Grab Holdings Limited Price & Performance (GRAB)

Hi. Good day, everyone. And welcome to Graf's Fourth Quarter and Full Year twenty twenty four Earnings Call. I'm Douglas Yu, Director, Investor Relations and Strategic Finance at Grab, Grab joining me today are Anthony Tom, Chief Executive Officer Alex Hungate, President and Chief Operating Officer Peter O'Hee, Chief Financial Officer. During this call, we will be making 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. 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 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 a profitable manner. We achieved our first full year of positive group adjusted EBITDA of $313,000,000 dollars coming in at the upper end of our upgraded guidance and positive full year adjusted free cash flow of $136,000,000 which improved by $370,000,000 year on year. Building upon these strong foundations we've laid in 2024, to scale our platform, we see plenty of headroom to further out serve 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 while also being highly disciplined With that, we now open the call for questions. Operator?

Ladies and gentlemen, we'll now start the questions and answers portion of the call. Our first question comes from Pang Bi from Goldman Sachs. Your line is open. Please ask your question. Hi, good morning and thank you very much for the opportunities. Congratulations as well for another great set of results. Two questions from me. Firstly, just wanted to have a better understanding around your product mix shift. Sabre is already at birth of your deliveries and How should we expect the mid shift to transform over the years? And how will this impact your margins, especially in mobility where we started to see your margins down dipping to 8.4%? That's question number one. Question number two on FinTech. We see that the loan book grew to R536 million, revenue also grew nicely to RMB74 million. Dollars 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?

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, go down. In order to make sure that that marketplace health is in the best possible state, and that we're really driving improvements for our consumers What's kilo is like on a full year basis, if you look back, deliveries margins did expand 70 basis points.

And the mobility margins also remained And obviously, you've seen now this acceleration in growth which is a big objective for us. As we look forward to 2025, now trying to address your question on mix, We will continue to grow this momentum and you will see us focus equally on the high end of price laddering as we are on the affordability end of the price laddering. To make sure that we keep that balanced approach to margin growth as well as overall GMV growth. And I just 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 then the mobility margins 9% plus. So we're still very confident that 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 and to make sure that we keep the margins balanced. I think our partner strategy is very important for that. So we have supply partners like Bluebird in Indonesia, for example, We have grocery partners examples of SM and Robinsons in The Philippines. Brand partners like Coke where we've done the Coke and 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, Quoc and Emtek. Totally blue chip with Grab 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. On the Digibank Lending First, the loan products will launch very recently in the fourth quarter.

And so we're really growing those fast. And scaling well within the credit risk appetite that we've set out. So we do expect the Digibanks to continue to see increase in direct costs with these new launches Firstly, the Flexi Loans In Malaysia is just launching for the first time for consumers and then the MSME products for small businesses also just launching in Malaysia and Singapore. So with supporting those launches currently. And that obviously brings some increase in 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 ECLs through the expense lines of the P and L as we grow. And obviously, as the credit models develop, etcetera, it's good to have a strong balance sheet, but as those credit models develop, we'll be able to sharpen our pencils on on that overall And that will be a driver of of the return to profitability because We are confirming 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 Gfins side, so that's the bank side. On the GfEN side, it's already providing good risk adjusted returns on capital, in fact comfortably above the Grab's own cost of capital. So that's a strongly performing business with good returns. So we'll continue to for that across our ecosystem. Hopefully, that's helpful to give you some character of the way financial services is growing and continuing to improve.

Thank you.

Thank you. Thank you. Our next question comes from Vinugupal Gaur from Bernstein.

Your line is open.

Hi. Good morning, management, and thanks for this opportunity.

I have two questions.

The first one is a question on management's guidance philosophy.

Entering into this year.

Now we've seen 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 [indiscernible] Do you really see this juncture a room for upside to your guidance and what has 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 of medium to long term in nature, If I were 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 are put out there for you, Specifically, I would like to [indiscernible] Sort of discuss autonomous vehicles. Versus say the speculated widely speculated innovation M and A as well as your expansion into DigiBank? So how would you balance between these? I'll probably say exciting, but relatively more resource intensive bets Hey, Venuti. It's Peter. Let me take the first one around guidance philosophy.

And I'm going to ask Alex and Anthony also just to chime in around your second part of the questions. Around where we think we'll your question around priorities and capital allocation, So let me take on the first one on revenue on guidance itself.

