Grab Holdings Limited

Ladies and gentlemen, thank you for joining us today. My name is Bailey, and I'll be your conference operator for this session. Welcome to GRAB's fourth quarter and full year 2022 earnings results call. After the speaker's remarks, there will be a question and answer session. I will now turn it over to Vivian Tong to start the call. Please go ahead when you're ready.

Good day, everyone, and welcome to GRAB's fourth quarter and full year 2022 earnings call. I'm Vivian Tong, head of U.S. investor relations at GRAB. And joining me today are Anthony Tan, Chief Executive Officer, Alex Tunke, Chief Operating Officer, and Peter Owee, Chief Financial Officer. During the call today, Anthony will discuss our key strategic and business achievements, followed by Alex, who will provide operational highlights. And Peter will share details of our fourth quarter and full year 2022 financial results. Following prepared remarks, we will open the call to questions where Anthony, Peter, and Alex will respond to the Q&A. As a reminder, today's discussion contains forward-looking statements about the company's future business and financial performance. These statements are based on our beliefs and expectations as of today. Actual events and results could differ materially due to a number of risks and uncertainties, including macroeconomic, industry, business, regulatory, and other risks, which are described in our Form F-1 registration statement and other filings with the SEC. We do not undertake any obligation to update any forward-looking statements. The discussion today also contains non-IFRS financial measures, which should be considered together with, rather than as substitutes for, IFRS financial measures. A reconciliation of non-IFRS to IFRS financial measures is included in this quarter's earnings materials. For more information and additional disclosures on recent business performance, please refer to our earnings press release and supplemental presentation for a detailed fourth quarter and full year 2022 financial review, which can be found on our IR websites. And with that, I will turn the call over to Anthony to deliver his opening remarks.

Thank you for joining us today. 2022 was a year of relentless execution, and we are pleased to have closed it on a strong note with solid financial fundamentals while maintaining category leadership in mobility and food deliveries. We had a single objective in 2022, and that was to grow sustainably and efficiently to build our business for the long term. To this end, our teams executed on three main areas. First, we focused on rebuilding our supply to capture the momentum in our mobility business. We worked on initiatives to improve the productivity of our driver partners as well as launch more affordable services. Second, we focused on product innovation to make our ecosystem stickier and more efficient by expanding services like Grab Unlimited. This also generates more recurring revenues to our ecosystem. Third, we reduced our cost to serve by optimizing incentives and our cost structure and streamlined our GrabFin business. As a result, we accelerated top line growth and narrowed our losses significantly during the year, while at the same time reduce incentives as a percentage of GMV. Throughout the pandemic and in 2022, we have maintained our category leadership in food deliveries and mobility. As COVID eases, we have continued to maintain and are committed to maintaining our category leadership. For the fourth quarter specifically, I'm pleased to report that on a year-on-year basis, group revenue rose over 300%. while we reduced our losses by 64% from the same period a year ago. We also saw two consecutive quarters of positive segment adjusted EBITDA margins for deliveries, which expanded to 2% of deliveries GMV in the fourth quarter. Mobility also rebounded strongly and continues to generate steady cash flows. Our 2022 results would not have been possible without the hard work of our grabbers and the millions of drivers and merchant partners who operated with resilience and agility to deliver the best possible service to our consumers. With 2022 firmly in the rearview mirror, we look towards 2023 with confidence and optimism. While there will be macroeconomic uncertainties ahead, we are laser-focused on accelerating our path to profitability and growing our ecosystem in a way that is sustainable and resilient. We're also optimistic on a recovery of tourism in the region and how that can benefit our business. And ultimately, our actions in 2022 and our plans for 2023 make us confident that we can achieve group break-even on an adjusted EBITDA basis in the fourth quarter of 2023. This is much earlier than our prior guidance of achieving group break-even in the second half of 2024. In the long run, we remain convicted in Southeast Asia's growth story. There is growing consumption in the region, a population that craves on-demand digital services, and governments who recognise digitalisation as an engine of economic growth and who are open to co-creating new ways of serving our communities together. I'll now hand over to Alex who will cover our fourth quarter operational highlights.

