Q3 2024 Grab Holdings Ltd Earnings Call
Ladies and gentlemen, thank you for joining us today. My name is Sierra and I will be your conference operator for this session.
Welcome to Grab's 3rd Quarter 2024 Earnings Results Call.
After the speaker's remarks, there will be a Q&A session.
Speaker Change: I will now turn it over to Douglas Eu to start the call.
Speaker Change: Good day everyone, and welcome to GRAB's third quarter 2024 earnings call. I'm Douglas Eu, Director, Investor Relations and Strategic Finance at GRAB, and joining me today are Anthony Tan, Chief Executive Officer, Alex Hungate, Chief Operating Officer, and Peter Oey, Chief Financial Officer.
Speaker Change: During this call, we will be making forward-looking statements about future events, including our future business and financial performance.
These statements are based on our current beliefs and expectations.
Speaker Change: Actual results could differ materially due to a number of risks and uncertainties, as described in this earnings call, in the earnings release, and in our Form 20-F, and other findings of the SEC.
Speaker Change: We do not undertake any duty to update any Fort Lewis statements.
Speaker Change: We will also be discussing non-IFRS financial measures on this call. These measures supplement but do not replace IFRS financial measures.
Speaker Change: Please refer to the earnings materials for a reconciliation of non-IFRS to IFRS financial measures.
Speaker Change: For more information, please refer to our earnings press release, remarks, and supplemental presentation available on our IR website. And with that, I will turn the call over to Anthony to deliver his opening remarks before we open it up for questions.
Thank you so much for joining us today.
Anthony Tan: Third quarter 2024 was a strong quarter for us. Investments we have made or been making across the business drove an acceleration of our on-demand GMB growth year-on-year.
Anthony Tan: We continue to leverage our platform scale to drive profitable growth with Group Adjusted EBITDA more than tripling year-on-year to reach another record high of $90 million, and our 11th consecutive quarter of Adjusted EBITDA improvement.
Anthony Tan: Money Transacting Users, a leading indicator of future platform growth, also recorded its 6th
Anthony Tan: sequential quarter of growth growing 16% year-on-year to 42 million for the quarter
Anthony Tan: On the back of these strong results, we remain confident about Grab's growth potential and believe that we are in a pole position to capture the opportunities of growing high-value transactions and strengthening domestic demand.
Anthony Tan: And we are committed to doing this while ensuring profitable growth and sustainable free cash flow generation.
improving operating leverage and enhancing shareholder returns.
Anthony Tan: As always, I would like to convey our sincere gratitude to our fellow grabbers, our customers and partners for their contributions and support in driving these results. With that, I open the call for questions. Operator?
Thank you.
We will now start the Q&A portion of the call.
Anthony Tan: Please press star 1 to ask a question and you will be called on to speak your question.
While asking questions, please limit yourself to two per person.
Anthony Tan: Our first question of the day comes from Pong Vic with Goldman Sachs. Your line is now open.
Hi, good morning management and congratulations on strong quarters.
Anthony Tan: Two questions from my side. Number one, we've seen a meaningful pickup in your growth rates, particularly in your delivery business.
Anthony Tan: growing 16% year-on-year in constant currency term and also a very nice pickup in margin as well. Do you expect this growth to sustain and what incremental initiatives are you putting in place to drive this in fourth quarter and also especially going into next year 2025? That's question number one.
Anthony Tan: Question number two. Could you also share the latest update on competitive landscape, especially in Indonesia? Have you seen material change to market share as we've seen your main competitors spend more in recent months? Do you expect this to impact your margins going forward?
Anthony Tan: Thanks very much, Peng. This is Alex. I'll take those questions. So, first of all, we are seeing strong growth momentum in October and November to date.
Anthony Tan: particularly the push for affordability and high-value services for customers though part of the laddering strategy that we've talked about before and then Grab Unlimited continues to grow strongly to our loyalty program has hit another all-time high
Anthony Tan: I guess one key call-out that we focused on in some of the slide materials that we sent out earlier is the food-to-mark cross-sell. So mark has been growing 1.7 times faster than food in the quarter.
Anthony Tan: And then we're getting almost five times higher order frequency amongst users who transact in both food and mart with more than two times higher retention rate as well. So we expect that.
Anthony Tan: cross-sell to continue to be a strong source of growth for deliveries. The other thing that we're doing is that we are helping merchants to attract
Anthony Tan: customers to dine out at the store in addition to the traditional role that we've done in helping them with food deliveries.
