Q1 2022 Grab Holdings Ltd Earnings Call

May 19, 2022

[music].

Ladies and gentlemen, thank you for joining US today My name is Michele and I'll be your conference operator for this session.

Congrats first quarter 2022 earnings presentation. After the Speakers' remarks, there'll be a question and answer session.

I'll now turn it over to Vivian Tom to start the call.

Good day, everyone and welcome Congrats first quarter 2022 earnings presentation.

And Tom kind of U S Investor Relations at Grant and joining me today are Anthony can Chief Executive Officer, Peter <unk>, Chief Financial Officer, Nemo, President and Alex <unk>, Chief operating officer.

During the call today, Anthony will discuss our key business updates and Peter who will share details on our first quarter 2022 financial results.

Following prepared remarks, we will open the call to your questions with Anthony Peter and Alex will provide responses for the Q&A.

As a reminder, before we begin today's discussion contains forward looking statements about the company's future business and financial performance.

These comments are based on our predictions and expectations as of today.

Actual results could differ materially due to a number of risks and uncertainties, including those mentioned in our form S. One registration statement and other filings with the SEC.

The discussion today also contains operating metrics and non <unk> financial measures.

The comparable <unk> financial measures are included in this quarter's earnings materials for more information and additional disclosures on recent business performance. Please refer to our earnings press release and supplemental presentation for a detailed first quarter 2022 financial review, which can be found on our IR website.

Should you have any questions. After this presentation. Please reach out to investors relations Baccarat Dot com.

And with that I will turn the call over to Anthony to deliver his opening remarks.

Thank you everyone for joining us today I'm pleased to report a strong set of results in the first quarter, we outperformed our <unk> guidance for deliveries mobility and financial services segments, while improving our group level and delivery segment margins at the same time.

Our results are a testament to the resilience of southeast Asia as economy.

The region's governments have been more cautious lifting COVID-19 restrictions compared to other parts of the world.

In March saw a shift in some countries to a post pandemic footing, where travel restrictions and capacity limits you significantly.

We are optimistic that our business will continue to strengthen as more countries pivot living with COVID-19 looking.

Looking ahead, we are laser focused on meeting our profitability targets and growing sustainably. We have three main levers to achieve this first we're driving towards profitability through disciplined cost management, we started optimizing our fixed cost base and a disciplined capital by managing all spend closely.

Second we will continue to focus on winning the hearts and minds of more users across southeast Asia.

We will leverage technology partnerships, and our Super App strategy to grow our user base in an efficient manner that leads to greater consumer engagement and retention last we will continue to position our core segments for recovery and growth in order to capture the vast opportunities across all cost.

By doing this we aim to build a resilient.

Future proof business that delivers long term value to our shareholders.

This backdrop that is dive into our first quarter performance.

In the first quarter, our mobility segment rebounded with <unk> up 9% quarter on quarter. Despite the omicron overhang in the first two months of the year.

We saw signs of recovery coming out of the quarter as countries like Singapore, Indonesia, and the Philippines loosen Covid related travel restrictions in March.

Period of February through April our mobility <unk> increased 32%.

Airport rides, which have higher margin and high order values rose to 6% of <unk> the highest level since the start of the pandemic.

On the supply side in the first quarter, we reached the highest number of active drivers since the second quarter of 2020.

We increased our average monthly active drivers by 220000.

Third quarter 2021 first quarter 2022.

While these are positive indications that our efforts to restore driver supply are bearing fruit.

Active drive a base of our March 2022, the majority of whom do both deliveries and mobility jobs or 76%.

The December 2019 level.

This indicates an existing gap when it comes to meeting mobility demand that is rebounding sharply.

I will take some time to address this gap in our driver supply.

In 2021, COVID-19 variance from Delta two omicron cause many countries across southeast Asia to loosen and tighten restrictions in fits and starts.

This impacted our active driver supply at some drivers temporarily left capital cities during the Lockdowns to return to their hometowns.

This moved onto our jobs in other industries.

In the fourth and first quarters, we've had to acquire more drivers to meet the increased demand rapidly coming back online.

To rebuild that would drive a supply we have three main strategies for us were running targeted campaigns in each market to reactivate dahlman drivers second we're widening our acquisition funnel and making it more efficient for example, we have ramped up assisted onboarding in some countries to complement our self serve model to increase.

To drive our conversion.

Finally, we continuously innovate on our Super App platform. So we had our best platform for drivers to earn an income.

For example, we launched and Hans shifts feature of our Singapore drivers that led to higher drive our earnings in productivity for them in selected zones, while meeting demand and supply crunch areas.

We also launched cross vertical batching in a few cities to allow our drivers do back to back jobs across different verticals, improving your earnings by reducing idle time in the first quarter average driver earnings per hour increased by around 9% year on year, while utilization rates improve.

Cost reduction and drive our idle time also helps improve our overall cost to serve.

Looking ahead, we are focused on rebuilding our driver base to capture the strong mobility demand recovery.

We expect the mobility supply to stabilize in the second half of the year with driver incentives as a percentage of GMB tapering in that period.

Separately, but closely monitoring the impact of fuel inflation on our drivers earnings will continue to look for ways to support them through surcharges fuel discounts and fair adjustments to mitigate its impact on our driver supply.

Moving on to deliveries deliveries continued to register another quarter of strong <unk> and revenue growth on the back of food and grocery strength as well as contributions from Jaya grocer.

Managed to grow both our top line and improve our unit economics quarter on quarter. This gives us confidence in our sustainable growth strategy for deliveries in the first quarter, we focused on forging strong partnerships with local merchants to give users more reasons to transact with graph.

We believe this helps us form a natural moment, while improving user retention on our delivery platform.

Over the first quarter and the number of active merchants rose, 34% year on year, while average earnings per active merchant increased 9% year on year for.

For groceries, we began to integrate Jai outgrowths of stores onto our groceries marketplace in Malaysia.

Our plan for the integration to be fully completed in the second half of the year. Meanwhile, drop has been integrated in all Jaya grocery stores in the quarter and the first quarter Jai growth. So became the largest drop a merchant in the country by TPB all within a Super quick two month period post acquisition.

Looking ahead, we are focused on improving our unit economy at a faster clip by.

By tapering, our incentives and driving organic growth, we will do this by ensuring users have the best product experience and a wide as much inflection on graph. We also plan to sustainably grow our deliveries business in Underpenetrated outer cities and towns in five of our eight markets to meet strong.

Customer demand in those areas.

<unk> services, we continue to see strong momentum in payments and we made great progress in lending.

In the quarter PPV of our buy now pay later product grew five times between Q1 2021 in Q1 2022 overall loans disbursed, which includes buy now pay later loans grew three times in the same period.

We achieved this while keeping our NPL ratio steady at low single digits.

Looking ahead, we plan to expand the buy now pay later product into more markets and deepen lending penetration within our ecosystem. This will allow us to grow financial services to meet the needs of an underserved market while growing sustainably.

In the quarter.

<unk> continued to execute on its open ecosystem strategy OVO did so by forging new large partnerships, including one with global short form video sharing app and launching its first recurring payment in partnership with a global subscription streaming service.

Finally, I'm also excited about digital Bang opportunity.

Digital banking joint venture with Singtel also known as G X S Bank and a consortium of partners was selected to receive a full digital bank license in Malaysia in April there.

There were 29 total applicants and three full banking licenses were granted we will want to treat it past the high bar set by Malaysia Central Bank.

We are tremendously grateful for this opportunity so malaysians, where one two are currently considered underbanked or unbanked.

Winning the Malaysia digital banking license allows us to create a regional digital banking footprint in a cost efficient manner. We plan to leverage the same technology stack for our digital banks in Singapore, and Malaysia, and Indonesia Bank investment in order to sustainably scale access to financial service.

Across the region.

We also aim to launch a Singapore digital bank currently and in the internal pilot in the second half of the year.

A quick point on the enterprise and new initiatives.

<unk> and revenues grew strongly year over year, driven by advertising contributions in the quarter I will grab ads advertiser base jumped seven times compared to the same period a year ago as we continue to onboard <unk> onto ourselves of ads platform to provide them search and display.

<unk> options for them to grow sales in our App.

This is another example of our Super App strategy in motion.

Aside from being a super App for consumers. We are also super App for merchants, where we cross sell services to them and create a virtuous cycle that also benefits our merchant partners and allowed them to perform well.

When they perform well so do we and true grab ads, we give them the tools to grow their businesses.

To conclude we will continue to double down on our Super App strategy with a laser focus on growing sustainably. So you can win many more hearts in southeast Asia and drive toward our profitability targets I will now turn the call over to Peter to deliver a review of the financials.

Thanks Anthony.

We had a strong start to the EBITDA caused segment's first quarter 2022, GMB and TPB outperforming the high end of that guidance range.

GMB grew 32% year over year to $4 $8 billion.

Driven by both higher average spend per use up and continued growth in <unk> year on year.

For our segments <unk> and TPB performance, we saw strong growth in our delivery segment with <unk> growing 50% year on year to reach $2 $6 billion, while financial services TPB scaled at three 6 billion in the first quarter.

Mobility GMB was $834 million in the first quarter and grew by 3% year on year and 9% over the fourth quarter due to army call any impact of the first two months of the year.

