GRAB Q3 2026 EARNINGS CALL - GRAB HOLDINGS LTD

Financial Performance:

• Adjusted EBITDA reached a record $237 million in Q3 2026, a 73% year-on-year increase and 19th consecutive quarter of expansion.
• All three core segments (Mobility, Deliveries, Financial Services) are now profitable, with Financial Services achieving segment-adjusted EBITDA profitability for the first time.
• Group revenue and adjusted EBITDA guidance were raised for the second time in the year.
• Full-year 2026 adjusted EBITDA guidance raised to $790–$800 million (previously $720–$740 million), representing 16–18% year-on-year growth.
• Trailing 12-month adjusted free cash flow nearly doubled to approximately $553 million.
• Q3 2026 Financial Services contributed $12 million in EBITDA; long-term 2028 target is $500 million EBITDA and a loan book exceeding $6 billion.
• Mobility and Deliveries margins expanded sequentially to 8.9% and 2.7% respectively.
• Monthly Transacting Users (MTU) hit a record 57 million, up 20% year-on-year, with 3 million new users added in the quarter.
• On-demand GMV grew 22% on a constant currency basis.

Guidance and Future Outlook:

• Reiterated 2028 long-term targets: Group revenue CAGR >30% and Adjusted EBITDA of $1.7 billion (including the proposed acquisition of Atomi).
• Q4 2026 guidance assumes stable EBITDA relative to Q3 to fund strategic investments in driver capacity, festive season marketing, and new product launches rather than immediate margin expansion.
• Financial Services is on track to reach $500 million EBITDA by 2028, driven by the integration of Atomi and scaling of GrabBank/GXS.
• Deliveries segment aims to progressively increase margins toward a long-term target of >4%, despite planned $200 million investment in product growth (GrabMall, GrabMart) over the next three years.
• Management expects consumer credit TAM in Southeast Asia to be 10x current levels, providing significant runway for growth beyond 2028.

Business Segments and Product Lines:

• Financial Services: First profitable quarter; $12 million EBITDA contribution. Growth drivers include Superbank, Stash, and non-bank lending (GrabFin). The proposed Atomi acquisition will add massive consumer lending scale and monetization capabilities.
• Deliveries: Launched "GrabMall," a branded retail commerce channel leveraging closed-loop advertising and quick commerce. Ads are a key margin driver alongside operational leverage.
• Mobility: Maintained highest-ever active driver base (+20% YoY) to address fuel cost pressures and ensure supply reliability during the festive season.
• New Products: Rollout of GXS credit card in Singapore and OVO Pinjang (lending product with Credit Pintar) in Indonesia.
• Investment Strategy: Allocating ~$200 million to fund GrabMall and GrabMart growth while targeting long-term margin expansion.

Market and Competitive Landscape:

• Southeast Asia remains a high-growth region projected to expand well above global averages in 2026.
• AI is central to the competitive moat; AI interactions grew 60% quarter-on-quarter with compute costs down 42%.
• GrabMall targets the FMCG advertising market by offering end-to-end fulfillment, differentiating from pure-play advertising networks.
• Grab Unlimited subscribers (over 20% of Deliveries MTU) generate 35% of deliveries GMV and transact nearly 3x more frequently than non-subscribers.
• Strategic partnerships include OpenAI (training 30,000 partners) and Meta (Muse AI agent integration in Singapore).

Risks and Challenges:

• Operational Costs: Elevated fuel prices continue to pressure driver earnings and operating costs across Mobility and Deliveries.
• Regulatory Environment: Indonesia's new two-wheeler commission framework and potential new guidelines on on-demand logistics/food delivery require careful navigation to protect driver earnings and fee transparency.
• M&A Uncertainty: The proposed acquisition of Atomi remains subject to regulatory completion; the rejection of the Foodpanda Taiwan acquisition resulted in a $550 million cash injection but disappointed management.
• Market Dynamics: Persistent inflation affecting household spending; the need to balance driver incentives with margin targets.

Management Commentary and Tone:

• Tone is highly confident and conviction-driven; CEO Anthony Tan personally purchased additional shares.
• Management emphasized "ecosystem compounding," where more users and services drive higher margins and better partner earnings.
• Strategic focus on "AI first with heart" to simplify user experiences and increase partner earnings.
• Emphasis on a "prudent" guidance philosophy, prioritizing long-term market share and partner stability over short-term margin peaks in Q4.
• Commitment to capital discipline with a $900 million share buyback program, $400 million already repurchased in Sept/Oct, with the remainder to be completed by September 2027.

Analyst Questions and Answers:

• Guidance Q4 Stasis: Explained as a deliberate strategic choice to reinvest in driver capacity (20% YoY growth), festive season marketing, and new product launches (GrabMall, digital banking) to ensure reliable supply and customer experience.
• Deliveries Margins: 2.7% margin reflects operating leverage and AI efficiency; Ads growth and scale are key drivers. Expected to improve progressively toward 4%+ despite ongoing product investments.
• AI Proof Points: Users shopping both GrabFood and GrabMart have 10% larger baskets; drivers using AI assistants earn >10% more/hour; merchants using AI earn ~20% more. AI adoption remains a work in progress but is core to DNA.
• Financial Services Mix: No split provided per sub-entity (Superbank/Stash/GrabFin), but $300M of the 2028 target is expected from Atomi and Superbank, with the remainder from other ecosystem products.
• Capital Allocation: Focused on organic growth and Atomi; excess cash will be used for share buybacks to cancel shares.
• Autonomous Vehicles (AVs): Grab will act as the orchestrator/distribution layer for AVs (asset-light model) alongside human drivers for at least a decade, managing hybrid dispatch in Southeast Asia's unique weather and cost conditions.
• Partnerships: Willing to partner with global firms (e.g., Uber, OpenAI, Meta) to leverage external tech while retaining control of the local network and customer relationships.

Other Key Points:

• 20 billion cumulative transactions processed on the platform, providing deep real-world data for AI models.
• OpenAI partnership aims to upskill 30,000 drivers and merchants over two years, starting in Singapore/Thailand and expanding regionally.
• Meta's Muse AI agent integration allows users to build shopping baskets via chat for GrabMart and GrabEats.
• Grab Unlimited program now extends benefits to mobility in select markets to drive cross-sell.
• Merchant-funded promotions increased 48% year-on-year, driven by interest in reaching high-value Grab Unlimited users.