Grab Q2 Earnings Update!
Accelerating GMV growth and Exploding Loan Portfolio!
Grab is not just “Uber of Southeast Asia”, it is much more!
The company is on a path to achieving something that Uber failed at, and that is becoming a Super App.
Combining financial services with a thriving ecosystem of services such as mobility, delivery, and travel is a great recipe for sustained long-term growth.
Q2 2025 demonstrated why Grab has become one of the favorite stocks of the retail investing community.
GMV, revenue, and net income growth accelerated.
The loan book explosion continues, +78%!
And they gained 1.7M new users!
Those looking for a comprehensive Grab analysis, my Deep Dive is below.
Overall, Q2 2025 was a great quarter for the company, sending the stock up 0.6%.
Let’s take a ride into Grab’s Q2 earnings to find out more!
1. GMV
2. Deliveries and Mobility
3. Financial Services
4. Incentives
5. Financials
6. Cash Raise
7. Valuation
8. Conclusion
1. GMV
Gross Merchandise Volume of the Grab ecosystem grew 21% Y/Y to $5.3B!
Growth accelerated compared to 16.3% in Q1 2025 and 12.6% in Q2 2024!
Many Grab bulls said that GMV growth was temporarily depressed due to the COVID demand pull forward, and Grab continues to demonstrate that this thesis was right.
GMV growth was driven by a strong showing in the deliveries segment, whose GMV grew by 22% to $3.47B.
Meanwhile, mobility GMV grew by 19% to $1.88B.
Overall, the company gained 1.7M monthly transacting users in Q2 2025 and 5.3M users in the past 12 months to reach 46.2M.
This means that MTU growth was 13% Y/Y and 3.8% Q/Q!
This is a bit slower than the 16% growth in Q1 2025, but still impressive. Let’s remember that there are over 670M people in Southeast Asia, so Grab is still early in their expansion journey. There is a clear pathway for Grab to reach over 100M users in the decade.
GMV per MTU grew by 5% Y/Y to $127, compared to -1% in the prior quarter. It’s nice to see that GMV growth is driven not only by new users, but also by existing users increasing their utilization of the platform.
Another important way in which Grab increases their GMV monetization is by growing their advertising business!
As of Q2 2025, the company now generates 1.7% of deliveries GMV from advertising, operating with a run-rate of $236M.
Grab claims that advertisers generate 9X return on their ad spend. This is an incredibly strong return, indicating that Grab is underpricing ads to attract new advertisers.
There is significant potential to increase advertising revenue, as even a 5-6X return on ad-spend is more reasonable and still considered good!
Key Points from the Call:
“As such, we expect to sustain this growth momentum to accelerate on demand GMV growth rates relative to 2024.”
GMV Growth rate will continue to be higher in 2025 and likely in 2026.
2. Deliveries and Mobility
The deliveries segment grew revenue by 23% Y/Y to $439M!
Growth accelerated from 18.6% in Q1 2025 and 11.3% in Q2 2024.
Whilst the mobility segment grew revenue by 19% Y/Y to $295M!
Here also growth accelerated from 18.6% in Q1 2025 and 11.3% in Q2 2024.
Note that the delivery segment Q2 2025 revenue growth of 23% is above the 22% deliveries GMV Growth, indicating a slight increase in take-rate.
Meanwhile, the mobility segment grew revenues at the same pace, indicating no changes in the take rate.
However, the mobility average fare per user decreased 4% Y/Y, and the company said that this intentional strategy was to capture more market share, not consumer weakness in a particular market.
As we can see in the graph above, the delivery take rate of 12.6% is slightly above the mobility take rate of 15.7%!
Looking at segment profitability, we see that the mobility segment is significantly more profitable, generating $164M in ADJ EBITDA, an increase of 27% Y/Y, with the margin improving from 8.2% to 8.7%.
Meanwhile, the deliveries segment generated $50M in ADJ EBITDA, a much smaller margin of 1.8%. However, the economics of this segment are improving rapidly, as ADJ EBITDA grew 50% Y/Y.
Because the delivery segment involves 2 supply side partners (merchant and the driver) instead of just 1 as for the mobility, I think it will always have a lower margin. Yet, in absolute terms, because average ticket sizes are much larger, it could generate higher earnings.
Key Points from the Call:
“Online groceries is still barely penetrated in Southeast Asia, probably less than 5% penetrated. And it's a context where many of our countries in Southeast Asia have a very low penetration also of the modern retail offline business.
So the user experience is not great. So the chance to leapfrog that with a digital Mart experience is strong. Mart is only currently less than 10% of our deliveries business, but already growing faster than food deliveries. So it's about 1.5 times in terms of growth rate.”
