Executive Summary / Key Takeaways

• Grab Holdings Limited (NASDAQ:GRAB) is solidifying its position as Southeast Asia's leading superapp, demonstrating a clear path to sustained profitability through its diversified ecosystem of mobility, deliveries, and financial services. The company achieved its 14th consecutive quarter of adjusted EBITDA growth in Q2 2025, with trailing 12-month adjusted free cash flow expanding to $229 million.
• A product-led strategy, emphasizing affordability and AI-driven innovation, is fueling robust user engagement and Gross Merchandise Value (GMV) growth. On-demand GMV accelerated to 21% year-on-year in Q2 2025, with monthly transacting users (MTUs) reaching an all-time high.
• Grab is making significant strides in technological differentiation, particularly with AI and autonomous vehicles (AVs). Its AI-driven tools are enhancing operational efficiency and merchant performance, while strategic partnerships in AVs aim to revolutionize future mobility services in the region.
• The Financial Services segment is Grab's fastest-growing business, with total loan disbursals nearing $3 billion on an annualized run rate in Q2 2025. The segment is on track for overall profitability by the second half of 2026, with its digital banks expected to break even by Q4 2026.
• Despite strong operational performance and increased forecasts for GMV and EBITDA, recent analyst sentiment, including a downgrade from HSBC (HSBC), highlights valuation concerns, suggesting a balanced risk-reward profile at current stock levels.

Southeast Asia's Digital Powerhouse: Grab's Superapp Foundation

Grab Holdings Limited, established in 2012, has evolved into Southeast Asia's preeminent superapp, seamlessly integrating mobility, delivery, and digital financial services across a vast and underpenetrated market. The company's foundational strategy centers on leveraging its comprehensive ecosystem to drive growth and efficiency, positioning itself as a critical digital utility for millions of users and partners. This approach is particularly potent in Southeast Asia, a region experiencing robust digital economy growth, projected to reach US$300 billion by 2025 and potentially US$1 trillion in gross merchandise value (GMV) by 2030.

Grab's journey has been marked by strategic adaptability. A pivotal shift in 2023 saw the company lean into affordability with the introduction of services like Saver delivery and Saver transport rides. This move proved prescient, positioning Grab as a "countercyclical company" capable of sustaining user engagement and growth even amidst global macroeconomic uncertainties. This product-led philosophy continued to yield results, culminating in a record number of transacting users and an acceleration of on-demand GMV growth to 20% year-on-year in 2024. Grab's multi-vertical ecosystem provides a significant competitive advantage, allowing for extensive cross-selling opportunities across its services and fostering deep user loyalty. The company is approximately 3 to 4 times larger than its next closest regional competitor, a scale that enables substantial reinvestment in technology and operational efficiencies.

Technological Edge: Fueling Efficiency and Future Growth

At the heart of Grab's strategy lies its profound commitment to technological differentiation and innovation, particularly in Artificial Intelligence (AI) and Machine Learning (ML). The company boasts over 1,000 AI/ML models in production, touching every facet of its product offerings. This extensive AI infrastructure is not merely a cost center but a powerful engine for efficiency and demand generation.

Grab's AI-driven tools deliver tangible and quantifiable benefits across its ecosystem. The Merchant AI assistant, for instance, provides tailored recommendations to merchants on how to boost sales and optimize ad spend, resulting in a 24% uplift in ad spend among engaged merchants. Similarly, Mystique, Grab's GenAI copywriting tool, has demonstrated its effectiveness by improving conversion rates by 2x and increasing user engagement by 50%. For its driver-partners, the AI-powered Ride Guide is utilized by approximately 250,000 drivers weekly, leading to higher income and improved productivity. These innovations underscore how AI directly translates into enhanced operational performance and stronger marketplace health.

Beyond current applications, Grab is actively investing in next-generation technologies. The company has launched an AI Center of Excellence in Singapore, aiming to develop its own specialized foundation model, bolster developer productivity, and contribute to smart city initiatives. This center is focused on creating advanced AI capabilities for real-time road hazard detection, traffic intelligence for urban planning, and real-time flood monitoring. Grab's in-house Large Language Model (LLM) kit has dramatically accelerated development, reducing the time required to build generative AI applications from one and a half weeks to just half a day.

Grab is also making significant strides in autonomous vehicle (AV) technology, viewing it as a critical component of future mobility. The company envisions a hybrid AV-human fleet, particularly in areas poorly served by human drivers, to enhance fulfillment rates and customer satisfaction. Recent strategic moves include a partnership with A2Z for the first autonomous electric shuttle bus in Singapore and a strategic equity investment in WeRide, a global leader in autonomous driving technology, to accelerate the deployment and commercialization of Level 4 Robotaxis and shuttles across Southeast Asia. Grab's "right to win" in the AV space is underpinned by strong relationships with AV players and OEMs, its regional scale for optimal utilization rates, a proven track record of safety and regulatory collaboration, and proprietary mapping technology rich with local data sets for complex urban environments. This technological leadership forms a robust competitive moat, driving cost reductions, enhancing market positioning, and laying the groundwork for long-term growth.