The 2025 EBITDA guidance is a 40% to 50% growth.

Relative to 2024 levels, And the revenue growth that we're forecasting also is somewhere between 1920%, 22%.

It's a strong top line growth.

If you look at where we landed in 2024, landed revenue somewhere around the 21% mark on a constant currency basis. Now around guidance philosophy, and if you look at since we went public two to three years ago now, there is a pattern And as a management team, we embrace the philosophy of Bin Race. When it comes to our guidance. Especially on the EBITDA side, as well as on the revenue, So when we put out numbers at the beginning of each year, we do bake in some potential uncertainties. That we can't predict And I'll give you a couple of examples of that. We looked at a seasonality perspective, especially in the first quarter, the first quarter is a very important quarter for us.

Where we look at the Ramadan and the Lunar New Year, where this year it's a little bit odd where we do have a convergence of those two facilities all in the same quarter versus last year or previous years the Ramadan actually extends to the second quarter of the business. The good news is we're seeing a very strong January.

So far, but it's too early to tell. So there is some some uncertainty that we're baking in on the revenue guidance and the EBITDA guidance. Now as the year progresses and you've seen this, in the last couple of years, as the outlook improves, and we make those adjustments to reflect the latest outcomes, in the business and also always remind our investors to take their lens. When it comes to considering our guidance, especially at the beginning of the year when we put out Let me just finish off here. Most importantly, we always take as a management team a balanced approach When we are driving two things, We're driving top line growth and you're seeing that momentum in the business Second half was critical for us to exit strongly because that will set us up for 2025 and you saw that on demand GMV growth at 20% on a quarter on a year over year basis maximizing adjusted EBITDA and free cash flow. On an absolute basis and we're very committed in growing that EBITDA and free cash flow in 2025. So, Vinu, hopefully that will give you some some picture and also how we think about our guided philosophy On your second part of the question, There's an area here where I think we will need to address, which I'll ask Alex and Anthony to chime in.

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 unattapped. We've shown and proven we've hit an all time high of 44,000,000 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 out serve across this region. So what does that mean for us? We are going to double down on the core because the core is still [indiscernible] And on top of this, we're also looking into 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 Gen AI adoption across the org. Now on AVs, we've been watching this space closely and I'm very excited about the long term opportunity related to this tech. I personally and our leadership has actually taken many rides across the world across various brands Just to understand and be forward leaning in this space, over the next few years And we have a very significant role to play in this region via 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. 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 on 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 upscale workers, to upscale our driver partners and to equip them for more tech enabled future, So going forward, I can confirm we are in active discussions with regulators We intend to work closely at every government 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. In the meantime, we we are actively pursuing several partnerships Alex, go ahead.

Thanks, Anthony. Yes, 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 Bluebird earlier, and we're also expanding our EV fleet with BYD. They were 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 not just in Indonesia, but across the region on some of our tech advantages 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. Hey, Ebonyou, just to add to Alex, from an inorganic perspective, because your question is around capital allocation and where do we balance priorities, I've been just chiming here a little bit just to give context [indiscernible] 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 and A that I just talked about. And then third, there is excess capital as a priority, we will return it to our shareholders. So we're continuing to deploy those capital allocation framework and 2025 is no different for us. So hopefully that's helpful in addressing your questions.

Thanks a lot. Yes, it does.

Thanks.

Next question please. Thank you. Our next question comes from Alicia Yap from Citigroup.

Your line is open. Hi, thank you. Good morning, Manish Grab on the solid sales of results and thanks for taking my questions. Two questions. First is that, can you share the updates on the cross selling of the delivery business with Food and Mark? Can you compare and contrast the AOE for user that use both versus the user who only use food delivery? And how do you anticipate the increase in the AOV and the wallet spend growth of user 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 view on the China's DICC model versus your experience working with OpenAI as your lighthouse partner? Thank you.

Thanks for your questions. Alicia. Let me take the first one on the ecosystem and cross sell because that's at the core of our You're right, cross sold users continue to show improving uplifts. Q on Q. So let me see users who transacted in both [indiscernible] have average spend which is four times higher and then frequency uplifts are 2.5 times higher. So this is a really key linkage in our strategy and it gives us versus vertical single vertical competitors in On Demand. Retention rates also twice as high And the food owner uses So that's super important as we continue to grow and look for efficiencies with the ecosystem doesn't end with on demand though. As you know, we the growth of financial services is giving us lots of opportunities to And I don't know if I should maybe I'll flag also that the grocer is growth. Grocery delivery is actually faster than the food delivery growth for the second quarter in a row. We're very excited about the potential here The penetration of a grocer is still very low in our ecosystem. And we intend to continue to grow this. With strong partnerships market by market.

