Grab Holdings Ltd Q4 FY2022 Earnings Call

Ladies and gentlemen, thank you for joining us today. My name is Bailey, and I will be your conference operator for this session. Welcome to Grab's Fourth Quarter and Full Year 2022 Earnings Results Call. I will turn it over to Vivian Tong to start the call. Please go ahead when you're ready.

Good day, everyone, and welcome to Grab's Fourth Quarter and Full Year 2022 Earnings Call. I'm Vivian Tong, Head of U.S. Investor Relations for 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 fourth quarter and full year 2022 financial results. Following prepared remarks, we will open the call to questions where Anthony, Peter and Alex will respond to the Q&A. 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 are described in our Form F-1 registration statement and other 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 a substitute 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 fourth quarter and full year 2022 financial review, which can be found on our IR website. And with that, I will turn the call over to Anthony to deliver his opening remarks.

Thank you for joining us today. 2022 was a year of relentless execution, and we are pleased to have closed it on a strong note with solid financial fundamentals while maintaining category leadership in Mobility and Food Deliveries. We had a single objective in 2022, and that was to grow sustainably and efficiently to build our business for the long term. To this end, our teams executed on three main areas. First, we focused on rebuilding our supply to capture the momentum in our Mobility business. We worked on initiatives to improve the productivity of our driver partners and launched more affordable services. Second, we focused on product innovation to make our ecosystem stickier and more efficient by expanding services like Grab Unlimited. This also generates more recurring revenues for our ecosystem. Third, we reduced our cost-to-serve by optimizing incentives and our cost structure, and streamlined our GrabFin business. As a result, we accelerated top line growth and narrowed our losses significantly during the year, while at the same time, reduced incentives as a percentage of GMV. Throughout the pandemic and in 2022, we maintained our category leadership in Food Deliveries and Mobility. As COVID eases, we are committed to maintaining our category leadership. For the fourth quarter specifically, I'm pleased to report that year-on-year, group revenue rose over 300%, while we reduced our losses by 64% from the same period a year ago. We also saw two consecutive quarters of positive segment adjusted EBITDA margins for Deliveries, which expanded to 2% of Deliveries' GMV in the fourth quarter. Mobility also rebounded strongly and continues to generate steady cash flows. Our 2022 results would not have been possible without the hard work of our Grabbers and the millions of drivers and merchant partners who operated with resilience and agility to deliver the best possible service to our consumers. With 2022 firmly in the rearview mirror, we look towards 2023 with confidence and optimism. While there will be macroeconomic uncertainties ahead, we are laser-focused on accelerating our path to profitability and growing our ecosystem in a sustainable and resilient way. We're also optimistic about the recovery of tourism in the region and how that can benefit our business. Our actions in 2022 and our plans for 2023 make us confident that we can achieve group breakeven on an adjusted EBITDA basis in the fourth quarter of 2023. This is much earlier than our prior guidance of achieving group breakeven in the second half of 2024. In the long run, we remain committed to Southeast Asia's growth story. There is growing consumption in the region, a population that craves on-demand digital services and governments who recognize digitalization as a driver of economic growth and who are open to co-creating new ways of serving our communities together. I'll now hand over to Alex, who will cover our fourth quarter operational highlights.

