Grab Holdings Ltd Q4 FY2024 Earnings Call

Ladies and gentlemen, thank you for joining us today. My name is Faith, and I will be your conference operator for this session. Welcome to Grab's Fourth Quarter and Full Year 2024 Earnings Results Call. After the speakers' remarks, there will be a question-and-answer session. I will turn it over to Douglas Eu to start the call.

Good day, everyone, and welcome to Grab's Fourth Quarter and Full Year 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, President and Chief Operating Officer; and Peter Oey, Chief Financial Officer. 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, remarks and supplemental presentation available on our IR website. And with that, I will turn the call over to Anthony to deliver his opening remarks before we open it up for questions.

Thank you, Doug. Fourth quarter was our strongest quarter ever, closing out 2024 on a strong note as we relentlessly executed on our product and tech-led initiatives. This drove an acceleration in our on-demand GMV to 20% year-on-year. Product initiatives launched in 2024, and targeted at improving the affordability and reliability of our on-demand services resulted in a new record of transacting users on Grab. Today, we have achieved strong product-market fit with features such as Saver Rides and Priority Deliveries across all our markets. The strong top-line growth, coupled with ongoing cost discipline across our business units, has enabled us to continue scaling the platform in a profitable manner. We achieved our first full year of positive group adjusted EBITDA of $313 million, coming in at the upper end of our upgraded guidance, and positive full year adjusted free cash flow of $136 million, which improved by $370 million year-on-year. Building upon the strong foundations we've laid in 2024 to scale our platform, we see plenty of headroom to further outserve the millions of users and partners across Southeast Asia this year. We will continue to evolve our product strategy to harness the power of our ecosystem. As a result, we expect to maintain our on-demand GMV growth momentum in 2025. And concurrently, we will take a balanced approach to drive a continued expansion of our adjusted EBITDA and adjusted free cash flow while also being highly disciplined on our use of cash. With that, we now open the call for questions.

Our first question comes from Pang Vitt from Goldman Sachs.

Congratulations as well for another great set of results. Two questions from me. Firstly, just wanted to have a better understanding about your product mix shift. Saver is already one-third of your deliveries and 26% of the mobility transactions. How should we expect the mix shift to transform over the years? And how will this impact your margins, especially in mobility, where we start to see your margins now dipping to 8.4%? That's question number one. Question number two, on FinTech. We see that the loan book grew to $536 million. Revenue also grew nicely to $74 million. However, EBITDA losses were slightly higher on a quarter-on-quarter basis. Help us understand where you are spending more? And when will we see the inflection point towards profitability?

