Caixin
Nov 12, 2021 06:32 PM
BUSINESS

Grab Reports $988 Million Loss as Lockdowns Hurt Ride-Hailing

(Nikkei Asia) — Southeast Asian unicorn Grab Holdings Inc. on Thursday reported a net loss of $988 million for the July-September quarter, worsened from a $621 million loss a year earlier, as heightened Covid-19 control measures in the region hit its core ride-hailing business.

A prominent startup in the region, the Singaporean digital tech group offers ride-hailing, delivery and financial services under what it calls a “superapp” strategy. It operates in eight countries, including Singapore, Malaysia, Indonesia, Vietnam, Thailand, the Philippines, Cambodia and Myanmar.

On Thursday, Grab also said its planned merger with a special purpose acquisition company, U.S.-based Altimeter Growth Corp., “continues to progress and is expected to close in the fourth quarter of 2021.” The deal valued Grab at nearly $40 billion and would enable the company to be listed on Nasdaq.

Grab explained that a large part of the big loss for the quarter stems from noncash expenses such as accrued interest, stock based compensation and fair value changes on investments.

But during the three months through September, many Southeast Asian governments imposed strict measures to limit the spread of coronavirus, providing “a challenging operating environment,” the company said in a statement.

Quarterly revenue decreased 9% to $157 million “as a result of the expected decline in mobility due to the severe lockdowns in Vietnam,” the company said.

Ride-hailing business revenue declined 26% to $88 million, while revenue for the delivery business grew 58% on the year to $49 million. Revenue for financial services, such as its e-wallet, increased 11% to $14 million. Grab's accounting revenue is presented net of incentives for drivers, merchants and consumers. Consumer incentives for the quarter doubled to $271 million, which suggests a competitive business environment in the region.

Its gross merchandise value — the total value of transactions made through Grab’s platform — increased 32% to $4 billion in the quarter, due to expansion in its delivery and financial services.

“Despite severe lockdowns in Vietnam and heightened restrictions across the region in the third quarter due to COVID-19, we executed well on our superapp strategy and delivered strong growth,” CEO Anthony Tan said in the statement.

“With recovery in sight, and the gradual reopening of economies providing tailwinds to our business, we are doubling down on investments that will help us capture a greater share of the opportunities in front of us and open up new addressable markets for Grab, such as groceries.”

Separately, Tan told an investor webcast that the company expects major recovery for the ride-hailing business in the fourth quarter, especially in Indonesia, Malaysia and Vietnam, as vaccination rates increase in the region.

This story was first published in Nikkei Asia.

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