Q1 2025 Grab Holdings Ltd Earnings Call
Yeah.
Ladies and gentlemen, thank you for joining us today.
My name is Laura and I will be your conference operator for today's session, we'll come to <unk> first quarter 2025 earnings results call.
After the Speakers' remarks, there will be a question and answer session I would now.
Douglas: Now turn it over to Douglas you to start the call.
Douglas Yu: Good day, everyone and welcome to grab first quarter 2025 earnings call I'm Douglas you Director Investor Relations and strategic Finance I grabbed and joining me today are Anthony Tonn, Chief Executive Officer, Alex Hungate, President and Chief operating Officer, and Peter <unk>, Chief Financial Officer.
Douglas Yu: 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 actual results could differ materially due to a number of risks and uncertainties. As described on this earnings call in the earnings release, and our form 20-F, and other filings with the SEC, we do not.
Douglas Yu: Undertake any duty to update any forward looking statements. We will also be discussing non <unk> financial measures on this call. These measures supplement, but do not replace Ifr's financial measures. Please refer to the earnings materials for a reconciliation of non <unk> to <unk> financial measures for more information. Please refer to our earnings press release remarks and coupled.
Douglas Yu: Rental 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.
Anthony: Our first quarter results were strong as we achieve profitable growth despite the seasonal impacts to demand from the lunar new year and Ramadan fasting period.
Douglas Yu: We grew on demand <unk> by 17% year on year.
Douglas Yu: And achieved yet another record number of monthly transacting users on our platform.
Douglas Yu: Translating to another quarter of record revenues.
Douglas Yu: We drove strong top line growth, we continue to harness the scale of our ecosystem to drive greater network efficiencies and maintain a disciplined stance on costs.
Douglas Yu: As such we achieved our 13th consecutive quarter of group adjusted EBITDA improvement, while our trailing 12 months adjusted free cash flow also expanded to $157 million.
Douglas Yu: We're cognizant.
Douglas Yu: <unk> levels of uncertainty in the global macro economy landscape.
Douglas Yu: We remain committed to the mission of our company and believe that is more important than ever before to continuously drive improvements due to reliability and affordability in our offerings.
Douglas Yu: This will increasingly position us as a counter cyclical company, enabling us to stay resilient and continue driving new user growth and improvements to usage frequency and retention regardless of the macro economy landscape.
Douglas Yu: Looking ahead, we reiterate our expectations to maintain our on demand <unk> and revenue growth momentum compared to 2020 full growth rates, while maintaining a highly disciplined stance on costs.
Douglas Yu: Given the strong performance of the first quarter, we are raising our adjusted EBITDA for the full year 2025 to 462 $480 million from $440 million to $470 million previously.
Speaker Change: Good day, everyone and welcome to grabs first quarter, 'twenty 25 earnings call and Desert view director Investor Relations and strategic finance.
Douglas Yu: Grab and joining me today are Anthony time, Chief Executive Officer, Alex Hungate, President and Chief operating Officer, and Peter <unk>, Chief Financial Officer during.
Douglas Yu: During this call we will be making forward looking statements about future events, including our future business and financial performance.
Douglas Yu: Okay.
Douglas Yu: Ladies and gentlemen will now start the question.
Douglas Yu: <unk> of the call.
Douglas Yu: Please press star one to ask a question and we'll call on you for your question and asking questions. Please limit to two questions per person.
Douglas Yu: Yes.
Douglas Yu: Okay.
Douglas Yu: Okay.
Douglas Yu: Okay.
Douglas Yu: Your first question from the line of.
Douglas Yu: Sure.
Douglas Yu: <unk>.
Speaker Change: Operator can we just check that the audience can here.
Speaker Change: The current live call right now we seem to be getting signals that are then not hearing anything.
Speaker Change: The second year loud and clear Sir.
Speaker Change: Okay, let's have the first question please.
Speaker Change: Once again I'd like to call on.
Speaker Change: Please pang with a one calling from Goldman Sachs.
Speaker Change: Your line is now open.
Speaker Change: With regard operator, I don't think the audience actually able to share. This is why I think we're not getting in our responses.
Okay.
Speaker Change: Let me just go ahead and call on once again for me spans a go.
Speaker Change: MS. <unk>. Your line is now open please ask your question.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Hello.
Speaker Change: Bang Juris.
Speaker Change: Hello, I can hear you, but can you give me hello.
Speaker Change: Hello, Yes, yes, yes, we are having some sort of technical challenges. This morning, so apologies to the audience.
Speaker Change: So, let's let's get the Q&A. So we can hear you paying us.
Steve: Yes, Steve I'll just.
Speaker Change: Great sounds good.
Steve: You can hear us right great great.
Speaker Change: Yes, yes, I can hear you loud and clear alright, Okay, Alright, now we're back on the AGM to be some sort of tipping Eni technical challenges.
Steve: Yes.
Steve: Yes.
Steve: Go ahead Mike.
Steve: Yeah.
Speaker Change: So actually I shall ask congratulation on a great set of results and quick question for me number one just on the macro have you seen any changes in consumer behavior amidst IHOP weakening macros.
Speaker Change: Actually in Indonesia, how resilient do you think is crap in this environment and how do you plan to position <unk> to be more color kind of cyclical that's question number one.
Speaker Change: Question number two you have announced several new products at your crap ex day last month could you share. How you expect these products to drive the operational performance at these new product roll out how should we foresee how.
Speaker Change: Should we proceed of margin weakness as you launched audio product High school. Thank you.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: Hi, Bob It's Alex here, Thanks, very much for both of those questions. So the first one on consumer behavior, we haven't seen yet any signs of consumer weakness of course, we are monitoring very closely.
