Ladies and gentlemen, thank you for joining us today. My name is Adam and I will be your conference operator for this session. Welcome to Grab's Third Quarter 2023 Earnings Results Call. After the speaker's remarks, there will be a question-and-answer session. I will now turn it over to Douglas Eu to start the call.

Good day, everyone, and welcome to Grab's third quarter 2023 earnings call. I'm Douglas Eu, Head of Asia Investor Relations at Grab, and joining me today are Anthony Tan, Chief Executive Officer; Alex Hungate, Chief Operating Officer; and Peter Oey, Chief Financial Officer. During the call today, Alex will discuss our operational highlights, followed by Peter who will share details of our third quarter 2020 financial results, and Anthony will then discuss our strategic outlook. Following the prepared remarks we will open the call to questions. As a reminder, today's discussion contains forward-looking statements about the company's future business and financial performance. These statements are based on our beliefs and expectations as of today. Actual events and results could differ materially due to a number of risks and uncertainties, including macroeconomic, industry, business, regulatory and other risks, which is described in our Form 20-F for the year ended December 31, 2022 and our filings with the SEC. We do not undertake any obligation to update any forward-looking statements. The discussion today also contains non-IFRS financial measures, which should be considered together with rather than as substitutes for IFRS financial measures. A reconciliation of non-IFRS to IFRS financial measures is included in this quarter's earnings materials. For more information and additional disclosures on recent business performance, please refer to our earnings press release and supplemental presentation for a detailed third quarter 2023 financial review, which can be found on our IR website. And with that, I will turn the call over to Alex to deliver his remarks.

Thanks Doug, and thanks for joining us today everybody. I'm pleased to share that we reported a strong set of results this quarter. Grab has reported positive group adjusted EBITDA for the first time. And while this is an important milestone, it represents just one step in our journey as a public company. At the same time, our top line continues to grow from strength to strength. Revenues are up 61% year-on-year and 8% quarter-on-quarter, while group MTUs hit another all-time high. Over the next few minutes, I will share the operational highlights across each of our segments and the underlying drivers of these results. So starting with deliveries. Last quarter we reached an all-time high for deliveries GMV and mentioned that we expected to achieve sequential growth this quarter. In the third quarter, we not only continued to drive sequential GMV growth to another all-time quarterly high, but at the same time we continue to improve profitability with deliveries adjusted EBITDA margins improving to 3.4%, all the while maintaining our leading category position across the region. Our ability to drive both top line and bottom line improvements while deepening the market penetration is a result of the following key initiatives. First, we've made progress on reducing our cost to serve to improve the affordability of our products and services for users while enhancing partner earnings. We've built a strong competitive moat by leveraging our scale, category leadership position and tech advantage to create the best-in-class experiences for our users and partners. For example, batched orders which now account for over one-third of deliveries orders provided average delivery fees for users that were 8% lower than unbatched orders and resulted in 5% higher driver earnings per transit hour compared to unbatched orders. Improved allocation and navigation efficiencies among other factors…

Thanks Alex. We delivered on our commitment to achieve adjusted EBITDA breakeven this quarter, driven by improved profitability across all our segments even as we continue to grow our top line. Let me start by providing some color on our revenue growth. Group revenues in the third quarter grew 61% year-on-year and 8% quarter-on-quarter to reach $615 million. On a constant currency basis, revenues grew 62% year-on-year and 10% quarter-on-quarter. The strong revenue growth was driven by all segments of our business. Mobility revenues were up 31% year-on-year and 11% quarter-on-quarter to hit $231 million. Our efforts to deepen user penetration via more economical service offerings have enabled us to capture the growth in demand. Deliveries revenues grew 79% year-on-year and 5% quarter-on-quarter to reach $306 million as we continue to grow GMV and reduce incentives. Financial Services revenue grew by 156% year-on-year and 24% quarter-on-quarter to $15 million underpinned by improved monetization of our payments business increased contribution from lending and lower incentive spend. And Enterprise and New Initiatives revenues grew 83% year-on-year and 4% quarter-on-quarter to reach $28 million. This was supported by increased monetization of our advertising business. Turning now to group GMV. We recorded year-on-year growth of 5% to reach $5.3 billion in the third quarter. This was supported by a 7% year-on-year increase in group MTUs and 5% increase in average order frequency of our services. Our on-demand segments of Mobility and Deliveries recorded GMV growth of 14% year-on-year and 3% quarter-on-quarter. Mobility GMV grew strongly by 30% year-on-year and 7% quarter-on-quarter and we remain on track to exit 2023 around pre-COVID GMV levels. Deliveries GMV continued to expand further as we rolled out more affordable offerings increasing 7% year-on-year and 1% quarter-on-quarter to $2.6 billion. Moving on to segment adjusted EBITDA. Our total segment…

