Ladies and gentlemen, thank you for joining us today. My name is Aida, and I will be your conference operator for this session. Welcome to Grab's Second Quarter 2024 Earnings Results Call. After speakers' 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 second quarter 2024 earnings call. I'm Douglas Eu, Director, Investor Relations and Strategic Finance 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, Anthony will discuss our key strategic and business achievements, followed by Alex, who will provide operational highlights, and Peter will share details of our second quarter 2024 financial results. Following the prepared remarks, we will open the call to questions. During this call, we will be making forward-looking statements about future events, including our future business and financial performance. These statements are based on our current beliefs and expectations. Actual results could differ materially due to a number of risks and uncertainties as described on this earnings call, in the earnings release and in our Form 20-F and other filings with the SEC. We do not undertake any duty to update any forward-looking statements. We will also be discussing non-IFRS financial measures on this call. These measures supplement but do not replace IFRS financial measures. Please refer to the earnings materials for a reconciliation of non-IFRS to IFRS financial measures. For more information, please refer to our earnings press release and supplemental presentation available on our IR website. And with that, I will turn the call over to Anthony to deliver his remarks.

Thanks, Doug. Thank you for joining us today. During the quarter, we focused on leveraging our platform scale to drive profitable growth. On-Demand GMV, group monthly transacting users and group revenues hit new all-time highs. While our On-Demand transactions actually grew strongly at 22% year-on-year. We also delivered our 10th consecutive quarter of group adjusted EBITDA improvement even as we invested into new products and faced foreign currency headwinds. This underscores our relentless focus on generating sustainable and profitable growth at scale in the long term. And as we balance growth and cost discipline, we achieved our second quarter of positive adjusted free cash flow, giving us the confidence for adjusted free cash flow to turn positive for the full year of 2024. As a company, we're committed to deliver the best value and service quality for our platform users and partners. Our strategy to be product and tech-led has been key to unlocking platform growth. During the quarter, we rolled out more affordable and high-value offerings across mobility and deliveries to meet the diverse needs of our users. We also focused on providing more tailored solutions to our users. For example, family accounts, advanced booking, group orders and dine-out deals are nascent products today, but have begun to gain strong traction and bring greater convenience for our users. At the same time, GrabUnlimited, our subscriptions program hit a new all-time high in total subscribers in the quarter. On the banks, we had a public launch of Superbank in June, our digital bank in Indonesia. With all the three digital banks now fully operational, together with GrabFin, our fintech platform, we are very excited about our opportunities to continue driving financial inclusion across the region. Our Digibank deposits, lending disposals and total customers across GrabFin and our Digibanks continue to…

Thanks, Anthony. Over the next few minutes, I will share our operational highlights and the underlying drivers of these results, starting with deliveries. We generated strong deliveries growth in the quarter by improving the affordability and reliability of our services with some significant tech and product initiatives, along with strong growth from Jaya. On a year-on-year basis, Deliveries GMV grew 14% on a constant currency basis, as we drove food transactions growth by 11% year-on-year. Segment adjusted EBITDA margins remained stable even as we invested in these new product rollouts. Saver deliveries gained further traction, reaching 28% of deliveries transactions from around 10% a year ago, creating meaningful uplifts for our ecosystem with Saver users exhibiting average order frequency levels 1.9 times higher than non-Saver users. Saver also attracted new users to Grab with 15% of new deliveries monthly transacting users joining the platform through Saver delivery. Concurrently, at the high end of the pricing ladder, we grew adoption of priority deliveries to 7% of deliveries transactions. We see a lot more potential in this relatively pricing sensitive segment. We particularly focused on innovating new ways to support large social gatherings and return to the office. For example, we revamped and relaunched group orders. So we've seen group orders driving basket sizes that were 2 times higher than average Grab food orders. And by enabling our users to connect seamlessly with each other on the platform, we're able to amplify new user growth and leverage our scale to drive improvements in retention, basket sizes and batching rates. This allows us to pass on cost savings to users in the form of lower delivery fees, which in turn accelerates growth. We strive to be the partner of choice for Southeast Asia's most loved merchants. We've increased median urgent -- median earnings…