Speaker Change: So in Q. This last quarter, we had the delivery M to us continuing to grow <unk>.
Speaker Change: Sequentially, particularly with a strong performance from grabbing grabbed marked demand in March.
Speaker Change: April trading update for you are we trending healthily in line I would say with our expectations. So we do expect a rebound in quarter on quarter growth rates across mobility and deliver his full quota too.
Speaker Change: At the same time of course because of the news flow. We are we continue to work closely with government partners to support local economies, particularly making sure our marketplaces healthy so that we continue to generate the earning opportunities for our partners on that platform going forward.
Speaker Change: I would just make an observation that in the past where there has been a turn down in economic conditions.
Speaker Change: Partner the platform the kind of works on a self adjusting basis in the following way.
Speaker Change: The number of new drivers will join the platform.
Speaker Change: As a cushion against potential job losses et cetera, and therefore, we tend to get an improvement in supply conditions, which in turn will reduce serge.
Speaker Change: At key moments therefore.
Speaker Change: Encourage more consumption more use of the platform by consumers. So you can see it's kind of a self correcting almost counter cyclical approach.
Speaker Change: That we see from the from the platform during those types of downturns.
Speaker Change: But so far no signs of a downturn. So we'll keep we'll keep monitoring that.
Speaker Change: Second question is about the <unk> product.
Speaker Change: Where we talked about harnessing AI to.
Speaker Change: To improve user and partner centric services going forward, the Colgate AI with Hartford for those of you that missed it.
Speaker Change: So a lot of the products that we launched did have affordability in mind.
Speaker Change: So it very much relates to your first part of your question. So we are positioning ourselves to continue to grow.
Speaker Change: Through through any kind of a weakness in the macros.
Speaker Change: So for merchants for example, we've used the merchant assistance to add something like 70000 menu items without human intervention that's mentioned scanning.
Speaker Change: And delivering generate descriptions now so $2 8 million different items that could go crystal mentioned.
Speaker Change: And then we're getting we're using ride guide to help drive the earnings to improve.
Speaker Change: So we've got now already a quarter of a million drivers using this feature on a weekly basis and we have seen from those drivers higher income higher productivity. So it keeps the marketplace healthy even under difficult.
Speaker Change: Difficult conditions I noticed that you your you asked about.
Speaker Change: Margin weakness from this push for affordability.
Speaker Change: We don't actually anticipate a margin loss from these new products and we're not seeing it so far let me explain why because something like shared saver for example, which has a lower cost for consumer and.
Speaker Change: And therefore drives drives good volume improvement is actually amortizing the same delivery cost across multiple customers.
Speaker Change: By inviting multiple people to join the same the same order.
Speaker Change: Essentially no extra cost to grab onto the marketplace.
And even grab food for one which has a lower cost per meal.
Speaker Change: Is actually benefiting the merchants from allowing them to batch up a lot of meal production and into the same cooking batch and as some of you know I used to be in the food industry. So I know that this is much more cost effective and more productive for merchants to cook in large batches.
Speaker Change: And then we generate the demand for those special offer meals at that particular window and they're able to package up the large batch into multiple meals and sell them altogether. So in that case, we're amortizing the merchant costs.
Speaker Change: Into into a very.
Speaker Change: <unk> production batch for them and there's no additional cost to grab also so you can see that that that kind of approach is just making the marketplace more efficient, but it should not drive our it should not have put pressure on our margins are.
Speaker Change: The key point for US is that we want to drive the penetration of our annual transacting units uses up further so I M to use a monthly transacting users increases and then within that we want to continue to drive up our daily transacting users as well so these kinds of affordable products.
Speaker Change: And viral products that we announced at the <unk> will help us do both of those.
Speaker Change: So on margin, we're going to continue to focus on balancing this with the growth.
Speaker Change: With a key focus for us obviously is driving absolute profit growth.
Speaker Change: It's just west just remembering that we are now in our 13th quarter of improved.
Speaker Change: EBIT.
Speaker Change: In a row. So you can see that that's very much a focus for us.
Speaker Change: Thank you Tom.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Next question operator.
Speaker Change: Your next question comes from the line of Alicia Yap of Citigroup. Your line is now open.
Alicia Yap: Hi, Good morning can you hear me.
Speaker Change: Yes, loud and clear.
Alicia Yap: Okay Alright.
Alicia Yap: Alright, thank you.
Speaker Change: Management, Congrats on the solid quarter and also thanks for taking my questions.
Speaker Change: Two questions here first I think on your guidance, especially.
Speaker Change: Especially on the higher EBITDA guidance.
Speaker Change: Can management elaborate there.
Speaker Change: Reasons for your confidence on the profitability improvement.
Speaker Change: Are you seeing.
Speaker Change: <unk> cost optimizations coming from your AI technology enhancement.
Speaker Change: Even though <unk> right in the case of the second half if the top line at your face on macro headwinds and then second question. Please that I understand you mention you have not seen.
Speaker Change: Any demand slowdown.
Speaker Change: With the tariff concerns or not at all but in the coming months just in case right. If you ask us to see some softness.
Speaker Change: On the <unk> or even mobility demand would you actually lacked.
Speaker Change: What would be your plan would you actually lack of volume naturally slow down or would you actually were introduced.
Speaker Change: Some subsidies or rebates or promotion to actually encourage the.
Speaker Change: <unk> NAND and also with the spending to keep up.
Speaker Change: The volumes and also the engagement. Thank you.
Speaker Change: Thank you.