I think what we've done with Jaya in Malaysia demonstrates what can be done. To grow online deliveries as a share of overall revenue. And the tech that we've developed there, very closely in Malaysia, we're now sharing with some partners like SM and Robinsons and in Philippines and Transmart in Indonesia. And that is powering this exceptional growth that we're seeing on the Mart side. For the first time now, we're actually instead of selling from food into Mart, we're now looking at selling the other direction from MART back into food. From these new users who are coming into our ecosystem from partnerships.

And then the financial services side, I think you can see from some of the slides that we sent out this morning, there's great acquisition opportunities 90% of the Gx Bank customers in Malaysia came from Grab. And the acquisition cost is minimal. The speed at which we've been able to gather [indiscernible] is very, very pleasing indeed. And it shows the power of the ecosystem and the brand in low customer acquisition and cross sell.

Maybe if I can just jump in and talk about the GAI and specifically you referred to OpenAI, DPO Seek and other cost optimization efforts. So I think Alicia, as a company, we've been actively leaning in really leaning in, I would say, in embracing GAI right from the beginning. OpenAI is one where we've been very blessed with being the first lighthouse partner that they chose in Southeast Asia. And we've built a strong partnership with them solve complex problems that drive benefits our ecosystem users and partners.

But we also work with other multimodal foundational models across the world. Let me share one example where we use our multimodal models I'll mention AI assistant. I'll merge an AI assistant today really addresses a major pain point Today, many merchants, especially Long tail, merchants, they don't have account managers and they need help.

These merchants always crave more insights, especially insights on how to boost sales, how to target users, and they are really starving for these solutions. So what do we do? How did we leverage AI? We saw this as a perfect opportunity for Gen AI to enhance the earnings potential for our partners on our platform. By leveraging Gen AI, we developed a self serve chatbot providing our merchant partners with personalized recommendations answering whether it's business related, example, top selling menu items to how to be a even better chef how to be even a packaging master for their customers and really gives them ways to optimize, for example, their recommendations, their ad spend, [indiscernible] User targeting. As a result, we saw a 24% uplift in ad spend among merchants who engage with our merchant AI assistant versus merchants who did not, and we saw sales uplift among those merchants as well. Now for all our merchant partners who hear this, we highly encourage you to try this solution and hope that you will find it a useful tool to generate stronger sales. And let's continue to innovate together. But in short, I'll say this, we are going to continue leaning heavily Alicia, GenAI and we're exploring ways where we can further integrate these solutions that drive higher sales more productivity improvements for our workforce. '25 is the year of AGENTEC AI, I foresee how we all as a leadership or see that we will be rolling out even greater personalized solutions for our ecosystem partners.

Thanks, Anthony. Thank you. Our next question comes from Mark Mahaney from Evercore. Your line is open. Okay. Thanks. 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 want to 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 that something structural or is that consumer incentive spend in advance or in alignment or in support of this some of the newer products that you're rolling out on the value side, high end, low end. So just talk about what the the how we should think about those consumer incentives that 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?

Hey, Mark. Let me take the the incentive questions and I'll ask Alex to chime in. The MTU front. It's a key focus area for Alex and we're seeing some really good fruits coming out of that. 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 see 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 we 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 twelve months, it was up 90 basis points also.

So we use that, the lever as a critical factor on especially on product adoption. Alex, do you want to just chime in on the MTU side?

Yes, Mark, you're right. The MTU growth exact acceleration is something we been really focused on. One of the big drivers is the affordability products both for deliveries and mobility. Of the new NTUs this quarter were either new or reactivated users and a lot of that's coming from from the affordable products. We are balancing that with high LTV users, as I mentioned earlier, particularly travelers, which has been a big driver of new MTUs as well. Typically spending something like more than two times what a domestic user would spend So we have high value premium users growth as well.

I can confirm that the product holdings of two or more is still more than two thirds of our users.

And so you speaking to Alicia's question earlier, we've still got really good cross sell ecosystem performance. And then the older cohorts are also still spending more. So we're seeing deliveries are seeing growth across all cohorts, even for the pre COVID cohorts of 2018, 2019.