Looking ahead, we are optimistic of a gradual mobility recovery and we will continue to spend efficiently and judiciously to grow at drive the base to support demand coming back online.

As Anthony mentioned, we expect the mobility supply to stabilize in the second half of the year with driver incentives as a percentage of GMB tapering in that period.

Overall across all of our segments, we are seeing improvement in commission rates.

Year on year deliveries commissions are up from 18, 2% to 19, 9%.

Mobility commissions up from 22, 6% to 23, 4%.

And financial services commissions up from two 1% to two 5%.

The year on year improvement in deliveries and mobility Commission rates was driven by product and country mix.

Financial services commissions also improve on the back of a high contributions from our lending business.

Revenues on a risk basis for the first quarter grew by 6% year on year to $228 million and grew by 87% quarter on quarter.

Year on year growth in revenues was driven by a strong pickup in revenue in the delivery segment, which includes the revenue contribution from <unk> and continued growth in our financial services and enterprise revenues.

These revenue growth drivers more than offset the year on year decline in revenues from our mobility segment.

Segment, adjusted EBITDA margins declined year on year from 1% in the first quarter of 2021 to negative one 6% in the first quarter of 2022.

Our mobility segment adjusted EBITDA declined to $82 million in the first quarter of 2022 from $115 million in the same period last year.

Delivery segment, adjusted EBITDA declined to $56 million loss in the first quarter of 2022 from $4 million loss in the same period last year.

And our financial services segment, adjusted EBITDA declined to $102 million loss from $78 million loss from the same period last year.

As we mentioned in the prior quarter.

We made a decision to boost our active driver supply base and to capture the strong underlying demand growth from re openings, which caused our segment adjusted EBITDA margins to decline on a year over year basis.

However.

I do want to also point out that we've managed to improve.

Segment, adjusted EBITDA margins quarter on quarter by around 100 basis points as we continue to drive greater discipline in managing our incentives for example.

Delivery segment, adjusted EBITDA margins improved quarter on quarter from negative three 5% to negative two 2%.

130 basis points improvement.

Our core food delivery segment EBITDA margins also saw improvements quarter on quarter from negative two 8% to negative one 7%.

110 basis points improvement.

We also saw our financial services segment, EBITDA margins as a percentage of TPB improve quarter on quarter from negative three 2% to negative two 8% up 40 basis points improvement.

Looking ahead, we will continue to remain focused on growing sustainably by allocating our capital efficiently and tapering down.

Ziv spin.

Our group adjusted EBITDA margins, followed a similar trend as we ended the first quarter with an adjusted EBITDA margins of negative 6%.

Decline from the prior year period of negative three 1%.

But an improvement of 80 basis points from the fourth quarter of 2021.

Our regional corporate costs for the first quarter of 2022 increased to $212 million from a $146 million last year, but remained stable at roughly 4% as a proportion of our GMB.

The regional cost increase was primarily driven by investments in product development and cloud infrastructure, along with our increasing about talent pool as well as compliance and other ancillary expenses related to being a newly listed public company.

I want to assure you that as Anthony mentioned, we are very focused on our overall cost management and on driving greater internal efficiencies.

We will continue to optimize our fixed cost base.

Disciplined hiring and other expenses as we focus on growing our business sustainably.

<unk> loss for the first quarter was $435 million.

Representing an improvement from a loss of $666 million in the prior year period.

This is primarily due to the elimination of noncash interest expense of grafts convertible redeemable preference shares which was no lingering could when we became a public company.

Turning to our balance sheet and liquidity position.

Which continues to be strong.

We ended the first quarter with $8 $2 billion of cash liquidity, including $2 billion term loan B facility.

Our net cash liquidity was $6 billion.

The end of the first quarter.

Our cash liquidity declined by $754 million from the end of the fourth quarter, mainly due to net cash outflow from operating activities and the acquisition of J a grocer.

We will maintain a disciplined stance in how we allocate and deploy our capital the strength of our balance sheet is not something that we take for granted.

As we look ahead for the second quarter and rest of year in.

In the second quarter, we expect to see deliveries <unk> of $2 $55 billion to.

<unk> six 5 billion.

Mobility <unk> of $950 million to $1 billion.

And financial services, TPB, a $3 5 billion.

$3 6 billion.

Our path to profitability plans remain on track and is a key focus for our management team.

In the second quarter, we expect to see continued improvement in the mobility business with Covid related travel restrictions easing across the region.

For mobility, we expect margins to recover back towards our long term target of 12% of GMB.

Active driver base and mobility demand rebounds.

We also expect that mobility supply to stabilize in the second half of 2022 and for mobility driver incentives as a percentage of GMB to taper in that period.

In deliveries, we expect demand to remain firm.

But saw some seasonally impact on demand levels, given the observation of Ramadan, a month of fasting and pray for Muslims in April impacting primarily Indonesia, Singapore and Malaysia.

With deliveries.

We reiterate our expectations for the segment through each segment adjusted EBITDA breakeven by the end of 2023.

With core food delivery breakeven by the first half of 2023.

We expect that long term segment adjusted EBITDA margin as a percentage of GMB to come in above 3%.

This is higher than the 3% guidance that we presented in the prior quarter.

We have achieved margins higher than 3% in some of our markets in the past and believe we can adapt the learnings from those markets to optimize our overall segment adjusted EBITDA margins.

I do also want to note that our long term deliveries margin excludes contributions from advertising.

It is currently captured <unk>.

Enterprise and new initiatives segment.

For financial services, we will also continue to drive greater adoption of our wallet and continue to expand our buy now pay later product.

Looking at the 40, we expect group <unk> in fiscal year 2020 to grow between 30% to 35% year on year, and we expect to generate revenue of approximately $1 2 billion to $1 3 billion.

Our revenue guidance includes contributions from Jaya Grosso, along with our expectations to taper our incentive spend.

We expect that group revenues, excluding <unk> to grow by no less than 50% in fiscal year 2022.

In conclusion, we are pleased with our performance in the first quarter.

Which sets us up nicely to continue executing for the rest of the year.

We will continue to focus on optimizing our cost structure exercising capital discipline and tapering out incentive spend sequentially as we push ahead on our path to profitability.

Thank you very much for your time, and we will now open up the call to questions.

Ladies and gentlemen, we will now start the question and answers portion of the call joining us for the question and answer session will be Anthony Kim Chief Executive Officer, Peter <unk>, Chief Financial Officer.

President and chief.

<unk> operating officer. Please press star one to ask a question and we'll call on you for your question.

First question comes from the line of Alicia Yap Citigroup. Your line is open.

Hi, Good evening management, Thanks for taking my questions.

I have a question on the delivery business.

Just wondering for <unk> guidance itself.

Exclude Jaya growth.

What kind of growth rate.

We should be expecting on the organic growth.

And then.

Uh huh.

In terms of the.

Management, Ken also comment if there's any change of the competitive landscape for the delivery business.

Any country that you are seeing.

Facing more aggressive subsidy by the competitor or any areas that stand out in the recent quarter that we should be.

Paying more attention to any change on the landscape.

Thank you.

Hi, Alicia this is Peter let me take the first one and then Anthony will take the second one so on.

On the Q2 deliveries GMB guidance.

But what I'll say is we don't break out the <unk> piece, we don't breakout normally all the different sub verticals within a segment of our business.

But if you look at delivery just stepping back it's still growing and very stable also.

We did see some seasonal impacts in the first quarter as we came off a strong fourth quarter, but just deliveries overall, it's very stable. It grew at 5% as you saw from a quarter on quarter basis, and if you look at from February to March grew 11%.

From a business and also from December to March at 7%.

We are seeing good.

Momentum despite the very strong coming back come back off mobility business and we're going to see continued growth in the deliveries business overall.

Thanks, Alicia I'll take the competition question.

Especially with regards to deliveries.

In this quarter actually we gained share in deliveries against regional food delivery players in all of our markets.

And improved argued in economy.

So we expect that total incentives as a percentage of <unk> to continue to taper as we look ahead.

Our focus on our laser focus on driving organic growth through really better user experience and of course, what the.

Users really appreciate is a wider selection and we believe we have wanted to why does it not <unk> is out there.

In terms of.

When we think about comp.

Competition, we think about how do we serve our users and partners.

And we do this by capturing the higher basket size user demand across different modalities, whether it's ready to eat food.

But it's at a restaurant or self pick up all other forms.

And as a result, we actually drive most business for all much in and drive our partners. Hence many of these partners choose us as their main platform and by doing this it means that we bring the largest much in discovery and more user delight.

So all in all there is always going to be competition in the market. What is key for us is to enhance our right to win by capitalizing on our most of our business and.

And we'll just keep executing effectively hedged down as we taper down on incentive spend.

Okay. Thank you.

Our next question comes from NAV and kill with UBS. Your line is open.

Hi, good evening and thank you for the opportunity.

I actually had two questions first of all.

On the delivery business I just wanted to understand.

I guess broad breakdown between food groceries in parcels.

And even if you have any specific numbers I guess overall, how the mix will evolve and what that would mean for commission directionally.

And I guess the reason for this question is because.