Grocery delivery will be a huge driver for the deliveries segment. In developed markets, many retailers handle grocery delivery directly, but in Southeast Asia, Grab has the potential to capture a higher grocery delivery market share than platforms such as Uber, and Instacart in US, and Delivery Hero and Flink in Europe.
3. Financial Services
Southeast Asia is a very promising region to grow a technology-first financial services business. Depending on estimates, around 50% of the population doesn’t have access to a bank account, and another 20% only have access to limited financial services.
Overall, this cohort of adults contains close to 300M people, thus, Grab has made it their key growth pillar.
And this quarter, they delivered!
Financial services revenue grew by 41% Y/Y to $84M!
But what impressed me the most is the strong growth of the loan portfolio, which expanded by 78% to reach $708M!
Grab announced that it expects to finish the year with a $1B loan portfolio, which would be an increase of 86.5% Y/Y. This guidance indicates that Grab expects the loan book expansion to accelerate as the loan portfolio grew by 64% in Q4 2024, 56% in Q1 2025, and 78% this quarter.
This is what I said in my Grab Deep Dive regarding this segment.
This quarter, Grab demonstrated how this is done.
Furthermore, Grab reported that customer deposits more than doubled Y/Y from $730M to $1.5B. In Q2, the deposit balance increased by $111M or 7.8% Q/Q.
However, despite this strong growth, the financial services unit is unprofitable, with ADJ EBITDA losses increasing from $24M to $26M.
But higher losses don’t mean that there is no progress being made towards profitability, as ADJ EBITDA margin increased from -39.6% to -30.2%!
Grab says that they expect the financial services segment to be ADJ EBITDA break-even in the second half of the next year.
Key Points from the Call:
“The reason why we're very confident that we can exceed $1B (loan portfolio) is because of the very strong product lineup we have both for Grabfin, our fintech arm, and for the digital banks. So for the first time, we've got personal lending products available for all three banks. We've got BNPL available through Grabfin in multiple markets. And as of the middle of this year, so going forward for the full second half, we have the supply chain financing capability that we got by acquiring the Validus business in Singapore, which has now been rebranded GXS Capital through GXS Bank.”
The TAM for the financial services business is truly massive, as the region is heavily underserved in financial services.
4. Incentives
Sometimes investors forget about incentives because they are not included in the income statement as a separate cost line item.
Instead, Grab defines net revenues as gross revenue minus incentives, making incentives a crucial cost that needs to be monitored.
This quarter, the company spent $546.7M on incentives, an increase of 20.9% Y/Y!
Grab spends around 10.1% of GMV on incentives to grow the platform, the same as last year.
It is nice to see that incentives grew slightly slower than the overall GMV growth and that incentives as a share of GMV have stabilized. A core bull thesis of Grab is that once they acquire a critical mass of users and partners, they will significantly reduce incentives, without affecting either the demand or the supply, turbocharging profits.
I think it is a bit too early to see that, as Grab is still prioritizing gaining users and market share. So realistically, in my opinion, we could start to see incentives fall more noticeably in 2-3 years, I doubt Grab will do it earlier.
However, we are seeing a shift in how Grab utilizes incentives!
If last year, Grab spent 4.2% of GMV on partner incentives, this year, the company spent 4.5%, a notable increase. Meanwhile, consumer incentives were reduced from 5.9% to 5.6% of GMV.
Overall, partner incentives grew 28.3% to $239.5M, whilst consumer incentives grew with a slower rate of 15.6% to $307.2M!
Grab is likely seeing that customers are becoming more sticky, thus fewer promotions are required to keep them on the platform. However, competition for drivers and restaurant partners is fierce, thus, Grab is prioritizing having a higher supply of partners.
This strategy is sound, as it doesn’t make sense to stimulate demand if they lack the supply to fulfill it.
Additionally, there have been some driver protests in Indonesia and elsewhere demanding higher pay. Grab likely prefers to increase driver bonuses and incentives, rather than base pay, as that gives the company more flexibility to reduce costs during low-demand periods and increase driver supply during peak hours.
Another change is Grab spending a slightly higher share of incentives on deliveries.
Deliveries incentives increased to 11.3% of GMV from 11.2%, while mobility incentives were reduced from 8.1% to 7.8%.
This change of focus reflects the fact that, as discussed in the previous chapter, the mobility segment is more profitable, so Grab is spending resources to solidify their position in the delivery segment.
5. Financials
Overall, Grab revenue increased by 23% Y/Y and 19% on an FX-neutral basis. Recent Trump’s actions have significantly weakened the USD, so this quarter the company benefited from that.