Speaker Change: Great Vallum, Alicia let me take this question and maybe Alex also if you can add some color, especially around on the demand side.
Speaker Change: The if you look at the macro situation, we are definitely watching and monitoring that from the sideline, we kind of ignore it and but we're also keeping a close eye on it but the guidance that we've given out is something that we feel very comfortable at and let me kind of step back as to why we are giving these level of confidence in our <unk>.
Speaker Change: <unk> guidance, we do two things right, we're doing reiterate reiterating our revenue guidance and we're actually increasing our EBITDA guidance.
What happened in Q1, so Q1 is usually our slowest slowest season on the back of coming out of a high season from Q4, but what we saw actually in Q1 actually was a couple of really unique things in our business demand did not slow down.
Speaker Change: Despite the Ramadan and the lunar new year, if you look at our on demand GMB grew at 17% on a year over year basis, but if you look at what's unique is we had another all time high when it comes to monthly transacting users so that M to us continuing to be at an all time high we had another record revenue quarter for us and.
Speaker Change: Really what's you're really for us actually was a very interesting data point was it the number of transactions that occurred on our platform was up 19% on a year over year basis, which means that the number of engagement and the number of transaction grew faster than our on demand GMB business overall and if you.
Speaker Change: Looking at April and Alex mentioned, two <unk> clearly a question what are we seeing in April we're seeing a strong rebound also coming on the back of Ramadan in terms of on demand GMB growth is coming in in line with our expectation. So if you look at all those different components. We were looking at for the rest of the year, we see demand continuing.
Speaker Change: To be strong and we continuing to see willful map perspective, Mal lands continuing growth in our on demand business for the rest of year on a year over year basis is also across all of our revenue lines, especially on the fintech side of the business.
Speaker Change: Cost is another component that we are also watching very closely the cost structure of the business continues to be optimize you saw what the regional corporate cost number was it was slightly down on a Q on Q was down 5% on a year over year basis, and we're continuing to make sure that a weak optimizing that cost. Yes. There were some components of cost that we are deferring.
Speaker Change: To lay that given seasonality.
Speaker Change: There will be some components of that as variable as.
Alicia Yap: Is the variable cost component goes out with volume, but we are managing our cost base also at the same time with all those different components. Alicia what we are seeing is that we're confident that the rent the EBITDA guidance that we that we're giving out we feel very comfortable and we're seeing confidence in making sure we can execute that the risk.
Speaker Change: Of this year.
Speaker Change: While it can be you want to add a little bit around the on demand side of the business.
Speaker Change: Yeah, I think as Peter said that this quarter should have been a seasonally weak quarter, but we were able to continue to grow deliveries empty us sequentially.
Speaker Change: A lot of that was because of the way we operationalize mark during the Ramadan fasting period to replace dining out with providing groceries and food for people at home.
Speaker Change: That's productivity gains from AI come came through already in the quarter and the way that we manage the direct marketing costs during those campaigns and that's that's a capability, which I think will serve us well. If there is the kind of downturn that you're asking about.
Speaker Change: I think the way in which we can fine tune, our promotions and our incentives using AI is demonstrably better than it was even six months ago. So we can we can get a benefit from that from that as well.
Speaker Change: Cross sell continues to be a big focus for us and you can see that.
Speaker Change: In particular, the financial services business has been demonstrated is benefited from excellent cross sell with the majority of the new.
Speaker Change: New to.
Speaker Change: Financial services customers coming from <unk> platform.
Speaker Change: I'd also the cross sell that we're getting between the verticals like food to treat to mobility and.
Speaker Change: Food food demand continued to perform well on all of these are increasingly powered by or through adaptive AI campaigns.
Speaker Change: The focus that you heard about at grab bags is on tech and product innovation.
Speaker Change: And not therefore with less and less reliant upon promotions and incentives.
Speaker Change: In particular, what I really like about the new products coming out now is they have a viral component. So think like things like family orders, you've got family units, who are bringing in other family members into the platform and booking rides on behalf of other family members. This is all part of the kind of viral component that.
Speaker Change: It helps the platform to grow itself, so you'll see our strategy increasingly focused on that as well.
Speaker Change: I think.
Peter: Peter covered.
Peter: Some of the ways in which we are thinking about demand. It's worth it's worth just highlighting one more time that.
Peter: Our empty you numbers only still only 6% of the total population of southeast Asia or as a management team. We're very focused on the other 94%, we think theres a lot of opportunity and particularly with these new affordable products, we intend to keep expanding the perimeter of our ecosystem.
Peter: As our main focus and I think you can be having seen us.
Peter: Deliver 13 quarters of improving EBITDA winner in a row, hopefully you feel confident that we'll get the balance right between that focus on growth and yet also continuing to improve.
Peter: Improved the bottom line as well.
Peter: Thank you.
Peter: Operator next question next question.
Speaker Change: Our next question comes from the line of <unk> Dalal Gopal Gara Bernstein's Aside General group. Your line is now open.
Gopal Gara: Thank you good morning management and congratulations on a good quarter two questions for me.
Speaker Change: Firstly.
Speaker Change: Photos with delivery industry is concerned we are seeing further consolidation.
Speaker Change: Participant pondok resemble shutting down their Thailand business, even though it was significantly smaller.
Speaker Change: <unk> delivery.
Speaker Change: Their business to door dash, so how do we see industry consolidation shaping up in this segment in ASEAN is there room for more or is it done.
Speaker Change: And I'm asking this because you already have a fairly strong category position. That's the first question. The second question is.
More centered around.
If you could share a bit on your <unk> businesses.
Speaker Change: Back to your closest competitor, who roku ended up reporting yesterday.
