Grab Holdings Limited (GRAB) Earnings Call Transcript & Summary

Hello everyone, and welcome to Grab's Third Quarter 2026 Earnings Call. I'm Douglas Eu, Director of Strategic Finance and Investor Relations at Grab. And joining me today are Anthony Tan, Chief Executive Officer; Alex Hungate, President and Chief Operating Officer; and Peter Oey, Chief Financial Officer. During this call, we will be making forward-looking statements regarding future events, including our 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 in his earnings call and earnings release and in our Form 20-F and other filings with the SEC. We do not undertake any duty to update any forward-looking statements. We will also be discussing non-IFRS financial measures on this call, and these measures supplement but do not replace IFRS financial measures. Please refer to the earnings materials for a reconciliation of non-IFRS to IFRS financial measures. And for more information, please refer to our earnings release remarks and supplemental presentation available on our IR website. So for today's call, Anthony will deliver opening remarks, after which we will open the floor for questions. And as a reminder, we accept questions via our IR email at investor.relations@grab.com. So please do submit your questions ahead of time, and we'll add them to the Q&A queue. And with that, I'll hand it over to Anthony.

Thanks so much, Doug. Good day, everyone, and thank you for joining us. The third quarter of 2026 was a quarter of several milestones. For the first time, all 3 of our core segments are profitable with financial services achieving segment adjusted EBITDA profitability, including the contributions from Stash and Superbank. Adjusted EBITDA reached a record $237 million, up 73% year-on-year, our 19th consecutive quarter of adjusted EBITDA expansion. On-demand GMV grew 22% on a constant currency basis and monthly transacting users reached a record 57 million. We have a clear line of sight to the fourth quarter, we are raising our full year guidance for both group revenue and adjusted EBITDA for the second time this year. We also reiterate our 2028 expectations of our group revenue compounded annual growth rate of over 30% and adjusted EBITDA of $1.7 billion. These expectations include the proposed acquisition of Atome, which remains subject to completion. Now we delivered this in a challenging environment. Elevated fuel prices continue to pressure driver operating costs, persistent inflation generated our tightened household spending and Indonesia's new 2-wheeler commission framework took effect in July. We leverage our ecosystem advantages to grow revenue while expanding profitability and our mobility and deliveries margins both expanded quarter-on-quarter to 8.9% and 2.7%, respectively. This is what we mean when we say our ecosystem compounds with more users, more services per user and more of each dollar reaching the bottom line. That [ streak ] is also what allows us to stand with our driver partners. We know elevated fuel costs have weighed directly on their take-home earnings, and we continue to support them through this period. Beyond immediate relief, we are also equipping partners with tools that help them earn more on every hour they spend on Grab. AI now powers every layer of the Grab ecosystem, and we are building AI-First with Heart to simplify experiences for our users and drive tangible earnings growth for our partners. As AI agents become a new way for consumers to transact every order they place still needs to be fulfilled on the ground to the drivers, merchants and logistics and licenses we have built for over more than a decade. With over 20 billion cumulative transactions in our platform, our models have a deep real-world understanding of how Southeast Asia moves, eats, shops and borrows. We're doing this while structurally lowered our compute cost with cost per AI interaction down 42% quarter-on-quarter as AI interactions grew 60%. In September, we also announced a partnership with OpenAI to equip 30,000 driver and merchant partners with practical AI skills over the next 2 years starting in Singapore and then Thailand and expanding to Indonesia and the Philippines later this year, followed by Malaysia and Vietnam in 2027. Southeast Asia has been our home for nearly 15 years, and our conviction in the region has never been stronger. It's 1 of the world's fastest-growing economies and is projected to expand well above the global average in 2026 according to the latest IMF forecast. With all 3 core segments now profitable and our outlook raised for the second time this year, Grab has more engines contributing to profit than at any point in our history. I share that conviction personally, and I have purchased additional shares in Grab. Our mission to drive Southeast Asia forward by empowering millions across the region remains central to our strategy and every capability we built serves our triple bottom line of delivering long-term shareholder value, creating meaningful impact for the communities and partners in our ecosystem and operating responsibly across Southeast Asia. Thank you so much, and let's open it up for questions.

Great. Thank you, Anthony. So we will now begin the Q&A session, and we encourage you to submit questions throughout the webinar via e-mail. So we received some questions coming in. So the first question is on guidance upgrade, and this is a question for Peter, and the question comes from several analysts, Ranjan of JPMorgan, Piyush at HSBC, Jiong at Barclays and Wei from Mizuho. So the question is, pleased to see the guidance upgrade, but why not raise the 2026 EBITDA guidance higher as the current guidance indicates that the fourth quarter EBITDA may be stable relative to the third quarter? Question then goes on to ask, what are you assuming for fuel support FX and effective season investments for the fourth quarter? So it's a question for Peter.