Thank you, Anthony. I would like to start by sharing the business and operational highlights for Mobility, which recorded strong year-on-year revenue and GMV growth in the fourth quarter. This growth came on the back of a strong recovery in demand, with post-COVID reopening continuing across the region, in addition to our own efforts to increase supply to keep pace. We saw a particularly strong rebound in airport rides, contributing to our Mobility segment. In the quarter, airport rides registered growth of 244% year-on-year and 14% quarter-on-quarter. Overall, our Mobility GMV is now back to 74% of pre-COVID levels in the fourth quarter of 2022. So there is still plenty of headroom for growth. In the quarter, we continued to focus on bringing new drivers onto the platform and improving the productivity of our existing drivers. We did this primarily in two ways. First, we made our onboarding journey even more seamless, making it easier for driver partners to join us. This resulted in a 71% year-on-year increase in the number of drivers onboarded in the fourth quarter relative to the same period a year ago. Second, our efforts to improve productivity, such as our new shift option for drivers also bore fruit. We saw driver wait times at merchants being reduced by 27% year-on-year and 12% quarter-on-quarter. Our Grab Navigation app within Grab Maps has also shown strong results. Based on data from driver partners who utilized grab navigation across several cities last year, we saw a 7% improvement in trips per transit hour for Mobility and a 3% improvement in fulfillment rates. We also launched an updated version of GrabShare in the Philippines and recently in Singapore to provide more affordable mobility options for our users while optimizing supply. Additionally, we will continue to work with governments to increase our pool of driver partners. For example, this month, the Philippine government announced that they would be opening up 100,000 more 2-wheel and 4-wheel licenses for all interested transportation network companies in the country. Looking ahead, we are positioning Grab to benefit from the broader Southeast Asian reopening, especially from the rebound in the tourism sector. We recently launched a partnership with WeChat to provide enhanced services to Chinese travelers, and we rolled out pre-installation packages for China-based Android phones, which enables users to download the Grab app prior to arriving in Southeast Asia. So we are hopeful that the rebound in tourism arrivals to the region will drive stronger demand for our Mobility services. Moving into our Deliveries business. In the fourth quarter, we continued to focus on the profitability of our Deliveries segment, resulting in strong year-on-year and quarter-on-quarter margin improvement. Deliveries posted segment adjusted EBITDA margins of 2% in the fourth quarter. This puts our Deliveries segment firmly on the path to achieving our steady-state margin assumption of 3% plus. At the same time, we maintained our category leadership in food deliveries with our focus on driving high-quality transactions, lowering our cost-to-serve, and continuously improving our quality of service for our users. During the quarter, we continued to roll out our GrabUnlimited subscriptions with more targeted incentives to augment users' spending habits. GrabUnlimited is now available in all six of our core markets, accounting for more than one-fourth of our Deliveries' GMV in the fourth quarter. GrabUnlimited's subscribers transact and spend over three times more than nonsubscribers for food deliveries. This is a promising start for GrabUnlimited, and over time, we see more opportunities to evolve this subscription program as we deepen and broaden our relationship with our subscribers. As a result of these initiatives, we managed to reduce our deliveries incentive spend to 12% of GMV in the fourth quarter from 18% a year ago. In our non-food deliveries business, we are focusing on delivering the best value proposition for our customers in a sustainable way. In Malaysia, where we own Jaya Grocer, we have continued to enhance our groceries marketplace to bring the convenience of on-demand grocery delivery to more consumers in Malaysia. In the second half of 2022, we also exited dark stores and GrabKitchens' operations in most countries. While these closures had an impact on GMV in the fourth quarter, we also managed to reap significant cost savings from the move, which improved our overall deliveries profitability. Looking ahead, we will continue to improve our Deliveries segment profitability without sacrificing our category leadership position in food delivery. Next, on Financial Services. In the quarter, we posted strong revenue growth on the back of higher contributions from our lending business and lower incentives as a percentage of GMV. The strategic refocus we initiated in the second half of 2022 to primarily serve Grab's ecosystem is already showing results. GrabFin's cost base fell year-on-year and on a quarter-on-quarter basis. Our lending business continues to grow and serve more driver and merchant partners. In the fourth quarter, the value of loans disbursed rose 57% year-on-year. Last month, we also announced strategic payment partnerships in Vietnam and the Philippines. These partnerships integrate our partners' e-wallets onto our platform, giving users more e-payment choices while optimizing our cost of funds in those countries. For Digibank, we have some promising signals from our limited launch in Singapore. During this initial period, we can only operate within the SGD 50 million deposit limit set by the regulator in Singapore. But on a positive note, we are not far from this deposit limit already with no acquisition costs to date. We were also pleased to see strong ecosystem linkages with 80% of GXS users linking their GXS accounts to Grab or to a partner e-wallet. Beyond deposits, GXS is expanding into lending, soft launching a credit product to Grab and GXS ecosystem employees earlier in January 2023. These developments in Singapore are encouraging signs as we prepare for the launch of our Indonesian and Malaysian Digibanks later this year. Lastly, our enterprise segment continues to grow with segment adjusted EBITDA growing double digits year-on-year. This year, our teams continue to build out our advertising self-service platform that will allow more merchants to enjoy our ads offerings. We believe our advertising platform, together with the breadth of our ecosystem, could help many small merchants grow faster by reaching new customers. Over time, this will incrementally accelerate our ads business growth and margin contribution to our overall business. In closing, for 2023, to echo Anthony's opening remarks, we are focused on accelerating our path to profitability and driving sustainable growth for the long term while maintaining category leadership in Mobility and Food Delivery. With a disciplined stance on costs, driving product innovation and strengthening cross-vertical synergies to reduce our cost-to-serve, we are confident we can achieve group breakeven ahead of schedule. I will now turn the call over to Peter to review fourth quarter and 2022 financials.