Okay, thanks, Pang, for the questions. This is Alex. Let me answer both of those. So first of all, on the dip in margins and deliveries this quarter, as you know, we don't operate the business on a short-term margin optimization basis, but we are trying to drive absolute EBITDA and free cash flow growth. So you will see these kinds of fluctuations in our segment margins from quarter to quarter. And then sometimes incentives go up and down in order to make sure that the marketplace health is in the best possible state and that we're really driving improvements for our consumers. What's key though is that on a full-year basis, if you look back, delivery margins did expand 70 basis points year-on-year, and the mobility margins also remained stable. And obviously, you've seen now this acceleration in growth, which is a big objective for us. As we look forward to 2025, we will continue to grow this momentum, and you will see us focus equally on the high end of our price laddering as we are on the affordability and the price laddering to ensure that we maintain a balanced approach to margin growth as well as overall GMV growth. And I could take this opportunity to reconfirm our commitment that the long-term steady-state delivery margins will be 4% plus, in line with the prior guidance that we've given. And the mobility margin is 9% plus. So we're still very confident that that's where this business will end up. In terms of some of the growth drivers for our high-value services to better serve that segment and to make sure that we keep the margins balanced, I think our partner strategy is very important for that. We have supply partners like Blue Bird in Indonesia, for example. We have grocery partners, examples of SM and Robinsons in the Philippines; and brand partners like Coke, where we've done the Coke&Go initiatives to drive benefits for consumers together. And then, of course, we've got a great set of partners for the banks in each of the three markets, Singtel, Quackr and TEK, totally blue-chip with great customer bases for us to expand our ecosystems. Maybe I'll turn to your second question now, which is on the financial services loan book and the increase in costs as we grow. So firstly, just to recap for everyone on the call, we've got two different businesses within the Financial Services segment. We've got the Digibank and we've got the GFin. So on the Digibank lending first, the loan products were launched very recently in the fourth quarter. And so we're really growing those fast and scaling while within the credit risk appetite that we've set out. So we do expect the Digibank to continue to see an increase in direct costs with these new launches. Firstly, the Flexiloans in Malaysia is just launching for the first time for consumers, and then the MSME products for small businesses are also just launching in Malaysia and Singapore. So we're supporting those launches currently, and that obviously brings some increase in direct expenses. But probably more significantly, as you understand, with the loan growth at this rate, for example, GXS in Singapore doubled their loans year-on-year. We do need to build up balance sheet provision. So we're running these ECL through the expense lines of the P&L as we grow. And obviously, as the credit models develop, it’s good to have a strong balance sheet. But as those credit models develop, we'll be able to sharpen our pencils on that overall. And that will be a driver of the return to profitability because we are confirming what we've told you before that financial services overall will be profitable by the second half of next year. And the banks overall will be profitable by the fourth quarter of next year. On the GFin side, that's the bank side; on the GFin side, it's already providing good risk-adjusted returns on capital. In fact, comfortably above Grab's own cost of capital. So that's a strongly performing business with good returns. So we'll continue to put that across our ecosystem. Hopefully, that's helpful to give you some insight into the way financial services is growing and continuing to improve.

Our next question comes from Venugopal Garre from Bernstein.

I have two questions. First one is a question on management's guidance philosophy entering into this year. Now we've seen in prior years that we have demonstrated a track record of beating and raising your numbers through the year. And of course, the implication of that is that you typically start with a softer guide at the start of the year. Now my question is that while this time around your guidance for sales and EBITDA is pretty much in line with consensus, and of course, I'm ignoring Bloomberg's incorrect reporting on sales guidance versus estimates. Do you really see this juncture a room for upside to your guidance? And what have you broadly baked into the assumptions? So that's the first question. The second question that I would like to ask is a bit more medium to long-term in nature. If I want to take a step back and look at the bigger picture, how do you plan to balance your priorities and the capital allocation between various initiatives, which I guess I put out there for you? Specifically, I would like to sort of discuss autonomous vehicles versus, say, the speculated innovation M&A as well as your expansion into Digibank. So how would you balance between these probably say exciting, but relatively more resource-intensive banks?

Peter addressed the first question regarding guidance philosophy and asked Alex and Anthony to comment on the second part related to priorities and capital allocation. He noted that the 2025 EBITDA guidance reflects a growth of 40% to 50% compared to 2024. The forecasted revenue growth is expected to be between 19% and 22%, indicating strong top-line growth. In 2024, revenue was approximately 21% on a constant currency basis. Regarding guidance philosophy, Peter highlighted that since going public 2 to 3 years ago, the management team has adopted a cautious approach, especially concerning EBITDA and revenue. They incorporate potential uncertainties into their annual numbers, such as seasonality, particularly in the first quarter, which is crucial for the company due to the overlap of Ramadan and Lunar New Year this year. Although January has shown strong results, it is still early to draw conclusions, and some uncertainty remains in the revenue and EBITDA guidance. As the year progresses, the outlook tends to improve, and adjustments are made based on the latest business outcomes. He reminded investors to consider this cautious perspective, especially early in the year. Additionally, the management team is focused on maintaining a balanced approach to driving top-line growth while also maximizing adjusted EBITDA and free cash flow. They are committed to increasing both EBITDA and free cash flow in 2025. Peter then transitioned to the need for Alex and Anthony to address the second part of the question.