Yes, sure. It's a great question to open up. Look, when you look at our guidance revision today, so what are we? We're at $790 million to $800 million. And this is from our previous range just to reset from $720 million to $740 million. So that's roughly about a 58% to a 16% year-over-year expansion on our EBITDA. Now in context, we are now operating at the highest margins level in Grab's history. If you look at the year-over-year, it was a 560 basis points improvement in terms of EBITDA margin that we are continuing to demonstrate as our business continues to perform. Now the progression from Q3 to Q4, which is what at the heart of the questions, there are a couple of deliberate strategic choices that we as a management team going into Q4, feel that it's really important. Now if you look at the fourth quarter, the fourth quarter is a high-return investment window, it's 1 of our busiest season for Southeast Asia itself. It's the festive season and a very high-volume tourist travel also at the same time. And we saw some snippets of that in October with a lot of the events and also coming up also in December itself. Now Anthony just spoke about driver supply and some of the challenges that we've got here also, the elevated fuel prices has continued. We saw it in the second quarter, we saw it in the third quarter, and we're expecting the same in the fourth quarter. Now we need more drivers on the platform. Actually, if you look at the third quarter, our active driver base was the highest ever on the Grab ecosystem itself. We increased the driver base by 20% on a year-over-year basis, and we need more drivers out there. So securing driver partner capacity is really critical as for us going to the Q4. So we're leaning in Q4 to make sure our driver community continues to be strong and also to help our passengers also to have access to rides reliably as well as affordable at the same time. Now we're also deliberately deploying targeted marketplace investments across the board, both on the driver side also and also having making sure they have access to vehicles at the same time. Because if we fail to have drivers on the platform, it will just be leading to higher prices, high consumer waiting time, which is not a great customer experience. So that's 1 part, which is really important how we think about Q4, especially around the mobility. Now the second part, going into this very busy season is also supporting the high-growth product launches. And if you read in the earnings remarks today, what did we launch? We launched Grab Mall in the Q3, and we're also rolling out several digital banking initiatives, the GXS credit card in Singapore and also in Indonesia, we launched in conjunction with our collaboration with Atome, OVO Panjang which is a lending product for our consumers with KreditPintar. And these are very exciting both delivery products as well as financial services products. So we're allocating marketing and also leaning in to make sure these products continue to pick up the traction in Q4 and also as we get into 2027. Now on the cost structure itself, we see that regional corporate costs to be fairly stable in the second half to the first half. So that is really the package of how we think about the Q4 itself. Now my guidance philosophy has always been to be on the prudent side and also be transparent with our shareholders, but also be grounded in what we're seeing on the ground. And we are seeing some of the challenges on our driver community that we talked about earlier. So we are setting expectations to ensure that we can reinvest with agility, but also capture the seasonal market share. We want to finish the fourth quarter strong and we're on track to do so, profitably at the same time, also deliver a great customer experience for our customers, but also for making sure our drivers and our merchants are also increasing their earnings at the same time.

So we received -- this next question said it came from several analysts, it's all pertaining to the deliveries segment. So we've segmented it into 3 parts. The questions came from several analysts like Divya of Morgan Stanley, Alicia of Citi, Piyush of HSBC, Ranjana of JPMorgan and Thomas of Jefferies as well. There's a question for -- [ packed ] for Alex. So the 3-part questions. First is on margins. Second is on ads. And then third is on clarification on Grab Mall. So are we basically each of the 3 components. And the first component is on the delivery segment, is the 2.7% EBITDA margin a new structural baseline? And what drove the outperformance and how much of this was enabled by AI-driven unit cost efficiencies? And should we expect a 2.7% segment margin to be a new base? The second part of your question is then on advertising. Can you update us on advertising penetration relative to deliveries GMV and what outperformed in the quarter? And the third part is on clarification on Grab Mall. Could you expand more on the Grad Mall strategy? So this is a question [ time ] for Alex.