Anthony Tan: and that's driving strong GMB growth and of course we've got a lot of available TAM there because in most restaurants the majority of the TAM, majority of the revenue
Anthony Tan: that the merchant is trying to manage is people coming into the store. So that allows Grab to play an important role there. And with the strong growth in advertising revenues that you've seen, that helps us to monetize that with the merchant.
Anthony Tan: Mobility is also pacing strongly, as you saw, so 30% year-on-year GMV growth from high-value mobility rides. So these are the new services that we've launched, particularly advanced booking, which is very popular with both travelers and executives.
Anthony Tan: and we think that that has a lot of upside. It's a newer set of products than our affordability products and therefore gives us a lot of scope to grow tan there.
Anthony Tan: It's high margin and it can produce higher driver earnings, so it's a very good healthy new source of growth for our marketplace.
Anthony Tan: and then finally on the bank side we're optimistic as of November we now have lending products in all three markets so it's the first time that we've been able to lend in all three markets in addition to lending through GFIN which has been our traditional way of lending
You will have noticed in our prepared remarks,
Anthony Tan: Maintaining our prior expectations of driving another quarter of sequential growth.
Anthony Tan: in both on-demand segments heading into the fourth quarter. So that will set us up strongly for 2025.
Anthony Tan: The second question was about competition, especially in Indonesia. Okay, so, well Grab Indonesia is enjoying good, sustainable growth.
Anthony Tan: For us, Indonesia started to be positive EBITDA more than a year ago, as you recall.
Anthony Tan: Since then, we've grown Indonesia's EBITDA, Indonesia's revenue, and Indonesia's GMV both year-on-year and quarter-on-quarter, so it's good progress financially across all fronts.
Anthony Tan: We have noticed an increased spend from our competitor in Indonesia, as you noted in your question.
Anthony Tan: I think the reliability of our services and the new services that we've launched are getting good traction with customers.
Anthony Tan: You can see that very clearly in the data. So overall...
Anthony Tan: order frequency is up year on year in Indonesia while retention rates have remained roughly stable.
Anthony Tan: So, that means that the lifetime value of our Indonesian customer base is improving, and in particular the deliveries, average order frequency has accelerated strongly quarter on quarter. So, that's even while competitors are spending a lot more than us, we are able to generate that great traction with our customers.
Anthony Tan: And because of our regional scale, where you'll recall we're about four times larger than our next biggest competitor in the region, we are getting better operating leverage across our cost base.
Anthony Tan: You know, so we don't comment on category position country by country, but I can confirm that we're still approximately four times larger than our next largest competitor in the region.
Anthony Tan: So then, just to wrap up, on EBITDA, we do remain committed to driving that profitable growth and so this quarter is a strong proof point for that.
Anthony Tan: Our intent is to continue to grow absolute EBITDA. So based on the updated EBITDA guidance that we've shared today of between 308 and 313 million for the whole year 2024, this implies another strong quarter of EBITDA generation in the fourth quarter.
Thank you.
Speaker Change: Our next question comes from Mark Mahaney with Evercore. Your line is now open.
Mark Mahaney: Okay, thanks. Two questions please. One, on the incentives, could you just talk about the outlook for incentive spend going forwards?
That's just
Mark Mahaney: as to whether that's a reasonable expectation or not or you want to continue to be able to pull in and pull out as necessary on that metric. And then on the MTU growth, any color on the sources of that MTU growth to help us think about how sustainable that kind of mid-teens growth, it looks like it's been consistent the last couple of quarters. Is there, are there good reasons to think that it should be consistent going forwards over the next year? Thank you very much.
Speaker Change: Thanks Mark, let me let me pick up those questions. So on incentives as you know over several years our incentive percentage as a percentage of GMV has been coming down so you're right the overall trend is there and that's because we are able to get more and more efficiency
Speaker Change: and of course you know we're using a lot of AI targeting now that we didn't have a few years ago too so there's a lot there's a lot to be optimistic about in terms of the overall trajectory of incentives.
Speaker Change: From quarter to quarter it can go up and down and I think particularly when we launch new products as we have been doing a quite a quite a steady pace these last two quarters.
Speaker Change: for example, where we want to generate sustained consumer behavior to look to the Grab app for their dining out choices, as well as traditionally what they've done for delivery. Changing consumer behavior does require incentives.
Speaker Change: And similarly, you know, when we launch something like advanced booking
Speaker Change: to get consumers to use the app in a different way ahead of the time at which they want to make the ride. That also requires changing consumer behavior. So we will use incentives from time to time to generate the momentum behind these new ways of interacting with the app.