Yes, thanks, Peter. I totally agree, Peter. And hey, Venu. So first of all, with regards to what Peter shared, I think we are very bullish. We believe that there is plenty of headroom to drive organic growth in Southeast Asia specifically in mobility, in food, in groceries. The addressable market is still significantly under-tapped. We've shown and proven we've had an all-time high of 44 million MTUs, and this represents about 17% growth year-on-year, but we are still only serving one in 20 Southeast Asians. So we are actually just scraping the surface in terms of users that we can outserve across this region. So what does that mean for us? We are going to double down on the core because the core is still expected to grow strongly. And on top of this, we are also looking at the new growth areas. Now specifically, you called out AV or autonomous ride-hailing. For me, personally, AI and robotics are top of mind. As you know, when large language models were first released, we leaned in very early last year to drive GenAI adoption across the organization. Now on AVs, we've been watching this space closely and are very excited about the long-term opportunity related to this technology. I personally and our leadership have actually taken many rides across the world, across various brands, just to understand and be forward-leaning in this space. We believe we are in prime position in supporting the AV transition over the next few years. And we have a very significant role to play in this region by a hybrid AV human fleet. When we think about our right to win, we have strong relationships with players around the world as well as OEMs. We have the highest utilization across the whole region. We have a long track record of working hand in hand with regulators and governments to ensure passenger and driver safety. So as we think about this AV transition, we're also proactively thinking about how can we play a part in upskilling our driver partners as part of this shift because that is core to our mission and an important aspect of our strategy. As we've shown before, we've collaborated with global partners like Mastercard and Microsoft and have a track record of working governments and regulators to upskill workers, to upscale our driver partners and to equip them for a more tech-enabled future. So going forward, I can confirm we are in active discussions with regulators. We intend to work closely with every government in Southeast Asia to drive this forward. We do anticipate a longer road to mainstream AV adoption in other parts of Southeast Asia, and this is because road infrastructure is different, regulations are different, but we are very excited about this space. So in the meantime, we are actively pursuing several partnerships, and we'll look to share more updates in the coming weeks. Alex, go ahead.

Thanks, Anthony. And on the question of allocation towards organic growth, particularly Indonesia, we're very happy with the acceleration of our on-demand GMV overall as a group. In Indonesia, in particular, on demand, GMV grew 10% quarter-on-quarter, so faster than our overall group average actually. It was an important focus for us in 2024, and Indonesia will remain a key focus for us to serve our drivers and merchants in 2025. I mentioned the partnership with Blue Bird earlier, and we're also expanding our EV fleet with BYD. So we're adding more drivers and more merchants in the quarter. The online earnings for those drivers per hour and the average deliveries merchants earnings have also increased. So I think we have a very healthy and fast-growing marketplace. And we continue to invest not just in Indonesia but across the region on some of our tech advantages like mapping, hyper batching, just-in-time allocation as well. These are very difficult for competitors to replicate. So we're doubling down on organic opportunities in Indonesia and across the region.

Venu, just to add to Alex, from an inorganic perspective, because your question is around capital allocation and also we do balance priorities, but just chime in here a little bit just to give context. As you know, as a management team, we have a very high bar when it comes to inorganic opportunities. And these opportunities we evaluate on a case-by-case basis, but the bar is very high. We have to make sure that key synergies and value add is instrumental in these inorganic opportunities. And this is very consistent with our capital allocation policy that we've shared many times with all of the investors. In terms of the capital allocation framework, it's always been very consistent. Organic growth comes first in the business, and that's to drive EBITDA growth and free cash flow. And second is having that high bar on M&As that I just talked about. And then third, when there is excess capital, as a priority, we will return it to our shareholders. So we're continuing to deploy those capital allocation frameworks, and 2025 is no different for us. So hopefully, that's helpful in addressing your questions.

Congrats on the solid set of results. I have two questions. First is can you share the updates on the cross-selling of the delivery business with Food and Mart? Can you compare and contrast the AOV for users that use both versus the users who only use food delivery? And how do you anticipate the increase in the AOV and the wallet spend growth of users on your platform over the next couple of years? Second question is, can management elaborate on how you foresee AI further enhancing your cost optimization efforts and the demand generation capabilities? Specifically, what is management's view on China's DeepSeek model versus your experience working with OpenAI as your lighthouse partner?