I would imagine as groceries and I'll get bigger the commission potentially could decline, but we will obviously manage to grow that so I wanted to understand that a little bit more and then secondly in terms of cash.

You, obviously mentioned the strong balance sheet and the <unk>.

<unk>, obviously take it.

Easy.

Yes.

Between the cash burn in the business.

Plus I guess.

Some of the inorganic acquisitions that we need to do to expand I guess, either your physical business or the financials business. How do we look at the balance between those.

Various kind of sources of cash sources of utilization of cash.

Sure.

So let me address the first one around deliveries mix, we don't breakout the specific percentages between food our express business.

Supermarket, Mark business, but I would say is the food business still comprises the majority of.

All of our delivery segment itself.

At the same time also we are seeing good growth in terms of our mod and supermarket.

You look at the and just to give some numbers around there we saw a.

Gross off over 150% when it comes to Martin supermarket on a year on year basis and continues to grow double digit on a quarter on quarter basis. It's still very early days for us when it comes to modest supermarket, we're optimistic.

And also with the integration of Jaya, we're learning a lot and.

Applying a lot of those learnings to our Mod and supermarket infrastructure also at the same time.

In terms of how that ties the commission rates Commission rate continues to improve as.

You had earlier deliveries was up 190 basis points. If you. If you look at it on a quarter on quarter basis. It was 170 basis points.

Even if we extract the giant piece out.

See commission rates very strong at the same time. So it's the if you look from a mixed standpoint, when we look at our portfolios.

From a same lens perspective, and that is to improve our unit economics.

On the cash piece.

Mentioned that the.

Financial services piece was.

Panic, we actually see our financial services and digital bank as organic businesses.

And it's part and parcel of our ecosystem, it's part and parcel about Super App strategy and it's important that we allocate capital. There also as part of that if you look at just in terms of how we think about M&A activities.

We have a very high bar when it comes to M&A activities.

Two critical lens that we look at one is does it improve our unit economics about business does it improve the path to profitability of our business and it's a very high bar for us to look at now we're very focused on organic growth will continue to be very focused on all the segments of our business mobility is coming back very strongly delivery continues to be very <unk>.

Table financial services continues to grow also and those organic growth, we will allocate the right capital to it but also at the same time. We're also keeping an eye on margins as we want to make sure that our margins continue to improve sequentially.

Maybe if I can just follow up.

What I meant by inorganic in financial services side.

Not necessarily I guess, the cash that you need to spend to grow the digital banks and all but more acquisitions.

And then have been kind of discussed in the past.

It was more a question of what goes organically growing the businesses versus acquisitions that might have to do to scale up those businesses.

Yes.

This is ming.

First of all I would just point out that our general policy is to avoid commenting on any market rumors out there.

But I would.

I get up to you.

If you really think about inorganic opportunities, there's really two points I would highlight as Peter mentioned.

Just a very conservative stance around M&A.

The bar is very high cash is king for us. So we're only looking at opportunities that are very compelling to us.

Now what would those look like generally those will look like situations, where we can either accelerate our path to profitability.

Sure.

Meaningfully improved the unit economics within our marketplace.

Ecosystem.

Absent those two criteria, we're going to be very very disciplined around M&A.

Our next question comes from Mark Mahaney with Evercore. Your line is open.

If I could just ask a question. Please on the mobility segment could you talk about Ryder trends.

Quantitatively or qualitatively in terms of trip frequency trip fair amount number of users relative to what you experienced in pre COVID-19 back in 2019. Thank you.

Thanks, So much I really appreciate the question with regards to mobility.

Specifically I'll talk more about in Q1, we actually achieve.

Achieved mobility growth even despite this impact of all I think running the first two months.

We see clear evidence of a gradual recovery coming out of Q1.

Much of these restrictions ease omicron restrictions are lifted in March.

To us.

<unk> just reported that mobility GMB is up 9% Q on Q.

Exiting the quarter, we actually see demand recovery.

Mobility GMB up by 32%.

From February to April so we're pretty pleased there.

Even then.

I have to admit we still have plenty of headroom to grow.

Mobility in March 'twenty, two is only 57% of pre COVID-19 levels.

So we actually expect the mobility segment is stabilizing each too.

And with regards to drive incentives as a percentage of GMB to taper in that same time period.

And with that being said, we expect mobile <unk> segment, adjusted EBITDA margins to recover back to 12%.

So on the teams know we are laser focused on mobility supply to make sure. We can capture this demand is coming back quickly online and I'm sure. If you come across southeast Asia, we see it Alex and I.

Our Seo have traveled across 13 cities and over the past 14, 15 weeks and we've seen demand coming back strongly so we're going to just execute strongly on that front to make sure. We take advantage of this mobility recovery in a very disciplined way.

Thank you very much.

Our next question comes from Teng debt with Goldman Sachs. Your line is open.

Thank you very much want that opportunity.

My question around that.

How has the rising inflation in CLO.

Paul Your service in Vietnam and Malaysia.

Awesome. Thank apart is that an impact.

And also together with our mobility business. If you can comment a route.

Imparity dynamic it landscape that will be very helpful. Thank you.

Sure let me take the <unk>.

Question on inflation.

We are actually closely monitoring the situation, but so far we've actually not seen headwinds to demand.

Higher inflation rates.

Is it actually more evident.

And observable is actually higher fuel prices.

We've slightly increased fares in Singapore, and Vietnam, but have yet to see a material impact in mobility demand in fact, we're seeing demand still growing faster than supply, even so generally quite positive where mobility demand.

January to March as well.

As just one we shed our mobile <unk> is growing.

As we bring down partner and consumer incentive spend in this same time period.

So we believe it is still too early to comment on the change in any structural change in consumer behavior due to any of these inflationary pressures.

But we remain very confident in.

That the resilience of our everyday services, whether its mobility deliveries in country and this new endemic phase.

And on that comparison.

Okay.

And I'll just add on the Singapore, Singapore is a surcharge and not a fair increase.

So just to be just to be clear.

On competition.

If you don't mind I'll just jump in again.

Look the reality is competition is not new to US we've shown time and again that we can out execute our competition in a more efficient way.

Because of the cost benefits from our Super App ecosystem.

So we've actually remained or maintained our leadership category position in mobility and deliveries in the quarter. According to Euromonitor.

And notably we actually increased our lead relative to the next largest regional food.

Every competitor so while we maintained leadership in mobility.

So we can only do this.

Oh.

Because of the leadership that has led to us being able to benefit from reducing.

Our total group intended spin compared to Q4.

That means we are actually being more efficient with our incentives spend compared to our peers, while the business continues to grow.

Looking ahead, we actually see total incentives as a percentage of GMB come down.

Now as.

An example of this what we see is through cross vertical batching fall drive us because of our Super App strategy.

We actually see better supply side unit economy, because drivers can earn more while we're actually improving our incentives.

Seen whether it's earnings average earnings, but transit hour, that's increased 9% year on year, we've seen utilization rates also improving as same period, even though we've actually taper down incentives as a percentage of GMB.

So so we believe it's about building better experiences for users and partners.

And that's why we're just going to keep doubling down on the Super App more and reducing all cost yourself.

And also I'll just add that in terms of incentives that we're seeing.

As the competitors overall tapering down on some decent mobility and it's a great site because the.

The market is rationalizing also has been more constructive at the same time.

That's also helpful for us.

That's something that we're keeping a very close eye on as we continue to make sure our supply base also grows to meet the OLED demand.

Helpful.

Thank you very much.

Thank you our next.

Our next question comes from Ranjan Sharma with Jpmorgan. Your line is open.

Hi, good evening and thank you for the presentation.

Two questions from my side Firstly.

If you can just give more color on the revenue guidance of one two to one to $1 $3 billion.

And that guidance, how much are you expecting incentives to come.

Down versus last year.

The second question is if you can also talk you through.

The changes in the cost that you've seen because I see cost of revenues up 30%.

G&A expense was up 90% in R&D at 60%.

So whats driving these cost numbers up.

Thank you.

Sure, Yes, so on the revenue guidance part.

The revenue guidance, which we are giving up for the first time.

One two to $1 $3 billion.

It's largely driven by a few things let me break it out for you one is it driven by the topline growth.

Definitely.

We're expecting a strong topline GMB growth of 30% to 35% for the fiscal year.

It's also.

Seeing some as you can tell from the growth of commission rates.

We've seen from the prior period.

The other piece is it includes also the contribution from Jr.

And also the fourth component is it's a reduction of the incentives now we don't give out all the all the different components of that but you can get a get a good feel in terms of where that's coming in the other data point I would give values that will be helpful. Is we expect that group revenues, excluding jaya to growth no less than 50%.

For fiscal year 2022.

In terms of cost you. Other question our cost structure overall came in from a percentage of <unk> focusing on our regional cost structure roughly about 4%.

In terms of cost now.

<unk>.

It's something that we're watching very closely and the cost increase was primarily driven by investments in product development.

We also invested in our cloud infrastructure, along with our increasing talent pool as well as some compliance.

<unk> expenses being a new listed public company.

Looking ahead, though we are very focused on our overall cost management.

And Theres a lot of initiatives, that's up and running actively all around the world for us in driving greater internal efficiencies and we see regional costs as a percentage of GMB coming down this year.

