The old chestnut holds in business, especially for platform firms focused on building super apps: You’ve gotta spend money to make money.
It’s not uncommon to see firms with strong top-line momentum to post red ink on the operating line, as all sorts of costs tied to gaining scale and users, including marketing costs, are ratcheted up.
But in the pandemic, which has hit some economies more than others — and where ride-hailing’s trajectories are uneven as well — Grab’s latest results show some bumps in the road, tied more to where it operates than what it does.
In terms of headline numbers, net losses, tied in part to non-cash charges, widened year over year to nearly $1 billion in the latest third quarter, up from the USD equivalent of $621 million last year. EBITDA, a rough measure of cash flow, saw losses of about $212 million from $128 million last year. Revenues were down 9% as measured year over year to $157 million.
Some puts and takes: The mobility business was hit hard during lockdowns in Vietnam. And as a result, there was a 30% slide in mobility GMV to an overall $529 million, per supplementals released by the company.
During the quarterly conference call, Anthony Tan, CEO, noted that “as the pandemic intensified throughout Q3, we saw several governments in Southeast Asia ratchet up COVID-related restrictions, both in terms of severity and duration. All eight markets in which we operate were affected, with six of them experiencing tighter controls. Vietnam, in particular, implemented stricter measures than most other markets, with the government strictly controlling ride-hailing and food delivery operations.”
For a sense of Vietnam’s impact, management disclosed on the call that monthly transacting users (MTUs) were also impacted in Q3 by the movement restrictions, which constrained operations in Vietnam. MTUs declined to 22.1 million versus 23.9 million in Q3 of last year.
“If we were to normalize MTUs in Vietnam, MTUs would have grown to 24.8 million in Q3 this year,” Tan noted.
Conversely, deliveries surged by 63% (as measured in GMV), and helped propel total GMV to $4 billion, up 32% year on year. Materials released by the company also show that the financial services segment, which includes online checkout and digital payments, was up 44% year on year as measured in total payments volume, to $3.1 billion.
The cross-platform functionality – the ability to have some offset to the pandemic-led pressures – is critical to navigating external shocks. PYMNTS noted the strategy at work with Uber’s own results during this past earnings season.
Also see: Uber’s Horizontal Platform Shows Delivery Revenue Growth Outpacing Ride-Hailing Snapback
The general super-app strategy – no matter the company – takes time, and might be bumpy.
In an illustration of that bumpiness, Altimeter Growth, the special-purpose acquisition company (SPAC) whose merger with Grab is slated to close this quarter, saw its stock slide by 5% on Friday morning (Nov. 12).
For Grab, volume for its on-demand everyday goods delivery service GrabMart for Q3 2021 increased by nearly four times as compared to the prior-year period and rose 78% from the prior quarter.
Management stated on the call that, per Tan’s comments, “looking ahead into Q4, we’re seeing Malaysia, Indonesia and Vietnam recover rapidly on the back of easing COVID restrictions.” Mobility GMV at the group level increased by 26% compared to the first four weeks of Q3. At a country level, according to the call, GMV recovery in Malaysia and Indonesia has been strong, growing 106% and 109%, respectively, in the same time period.
A return to growth in that mobility segment would do much to boost top-line momentum. And beyond the pandemic, the super app continues to have appeal in Southeast Asia. This week, GoTo, which is based in Indonesia and is also focused on ride-hailing and delivery, raised $1.3 billion ahead of a planned IPO.
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