Thank you for your questions, Alicia. I'll address the first one regarding our ecosystem and cross-selling, which is central to our strategy. You are correct that users who engage with both Food and Mart show consistent improvements each quarter. Specifically, those users have an average spend that is four times higher, and their transaction frequency is 2.5 times greater. This connection is crucial for our strategy and gives us an edge over one-dimensional competitors in the on-demand space. Additionally, retention rates for these users are double compared to those focusing solely on food. This is vital as we aim for growth and efficiency through scale. The ecosystem extends beyond just on-demand services. As you know, our financial services growth is opening up many opportunities. I should also mention that grocery deliveries have outpaced food delivery growth for the second consecutive quarter, which is very promising. The penetration of groceries within our ecosystem remains low, and we plan to enhance this with robust partnerships in each market. Our collaboration with Jaya in Malaysia exemplifies how we can increase online deliveries as part of overall revenue. The technology we've implemented there is now being shared with partners like SM in Robinsons in the Philippines and Transmart in Indonesia, fueling remarkable growth in the on-demand sector. For the first time, we are looking at selling from Mart back into Food through new users coming into our ecosystem via partnerships. Regarding our financial services, as illustrated in the slides we released this morning, there are significant customer acquisition opportunities. A remarkable 90% of GXBank's customers in Malaysia originated from Grab, with minimal acquisition costs. We've efficiently amassed deposits and opened new accounts, reaching 4 million across three banks, which underscores the strength of our ecosystem and brand in achieving low acquisition costs and effective cross-selling.

I would like to discuss GenAI, particularly in relation to OpenAI, DeepSeek, and our efforts in cost optimization. As a company, we have been dedicated to embracing GenAI from the outset. We were fortunate to be the first lighthouse partner selected by OpenAI in Southeast Asia, establishing a strong partnership aimed at addressing complex challenges that benefit our users and partners. Additionally, we collaborate with various multimodal foundational models globally. For instance, we have developed a merchant AI assistant that tackles a significant pain point for many merchants, particularly those without account managers who need assistance. These merchants seek insights to boost sales and target customers more effectively. We identified an opportunity to utilize GenAI to enhance our partners' earning potential. By implementing GenAI, we created a self-serve chatbot offering precise recommendations on various business-related queries, such as top-selling items and improving culinary skills or packaging for customers. This has enabled merchants to optimize their ad spend and user targeting. Consequently, we observed a 24% increase in ad spending among merchants who used our AI assistant compared to those who did not, as well as an increase in sales for those merchants. We strongly encourage all our merchant partners to try this solution, as we believe it will be a valuable tool for driving sales, and we look forward to continuing our collaborative innovation. In summary, we will continue to focus on GenAI and seek additional ways to integrate these solutions for higher sales and improved productivity for our workforce. We anticipate that 2025 will be the year of agentic AI, leading to the rollout of more personalized solutions for our ecosystem partners.

Okay. Two questions, please. First, MTU net adds were relatively high. Just talk about the source of where you're bringing in new users? And anything you can tell about their engagement levels versus prior cohorts? And then I'll ask about consumer incentives. So they have jumped up both on mobility and the delivery side as a percentage of GMV to pretty high levels, especially versus the last year or two. What I'm trying to understand is, is that something structural? Or is that consumer incentive spend in advance or in alignment or in support of these newer products that you're rolling out on the value side, high end, low end? So just talk about how we should think about those consumer incentives if they're to support these sort of relatively new product launches and therefore, over time, they should step down in intensity, or whether we are structurally at a higher level?

Mark, let me take the incentive questions, and I'll ask Alex to chime in on the MTU front; it's a key focus area for Alex, and we're seeing some really good fruits coming out of that. So on the incentives, you'll see that our incentives, mobility and deliveries move up and down quarter-on-quarter. And that's deliberate, and that's intentional, and it's in line with our expectations. A lot of that is driving product adoption in our business. And you referred to the MTU growth for an example as a question of that. But also, we're driving frequency in terms of our products. Now as you know, we as a business don't operate to short-term margin percentages, but really focus on that dollar EBITDA free cash flow, and we reinvest in those areas to get product adoption. So there is a function of really going to market and using that lever to drive growth in the business. But you'll see that incentives move up and down. If you step back, actually, if you look at our mobility incentives and margin, it's actually stable on a year-over-year basis at 8.6%. And if you look at our deliveries margin, on a full 12 months, it was up 90 basis points also. So we use that lever as a critical factor, especially on product adoption. Alex, do you want to just chime in on the MTU side?