Thank you very much, Peter. We are proud to have achieved adjusted EBITDA breakeven this quarter. That said, we are clear that it represents just one milestone of many in our journey as a company. As such, even as we adapt our business to the evolving market environment, we will remain laser focused in driving both growth and profitability, and stay true to our mission and that mission is to drive Southeast Asia forward by creating economic empowerment for everyone. Despite operating in this region for over a decade, we still see abundant opportunities to untangle complex, societal problems in the region. We still have a long way to go in achieving our mission. There is so much more we can do to serve beyond one in 20 Southeast Asians, that use our platform every month and empower the millions of everyday entrepreneurs, currently on our platform. Now, in order to achieve this we have to provide our consumers with more affordable services while enabling our driver merchant partners to earn more. Hence we need relentless innovation and that's something we will continue to strive for to build a sustainable and thriving marketplace that balances the interest of our users and partners for the long-term. We will continue to focus on investing to develop hyper local innovations and leveraging our scale advantage to solve problems for Southeast Asia. Three main factors will guide us on how we decide where to focus our investment efforts. Firstly, these investments have to improve the health of the marketplace and solve an actual problem. This will ensure that we never compromise on being the number one choice for our users and partners. And examples of these will be the rollout of Saver deliveries and improvements to batching rate which reflect how we are offering…

[Operator Instructions] The first question today comes from Navin Killa from UBS. Navin, your line is open. Please go ahead.

Hi, thank you for the opportunity. I guess two questions from me. First of all, I guess I wanted to touch on the elephant in the room which is the Food Panda proposed sale in Southeast Asia. What can you comment on this? And I guess in particular, how do you think about it between acquiring it versus not acquiring it and competing potentially I guess with a more aggressive competitor. Can you I guess also help us understand, how you're thinking about this with regards to your overall capital allocation principles? And I guess the second question, I know you briefly touched upon this a little bit. But with the business now achieving positive EBITDA, how are you thinking about balancing growth and profitability going forward? And how should we think about your adjusted EBITDA margin going forward? Thank you.

Thanks, Navin. Alex here. I'll start on the question about Food Panda Southeast Asia. As you know, we won't comment on rumors, but I will say that we don't operate for M&A. We operate to provide the best experience and the best services for our customers, merchants and drivers while trying to be profitable as a platform as you can see from our strategy. So I think some of the outstanding numbers this quarter if you ask me what are the operational numbers, batch order is now accounting for over one-third of Deliveries orders, reduction in driver wait times improving by 72% year-on-year and 47% quarter-on-quarter with the proprietary mapping that we have. And then that's all translating to higher earnings per hour for our drivers, which means that we get much better loyalty and much better supply than smaller competitors. So that translates into affordability, quality of selection. So we just keep increasing wallet share and engagement as well with the financial services that we add on. So that multi-segment approach is also super important. So, I would say that our main focus is on continuing to double down on that scale advantage so that we increase value for consumers, drivers and merchants on our platform.

Navin, on your question around just capital allocation. Look, I think Anthony summed it up well during his remarks where he said, while we have a very strong balance sheet today we're going to consider to maintain very disciplined. We have a high hurdle rate when deploying our capital both organic and inorganic opportunities. So no change in terms of how we view our capital deployment principles, it will continue to be prudent. We'll continue to have high -- very high hurdle rate when it comes to deploying those capital. And we're very focused on making sure that we have a healthy cash balance and adopt that discipline that we've been executing taking a balanced approach towards that capital allocation.

