CGS International
July 31, 2025

Grab Holdings Q2 2025: Strong GMV Momentum but Margin Pressures Loom, Says CGS International

Executive Summary: Grab Holdings Delivers Robust Growth with Eyes on Topline, Faces Margin Challenges

Grab Holdings continues to ride a wave of post-pandemic recovery across Southeast Asia, posting robust topline growth in Q2 2025. However, a relentless focus on growing gross merchandise value (GMV) through affordability initiatives and new product rollouts is beginning to compress margins. CGS International maintains its Hold rating, raising the target price to US$5.40, and flags both upside and downside risks as the company balances growth ambitions with profitability.

Q2 2025 Financial Performance: Strong GMV Drives Revenue, Margins Tighten

• Revenue: US\$819 million (+6% qoq, +23% yoy), slightly above Bloomberg consensus and in line with CGS International’s forecasts.
• Adjusted EBITDA: US\$109 million (+3% qoq, +70% yoy), with group margins facing slight compression.
• Guidance: No change in 2025F revenue (US\$3.33bn – 3.40bn) and EBITDA (US\$460m – 480m) guidance.

Segment Performance Highlights

Deliveries Segment: GMV, User Growth, and Advertising Revenue Surge

• GMV: US\$3,471 million (+22% yoy, +11% qoq), fueled by the end of Ramadan and favorable FX trends in Southeast Asia.
• Margin: EBITDA-to-GMV margin narrowed by 20bps qoq to 1.82%, pressured by lower-margin products like affordable food bundles and Grab Food for One.
• User Activity: Both daily and monthly transacting users increased in July 2025, supporting strong GMV momentum into the second half.
• Advertising Revenue: Merchant partners are reinvesting more earnings, boosting ad revenue to an annualized run rate of US\$236 million. Advertising as a share of Deliveries GMV rose from 1.4% in Q2 2024 to 1.7% in Q2 2025.
• Strategy for 2H25: Grab will focus on affordability and transaction frequency, aiming to sustain ecosystem growth.

Mobility Segment: Expansion and Innovation Drive Growth

• GMV: US\$1,883 million (+19% yoy, +4% qoq), recovering post-festive season and aided by a larger driver base.
• Margin: EBITDA-to-GMV margin edged down 10bps qoq to 8.7%, reflecting the rollout of local innovations like Grab Car Savers.
• Fleet Expansion: Launched eco-friendly GrabCab vehicles equipped with AI-powered safety solutions and integrated fare systems in Singapore.
• Outlook: Management expects continued sequential GMV growth with stable margins, supported by rising user engagement and tech-driven initiatives.

Financial Services Segment: Rapid Loan Growth, Cautious Near-Term Profit Outlook

• Loan Book: Outstanding loans climbed to US\$708 million in Q2 2025 (+25% qoq, +78% yoy), driven by prudent credit expansion and new products (MSME loans, Flexiloans) via GXS Bank (Singapore) and GX Bank (Malaysia).
• Adj. EBITDA: Loss narrowed to US\$26 million, from US\$30 million in Q1 2025.
• 2025 Target: Management expects the loan book to surpass US\$1 billion by year-end, but higher credit loss provisions are likely to mute near-term earnings impact.

Financial Summary and Forecasts

Valuation, Recommendation, and Risks

• Rating: Hold (unchanged).
• Target Price: US\$5.40 (raised from US\$5.20), reflecting higher loan disbursement forecasts for FY25-27.
• Current Price: US\$5.29
• Market Cap: US\$21,552 million
• Consensus Ratings: Buy 24, Hold 4, Sell 0
• Upside Risks: Cost optimization, greater ad business penetration, faster financial segment profitability.
• Downside Risks: Higher-than-expected credit losses, rising regional corporate costs.

Peer Comparison: Mobility, Deliveries, and Financial Services Sectors

ESG Performance: Social Impact, Diversity, and Decarbonization Drive Recognition

• Commitment: Grab maintains a strong focus on social impact, gender diversity, and environmental sustainability, with a 20-year decarbonization roadmap and clear targets:
  • Double number of marginalized individuals earning on the platform by 2025
  • Reach 40% female leadership by 2030
  • Achieve carbon neutrality by 2040
• Recognition: Grab has held MSCI ESG AA rating since 2022 and was named to the TIME100 and Fast Company’s Most Innovative Companies lists in 2023.
• Performance Metrics: In 2023, while total rides increased 11%, road accident rates dropped by 11%, and 99.99% of rides occurred without safety incidents. Emission intensity per km fell 2.1% yoy in Mobility and 8.2% in Deliveries.

Key Shareholders and Analyst Coverage

• Major Shareholders:
  • Uber Technologies: 13.7%
  • SoftBank Investment Advisers: 10.3%
  • Toyota Motor Corp: 5.7%
• Analyst: Jacquelyn YOW, CGS International

Conclusion: Balanced Growth, Prudent Caution

Grab Holdings’ Q2 2025 results underscore the company’s ability to drive GMV and revenue growth across core segments, while navigating a shifting margin landscape. With a strategic push in financial services and ESG leadership, the company is well-positioned for the evolving Southeast Asian digital economy. However, CGS International’s Hold rating and modest target price raise reflect a prudent stance as margin pressures and external risks remain on the horizon.