Yes, Mark, you’re right. The growth in monthly active users is something we’ve been really focused on, and the acceleration is noteworthy. A significant factor driving this is our affordability products for deliveries and mobility. This quarter, one-third of new monthly active users were either new or reactivated, largely due to these affordable offerings. We are also balancing this with high lifetime value users, particularly travelers, who typically spend more than twice what a domestic user spends. Additionally, we are seeing growth among high-value premium users. I can confirm that over two-thirds of our users hold two or more products. Regarding Alicia's earlier question, our cross-selling ecosystem is performing well, and older user cohorts continue to increase their spending. We’re seeing growth in deliveries across all cohorts, including those from before COVID-19 in 2018 and 2019. Our strategy, driven by product development rather than solely by incentives, is enabling us to grow monthly active users faster than the market. While we do occasionally require incentives to launch new products, we have introduced significant offerings such as group orders and family accounts, which help the ecosystem expand organically. This is more of a quarter-to-quarter feature rather than a fundamental change.

I have two questions. But firstly, I have a follow-up on what Peter mentioned earlier on the guide. It's great, Peter, you said you started off the year with something conservative and the base case is to beat and raise; that's all we'd like to hear. Your guidance indicated, although you didn't guide on the GMV, but only guided on revenue, it appears to indicate the acceleration in growth in '25 vis-a-vis '24, and your GMV revenue has indeed accelerated over the last two quarters in a row. I just want to confirm that's still kind of the expectation reasonable to expect the accelerating growth in both Food and Ride is going to continue in 2025 vis-a-vis '24? That's my first follow-up. And I have two separate questions later.

Sure, Jiong. So we are seeing good momentum on on-demand GMV growth. We put it, it's been a momentum that has been intentional on our part in driving growth. We just talked about MTUs, for an example. But at the same time, we're also watching the dollar EBITDA and the free cash flow that we can generate from the on-demand business. What we expect going into 2025 is for that on-demand GMV growth momentum to continue. Alex talked a lot about product features and investments that we're making. Anthony talked about AI also as part of that. So it's a combination of all these things that we feel that we want to continue to fuel growth in our business. And we saw a very strong exit in Q4 that really sets us up nicely as we go into 2025. Hopefully, that gives you a bit of a picture.

My first question is about the autonomous driving robotaxi and EVs mentioned in your press release, specifically regarding access to 50,000 BYD EVs. I recall that Anthony touched on these topics earlier. I would like to understand a couple of things. First, since EVs do not use gas, how does this impact your margins? Does it make any difference for your long-term EBITDA margins in the Rides or Mobility business? Also, regarding the robotaxi, I know you are concentrating on autonomous driving and robotaxi. However, from a broader perspective, considering that driver costs are relatively low in Asia, how does the equation change? Does it make sense to implement robotaxis in places like Southeast Asia or even China? I would like to get your thoughts on this. That’s my first question. Let me stop here.

Jiong, this is Alex. Let me take that. Firstly, EVs, we're a triple bottom line company. So we want to encourage cleaner transportation. But we are also seeing that it reduces the drivers' running costs, and that's important to us because our objective over time is to push out the price reliability boundary every day, improving bit by bit. And that means that we can take a larger share of the overall transportation TAM in Southeast Asia. We've been doing that successfully with a lot of tech improvements as we've talked about on this call. But one of the drivers is the cost of ownership of the vehicles for our drivers. So we know that EVs, particularly with the price point being lowered rapidly over the last couple of years, are one of the ways to unlock even better affordability. The infrastructure in Southeast Asia is improving. A lot of governments are leaning into this. So that's why we want to encourage EVs and work with some of these big partners like BYD. On AVs, unit economics will also continue to improve. We know that the supply chain for AVs is built on top of the supply chain for EVs. So a lot of what I just said about the improving unit costs will translate through into AVs over time. This is not going to happen overnight, particularly in Southeast Asia where labor costs are lower than places like the U.S. but it will happen. So as Anthony said earlier, we're really intensely leaning in making sure that we are proactive and we're one of the key players in leading how it is introduced safely into this region.

