Singapore-based superapp Grab logged its first ever positive net profit late last week and revealed it was helped by cutting cloud costs and adopting generative AI.
“2023 was a pivotal year for Grab,” enthused co-founder and CEO Anthony Tan in an earnings call.
The superapp’s net profit hit US$11 million in its Q4 2023 – a stark improvement from the previous year, when the company reported a US$391 million loss.
The biz ascribed the improvement a 32 percent decline in cloud costs, achieved after an optimization effort. An 18 percent reduction in total headcount helped too.
So did AI.
Tan disclosed Grab has built its own in-house LLM-powered marketing tool. The CEO claimed it had reduced content generation time from 99 hours to just 90 minutes while raising output quality and driving click through rates upward when compared to manually generated content.
Step three: profit.
In June 2023 Grab laid off 11 percent of its workforce. At the time, Tan promised the company was not reducing workforce “as a shortcut to profitability," but rather as a way to adapt to changing times. He cited Genrative AI as one environmental change that could allow organziations to stay nimble and sustainable.
“So this not only drives significantly greater throughput, but also enables us to stay lean and disciplined from a cost management perspective. Savings can then be reinvested into more technology to drive greater long-term growth for the platform,” stated Tan.
Tan added that other generative AI initiatives are already in progress.
It wasn’t just net profit in the positive – the company’s quarterly revenue increased 30 percent year on year to US$653 million. The deliveries segment was the biggest money maker, growing 20 percent year-on-year to US$321 million. Mobility services grew 26 percent to U$237 million.
Tan attributed some of the increase to COVID recovery.
“Our mobility business, which was severely impacted by the pandemic exceeded pre-COVID levels as we exited 2023. This was done through focused product investments into our key affordability initiatives and targeting traveler demand,” he explained.
Grab also announced it has approved a buy back program to repuchase up to US$500 million class A ordinary shares, thereby signalling confidence in its short-term share price.
The company has reecently been the subject of merger rumours, reportedly with Indonesian competitor GoTo. A buy-out of German competitor FoodPanda has also been rumored.
COO Alex Hungate hibernated the FoodPanda speculation:
Grab already faces scrutiny from the Competition and Consumer Commission of Singapore for a proposed acquisition of Trans-Cab last January. ®
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