Southeast Asia’s ride-hailing giant revealed its annual revenue run rate for the first time.
“Grab is the first transportation tech company in Southeast Asia to cross US$1 billion annual revenue,” Grab President Ming Maa said in an interview with Chinese news service Yicai, “2018 is going to be a crucial year for the ride-hailing industry and the acquisition of Uber SE Asian operations keeps us ahead of our competitors in the region.”
At the same time, Maa told Yicai that the company doesn’t have a plan to break even now.
As in many other parts of the world, ride-hailing companies throughout Southeast Asia are operating at a loss due to the fierce competition. Grab and its rivals rely heavily on discounts and promotions to entice users, driving down their profit margins.
Uber’s retreat doesn’t make it better
In January, KrASIA first reported the Uber-Grab deal as we have learnt from people familiar with the matter that Grab was in talks for a potential takeover. Two months later, Grab confirmed the merger of Uber SE Asian operations and Anthony Tan, CEO and co-founder of Grab, described the Grab-Uber deal as “an epic chapter in the story of Grab to a victorious end” in an email to his employees.
But with Uber retreating from the region, a number of Grab rivals have stepped in to fill the void. Those include Grab’s most prominent rival Go-Jek.
On Thursday, a Bloomberg report revealed that existing investors of Go-Jek, including Tencent and Warburg Pincus, have offered over US$1 billion to the Indonesian unicorn to accelerate its overseas expansion. Go-Jek announced last month that it would invest US$ 500 million to support its expansion to enter four SE Asian markets, Vietnam, Thailand, Singapore and the Philippines in the next few months.
Back home, Grab is locking horns with newer names like Singapore-grown Ryde and India’s Jugnoo. Ryde has launched a private-hire car service to its car-pooling app, promising to be cheaper than Grab, while Jugnoo had made its service available in May.
Pushing into fintech
Apart from battling the ride-hailing competition, Grab has been pushing itself into fintech, making it even harder to turn a profit given its hefty investment to build up its financial services.
In March, the ride-hailing company teamed up with Japan’s biggest lender Credit Saison to create Grab Financial, a joint venture which will offer micro-loans and insurance products to Grab drivers and business owners who use its payment services GrabPay. The company is also bringing GrabPay to Malaysia in the coming weeks through a partnership with Maybank.
“Grab’s financial services business is seeing the fastest development among all Grab business units and is likely to generate more revenue for the company than our ride-hailing platform,” Maa told Yicai.
KrASIA has updated this article as per Grab’s request. The US$1 billion figure refers to Grab’s revenue run rate rather than its annual revenue to date.
Editor: Jason Zheng