Thanks, Alex. We're pleased to report another strong set of results to close out 2022 on a high note. We exceeded our guidance for both revenues for the full year and adjusted EBITDA for the second half. We grew our GMV by 24% for 2022, which is in line with our guidance range of 22% to 25% year-over-year. Revenues in the fourth quarter grew strongly by 310% to $502 million and grew 346% on a constant currency basis. Full year revenues grew by 112% to $1.4 billion or 125% growth on a constant currency basis. Both our fourth quarter and full year reported revenues were record highs for the company. The strong revenue growth came from all segments of our business. For Mobility, revenues grew 78% in the fourth quarter and 40% in 2022, underpinned by the continued recovery in ride-hailing demand and our efforts to improve supply across the region. For Deliveries, revenues grew strongly from contributions from Jaya Grocer and lower incentives as a percentage of GMV. There was also a change in business model for certain delivery offerings in one of our markets to address licensing requirements, where we transitioned from being an agent arranging for delivery services to our principal model. If the model change had not taken place in the fourth quarter, our fourth quarter group revenues would be $434 million with full year group revenues of $1.37 billion, implying growth of 255% and 102%, respectively. Revenues from Financial Services for the fourth quarter came in at $28 million from a negative $1 million in the same period last year, and it grew 166% on a full year basis attributed to greater optimization of our incentive spend and our increased focus on lending. For Enterprise and New Initiatives, revenues grew 10% in the fourth quarter and 37% in 2022 on the back of a stronger contribution from advertising. Turning over to GMV. For the fourth quarter, we recorded growth of 11% to reach $5 billion. And for the full year 2022, GMV grew 24% to reach around $20 billion. On a constant currency basis, our fourth quarter GMV grew 20% and while full year GMV grew 30%. We saw strong year-over-year growth in Mobility GMV and Financial Services TPV in the fourth quarter, coming in line and above our guidance ranges, respectively. Deliveries GMV in the fourth quarter was softer than guidance range with GMV declining 4% year-on-year but grew 5% on a constant currency basis. This softness came as a result of our continued focus to drive a more sustainable and profitable Deliveries business as we improved our segment EBITDA margins quarter-on-quarter. Notably, we continued to maintain our category leadership position in food deliveries while reducing consumer incentive spend. Moving on to segment adjusted EBITDA. We reported total segment adjusted EBITDA of $112 million in the fourth quarter and $65 million for the full year. In the fourth quarter, margins improved 477 basis points year-on-year and 131 basis points quarter-on-quarter. A key driver of this was the reduction of incentives as a percentage of GMV, which declined to 8.2% from 13% in the same period last year. In Deliveries, segment adjusted EBITDA was $47 million in the fourth quarter and negative $35 million for the full year. Fourth quarter margins in Deliveries expanded by 550 basis points year-on-year and 163 basis points quarter-on-quarter to reach 2% of Deliveries' GMV. This was a substantial improvement after achieving breakeven in the prior quarter driven by greater optimization of incentive spend. For Mobility, segment adjusted EBITDA was $152 million in the fourth quarter and $494 million for the full year. Fourth quarter margins improved year-on-year by 312 basis points to 13%. Going forward, we continue to maintain our steady-state margins of 12% for Mobility and we will aim to reinvest incremental margins to grow into underpenetrated cities and improve platform efficiency. For Financial Services, segment adjusted EBITDA was negative $93 million in the fourth quarter and improved 16% year-on-year. For the full year, segment adjusted EBITDA was negative $415 million. As a percentage of TPV, fourth quarter margins for Financial Services improved from negative 3% to negative 2% as we continue to streamline our cost base for GrabFin and focus on driving ecosystem transactions. Group adjusted EBITDA in the fourth quarter was negative $111 million, while the full year group adjusted EBITDA was negative $793 million. Group adjusted EBITDA margins in the fourth quarter improved by 454 basis points year-on-year and 94 basis points quarter-on-quarter, which sets us up on the right path towards achieving group adjusted EBITDA breakeven. For the fourth quarter, our regional corporate costs were $223 million as compared to $192 million in the same period a year ago and $208 million in the prior quarter. Our regional corporate costs for the full year was $858 million for 2022 as compared to $717 million in 2021. On a year-on-year basis, regional corporate costs in the fourth quarter were relatively flat, excluding a nonrecurring benefit reported in the fourth quarter of 2021. The quarter-on-quarter increase was predominantly driven by increases in seasonal direct marketing costs and professional fees. Direct marketing costs saw an increase due to seasonally higher spend in the fourth quarter during the festive period. For professional