Grab, a ride-hailing and food delivery startup with operations across most of Southeast Asia, reached a major milestone for any tech company with its first ever profitable quarter at the end of 2023.
Grab reported a profit of $11 million in the last three months of 2023, compared to a loss of $391 million in the same period last year. Revenue for the quarter also increased to $653 million, a 30% increase compared to the same period in 2022.
“We’re on the brink of breaking even,” says Alex Hungate, Grab’s chief operating officer. “There is tremendous potential for scale in our region and we need to continue to drive growth.”
Many technology companies have been forced to tighten their belts in recent years. Rising interest rates and a challenging macroeconomic environment have left supporters and investors struggling with continued losses and high expenses.
Grab has never made an annual profit. In 2023, Grab posted a net loss of $485 million, a significant improvement from the $1.74 billion loss it reported in 2022. The company’s stock has lost nearly 75% of its value since its debut in December 2021, when it listed on the Nasdaq. Through a merger with a special acquisition purpose company (SPAC).
Grab achieved its first-ever profitable quarter on the back of a series of cost-cutting measures for the Southeast Asian technology company, including a hiring and salary freeze for senior executives, and a one-time accounting gain.
The ride-hailing startup will soon show whether it can build on its momentum in the new year. Grab is scheduled to announce its first quarter 2024 earnings on May 15th.
data science companies
Hungate said Grab’s investments to date are starting to bear fruit, and the company will be able to reinvest the proceeds back into the service to attract new users and retain existing ones.
Grab is best known as a ride-hailing and food delivery service, leveraging its large fleet of drivers across Southeast Asia to transport passengers and food to various locations. But Hungate instead views Grab as a data science company with enough inside information to optimize revenue growth.
As an example, Grab (like most other ride-hailing apps) made the decision to create its own mapping solution rather than licensing it from a third-party provider.
Cities in Southeast Asia are large and cluttered, with narrow streets and roads without clear signposts. What is another important feature of Southeast Asian cities? Shopping malls. In addition to retail stores, they often serve as residential and commercial hubs. However, drivers can get lost in complex maze-like locations.
“14% of a driver’s time is spent on the final 2% of the trip, as they often cannot find a place to pick up or drop off within the mall,” Hungate says. He claims that due to improved mapping, drivers’ hourly earnings increased by 14% last year compared to 2022, as the technology allows the company to allocate vehicles better. I am.
Another area where Grab is leveraging data is in the emerging financial services sector. Grab provides loans to drivers through its GrabFin service and Digibank. The startup uses data such as driver ratings, safety records, and types of rides accepted when assessing driver risk. Hungate claims that Grab’s collection efficiency is higher than traditional banks (although Grab also allows drivers to deduct loan payments from their income).
grub growth
Hungate joined Grab after serving as CEO of Singapore Airport Terminal Services, a food and logistics company known for providing in-flight catering services at Singapore’s Changi Airport. Prior to that, he led HSBC’s Singapore operations for almost six years.
Grab started in 2012 when Anthony Tan and Tan Hooi Ling launched a Malaysian ride-hailing service called MyTeksi. The startup quickly expanded to the Philippines, Singapore, Thailand, and Indonesia. In 2013, the company moved its headquarters to Singapore and changed its name to Grab.
Ole Huiin—Bloomberg via Getty Images
The ride-hailing startup has successfully pushed Uber out of Southeast Asia, making it one of the few markets to keep the U.S. ride-hailing giant at bay. Grab ultimately acquired Uber’s Southeast Asian assets in March 2018. In return, Uber acquired a 27.5% stake in Grab. The startup was also backed by Japan’s Softbank, Singapore’s Temasek, and BlackRock.
Grab only serves the Southeast Asian market, with per capita income levels varying from wealthy Singapore to relatively poor Cambodia.
That will determine how Grab operates, Hungate said. Many in Southeast Asia do not have bank accounts and, unlike Western consumers, do not have credit cards. By building its own payment system, Grab is able to eliminate the use of cash and serve the unbanked, while still connecting customers to its app.
Regional differences are also the reason why Grab is relying on a “super app” strategy. Southeast Asian consumers prefer to do everything with one app, and Hungate believes this is due to the limited capacity and data bandwidth of cheap smartphones.
Hungate said Grab will continue to focus on Southeast Asia. “This region is the third most populous region in the world, with 650 million consumers. Out of 650 million consumers, Grab users are the third most populous region in the world. There’s only one person,” he says.
“We think there are significant benefits.”