Well, thank you all. I guess this is the most popular question so far. So let me try and go a bit detailed in those 3 parts. You're right, delivery's margin performed very strongly, 2.7%, up from 2.1% in the prior year, so very strong in the quarter. That does reflect primarily the operating leverage that we're getting from the scale because deliveries is growing fast, so 21% GMV growth year-on-year. As Peter said earlier, our control of the corporate costs, the regional corporate cost has been good, so pretty much flat in the second half versus the first half. And that gives us strong operating leverage enhanced by very widespread deployment of AI, both in terms of the productivity that we as Grabbers benefit from. But more importantly, if you think about our central purpose, it's driven by continued improvements in the performance of the marketplace that we run, increasingly using AI to do the optimization that we need to make sure we get the best combination of reliability of service and affordability for our users. So that is going very strongly. The other driver of the improvement in margin is ads. Ads are growing strongly as our scale attracts more of the endemic advertisers who sell food on the platform and increasingly also brings in new FMCG advertisers who start to get attracted by that growing reach and are now very engaged also in partnering with us to grow Grab Mart and Grab Mall. So we've been able to do this at the same time as we increase driver incentives. As Peter mentioned, we're leaning in to help drivers during these difficult times. So you do see increased incentives, both for mobility and for deliveries for drivers. So the operating leverage is even bigger than the increase in incentives that we've given out to drivers. So that shows the strength and the overall reach that we're getting now with that scale. So we still see plenty of opportunities to invest though in the delivery segment using product-driven growth, which has been a key factor in our success over the last couple of years. So we are expecting, as you remember from the last quarter, to invest in product growth in the Grab Mall marketplace area. So something like $160 million we set aside in the 2028 adjusted EBITDA guidance to fund those investments. It's driving better affordability in groceries and driving further growth in both Grab Mall and Grab Mart. But in spite of these investments, we expect deliveries margins to improve progressively year-by-year as we make progress towards our longer-term margin target of 4% plus, which you'll recall, we've been guiding towards over the last couple of years. And then the last part of the strategy, I believe, was the Grab Mall -- question was the Grab Mall strategy. So let me talk about that. We launched Grab Mall this quarter. It's a branded retail economist channel within the deliveries ecosystem. It's been inspired by the FMCG advertisers who have been working with us on advertising. They're now keen to partner to do closed loop endemic advertising where we actually fulfill the transaction as well. And because of our very strong last mile quick commerce capabilities, we're able to do that probably better than any other partner in the region. So it's a good combination. We tap on our ecosystem advantage, and then we have that very large high-frequency user base and proven fulfillment network. And then we also know how to work well with merchants in terms of making sure that we tap into understanding their inventory so we can get a very good online fulfillment rates for customers as well. The additional benefit here once Atome is approved is, of course, that we'll be able to then have better monetization capabilities via lending as well on this new base. So we'll get not just the advertising improvement in margin as we grow Grab Mall and Grab Mart, but we'll start to get stronger lending monetization as well with those highly developed Atome consumer lending models. So we'll continue to pilot Grab Mall, which we just launched across select markets, and we are seeing good uplifts right away from these pilots, and we'll start to expand that across the region.

Thank you, Alex. So next question is on AI and specifically on AI proof points. Question came from Alicia of Citi and John [ divest ] a question for Anthony. So Anthony, could you elaborate on how AI agents and Gen AI's features are currently driving user engagement and transaction velocity across the platform, specifically what early trends are you observing in terms of cross-sell in-app type spend and basket size uplift? And additionally, on the supply side, how are merchant partners leveraging AI tools to drive demand, improve sell-through and how our drivers partners utilizing AI to optimize their earnings and manage the workload and rest cycle? So that is a question for Anthony.

Thanks so much, Alicia, and John. Let me take the AI proof points. So on engagement, I want to be straight about what we measure. We do not optimize for time spend in the app. For every AI feature, we ask whether people transact more often, more loyal, do they come back because that is what you can model. Three numbers from this quarter answer it, users who shop both Grab Food and Grab Mart now account for 43% of food GMV and their baskets are about 10% larger. Groceries GMV is growing 1.8x faster than food. Grab Unlimited subscribers transact almost 3x as often as nonsubscribers. AI sits behind each of those in search, in recommendations and offers we show but we report the outcome rather than the model, and we will keep reporting the same metrics every quarter so you can track them. On the supply side, the tools are now at scale. The driver AI assistant is with nearly 500,000 drivers. It shows them where demand will be before it peaks and drivers who actively use it earn over 10% more per online hour. The same information helps them plan the day, their breaks because they no longer need to stay online, just waiting for the next job. I want to be clear on how we see that. These are tools drivers choose to use, and they decide when and how long they want to drive. On the merchant side, merchants on our merchant AI-assisted [ MAI ] earned about 20% more on average. Average merchant earnings grew 15% year-on-year and active advertisers grew 39%. Look, I'll be honest, adoption still has a long way to go, and that's why we continue to lean in on AI as a core part of our company's DNA.