Speaker Change: And given that there is a lot of questions centered around macro I wonder will just get a perspective on your cockpit on capital allocation in light of not produce Michael.
Speaker Change: Turning to the macro items that might emerge when products or IPO.
Speaker Change: So essentially do we still have an appetite for further inorganic M&A.
Speaker Change: Namely Google as you've seen.
Speaker Change: In the recent quarters in terms of news flow.
Speaker Change: Thank you.
Speaker Change: Great. Thanks, Andrew Let me take the first one around consolidation, maybe Alex you up and ask you to take the Indonesian specific question, there and what Youre seeing maybe you can shed a little bit more color there.
Speaker Change: <unk> I think when it comes to consolidation it's hard to predict.
Speaker Change: Common really in terms of how they deliver market will shape up in.
Speaker Change: In the future.
Speaker Change: We've been focusing a lot in going continue to growth our delivery segment of our business. It grew at 17% on a year over year basis, we feel it's underpenetrated. So theres still ways to go in growing that business. So we're heads down executing that and Alex spoke about some of the products.
Speaker Change: We hit that we've been sharing and also through our grab bags also that youre seeing to continue to bolster that growth in the business. We also want to drive more engagement also at the same time with a set of a deliberate used products. So we're going to continue to make sure that we increase the number of users on our platform.
Speaker Change: On that on deliveries organic has been working nicely for us and we're going to continue to execute that business competitors come in competitors go as you've said also.
Speaker Change: Continuing to make sure that in this environment that we're in we have to continue to make sure. Our products are affordable. It is really important for our users and the selection also continues to widen.
Speaker Change: Which is where we've been focusing around an example around areas of bolstering our mar products as well as continuing to bring traffic to our merchants install at the same time. So that's how we see that the market landscape, whether it'll you'll see some more consolidation who knows.
Speaker Change: But we're going to continue to continue to grow our market share.
Speaker Change: Thanks, and Oh, Yes, let me pick up on Indonesia, a key market for US obviously, we can confirm that similar to the last quarter or the fourth quarter in the first quarter. We did outgrow our closest competitor once again, so I think our product led approaches is helping particularly to offset in what should have been a weaker seasonal quarter.
Speaker Change: We continued in spite of Ramadan.
Speaker Change: To grow deliveries empty use in Indonesia, we grew sequentially and particularly as I mentioned earlier on the back of a strong performance from grab Mont where people can do infant shopping on grab.
Speaker Change: I have a great example of what I was talking about earlier in terms of fine tuning costs at the same time, because our direct marketing costs within Indonesia in the same period.
Speaker Change: Declined actually 12% quarter on quarter.
Speaker Change: So that helps contribute to adjusted EBITDA as a percentage of G. M V improving quarter on quarter. Despite the fact that we outperformed on category position. So I think our intent under Indonesian business is performing very very well and will continue to stay very focused on making sure that continues.
Speaker Change: They will continue.
Speaker Change: To look opportunistically to see if they're up.
<unk> for value add and synergies into our existing businesses.
Speaker Change: To talk to about the high bar that we have.
Speaker Change: But it's worth pointing out that we have made a number of bolt on acquisitions that where we thought there was really good opportunities to have immediate impact on our.
Speaker Change: Either capabilities or to extend our ecosystem further but.
Speaker Change: Just to summarize we purchased choke the reservation application.
Speaker Change: Which we have now reproduced as native inside the grab app.
Speaker Change: So that is helping their customers and their workflow as they identify where they want to dine out.
Speaker Change: As a new capability the way that we're growing on the platform. They can now also take the next logical step which is to make a reservation.
Speaker Change: We also purchased ever rise, which is a retailer and east Malaysia, which extends the giant footprint into a nation now a nationwide, leading grocer, which is helping to strengthen the frequency and the reach of our offerings of the ecosystem in east Malaysia.
Speaker Change: And then finally G excess bank, our banking subsidiary here in Singapore purchased Validus switches.
Speaker Change: Supply invoice financing.
Speaker Change: <unk> ability, where which would have probably taken us a while to build on our own but it's a logical extension to support the small businesses that operate on our platform and to extend credit to them in a risk managed way because it's based on the.
Speaker Change: The payment credit of much larger companies in the that can operate in the ecosystem. So.
Speaker Change: Those are all great. Examples of how we are seeing in this environment that there are indeed undervalued.
Speaker Change: <unk> opportunities that we can bolt on to the onto the platform that can help us to generate value right away.
Speaker Change: And accelerate our time to market.
Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line.
Speaker Change: Yes, Chad Hardy at HSBC. Your line is now open.
Chad Hardy: Yeah. Good morning, Thanks for the opportunity can you hear me.
Chad Hardy: As you can go.
Speaker Change: Go ahead.
Speaker Change: Yeah, Yeah, Hi, Thanks management, congrats for a strong first quarter results and raising the guidance.
Speaker Change: On the user base, thanks for sharing that chart on <unk> trends.
Speaker Change: <unk> is around 16% of MDU as of first quarter.
With new product initiatives do you expect the deal to rise.
Speaker Change: But I wanted to check if there is any two three year kind of target, where you would like <unk> penetration over time due to reach and which segment between mobility and delivery do you expect.
Speaker Change: Penetration to drive.
Speaker Change: Foster.
Speaker Change: Second question was on order frequency.
Speaker Change: Can you share what's the monthly order frequency in both delivery and <unk>.
Speaker Change: Mobility segments, and how has it changed over last one year and your outlook for the same.
Speaker Change: Thank you.
Speaker Change: Thanks, Josh.