fees, the increase was due to higher expenses associated with being a publicly listed company such as SOX-related compliance and one-off systems implementation costs to improve automation. Going into 2023, we'll continue to optimize our regional corporate costs to accelerate our path to profitability. There are a series of cost optimization initiatives being implemented across our organization as we used greater cost and capital discipline and cut back on discretionary spending. For example, we anticipate cloud costs to reduce by 5% to 10% year-on-year driven by our efforts to optimize processing speeds and improve network costs. We've also implemented a series of zero-based budgeting on a number of our operating expense line items, including travel and professional fees. We've frozen hiring across most of our regional corporate functions, which is consistent with our efforts to slow down the pace of hiring across our organization. As such, we anticipate headcount under our regional corporate costs to be lower in 2023. Moving on to our IFRS loss. We reported a fourth quarter loss of $391 million, representing a 64% improvement from a loss of $1.1 billion in the same period last year. The reduction in our IFRS losses was due to improving profitability on a group adjusted EBITDA basis, coupled with the elimination of non-cash interest expense of Grab’s convertible, redeemable preference shares, which was no longer incurred when we became a public company. Our fourth quarter IFRS loss of $391 million includes $263 million of noncash expenses below our adjusted EBITDA line. Of this, $119 million was from the revaluation of Grab's equity investments, which are marked to market each quarter, and $9 million was from stock-based compensation. Turning to our balance sheet, our liquidity and cash positions continue to be strong and robust. We ended the fourth quarter with $6.5 billion of gross cash liquidity. Cash liquidity declined from $7.4 billion at the end of the prior quarter, as the substantial part of the cash outflow was attributed to the repurchase of our Term Loan B for an aggregate consideration of $738 million in November. Our net cash liquidity was $5.1 billion as of the end of the fourth quarter as compared to $5.3 billion in the prior quarter. With $5.1 billion of net cash liquidity, we expect to have a sufficient net cash buffer of well over $3 billion, even after accounting for the capital required for our Digibank, upon reaching our expected group adjusted EBITDA breakeven timeline. As we look ahead to 2023, we'll continue to be focused on accelerating our path to profitability while driving sustainable growth. In Mobility, we expect our year-on-year growth trajectory to remain strong and healthy. With economies continuing to reopen, coupled with the recovery in tourism demand and amidst our push to expand into other key cities, we expect Mobility GMV to reach pre-COVID levels by the fourth quarter of 2023. For Deliveries, we remain bullish on our long-term prospects and are committed to operating a business focused on driving sustainable growth while solidifying our category leadership position. We believe that we have a more sustainable deliveries business in place and a clear trajectory towards attaining our long-term expectations of Deliveries segment adjusted EBITDA margins of 3% plus. I do also want to note that seasonally, we expect our on-demand GMV, which combines our Mobility and Deliveries GMV, to perform stronger in the second half compared to the first half, with the latter being impacted by festivities such as Chinese New Year and Ramadan. For Financial Services, we expect GMV to moderate down in 2023 consistent with our refocus on driving ecosystem transactions and increasing profitable transactions such as lending. Accordingly, we expect revenues to grow healthily and for segment adjusted EBITDA losses to stabilize quarter-on-quarter despite increasing investment costs as we aim to launch our Malaysia and Indonesia Digibanks this year. For group revenues, we expect full year revenues of $2.2 billion to $2.3 billion in 2023. This implies 54% to 60% year-on-year growth on a headline basis. Excluding the change in business model, our revenue growth estimates for 2023 remain in line with our prior guidance of 45% to 55% year-on-year on a constant currency basis. On profitability, we estimate our 2023 group adjusted EBITDA loss to be in the range of negative $275 million to negative $325 million. This represents a $468 million to $518 million year-on-year reduction in our adjusted EBITDA losses. With the year-on-year improvements in group adjusted EBITDA, we are bringing forward our group adjusted EBITDA breakeven timeline. We now expect breakeven to be in the fourth quarter of 2023 from our initial guidance of the second half of 2024. In conclusion, we delivered another strong quarter where we performed on the top and bottom line and executed on our path to profitability acceleration goals. As always, Anthony, Alex, and I want to thank Grabbers for their hard work in making these results possible. We want to express our deep appreciation for our driver and merchant partners. While there is still a lot of work ahead of us, we are confident that our strong balance sheet, cost discipline, and strategies will enable us to continue to grow our segments sustainably.