I'll just add to Alex. Alex is totally right, Jiong. The key as we think about AV is not just AVs; AV is a hybrid fleet complemented by a human fleet. And we see a very nice symphony where there are areas that are poorly served, say there are parts in Singapore, if you do live in Singapore, you will see that the areas that are harder to serve by human drivers, and this is where robotaxis would really improve fulfillment rate and customer satisfaction. So those are places that are ripe for, I would say, introduction and pilots in the future.

Okay, great. And actually, my second question is about Singapore. We have seen the news today, maybe yesterday, it was about a corporate tax rebate, which is fine, but it's more interestingly relevant to you guys. We have seen some like talking about vouchers, pretty sizable vouchers for individuals and families to spend for those of us living in Singapore, in this case. Could you sort of elaborate on exactly what are some of those incentives? How long is that for the whole year? Or does that affect Grab's business? I remember a couple of years ago or maybe longer ago, when you went IPO, Singapore was a sizable part of the business, 40% or maybe even higher. But what is Singapore now as a revenue contribution to Grab, the overall revenue now?

Jiong, let me take that. Look, the budget just came out a couple of days ago; we're still going through it. We're assessing it. I have to commend to the Singapore government in how they're supporting the economy and also for the everyday Singaporeans out there. We were excited about what they're doing in terms of vouchers, as you mentioned, and tax rebates also for the businesses. Those are the right things. And again, Singapore is a very thriving economy where there are a lot of strong businesses here that are growing. We believe that these things on tax rebate will benefit many of our small merchants that we operate with in Singapore today. We want to see more merchants in Singapore that we can actually support for the vouchers. I think it's great for the economy overall for the everyday Singaporean. Again, they'll benefit from that. And also, we see that as hopefully a beneficiary of that as they use transport services and also use our food services. So I think overall, Singapore is thriving. Singapore is advancing; we're in lockstep with the Singapore government on many areas. And we feel that with all the services that we have, including the banks, we're set up to continue to grow Singapore.

Two questions from me. Just maybe it's a follow-up on the mobility margin. Product mix is definitely one of the reasons as we noticed that the Saver rides are 300 basis points higher. But just curious to know if there are other factors that have also affected the mobility margin in the fourth quarter. Maybe if you can comment on the competitive landscape and how our market shares have evolved in various countries in 2024 versus 2023. And my second question is on corporate costs. They fell another 13% year-on-year in the fourth quarter. So we've been executing pretty well on corporate costs despite the tremendous growth we've seen in orders. Could you comment on the outlook for 2025 and if you can continue seeing this kind of savings?

Thanks, Divya. Let me take the first one on the mobility business. We are very focused on growing affordability. You can see that has helped us expand MTUs. It's also helped us to improve frequency across all cohorts. So we know this is a good strategy. We've launched some new capabilities in this sense. We got family accounts for mobility, which I think is going to help us with frequency and retention. We've also got high-value rides and some new partnerships like Blue Bird, advanced booking for those critical airport-type rides, which is also a new launch across all regions. There are always competitive factors from time to time in various markets. I can confirm in every market we remain the competitive choice leader for mobility across all of our markets. Overall, across the region, we maintained or grew our competitive position. So I think we're highly competitive, particularly with these new markets. We are the only multi-vertical competitor across all markets in the region. So that gives us cross-sell benefits, scale benefits, and that allows us to continue to invest in some of the new technology like AI where we can amortize those costs across a much larger user base. So I think on that basis, we're well set up, I think, for continued mobility growth. And I would, as I mentioned earlier, but I say it again, reiterate that we believe that our mobility business will reach 9% plus margins in the steady state.

