Grab Holdings: Time to Grab More of This Rideshare Beast

Key Points

• Grab is the largest rideshare operator in Southeast Asia, with only a 5% penetration of its nearly 700 million-person population.
• In addition to ride-hailing, Grab’s super mobile app offers food, courier and grocery delivery, gift cards, insurance, rewards, loans, digital banking and payment services.
• Grab achieved its first full year of positive group-adjusted EBITDA of $313 million.

Grab Holdings Ltd NASDAQ: GRAB is the largest rideshare operator in Southeast Asia, serving nearly 44 million monthly transacting users (MTUs), also known as "paying users," across eight countries, including its base in Singapore, Indonesia, Malaysia, Thailand, Vietnam, Cambodia, Myanmar and the Philippines.

Computer and technology sector leader Uber Technologies Inc. NYSE: UBER sold its Southeast Asia rideshare business to Grab in March 2018 in exchange for a 27.5% stake in the company, which is now speculated to be down to 12.5%.

The Southeast Asia population is nearly 700 million people, and Grab has only penetrated 5%, which leads to a long runway for growth, which is a compelling prospect for growth investors.

Grab Is Now a Super App With Multiple Streams of Revenue

Parlaying off its rideshare business, Grab fosters the network effect by taking a page out of Uber’s playbook and adding more services. It’s transformed a rideshare app into a mobile super app that offers rideshare, food, courier and grocery delivery, gift cards, insurance, rewards, loans, digital banking and payment services. Grab appropriately calls itself the “The Everyday Everything App.” Business is thriving, as evidenced by its fourth quarter of 2024 results.

Grab’s Businesses Were Firing on All Cylinders in Q4

For the fourth quarter of 2024, Grab posted a profit of a penny per share, which matched consensus estimates. Revenues rose 17% year-over-year (YoY) to $764 million, beating consensus analyst estimates of $762.08 million. Its various services experienced double-digit growth across the board:

• On-demand gross merchandise value (GMV) rose 19% YoY to $5.03 billion. On-demand represents its Mobility and Delivery segments.
• Group MTUs, paying users, rose 17% YoY to 43.9 million.
• Partner incentives rose 18% YoY to $204 million.
• Consumer incentives rose 37% YoY to $308 million.
• The loan portfolio grew 64% YoY to $536 million.

Operating profit was $2 million, which represents a $48 million YoY improvement. Group adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $97 million, an improvement of $61 million YoY. Regional corporate costs fell to $87 million, down from $100 million last year, as the company continues to optimize its cost base, with staff and variable costs falling 15% YoY.

Grab closed the year with $5.8 billion in net cash liquidity, helped by an increase in customer deposits in its digital banking business. Adjusted free cash flow was $61 million in Q4 and $136 million for the full year 2024. Revenues for the full year 2024 grew 21% YoY to $2.8 billion with an adjusted EBITDA of $313 million.

Grab Issues Full Year 2025 Guidance Implying 19% to 22% YoY Growth

For its 2025 full-year forecast, Grab sees revenues of $3.33 billion to $3.40 billion, with a midpoint at $3.365 billion. This represents an annual growth rate of 19% to 22% at a midpoint of 20.5%. Adjusted EBITDA is expected to be between $440 to $470 million, with a midpoint of $455 million and a growth of 41 to 50%, representing a midpoint of 45.5%.

The Q4 earnings results were robust enough to trigger a breakout attempt on the daily symmetrical triangle but faced profit takers, causing shares to get pulled right back into the triangle. The immediate Fib supports are $4.41, $4.26 and $4.10.

Upbeat CEO Comments and Only a 5% Penetration

CEO Anthony Tan pointed out that Q4 was the strongest quarter ever and achieved its first full year of positive group-adjusted EBITDA of $313 million.

There is much growth runway, as Tan points out. “We believe that there is plenty of headroom to drive organic growth in Southeast Asia, specifically in mobility, food, and groceries. 

The addressable market is still significantly under-tapped. We've shown and proven we've had an all-time high of 44 million MTUs and this represents about 17% growth year-on-year, but we are still only serving 1 in 20 Southeast Asians.

So, we are actually just scraping the surface in terms of users that we can out-serve across this region.“