Thank you, Anthony. I would like to start by sharing the business and operational highlights for mobility, which recorded strong year-on-year revenue and GMV growth in the fourth quarter. This growth came on the back of a strong recovery in demand, with post-COVID reopening continuing across the region, in addition to our own efforts to increase supply to keep pace. We saw a particularly strong rebound in airport rides, contributing to our mobility segment. In the quarter, airport rides registered growth of 244% year on year and 14% quarter on quarter. Overall, our mobility GMV is now back to 74% of pre-COVID levels in the fourth quarter of 2022. So there is still plenty of headroom for growth. In the quarter, we continue to focus on bringing new drivers onto the platform and improving the productivity of our existing drivers. We did this primarily in two ways. First, we made our onboarding journey even more seamless, making it easier for driver partners to join us. This resulted in a 71% year-on-year increase in the number of drivers onboarded in the fourth quarter relative to the same period a year ago. Second, our efforts to improve productivity, such as our new shift option for drivers, also bore fruit. We saw driver wait times at merchants being reduced by 27% year-on-year and 12% quarter-on-quarter. Our Grab navigation app within Grab Map has also shown strong results. Based on data from driver partners who have utilized Grab Navigation across several cities last year, we saw a 7% improvement in trips per transit hour for mobility and a 3% improvement in fulfillment rates. We also launched an updated version of Grab Share in the Philippines and recently in Singapore to provide more affordable mobility options for our users while optimizing supply. In addition, we will continue to work with governments to increase our pool of driver partners. For example, this month, the Philippines government announced that they would be opening up 100,000 more two-wheel and four-wheel licenses for all interested transportation network companies in the country. Looking ahead, we are positioning Grab to benefit from the broader Southeast Asian reopening, especially from the rebound in the tourism sector. For example, we recently launched a partnership with WeChat to provide enhanced services to Chinese travelers, and we rolled out pre-installation packages for China-based Android phones, which enables users to download the Grab app prior to arriving in Southeast Asia. So we are hopeful that the rebound in tourism arrivals to the region will drive stronger demand for our mobility services. Moving into our deliveries business, In the fourth quarter, we continued to focus on the profitability of our delivery segment, resulting in strong year-on-year and quarter-on-quarter margin improvement. Deliveries posted segment-adjusted EBITDA margins at 2% in the fourth quarter. This puts our delivery segment firmly on the path to achieving our steady-state margin assumption of 3% plus. At the same time, we maintained our category leadership in food deliveries, with our focus on driving high quality transactions, lowering our cost to serve, and continuously improving our quality of service for our users. During the quarter, we continue to roll out our Grab Unlimited subscriptions with more targeted incentives to augment user spending habits. Grab Unlimited is now available in all six of our core markets, accounting for more than a quarter of our deliveries GMV in the fourth quarter. Grab Unlimited subscribers transact and spend over three times more than non-subscribers for food deliveries. This is a promising start for Grab Unlimited, and over time we see more opportunities to evolve this subscription program as we deepen and broaden our relationship with our subscribers. As a result of these initiatives, we managed to reduce our deliveries incentive spend to 12% of GMV in the fourth quarter from 18% a year ago. In our non-food deliveries business, we are focusing on delivering the best value proposition for our customers in a sustainable way. In Malaysia, where we own Jaya Grocer, we have continued to enhance our groceries marketplace to bring the convenience of on-demand grocery delivery to more consumers in Malaysia. In the second half of 2022, we also exited dark stores and grab kitchens operations in most countries. While these closures had an impact on GMV in the fourth quarter, we also managed to reap significant cost savings from the move, which improved our overall deliveries profitability. Looking ahead, we will continue to improve our delivery segment profitability without sacrificing our category leadership position in food delivery. Next, onto financial services. In the quarter, we posted strong revenue growth on the back of higher contributions from our lending business and lower incentives as a percentage of GMB. The strategic refocus we initiated in the second half of 2022 to primarily serve Grab's ecosystem is already showing results. GrabFin's cost base fell year on year and on a quarter-on-quarter basis. Our lending business continues to grow and serve more driver and merchant partners. In the fourth quarter, the value of loans dispersed rose 57% year-on-year. Last month, we also announced strategic payment partnerships in Vietnam and the Philippines. These partnerships integrate our partners' e-wallets onto our platform, giving users more e-payment choices while optimizing our cost of funds in those countries. For Digibank, We have some promising signals from our limited launch in Singapore. During this initial period, we can only operate within the 50 million Singapore dollar deposit limit set by the regulator in Singapore. But on a positive note, we are not far from this deposit limit already with no acquisition costs to date. We were also pleased to see strong ecosystem linkages with 80% of GXS users linking their GXS accounts to Grab or to a partner e-wallet. Beyond deposits, GXS is expanding into lending, soft launching a credit product to Grab and GXS ecosystem employees earlier in January 2023. These developments in Singapore are encouraging signs as we prepare for the launch of our Indonesian and Malaysian digibanks later this year. Lastly, our enterprise segment continues to grow, with segment-adjusted EBITDA growing double digits year on year. This year, our teams continue to build out our advertising self-service platform that will allow more merchants to enjoy our ads offerings. We believe our advertising platform, together with the breadth of our ecosystem, could help many small merchants grow faster by reaching new customers. Over time, this will incrementally accelerate our ads business growth and margin contribution to our overall business. In closing, for 2023, to echo Anthony's opening remarks, we are focused on accelerating our path to profitability and driving sustainable growth for the long term while maintaining category leadership in mobility and food delivery. With a disciplined stance on costs, driving product innovation, and strengthening cross-vertical synergies to reduce our cost to serve, we are confident we can get to group break even ahead of schedule. I will now turn the call over to Peter to review fourth quarter and 2022 financials. Thanks, Alex.