And we're already making some good early starts here in the second quarter and we are working very hard in all fronts here to make sure that we're optimizing every penny and every dollar and every department.

Great. Thank you.

Thank you.

Our next question comes from the Newco, Paul Gohr with Bernstein. Your line is open.

Hi, Thanks, a lot for the opportunity.

So a couple of questions first on the Delaware segment now after a few months and sort of a growth in the first quarter in D&B.

Midpoint of guidance and looking at close to about 20 people it seems like right now.

This is affecting the <unk> business as well so wanted to understand that is it more a situation wed be.

Scratching up because of which.

Thank you.

There is no momentum compared to what we used to see in the last two years.

Or is it more to do with a specific strategy.

What do you want to target the delivery segment.

Yes.

Part of that question also is that right.

I think given the broad indication of what that would be because you mentioned that revenue guidance, even excluding that it would be at least 50%.

Is that sort of ballpark give us an idea of <unk> hundred million dollars dnb for the deal.

If you give us what the number could you give us an idea of how overall warranty business in terms of numbers are J F.

At the time of acquisition.

So that's my first question.

Okay.

I think it was a lot of questions within that question, Vanessa So and I want to make sure I want to hit your question right. So but kind of on just US repeat itself you had a question around deliveries.

And and in terms of the 23% year over year.

And what is driving that.

Yes.

Coming to the first quarter.

Got it Okay and then your second question was around I believe it was around the revenue guidance is that correct the revenue $1 to $1 3 billion.

Address that.

Yes, yes.

And second question, how is that correct to understand how much is the one b in that because you also mentioned that.

Excluding <unk>, we would still expect that either the people that's in growth. So I could probably calculate based on the guidance it would be at least $200 million.

Now let me show you don't want to give the numbers for this year, but at least at the time of acquisition what goes on in late.

Hello.

Yes look right now in terms of Jive.

We're not breaking it out in terms of giant numbers itself and I think from a revenue guidance perspective.

And we don't give quarterly revenue guidance also so we only giving full year revenue guidance itself.

Good way to think about it is around our revenue excluding jr.

Full year basis to grow then no less than 50%.

So that gives you a good feel of which one is it is I would say insignificant.

Around the deliveries you other question around the deliveries guidance I believe that's where the other part of the question.

The delivery business like I said, it's growing it's growing.

And there's good growth in that business itself.

Again <unk>, it's not.

Not a big piece.

Insignificant to us our delivery business still primarily comes from the marketplace that we've continued to develop and.

And Thats reflected also improvement in our margin as well as reflected in that improvement a commission rate.

So far I think we feel pretty good around where we are with our deliveries JMP guidance.

There are some seasonality factored into our deliveries April was a month of Ramadan for us here in southeast Asia.

So there is a seasonal impact that we're taking into account, but overall stepping back it's growing and it's stable.

Got it.

Second question on the mobility segment.

Very good.

Cost increases.

And country to country, depending on on the latest strategies of each country.

Now the fare increases that we have done, especially in terms of surcharges firstly wanted to understand that modular with political.

Sort of fuel price.

Price impacts and the second thing within that is.

Based on my observation in Singapore.

It <unk> seem to have gone up a lot.

Active.

Platform. So wanted to understand that is it because of the diverse supply challenges continue particularly in Singapore, because it's a large market for you and if that is the case that fundamentally you did a good enough strategy too.

What I'll say is go up because it would probably help you cannot economic sense of that.

I'll take that question. Thanks, so much.

Basically how we think about it is number one is be the most reliable platform.

That is for Mike.

As part of our grab ways really.

Consumers and beat our most reliable out there too is then how do we actually keep.

Fares affordable even as you said in a.

Supply constrained environment.

For us as we think about it this way, even though demand outstrips Gulf al.

Supply.

When we do our internal benchmarking on prices versus.

Some of our peers actually.

We on average actually better and cheaper and we look at this but it is a P 25 50 75.

Across the segment. So so on some again some of our peers actually we are more affordable.

So.

And then a third is what we're seeing yes, that's one side of the consumer side and just as important as the driver side.

We remain.

The best earning platform for drivers, even with recent even Alex and I will just interviewing menu drive as we do these small group sessions.

Drivers, who are driving for our peers even today.

<unk>.

The left because we we excluded them in our platform because they.

They did some some things that reached out policies, but he said look if you can take us back we would gladly come back because we know that from our earnings platform.

This is still the best earnings platform, even though we have been driving in and then and really being very cost conscious.

Thanks, a lot.

Our next question comes from Thomas Chong with Jefferies. Your line is open.

Management, taking on my question.

My question.

The advertising piece in that can you comment about the future monetization potential.

And secondly regarding.

But these are small finance can we talk about our long term strategy and opportunities on a policy.

Thank you.

Yeah.

So maybe I'll take the first question on advertising and monetization of advertising. So what we're seeing actually is we're seeing a very strong growth.

In fact, if you compare just the same time period Youre looking at <unk>.

Growth over the same period a year ago.

We also saw that.

<unk> merchants, who actually are using our self serve advertising platform.

Basically provides them search and display AD options to.

Gross sales in that.

So we are seeing them onboard more.

Because.

In 2021, we see grab ads has proven very effective, especially for small merchant partners delivered 600% return on every dollar spent to this tool in 2021.

So our focus is to continue and Han scrap adds value preposition to our merchants.

We believe when they grow and perform so do we sustainably.

And let me take that question on the long term strategy for financial services and the partnership expansion strategy.

Financial services plays an important role in helping us grow and expand our marketplace. We know that users have grabbed pay of two seven times increase in engagement as compared to cash uses and a four 5% increase in spend.

One 3% increase in retention. So it's a very healthy way of us growing in our user base and keeping keeping the spend growing as well for those users.

Now, we are adding new services like embedded insurance and lending, which have higher margins. So the grad payers to start to convert to higher margin products and that also helps us to support the health and growth of our marketplace.

As we add digital banks, we can use the extraordinary depth of information we have about our users to do better credit underwriting better collections, and obviously low cost distribution of those products as well and the unique thing about how the digital banking license of course is if you can start to gather deposits, which reduces your cost of funds.

So you can see that overall.

We see combination of digital bank licenses and the <unk>.

Very strong fintech capabilities that we've developed as a way of helping our users to grow in a marketplace and hoping to add new users to that marketplace.

Our next question comes from the churn.

Conquer with Bank of America. Your line is open.

Hi, Thank you for the opportunity I have a few questions first just wanted to double check on.

The center take rate on deliveries, which increased from $17 five to $19.

Is this largely driven by Jr. David certain underlying factors also.

It's basically about product mix and our country mix.

Julia has a component to it but overall also there is country mix for us.

Okay and can you help give.

A little bit more clarity in terms of which countries are strong rate as compared to address.

We don't break out the countries.

All of our countries are all trying to optimize there.

The Commission.

The take rate.

And we're also trying to also at the same time improving on <unk>.

All of those countries, what I would say is certain countries that are coming out of the.

The lockdowns or the <unk>.

Growing at a much faster pace and also they are coming out also in terms of different order sizes.

And that helps the product mix for us in the country mix also.

Okay. So let me put that question in other words, if the country mix Tomorrow again versus should we see this going down or getting back to 17, just because of January it will remain high at around 19 are doubling.

It's fair to say, it's too early I would say, where the gyre has an effect on that we've only been with those guys for two to three months now.

We're obviously trying to optimize all our take rate.

And every possible way, but also at the same time, we are conscious that there are other demand and supply from a marketplace perspective, we're trying to balance that.

I think it's a bit too early to tell whether <unk> can play a significant part in terms of what our take rate can continue to improve oil stabilize.

Got it.

Second question is regarding the corporate cost.

You guys mentioned, it's mainly on the product development talent pool.

That's the case should one look at as a percentage of GMP audits should.

Generally we looked as largely a fixed cost.

The way the way we look at regional costs, just a in terms of how it is tracking as we compare it to as a percentage of GMB.

It's a good way for us to just a bench market.

And again, yes, Youre right. We did make we continue to make investments in product development and tied to that is our talent pool.

If you look at the majority of about.

Our regional cost structure.

Its product development.

Data science.

All related to really creating the product for us and that's a critical piece.

So we having said that also at the same time like I mentioned earlier in my statement that we are looking to reduce and make those costs optimize also at the same time. So we're trying to drive greater internal efficiencies at all the different departments in product development as part of that but also at the same time, we want to make sure that the.

That continues to evolve as a platform.

As we continue to grow our top line also.

Okay.

I ask this question is just wanted to understand again assure did grow in sync with the GMB and I do understand some cost controls.

Simple time today in other words, what is the gap between that yesterday, we can reported EBITA continued to widen.

Back of this higher corporate cost.

Yes from a dollar perspective, our regional cost will continue to come down and Thats important for us.

And I think it's important for us to maintain that we optimize the cost structure.

I would say that continuing to look at it as a percentage of GMB is a good benchmark.

Got it and my last question is when we looked at the current moment.

In the last three months.

Everything has obviously moved after task and I understand you guys report on U S dollars, while underlying currencies.