So I think what you're seeing is that our product led strategy more than our incentives, is what's enabling us to grow MTUs faster than the market. And although as Peter said, we need incentives from time and to time to launch new products and we have been launching some really significant new products For example, group orders and family accounts are viral products where the ecosystem starts to grow itself That's a quarter to quarter feature rather than a structural change. Thank you.

All right. Thank you very much. [indiscernible] [indiscernible] Thank you. Our next question comes from Zhong Zhao from Barclays.

Your line is open.

Thank you very much for taking my questions. I have two questions, but firstly, I have a follow-up. On what Peter mentioned earlier on the guide. It's great, Peter, you say you started off The year was something conservative and the base case is BN raised. That's all we'd like to hear. Your guidance indicated Although you you didn't guide on the GMV, but only guide on the revenue by appears to indicate acceleration in growth in '25 vis a vis '24 and your GMVN revenue have 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 accelerating growth in both food and rice is going to continue in 2025 vis a vis 2024? That's my first follow-up and I have to separate questions later.

Sure, Jean. So we are seeing good momentum on on demand GMV growth. We put it, it's been a momentum that been intentional on our part and driving growth We just talked about MTUs for an example. But at the same time also, 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 are we saw a very strong exit in Q4 that really sets us up nicely as we go into 2025.

Hopefully that gives you a better picture. Perfect. Thanks Peter.

My first question is that I know you talked about autonomous driving, robotaxi. And EVs in your press release, access to 50,000 VYD EVs I want to I know also Anthony mentioned those topics earlier as well. I want to understand a couple of things here. One, by using EVs naturally they don't burn gas. Would that matter? How does that affect your your margins? Like does that make any difference for your long term EBITDA margins for for your rides business, for the mobility business. And now back to the robo taxi, I know you are focusing on sort of the autonomous drivingrobotaxi. But on a high level, just for me to understand that while drivers' costs are kind of low in Asia, How the calculus work? Does that make sense at all to have robotics in places like Sogou say or even in China? Just want to pick your brain on this. So that's my first question. Let me stop here. Hi, John. 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 [indiscernible] 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 tech improvements as we've talked about on this call. One of the drivers is the cost of ownership of the vehicles for our drivers. [indiscernible] we know that EVs, particularly with the price point being coming down 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 what we some of these big partners like BYD On AV, unit economics will also continue to improve. We know that supply chain for EVs is built on top of the supply chain for EVs. 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're proactive and we're one of the key players in leading it is introduced safely into this region.

Yes. I'll just add to Alex. Alex is totally right.

John The key as we think about AVs is not just AVs, it's AVs is a hybrid fleet. Complemented by 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 there are the areas that are would say, harder to serve by humans drivers and this is where RoboTaxi would really keep improving fulfillment rate would say, introduction and pilots in the future.

Okay, great. Thank you guys.

And actually my second question is about Singapore. We have seen the news today or maybe yesterday was about a corporate tax rebates, which is fine, but it's more interesting All relevant to you guys, we have seen some like talking about vouchers, pretty sizable vouchers for individuals and family to spend For those of us living in Singapore, in this case, you sort of elaborate on exactly what are some of those incentives How that how long is that for the whole year? How does that affect Grabs business? I remember Grab 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. What is Singapore now as a revenue contribution to grabs the overall revenue now?

Yes, Jonk, let me take that. Look, the budget 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 and in how they're supporting the economy. Also for the everyday Singaporeans out there We were excited in terms of what they're doing in terms of vouchers, as you mentioned, tax rebates also for the businesses. Those are the right things. And again, Singapore is a very thriving economy. With a lot of very strong businesses here, which is growing. And we believe that these things on tax rebate actually will benefit a lot 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 Singaporeans. Again, they'll benefit from that. And also we see that as hopefully as 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 lock and step 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.

Okay. Thank you, Peter.

Thanks, Yong. Next question?

Thank you. Our next question comes from Divya Patel Morgan Stanley. Your line is open.

Thank you very much. Two questions from me. Maybe it's a follow-up on the mobility margin. Product mix is definitely one of the reasons as we noticed that the SavorRides is 300 basis points higher.

But just curious to know if there are other factors that have also affected the mobility 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 we can continue seeing this kind of savings? Thank you.