We're pleased to report another strong set of results to close out 2022 on a high note. We exceeded our guidance for both revenues for the full year and adjusted EBITDA for the second half. We grew our GMV by 24% for 2022, which is in line with our guidance range of 22% to 25% year-over-year. Revenues in the fourth quarter grew strongly by 310% to $502 million and grew 346% on a constant currency basis. Four-year revenues grew by 112% to $1.4 billion, or 125% growth on a constant currency basis. Both our fourth quarter and four-year reported revenues were record highs for the company. The strong revenue growth came from all segments of our business. For mobility, revenues grew 78% in the fourth quarter and 40% in 2022, underpinned by the continued recovery in rate-hailing demand and our efforts to improve supply across the region. For deliveries, revenues grew strongly from contributions from JL Grosser and lowered incentives as a percentage of GMB. There was also a change in business model for certain delivery offerings in one of our markets to address certain licensing requirements, where we transitioned from being an agent, arranging for delivery services to our principal model. To note, if the model change had not taken place in the fourth quarter, our fourth quarter group revenues would be $434 million with four-year group revenues of $1.37 billion, implying growth of 255% and 102% respectively. Revenues for financial services for the fourth quarter came in at $28 million from a negative $1 million in the same period last year. And it grew 166% on a full year basis, attributed to greater optimization of our incentive spend and our increased focus on lending. For enterprise and new initiatives, revenues grew 10% in the fourth quarter and 37% in 2022 on the back of a stronger contribution from advertising. Turning over to GMV, for the fourth quarter, we recorded growth of 11% to reach $5 billion. And for the full year 2022, GMV grew 24% to reach around $20 billion. On a constant currency basis, our fourth quarter GMV grew 20%, while full year GMV grew 30%. We saw strong year-over-year growth in mobility GMB and financial services TPV in the fourth quarter, coming in line and above our guidance ranges respectively. Deliveries GMB in the fourth quarter came softer than guidance range, with GMB declining 4% year-on-year, but it grew 5% on a constant currency basis. The softness came as a result of our continued focus to drive a more sustainable and profitable deliveries business as we substantially improved our segment EBITDA margins quarter on quarter. Notably, we continued to maintain our category leadership position in food deliveries while reducing consumer incentive spend. Moving on to segment adjusted EBITDA. We reported total segment adjusted EBITDA of $112 million in the fourth quarter and $65 million for the full year. In the fourth quarter, margins improved 477 basis points year on year and 131 basis points quarter on quarter. A key driver of this was the reduction of incentives as a percentage of GMB, which declined to 8.2% from 13% in the same period last year. In deliveries, segment adjusted EBITDA was $47 million in the fourth quarter and negative $35 million for the full year. Fourth quarter margins in deliveries expanded by 550 basis points year on year and 163 basis points quarter on quarter to reach 2% of deliveries GMV. This was a substantial improvement after achieving break even in the prior quarter driven by greater optimization of incentive spend. For mobility, Segment adjusted EBITDA was $152 million in the fourth quarter and $494 million for the full year. Fourth quarter margins improved year on year by 312 basis points to 13%. Going forward, we continue to maintain our steady state margins of 12% for mobility, and we will aim to reinvest incremental margins to grow into under-penetrated cities and improve platform efficiency. For financial services, segment adjusted EBITDA was negative $93 million in the fourth quarter and improved 16% year on year. For the full year, segment adjusted EBITDA was negative $415 million. As a percentage of TPV, fourth quarter margins for financial services improved from negative 3% to negative 2% as we continue to streamline our cost base for graphene and to focus on driving ecosystem transactions. Group adjusted EBITDA in the fourth quarter was negative $111 million, while the four-year group adjusted EBITDA was negative $793 million. Group adjusted EBITDA margins in the fourth quarter improved by 454 basis points year-on-year and 94 basis points quarter-on-quarter. which sets us up on the right path towards achieving group adjusted EBITDA break even. For the fourth quarter, our regional corporate costs was $223 million as compared to $192 million in the same period a year ago and $208 million in the prior quarter. Our regional corporate costs for the full year was $858 million for 2022 as compared to $717 million in 2021. On a year-on-year basis, regional corporate costs in the fourth quarter were relatively flat, excluding a non-recurring benefit reported in the fourth quarter of 2021. The quarter-on-quarter increase was predominantly driven by increases in seasonal direct marketing costs and professional fees. Direct marketing costs saw an increase due to seasonally high spend in the fourth quarter during the festive period. And for professional fees, The increase was due to higher expenses