SoftBank-backed Grab targets first profit by 2024

Grab, one of south-east Asia’s biggest tech groups valued at $10.8bn, said the 10-year-old business would be profitable by 2024, even as growth slows against mounting global recession fears and rising inflation.

The Nasdaq-listed company, which is backed by Uber and SoftBank, said at an investor day on Tuesday that revenue growth would slow to between 45 per cent and 55 per cent in 2023 on a constant currency basis. The company expects its 2022 revenue to be between $1.25bn and $1.3bn.

Grab’s share price has plunged since its listing via a special purpose acquisition company in December 2021. As well as never having been profitable, the ride-hailing and deliveries company has been buffeted by a sell-off in tech stocks, sending its share price down by 61 per cent over the year to date.

The announcement was the first time Grab has given a target for becoming profitable, albeit on an adjusted basis that excludes exceptional items such as restructuring costs. The company said it wanted to clarify a “refined and focused” strategy that focuses on local commerce and mobility.

“We are expecting the environment to remain tough,” said chief operating officer Alex Hungate in an interview in Singapore, where the company is headquartered.

“We want to be the largest, most efficient on demand platform in south-east Asia. We are a single app for the consumer, but we are not doing everything for the consumer,” he added.

Grab sought to reassure investors that it was in a strong position, with $6bn in cash and liquid items. The company expects losses to narrow to $380mn on an adjusted basis in the second half of this year, compared with $520mn in the first half.

Grab, which operates in 480 cities across eight countries in south-east Asia including Indonesia, Thailand and Singapore, has long been a barometer of consumer tech sector health in the region. The company started out in ride-hailing and expanded into banking, lending, grocery delivery and hotel bookings, among other services.

On Tuesday, Grab said it had abandoned some of the business lines that helped burnish its reputation as the region’s “super app” but burnt cash. The company lost $3.4bn in 2021.

A move into dark stores, where the company built its own warehouses and distribution centres and bought inventory wholesale, has been cast aside in favour of partnerships with major retailers, such as Malaysian supermarket chain Jaya Grocer and Indonesian supermarket group Trans Retail. Grab’s foray into so-called cloud kitchens is also being slowly phased out, said Hungate.

Grab said it had not had to announce big lay-offs seen in other technology companies this year. Hungate added that the tech group would be hiring next year, especially in financial services.

The group has launched a digital bank in Singapore, part of a partnership with telco group Singtel, and has plans to hire staff for two more banks in Indonesia and Malaysia next year.