Speaker Change: But, you know, those will those will peak at different times and then also come off. So those are not not long term.
Speaker Change: The MTU growth is encouraging. We found that the affordability push,
of the ladder pricing strategy that we have.
Speaker Change: is driving a lot of first-time users into the marketplace. And then, obviously, it's our marketing objective to capture them and keep them coming back and drive retention.
Speaker Change: and I think the big upside for MTUs that we see is frequency.
Speaker Change: Because if you look at our annual transacting users, it's a very large multiple of both our monthly and our daily transacting users.
Speaker Change: So a lot of our job is to, yes, bring new users in with affordability, but then to ride up the frequency curve with them, to bring them from annual into monthly, from monthly into daily, and so there's tremendous upside for us.
Speaker Change: At the moment, our monthly transacting users is only about 5% of our total users.
Speaker Change: And then the annual transacting users is something like 15%, so still lots and lots of upside to go for us.
Speaker Change: with this affordability strategy that we have. And then of course, plenty of opportunity to continue to drive good margin because of the ladder strategy where we have growing premium customer base as well.
Thank you very much.
Speaker Change: Our next question comes from Ron John Sharma with JPMorgan Singapore. Your line is now open.
Speaker Change: Hi, good morning and thank you for the presentation and congratulations on the results.
Speaker Change: Do you have a sense on what the target market could be in Southeast Asia, what the profitable
Speaker Change: Number of MTEs could be for the industry over the next few years.
Speaker Change: The second question is on your free cash flows and buybacks.
Now that you have 5.8 billion dollars of net.
and Akshay Kumar.
Speaker Change: Can we expect further increase to the Biobank program? Thank you.
Speaker Change: Thanks Anjan, let me take the first one and Peter will take the second one on the free cash flow and buy back.
Speaker Change: I started to get into answering your question a bit earlier on the response to Mark.
Speaker Change: You know, our monthly transacting users is around 5% of the total population of Southeast Asia. So we're lucky to be in a region which has lots of upside, lots of growth ahead of it.
Speaker Change: I think, you know, notwithstanding what's happening in the U.S., I think Southeast Asia has been...
Speaker Change: has been one of the regions which has benefited from the so-called decoupling. We expect that to continue. We've got strong leadership and a lot of them, a lot of, you know, political leadership in a lot of the markets.
and a lot of optimism in those markets.
Speaker Change: At 5% on MTUs and only something like 15% on ATUs, we think that there's considerable upside, not just in the short term, but importantly the long term with this young population.
Speaker Change: We'll continue to engage with them. The brand is strong. You can see from the positive uptake of our financial services offerings that
Speaker Change: The Grab brand seems to be attractive, not just in the on-demand space, but in some significant adjacencies too. And so the new financial services offerings will also help us drive MTUs in a whole new dimension.
Aranjan, on your question around cash and buyback...
Speaker Change: Let me just also clarify that on the net cash liquidity, when you look at that number, it does include our deposits, the bank deposits, and in our prepared remarks and also in our earnings, we had over a billion dollars of deposits that we generated from the two banks.
Speaker Change: but also remember there also excludes loans and we have restricted cash flow so it's part of that so just take that get into the mix
You look at our net cash liquidity.
We're just a free cash flow in the business
Speaker Change: and roughly 76 million dollars if you look at it from a trailing 12 months so it's working what we're doing for my capital from a cash business as you remember
We've always had a three-pronged strategy when it comes to...
Our bottom line, which is one...
Deriving Adjusted EBDOT, check.
Speaker Change: second positive free cash flow check and also we from a net income perspective also in this beginning journey of getting there. Now how did that translate to buyback to your other part of the question?
Speaker Change: Maybe the way to answer that is just to refresh the capital allocation framework because that's how I think about it.
Speaker Change: and what's that? It's really a three strategy from our perspective. One is
Organic growth, organic investment is critical for us.
Speaker Change: And you're seeing that being played out. Third quarter is a really great prime example where the investment that we're making...
Speaker Change: in product set that Alex talked about earlier is seeing the traction both from a top-of-the-funnel but also we're seeing it in frequency and retention.
Speaker Change: and that drives lifetime value for us as a business. So we're gonna continue to make those investments in the organic side of the business as the highest priority for us.
Speaker Change: We'll look at other opportunities inorganically, however those opportunities will be at a very high bar for us.
and that will continue also.