Yes. On growth and profitability or balancing them, we'll constantly be pushing for both growth and profitability, while staying on track with our mission of driving economic empowerment for everyone. As you now see we have achieved positive group adjusted EBITDA for the first time this quarter. While this is just one achievement there are many, many more that we are shooting for. So looking ahead, we are focused on driving, the steady pace of adjusted EBITDA growth and generating resilient free cash flows. And we have -- and we will continue to focus on investing and developing hyper-local solutions that solve real problems in this region. But how we think about investments we will do; one, criteria does it improve the health of our marketplace; two, are we able to successfully scale up in a very capital-efficient manner; and three, it must be able to generate sustainable unit economics for the long run. So, in short, we are actually very excited of this journey, and especially what lies ahead. We still see plenty of headroom to grow in the region. So we will do this in a sustainable and profitable manner and we will do so generating a steady pace of adjusted EBITDA growth.

And I mean just -- you had a question around adjusted EBITDA margin also as part of that. Look we're not guiding long-term EBITDA margins as yet group EBITDA margins. Here's what I can say is, the way we approach, it is really continue to drive operating leverage in the business and also making sure that we can continue to grow also our top line. So we'll be balancing that and we'll be managing our business to long-term EBITDA growth and also free cash flow generation. So that's how we're going to balance the growth and profitability.

Thank you.

Next question, please.

Next question comes from Alicia Yap from Citigroup. Alicia, your line is open. Please go ahead.

Hi and thank you. Good evening, Anthony, Alex and Peter. Thanks for taking my questions. Congratulations on the strong set of results. Two questions. First, can management share your view how you see the overall competitive landscape for the delivery business. Do you think there is still room for new players to enter by building their presence gradually and then taking share from some of the players who might scale back their focus in the region? And then second question is given your New Initiative Enterprise business is doing very well. So if you can share your aspiration for the online ad business. What is your specific KPI or milestone that you have set for yourself in the near term and medium term? How fast, how big you hope to achieve in the ad revenue? Thank you.

Thanks, Alicia for both those questions. Let me take those. Firstly, the Deliveries market has always been competitive as you know. We think our multi-segment approach to on-demand is gives us an advantage and the focus on the ecosystem scale I was speaking about earlier to Navin's question. If you look at the way we've been able to reduce our Deliveries total incentives down 444 basis points to 9.8% now down year-on-year by 444 basis points. And then the Deliveries consumer incentives within that down 249 basis points year-on-year to 5.6%. So I think that's a proof point that we're not dependent on incentives to grow. We can actually fundamentally drive the cost to serve down to create affordable services and that in itself can drive growth. If you look at the back to the financials for this quarter, we've now got Deliveries margins reaching 3.4% and with revenue growing 79% year-on-year and 5% quarter-on-quarter then I think you can see that we're getting both growth margin improvement, but with reducing incentives. EBITDA margin expanded 302 basis points year-on-year over the same period. So this is about driving affordability. And I reckon therefore if people do drop out of the market, I think we're optimistic that it will be Grab and not the new entrants who will take their share. So going back to your second question, which was on the ads business. Yeah. The year-on-year improvement in ads is one of the big stories I think this quarter and last quarter. We are confident in our endemic ads proposition because although there are other platforms out there, so platforms that have larger audiences than we do we uniquely can offer that closed loop on -- for performance marketing that endemic advertisers want. And we're dealing with first-party data in our case as well with the transaction associated with it. So this is a kind of a recession proof because it's the performance marketing which tends to outperform in difficult times. So we think it's the right thing to focus on. In the quarter, you can see that our self-serve advertisers -- merchant advertisers was up 83% year-on-year. So that's a reflection of the strategy we've shared with you over the last couple of quarters to focus on self-serve. But it's still in early days. We do -- we can see that we've still got lots of headroom to penetrate the long-tail advertisers further. And we've got great return on advertising sales for them. We're at about seven to 9x ROS even for the long-tail mix that we're serving. In terms of where that could end we're not giving guidance at this point, but I will say that we're watching carefully some of the external benchmarks which as you probably know are in excess of 2% as a percent of the revenue as a percent of Deliveries GMV. So that's more than double where we are at this point. Thanks, Alicia.

