Grab Surges Most in 6 Months After Unveiling Post-Pandemic Gains

(Bloomberg) -- Grab Holdings Ltd. climbed more than 24% after reporting a better-than-expected 6% revenue rise as the pandemic receded across Southeast Asia.

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Revenue increased to $228 million in the first quarter after the ride-hailing and delivery giant added sales from Jaya Grocer, a platform it acquired in January. That was more than the $139.2 million analysts were expecting. Grab’s net loss narrowed to $435 million, as the company fights to gain profitability following years of heavy spending in pursuit of market share.

The company managed to grow monthly users 10% to 30.9 million after Southeast Asian countries removed pandemic-era restrictions. Per-user spending climbed 19%, it said. Unlike other internet companies that are grappling with cooling post-Covid online activity, Grab’s car-hailing and delivery businesses benefit as life returned to normal.

The company had struggled since becoming a publicly listed company in the U.S. through a merger with a blank-check company in December. Mounting losses, coupled with a broad tech selloff, have weighed on its shares. On Thursday, Grab rose 24.1%, its biggest gain since November.

Grab Soars 24% as 1Q Beat Raises Analyst Optimism: Street Wrap

What Bloomberg Intelligence Says

Grab appears on track for robust sales growth amid the mobility segment’s recovery from pandemic effects and strong momentum across deliveries and financial services. Meanwhile, Ebitda losses are narrowing on lower user-acquisition costs. Ride bookings are poised for a comeback as Southeast Asia’s social restrictions ease further and though the unit suffered a drop in 1Q sales, it fueled about 50% of total revenue. Online food and grocery delivery’s user expansion and rising scale economies should also support sales, particularly with the inclusion of the newly acquired Jaya Grocer in Malaysia.

- Nathan Naidu, analyst

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Key Insights

• Revenue from delivery business jumped 70% to $91 million

• Revenue from mobility business declined 22% to $112 million

• Revenue from financial services rose to $11 million

• Grab plans to launch a Singapore digital bank, currently in internal pilot, in the second half, CEO Anthony Tan said during a conference call

• Deliveries GMV was $2.56 billion vs its forecast of $2.4 billion to $2.5 billion

• Mobility GMV was $834 million vs its forecast of $750 million to $800 million

• The company said it expects full-year revenue to increase to $1.2 billion to $1.3 billion; sales excluding Jaya Grocer will rise no less than 50% this year, CFO Peter Oey said on the call

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• Grab’s cash and cash equivalents fell to $3.4 billion at the end of March from about $5 billion at the end of 2021, partly because of cash outflow from operating activities and the acquisition of Jaya Grocer

• Partner incentives climbed 55% to $216 million, while consumer incentives rose 85% to $344 million

• Grab expects second-quarter deliveries GMV of $2.55 billion to $2.65 billion

• Company sees second-quarter mobility GMV of $950 million to $1 billion

• Grab expects second-quarter financial services total payment volume, before consolidation, to reach $3.5 billion to $3.6 billion

• Company sees GMV growing 30% to 35% in 2022

Market Reaction

• Grab shares rose more than 24% in New York.

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