Thanks, Alex. Before going to our results, it's important to highlight that Southeast Asia saw foreign exchange translational impacts that led to a divergence between our headline and constant currency growth rates. As the Southeast Asian currencies weakened against the U.S. dollar year-on-year, this translated to an impact of 528 basis points on the year-on-year On-Demand GMV growth rates and 549 basis points on revenue growth rates. Now withstanding these FX headwinds, our underlying demand in the region remains strong, as seen in the positive year-on-year GDP growth across Southeast Asia in the first half of 2024. This is driven by strong domestic demand and continued tourism recovery in the region. Now turning to our Q2 financial results, let me start with revenues. Group revenues in the second quarter grew 17% year-on-year, or 23% on a constant currency basis to reach an all-time high of $664 million. On a year-on-year basis, Mobility revenue was up 19% or 23% on a constant currency basis as we recorded strong growth in Mobility MTU and transactions. Our deliveries revenue grew 11% or 17% on a constant currency basis. Deliveries MTUs continued to grow as we drove top-line growth in food deliveries, advertising and Jaya Grocer. Incentive spend as a proportion of Deliveries GMV was down 40 basis points year-on-year. And financial services revenue was up 54% or 61% on a constant currency basis, driven growth by mainly from lending across GrabFin and GXS Bank and further optimization of payments incentive spend. Moving on to On-Demand GMV. Year-on-year second quarter On-Demand GMV grew 13% or 18% on a constant currency basis to $4.4 billion. On a segment level and year-on-year basis, Mobility GMV continues to grow strongly at 20% or 25% on a constant currency basis and Deliveries GMV growing by 9% or 14%…

Ladies and gentlemen, we will now start the questions-and-answers portion of the call. [Operator Instructions] Your first question comes from the line of Pang Vitt at Goldman Sachs. Your line is open.

Good evening, and thank you very much for the opportunity. Also, congratulations on a solid quarter. I noted that your second quarter GMV and revenue were hampered as a result of the FX weakness against the U.S. dollar. If not for that, growth actually looked quite strong in the second quarter. Could you also share some color on what you are seeing in the second half of the year in terms of this macro competitive and also on the industry perspective? Are you actually seeing improving sign in your market, which gives you the confidence to meet the upper end of your guidance items or even there is some room for you to potentially even beat on the guidance still? That's question number one. Question number two on Mobility. Can you explain and provide more color on the dip in EBITDA margin quarter-on-quarter? What is the reason behind this and also could you also provide some color on how these margins will trend in the coming quarters? Thank you.

Thanks, Pang. Great questions. Let me start, then I'll hand to Peter to just confirm the guidance. So yeah, you're right, the U.S. dollar strengthening did have a big impact on the headline growth in the second quarter. The good news is that so far this quarter, as you know, U.S. dollar has weakened, I think around 4% quarter-to-date. So those headwinds from the second quarter are kind of turning into tailwinds for us here in the third quarter. The macro outlook looks strong in Southeast Asia. So foreign direct inflows, Asian (ph) economies are at strong robust levels. Singapore recently upgraded its GDP forecast as well for the full year 2024. And on the ground, we're seeing tourism continuing to grow, particularly, European visitors and then Indian visitors as well, although, China is still behind where it was pre-COVID. And then your question on competition, I guess our markets have always been competitive, so there's no change there. We continue to main our category -- maintain our category leadership, both in the region and in every market. So our strategy is quite simple. We use this scale advantage along with our consistent investment in product and tech to drive improvements in both reliability and affordability, while growing profitability at the same time, as you've seen from our 10th quarter of improving profitability, that seems to be gaining traction at the same time as we're growing CP. Features like mapping, hyper batching and just-in-time allocation, they're all unique to Grab's and none of our competitors have that and we believe that makes us consistently more reliable as well as more affordable. As well as obviously attracting consumers because of the reliability with the group MTUs now at an all-time high. So it's very difficult for any local competitors in our -- in any of our markets to replicate that strategy because they simply don't have that scale and the technology to show sustainable profitability in the same way as we are. The trading update is positive. I hope that came across in comments in the prepared remarks. So demand for both Deliveries and Mobility has been strong in the first half of this quarter despite those difficult typhoon conditions that we referred to in several countries. So we do expect to drive sequential GMV growth for both Deliveries and Mobility as well as group adjusted EBITDA growth. And Peter, you want to talk about the guidance?

