Grab reported its first adjusted operating profit. Is a turnaround in sight?



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By Beansprout • 16 Dec 2023 • 0 min read

Grab posted its maiden positive quarterly EBITDA along with improved operating metrics. Could this be a sign of a turnaround for the super-app?

grab share price december 2023
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What happened?

Grab Holdings had some good news for investors in its third quarter 2023 (3Q 2023) financial results.

The super-app reported its first-ever positive adjusted EBITDA (earnings before interest, taxation, depreciation and amortisation), although the company still reported an overall net loss.

Shares of Grab have gone up by around 5% in the past one year and closed at US$3.13 on 22 November 2023.

We take a closer look at Grab’s latest earnings report to determine if the company could be on the path to higher profitability.

Source: Webull 

What investors may like about Grab’s results

#1 – A surge in revenue accompanied by positive EBITDA

Revenue for 3Q 2023 surged by 61% year on year to US$615 million, accompanied by revenue increases across all three of Grab’s major divisions.

Net loss for the period also reduced from US$342 million a year ago to US$99 million in the current quarter, an improvement of 71% year on year.

The ride-hailing cum food delivery company reported its first positive adjusted EBITDA of US$29 million for 3Q 2023, a sharp reversal from the US$161 million adjusted LBITDA in the prior year.

Its balance sheet grew stronger with cash more than doubling from US$1.9 billion as of 31 December 2022 to US$3 billion for 30 September 2023.

Over the same period, total debt also reduced from US$1.4 billion to US$778 million, giving the business an improved net cash position of US$2.2 billion versus US$587 million just nine months ago.

Meanwhile, Grab also generated a positive operating cash flow of US$112 million for the first nine months of 2023 (9M 2023) as well as a positive free cash flow of US$43 million.

#2 – Higher ride-hailing revenue

grab mobility earnings 3q 2023
Source: Grab

Diving into each of Grab’s segments, we first look at the Mobility division.

Revenue for the division jumped 31% year on year to US$231 million for 3Q 2023, led by a recovery in tourism ride-hailing demand.

Gross merchandise value (GMV) increased by 30% year on year to US$1.4 billion, led by more users booking a higher frequency of rides on Grab’s platform.

Segment EBITDA improved by 33% year on year to US$180 million for the quarter.

Grab is increasing its supply of drivers with a 9% year-on-year increase with earnings per transit hour of the company’s driver-partners increasing by 8% year on year.

#3 – A surge in Deliveries segment EBITDA

Grab deliveries earnings 3q 2023
Source: Grab


The Deliveries division did an even better job with revenue surging by 79% year on year to US$306 million for 3Q 2023.

GMV for the division improved by 7% year on year to US$2.6 billion.

Grab attributed the growth to improved affordability of its services along with higher user engagement via GrabUnlimited.

GrabUnlimited subscribers drove the bulk of this growth as they spent more than four times more on food deliveries relative to non-subscribers.

These members also had average retention rates that were double that of non-subscribers.

The adjusted EBITDA for the division leapt almost tenfold year on year to US$88 million.

#4 – A jump in loan disbursements for its Financial Services division

grab financial services 3q 2023
Source: Grab

Grab’s Financial Services division saw loans disbursed climb 52% year on year to US$1.05 billion for 9M 2023.

This level of loans was a far cry from the US$69 million three years ago and demonstrates the sharp increase in the division’s loan book.

Customer deposits at GXS Bank, a digital bank in partnership with Singtel, carried deposits of US$362 million as of 30 September 2023.

grab financial services earnings 3q 2023
Source: Grab


The division experienced rapid growth with revenue for 3Q 2023 more than doubling year on year to US$50 million, albeit on a low base.

Total payment volume inched up 1% year on year to US$3.9 billion while adjusted EBITDA improved from negative US$105 million in 3Q 2023 to negative US$68 million in 3Q 2023.

Other encouraging business developments may spur faster growth for this division in the coming quarters.

Grab’s Malaysian digital bank, GX Bank Berhad, received approval to commence operations in September this year while Kakaobank, a leading South Korean digital bank, announced that it will take up a 10% stake in Superbank, an Indonesian digital bank backed by both Grab and Singtel.

What investors may not like about Grab’s results

#1 – Yet to break even on a group level

Despite the encouraging progress in growing its revenue and GMV across its divisions, Grab’s business has yet to turn a profit.

Its 9M 2023 net loss amounted to US$496 million, although this was significantly lower than the US$1.3 billion loss incurred in the same period last year.

#2 – The company still relies on EBITDA as a key metric

Grab has proudly announced that it achieved its first positive adjusted EBITDA for 3Q 2023.

However, EBITDA is not a reliable measure of profitability as it does not include essential expenses such as depreciation and amortisation.

A better measure that the company can adopt is EBIT or operating profit.

Achieving positive EBIT is a much more admirable goal than EBITDA as it is a more robust measure of profitability.

What would Beansprout do?

Grab’s business has seen across-the-board improvements in revenue which is a very encouraging sign for investors.

However, while Grab has generated positive adjusted EBITDA in 3Q 2023, it is still a long way from being profitable as a group. 

For now, wall street analysts appear to be positive on the prospects of Grab. According to data from Webull, close to 90% of analysts have a Buy or a Strong Buy recommendation on the stock.

The average share price target is S$4.78, more than 53% above its share price of S$3.13 as of 22 November 2023. 

We will continue to be patient in assessing if the company can continue to improve its overall financial and operating metrics while generating consistent free cash flow.

grab share price target december 2023
Source: Webull

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