All right. Thank you, Anthony. So continuing on to that thread, additional questions as well on OpenAI [ Muse ], which are our recent partnership collaborations, questions as well coming from John of Daiwa and Wei of Mizuho. So once again, another question set for Anthony. So these are 2 separate questions on these partnerships as well and their broader AI benefits. So the first component is what tangible benefits do you expect the OpenAI partnership and your broader AI investments to deliver to Grab? And the second component is then on Muse. Grab was announced last week as an early connector partner for Meta Muse in Singapore across Grab Mart and Grab Dine Out. Can you discuss the early use cases you're exploring? And where do you see AI agents becoming a meaningful incremental customer acquisition channel for Grab over time? So questions for Anthony.

Thanks, John and Wei. On OpenAI and specifically, our OpenAI partnership delivers tangible benefits because we put the tools in our partners' hands and we teach them how to use them and how to make more money with them. The results are already measurable. As I shared just now on merchants using our AI assistance see about 20% uplift, drivers who use it earn over 10% more per online hour. Now to scale, in September, we launched Go Forward with OpenAI under Grab Academy. Over the next 2 years, we will equip 30,000 drivers and merchant partners across Southeast Asia with very practical AI skills. I actually met many of them, and I saw how they're using even [indiscernible] to help them become even greater creators, social media creators to help them boost their income. We started in Singapore, launched in Thailand in October and are expanding to several other countries, including Indonesia and the Philippines this year-end. Partners who use AI sell more, earn more and stay longer and more loyal to our platform. That gives us stronger supply, as Peter talked about, and better service quality. Now on Muse, Meta chose us as a launch partner when they brought Muse to Singapore last week. And we deliberately chose GrabMart and Dineout. Groceries are habitual. People buy much the same basket every week, and that's exactly the kind of task an agent does very well. Dining out is the other everyday use case. Here's how it works. A user ask Me in chat, Muse will build a basket from a GrabMart store and a basket shows up in the Grab app where the user approves the purchase. Our merchant, our inventory and the transaction data all stay with Grab. This is our pilot in one market, so it's too early to size the impact on customer acquisition or GMV. We see it first as incremental demand, just a new front door on Grab. We'll go partner by partner with platforms that bring real scale and utility and add services and markets when the time is right. Over time, I do expect agent originated orders to become a growing channel, and we will share updates as the partnership progresses. What does not change is where the value sits, whichever front door and order comes through, the merchant network, real-time inventory, dispatch, payments and customer care all run on Grab. We will also keep improving our own AI experiences, so users have good reasons to come to us directly.

Thank you, Anthony. So we received a few questions on financial services. So I think we'll take them as a different components. So the first component is on the financial services EBITDA breakdown for the third quarter. So this is a question for Peter coming from several analysts, including Piyush of HSBC and at Jacqueline from CGS. So for financial services, Peter, can you give us a split of the EBITDA contributions from Superbank, Stash, GrabFin and the remaining business in the third quarter?

Yes. We don't split them out for each of those components because the way we think about it, actually, financial services is 1 bucket of different components of the ecosystem working together. And hence, why we are very, very deliberate of not breaking it out, including the banks itself. And what is publicly available, obviously, we will disclose such as Superbank, which is public to public company itself. So just stepping back here, just to remind everyone here, the EBITDA target that we are giving up for 2028 for financial services is $500 million. Financial services today for the third quarter produce $12 million. So we still have some ways to go to get the $500 million. So where is it going to come from? What are the mix that we're going to see. Now what we said was $300 million out of the $500 million will come on, we believe, from Atome and Superbank, and we said that a few weeks ago. So the remaining $200 million come from all the other products, ecosystem of financial services, including the banks, the GXS GXP banks as well as our nonbank lending portfolio, which is coming from we call GrabFin. Now we do expect that our banks over time, given that a scaling mode to take up a larger share of the gross loan portfolio over time. And that will be a great leading indicator in terms of the profitability trajectory that we have. In addition to the autonomy also once the acquisition is closed, given that their loan book also is growing at a very rapid pace at the same time. And in this quarter, actually, we gave out some additional disclosure on financial services regarding NPL as regarding also risk-adjusted returns, revenue adjusted returns here to give the community a bit of a sense in terms of how we think about the unit economics of our lending portfolio to help you be able to model actually how we get to the $500 million.

Thanks, Peter. So for the second component on the financial services question, this is more in terms of the building blocks to get to the $500 million. So the question comes from Alicia of Citi and Piyush of HSBC. So I'll turn the question now to Alex to explain this. So the question is, as you work towards the 2028 financial services targets of $500 million EBITDA and the above $6 billion loan book target, where do you believe you are today relative to that journey? What are the building blocks required over the next few years in terms of customer acquisition, lending penetration, product expansion, funding costs and credit performance as required to get you there and which assumptions do you believe is the most critical in achieving these targets and wonder what scenarios could the business meaningfully outperform of fall short of your current actions?