Divya, on your corporate costs question, you're right. We've made a lot of progress in optimizing our cost structure as we exit 2024. And what you saw in the fourth quarter was a combination, actually, of reductions in variable costs and staff cost also as we continue to tune our cost structure in the business. Now as we think about 2025, with the strong on-demand GMV that we expect, there are variable cost components, things like cloud and direct marketing costs, which are housed in the central cost bucket actually will increase; that's natural. But we'll offset those by operating leverage that we'll expect to realize from the continued volume growth that we're going to see in 2025. Stepping back, we expect to see more efficiency gains in our cost base as a percentage of revenue. But we anticipate overall costs to increase naturally from a year-over-year basis, on an absolute dollar basis as we make those investments in on-demand GMV growth as well as also in investments like what we talked about earlier in the call regarding AI, for example, and continued IoT investments, mapping infrastructure which are all important pillars in making sure the foundation of our business continues to be solid. So we're making also those long-term growth investments as part of our regional corporate costs. But stepping back, what I can say is if you look at our group EBITDA to revenue margins, what we expect in 2025 is a revenue margin improve by about 200 to 300 basis points in 2025. And that's because we're driving more operating leverage also in the business. So hopefully, that gives you a bit of a picture in terms of how we think about operating leverage and cost structure of our business.

My question is about our advertising monetization. Given our focus on technology and AI, can management share about the percentage of our merchants using our advertising solution? And how are we actually seeing their business performance versus those without advertising? And my second question is about our 2025 guidance, in particular, about the Forex trend. Given that the U.S. dollar, I think, appreciates or depreciates from time to time, should we expect there to be two sets of year-on-year growth numbers taking into account what is for local currency versus those in U.S. dollars on a quarterly basis?

Alex responded to the inquiry regarding advertising, highlighting its significant role in achieving long-term delivery margin targets and its growing impact on mobility. He noted that the gross merchandise value (GMV) penetration for advertising rose to 1.7% in the fourth quarter, up from 1.4% a year prior, indicating positive momentum in advertising traction. He emphasized that a key factor driving this growth is the increased adoption of the advertising tools among merchants, confirming a substantial rise in merchant utilization over the year. The retention rate of these merchants on the advertising platform remains strong, around 75%. Return on advertising sales ranges between 5 to 8 times based on the merchant size and brand strength. Despite this success, merchant penetration in advertising is still under 50%. Looking ahead to 2025, the company plans to increase merchant penetration and enhance self-service tools to support the growth and success of merchants within the Grab ecosystem.

Thomas, on your FX question, I think it was around how FX was impacting our current guidance. Let me give you a few data points. On a year-to-date basis, we're facing about a year-over-year headwind of roughly about 30 basis points. And on a quarter-on-quarter basis, FX headwinds are roughly about 140 basis points on a year-to-date. And for the rest of 2025, from a guidance perspective, internally, we're using our prevailing spot rate in determining our current outlook for full year GMV and revenue. And we'll continue to monitor that spot rate; obviously, it moves around quite a fair bit. Again, part of that, going back to a couple of questions around our guidance philosophy. And at the beginning of the year, we tend to be a little bit more conservative on the FX side also, but that's how we're thinking about the FX movements. Thank you all for joining us today and for your time. In conclusion, Anthony, Alex, and I want to extend our heartfelt gratitude to all our drivers and merchant partners. We had a fantastic 2024, which would not have been possible without the support of our drivers across Southeast Asia and the merchants we work with. We also appreciate our customers who continue to passionately use our products. Thank you to our shareholders for your ongoing trust in Grab, and to the Grab team for driving our growth over the past year. Alongside the IR team, Ken, Doug, and I will be traveling over the next few weeks to participate in various investor relations conferences on the U.S. West Coast and in Asia. We would love to connect with you, so please feel free to reach out if you'd like to meet during this time. Thanks once again, and have a wonderful day. Looking forward to our next quarter.

This concludes Grab's Fourth Quarter and Full Year 2024 Earnings Results Call. Thank you for your participation. You may now disconnect.