In local currencies, so it will be possible to give us some kind of a translational impact.

What it has on the back of your guidance for what you are seeing given the strong credentials momentarily.

Yes, we're watching the currency the strengthening of the dollar obviously.

And what I would say is.

We have taken in some of those movements in currency that's been happening in the loss.

A month or two and we baked it into our into our guidance.

Alright, thank you.

Thanks for your question.

This concludes our question and answer session I would like to turn the conference back over to Peter for any closing remarks.

Well. Thank you very much everyone for coming up the time to listen we had a great quarter and.

We're off to a great start as we enter into Q2 already so thank you very much and we'll talk again next quarter. Thank you very much.

This concludes grabs first quarter 2022 earnings presentation. Thank you for your participation you may now disconnect your lines.

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Ladies and gentlemen, thank you for joining US today My name is Michelle I'll now turn your conference operator for this session welcome to <unk> first quarter 2022 earnings presentation.

After the Speakers' remarks, there will be a question and answer session.

I'll now turn it over to Vivian Tom to start the call.

Good day, everyone and welcome Congrats first quarter of 2020 earnings presentation.

100, <unk> with Investor Relations at ground and joining me today, Anthony Chan Chief Executive Officer, Peter <unk>, Chief Financial Officer, Newmark, President and Alex <unk>, Chief operating officer.

During the call today, Anthony will discuss our key business updates and Peter who will share details on our first quarter 2022 financial results.

Following prepared remarks, we will open the call for questions Anthony Peter O'malley.

Okay.

For the Q&A.

As a reminder, before we begin today's discussion contains forward looking statements about the company's future.

Answer performance.

These comments are based on our predictions and expectations as of today.

Actual results could differ materially due to a number of risks and uncertainties, including those mentioned in our form S. One registration statement and other filings with the SEC.

The discussion today also contains operating metrics and non <unk> financial measures.

The comparable <unk> financial measures are included in this quarter's earnings materials for more information and additional disclosures on our recent performance. Please refer to our earnings press release and supplemental presentation for a detailed first quarter 2020 to penetrate view, which can be found on Ireland.

Should you have any questions. After this presentation. Please be sure to investors relations <unk> Dot com.

And with that I will turn the call over to Anthony to deliver his opening remarks.

Thank you everyone for joining us today I am pleased to report a strong set of results in the first quarter, we outperformed our <unk> guidance for deliveries mobility and financial services segments.

While improving our group level and delivery segment margins at the same time.

Our results are a testament to the resilience of southeast Asia as economy.

The region's governments have been more cautious in lifting COVID-19 restrictions compared to other parts of the world.

But in March saw a shift in some countries to a post pandemic footing with travel restrictions and capacity limits ease significantly.

We are optimistic that our business will continue to strengthen as more countries pivot to living with COVID-19.

Looking ahead, we are laser focused on meeting our profitability targets and growing sustainably. We have three main levers to achieve this first we're driving towards profitability through disciplined cost management, we started optimizing our fixed cost base and our discipline of our capital by managing our spend closely.

Second we will continue to focus on winning the hearts and minds of more users across southeast Asia.

We will leverage technology partnerships, and our Super App strategy to grow our user base in an efficient manner. It leads to greater consumer engagement.

And retention.

We will continue to position our core segments for recovery and growth in order to capture the vast opportunities across all core segments by doing this we aim to build a resilient future proof business that delivers long term value to our shareholders with this backdrop, let us dive into our first quarter performance.

<unk>.

In the first quarter, our mobility segment rebounded with <unk> up 9% quarter on quarter. Despite the omicron overhang in the first two months of the year.

We saw signs of recovery coming out of the quarter as countries like Singapore, Indonesia, and the Philippines loosen Covid related travel restrictions in March.

Period of February through April our mobility <unk> increased 32%.

Airport rides, which have higher margin and high order values rose 6% of <unk>.

Higher level since the start of the pandemic.

On the supply side in the first quarter, we reached our highest number of active drivers since the second quarter of 2020.

We increased our average monthly active drivers by 220000 from the third quarter 2021, due to first quarter 2022.

While these are positive indications that our efforts to restore driver supply are bearing fruit.

Active drive a base of our March 2022, the majority of whom do both deliveries and mobility jobs or 76% of the December 2019 level.

This indicates an existing gap when it comes to meeting mobility demand that is rebounding sharply.

I will take some time to address this gap in our driver supply.

In 2021, COVID-19 variance from Delta two omicron cause many countries across southeast Asia to loosen and tighten restrictions in fits and starts.

This impacted our active driver supply at some drivers temporarily left capital cities during the Lockdowns to return to their hometowns.

While others moved onto our jobs in other industries.

In the fourth and first quarters, we've had to acquire more drive us to meet the increased demand rapidly coming back online.

To rebuild our driver supply via three main strategies for us were running targeted campaigns in each market to reactivate dormant drivers.

Second we're widening our acquisition funnel and making it more efficient for example, we have ramped up assisted onboarding in some countries to complement our self serve model to increase driver conversion.

Finally, we continuously innovate on our Super App platform. So we had our best platform for drivers to earn an income.

For example, we launched and Han shifts feature of our Singapore drivers that led to higher driver earnings in productivity for them in selected zones, while meeting demand and supply crunch areas.

We also launched cross vertical batching in a few cities to allow our drivers to do back to back jobs across different verticals, improving your earnings by reducing idle time in the first quarter average driver earnings per hour increased by around 9% year on year, while utilization rates improve.

Cost reduction and drive our Idaho time also helps improve our overall cost to serve.

Looking ahead, we are focused on rebuilding our driver base to capture the strong mobility demand recovery.

We expect the mobility supply to stabilize in the second half of the year with driver incentives as a percentage of GMB tapering in that period.

Separately, we're closely monitoring the impact of fuel inflation on our drivers earnings will continue to look for ways to support them through surcharges fuel discounts and fair adjustments to mitigate its impact on our driver supply.

Moving on to deliveries deliveries continued to register another quarter of strong <unk> and revenue growth on the back of food and grocery strength as well as contributions from Jaya grocer.

<unk> should grow both our top line and improve our unit economics quarter on quarter. This gives us confidence in our sustainable growth strategy for deliveries in the first quarter, we focused on forging strong partnerships with local merchants to give users more reasons to transact with graph.

We believe this helps us form a natural moment, while improving user retention on our delivery platform over the first quarter and the number of active merchants rose 34% year on year, while average earnings per active merchant increased 9% year on year for.

Our groceries, we began to integrate jr. Grocery stores onto our groceries marketplace in Malaysia.

Our plan for the integration to be fully completed in the second half of the year. Meanwhile, drop has been integrated in all Jaya grocery stores in the quarter in the first quarter. Jai grows so became the largest drop a merchant in the country by TPB all within a Super quick two month period post acquisition.

Looking ahead, we are focused on improving our unit economies at a faster clip by.

By tapering, our incentives and driving organic growth, we will do this by ensuring users have the best product experience and a wireless much inflection on graph. We also plan to sustainably grow our delivery business in Underpenetrated outer cities and towns in five of our eight markets to meet strong.

Customer demand in those areas.

For financial services, we continue to see strong momentum in payments and we made great progress in lending in.

In the quarter PPV of our buy now pay later product grew five times between Q1 2021 in Q1 2022 overall loans disbursed, which includes buy now pay later loans grew three times in the same period, we achieved this while keeping our NPL ratio steady at low single digits.

Looking ahead, we plan to expand the buy now pay later product into more markets and deepened lending penetration within our ecosystem. This will allow us to grow financial services to meet the needs of an underserved market while growing sustainably in.

In the quarter.

<unk> continued to execute on its open ecosystem strategy overall did so by forging new large partnerships, including one with a global short form video sharing app and launching its first recurring payment in partnership with a global subscription streaming service.

I'm also excited about our digital bank auction. These are digital banking joint venture with Singtel also known as G X S Bank and a consortium of partners was selected to receive a full digital bank license in Malaysia in April there.

There were 29 total applicants and three full bank licenses were granted we will want to treat it past the high bar set by Malaysia Central Bank.

We are tremendously grateful for this opportunity serve Malaysians, where one two are currently considered underbanked or unbanked.

Is this across the region.

We also aim to launch a Singapore digital bank currently and in the internal pilot in the second half of the year.

A quick point on the enterprise or new initiatives.

<unk> and revenues grew strongly year over year, driven by advertising contributions in the quarter I will grab ads advertiser base jumped seven times compared to the same period a year ago as we continue to onboard <unk> onto our self serve ads platform to provide them search and display.

<unk> options for them to grow sales in our App.

This is another example of our Super App strategy in motion.

When they perform well so do we and true grab ads, we give them the tools to grow their businesses.

To conclude we will continue to double down on our Super App strategy with a laser focus on growing sustainably. So we can win many more hearts in southeast Asia and drive toward our profitability targets I will now turn the call over to Peter to deliver a review of the financials.

Thanks, Anthony we had a strong start to the EBITDA cost segment's first quarter 2022, GMP and TPB outperforming the high end of our guidance range.

GMB grew 32% year over year to $4 $8 billion.

Driven by both higher average spend per use up and continued growth in <unk> year on year.