Speaker Change: Now, when we do have excess liquidity, we will look at opportunities to return them to our shareholders. Now, in our buyback program today, we're only about 190, roughly about $190 million out of the $500 million mandate that we have today. So we still have some ways to go. So we're gonna continue to execute that.
Speaker Change: And as opportunities come up in the future, if those opportunities are the right ones, we'll revisit our buyback program. But at this stage, we're committed to the 500 million and we still have about another $300 million to go to complete that buyback program.
Next question, please, operator.
Speaker Change: Our next question comes from Jiang Xiao with Barklegs. Your line is now open.
Thank you very much. Congrats on the very strong results.
Speaker Change: Two questions as well. Firstly, I would love to learn a bit more about your fintech business.
Speaker Change: I know you started with Digibank in Singapore, lending out loans to make money. And now all three Digibanks are offering credit products now.
Could you sort of elaborate a bit on the
Speaker Change: borrower's profile, like who borrowed from you, what kind of the typical terms
Speaker Change: and expand a bit, please, on the acceleration in growth rate from this business. Next year, I believe, you highlight that before, it's probably one of the most important drivers for revenue re-acceleration.
And so my second...
Speaker Change: to 1.8%, but that's still quite a bit below 4%. Could you elaborate a bit on what kind of growth trajectory for your advertising business may be?
Speaker Change: know that your Chinese peer is doing great job there in China. Could you talk about how do you plan, when do you plan to monetize the in-store part of the delivery business? Thank you very much for, sorry for the long questions.
Speaker Change: Thanks, John. That's great. Let me start by talking about financial services. Just explain a little bit about the lending in particular, which is the focus of your question.
Speaker Change: So you could see the strong loan dispersals in the quarter, 38% year-on-year, 13% quarter-on-quarter. So we're now at $565 million in the third quarter. So if you approximately annualize that $2.2 billion.
Speaker Change: So the pace of the lending is going up, and that's because we are layering now the lending through the banks on top of the existing GFIN business, which where the lending already had a healthy underlying growth rate.
Speaker Change: Let me start with the Gfin business to understand so you can understand that a bit better because that's a long a long-standing business
Speaker Change: So, primarily lending to partners and users across all of the markets, so it's ecosystem-based.
Speaker Change: where we're benefiting from the deep insights we have into the user behavior on the ecosystem.
Speaker Change: from the ecosystem make lending decisions. So it's a very different, much more multi-dimensional type of database than traditional banks would use.
Speaker Change: That allows us to lend to people like drivers, and other gig workers, who traditionally have not been well served by banks. So many of them are either unbanked or underbanked because they don't have traditional payslips.
Speaker Change: And that's very much in line with our mission as an organization to support them.
Speaker Change: The penetration of the driver lending by GFIN is good, but the models are improving all the time so we can continue to lend on a risk-adjusted basis and the risk-adjusted returns overall from GFIN are comfortably above
the cost of capital for the group.
Speaker Change: The penetration of lending to merchants is relatively low at the moment.
Speaker Change: So that's an area where we have a lot of upside, and when Peter answers the second part of your question, you'll see that we have more and more services that are targeted at the merchant and helping them being successful.
Speaker Change: And the good thing about us as a data science company is that as we as we provide more and more services to merchants that gives us more and more variables for our merchant lending model, which helps us to with the same risk appetite start to lend to more and more merchants across all of our countries.
Speaker Change: So that's the GFIN lending model, performing well, growing well, and producing good risk-adjusted returns.
Speaker Change: The recent addition on top of that, which is why you're seeing the acceleration of lending, is that we're also able to lend through the banks.
Speaker Change: The banks are also focused on people who are underbanked or unbanked.
Speaker Change: And that population is very large in Southeast Asia. By some external studies, we estimate like two-thirds of the population of Southeast Asia are either unbanked or unbanked or underbanked.
Speaker Change: Because we, again, we have very low cost of distribution to them. They're existing users of Grab and therefore they have an affinity with the brand.
Speaker Change: whether they're commuting to work, where they live, all these kinds of things we can we can impute from the behaviors that we see.
Speaker Change: We are able to lend to them. The first lending product which is now live in all markets, including Malaysia, as of this month, November, is the FlexiLoan product.
distributed very cost-effectively
Speaker Change: and then with flexible repayment terms from the point of view of the consumer, it has an extremely high NPS, something like 65. So most banks are hovering at around zero for NPS.