associated with being a publicly listed company such as SOX-related compliance and one-off systems implementation costs to improve automation. Going into 2023, we'll continue to optimize our regional corporate costs to accelerate our path to profitability. There are a series of cost optimization initiatives being implemented across our organization as we use the greater cost and capital discipline and cutting back on discretionary spending. For example, we anticipate cloud costs to reduce by 5% to 10% year on year, driven by our efforts to optimize processing speeds and improve network costs. We've also implemented a series of zero-based budgeting on a number of our operating expense line items, including travel and professional fees. We've also frozen hiring across most of our regional corporate functions, which is consistent with our efforts to slow down the pace of hiring across our organization. As such, we anticipate headcount under our regional corporate cost to be lower in 2023. Moving on to our IFRS loss, we reported a fourth quarter loss of $391 million, representing a 64% improvement from our loss of $1.1 billion in the same period last year. The reduction in our IFRS losses was due to improving profitability on a group adjusted EBITDA basis, coupled with the elimination of non-cash interest expense of Grab's convertible, redeemable preference shares, which was no longer incurred when we became a public company. Our fourth quarter IFRS loss of $391 million includes $263 million of non-cash expenses below our adjusted EBITDA line. Of this, $119 million was from the revaluation of GREP's equity investments, which are mark-to-market each quarter, and $19 million was from stock-based compensation. Turning to our balance sheet, our liquidity and cash positions continues to be strong and robust. We ended the fourth quarter with $6.5 billion of gross cash liquidity. Cash liquidity declined from $7.4 billion at the end of the prior quarter with a substantial part of the cash outflow attributed to the repurchase of our term loan B for an aggregate consideration of $738 million in November. Our net cash liquidity was $5.1 billion as of the end of the fourth quarter as compared to $5.3 billion in the prior quarter. With $5.1 billion of net cash liquidity, we expect to have sufficient net cash buffer of well over $3 billion, even after accounting for the capital required for our Digibank upon reaching our expected group adjusted EBITDA breakeven timeline. As we look ahead to 2023, we'll continue to be focused on accelerating our path to profitability while driving sustainable growth. In mobility, we expect our year-on-year growth trajectory to remain strong and healthy. With economies continuing to reopen, coupled with the recovery in tourism demand, and amidst our push to expand into outer T cities, we expect mobility GMV to reach pre-COVID levels by the fourth quarter of 2023. For deliveries, we remain bullish on our long-term prospects and are committed to operating a business focused on driving sustainable growth while solidifying our category leadership position. We believe now that we have a more sustainable deliveries business in place and a clear trajectory towards attaining our long-term expectations of deliveries segment-adjusted EBITDA margins of 3% plus. I do also want to note that seasonally, we expect our on-demand GMV, which combines our mobility and deliveries GMV, to perform stronger in the second half as compared to the first half, with the latter being impacted from festivities such as Chinese New Year and Ramadan. For financial services, we expect GMB to moderate down in 2023, consistent with our refocus on driving ecosystem transactions and increasing profitable transactions such as lending. As such, we expect revenues to grow healthily and for segment adjusted EBITDA losses to stabilize quarter on quarter, despite increasing investment costs as we aim to launch our Malaysia and Indonesia Digibanks this year. For group revenues, we expect full year revenues of $2.2 billion to $2.3 billion in 2023. This is an implied 54% to 60% year-on-year growth on a headline basis. And excluding the change in business model, our revenue growth estimates for 2023 remain in line with our prior guidance of 45% to 55% year on year on a constant currency basis. On profitability, we estimate our 2023 group adjusted EBITDA loss to be in the range of negative $275 million to negative $325 million. This represents a $468 million to $518 million year-on-year reduction in our adjusted EBITDA losses. With the year-on-year improvements in group adjusted EBITDA, we are bringing forward our group adjusted EBITDA breakeven timeline. We now expect breakeven to be in the fourth quarter of 2023 from our initial guidance of the second half of 2024. In conclusion, we delivered another strong quarter where we performed on the top and bottom line, and we executed on our path to profitability acceleration goals. As always, Anthony, Alex, and I want to thank Grabbers for the hard work in making these results possible, and we want to express a deep appreciation for our driver and merchant partners. While there is still a lot of work ahead of us, we are confident that our strong balance sheet, cost discipline, and strategies will enable us to continue to grow our segments sustainably. Thank you very much for your time, and we will now open up the call to questions.