For our segments <unk> and CPB performance, we saw strong growth in our delivery segment with <unk> growing 50% year on year to reach $2 6 billion.

While financial services TPB scaled at $3 6 billion in the first quarter.

Mobility <unk> was $834 million in the first quarter and grew by 3% year on year and 9% over the fourth quarter due to army Connie impact of the first two months of the year.

Looking ahead, we are optimistic of a gradual mobility recovery and we will continue to spend efficiently and judiciously to grow our driver base to support demand coming back online.

As Anthony mentioned, we expect the mobility supply to stabilize in the second half of the year with driver incentives as a percentage of GMB tapering in that period.

Overall across all our segments, we are seeing improvement in commission rates.

Year on year deliveries commissions are up from 18, 2% to 19, 9%.

Mobility commissions up from 22, 6% to 23, 4%.

In financial services commissions up from two 1% to two 5%.

The year on year improvement in deliveries and mobility Commission rates was driven by product and country mix.

Financial services commissions also improve on the back of a high contributions from our lending business.

Revenues and on a risk basis for the first quarter grew by 6% year on year to $228 million and grew by 87% quarter on quarter.

Year on year growth in revenues was driven by a strong pickup in revenue in the delivery segment, which includes the revenue contributions from <unk> and continued growth in our financial services and enterprise revenues.

These revenue growth drivers more than offset the year on year decline in revenues from our mobility segment.

Segment, adjusted EBITDA margins declined year on year from 1% in the first quarter of 2021 to negative one 6% in the first quarter of 2022.

Our mobility segment adjusted EBITDA declined to $82 million in the first quarter of 2022 from $115 million in the same period last year.

Delivery segment, adjusted EBITDA declined to $56 million loss in the first quarter of 2022 from $4 million loss in the same period last year.

And our financial services segment, adjusted EBITDA declined to $102 million loss from $78 million loss from the same period last year.

As we mentioned in the prior quarter, we made a decision to boost our active driver supply base and to capture the strong underlying demand growth from reopening which caused our segment adjusted EBITDA margins to decline on a year over year basis.

However.

I do want to also point out that we've managed to improve our <unk>.

<unk> adjusted EBITDA margins quarter on quarter by around 100 basis points as we continue to drive greater discipline in managing our incentives for example.

Delivery segment, adjusted EBITDA margins improved quarter on quarter from negative three 5% to negative two 2%.

130 basis points improvement.

Our core food delivery segment EBITDA margins also saw improvements quarter on quarter from negative two 8%.

Negative one 7%.

110 basis points improvement.

We also saw our financial services segment, EBITDA margins as a percentage of TPB improve quarter on quarter from negative three 2% to negative two 8% up 40 basis points improvement.

Looking ahead, we will continue to remain focused on growing sustainably.

Allocating our capital efficiently and tapering down our incentive spin.

Our group adjusted EBITDA margins, followed a similar trend as we ended the first quarter with an adjusted EBITDA margins of negative 6%.

The decline from the prior year period of negative three 1%.

But an improvement of 80 basis points from the fourth quarter of 2021.

Our regional corporate costs for the first quarter of 2022 increased to $212 million from a $146 million last year, but remained stable at roughly 4% as a proportion of our GMB.

I want to assure you that as Anthony mentioned, we are very focused on our overall cost management and on driving greater internal efficiencies.

We will continue to optimize our fixed cost base.

<unk> hiring and other expenses as we focus on growing our business sustainably.

<unk> loss for the first quarter was $435 million.

Presenting an improvement from a loss of $666 million in the prior year period.

This was primarily due to the elimination of noncash interest expense of grafts convertible redeemable preference shares which was no lingering could when we became a public company.

Turning to our balance sheet and liquidity position.

It continues to be strong.

We ended the first quarter with $8 $2 billion of cash liquidity, including $2 billion term loan B facility.

Our net cash liquidity was $6 billion.

As of the end of the first quarter.

Our cash liquidity declined by $754 million from the end of the fourth quarter, mainly due to net cash outflow from operating activities and the acquisition of Jaya grocer.

We will maintain a disciplined stance in how we allocate and deploy our capital.

Strength of our balance sheet is not something that we take for granted.

As we look ahead for the second quarter and rest of year in.

In the second quarter, we expect to see deliveries <unk> of $2 $55 billion to.

<unk> six 5 billion.

Mobility <unk> of $950 million to $1 billion.

And financial services, TPB, a $3 5 billion.

The $3 6 billion.

Our path to profitability plans remain on track and is a key focus for our management team.

In the second quarter, we expect to see continued improvement in the mobility business with Covid related travel restrictions easing across the region.

For mobility, we expect margins to recover back towards our long term target of 12% of GMB.

Active driver base and mobility demand rebounds.

We also expect that mobility supply to stabilize in the second half of 2022 and for mobility driver incentives as a percentage of GMB to taper in that period.

In deliveries, we expect demand to remain firm.

But saw some seasonally impact on demand levels, given the observation of Ramadan.

A fasting and pray for wisdom as in April impacting primarily Indonesia, Singapore and Malaysia.

While deliveries, we reiterate our expectations for the segment through each segment adjusted EBITDA breakeven by the end of 2023.

With core food delivery breakeven by the first half of 2023.

We expect our long term segment adjusted EBITDA margin as a percentage of GMB to come in above 3%.

Now this is higher than the 3% guidance that we presented in the prior quarter.

We have achieved margins higher than 3% in some of our markets in the past and believe we can adapt the learnings from those markets to optimize our overall segment adjusted EBITDA margins.

I do also want to note that our long term deliveries margin excludes contributions from advertising, which is currently captured in our enterprise and new initiatives segment.

For financial services, we will also continue to drive greater adoption of our wallet and continue to expand.

Now pay later product looking at the full year, we expect <unk> <unk> in fiscal year 2020 to grow between 30% to 35% year on year.

We expect to generate revenue of approximately $1 2 billion to $1 3 billion.

Our revenue guidance includes contributions from Jaya grocer, along with our expectations to taper our incentive spend.

We expect that group revenues, excluding <unk> to grow by no less than 50% in fiscal year 2022.

In conclusion, we are pleased with our performance in the first quarter.

Which sets us up nicely to continue executing for the rest of the year.

We will continue to focus on optimizing our cost structure exercising capital discipline and tapering out incentive spend sequentially as we push ahead on our path to profitability.

Thank you very much for your time, and we will now open up the call to questions.

Ladies and gentlemen, we will now start the question and answers portion of the call.

So the question and answer session will be Anthony Kim Chief Executive Officer, Peter <unk>, Chief Financial Officer.

Lima, President and Alex <unk>, Chief operating officer.

Please press star one to ask a question and we'll call on you for your question.

Our first question comes from the line of Alicia Yap Citigroup. Your line is open.

Hi, Good evening management, Thanks for taking my questions.

I have a question on the delivery business.

Just wondering for <unk> guidance itself.

Exclude giant growth.

What kind of growth rate.

We should be expecting on the organic growth.

And then.

Uh huh.

In terms of the if management can also comment if there's any change of the competitive landscape for the delivery business, especially any country that you asked.

Yeah.

Facing more aggressive subsidy by the competitors or any adverse cost.

Cost and all in the recent quarter that we should be.

Paying more attention to any change on the landscape itself. Thank you.

Hi, Alicia this is Peter and let me take the first one and then Anthony will take the second one so on the Q2 deliveries GMB guidance.

Look what I'll say is we don't break out the <unk> piece, we don't breakout normally all the different sub verticals within a segment of our business but.

But if you look at delivery just stepping back it's still growing and very stable also.

From a business and also from December to March at 7%.

So we are seeing good momentum despite the the very strong coming back come back off mobility business and we're going to see continued growth in the deliveries business overall.

Thanks, Alicia I'll take the competition question.

Especially with regards to deliveries.

And this quarter actually we gained share in deliveries against regional food delivery players in all of our markets.

<unk> improved our unit economies.

So we expect that total incentives as a percentage of <unk> to continue to taper as we look ahead.

So our focus on our laser focus on driving organic growth through really a better user experience and of course, what the users really appreciate is a wider selection and we believe we have wanted to why does it not <unk> is out there.

In terms of.

We will need think about.

Competition, we think about how do we serve our users and partners.

And we do this by capturing the higher basket size user demand across different modalities, whether it's ready to eat food whether it's.

It's at a restaurant or a self pickup or other forms.

So all in all there is always going to be competition in the market.

What is key for us is to enhance our right to win by capitalizing on our most of our business.

And we'll just keep executing effectively hedged down as we taper down on incentive spend.

Okay. Thank you.

Our next question comes from NAV and kill with UBS. Your line is open.

Hi, good evening and thank you for the opportunity.

I actually had two questions first of all.

On the delivery business I just wanted to understand.

I guess broad breakdown between food groceries in parcels.

And even if they.

Do you have any specific numbers I guess overall, how the mix will evolve and what that would mean for commission.

Tony.

And I guess the reason for this question is because.

I would imagine I mean, as groceries and I will get bigger.

<unk> potentially could decline, but we've obviously managed to grow that so I wanted to understand that a little bit more and then secondly in terms of cash.

You, obviously mentioned the strong balance sheet and the fact that he will obviously take it.