Operational Excellence and Segment Performance

Grab's operational performance in the second quarter of 2025 showcased strong momentum across its core segments, reflecting the efficacy of its product-led growth strategy and disciplined cost management.

In the Mobility segment, transactions surged by 23% year-on-year, attracting new user cohorts and improving retention. Monthly Transacting Users (MTUs) grew 16%, and Gross Merchandise Value (GMV) increased 19% year-on-year (or 16% on a constant currency basis). The segment's margin reached 8.7%, nearing its long-term steady-state target of 9% plus. This performance was achieved by balancing affordable options, with "Saver" services accounting for approximately one-third of Mobility transactions, alongside the growth of higher-margin premium rides, which now represent a double-digit percentage of Mobility GMV.

The Deliveries segment also demonstrated robust growth, with GMV accelerating 19% year-on-year on a constant currency basis in Q2 2025. The segment margin expanded by 34 basis points year-on-year to 1.8%, and absolute EBITDA grew an impressive 50% year-on-year. Affordable new product initiatives, such as GrabFood for One and Shared Saver, are growing 3x faster than existing products and now contribute one-third of Deliveries GMV. GrabUnlimited, the region's largest paid loyalty program, is a significant driver, with members exhibiting almost 5x higher spend and 3x higher order frequency. GrabMart, while currently less than 10% of the Deliveries business, is growing 1.5x faster than food deliveries, highlighting the vast untapped potential in online groceries.

Financial Services stands out as Grab's fastest-growing business. Total loan disbursals across GrabFin and its digital banks reached nearly $3 billion on an annualized run rate basis in Q2 2025. The loan book, which stood at $700 million at the end of Q2 2025, is targeted to reach $1 billion by year-end 2025, with half-on-half growth expected to accelerate to 41% in the second half of the year. Grab's sophisticated, large language model-based lending models, which ingest over 120 variables from its ecosystem, enable prudent risk management, with non-performing loans (NPLs) remaining stable at around 2%. The company's digital banks (GXS Bank in Singapore, GXBank in Malaysia, and Superbank in Indonesia) are expanding their offerings, including personal lending and supply chain financing, leveraging Grab's low-cost distribution and deep user insights to serve the underbanked population.

The Advertising segment is also a significant and rapidly expanding revenue stream. It achieved a run rate of $236 million in Q2 2025, growing 45% year-on-year, with GMV penetration reaching 1.7%. This exponential growth is driven by increasing advertiser adoption, high retention rates (around 75%), and an impressive average return on advertising sales of 8x.

Financial Trajectory: From Red to Robust Profitability

Grab's financial performance reflects a successful pivot towards profitable growth, building on its ecosystem's scale and operational efficiencies. The company achieved its 14th consecutive quarter of adjusted EBITDA growth in Q2 2025, a testament to its sustained discipline. For the full year 2024, Grab recorded its first full year of positive group adjusted EBITDA of $313 million and positive adjusted free cash flow of $136 million, a significant improvement of $370 million year-on-year. The trailing 12-month adjusted free cash flow further expanded to $229 million by Q2 2025.

The company's revenue trajectory has been strong, with annual revenue reaching $2.80 billion in 2024 and $3.07 billion on a TTM basis. Profitability metrics are also showing positive trends, with a TTM Gross Profit Margin of 42.87% and a TTM EBITDA Margin of 8.69%.

Grab has demonstrated effective cost discipline, with regional corporate costs increasing at a slower rate (9.5% quarter-on-quarter in Q2 2025) than its on-demand GMV growth (21% in Q2 2025), indicating strong operating leverage. Management anticipates a 100 to 150 basis points margin improvement in regional corporate costs as a percentage of revenue.

Grab maintains a robust liquidity position, with a net cash liquidity of $5.8 billion as of Q3 2024, which includes bank deposits. The company completed a $500 million share buyback program, with approximately $310 million remaining to be executed. Grab's capital allocation framework prioritizes organic growth, followed by highly selective M&A opportunities, and then returning excess capital to shareholders.

Competitive Dynamics and Strategic Positioning

Grab operates in a dynamic and competitive Southeast Asian landscape, but its multi-vertical superapp model provides a distinct advantage. The company is approximately 3 to 4 times larger than its next closest regional competitor, a scale that enables it to reinvest heavily in AI and other capabilities, driving efficiencies and passing savings to consumers. This makes Grab's competitive strategy sustainable, even as market dynamics fluctuate.

Directly comparing Grab to its key rivals reveals its differentiated strengths. Against Uber Technologies Inc. (UBER), a global mobility and delivery leader, Grab's localized superapp experience and deep regional expertise offer a stronger market position in Southeast Asia. While Uber Technologies Inc. boasts global scale and significant R&D in areas like autonomous features, Grab's integrated financial services and ecosystem approach foster greater user retention and cross-service engagement. Grab's ability to leverage its data for lending to the unbanked and underbanked population further distinguishes it.

