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Singapore-based super-app Grab Holdings, Southeast Asia's leading ride-hailing and food delivery app, announces the layoff of 1.000 employees, representing 11% of its total workforce, its CEO said on Tuesday. This decision was made with a view to controlling costs and ensuring affordable services in the long term.
In a letter sent to employees late Tuesday, which Reuters has been able to see, CEO Anthony Tan argued that these cuts, the largest since the start of the pandemic, are not intended as a "fast track to profitability" but as a strategic restructuring to adapt to the rapidly changing business environment.
“Changes have never happened so fast. Technology, such as generative AI (artificial intelligence), is developing at a breakneck pace. The cost of capital is increasing, which directly affects the competitive landscape,” Tan said in the letter. He emphasized that even without layoffs, Grab has controlled costs and expects to reach its goal this year of achieving break-even Ebitda (earnings before interest, depreciation and amortization) for the group.
The layoffs follow a similar move last year by Indonesian tech company GoTo, which offers transportation, e-commerce and financial services. This company has implemented rigorous cost-cutting measures, including cutting 12% of jobs by 2022. Another 600 workers were laid off in March. According to sources who spoke to Reuters last week, the new CEO plans to lead the company only temporarily and wants to step down once profitability improves.
Founded in 2012, Grab offers delivery, transportation and financial services in eight Southeast Asian countries, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. Although Grab is the market leader in ride-hailing and delivery in Southeast Asia, the company has yet to turn a profit. It spends money on growth and experiences price pressure from competitors such as Indonesia's GoTo Group.
Shares of Grab are down about 2021% since going public in New York in late 70, despite the company cutting its losses and promising to report adjusted earnings by the last quarter of this year.
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The cuts suggest Grab is succumbing to investor pressure to cut costs more quickly. Grab has been slower to reduce costs than regional competitors. While GoTo and Singapore-based Sea Ltd, Shopee's parent company, cut thousands of jobs last year, Grab has avoided mass layoffs. In 2022, the company has hired more than 3.000 employees, mainly thanks to the acquisition of supermarket chain Jaya Grocer.
Grab is also facing potential growth slowdowns as customers grapple with higher inflation and rising interest rates. Although the company reported a smaller quarterly loss last month, its gross merchandise value grew just 3% in the three months to March, a significant decline from its 24% growth for all of 2022. User growth also slowed as competitors lured customers with promotions and lower prices.
Grab's adjusted loss before interest, taxes, depreciation and amortization fell to US$66 million in the first quarter, and analysts predict losses will continue to shrink. On a net income basis, the company is even further from profitability. In the first quarter, net loss fell to $244 million from $423 million a year earlier.
Grab Thailand said in May that it is aiming for a break-even result before the fourth quarter as it sees itself on track to profitability thanks to its “One Grab” strategy.
“We expect to break even on our earnings before interest, tax, depreciation and amortization ahead of the fourth quarter group target due to prudent spending and the recovery of the transportation business,” said Worachat Luxkanalode, Head of Land of Grab Thailand.
Locally, the company's ride-hailing service has recovered from the pandemic, especially among tourists. Grab aims to have tourism customers account for 35% of the total transportation service soon, the same level as before the pandemic, Worachat said.
He added that in the first four months of this year, the number of travelers using Grab increased by 25%.
Source: Bangkok Post
Costs are rising and revenues are not increasing.
The boys with the motorbikes drive here and there with a large box on the back with GRAB on it.
According to my Thai family, the quality is generally better than street food.
Yet I see more and more bikes parked in the parking garages waiting for an order for a long time. The continuity has decreased somewhat in my opinion.
That's why people shrink.
Didn't know at all that Grab was also in the Netherlands. [55555]
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