We will now open the call to questions.

Congratulations on a great quarter and strong guidance, both on the revenues and EBITDA for 2023. Few questions from me. First, macro question for Anthony. How do you view the trade-off between growth and profitability right now? Can you perhaps share a little bit more in terms of the levers that you have control over versus those that you don't? We see strong GMV growth on a constant currency basis, but I am curious about how some of these trends will evolve as we move into 2023 and beyond. Second, on Mobility, how has the delivery supply chain issue evolved recently? EBITDA margin has now improved strongly to 13.2% for the quarter. Are you looking to maintain it at this level or will it normalize back to 12%? If it's the latter, could you share more context on why is this the case? And lastly, can we also have some color around your elevated expense for corporate costs in the quarter? What drove this increase? And how should we think about these cost items for 2023?

Thank you very much, Pang. On our approach to profitability versus growth, our aim is to drive sustainable growth, and we believe we have demonstrated that in our results. As shown in Q4, our GMV grew 20% at constant currency, and revenue grew more than 300% year-on-year, while the loss for the quarter has substantially improved. We've also moved our group adjusted EBITDA breakeven timeline forward to Q4 of this year. While we are proud of these achievements, we must never lose sight of the long-term potential of Southeast Asia. One of the key signals that we monitor is our category position, and we are clearly customers' #1 choice. We continue to drive towards becoming Southeast Asia's largest and most efficient on-demand platform that enables local commerce and mobility. As shown by the past two quarters, we not only grew the top line rapidly but also improved the bottom line significantly and gained category position, particularly for delivery. We have different products and services from premium to affordable, targeted at different user segments. For value-conscious customers, we introduced the Saver delivery option across several markets, which gives consumers the lowest delivery fees in some of our markets while also improving batching rates of our operations. Regarding levers, we are focusing on lowering our cost-to-serve and monetizing more effectively with affordable products. For Deliveries, we've rolled out a feature to reduce wait times of delivery partners at merchants when collecting their food, resulting in a 27% reduction in wait times year-on-year in Q4 2022. Another efficiency is Grab Navigation that improves the efficiency of our platform. We've seen a 7% improvement in trips per transit hour for Mobility and a 3% improvement in fulfillment rates. So all in all, growth is important, but we intend to grow profitably and sustainably. We aim to become Southeast Asia's largest and most efficient on-demand platform.