Speaker Change: Let me take your question about DTE as Youre right. We also believe that D to use can grow.
Speaker Change: And catch up the MTO space. So we are very focused on frequency and retention.
Speaker Change: We haven't disclosed targets externally for those things, but the fact that we're highlighting them on the presentation is an indication to you that is.
Speaker Change: It's something that we are focused on and that we're confident that we can make a real difference.
Speaker Change: A lot of the <unk> initiatives, whether they were viral or affordability based are designed to drive up the frequency use case, particularly on the daily basis.
Speaker Change: So basically highlighting that the hit to you today as a way of us, saying that the management team that.
Speaker Change: We're confident that we can show you some progress.
Speaker Change: Today, the D to use LTE penetration is about 16% of MCU, so lots of lots of room to grow in that space.
Speaker Change: But we also think that the MCU penetration of a to use can continue.
Speaker Change: And indeed, our <unk> as a percentage of total southeast Asia population also has headroom so.
Speaker Change: <unk>.
Speaker Change: The investment thesis is still very intact that there's lots of upside growth for us in terms of frequency and overall penetration as well.
Speaker Change: In terms of order frequency I can tell you that both.
Speaker Change: Both deliver then mobility have been improving year on year.
Speaker Change: So.
Speaker Change: The deliveries we hit a new quarterly record despite the seasonal softness so usually Q1 is weaker than the other quarters. In this particular quarter, we had post Chinese new year and Ramadan entirely in the first quarter. So it should have been a particularly challenging seasonal seasonally weak quarter, but as Peter indicated earlier.
Speaker Change: We because of the various new product launches.
Speaker Change: We have managed to manage that and get through that seasonally weak situation pretty well.
Speaker Change: And for mobility, we did share that frequency grew 5% year on year.
Speaker Change: Even though the MTO growth continue during that same period.
Speaker Change: <unk>.
Speaker Change: We're confident that we can keep this push on frequency and retention going.
Speaker Change: And we will share future updates in future data with you as we go forward.
Alex: Thank you Alex.
Thanks Scotia.
Speaker Change: Our next question comes from the line of <unk> at Mizuho Securities. Your line is now open.
Speaker Change: Great. Thank you for taking our questions.
Speaker Change: The first one on competition.
Speaker Change: It's kind of a follow up to that.
Speaker Change: Good questions right do you see market is getting more competitive given.
Speaker Change: So development of the U S tariffs and also.
Speaker Change: And any initiatives and how do you plan to navigate on that.
Speaker Change: It will be great. If you can comment on both that you are going to be an alternate separately and secondly can you also talk about your thoughts about why not integrating demo plants EBIT Morris geographic unlimited package. It yet yes. Thank you.
Okay. Thanks for yes.
Speaker Change: I guess the recent departure of one global competitive from the Thai market is let's see if the fourth departure of a competitive from a country.
Speaker Change: Over the last 18 months.
Speaker Change: And so I think it does it does signal the continued consolidation of the market.
Speaker Change: In the plant and this kind of a platform business thereon natural Richard Vince to scale. The density that you have allows you to continue to drive reliability and price performance at the same time, which over.
Speaker Change: Over time means that consumers and partners will will prefer the platform that we are starting to see this.
Speaker Change: Smaller players.
Speaker Change: <unk> still exist.
Speaker Change: Those with weak balance sheets may struggle to raise money in this kind of a macro environment.
Speaker Change: So that may that maybe to answer your question about the environment and how that might impact competitive behaviors.
Speaker Change: I imagine that shareholder.
Speaker Change: Shareholders will be less inclined to subsidize kind of promotion driven.
Speaker Change: Promotion driven campaigns.
Speaker Change: And we will be looking for more sustainable returns.
Speaker Change: We continue to hold the category leadership position across mobility and deliveries.
Speaker Change: You asked about you asked us to talk about that situation separately.
Speaker Change: But to be honest, we don't think about it separately. We are we do like to think of our relationship with our <unk>.
Speaker Change: Our customers and our partners drive our partners is being a multi vertical where we can really help them to optimize our relationship with him and Thats why grab on limited is being expanded to include mobility benefit.
Speaker Change: And also we have launched a VIP service, which reflects.
Speaker Change: The relationship the very special relationship we have with our most loyal highest spending customers across both mobility and.
Speaker Change: And deliveries.
Speaker Change: And increasingly we will expand those that type of multi vertical thinking about the relationship to financial services as well.
Speaker Change: And now that we have the banks in three markets and of course, a very vibrant and fast growing.
Speaker Change: <unk> financial Fintech business across all markets.
No.
Speaker Change: We fully agree with you that.
Speaker Change: Mobility is a key part of service grab on limited relationship going forward.
Speaker Change: I would think the in terms of the.
Speaker Change: The competitors that we see Darrin there are there are quite often smaller local competitors in each market lost there's a number of.
Speaker Change: Smaller <unk>.
Speaker Change: A multimarket competitors most of those are singles ethical therefore, they they don't have that many levers that we have to.
Speaker Change: To grow the relationship with our customers and partners.
Speaker Change: And in the market, where we do have a multi vertical competitor as I mentioned earlier. We are we are growing our CPE share for the second quarter in a row at the same time, expanding our margin so I feel like.
Speaker Change: We respect our competitors, but we.
Speaker Change: We feel like the formula that we have where we continue to invest in multi vertical relationships.
Speaker Change: We are continuing to improve the technology and the reliability and pricing of out of our network.
Speaker Change: We feel that we can concentrate on.
Speaker Change: Improving those services and growing through.
Speaker Change: Through the relationship with our consumers and partners.