Easy.

I guess.

The cash burn in the business.

Plus I guess some of the inorganic acquisitions that you need to do to expand I guess, either your physical business or the financials business. How do we look at the balance between those.

Various kind of sources of cash sources of utilization of cash.

Sure.

So let me address the first one around deliveries mix.

Got the specific percentages between food our express business or.

Supermarket Mart business, but I would say is the the food business still comprises the majority of.

All of our delivery segment itself.

At the same time also we are seeing good growth in terms of our mod and supermarket.

You look at the and just to give some numbers around there we saw a.

Growth of over 150% when it comes to Martin supermarket on a year on year basis and continues to grow double digit on a quarter on quarter basis. It's still very early days for us when it comes to modest supermarket, we're optimistic.

And also with the integration of <unk>, we're learning a lot and.

Applying a lot of those learnings through our Mod and supermarket infrastructure also at the same time.

In terms of how that ties the commission rates Commission rate continues to improve as <unk>.

Earlier deliveries was up 190 basis points. If you if you look at on a quarter on quarter basis. It was 170 basis points.

Even if we extract the giant piece out we continue to see commission rates very strong at the same time. So it's the if.

You look at from a mixed standpoint.

Look at our portfolios.

From a same lens perspective in this to improve our unit economics.

On the cash piece, you mentioned that the.

Financial services piece was inorganic we actually see our financial services and digital bank as organic businesses.

We have a very high bar when it comes to M&A activities.

The two critical lens that we look at one is does it improve our unit economics about business does it improve the path to profitability of our business and it's a very high bar for us to look at now we're very focused on organic growth will continue to be very focused on all the segments of our business mobility is coming back very strongly delivery continues to be very.

Stable financial services continues to grow also and those organic growth, we will allocate the right capital to it but also at the same time, we also keeping an eye on margins as we want to make sure that our margins continue to improve sequentially.

If I can just follow up.

I guess, what I meant by inorganic in financial services side.

Not necessarily I guess, the cash that you need to spend to grow.

Banks and all.

But more acquisitions.

And then have been kind of discussed in the press.

So it is more a question of what goes organically growing the businesses versus acquisitions that might have to go to scale up those businesses.

Yes.

This is ming.

First of all I would just point out that our general policy is to avoid commenting on any market rumors out there.

But I would.

Kick it up to you.

Do you really think about inorganic opportunities, there's really two points I would highlight as Peter mentioned.

We took a very conservative stance around M&A.

<unk> is very high cash is king for us. So we're only looking at opportunities that are very compelling to us.

Now what do those look like generally those will look like situations, where we can either accelerate our path to profitability.

Meaningfully improved the unit economics within our marketplace and within our ecosystem.

But obviously absent those two criteria, we're going to be very very disciplined around M&A.

Our next question comes from Mark Mahaney with Evercore. Your line is open.

If I could just ask a question. Please on the mobility segment could you talk about Ryder trends.

Quantitatively or qualitatively in terms of trip frequency fair amount.

<unk> of users relative to what you experienced in pre Covid back in 2019. Thank you.

Thanks, So much I really appreciate the question.

With regards to mobility.

Specifically I'll talk more about in Q1, we actually are.

She does mobility growth even despite.

This impact of omicron into first two months.

See clear evidence of a gradual recovery coming out of Q1.

Much of these restrictions is omicron restrictions are lifted in March.

To us.

Reported that mobility GMB is up 9% Q on Q.

Exiting the quarter, we actually see demand recovery with mobility GMB up by 32% from February to April So we're pretty pleased there.

Even then I have to admit we still have plenty of headroom to grow.

Mobility in March 'twenty, two is only 57% of pre COVID-19 levels.

So we actually expect the mobility segment is stabilizing each too.

And with regards to drive incentives as a percentage of <unk> to taper in that same time period.

And with that being said, we expect mobile <unk> segment, adjusted EBITDA margins to recover back to 12%.

So the teams know we are laser focus on mobility supply to make sure. We can capture this demand is coming back quickly online and I'm sure. If you come across southeast Asia, we see it Alex and I.

Our C O have traveled across 13 cities and over the past 14, 15 weeks and we've seen demand coming back strongly so we're going to just execute strongly on that front to make sure. We take advantage of this mobility recovery in a very disciplined way.

Thank you very much.

Our next question comes from Teng debt with Goldman Sachs. Your line is open.

Thank you very much want that opportunity.

Quick question around mobility.

Rising inflation in steel costs.

Paul Your service in Vietnam, and Singapore is that impacted.

And also together with the market, but if you can comment a route.

Competitive dynamics, yes that landscape that'll be very helpful. Thank you.

Sure Let me take the question on inflation.

I actually closely monitoring the situation, but so far we've actually not seen headwinds to demand.

From high inflation rates.

What is actually more evident and.

An observable is actually higher fuel prices.

We've slightly increased fares in Singapore, and Vietnam, but have yet to see a material impact in mobility demand. In fact, we're seeing demand are still growing faster than supply, even so generally quite positive where mobility demand.

From January to March as well.

Just knowing we shed our mobile <unk> is growing as we bring down partner and consumer incentive spend in this same time period.

So we believe it's still too early to comment on the change in any structural change in consumer behavior.

Do any of these inflationary pressures.

But we remain very confident and that the.

Zillions of our everyday services, whether its mobility, whereas deliveries in country and this new endemic phase.

And on that comparison.

That's helpful.

And I'll just add on the Singapore, Singapore is a surcharge and not a fair increase.

So just to be just to be clear.

On competition.

If you don't mind I'll just jump in again.

Look the reality is competition is not new to US we've shown time and again that we can out execute our competition in a more efficient way.

Hey, Bill.

Cause of the cost benefits from our Super App ecosystem.

So we've actually remained or maintained our leadership category position in mobility and deliveries in the quarter. According to Euromonitor.

And notably we actually increased our lead relative to the next largest regional food delivery competitor. So while we maintained leadership in mobility.

So we can only do this.

Al.

Because of the leadership that has led to us being able to benefit from reducing.

Our total group intended spend compared to Q4.

That means we are actually being more efficient with our incentives spend compared to our peers, while the business continues to grow.

Looking ahead, we actually see total incentives as a percentage of GMB come down.

Now as.

An example of this what we see is through cross vertical batching for our drivers because also perhaps strategy.

We actually see better supply side unit economy, because drivers can earn more wow, we're actually improving our incentives.

Seen whether it's earnings average earnings per transit, our debts increased 9% year on year, we've seen utilization rates also improved in the same period, even though we've actually taper down incentives as a percentage of GMB.

So so we believe it's about building better experience, thus far user and partners.

And that's why we're just going to keep doubling down on the Super App more and reducing our cost to serve.

And also I'll just add that in terms of incentives that we're seeing.

As the competitors overall tapering down on incentives and mobility and Thats a great sign because the.

The market is rationalizing also has been more constructive at the same time.

That's also helpful for us.

That's something that we're keeping a very close eye on as we continue to make sure our supply base of the growth to meet the OLED demand.

Helpful.

Thank you very much.

Thank you Frank.

Our next question comes from Ranjan Sharma with Jpmorgan. Your line is open.

Yeah.

Hi, good evening and thank you for the presentation.

Two questions from my side Firstly.

You can just give more color on the revenue guidance.

One two to one to $1 3 billion.

And that guidance, how much are you expecting incentives to come.

Down versus last year.

The second question is if you can also talk us through that.

The changes in the cost that you've seen because I see cost of revenues up 30%.

G&A expenses up 90% in R&D at 60%.

So what's driving these customers up.

Thank you.

Sure, Yes, so on the revenue guidance part.

The revenue guidance, which we have given out for the first time.

One two to $1 $3 billion.

It's largely driven by a few things let me break it out for you one is it driven by the topline growth.

Definitely we are expecting a strong topline GMB growth of 30% to 35% for the fiscal year.

It's also.

We're seeing some as you can tell from the growth of commission rates.

We've seen from the prior period.

The other piece is it includes also the contribution from <unk>.

And also the fourth component is it's a reduction of the incentives now we don't give out all the all the different components of that but you can get a get a good feel in terms of where that's coming in the other data point I would give out is it will be helpful. Is we expect that group revenues, excluding jaya to growth no less than 50%.

For fiscal year 2022.

In terms of cost you. Other question our cost structure overall came in from a percentage of <unk> and focusing on our regional cost structure at roughly about 4%.

In terms of cost now.

<unk>.

It's something that we're watching very closely.

The cost increase was primarily driven by investments in product development.

We also invested in our cloud infrastructure, along with our increasing talent pool as well as some compliance.

<unk> expenses being a new listed public company.

Looking ahead, though we are very focused on our overall cost management.

And there's a lot of initiatives, that's up and running actively all around the world for us in driving greater internal efficiencies and we see regional costs as a percentage of GMB coming down this year.

Great. Thank you.

Thank you.

Our next question comes from the Newco, Paul Gohr with Bernstein. Your line is open.

Hi, Thanks, a lot for the opportunity.

So a couple of questions first on the Delaware segment now up over 50% in sort of a growth in the first quarter in D&B.

The midpoint of guidance and looking at close to about 20 people listen to I liked.