Thanks very much, Anthony. Let me take that question on Mobility. So Mobility supply in most of our countries showed strong recovery with the exception of Singapore, where the cost of vehicles is still very high. One market where there was a significant breakthrough in this last quarter was the Philippines, where we are grateful that the government just announced that it will increase the number of 2-wheel and 4-wheel licenses by 100,000, which is a massive breakthrough. We are very pleased that this will unlock the supply shortage in the Philippines. Overall, we continue to improve our onboarding processes to make it easier for driver partners to join. In fact, our driver partners that onboarded increased to 71% year-on-year for this quarter. We are also trying to make our existing drivers much more productive. We've introduced shifts for drivers, which is turning out to be very popular. Furthermore, we're leveraging GrabMaps, as Anthony mentioned in his remarks, where we saw wait times fall 27% year-on-year and 12% quarter-on-quarter for food deliveries. The Grab Maps navigation has significantly helped productivity, showing a 7% improvement in trips for transit hour for mobility and a 3% improvement in fulfillment rates. Overall, driver earnings per transit hour, which is a key draw for new drivers to enter the industry, increased by 13% year-on-year, and driver retention is at 87% in the fourth quarter. A large portion of our 2-wheel drivers are now engaging in both deliveries and mobility. Additionally, we've also relaunched affordability products like GrabShare in Singapore and the Philippines. It's a carpooling service that enables us to improve the productivity of our existing fleet while offering affordability to new segments.

Pang, let me take part one of your question around the continuation of Alex on Mobility margin. Our expectation is to maintain this margin at the current 12% steady state. Part of this is to ensure we continue to grow our GMV in this segment. We have a lot of tailwind ahead of us as we look back to pre-COVID levels by the fourth quarter of this year, while working on supply recovery. We believe that a margin around 12% is our sweet spot. As I noted in my prepared remarks, we will reinvest any incremental margins we can achieve in our Mobility business to grow product offerings into underpenetrated cities. There is also substantial work around accelerating strategies to improve batching, allocations, and product efficiencies to lower our cost-to-serve. I also appreciate your question on regional corporate costs. The quarter-on-quarter increase in the fourth quarter was predominantly driven by seasonal increases in direct marketing costs related to higher festive spend. Additionally, we saw an increase in professional fees associated with being a publicly listed company as we prepare for year-end and our first year of SOX compliance. Looking into 2023, we are committed to a disciplined and judicious approach to managing costs. We've reduced our overall group headcount since September 2022 and have implemented various cost discipline measures across the organization.

Firstly, congratulations on a good quarter and pretty good guidance. I have three questions. I think the first one, a part of that you already answered, but I was Curios to know that while the revenue growth guidance is fairly strong, can you explain to us how it will shape up across segments? More importantly, I would be curious to know what the broader outlook on GMV is at this stage? My second question is on food delivery. We've reached about 2% EBITDA-to-GMV in this quarter, and now you have a guidance of about 3% plus for the long term. How do we see this trend shaping up, especially over the next 12 to 18 months? Third, a small clarification on the business model change which has happened for deliveries. Did it have an impact on EBITDA, or is it just a presentation issue with no impact?

Thanks, Venu. Let me take all those questions. First, regarding GMV growth, we expect that on-demand GMV to continue to grow year-over-year. On the Mobility side, we believe that the business will continue to see strong growth as we experience tailwinds following the COVID lockdowns from last year. As of the end of December, we're roughly at 74% of our pre-COVID GMV levels. However, we may not see the same rate of growth as in 2022, given that the base has significantly grown. For Deliveries, our focus is on driving sustainable growth while retaining our category leadership. Our business grew significantly last year in Deliveries, while incentives came down, which allowed us to maintain our leadership position. Regarding your second question about the food delivery segment adjusted EBITDA, we feel the delivery business is in a strong position, achieving significant margin improvement quarter-on-quarter and year-on-year. We are well-positioned to achieve our long-term expectations of 3% plus margins as many of our core markets have achieved or exceeded this target already. As for the business model change for Deliveries, there is no impact on EBITDA whatsoever; it’s a presentation issue between gross versus net as we ensure compliance with licensing requirements. It simply reflects a transition in our accounting presentation without affecting overall profitability.

I have two questions. The first is related to your GrabFin strategy and the growth expectations in the coming quarters. With your strategic shift to focus more on the on-ground platform usage, what is your go-to-market strategy to encourage higher transaction usage and product adoption by Grab users? Also, what is your expectation of the revenue contribution from digital banks by the end of the year? My second question is on the delivery business. We are glad to see that EBITDA margin is improving gradually. Are there plans to step up spending in user subsidies effectively to drive a balance between faster volume growth and improved margin trends?