Yeah. So yeah, Pang, if you heard Alex there, we are at the sequential GMV growth, both Deliveries and Mobility, as well as also on the financial services front, we're picking up traction there on our lending book, and the banks are starting to scale. We're confident that on the EBITDA side, we will land at the upper end, which implies that our second half will be stronger than the first half. And let's not also forget that the free cash flow generating in the business is now in momentum. We expect adjusted free cash flow positive for the full year. So all these estimates are already baked-in in the -- all the competitive elements and the product investments plans that we make throughout the year. So we're feeling pretty good at how the second half will shape up for us with a lot of these investments that we made in the first quarter and the second quarter translating to the second half.

Thanks, Peter. And then Pang, your second question was on Mobility margins, the dip in this particular quarter and reasons behind this, and trends in the next coming quarters. Well, our main observation on Mobility is that there's a long runway for growth for Mobility in Southeast Asia that we just literally scratching the surface, we believe. So we want to target with more affordability along with reliability. We want to target a growth of the TAM basically by continuing to attract new users. So we have been rolling out those innovative affordable new products. They are unlocking new users. So the strategy is working. So in the quarter, Mobility GMV grew 25% year-on-year on that constant currency basis similar to the delivery segment. And then that growth was led by transaction volumes, which is what you'd expect obviously with an affordability strategy. And so the transaction volumes grew even faster at 38% year-on-year. And then the MTUs growing at 26% year-on-year. So the strategy is working is exactly what we had planned. So the net effect did lead to a reduction in segment adjusted EBITDA margins in the second quarter, but very much in line with our expectations and we -- but we expect the EBITDA to improve sequentially from here in third quarter and fourth quarter, and we remain committed to our long-term margin expectations of 9% plus for Mobility. Operator next question.

The second question comes from the line of Alicia Yap at Citigroup.

Hi. Good evening, management. Thanks for taking my questions. Two questions. First is wanted to get management comment how we perceive these potential disruptions of the On-Demand service given the entrants and partnership of the Shop Video platform with other On-Demand peers. How will Grab plan to defend the threat and how will that impact the EBITDA margin, if we need to fight back with more subsidy? Second is that if we can get some update on, I know you rolled out some products offering like the corporate, the premium cars and also those airport pickups. Any progress on that? And also any update on the Trans-cab acquisition? Thank you.

Okay . Thanks, Alicia for those three questions. The first one, yeah, we do work with all the major social media partners ourselves as well. We use it to drive top of funnel user acquisition and to reduce our CAC. So there's a lot of optimization that we do as we go from one to the next to drive top of funnel. But we are confident that consumers do prefer Grab's in-app experience further down the funnel because of course, that reliability and affordability that we offer due to our scale. And there's deep functionality in the Grab app, as you're aware with the ability, for example, for the user to communicate with driver and merchant directly throughout. And those product advantages like the largest driver partner network in the region, we use GrabMaps across all the markets, about 90% of the drivers use GrabMaps to navigate. And then, of course, the SuperApp ecosystem, including the banks now, leveraging GrabUnlimited, our subscription program and GrabRewards to cross-sell. So that scale advantage along with that consistent investment in product and tech means that the in-app experience and the reliability and affordability is very hard for social media players to replicate. And so in our view, the social media players will not impact our long-term margins and growth prospects, and we are maintaining the outlook for those long-term margins. So I hope we sound confident. It's not that we are complacent. We are monitoring very, very carefully what those interactions are between the social media players and other players in the industry. But we think that the relationship we have with many of them allows us to optimize acquisition, but provide the best possible combination of reliability and affordability once in our app. And then your next question was about the premium…

Thank you.

