Grab Holdings has announced its unaudited financial results for the second quarter ended June 30, 2025, trumpeting a period of “profitable growth at scale”.
While the Southeast Asian super-app giant reported an overall profit for the quarter and impressive growth across several key metrics, a closer examination of the figures reveals nuances and potential concerns that warrant attention beyond the headline successes.
Profits mask underlying cash flow concerns
Grab reported a profit of US$20 million for the quarter, an improvement of US$89 million year-over-year, alongside a record Adjusted EBITDA of US$109 million.
Revenue saw a robust 23 per cent year-over-year increase, reaching US$819 million, driven by its on-demand and financial services segments. On-demand gross merchandise value (GMV) also accelerated, growing by 21 per cent year-over-year to US$5.4 billion.
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Group CEO and co-founder Anthony Tan stated that the company “delivered another record quarter of profitable growth at scale,” with over 46 million monthly transacting users powering the Grab ecosystem. He emphasised the acceleration of on-demand GMV and Grab achieving its fourteenth consecutive quarter of Adjusted EBITDA growth.
However, despite these positive indicators, net cash from operating activities in Q2 2025 saw a significant decrease of US$209 million year-over-year, landing at US$64 million. This decline occurred despite improved operating performance, offset by lower cash inflows from customer deposits in the banking business and higher cash outflows related to lending businesses.
While Adjusted Free Cash Flow for the quarter improved year-over-year to US$112 million and stood at US$229 million on a trailing 12-month basis, the quarterly operational cash flow dip is a notable detail often overlooked.
Financial services losses widen despite revenue growth
Grab’s financial services segment reported strong revenue growth, increasing by 41 per cent year-over-year to US$84 million, primarily from lending across GrabFin and Digibanks. Total loans disbursed grew by 44 per cent year-over-year to US$721 million, with the total loan portfolio outstanding expanding by 78 per cent year-over-year to US$708 million. Customer deposits in its GXS Bank (Singapore) and GX Bank (Malaysia) also surged to US$1,543 million.
Yet, this rapid expansion came at a cost. Segment Adjusted EBITDA losses for financial services actually increased by 8 per cent year-over-year to negative US$26 million. Grab attributes this increase to higher expected credit loss provisions as loan disbursals increased. While Grab maintains a prudent stance on credit risk, aiming for Segment Adjusted EBITDA breakeven in the second half of 2026, the current trend shows widening losses in this segment as it scales up. This challenges the overall narrative of increasing profitability across the board.
Persistent incentives and rising corporate costs
Cost discipline was highlighted by Peter Oey, CFO of Grab, who stated that “continued discipline on costs demonstrate our ability to generate Adjusted EBITDA growth”. However, the press release reveals that total incentives amounted to US$547 million during the quarter. On-demand incentives as a proportion of on-demand GMV remained flat year-over-year at 10.1 per cent, indicating a continued reliance on incentives to drive user growth and adoption of new product offerings across Mobility and Deliveries. This sustained high level of incentive spending could pose questions about the long-term sustainability of profitability if user acquisition and retention remain dependent on such expenditure.
Furthermore, regional corporate costs increased to US$92 million in the second quarter, up from US$84 million in the prior year period and US$86 million in the first quarter of 2025. These costs, which are not attributed to specific business segments and include expenses like cloud computing, mapping technologies, and shared finance and HR costs, represent an increasing overhead for the company.
Strategic debt and share buybacks: A closer look
Grab’s cash liquidity at the end of the second quarter totalled US$7.6 billion, a significant increase from US$6.2 billion at the end of the prior quarter. This boost was “contributed by the issuance of convertible notes in the aggregate principal amount of US$1.5 billion”.
While CFO Peter Oey stated this “further strengthens our balance sheet and optimises our strategic flexibility,” the structure of these zero-coupon convertible senior notes is accounted for as a derivative liability under IFRS. Grab acknowledges that this accounting treatment “may lead to volatility in profit/loss for the period,” although it states it does not impact underlying cash flows or adjusted EBITDA.
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Additionally, Grab actively engaged in share repurchases during the quarter, buying back 58 million Class A ordinary shares for US$274 million. Cumulatively, Grab has repurchased and retired 126 million Class A ordinary shares for a total of US$499.6 million as of June 30, 2025.
While share buybacks can be seen as a return of capital to shareholders, they also consume cash that could otherwise be deployed for organic growth or strategic investments.
In conclusion, while Grab’s second quarter 2025 results show strong top-line growth and improved overall profitability, the devil is in the details. The decrease in quarterly operating cash flow, the widening losses in the expanding financial services segment, the sustained high level of incentives, and rising corporate costs suggest that Grab continues to face challenges in translating its impressive growth into robust, consistent operational cash generation and segment-level profitability across all areas. The market’s reliance on a large convertible note issuance for cash liquidity and ongoing share buybacks is also worth careful consideration.
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