Speaker Change: So a 60 a product with 65 MPS is quite unusual for banking and so that makes us
Very successful in terms of the uptake.
Speaker Change: We are very carefully whitelisting users for that product using the data models. And that means that we will maintain, you know, a very careful look in terms of risk appetite.
But overall between Gfin and
Speaker Change: The banks, our non-performing loan ratio is still around 2%, so that's extremely good performance from those credit models.
Speaker Change: and on obviously to fund that the the benefit of having a banking license is we get access to very low-cost deposits
Speaker Change: And what we've been delighted with since the launch of all three banks is our ability to attract those deposits. We've been able to bring in deposits much faster and with less cost than we had even planned. So you've seen that the –
Speaker Change: Positive momentum across GXS Bank in Singapore and GX Bank in Malaysia where customer deposits have grown 50% quarter-on-quarter.
So over a billion now in the third quarter.
Speaker Change: And then Superbank, which is the Indonesian bank, which only just launched in July, hit 2 million accounts by October, by last month. So a really tremendous update. So we are able to raise deposits at a very low cost.
Speaker Change: therefore what you know because of the focus we have on data science and the lending model you can see very clearly that we can continue this very positive data flywheel for lending.
Speaker Change: Peter, do you want to? Yeah, sure. Yeah. Jong, on your question around delivery's margin, you asked about the trajectory.
Speaker Change: If you look at our deliveries business, you've seen this evolution, actually, across all the different products that we've introduced in the last, over the last 12 months especially.
Speaker Change: It's been very intentional, and part of this, John, is to drive a few things.
We're driving the top of the funnel.
Speaker Change: and pushing the number of transactions when each man that our users are using a delivery product. The more products that we are offering them, the more that we can offer more variety and also drives transaction. A great example of that is Savor, Savor Deliveries.
Speaker Change: which now accounts for about a third of our deliveries transaction today and it was about 14% same period last year.
The other part that we're also deriving is also frequency.
Speaker Change: In our ability for our subscribers, which is a really important part of our deliveries business, a third of our
Deliveries today are coming from subscribers.
The level of frequency there...
Speaker Change: is way higher than what you're seeing in other parts of our business today. Today, if you look at it, if you're a Grab Unlimited subscriber, you're spending four times more, and your frequency is three times higher.
Speaker Change: We're also doing a lot of selling between our food and our Mart business also, and that's driving frequency. If you're both a GrabMart and a GrabFood user in the deliveries, your frequency is five times higher than if you're just using food only.
Speaker Change: And if you're a subscriber, our retention there is two times higher, which is very similar to also that you're seeing from our GrabFood and GrabMart cross-sell also. So I'm highlighting these examples because these are critical components.
for us in driving engagement in our deliveries business.
Speaker Change: But also at the same time also continuing the monetization. You had a question around monetization. These are all things that are stacking up in terms of monetizing our users through all these different products that we have. And this is a critical part in also driving.
Sigmund Margin also.
Speaker Change: Well, we are committed for the businesses to continue to drive absolute dollar EBITDA in our deliveries margin and also to our long-term margin targets.
Speaker Change: You will see quarter to quarter for us making investments in our deliveries business because we are driving all these different elements Whether it's engagement, frequency, retention also, and this is really important as we continue to grow our deliveries business
Speaker Change: Third quarter was a very important quarter for us. It saw our GMV acceleration and our deliveries business
Speaker Change: We grew at 16% on a year-over-year basis. We added more users than before also in our deliveries business. And also you saw our segment margin also hitting 1.8% versus last quarter at 1.5%. So hitting all the right things.
Speaker Change: and we're going to continue this momentum in our deliverance business.
Speaker Change: Yeah, that's great. And I'll just build on that for the advertising part. So yes, advertising revenue is increasing. So I remember only a few quarters ago, we celebrated crossing 100 million. Now we're 185 million in revenue for advertising.
Speaker Change: and the percentage of deliverers GMV has increased from 1.4 in the prior quarter to 1.6 percent.
Speaker Change: and that's up from 1.1% in the prior year period. So you can see really strong momentum. A lot of that is driven by self-serve advertising capabilities. We're continuing to make it easier for merchants to both target
Speaker Change: on our platform and also get good line of sight of the results.
and for self-serve we have a cost per order.
Speaker Change: form of advertising. In other words, you don't pay unless you actually get orders through the platform. And that's very popular with the smaller merchants because they're typically less sophisticated in terms of how to think about cost per click and some of the other models.