Thank you.

The next question comes from Pang Vitt from Goldman Sachs. Pang, your line is open. Please go ahead.

Hi. Thank you very much for the opportunity and congratulations for a good set of results. So question for me please. Number one, on the on-demand market share trends. We noticed it's very strong this quarter especially in Indonesia. Would you continue to deliver in mid-teens in terms of year-on-year trend versus your peers that seem to contract on mid-teens as well. What have you done differently there that led to this strong growth trends? And more importantly, can you also comment on how management sees the current competitive landscape into fourth quarters over there with your competitors signaling that they are moving to protect their market share now? That's question number one. Question number two related to the Financial Services segment. Growth materially picked up in the quarter. Can you share with us more on the trend going forward? How much of this growth come from payment and how much of this is now coming in from lending. With your loans outstanding amounted to around $175 million [ph] in the quarter. How should we see this trend going forward as well?

Okay. Pang, thanks so much for both questions. Let me take the question on Indonesia first. You're right we've grown strongly in Indonesia in both mobility and deliveries. I guess, there are no secret ingredients but I think a strategy that's working for us is to have a laddered pricing. That means we've got a [Indiscernible] or economy saver service that helps us drive the base of the pyramid and bring new people into the platform. And it's layered with ads, so it helps to drive our -- we get ads margin enhancement from that. And then we've got premium services to cater for business community, which obviously come with higher margins. And then the price laddering between the economy, the standard and the premium is optimized all the time using machine learning city-by-city time slot by time slot. So this is working for us. It's allowing us to grow healthily and at the same time maintain our margins at/or above the long-term targets that we shared with you. In addition, I think we have an advantage in Indonesia because of our geographical diversification. We get scale by being consumer choice -- number one choice in multiple markets. And so the tech that we can roll out like our mapping tech, our payments and a lot of our other optimization tech that's driven the great operational performance in this quarter is built for multiple markets and so we can amortize the cost for the Indonesian market. We've been able to lower the consumer incentives. So as I talked about earlier to Alicia's question, you can see that we demonstrated that we can use cost-to-serve initiatives to provide affordable services without using incentives. And I think that will be our strategy to continue to do that in Indonesia. You asked about…

The next question comes from Divya Kothiyal from Morgan Stanley. Divya, your line is open. Please go ahead.

Thank you. I had two questions. The first one was continuing with the Financial Services segment. Just wondering the narrowing of losses that we've seen in this quarter despite higher Digibank related costs, can we just explain the drivers of this? And what would your outlook for the fourth quarter and beyond be? Do we expect these losses to continue tapering now? Or should we expect it to be bumpy as you launch into new markets? And my second question is around corporate costs. We noticed this was flat quarter-on-quarter. Once again, I would be keen to know your comments on how you see this trending whether we are depending more on operating leverage now? Or do we have more levers to pull to reduce this? Thanks.

Hi Divya, it's Peter. Let me take both those questions. So on Financial Services that you did -- we did see a narrowing of the losses on a Q-on-Q basis. So let me provide a bit of color on that. If you look at our GFin business and that's where we're continuing to optimize the cost structure of our GFin business, and we're going to -- and then we've seen some really good traction. And we also have see it very similar previous quarter. And if you look at also the variable cost, which is about a-third of the GFin -- of our fintech business today, that's a variable piece which is actually supporting our payments platform. So as the volume transactions grow, you're going to see an uptick of the payment costs on the cost of funds to support our growing Mobility and Deliveries business. But setting that aside the cost structure of GFin continues to be -- continue to come down. It continues to be optimized in the business. On the Digibank side, we're getting ready for a couple of big launches in a couple of remaining countries in this quarter. So we're very excited about that. And some of the cost structure 11% increase that we talked about is leading up to those launches that we have. And as we think about this quarter overall, I would say probably in terms of our cost structure for our overall fintech business is slightly higher just given that we are going in with those key launches in those couple of markets that we have. Yes, go ahead.