Thanks, Alicia. It's Alex. Let me take your question on GrabFin. You are right about the focus on the on-Grab platform. As we said at the Investor Day last autumn, this refocus allows us to leverage our ecosystem's benefits, including distribution advantages, while deemphasizing unprofitable off-platform transactions. We aim to drive higher transaction frequency and adoption without relying heavily on consumer incentives. We've shown through recent quarters that we can accomplish this through embedding use cases. In terms of digital payments, we plan to reduce consumer incentive spend as we shift to on-platform usage, aiming at cost neutrality or better. A good example is our collaboration in Vietnam with ZaloPay and in the Philippines with GCash, which are leading e-wallets. This helps us to provide a seamless payment experience and access a larger user base while reducing incentive costs. In terms of lending, GrabFin continues to grow, with the value of loans disbursed increasing 57% year-on-year, and revenues are improving as well. We look forward to a successful launch of our Indonesia and Malaysia Digibanks this year. Meanwhile, regarding your question on the delivery segment, we are committed to driving growth while maintaining our category leadership. We believe it is achievable without stepping up our subsidy spend. Instead, we are optimizing our operations and looking into innovative solutions to provide affordability to our customers.

To add to Alex's points around revenue growth, we expect strong growth year-over-year from our GrabFin business. This growth will be driven primarily by our ecosystem lending. As for the delivery business, we aim to maintain a healthy marketplace while driving efficiency. We don't see a tradeoff between profitability and growth; multiple levers beyond subsidies can drive our growth. Our customers desire affordability, so innovation in our service offerings can support growth while avoiding a reliance on subsidies.

I've got two questions. First, regarding the Delivery business. Traditionally, the fourth quarter is expected to be strong due to the festive season. Following the marketing promotions, we observed a quarter-on-quarter reduction. I believe FX movements were minimal on a quarter-on-quarter basis. Is there any insight into the 4% reduction in GMV for Deliveries? Alternatively, how should we view growth in 2023 beyond this that looks like a healthier delivery business? Second, could you provide a breakup of your Monthly Transacting Users (MTUs) for Mobility and Deliveries? The consolidated MTUs seem flat; should we attribute that to higher frequencies, or are you still seeing new users joining?

Thank you, Varun. I appreciate your questions. Regarding deliveries in Q4, yes, we made a conscious decision to focus on profitability. In that quarter, Deliveries' GMV showed a constant currency increase of 5% and a 22% growth year-on-year. We traded off some growth to foster a more sustainable and profitable Deliveries business, and we made substantial improvements in our EBITDA margins. The closures of dark stores and most of the GrabKitchens impacted GMV growth, but we used this opportunity to realize significant cost savings, enhancing our margin position. Looking ahead, we have embarked on several initiatives that will help generate growth throughout the year, including Grab Unlimited and partnerships like Jaya Grocer. This mid-to-long-term growth strategy will support our margins. We believe we have instituted a sustainable deliveries business aimed at achieving our 3% plus margin target. In the context of the broader outlook, Southeast Asia’s combined online ride-hailing and food delivery market size is estimated to be around $35 billion by 2025, indicating substantial room for expansion as market penetration remains low. Our MTUs grew by 14% year-on-year in Q4. While we do not provide specific breakdowns, our goal is to continue growing our platform’s user base through expanded services and offerings designed for different user types.

On MTUs, they indeed grew 14% year-on-year. While we don't provide specific guidance, we anticipate continued growth due to the recovery in mobility post-COVID and the expansion of our services across markets. Our platform has significant potential for user growth based on the sizable online population in the region, allowing us to position ourselves favorably in a growing market landscape.

Thank you. This concludes the question-and-answer session. I would like to turn the conference back over to Peter for any closing remarks.

Thanks, everyone, for taking the time to join us today and for your continued support. If you have any questions, please feel free to reach out to our Investor Relations team or visit our Investor Relations website. Thank you again, and we look forward to speaking with you in the next quarterly call.

This concludes Grab's Fourth Quarter and Full Year 2022 Earnings Conference Call. Thank you for your participation. You may now disconnect your lines.