ADJ EBITDA jumped 69% to $109M, enabling the margin to increase from 9.7% to 13.3%!
As we discussed in the segment sections, this improvement was driven by lower ADJ EBITDA loss margin (-39.6% to -30.2%) in the financial services segment and noticeable profitability improvements in deliveries (1.5% to 1.8%) and mobility (8.2% to 8.7).
Another contributor to higher ADJ EBITDA is corporate HQ costs. Grab excludes $92M from segment ADJ EBITDA as corporate HQ costs, so the sum of all segment ADJ EBITDA is not $109M. In Q2 2025, these corporate costs increased by 8.7% Y/Y, significantly lower than the total revenue growth of 23%.
Let’s look at expenses and profitability in more detail.
Gross margin improved to 43.2% from 41.9% in Q1 2025 and 41.7% in Q2 2024.
Operating profit jumped from a loss of $56M last year to $7M in Q2 2025, a margin of 0.85%!
112.5% growth in operating profit was driven by Grab reducing general and administrative expenses by 9.2%, despite growing the top line. Additionally, other expense categories grew more slowly than the 23% revenue growth, with marketing increasing by 12.7% and R&D by 8.7%.
However, net impairment losses on financial assets grew by 65%. In this line item, Grab reports expected credit losses from its financial services business. Losses growing slower than the loan book (78%), indicates improving loan book quality.
Grab’s net income grew by 129% from -$68M to $20M, a margin of 2.4!
For most companies, net margin tends to be smaller than operating margin, but due to Grab’s high cash balance, the company generates significant interest income.
This quarter, Grab’s net interest income more than doubled from $14M to $30M. It is my understanding that this doesn’t include interest generated by the financial services segment, as that is reported as revenue.
Looking at FCF, as Grab grows their financial services business, this has now become a useless metric!
Banks and many other financial services businesses handle a lot of cash inflows and outflows, and this makes FCF a bad metric to measure their operating performance.
For this reason, Grab reports an ADJ FCF, which adjusts for the cash flow dynamics of the financial services business.
As we see in the picture above, ADJ FCF grew 180% to $112M!
6. Cash Raise
After raising $1.5B using convertible notes, the company has around $7.1B in cash on its balance sheet!
It is clear that Grab is planning to do major acquisitions.
The biggest potential target is the Indonesian company Gojek. It tried to rival Grab across Southeast Asia, but failed miserably. After years of huge losses, the company has exited most markets and now has a meaningful presence only in Indonesia and Singapore.
Last year, Gojek lost over $300M and trades for a market cap of $4.6B!
Grab could easily afford to acquire the company, but there are significant competitive and political issues that make a deal unlikely.
Firstly, the combined company would control over 90% of the market in Indonesia, creating a monopoly that would lead to lower wages and higher prices.
Secondly, Gojek is viewed as a local tech champion in Indonesia and carries significant national pride. There are few start-up success stories in Indonesia, and “selling out” to a Singaporean competitor would be incredibly unpopular and politically damaging to the government.
Of course, these issues could be “resolved behind closed doors”, but I remain skeptical.
I think it is more likely that the company does smaller acquisitions to solidify its mobility and deliveries market share or expand new service offerings!
Across the region, there are dozens of various ride-hailing, taxi, food delivery, grocery, and event apps that Grab could acquire to integrate into their Super App ecosystem.
Or it could try to expand to other countries, such as Bangladesh, Taiwan, Sri Lanka, or others, but that is less likely.
Key Points from the Call:
“with M&A, we're always on the lookout.
With a strong balance sheet and with the recent capital raise, it does give us that strategic flexibility. And the flexibility is important because M and A comes and goes. So we'll be continuing to scour the market in terms of what's available,”
7. Valuation
Since falling 80% after the 2021 stock market bubble, Grab has been on a slow but steady path towards recovery.
The stock is up 60% in the past 12 months and 12% YTD.
Today, I don’t see any reason to change the assumptions in my Grab Deep Dive valuation model.
A full explanation of the model can be found in Part 3 of my deep dive.
After updating it with the current stock price, I see an 80.8% to 193.8% upside in Grab’s stock by 2030!
8. Conclusion
Grab reported a good quarter with accelerating revenue growth, improving margins and profitability, and an exploding loan portfolio!
The Bull Case of the company is simply illustrated by the blow chart!
Network effects drive more drivers, merchant partners, and customers to the platform.
A higher supply of drivers means lower costs and faster service.
This leads to more customers joining the platform to use these convenient services.
This leads to growing transaction volumes, and the cycle starts again and again.
Now you add financial services into the mix, and you have a potent combo to grow a large and very profitable Super App marketplace business!
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