Thank you. Ladies and gentlemen, we'll now start the question and answer portion of the call. Joining us for the question and answer session will be Anthony Tan, Chief Executive Officer, P2OA, Chief Financial Officer, and Alex Hungate, Chief Operating Officer. please press star followed by one to ask your question and we'll call on you for your question. The first question today comes from the line of Pang Vit from Goldman Sachs. Please go ahead. Your line is now open.

Sure. Thank you very much for the opportunities and congratulations on a great quarter and strong guidance both on the revenues and EBITDA for 2023. A few questions from me. Number one, a question for Anthony. How do you view the trade-off between growth and profitability right now? Can you perhaps share a little bit more in terms of the levers that you have control over versus those that you don't? We see strong GMV growth on constant currency basis, but curious of how some of these trends will evolve as we move into 2023 and beyond. Number two, on mobility, how has the delivery supply chain issue evolved recently? If the margin has now improved strongly to 13.2% for the quarter, are you looking to maintain it at this level or will it normalize back to 12%? If it's the latter, could you share more context on why is this the case? And lastly, can we also have some color around your elevated expense for corporate costs in the quarter? What drove this increase and how should we think about this cost items for 2023?

Thank you very much, Pang. Now, on our approach on profitability versus growth, our aim is to drive sustainable growth and we believe we've demonstrated that in our results. As we have shown in Q4, our GMV grew 20% at constant currency and revenue grew more than 300% year-on-year, while loss for the quarter substantially improved. We've also moved our group adjusted the BIDA breakeven timeline forward to Q4 of this year. While we are proud of these achievements, we must never lose sight of the long-term potential of Southeast Asia. One of the key signals that we monitor is our category position, and we are clearly customers' number one choice, and we continue to drive towards becoming Southeast Asia's largest and most efficient on-demand platform that enables local commerce and mobility. Now, as shown by the past two quarters, we not only grew top line rapidly, but also improved bottom line significantly and gained category position, particularly for delivery. We have different products and services, from premium to affordable, targeted at different user segments. Now, an example of our product for value-conscious customers is saver delivery. We introduced this saver delivery option across several markets. It gives consumers the lowest delivery fees in some of our markets while also improving batching rates of our operations. Now, on the second part to your question about levers, let me talk about our levers that we have. One, we drive down our cost to serve. Two, we monetize more effectively with affordable products. So for deliveries, we've rolled out a feature to reduce wait time of delivery partners at merchants when collecting their food. This has resulted in a 27% reduction in wait times year on year in Q4 2022. Another example on efficiency is Grab Navigation. That improves the efficiency of our platform. We've seen a 7% improvement in trips per transit hour for mobility, and a 3% improvement in fulfillment rates. So all in all, growth is important, but we intend to grow profitably and sustainably. We are driving towards becoming Southeast Asia's largest and most efficient on-demand platform.

Okay, thanks very much, Anthony. Let me take that question on mobility. So mobility supply in most of our countries showed strong recovery, with the exception of Singapore, where the cost of vehicles is still very high. One market where there was a big breakthrough in this last quarter was the Philippines, where we're grateful that the government just announced that it will increase the number of two-wheel and four-wheel licenses by 100,000, which is a massive breakthrough, and we're very pleased that that will unlock the supply shortage in Philippines. Overall, we continue to improve our onboarding processes to make it easier for driver partners to join. In fact, our driver partners onboarded increased it 71% year-on-year for this quarter. And second, we're trying to make our existing drivers much more productive. So we've introduced shifts for drivers, which is turning out to be very popular. We're leveraging Grab Maps, as Anthony was saying in his remarks, where we saw wait times fall 27% year-on-year and 12% quarter-on-quarter for food deliveries. The Grab Maps navigation has helped a lot in terms of productivity as well, with an improvement of 7% in trips for transit alpha mobility and 3% improvement in fulfillment rates. Overall driver earnings per transit hour, which is a really key draw for new drivers to come into the industry, increased 13% year on year. And driver retention is at 87% in the fourth quarter. And 74% of our two-wheel drivers are now doing both deliveries and mobility in the quarter. And then finally, we've also relaunched some affordability products like GrabShare in Singapore and the Philippines. It's a carpooling service that enables us to improve the productivity of our existing fleet while offering affordability to new segments.

Hey, Pat, let me take the part one of your question around just the continuation of Alex on mobility margin. And I think you also had a question around regional costs. So on the 12% margin for mobility, our expectation is we're going to continue to maintain this margin. at the current 12% steady state. Part of this is also we gotta make sure we're gonna continue to grow our GMV in this segment. We've got a lot of tailwind ahead of us here as we get back to pre-COVID levels by the fourth quarter of this year. And we've also got supply recovery that we're working at the same time also. So we feel that the margin around 12% is our sweet spot. Now, as I said in my prepared remarks, we will be reinvesting any incremental margins that we can achieve from a mobility business. And that's important as we look at how we can continue to grow our product offerings into under-penetrative cities that we haven't touched or we want to continue to expand in those cities. There's also a lot of work that we're working around just accelerating our strategies to improve batching, allocations, all those product efficiencies that we want to continue to lower our cost to serve. So 12% we feel is the sweet spot. Your question around regional corporate costs in terms of, hey, what drove this increase and how should we think about it for 2023? So the quarter-on-quarter increase in the fourth quarter was predominantly driven by seasonal increases. There's a couple of things there. One was around direct marketing costs. Again, this is very much related to the festive period of Q4. So usually we do see an increase in marketing costs during that fourth quarter. And also the second part is we did see an increase in professional fees. And part of that is related to being a publicly listed companies as we get ready for year end, as well as our first year of SOX compliance. Now, how do we think about 2023? So looking into 2023, Our philosophy is continuing to be disciplined and also judicious in how we manage our costs in our business today. There's been a ton of work on that front since last year, and we're going to continue that discipline in our cost structure. If you look at actually on our headcount since September 2022, we've actually trended down in our overall group headcount. And also we've announced a number of cost discipline measures internally And I called out a few of those in my prepared remarks, whether it's cost computing that's going to come down by 5% to 10%, we expect, and also other zero-based line items that we're budgeting that were actually implemented across the organization. So as part of that profitability acceleration, to get to that fourth quarter, as we've committed to our investors, part of this is making sure our costs also continues to be optimized and also making continue to have operating leverage in our business.