In comparison to GoTo Group (GOTO), another Southeast Asia-focused superapp, Grab has consistently outgrown its closest competitor in Indonesia, a key market, for two consecutive quarters. Grab's product-led approach, coupled with its ability to fine-tune direct marketing costs (declining 12% quarter-on-quarter in Indonesia in Q1 2025), has allowed it to outperform while improving adjusted EBITDA as a percentage of GMV. While GoTo Group may exhibit localized agility, Grab's broader regional presence and multi-vertical integration provide superior operating leverage.

Against Delivery Hero SE (DHER), which operates platforms like Foodpanda, Grab's delivery services benefit from the broader superapp ecosystem. Grab's strategy of bundling services and driving higher frequency through initiatives like GrabUnlimited and GrabMart cross-sell (5x higher frequency for users of both food and mart) creates a stickier customer base than single-vertical players. The ongoing consolidation in the market, evidenced by the departure of competitors from certain countries, further strengthens Grab's category leadership across mobility and deliveries.

Grab's competitive advantages, or moats, are primarily its powerful network effects, strong brand trust in Southeast Asia, and proprietary technology. The vast ecosystem of drivers, merchants, and users creates a virtuous cycle, reducing customer acquisition costs and fostering recurring revenue. Its AI and ML capabilities, as detailed earlier, provide a technological edge that is difficult for smaller, single-vertical competitors to replicate. However, Grab faces vulnerabilities such as high operational costs, though its AI investments are actively addressing this, and dependency on regional regulatory frameworks, as seen with the Philippine Competition Commission's oversight on driver incentives. Grab's strategic response involves continuous product innovation, AI-driven efficiency, and selective bolt-on acquisitions like Chope (reservation app), Everrise (retailer), and Validus (supply chain financing) to expand its ecosystem and capabilities.

Outlook and Investment Implications

Grab's forward-looking guidance underscores its confidence in sustained profitable growth, driven by its strategic initiatives and technological leadership. The company expects on-demand GMV growth to accelerate in 2025 relative to 2024 levels, with adjusted EBITDA for the full year 2025 projected to be between $460 million and $480 million, an increase from its previous guidance. Management anticipates adjusted EBITDA in the second half of 2025 to be substantially stronger than the first half. This outlook is predicated on continued product adoption, AI-driven efficiency gains, and the company's countercyclical positioning amidst potential macroeconomic headwinds.

Segment-specific guidance is equally compelling. Deliveries margins are expected to improve sequentially for the remainder of 2025, with a long-term steady-state target of 4% plus. Mobility margins are also targeted to reach 9% plus in the steady state. The Financial Services segment is on a clear path to profitability, with the overall business expected to break even in the second half of 2026, and the three digital banks collectively by the fourth quarter of 2026. Regional corporate costs are projected to increase by 10% to 12% year-on-year, but Grab expects to achieve 100 to 150 basis points of margin improvement as a percentage of revenue, reflecting ongoing operating leverage.

Despite this optimistic operational outlook, investors should consider the current valuation. HSBC recently downgraded Grab to "Hold," citing valuation concerns after a significant rally in the stock over the past year. The stock's current metrics, such as 0.81x EV/GMV, 27.6x EV/EBITDA, and 80x P/E for 2026 estimates, appear stretched, with its 12-month forward EV/GMV approaching two standard deviations above mean levels. While analysts generally maintain a "Buy" or "Moderate Buy" consensus, the average price target suggests limited immediate upside from current levels.

Key risks include ongoing macroeconomic uncertainties, particularly potential consumption weakness and the impact of trade tariffs. Regulatory scrutiny, especially concerning driver pay, commissions, and fintech licensing, also presents a potential headwind that could cap margins. Furthermore, execution risk in Grab's lower-margin businesses remains, where missteps in cost control or subsidy discipline could erode profitability.

Conclusion

Grab Holdings Limited stands as a compelling investment proposition, deeply embedded in the rapidly expanding digital economy of Southeast Asia. The company's transformation into a profitable superapp, driven by its robust ecosystem, relentless focus on affordability, and cutting-edge AI and AV technologies, positions it for sustained long-term growth. Grab's consistent financial improvements, accelerating GMV, and clear path to profitability across its diverse segments underscore the strength of its strategic execution.

While valuation concerns warrant careful consideration, Grab's dominant market position, technological leadership, and strategic diversification into high-growth areas like digital banking and autonomous mobility provide a strong foundation. The company's ability to leverage its scale and data advantage to outcompete rivals and adapt to market dynamics suggests a resilient business model. For investors with a long-term horizon, Grab represents a unique opportunity to participate in Southeast Asia's digital future, powered by innovation and a commitment to profitable expansion.