Speaker Change: I was just in Indonesia two weeks ago in Manado and they had, I met with a burger chain entrepreneur
Speaker Change: And all of his advertising was done through Grab, both for delivery and for the dining in, which was really powering great success. And he had also...
Speaker Change: taken a loan through the platform. This guy didn't have any account management, so he'd actually been proposed the loan, I presume through a whitelisting process by us on the back end.
Speaker Change: and taken down the loan in order to order the beef to manage his working capital for his supply chain for beef, which was obviously his most expensive ingredient, and that was allowing him to grow even faster and open more outlets.
Speaker Change: So, I think self-serve is really, really a key part of our strategy because many of our merchants are small and many of them are in far-flung places like Sulawesi.
Speaker Change: Our next question comes from Sergeant Salgon Carr with Bank of America. Your line is now open.
Speaker Change: Thank you for the opportunity. I have two questions. First question, I wanted to understand a bit more on what could we think as a steady-state delivery GMB growth.
Speaker Change: For last few quarters Grab is growing in the range of 9 to 12% and given the fact that we are now looking to make an MTU push with the focus on first-time users
Speaker Change: So is that something what Southeast Asia could eventually go to? So that's question number one. Question number two, a couple of your peers are talking about a consumption slowdown and impact on that. I just wanted to understand how you guys are looking at it. Thanks.
Speaker Change: Maybe I'll take the second one first around consumption slowdown. If you look at Southeast Asia, it's still under-penetrated, Sachin.
Speaker Change: I'll quote a third-party report that was put out last week and what they're saying is over the next five years in Southeast Asian digital economy both the mobility and deliveries is growing at double-digit CAGR growth.
Speaker Change: and we're very bullish actually on Southeast Asia. We're not seeing any slowdown.
Speaker Change: in terms of top of the final for us. If anything, we're seeing an acceleration of that.
Speaker Change: Part of that also is the new product sets and all the things that we just talked about earlier during the call.
Speaker Change: So, we feel that from a consumption perspective, from a macro perspective also, it's looking strong for Southeast Asia. Demand looks great at the moment and October is strong for us.
Speaker Change: We see Q4 is a very strong season for us on tourism. We see tourism increasing in Southeast Asia also at the same time. So all these things are pointing.
Speaker Change: For us, at least anyway, from our perspective, a strong Southeast Asian economy as we continue to penetrate what is a very under-penetrated market for us, both in all the products that we have today.
I'll just jump in there.
Speaker Change: Like what Peter said, we're actually very optimistic about the long-term growth outlook.
Especially for the region given
strong inbound tourism. Just recently, the Prime Minister of Thailand
Speaker Change: and the cabinet ministers, several of them, and we could see, I mean...
Speaker Change: you know it's like the movie everybody loves Raymond this one is everybody loves Thailand
Speaker Change: and there's a lot of people coming in and we are really blessed to see that strengthening of inbound tourism that's supporting our growth.
We also see it...
Speaker Change: Not just with our own numbers, but we also see across reports. If you look at the Tamasek Bay in Google report,
It's still very nascent right now on...
The Penetration Levels
Speaker Change: and we actually, if you look at it, the report, it actually expects double-digit growth of keggers.
Speaker Change: to be achieved between 2024 to 2030 on both mobility and food deliveries, to your question.
Speaker Change: Alex talked about the affordable, the high value offerings on demand, Alex talked about the advertising and the Omni components and also the financial services across our ecosystem.
So our take is we actually see
and are very optimistic about this region's long-term growth outlook.
Speaker Change: Thank you. Just a quick follow-up of the year. Despite underpenetration, we are seeing a growth on food GMB in the range of 10 to 12 percent. Is that a steady state growth or we should expect a 15 percent growth for the industry going ahead?
Speaker Change: Sachin, we're not guidelines on what growth rate in terms of all across all our business today. Now what you are seeing is an acceleration of growth in our deliveries business. We did 16%.
Speaker Change: on a year-on-year and a constant currency basis and it was 14% on a year-on-year growth we recorded in the prior quarter.
Speaker Change: Driving order value also, where we continue to make sure that the customers are getting what they want from a price perspective as well as from a product selections perspective, and we're able to continue to cross-sell the customers also. We feel good that the delivery systems will continue to grow sustainably.
Speaker Change: So that's where we focus and making sure that the customers also and our merchants are also benefiting from all these product investments that we're making.