This is affecting the <unk> business as well.

So wanted to understand that is it a situation where you base.

This is catching up because of which.

Utility slightly slow momentum compared to what we used to see in the last two years.

Is it more to do with a specific strategy around what you would target in the Delaware.

Yes.

Part of that question also is that I think given the broad indication.

<unk> would be because you mentioned that revenue guidance, even excluding that it would be at least 50%.

That sort of ballpark give some idea about <unk> hundred million dollars dnb for the deal.

Yeah.

To give a quarter number could you give us an idea of how overall warranty business in terms of numbers are there for them.

At the time of acquisition.

So that's my first question.

Okay.

So I think it was a lot of questions within that question vendors, so and I want to make sure.

I hit your question right. So if I can.

And if I just repeat it so you had a question around deliveries.

And and in terms of the 23% year over year.

What's driving that.

Yes.

Coming to the first quarter.

Got it Okay and then your second question was around I believe it was around.

The revenue guidance is that correct the revenue $1 to $1 3 billion questions addressed.

Yes.

Yes, and the second question was is it correct to understand how much is the one b in that because you also mentioned that.

Excluding <unk>, we would still expect that to use other people's Ingrowth. So I could probably calculate based on the data that they would be at least.

Now let me show you wouldn't want to give the numbers for this year, but at least at the time of acquisition.

And this would be good to know.

Yes look right now in terms of <unk>, we're not breaking it out in terms of the giant numbers itself and I think from a revenue guidance perspective.

And we don't give quarterly revenue guidance also so we only giving full year revenue guidance itself.

Good way to think about it is.

<unk> revenue, excluding Jaya on AR.

Full year basis to grow then no less than 50%.

So that gives you a good feel of which one piece.

Say insignificant.

Around the deliveries the other <unk>.

And around the deliveries guidance I believe that's where the other part of the question.

The delivery business like I said is growing it's growing.

And there is good growth in that business itself.

Again, <unk>, it's not a big piece it is insignificant to us our delivery business still primarily comes from the marketplace that we've continued to develop and.

And Thats reflected also improvement in our margin as well as reflected in our improving our commission rate.

So so far I think we feel pretty good around where we are with our deliveries JMP guidance.

There are some seasonality factored into a deliveries April was a month of Ramadan for us here in southeast Asia. So there is a seasonal impact that we're taking into account, but overall stepping back it's growing and it's stable.

Got it.

If I could a second question on the mobility segment.

Fuel cost increases.

And country to country, depending on on the way to start the needs of each country.

Now the fare increases that we have done, especially in terms of surcharges. Firstly wanted to understand that as you look at fully covered.

Fuel price impact and the second thing within that is based on my observation in Singapore.

Yes.

<unk> seem to have gone up a lot.

Got it.

The platform. So wanted to understand that is it because of the diverse supply challenges continue particularly in Singapore, because it's a large market for you and if that is the case that fundamentally is that a good enough strategy too.

Overall sales were up because it is probably as good economic sense of that.

I'll take that question. Thanks, so much.

Basically how we think about it is number one is be the most reliable platform I think.

That is from.

As part of our grab ways really.

Consumers and be the most reliable out there now matures then how do we actually keep.

Fares affordable even as you said.

Fly constrained environment.

For us as we think about it this way, even though demand outstrips growth.

Outstrips supply.

When we do our internal benchmarking of prices versus.

Some of our peers actually.

We on average actually better and cheaper and we look at this but it is a P 25 50 75.

Ross the segments. So so on some again some of our peers actually we are more affordable.

And then a third is what we're seeing yes, there's one side of the consumer auto site and just as important as the driver side.

We remain.

The best earning platform for drivers even win recently when Alex and I will just interviewing many drivers we do these small group sessions.

Drivers, who are trading for peers even today.

Sure.

The last because we.

We excluded them in our platform because they.

They did some some things.

<unk> reached out policies, but he said look if you can take us back we would gladly come back.

We know that from our earnings platform.

This is still the best earnings platform, even though we have been driving end to end and really.

Being very cost conscious.

Thanks, a lot.

Our next question comes from Thomas Chong with Jefferies. Your line is open.

Yeah.

I think management or taking on my question.

My question about the advertising piece in that can you comment about other future monetization potential.

Secondly regarding.

But this is all finance all can we talk about our long term strategy and opportunities on a policy.

Thank you.

Yes.

So maybe I'll take the first question on advertising and monetization of advertising. So what we're seeing actually is we're seeing very strong growth.

In fact, if you compare just the same time period are you looking at seven X.

Our growth over the same period a year ago.

We also saw that.

Grabbed merchants, who actually are using our self serve advertising platform.

Basically provides them search and display AD options to grow the sales.

So we are seeing them onboard more.

Because.

In 2021, we see grab ads has proven very effective, especially for small merchant partners delivered 600% return on every dollar spend to this tool in 2021.

Our focus is to continue and Han scrap adds value preposition to our merchants.

We believe when they grow and perform so do we sustainably.

Okay.

And let me take that question on the long term strategy for financial services and the partnership expansion strategy.

One 3% increase in retention. So it's a very healthy way of us growing and I'll use the base and keeping keeping the spend growing as well for those users.

Now we are.

Adding new services like embedded insurance and lending, which have higher margins. So the.

<unk> pay is the start to convert to higher margin products and that also helps us to support the health and growth of our marketplace.

As we add digital banks, we can use the extraordinary depth of information we have about our users to do better credit underwriting better collections, and obviously low cost distribution of those products as well and the unique thing about have a digital banking license of course as you can start to gather deposits, which reduces your cost of funds.

You can see that overall.

We see a combination of digital bank licenses and the very strong fintech capabilities that we've developed as a way of helping our users to grow in a marketplace and helping to add new users to that marketplace.

Yeah.

Our next question comes from the churn.

Sagar with Bank of America. Your line is open.

Hi, Thank you for the opportunity I have a few questions first just wanted to double check on.

Great.

Deliveries, which increased from 17, 5% to 19 point.

Is this largely driven by Jr. Davis certain underlying factors also.

Yeah.

It's basically about product mix and our country mix.

So Julia has a component to it but overall also there is country mix for us.

Okay and can you help give.

Give a bit more clarity in terms of which countries are strong rate as compared to address.

We don't break out the countries.

But all our countries are all trying to optimize there.

Commissioner.

Great.

And we're also trying to also at the same time improving on <unk>.

And all of those countries, what I would say is certain countries is coming out of the lockdowns or the <unk>.

<unk>.

Growing at a much faster pace and also they are coming out also in terms of different order sizes and that helps the <unk>.

Mix for us in the country mix also.

Okay. So let me put that question in other words.

<unk> Tomorrow again versus should we see this going down again back to 17, just because of January it will remain high at around 19, our DAU going ahead.

I think it's fair to it's too early I would say, where the gyre has an effect on that we've only been.

With those guys for two to three months now.

We're obviously trying to optimize all our take rate.

Every possible way, but also at the same time, we're conscious that there are other demand and supply from a marketplace perspective, we're trying to balance that.

I think it's a bit too early to tell whether <unk> can play a significant part in terms of where our take rate can continue to improve oil stabilize.

Got it.

My second question is regarding the corporate cost.

I heard you guys mentioned, it's mainly on the product development talent pool. If that's the case should one look at as a percentage of GMP audits should generally be looked as largely a fixed cost.

The way the way we look at regional costs, just a in terms of how it is tracking as we compare it to as a percentage of GMB.

It's a good way for us to just a bench market.

And again, yes, you are.

We are we did make we continue to make investments in product development and tied to that is our talent pool.

If you look at the majority of about.

Our regional cost structure.

<unk> product development.

Data science.

All related to really creating the product for us and it's a critical piece.

That continues to evolve as a platform.

We will as we continue to grow our top line also.

Okay.

I ask this question is just wanted to understand again assure did grow in sync with the GMB and I do understand some cost control.

Simple time today in other words, what is the gap between that yesterday, we can reported EBITA continued to widen on the back of this higher corporate cost.

Yes from a dollar perspective, our regional cost will continue to come down and Thats important for us.

And I think it's important for us to maintain that we optimize the cost structure. So I would say that continuing to look at it as a percentage of GMB is a good benchmark.

Got it and my last question is when we look at the currency movements.

In the last three months.

Everything has obviously more of the costs and I understand you guys report on U S dollars, while underlying currencies.

Local currencies, so possible to give us some kind of a translational impact.

What it has on the back of your guidance for what Youre seeing given the strong currency momentarily.

Yes, we're watching the currency the strengthening of the dollar obviously.

And what I would say is.

We have taken in some of those movements in currency that's been happening in the loss.

A month or two and we baked it into our into our guidance.

Alright, thank you.

Thanks for your question.

This concludes our question and answer session I would like to turn the conference back over to Peter for any closing remarks.

Yeah.

Well. Thank you very much everyone for coming up the time to listen we had a great quarter and.

We're off to a great start as we enter into Q2 already so thank you very much and we'll talk again next quarter. Thank you very much.

This concludes grabs first quarter 2022 earnings presentation. Thank you for your participation you may now disconnect your lines.

Q1 2022 Grab Holdings Ltd Earnings Call

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