Thank you. The next question comes from Sachin Salgaonkar at Bank of America.

Hey, thank you for the opportunity. I have two questions. First question is on our Delivery EBITDA margin. We see the last couple of quarters, it's hovering in the range of 1.5%, 1.6% versus, let's say, in 4Q, it was high at 2.1%. I do understand there's a bit of a seasonality associated with that. But apart from that, anything else which is impacting it? And general thoughts on how we should look at the margin, should we see a near-term improvement in this margin? Any changes to your long-term guidance out here? Second question is on your financial services. Clearly now all Digibanks have been launched in all three countries. You do expect your second half to be better than first half. So in that context, any change in terms of guidance and breakeven in financial services?

Sachin, let me take the questions on both of them here. Look on Deliveries margin, we were continuing to invest in products at the same time. You've seen some -- if you look from a quarter-on-quarter perspective, we -- our margin slightly ticked up. If you look from a year-over-year basis, our margin for Deliveries improved by about 110 basis points. So overall, I think we're making all the right decisions in investing into new products also in Deliveries. We spoke a lot about Mobility. We shouldn't forget about Deliveries also. There's a ton of stuff that's going on in the Deliveries side. We've got also dine-out features now prominent in our app. The users are using it. There's other initiatives also that were in the works. Our grocery delivery, as well as our mark delivery continues to see good momentum. And so we'll continue to make those investments. So we're continuing to make those investments and also balance profitability at the same time. So we continue to grow the EBITDA of our Deliveries business. It's important that we do that and we feel pretty good in where we are today and we'll see -- you'll see sequential growth in both our GMV revenue and our EBITDA dollars from that perspective. We're committed to the 4% plus in terms of margins. You'll see margins swing from one quarter to a quarter. Some of that it could be just the product mix in the business and also how advertising comes in also into the business. But where we are today, the EBITDA -- the margin for Deliveries, we feel is in a good spot and we are shooting for that 4% plus from a long-term margin perspective. Second question around the banks itself. You saw all the statistics that in the prepared remarks, what you saw there was the momentum that we're seeing in both Singapore and Malaysia and also including Indonesia in the deposit base. We’re starting to see now momentum in our loans business, both across especially our GrabFin as well as in our banks. And in my remarks, I alluded that we remain committed for our banks to breakeven by no later than the second half of 2026. And we're seeing some good momentum in where the users are leveraging the banks within Grab ecosystem. Over 80% of our Grab users are actually leveraged in terms of the deposit holders and those who are using the bank products today, there's a good 80% portion of them are Grab users and that's healthy and that's what we want to see. And we're continuing to get more products out also for our banks and also as we drive the profitability to come for no later than 2026.

Thank you.

Thanks, Sachin. Next question, operator.

Next question comes from Piyush Choudhary at HSBC. Your line is open.

Yeah. Hi. Thanks for the call. Two questions, please. Firstly, could you talk a little bit about competitive landscape across both the ride-hailing and Delivery segment. Reason to ask is what has led to increase in incentive spends in On-Demand segment? It rose to around 10.1% of GMV in 2Q versus 9.7% in first quarter? And that's the first question. Secondly, you've explained on the Mobility margin drop, but what is the breakup of how much of the drop is due to new rollout of -- new product rollouts and how much is due to change in product mix? And how long will these investments into new product initiatives would persist in the Mobility segment? Thank you.

