Singapore-headquartered ride-hailing and deliveries company Grab on Thursday reported a net loss of $988 million in the third quarter of this year, up 59% from the same period last year.
The company said its Q3 losses widened on account of non-cash expenses, with $748 million of the third-quarter loss due to non-cash items, primarily consisting of interest accrued on Grab’s convertible redeemable preference shares, stock-based compensation, and fair value changes on investments.
“A significant proportion of such non-cash expenses is expected to cease after the business combination,” it said in its statement.
Grab’s Q3 revenue was down 9% year-on-year to $157 million as mobility restrictions impacted its ride-hailing business, particularly in Vietnam where there were strict lockdowns.
The company recorded adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) losses at $212 million, increasing by 66% year on year as it spent more on operations alongside the impact on the mobility business.
Segment adjusted EBITDA excludes regional corporate costs, legal, tax, and regulatory settlement provisions, and unrealised foreign exchange gains or losses.
However, gross merchandise volume grew by 32% to a record $4 billion on the back of strong deliveries and advertising business performance. Calling the third quarter a challenging environment, Grab’s co-founder and chief executive Anthony Tan said that six of the eight markets it operates in were under strict movement controls due to the delta variant spread, affecting the company’s ride-hailing and delivery operations.
Ride-hailing and deliveries
Revenue from ride-hailing was down by 26% year-on-year to $88 million. Though deliveries revenue climbed 58% to $49 million, it was marginally higher than the $45 million made in the second quarter. Grab is confident that ride-hailing will bounce back in the final quarter as markets open, Tan said, citing the rebound in ride-hailing demand.
Mobility gross merchandise volume in the first four weeks of the fourth quarter was 26% higher than the first four weeks of the previous quarter, the company’s figures showed.
Grab’s margins for deliveries and ride-hailing have also improved, the company’s chief financial officer Peter Oey highlighted. Segment adjusted EBITDA as a percentage of gross merchandise volume for deliveries rose slightly to -0.9% from -1.6% because of improving take rates. Ride-hailing also saw a slight uptick from 11.4% to 12% in the same period due to “cost optimisation,” Oey said.
Financial services and enterprise
Revenue from financial services was much less at $14 million but rose 11% from the year before. Segment adjusted EBITDA as a percentage of total payment volume improved slightly from -2.7% to -2.4% as total payment volume hit a record $3.1 billion.
Oey said Grab “remains highly encouraged in the development of financial services evident in the increasing penetration of our digital wallet.” The company had increased its share in OVO to 90% last month, before trimming its stake to 79.5% by bringing in an Emtek executive to comply with regulations.
Grab’s enterprise and new initiatives businesses made just $7 million this quarter, declining by 37%, while segment adjusted EBITDA fell by $4 million to just $1 million. Grab said they were spending to grow its merchant base, and the division’s gross merchandise value had grown 3.5 times to $41 million as demand for its advertising services grew. Grab’s enterprise division currently includes advertising under GrabAds, and an online fraud and risk detection service under GrabDefence, with plans to eventually launch mapping technology as well.
New initiatives include businesses like GrabHealth in Indonesia and its hotel listings. Grab’s cash on hand increased to $5.2 billion as of end-September this year, up $1.5 billion from the end of 2020. Its number of users also dipped 8% from 23.9 million in 2020 to 22.1 million this year as a result of the lockdowns, although the average spend per user increased 43% to $183.
Grab, which operates in eight countries and over 400 cities, confirmed that its $40-billion merger with US special-purpose acquisition company (SPAC) Altimeter Growth Corp is on track to complete by the end of the year. Oey said the company will be filing another amended F-4 form — it has filed two so far since its initial filing in August — with the US Securities and Exchange Commission soon, after which both Grab and Altimeter will hold extraordinary general meetings ahead of the merger.