Speaker Change: Yeah and Sachin, just to jump in, in terms of a trading update, October and first part of November, we are seeing an acceleration in the deliverance GMV growth, so we'll keep pushing with the strategy that Peter and Anthony just laid out.
Perfect. Thanks a lot.
Our next question comes from Alicia Yap with Citigroup.
Your line is now open.
Speaker Change: Hi, thank you. Good morning management. Thanks for taking my questions and also congrats on the solid
Speaker Change: results and also the guidance. Two questions. First is that understand the growth in mock
Speaker Change: is faster than food, like 1.7 times faster. So it is the main driver on the crop selling. So wondering, do you anticipate the faster growth in March right now could eventually also help to increase the faster growth in food in coming months?
Speaker Change: So, for example, where in, maybe in one quarter in the future, could we actually see the frequency and autovolume growth in food growing faster than Mark?
Speaker Change: So that's the first question. And second question is a follow up on the incentives.
Speaker Change: So we saw that the incentive, especially on the consumer front, is actually increasing at a faster rate. Understand, you know, I think Alex mentioned earlier, some of that is actually necessary when you have the new product launch and all that to drive, you know, obviously user awareness and also the conversion. So just wondering.
Speaker Change: you know, on the back, some of these incentives potentially could actually scale back.
in the future quarters.
Speaker Change: wanted your margin improvement at a more steady stage or we actually could see
Speaker Change: In one quarter, if the scale backs more than you expected, then you actually see a jump in the EBITDA margin. And lastly, is that anything on the improvement in AI and technology in driving the efficiency is actually helping your improvement in the margin. Thank you.
Thanks Alicia. Yeah, some really good questions there.
higher order frequency than just
Speaker Change: food users. And that's the key effect that we're going for as we push the cross-sell into Mark. So not only does it drive the Mark GMV stand alone
Speaker Change: but it also drives a flywheel where we're getting users in the app much more frequently. And then that allows us to then push the consumer behavior to use the app.
Speaker Change: for dining out as well. So you can see, actually, our strategy is to have much higher user frequency, much higher share of mind for the user.
Speaker Change: and that helps us to drive GMV across all three of those initiatives so the food business, the mop business, and then finally the dining out part of the business.
Speaker Change: incentives to drive that consumer behavior, particularly into the dining out choices that consumers are making.
Speaker Change: That's very important for us, and you're right, it has resulted in a little bit of an increase quarter-on-quarter and year-on-year on incentives.
Speaker Change: present in Singapore, Thailand and Indonesia. That's a key part of our platform because if you think about the user journey, they go into the app, they look at the different deals and choices they have for dining out, they then need to make a reservation.
Speaker Change: and before they go, you know, to the restaurant. So it's a perfect gap filler and time to market for us.
Speaker Change: And we can, with our footprint, we can actually expand the...
Speaker Change: And I think, Peter, you wanted to follow up? Yeah, let me address, Alicia, your question around incentives. I think there was an earlier question from Mark also on this point. But the way I think about incentives is it's a lever for us.
Speaker Change: and quarter-to-quarter these incentives whether it's on the consumer side whether it's on the partner side will move up and down.
Speaker Change: And in the last, if you remember last quarter in Q2, we had a discussion around mobility margins also, and I made a statement that we are investing into the mobility high-value rides, all the new products, and what you're seeing in the third quarter is some of those coming into play.
on those product sets.
Speaker Change: So we will continue to make those investments, Alicia. We feel it's right. Again, we're driving a long-term business here. We're driving, again, frequency.
Speaker Change: We're driving engagement across all our product portfolios, which is really critical. And you will see those movements in a quarter-from-quarter-on-quarter perspective of incentives. We'll make those investments also, not just incentives, we'll make them up and down the P&L line.
Speaker Change: And these investments into this new product is really important because it really drives scale. It really drives also efficiency at the same time. Now, while I'm saying all that also, we're also keeping a very close eye on unit economics of our business.
Speaker Change: and the unit economics translate especially around the margin so we will see where there's opportunities to improve margins we will definitely improve those margins and you've seen it in the deliveries margin moving from where it was same time last year was 1.1 percent
And now we're at
Speaker Change: Close to 1.8%, and then we improved from 30 basis points from a quarter-on-quarter perspective.
Speaker Change: We'll take a better balanced approach in really growing the top line engagement and frequency, but also in driving profitability at the same time.
I'll just add to what Peter shared.
on the AI front.
Speaker Change: In fact, we've been doing machine learning and AI since the very beginning. We have over 1,000 AI ML models in production, one of the highest in the region, and it touches every part of our product.
whether it's developing product development, velocity.
