Get the passenger unit on track to reach pre-Covid levels by the end of 2023

Singapore-based Grab said on Wednesday that its ride-hailing services unit is on track to reach pre-Covid levels by the end of this year.

in it second quarter earnings In a press release, Grab reported that total mobile merchandise value for the quarter was $1.32 billion, up 28% from $1.03 billion in the same period last year. Grab, which also offers food delivery and mobile payments, said its GMV traffic had recovered to 85% of pre-Covid levels.

“Demand for international travelers continues to recover. We increased airport trips by 64% year-over-year to 77% from pre-Covid levels,” COO Alex Hungate said during an earnings call Wednesday.

“Domestic demand has also normalized further across our markets with total commuting now at 85% of pre-Covid levels. When we compare the commuting volume levels between the second quarter of 2023 and the same period in 2019, many of our core markets such as Malaysia, Singapore and Thailand have either reached or exceeded these levels, Hongat said.

Lockdowns and pandemic restrictions have hurt Grab’s passenger business. And in the third quarter of 2021, its mobility business fell short of its delivery unit, on record $88 million in revenue down 26% year-on-year while revenue for the latter was up 58%. Singapore lifted most and all of its COVID-19 restrictions in April 2022 Residual border measures in the age of a pandemic In February this year.

In February, Peter Oy, Grab’s chief financial officer, told CNBC that the company “has seen a huge amount of traffic” as people return to their offices and travel resumes.

“We remain on track to exit 2023 at pre-Covid GMV levels,” Oye said during Grab’s earnings call on Wednesday.

At the beginning of 2023, Grab also resumed GrabShare – a car-pooling service that had been suspended during the pandemic.

“GMV growth was driven by growth in mobility, GMV delivery and group monthly transaction users,” Sachin Mittal, Head of Communications, Media and Technology Research at DBS Bank, said in a note.

GMV deliveries grew 4% year-over-year due to the expansion of the subscriber base of GrabUnlimited, a monthly subscription plan that offers users discounts and deals.

DBS said Grab was fully appreciated, and that “we don’t see much scope for a margin hike over the long term”.

Grab’s Hungate said driver supply levels are currently at 84% of pre-Covid levels and that the company will “continue to focus on improving driver supply.” Singapore has faced a driver shortage since the outbreak of the pandemic, which has led to higher prices and longer wait times.

in July, Grab said it will take over the Trans-cab To grow the driver base and digitize Trans-cab fleet operations. Trans-cab is the third largest taxi operator in Singapore and has a combined fleet of more than 2,500 vehicles. The transaction is expected to be completed by the fourth quarter.

“The company demonstrated its competitive strength this quarter with the acquisition of Trans-cab. We believe the acquisition provides avenues for car rental and Grab fleet expansion, which should boost its mobility services in Singapore,” Kai Wang, chief equity analyst at Morningstar. Asia, in August. 24 reports.

On Wednesday, Grab published revenue and net loss numbers that beat estimates. Revenue for the second quarter was $567 million, up 77% from a year ago. Its net loss was $135 million, a 75.3% improvement over the $547 million recorded in the second quarter of 2022.

US-listed Grab shares closed up 10.78% on Wednesday.

“Overall, it’s a quite positive set of numbers,” said Jonathan Wu, senior research analyst at Philip Securities Research.

“At least there is an end in sight for profitability. We believe Grab can turn a net profit as soon as early 2025 if costs continue to improve,” Wu said.

Grab is largely unprofitable, having incurred billions of dollars in losses since its inception. But on Wednesday, Grab pushed the tie-breaker into the third quarter. It previously predicted it would break even in the fourth quarter. For 2023, Grab expects revenue between $2.2 billion and $2.3 billion.

Over the past few months, Grab has cut costs in response to macroeconomic headwinds, reducing customer incentives and discretionary spending, as well as mass layoffs. Similarly, other regional tech giants such as Sea and GoTo have cut costs through tactics such as mass layoffs and salary freezes.

In June, Grab announced that it would cut more than 1,000 jobs to “go green” and the high cost of capital. It was the group’s largest round of layoffs since 2020, when it laid off 360 employees in response to the challenges of the pandemic.