Thank you.

Thank you. Thanks, Ben. The next question today comes from the line of Venugopal Gar from Bernstein. Please go ahead. Your line is now open.

Hi. Thanks a lot for the opportunity and congratulations on a good quarter and a pretty good guidance. You know, I have three questions. I think first one, a part of that you've already answered, but I was pretty curious to know that while the revenue growth guidance is fairly strong to an extent, can you explain to us how it will sort of shape up across segments? I think more importantly, I'd be also curious to know what is the broader outlook on GMB at this stage? My second question is on food delivery. We've already We've already reached about 2% EBITDA to GMB in this quarter. Now you have a guidance of about 3% plus for the long term. So how do we sort of see this trend sort of shaping up especially over the next 12 to 18 months? The third thing, a very small question. I just want to clarify the business model change which has happened for deliveries. Did it have an impact on EBITDA, or is it just a same revenue item sitting in cost as well, so there's zero impact on EBITDA?

Thanks.

Hey, thanks, Vinod. Let me take all those questions. I'll take them one by one. Let me start from the top around your question around how do we think about the GMV growth? We don't break it, obviously, by segment, you know, our revenue, but what I'll do is I'll provide a bit more color in terms of our GMV. So let me start by saying that we expect that on-demand GMV to continue to grow year over year. As we look at now the two different big buckets here, let's start with mobility. We believe that the mobility business will continue to be another solid and strong growth year over year for us. We say that because we're still experiencing the tailwind coming out of the COVID lockdowns from last year. If you look at where we are today, as of the end of December, we're roughly about 74% of our pre-COVID levels when it comes to GMB. If you look at for mobility, if you look at where airport rides is today, as of the end of last year, we're only at 65%. And airport rides is a really critical piece of our business. We're starting to see more China tourism also coming across to Southeast Asia. Now, of course, also we're coming up a very strong comp in 2022. So we won't be seeing obviously the rate of growth that we saw compared to 2022 over 2021. So just bear that in mind also because the base is just much bigger now. But we feel that with all those activities and demand coming into Southeast Asia, we feel very optimistic and very bullish that our mobility business will see another strong growth year over year. Now, the second bucket is around deliveries. Here, what I will say is that we're really focused on Bennu on really driving sustainable growth. Anthony mentioned part of that in his earlier question that he answered from Pang. Really, how do we continue sustainable growth and also driving EPIDAR margins towards that 3% plus that we're all aiming for here. At the same time also, we're gonna be very focused, Bennu, on making sure our category leadership position, like what you saw in 2022, continues to be maintained and also retained to be the number one. And that's been a very critical part of our philosophy here in Grab. You saw how our business grew last year in deliveries. You saw also how incentives came down. But yet also we executed on category leadership position. So within those two mix, we are going to be very focused in making sure our GMV business grows sustainably. What you will see, though, is some seasonal impact. As you think about the first half versus the second half, we should be seeing a stronger in the second half just because of all the festive season that you see in the first half in your typical cycle within Southeast Asia with all the Chinese New Year as well as Ramadan. So hopefully that gives you a bit of color into how we think about mobility and deliveries GMB. Your second question was around the food delivery segment-adjusted EBITDA, the 3%. We feel that right now, where we are, Bennu, our delivery business is in a very, very strong position. We've got strong CP, category position. We've driven margin improvement on a quarter-on-quarter and a year-over-year basis. And we have a very clear trajectory towards our long-term expectation of 3% plus margin. We're actually very encouraged. If you look at today, The majority of our six core markets have achieved deliveries profitability near or higher than the 3% today, which is actually a very big sign for us and a very strong signal that we have all the different building blocks for us to get to the 3%. Now, I'm not committing to a timeline to you or to our investors. What we are very laser-focused is getting there as quickly as possible making sure also the marketplace is very healthy at the same time. So balancing the three-sided marketplace as well as making sure category position remains very strong and we are the leader. So I think that gives a bit of color on the 3% where we're heading and how we can get there. Your last question is around the business model change for delivery. So let me, out of the gate, saying that there is no impact on EBITDA whatsoever, on this business model change. It's basically a presentation between gross versus net from the revenue and the cost of sales line. There was a licensing requirement in one of our countries that we operate in today, and to make sure that we are in compliance with those licensing requirements, the principal and agent model changed, of which, from an accounting standpoint, that had to follow up. And that is basically just a presentation between revenue and cost of sales with no impact whatsoever to EBITDA. Hopefully, Vanu, I've answered all your questions.

Yeah, that's all. Thanks a lot.

Thanks, Vanu. The next question today comes from the line of Alicia Yeh from Citi. Please go ahead. Your line is now open.