Speaker Change: Other than getting too distracted by competitive.
Speaker Change: Great. Thank you so much.
Speaker Change: Great.
Speaker Change: Our next question comes from the line of BVA going higher.
Stanley: Stanley Your line is now open.
Speaker Change: Thank you very much. Good morning. My first question is on the margin drivers for this quarter could you elaborate the drivers for the deliberate margin improvement besides advertising and specifically on grab Mod how big is this now and how are the unit economics are what is the delivery business.
Speaker Change: Also on the margin question just on mobility, we did see a year on year drop in margin could you just help us understand the reasons for that.
Speaker Change: Questions on the Fintech business. The loan book growth was the what's going on here about 5% to 6% quarter on quarter and you've also noted higher credit provisions as the notebook is scaling.
Speaker Change: Could you comment on what the NPL currently is and what are the indicators that are in track to monitor credit quality are you also being a bit more consultative unknown disposals going forward and given that you had some traction now in Singapore.
Speaker Change: What kind of target markets are you attracting for these loans.
Speaker Change: Alright, David you've got a lot of questions. There. So let me take the margin ones and Alex maybe you can take the fintech on the loan book since you're so close to it also you've been seeing that portfolio growing I'll look on the margin side on the first question was around deliveries look at there's a lot of product mix that goes on.
Speaker Change: In the first quarter.
Speaker Change: And you had a question also how big is mark as a business of valves. Marty is still roughly is still less than 10% about deliveries GMB, but having said that it's growing much faster also than our other product portfolio, we didnt deliveries.
Speaker Change: The margin in food continues to be very healthy for us.
Speaker Change: As a business overall.
Speaker Change: Mot also was a star performer in the first quarter for us that we spoke about earlier. So there's a lot of product mix that you saw coming in into the quarter. In terms of margin. You saw also incentives were relatively flat on a year over year basis for us.
Speaker Change: And that helps our help some of the margin growth in our business and our advertising also was one 7% penetration rate, but also contributed to some of the margin improvement that you saw in the business. So again very much is all moving pieces DVR product mixes is part of that which is really important and youll see the fluctuations.
Speaker Change: On this product mix from quarter on quarter, depending depending also on the seasonality of the business itself mobility margin was lower on a year over year basis.
Speaker Change: And that was for us.
Speaker Change: Intentional to some degree because there was a critical part of that we wanted to really make sure we build up which is on the driver side. If you look at where the level of incentives was higher for US deliveries was flat in terms of mobility into the incentive was around mobility.
Speaker Change: And and what we saw in Q1 was at the number of rides with just outpacing the number of growth that we saw in the GMB. So we are seeing a 25% rides increased on a year over year basis versus a G. M V of a 17% growth on a year over year basis, and we sold.
Speaker Change: <unk> also growing at over 20% on a year over year basis. So we wanted to make sure that we have enough supply of drivers out there.
Speaker Change: To make sure that reliability continues to be high and also affordability for our customers also continues to be maintained at the same time, so and that's why you saw some of the some of the degradation in terms of margin expansion for us in the mobility space Alex.
Speaker Change: Alex on the Fintech, yeah, Thanks, Peter and I would just comment that on.
Speaker Change: Advertising was a big drive as you said <unk>.
Speaker Change: It is particularly gratifying that in a weeks what is normally a weak quarter for advertising, we managed to increase our penetration of <unk> for ads from one three to one 7% on a lot of that which I'm delighted to talk to you about is that small merchants that usually don't have access to these kinds of sophisticated tools.
Speaker Change: Really flocking to the self serve capabilities.
Speaker Change: In the quarter.
We had a growth of 49% year on year of the self serve adoption of the advertising platform.
Speaker Change: And the average spend by those active advertisers on the self serve platform increased by 30%. So that shows that those tools are really working they're getting and the return on advertising sales, which helping them grow their businesses, which in turn makes the marketplace, even more healthy and then the other the other driver for improved margins was the direct marketing performance as I mentioned.
Speaker Change: I gave you. The example for Indonesia, but it is true across the in all the countries that are direct direct marketing accuracy and performance is improving because of the use of AI and how we do the targeting.
Speaker Change: Okay, so quickly onto the fintech.
Speaker Change: Yes. This this last quarter Q1 was the first quarter in which we had loan products from all three banks in the marketplace. So they've just started to grow those loan books.
Speaker Change: We are not seeing any deterioration yet in the loan quality so.
Speaker Change: NPL stable quarter on quarter. However.
Speaker Change: However, as we grow the volume of loans, we do want to make sure the balance sheet is reinforced so.
Speaker Change: So we are we're running expected credit losses through the P&L in order to strengthen the balance sheet and so that's why you see.
Speaker Change: The small increase in the.
Speaker Change: Overall loss for the financial services segment, because it's driven by that big buildup in an ECL on the balance sheet.
Speaker Change: Growing in tandem with the with the loan book, which is about 56% year on year. So you can see why that would be would be a large number.
Speaker Change: So we will maintain that prudent stance. We obviously, it's a great time for us to drive growth now that we have the product in the market, but we are aware that the credit models need to develop and mature. So we're running those now and we will keep monitoring we'll keep monitoring that but for the time being we're very happy with the performance. We're on track with our plan and we do not.
Speaker Change: See a deterioration in the nonperforming loans.
Speaker Change: Thank you Alex Thank you Peter.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Mark Mahaney at Arthur Evercore. Your line is now open.
Speaker Change: Hey, Thanks, I just wanted to ask kind of a separate line.
Speaker Change: Your line of questioning has to do with these AAV partnerships I think there is.
Something like Mou's with for autonomous vehicle companies that you've signed.