Speaker Change: So specifically, so if you look at this is army knife that we built with LLMs We can handle a wide variety of tasks versus just having various
Speaker Change: Douglas Oey, Alexander Hungate, Ping Tan, Douglas Oey, Alexander Hungate, Ping Tan, Douglas
Speaker Change: new frontiers of productivity. In the past, for example, our sales-enabled
Speaker Change: would spend, you know, a full day just working on slides for their key customer accounts and today we can get that done in minutes.
Speaker Change: So we're very very excited. If you just look at Mystique, we talked about this before, our Gen AI copywriting tool that helps improve conversion by 2x, increasing engagement by 50% amongst users.
Speaker Change: So, lots and lots of these examples that go along all across Grab that will continue to drive greater cost synergies while ensuring better customer experiences.
Our next question comes from Divya Kothia with Morgan Stanley.
Please proceed.
Divya Kothia: Thank you very much. The first question I had is just on the mobility margin. I mean we've seen that improve and you've attributed it to better mix.
Divya Kothia: You did comment earlier on Indonesia but I'd be keen to hear your comments on the competitive landscape especially related to Singapore, Vietnam and Thailand where we have seen new players come up. Could you just comment on how you see your market shares in those markets and if there's any risk from competition in these markets to the margins?
Divya Kothia: The second question is related maybe a little bit to, you know, what you just talked about. On overall group corporate costs, Grab has done really well this year. We've managed to reduce that by 10, 11 percent. I'd like to hear your thoughts going into 2025. Do you think that we have scope to reduce this further either through AI or is it going to be more operating leverage driven and any callouts on cost inflation that we should be looking out for next year? Thanks.
Speaker Change: Let me take the first question on competition. You're right, there have been a couple of announcements of new competitors in the region in the last quarter. Similarly, you know, we've had Jericho announce... Sorry, we've had...
Speaker Change: the Vietnam market. So the region is competitive. It's always been competitive with people coming in and out. I think the key part of our strategy and the reason why you've seen the improving margins plus the strong growth is that we've got very high operating leverage. So we
Speaker Change: We're in a position where we're using our scale to push out the reliability and affordability frontier all the time.
Speaker Change: So the AI that Anthony was talking about helps us to optimize even faster And we are doubling down our investment in making sure that we improve
Speaker Change: services and reliability for our customers at the same time as we make the rides more affordable and at the same time make sure our drivers
take home more earnings.
Speaker Change: When you are large, you can do that much more efficiently. And you can see, not just in Southeast Asia...
Speaker Change: where we are four times bigger than our next biggest competitor but also in almost every other part of the world that the returns to scale to the largest player are there in these platform businesses.
Speaker Change: We we are aware and we monitor very closely whenever there are new entrants into the market There's always a number of small players in every market, but we have found particularly now that we have
Speaker Change: We have the variable commission model for drivers. We are in a very strong position to be able to fine-tune the market, make sure those...
Speaker Change: The supply does remain loyal to Grab and that makes it hard for the new entrants to gain traction from the point of view of attracting driver supply.
Speaker Change: On your question around regional corporate costs, I mean you know we've seen that we've done a lot of work around optimizing the business.
Speaker Change: and we'll continue to do that in operating, making sure that we continue to have operating leverage is critical in this business.
So we're going to continue to drive that.
Speaker Change: In terms of corporate costs, though, you will see, from a dollar perspective, an uptick, and you saw that in the third quarter.
Speaker Change: And that's tied to volume also, because as the business continues to grow...
We're seeing traction at the top of the funnel.
Speaker Change: We're seeing the number of orders also increasing also. There are variable pieces in the regional corporate costs. If you remember, about 40% of our corporate regional corporate costs are tied to variable. Those variables actually will move up also as the volume picks up at the same time.
Speaker Change: and from a fixed-cost perspective also, there'll be certain times when we will make certain additional investments, such as what Anthony talked about around Gen AI, which has been a critical part in driving productivity and also efficiency in the business today.
Speaker Change: So, we want to make sure that we do have operating leverage, that's really important. When I look at regional corporate costs, I look at, rather than dollar, I look at as a percentage of revenue, to make sure that we are continuing to drive efficiency in our business.
Speaker Change: and making sure that that level of leverage continues also in the outer years. So I hope that gives you a bit of color of how I think about regional corporate costs.
Speaker Change: Thank you. This concludes GRAP's third quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect.