Divya Gangahar

Divya Gangahar asked about the path to 4% deliveries margins, specifically inquiring about margin differences across countries, Indonesia's role, and the dilutive effect of Grab Mart. She also sought details on the financial services break-even framework and milestones for the next six months, key risks, and typical use cases for loan book expansion, particularly on the digital bank side.

Answer

President and COO Alex Hungate explained that Grab Mart currently has lower margins than food deliveries due to growth speed and scale, but expects improvement as it grows. He confirmed strong high-teens year-on-year growth for Indonesia's delivery business with stable margins, and noted Malaysia has already reached the 4% steady-state margin target, allowing for instant commerce experiments. He reiterated the financial services segment's break-even target for H2 and the banks' break-even in Q4, citing accelerating loan dispersal ($3.5 billion annualized), maturing credit models, and the rollout of flexi loan products across bank and non-bank markets. He highlighted SME lending (merchants on Grab ecosystem) and financial inclusion for unbanked/underbanked gig workers as key use cases, with risk-adjusted returns comfortably above the cost of capital.

Divya Gangahar asked about the path to 4% delivery margins, specifically how margins differ across countries, the role of certain countries (like Indonesia) in lifting overall portfolio margins, and the dilutive effect of GrabMart. Divya Gangahar also sought a framework and milestones for the financial services segment to hit its break-even target over the next six months, key risks, and typical use cases for loan book expansion, particularly on the digital bank side.

Answer

President and COO Alex Hungate explained that GrabMart currently has lower margins than food deliveries due to growth speed and scale, but expects improvement as it grows. He confirmed strong high-teens year-on-year growth for Indonesia's delivery business with stable margins, and noted that Malaysia has already reached the 4% margin target. He emphasized a portfolio approach to achieve margin targets across countries and verticals. For financial services, Alex Hungate reiterated the break-even target for the segment in H2 2025 and for banks in Q4 2025, driven by accelerating loan dispersal growth and maturing credit models. Key use cases include financing SMEs on the Grab ecosystem and providing credit to unbanked/underbanked gig workers, with risk-adjusted returns comfortably above the cost of capital.

Divya Gangahar questioned the drivers behind the slowdown in Mobility GMV growth and the 4% drop in trip fares, asking about market-specific competition. She also asked about capital allocation plans for the recent $1.5B convertible bond raise and any updated thoughts on share buybacks.

Answer

COO Alex Hungate clarified that the 4% drop in Mobility AOV was a deliberate strategic choice to reinvest in volume and growth, not a reaction to competition. He emphasized Grab's significant scale advantage over rivals. CFO Peter Oey addressed capital allocation, stating the top priority is organic growth. While the recent capital raise provides flexibility for M&A, the bar remains high. He confirmed the completion of the previous $500M buyback program with no new plans to announce at this time.

Divya Gangahar asked for details on the drivers of Deliveries margin improvement, the scale of GrabMart, and the reason for the year-over-year margin decline in Mobility. She also questioned the fintech business regarding its loan book growth, NPL levels, and credit monitoring practices.

Answer

CFO Peter Oey explained that Deliveries margin improved due to product mix, stable incentives, and advertising growth. The Mobility margin decline was intentional, as Grab invested in driver supply to meet a 25% YoY surge in rides, ensuring reliability. President and COO Alex Hungate addressed fintech, stating that NPLs are stable but provisions are increasing as the loan book grows (up 56% YoY), which impacts segment profitability. He noted this is a prudent measure as the new digital banks in Malaysia and Indonesia scale their operations.