Speaker Change: Just I know, it's early and it will be very early days, but just talk about the anticipated benefits from these when might we see pilot deployments in anything at all you could share about the economics. Thank you very much.
Speaker Change: Thanks, Mark, Yes, I think.
Speaker Change: We are very excited also about the potential for avs. That's why we wanted to lean into this space and take a very early start is working with partners. You can see a lot of people into work with us I think because our leading position in the region. Obviously makes us an attractive partner, but also the fact that we've leaning we're leaning into AI at the <unk>.
Speaker Change: AME time so.
Speaker Change: I think we're hopefully a knowledgeable partner for them to to to work with also our intention is to is to really be at the forefront of the exploratory use of this of this new technology.
Speaker Change: We I won't give you a timeline for pilots because we obviously have to in discussion with various governments too.
Speaker Change: To get that going but.
Speaker Change: Our intention is to be at the absolute forefront because we want to understand what is what it's going to take to make this successful.
Speaker Change: Obviously fleet operations is something we're very familiar with because of the way you manage your own fleets today or what will fleet operations look like for <unk>. For example, we're also at the forefront of insurance you know we have our own general insurance license.
We've been distributing insurance in every market for some years now and that's a very successful profitable and growing business.
Speaker Change: But also that helps us to become a good partner for these companies also in understanding what the insurance capabilities that would be necessary to make them successful also.
Speaker Change: So I would say as you said early days, but you can think of grab as one of the companies globally, that's really leaning into this space.
Speaker Change: Thank you very much.
Speaker Change: Our next question comes from the line of John Scholl.
Speaker Change: Barclays. Your line is now open.
John Scholl: Thank you very much for taking my questions.
Speaker Change: And a lot of questions have been asked I do have two follow ups. Please.
John Scholl: The first is a factor of seeing Tac.
John Scholl: So I understand your model is slightly different from two of your peers.
John Scholl: In the region <unk> Tac.
John Scholl: But it wont reappear.
John Scholl: Trc is making a lot of money and the other is making a little bit of money. So could you perhaps.
John Scholl: Elaborate a bit sort of cast as a difference in in our models.
John Scholl: You are using.
John Scholl: Adopting fintech that creates sort of a near term losses in golfing tag.
John Scholl: So that'll be helpful and relate to <unk> Tec also.
John Scholl: Is that I believe you have talked about the revenue growth reacceleration in the second half and could you please sort of.
John Scholl: Reiterate and remind us what are some of the key drivers behind that.
John Scholl: Behind that are the look my second question is back to the food delivery business I think you talked about in your prepared remarks about.
John Scholl: Like food Slash restaurant discovery.
John Scholl: If you can share with us some of your early thoughts around the monetization of this kind of in store Fuji restaurant discovery business as some of your global peers seems to be making quite a bit of money in that particular.
John Scholl: Second line.
John Scholl: And then on the margins for food I know you have full pass percent target.
John Scholl: Given you have had a lot of success in bringing that to 2% now.
John Scholl: Could you remind us that 4% as sort of two to three year Takeda trajectory or that's really really a longer term target.
John Scholl: Thank you so much.
John Scholl: Thanks, John Let me take the first two and I'll, let Peter take the last one on.
John Scholl: Margin expectations so.
Peter: You are right our Fintech model is different than the two peers that I think are referring to.
John Scholl: Okay.
John Scholl: That we have we have focused initially on supporting partners on the platform.
John Scholl: And is that we know very well, where we have both a.
John Scholl: Both our credit underwriting.
John Scholl: Advantage, but also our collections advantaged because of the fact that you're providing to them and therefore, we completed the debt repayment from them and that's one of the reasons why you see.
John Scholl: Our npls are very stable.
John Scholl: And we've been able to manage them very accurately.
John Scholl: We.
John Scholl: We want that we want to extend that philosophy, as we think about how to lend to consumers as well. So we our credit models are most accurate where we we know the most about the consumer also so the same philosophy apply.
John Scholl: That means that we have spent some time developing and deepening the credit modeling for consumers.
John Scholl: And then the borrower the lending to the consumer market you can see us starting to do that as we grow our lending, particularly through the banks because the banks have access to even deeper data and obviously you have a lower cost of funds advantage as well.
John Scholl: So in 2025, and increasing proportion of the lending will be to consumers.
We'll continue to deepen and enhance the relationship we have with lending to partners I would say our penetration of drivers is the highest.
John Scholl: We're still improving the models, there and working on ways to.
John Scholl: Militate smaller quanta and.
John Scholl: And different tenures to more.
John Scholl: More drivers, but I think that is starting to plateau.
John Scholl: And therefore.
John Scholl: That will grow only at the rate at which the number of drivers.
John Scholl: And the GMB they support and it comes onto the marketplace in terms of merchants, we're much less penetrated and as we develop more and more capabilities for merchants.
John Scholl: Like hunting on payments enhancing our dine out discovery, which is the second part of your question that allows us to see more of the of the GMB and allows us therefore to extend our credit models and extend more lending to them.
John Scholl: And then as I as I mentioned, the consumer models are the ones, which we are very focused on developing now we are very conscious of the.
John Scholl: The macro environment for that one so we will do it in a prudent way, but there will be an increase in the proportion of lending to consumers during the year.
John Scholl: In terms of profitability.
John Scholl: Our fintech business is already profitable.
John Scholl: Like like the peers that you mentioned.
John Scholl: The increase in the losses is due to the fact that the banks are basically all launching at the same time, particularly Malaysia, and Indonesia, which have only just launched their new products last quarter. So that I think that's to be expected is inline with our plan.