Thanks, Steve. Let me take the first one on the mobility business. We are very focused on growing affordability and 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've got family accounts for mobility, which is I think going to help us with frequency and retention. We've also got high value rides and some new partnerships like Bluebird advanced booking for those critical like airport type rides is also a new launch across all regions. There are always competitive factors from time to time in various markets. Our I can confirm that in every market, we remain the competitive choice leader for our for mobility across all of our markets. Overall, across the region, we maintained or grew our CP position. So I think we're highly competitive, particularly with these new markets. Multi vertical competitor across all markets in the region. So that gives us cross sell benefits, it gives us scale benefits and it 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'll say it again, reiterate that we believe that our mobility business will reach 9% plus margins in the steady state And, Devial, on your corporate cost question, in optimizing our cost base. 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, the variable there are variable cost components things like cloud, direct marketing costs, which are housing central cost bucket actually will increase That's natural. But we'll offset those by operating leverage also. Which we'll expect to realize from the continued volume growth that we're going to see in 2025. Stepping back, we'd expect to see more efficiency gains in our cost base as a percentage of revenue. But we do anticipate copper costs to increase just naturally because on a year over year basis, on an absolute dollar basis, as we make those investments in on demand GMV growth as well as also as we make into investments like what we talked about earlier in the call regarding AI, for an example, 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 cost. But stepping back, what I can say is if you look at our group EBITDA to revenue margins, what we expect in 2025 as a revenue margin, And that's because we're driving more operating leverage also in the business. So that gives you a bit of a picture. Terms of how we think about operating leverage and cost structure of our business. Thank you very much. Thanks, Divya. Operator, Next question?

Thank you. Our next question comes from Thomas Chong from Jefferies. Your line is open.

Hi, good morning. Thanks management for taking my question. My question is about our advertising monetization. Given our focus in 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 think appreciate, appreciate from time to time, Should we year on year growth numbers taking into account what it is for local currency versus those in U. S. Dollars on a quarterly basis. Thank you. Hi, Thomas. It's Alex. Let me take a question on advertising, which obviously is one of the big drivers of our long term deliveries margin target and is increasingly also contributing to mobility as well. The penetration of GMV for advertising did increase again, improved again to 1.7% in the fourth quarter from 1.4% in the same period last year. So That is a proof point of our continued traction we're getting on advertising. One of the big drivers for that is the penetration of our merchant base which I think was part of your question.

I can confirm that the penetration of the merchant base [indiscernible] So more of our merchants are using our demand generation tools The retention of those merchants on the advertising platform is very high. Something around 75 percentage points. So this is working for them. Return on advertising sales, is between five times and eight times on the platform. [indiscernible] So our and yet the penetration of our merchant is still less than half. So I think over the medium term, and in fact throughout 2025, we will continue to improve the capabilities of the self serve tools in particular so that the very large merchant base that's on the Grab ecosystem these tools available so that they can continue to grow their business and become successful growth businesses on the Grab platform. Thomas, on your FX question, I think it was around how FX was impacted to our current guidance. Me give you a few data points. On a year to date basis, we're facing a a year over year headwinds of roughly about 30 basis points. And on a Q on Q, basis, FX headwind is roughly about 140 basis points on a year to date. And for the risk of 2025, What we from a guidance perspective internally here, we're using our prevailing spot rate.

In determining our current outlook for full year GMV in 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 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.

Thank you.

Thank you.

Let me just wrap it up. Operator, for any closing remarks.

Great. Thanks very much. Hey, thanks everyone for listening and investing the time us today. In closing, Anthony, Alex and I would just like to express our sincere appreciation to all our drivers and merchant partners, We had a great 2024. All of that was not be able to be accomplished without the support from all our drivers around Southeast Asia and to our merchant partners that we serve also to all our customers out there who's vividly continuing passionately to use our products. Thank you very much. And also for our shareholders, for their continued trust in Grab Grab also for the Grab out there. Who's really been spearheading the growth of our business in the last twelve months and really just supporting the business. So thank you to all these folks Together with the IR team, Ken, Doug and I will be on the road Over the next few weeks, we'll be attending various IR Conferences Across The U. S. West Coast also in Asia in the coming weeks. We'd love to see you meet up with you and approach us any of us IR team, if you wish to meet up as we spend some time meeting investors over the next few weeks.

Thanks again, everyone. And have an awesome day. All right. Until next quarter. This concludes Grab Fourth Quarter and Full Year twenty twenty four Earnings Results Call.