Thanks, Piyush. Yeah. There's a lot of new launch activity going on in this quarter, not just in Mobility, but also Deliveries, Peter was referring to the omni services that we've been launching, as well as Saver there. And then, we've got Saver and advanced booking in the Mobility space. So those incentives were largely associated with supporting those launches. The competitive activity is there, but it's always been there, as I was saying earlier. So we don't see any particular intensification of competitive activity. The product mix is a factor. Obviously, the Saver launches went ahead of the premium launches. So that has changed the product mix in the short term. But like I was saying earlier, we are expecting the premium launches to get more traction in the second half because they were launched only very recently.

Another thing I'm going to add, Piyush. We don't break up the split-up between what's new product and product mix because there are some seasonal impact in terms of what type of rides people take in different months also. And also there is also tourism that comes into it. As Alex mentioned earlier, the tourism market also attracts much of a high valued ride for us. So I think overall, while what we're doing is a balance between new products and product mix and new products as well as incentives, also growing the supply base also at the same time. We are anticipating a strong second half Mobility business. We're ramping up our driver supply base. We are ramping up premium driver supply base also as we anticipate the traveler segment also growing here in Southeast Asia. So from a margin perspective, we'll continue to be committed to the long-term margin of 9% plus for Mobility. And we expect also to continue to drive EBITDA growth in our Mobility business, especially in the second half versus the first half.

Next question is from Ranjan Sharma at JPMorgan. Your line is open.

Hi. Good evening, and thank you for the presentation and the opportunity. So I just have two questions. Firstly, on your stock-based compensation, I see the first half is running at a higher level compared to the first half of last year and even the quarter is running much higher than the quarterly run rate that you had from the second to third quarter -- second to fourth quarter last year. Now when your corporate -- when your headcount is getting optimized, like why is your stock-based compensation running high if you can share more color around that? And secondly -- and the second question is on your free cash flows. Your guidance is maintained on EBITDA. So -- but you see an inflection in adjusted free cash flow. So if you can help us understand what is the moving part? Thank you.

Sure, Ranjan. If you look at our stock-based compensation, if you look at the first half and I'm going to compare it to the last half of last year, we're roughly about $8 million higher than last year. And there's always timings when it comes to vesting periods. Yes, we do have a lowered headcount. But if you also remember that the headcount that we made the reduction was in the second half, that was in June last year when we did the restructuring. So a lot of the benefits that you'll see will flow in the second half. So I don't think first half is a good comparison. What I'll say is that from an SBC perspective as a percentage of revenue, it will be lower, roughly about 200 basis points to 300 basis points on a year-over-year basis. And it's a cost that we're also obviously watching very closely here. And on dilution, just to give another perspective on SBC, it's currently pacing at roughly about 2% and we're very judicious when it comes to that. Actually, if you include the share buyback program, our dilution is roughly about 1.3% and we're planning to actually deploy our share buyback program more judiciously also to manage our overall share dilution. Second question around the free cash flow. Look, the really the difference between our -- the delta between EBITDA and free cash flow, all of the components is really on working capital and CapEx itself. So if you look at our CapEx in the first half is roughly running about $50 million and then the other part is working capital. Our working capital in the second half is traditionally much more positive than the first half. And also the third component probably is a little bit more different than last year's taxes. So our income tax expense is higher than last year, but that's also natural just given the profitability profile of our business and just in certain countries, the way our NOLs are also being utilized and also some entities are just achieving profitability much faster than the other countries from a tax perspective.

The next question is from Mark Mahaney at Evercore.

Hey, thanks. I'll just ask one question. These group MTUs, I think they rose about $2.4 million sequentially. I think that's the biggest increase you've had in the last two plus years or something like that. So just go through what, what were the big inflection point drivers of the growth in group MTUs? Thank you.

