management in our business. And when we have a new buyback, we'll definitely share it with all of you.

Q: I just wanted to ask about the advertising revenue. You got that $236 million run rate, I think, in that 45% growth. Just talk about the sustainability of that growth, and then think about or talk about the long-term ceiling or marker for where advertising as a percentage of GMV could go?

A: The advertising business has doubled a couple of times over the last couple of years. Penetration of advertising to GMV can get much higher. Penetration of advertising to GMV in various markets can get much higher than where we are today. We're seeing examples of 2% penetration, 3% penetration, even 4% penetration, particularly in Mart ecosystems. The return to advertisers is key, and we have exponential growth potential with penetration and existing advertiser spending increasing.