John Scholl: So.
John Scholl: The investment in starting a new bank.
John Scholl: Is is there and it's something we've been flagging over the last several.
John Scholl: He is.
John Scholl: But we are retaining our.
John Scholl: Our guidance that the bank's overall, so all three of the banks collectively will be profitable by the fourth quarter of 2026. So it's very much in line with our investment plans for getting those banks up and running.
John Scholl: Moving onto your second question Dino discovery allows us to tap into a much larger tam than food delivery.
John Scholl: So although with the CPE later on food delivery.
John Scholl: We all know that.
John Scholl: Most restaurants will make the majority of the GMB from from having people dine in at their stores.
John Scholl: We want to be a part of making them successful in attracting people into the stores and they recognize that our relationship with consumers.
John Scholl: On a increasingly frequent and loyal basis is a very great asset for them to do that.
John Scholl: And so we've been extending the capabilities that we have to enhance.
John Scholl: Dine out discovery in line with that kind of marketing.
John Scholl: <unk> marketing relationship that we have with the consumer we have a lot of data on our consumer reviews for example, or for delivery, but we can easily expand that to the adjacent space of consumer reviews for dining out.
John Scholl: The merchants are keen on working with us in terms of creating deals to encourage consumers to two to eat with them and as they do that we uniquely can close the loop on those campaigns that they put out there with the first party data that we have linking back to loyalty plans or payment.
John Scholl: That allows them to establish that those consumers come in as they redeem those discounts.
John Scholl: Or is it.
John Scholl: It's a fully transparent closed loop advertising performance.
John Scholl: Our dine out in exactly the same way as we delivered that for delivery in the past so the merchants understand very well what the proposition is and they seem to like it.
John Scholl: So it fits beautifully with what we do already on payments and so it will be in hunting.
John Scholl: The payments capabilities, we have for merchants and in hunting the loyalty capabilities as well all of which help us close that loop.
John Scholl: <unk> opportunity. Therefore is primarily driven by an increase in the Tam against which we can generate advertising dollars and that's a very clear partnership model that merchants are used to and that we will.
John Scholl: That we will push where the very early stages of this so.
John Scholl: And in many ways this ramp up stages in investment stage.
John Scholl: And so, but we will begin to monetize in future years, rather than in 2025.
John Scholl: And gentlemen, your question on the margin turf assured you alluded the 4% plus timeframe et cetera look we're not really tied to any specific timeline to get to the 4%.
John Scholl: The good news is that in certain countries, we're already seeing 4% plus so we know how to get there.
John Scholl: We are managing the business for our food is two four absolute dollar expansion EBITDA expansion versus a certain margin percentage because we see the opportunities in growing the food business even more.
John Scholl: We talked a lot about daily transacting users to monthly transacting users today and that's just another catalyst for us if we got to do more in the food section for us to actually grow into their into the Tam.
But we still have a long ways in terms of penetrating in all the countries that we're in here today, especially around also.
Speaker Change: The all Alex talked about when it comes to dine out capabilities also as well as complementing that with Mark. So that's how we view our margin if our food business.
John Scholl: Great Alright.
John Scholl: Thank you John for your question was helpful.
Speaker Change: I appreciate it. Thank you, but we are up against the hour here. So I want to thank all the all the calls here why don't we know we had some technical difficulties earlier on so I don't know how much off Anthonys opening remarks was captured maybe if I can just sum it up here in the next 60 seconds and I'll close the call here.
John Scholl: It was a great set of results for Q1.
John Scholl: And this is despite of the seasonal headwinds.
John Scholl: And now as we entering in the second quarter. What we are seeing is the continuing sequential growth you know across all our businesses today and we expect to maintain this momentum of growth from 2024 and to 2025.
John Scholl: EBITDA guidance upgrade also it's a reflection of our confidence in.
John Scholl: Shaving the strong performance, even after 13 consecutive quarters of EBITDA improvement.
John Scholl: A lot of questions today around macro and slowing down on demand et cetera, but we've addressed those questions. Our business. We built this business to be counter cyclical.
John Scholl: And we are well position to weather any down downturn or any slowdowns of economies and the investments that we're making around the product set with some of you got to see also in grab bags. A few weeks ago is an example of where we're going to continue to double down we've got more products that we need to bill ear across their food as well.
John Scholl: Matt and mobility, and the Fintech side, especially on our loan book and also making our products more affordable, which is really important, especially if we are going to see some economic.
John Scholl: Input implications down the line here, but we're very confident in what we're seeing so far and we're executing also right on strategy.
John Scholl: So in closing I.
John Scholl: I want to thank all the partners and the merchant drivers that we that we continue to support and they are supporting us. So thank you very much and also to all our customers who continue to use our product day in and day out we are continuing to see engagement, which is great to see and also we kind of DTC.
The lifetime value of customers going up and also it's still thank you for all of our shareholders for your support.
John Scholl: On our business so.
John Scholl: The IR team and myself will be on the road again over the next few weeks I'll be on the East coast.
John Scholl: Boston and New York, Alex will be in Hong Kong in a couple of weeks' time, So would love to get together with you all and I'm sure you have more questions that we can dialogue on the thank you for carving out the hour and with this I'll close the call till next quarter. Thanks, everyone.
John Scholl: Okay.
Speaker Change: Thank you ladies and gentlemen, this concludes <unk> first quarter 'twenty to 'twenty five earnings conference call.
John Scholl: For your participation you may now disconnect.
John Scholl: Yes.
John Scholl: Sure.
John Scholl: Yes.
John Scholl: Sure.
John Scholl: [music].