Hi, thank you. Good evening, management. Thanks for taking my questions. I have two questions. The first one is related to your Grab theme strategy and also the growth expectation in the coming quarters. So with our strategic shift to focus more on the on Grab platform usage, what is your go-to-market strategy to encourage higher transaction usage and product adoption by the Grab users? So can management share with us also what is your expectation of the revenue contribution potentially could come from the digital banks by the end of this year? The second question is on the delivery business. Obviously, we're glad to see the EBITDA margin improving gradually. Is there any plans to step up the spending in user subsidy more effectively to actually drive the balance between potentially faster volume growth and also maintaining, you know, having the improved margin trends as well. Thank you.

Thanks, Alicia. Alex, let me take your question on GrabFin. You're right about the focus on the OnGrab platform. As we said at the Investor Day last autumn, this refocus does allow us to use the benefits from our ecosystem, the data benefits, the distribution advantages, while de-emphasizing the unprofitable off-platform transactions. So we're leveraging our embedded ecosystem use cases to drive higher transaction frequency and adoption. And we don't have to rely on consumer incentives. So we've shown that we can do that over the last several quarters. And that remains our strategy. We remain confident that we can do this through embedding the use cases. In fact, for digital payments, we plan to reduce our spend on consumer incentives because we're going to be moving from the off-platform digital payment use cases and making sure that we move to at least cost neutrality or better off-platform. A good example, actually, is what we've done in Vietnam with Zelle Pay and also with GCash in the Philippines, both of which, as you probably know, are leading e-wallets in their respective countries. That will help us to provide a more seamless payment experience to more users in each country and also to tap into a larger user base even while we reduce incentive costs. We're focusing on the value add from lending and insurance, which are also very important use cases. GrabFin lending continues to grow. In fact, the value of loans disbursed rose 57% year-on-year, and revenues improved, as you saw. And then just as we promised at the Investor Day, we have reduced GrabFin's costs as well, so excluding Digibank. GrabFin's cost reduced 4% year-on-year and 11% quarter-on-quarter, so a real big acceleration of cost reduction for GrabFin in this recent quarter. And then on Digibank growth, we're not disclosing any specific numbers on the banks at this stage, but we are pleased with the early positive signals from the limited launch in Singapore, as I shared in my remarks earlier. And I can confirm that we're still on track to launch our Indonesia and Malaysia Digibanks later this year.

Maybe, Alicia, just to add on to Alex there around how do we think about revenue growth for our Grab Financial Services business, especially around our Grab fan. What I can say is we do expect to see strong revenue growth year over year, and a lot of that's driven by what Alex just referred to, a lot around our ecosystem lending, and also we've got the banks coming online, especially in the second half of this year for Malaysia as well as Indonesia, The Singapore side, as you heard from our prepared remarks, are already operational. And the deposits are already operational, our deposit product. And we've got our lending product also currently in pilot phase at the moment. The other point I do want to probably add on to this is that on an EBITDA basis, we expect that EBITDA to stay relatively flat on a quarterly throughout 2023. You just heard from Alex that we've driven a lot of cost out of our GrabFin business, and we saw some really nice uptick in cost reduction in that. So we're going to continue to do that in GrabFin, which will partially be offset by the launch of our Digibanks across the three markets. Your second part of the question was around deliveries. You asked about what about EBITDA margins. Is there any plans to increase subsidies? The way we think about it is the way it's a healthy marketplace that we need to make sure we maintain in our food delivery and just deliveries in general. We are going to continue to drive down the cost to serve. That's really important for us. Driving efficiency in the marketplace with our drivers as well as with our merchants. And you've seen some of the waiting time improvements that we quoted earlier, and that's part of our lowering our cost to serve. At the same time also, Alicia, we've got to drive volume growth while improving margins at the same time. So we don't see it as a trade-off between profitability and growth. But we don't have to use subsidy as one of the levers. There's multiple levers that we can use. We do not have to step up our subsidy spend to get that growth going at the same time also. And you saw that also in last year where we continue to make sure our category positioning for delivery was very, very important, which is very critical to us. We were still maintaining and also retaining as number one while we also increase our subsidies and we improve margins and we also reach segment profitability all at the same time. So with these playbooks playing nicely, we'll continue to use this. I think we also will be focusing on the issue is that consumers want affordability and also not specifically subsidies. So as Alex mentioned also, as Anthony mentioned, we've got the saver delivery option also that we introduced. It's just an example of how we can actually bring affordability to our consumers in Southeast Asia. And there's a lot of other product innovations that we're working on also to make sure that we can continue to grow in our deliveries business.

I see. Thank you. Thanks, Peter.

Thanks.

Thank you.

The next question today comes from the line of Varun Oja from Credit Suisse. Please go ahead. Your line is now open.