Yes. I'll just add some numbers to illustrate Peter's comments. So cost of funds represents about 30% of our financial services costs. And that obviously increases in line with the GMV growth. So that's what Peter referred to as variable. So that's the 30%. The other segment costs, if you do the sums from the numbers we shared this quarter, the other segment costs actually reduced by about 5% year-on-year and that's despite the increase in the build cost for the Digibank, which is up 11% quarter-on-quarter. So we've managed to absorb that build cost for the Digibanks and at the same time reduce the total cost by 5%. Thanks. Peter?

Yeah. And then on regional corporate costs going to continue to look for operating leverage in the business. And as you saw in the third quarter, it was flat on a quarter-to-quarter basis, but it was down on an 8% year-over-year basis. If you unpeel that what we did see is headcount cost was down 6% year-over-year and also on Q-on-Q basis and our fixed overhead -- non-headcount fixed overhead was down 14% year-over-year or 9% quarter-on-quarter. So that continues to -- we're going to continue to look for opportunities to optimize costs, but also at the same time that we also want to balance the need for us to also grow the business and to run the business at the same time. So, we're going to be very disciplined in terms of how we hire. We're going to be very disciplined in terms of what costs we take on as a business. But it is important that, we do have operating leverage in the business and we're seeing that also and we're going to continue to make sure that operating leverage continues to drive both growth in the business, but also margin improvements overall.

The next question comes from Piyush Choudhary from HSBC. Piyush, your line is open. Please go ahead.

Yeah. Thanks a lot. Congrats Anthony, and entire team on a good set of results and turning it just EBITDA positive. Two questions. Firstly, you've talked a lot about affordable solution in both Mobility and Delivery. Can you give some color what percentage of incremental users are coming, because of such solutions and what percentage of incremental GMV growth is driven by that? And is the margin profile of these new product solutions similar? That's the first one. Secondly, in the Delivery segment you have already reached 3.4% segment margin. So any revisions to your midterm margin expectation? Can the segment reach 5% segment margin by 2025? Thank you.

So, Piyush thanks for your questions. Yeah, the Saver solution now is responsible for about one-third of the GMV. So imagine that equates to about one-third of the MTUs. On the margin impact what we are able to do -- because of the ladder pricing approach that I described earlier is, because we're optimizing the pricing between the Saver offering the standard offering and the premium offering. We're able to manage the margin to the same stable end result that you saw. So, over 12% for Mobilities and the 3.4% for Deliveries. It's the same optimization that we use as I mentioned using machine learning. The products are distinctly differentiated. So for example on the Saver product, you'll see more ads layered in the -- as an example and then on the premium product, you'll get better vehicles. So the physical product is different and then also you get a more reliable faster pickup for airport rights for example which is something we've been growing very, very rapidly. So net-net that the margin is stable across that despite the fact we're now able to target the affordable segment.

If you show on your Deliveries margin of 3.4,% we've always said that we're from a steady state perspective our Deliveries margin will be 3% plus, and we've achieved that. And if you look at our ads business also last Q3 from a margin perspective it's roughly about 40%, 41%. So we're going to continue to balance. In terms of growing the Deliveries business, we still see a lot of opportunities in our Deliveries business as Alex mentioned, a third of our Deliveries users are tapping into our affordable options which is great. A third of our Deliveries GMV comes from subscribers, which is critical also. So we're going to drive frequency. We're going to drive growth also at the same time. But also we're going to be, very disciplined also in making sure that the margin for Deliveries continues to be that 3%, plus that we've said in prior quarters before.

The next question comes from Reena Bhasin from Deutsche Bank. Reena, you line is open. Please go ahead.

Hello. Can you hear me please?

Ma'am, please go ahead.

Yeah. Go ahead.