Hi, Mark. Thanks for the question. The biggest driver was the push for affordability. So we specifically made this decision to use our scale to drive affordability and that's allowed us to attract new users to the platform. So we're seeing 14% and 15%, respectively, new users to Deliveries and Mobility through those Saver products first and then we cross sell from there. So that's been a big injection of new MTUs. And then the transaction volumes are coming and therefore boosting MTUs as well. So we're getting higher frequency from existing users and that's boosting MTU. So this was an intentional strategy. We flagged it at the start of this year and we talked about the new product launches that would underpin it, and we're delighted that we are seeing the MTU increase. In our view, this is a leading indicator for future revenue and profitability growth. So we think it's a good investment for us to make for shareholders.

Thank you very much.

Next question is from Jiong Shao at Barclays. Please go ahead.

Thank you for taking my question. My apologies for getting a bit late, if I ask you already answered my apologies. I saw you had a nice improvement in regional cost this quarter. Could you talk about sort of your outlook for the next two quarters as well? There was a nice reduction quarter-over-quarter in Q2. Lastly on the regional cost, I know already you have talked about the sort of the competition of potential competition from TikTok, but I want to flip to the other side because obviously, some of your peers only really have the business for delivery in one country in a way. Do you think the potential revenue opportunities or partner opportunities with TikTok in the other countries in the region where you have a very high market share. Thank you.

Hey, Jiong. Let me take the first one on regional corporate costs and I'll turn it to Alex on competition. So on regional corporate cost, as you know, and I've been speaking this now for many quarters, we've been really focused in driving our cost structure down. And it's -- we -- as we scale this business, we want to drive more operating leverage. Our regional corporate cost was down 14% on a year-over-year basis in the second quarter. And in terms of how we're thinking for the rest of the half here, what I did say earlier was our regional corporate cost for the year 2024 will be lower than 2023. And that gives you the perspective how to model that for the rest of this year. Now, we see -- we're going to continue to find ways in optimizing our cost structure, whether it's fixed or variable because again as we drive scale, we want to drive more operating leverage in the business.

And let me answer the second question about kind of the potential upside from the growth of social media in the region. It is true actually. Yeah. I think that the online commerce is growing as a category, and we work with all of the social media platforms as marketing partners to attract top of funnel. The most direct impact that we would see outside of food delivery is our GrabExpress services and GrabExpress, which is a last-mile delivery service, is growing. It's one -- it's the largest instant delivery service in the region. And we do see upside there as our merchant partners work with social media platforms and as we ourselves use it to attract users into the platform. Thanks for the question.

So could I please follow up on both questions. One is that, Peter, do you have comments about I know in the past, you may have talked about corporate cost to be kind of flattish next year. Any update there? And back to the social media, I also want to follow up that just curious if you already start discussing about trials in terms of working with them. I know they have started trials in Indonesia with another company as you probably know. Thank you.

Yes, Jiong. We're not providing guidance yet for next year. We'll do that in due time. We'll continue to optimize our costs. And that's my commitment to the business. It's always been, and we'll find ways to do that. So what you'll see is -- and you can see the trend of our corporate cost structure of our business, and we'll continue to find ways to it. And again, this is not just fixed cost, right, you also got variable costs into those components. So again, we're -- when -- we look for every opportunity where we can.

And Jiong, I won't comment on any specific discussions as I'm sure you'll understand. But the way we work with the social media platforms is we use them for demand generation. And there are many -- there are several very large and successful platforms for us to choose from. So we work with all of them and we optimize our marketing efforts across them to make sure that we manage our acquisition costs accordingly. Thanks.

Thank you very much.

Thanks everyone for your time. Thanks very much guys for listening to the call. I hope it was helpful. And if you have any questions, please address it to our Investor Relations team. More than happy to have more conversations with all of you. So thanks again for your time. Appreciate it and talk next quarter.

This concludes Grab's second quarter 2024 earnings conference call. Thank you for your participation. You may now disconnect.