Hi, thanks for the opportunity. I've got two questions. First one, going back to the delivery business, if you look at seasonally, 4Q is expected to be a strong quarter because of, obviously, festivities year-end. And as you mentioned, we had some marketing promotions also going into the quarter. So if you look at seasonally also, there's a quarter and quarter reduction. Obviously, I believe there's not much fixed movement on a quarter and quarter basis. So on 4% reduction in GMBs, deliveries are also in gross billing. Obviously, the take rates have also come down on a quarter and quarter basis. Sorry, it's flat on a quarter and quarter basis. So any reason why sequentially there is a weakness there? Is it I understand the focus on profitability and expansion in margin, but is there any market retreat to it? Is there anything you can give? How much it has impacted anything that you can show color on that front? And sticking to business, how should we think about from a media perspective? I know creativity looks to be relatively... Again, a soft year with focus on profitability, but beyond that, is it a segment that you think can grow faster than GDP growth? How should you think about any color? Secondly, on your MTUs, I think if you can provide a breakup between mobility and delivery, I know that in Android report you do end up breaking up between them. So if you can provide for year-end the breakup between mobility and delivery MTUs. If you look at the consolidated MTUs are flat on a quarter-on-quarter basis. So how should we think about future growth? Is it more driven by higher frequencies, or you still think a lot more users can come onto the platform? Thank you.

Thanks, Varun. Let me take your first question on deliveries. So in the fourth quarter, yeah, we made a conscious decision to focus on the profitability of our delivery segment. So deliveries, GMV, in the fourth quarter grew on a constant currency basis by 5%, and then 22% for the full year, year-on-year. So we did trade off growth to drive a more sustainable and profitable deliveries business as we substantially improved the EBITDA margins, you know, quarter-on-quarter plus 160 basis points and then year-on-year 550 basis points up to 2%. The other thing in the fourth quarter was we did affect the closure of the dark stores and most of the grab kitchens. So that had an impact on GMV growth in the fourth quarter. Although, of course, we managed to reap some good cost savings from that, which improved the margin position as well. At the same time, as Peter was saying earlier, we continue to extend our category leadership position. So we're happy with the trade-offs that we made in the fourth quarter. Peter mentioned earlier in his remarks that we expect the first half to be relatively seasonally weaker than the second half in the coming year. But we're embarking on a number of initiatives which we think will help across the year. Grab Unlimited to improve engagement and stickiness, and the Jaya Grocer and Transretail partnerships will also help. And then the piloting of Dine-In and Takeaway, which will push us into the offline dining segment, the dining-in segment over time. That's a good mid- to long-term growth driver for us. So we now believe that we have a sustainable deliveries business in place and we can head towards that 3% plus margin that Peter was talking about earlier. And in fact, we're at that margin, 3% or higher in the majority of our six core markets already. You asked about the longer term perspective. We do believe that the potential is sizable in the longer term. So across those six core markets for us in Southeast Asia, Euromonitor estimates that the combined online Market size for ride hailing and food deliveries is about 35 billion US by 2025. And we are the category leader, and we intend to remain the category leader in that marketplace. So there's a long runway for growth as market penetration currently is still very low. In fact, if you look at our MTUs in Q4, it's still only a single digit penetration of the total population in Southeast Asia.

So on the MTUs, Varun. So MTUs actually grew 14% year-on-year. While we don't provide specific guidance on MTUs, we expect it to continue to grow on the back of COVID reopening and mobility recovery across our markets. Honestly, there's still a lot of potential to grow TAM, given the sizeable online population in the region. Grab serves one in 20 people in this region every month. For us, this means that there's still plenty of room for us to grow. Second, we started in the mobility market and have significantly expanded our TAM over the last 10 years by expanding into deliveries, financial enterprise services. Today, we are a household trusted name with multiple competitive advantages, including the strong edge of being able to leverage and power the brand and our ecosystem. Now, Varun, you also asked how would we grow the MTUs. We have a multi-pronged approach to grow. We are, one, penetrating into cities with new services and categories. Two, increasing our financial services with our own growing ecosystem. And three, evolving our product and service offerings to appeal to different user types. So, for example, Varun, we increased demand by providing affordable services when we launched MTUs. our new version of Grab Share in Philippines and Singapore, where users can save on their fares when booking our on-demand carpooling service. Another example, to create new demand for corporates, we've developed Grab for Business, a B2B SaaS solution, which basically gives companies more control, convenience, and saves time and money for companies to offer employee services. So whether they are services like getting to and from the office safely or food delivery in offices. So Grab has plenty of room to grow. We are in pole position to capture the large TAM given the power of our ecosystem. So we will execute a multi-pronged approach to grow our user base.

Thank you.

Thank you. This concludes your question and answer session, so I'd like to turn the conference back over to Peter for any closing remarks. Please go ahead.

Thanks, everyone, for making the time and just investing the time to ask all your questions. And thank you for supporting us. And if you have any questions, please feel free to reach out to our investor relations team or visit our investor relations website. Thanks again, everyone, and speak in the next quarterly call.

This concludes Grab's fourth quarter and full year 2022 earnings conference call. Thank you for your participation. You may now disconnect your lines.