Yeah. Thank you for the call and also thank you for the improved disclosure on your Financial Services business. I have a few questions. Firstly on the Digibank side. Can you please help us understand what metrics we should use to evaluate the effectiveness of your Digibank strategy? I know you've given numbers on the Singapore deposit base where you've completed a year. But could we know how much of the loan book is coming from the Digibank or at least in terms of origination transactions? If you could share some color on that front please? My second question is actually with regard to Anthony's comments about the aspects that look -- that are key to long-term growth, I found it kind of just easy to accept that any M&A will more or less improve the health of marketplace and help to scale up the business in an efficient way. And with the treasury which is earning some 5% income, I think the hurdle rate to deploying more money into businesses doesn't seem that high. So I'm just trying to think, why, would you ever say no to any M&A. Could you just please share some clarity on what kind of metrics you're using besides improving health of the marketplace? I guess my third question is just, if you could share any light on what kind of commitment, could you make to the regulator in Singapore to kind of ensure that the Trans-cab transaction does go through smoothly. Is that something you're considering making commitments to the regulator. Thank you.

Thanks Reena. Yes. Let me take your first and third question. So the first one on the Digibank, as you probably saw the loans outstanding in total between GFin and Digibank is at $275 million. And the loan dispersal year-to-date has reached $1 billion. Now, we don't break out within that what is the Digibank. The main reason is because the Digibank has just started lending as you know with the Flexi-Loan product. But as that portfolio gets larger it is likely that sometime next year we'll start to break this out so you'll be able to see GFin on the one hand and then the Digibank Flexi-Loan portfolio size on the other hand. The main reason -- the main method for judging the success of the Digibank is at this stage is the consumer take-up. We're very pleased that the take-up of deposits has been strong and the take-up of the Flexi loan product also strong. We're obviously monitoring the credit models to make sure that the Flexi loan is performing seems to be performing well. And then we'll work with the regulators to understand how to move out of the progressive phase that we're in to ultimately end up as a full digital bank where we can grow both sides of the balance sheet faster. I'll just jump to your third question as well. We are working closely with CCS to answer all their questions. We provided a lot of information to them. We'll continue to be very open with them. We are committed to making sure that drivers can openly drive on any platform that they want to drive on. There will be no lock in to the Grab platform. And I think beyond that there shouldn't be any need for commitments to the regulators because in our view this transaction is good for the drivers helps them to improve their earnings and efficiency and productivity. And it's good for consumers because it increases the availability of supply in Singapore by making those drivers more available using better technology.

And your question around M&A and how we think about it. So, there's a few things when we look at inorganic opportunities. You mentioned that there's hurdle rates that we use, while there's financial guardrails that we use, but also we look at others. And a couple of those, which are very important to us is how does it impact the ecosystem or the marketplace that we have today. So, it's really important that whichever -- whatever we look at any opportunities that it has to benefit the marketplace. Great example of that is Jaya Grocer that we did. So if you look at the Jaya Grocer today we've managed to increase their online delivery which was hardly any when we took up with the business and that's benefited our consumers in Malaysia and it's benefited also our driver partners also at the same time. We look at also what opportunities will those targets also can add into -- whether it's our merchant base or how we can drive more demand for our driver partners. So, those are really important while financial accretion is also as critical as important to us we look at all those dynamics when we evaluate an M&A opportunity overall as a package. So, I hope that helps to give a bit of a color on how we think about it.

Yes. Thank you. May I just quickly follow up on your last point about the financial accretion part. The -- can you please comment on the treasury strategy as you kind of surface in the news more often than before with regard to a potential large outgo towards M&A. How is the treasury strategy changing? And is 4%, 5% kind of income going to just kind of vanish from the balance sheet if you were to indulge in big-ticket M&A?

The cash in the balance sheet that we have, we're going to be very good stewards of our capital. And whatever the treasury yield is today we'll make sure we'll maximize it. But also at the same time, we're going to make sure that every dollar that stays on our balance sheet also is off to good use whether it's investing in whatever we can in treasuries or whatever other investment products. But I think what's really important is we've been very prudent in terms of how we deploy our capital at the end of the day. And that's really what's critical to the shareholders so that we are being very careful in terms of how we deploy it.

This concludes Grab's third quarter 2023 earnings conference call. Thank you for your participation. You may now disconnect.