Grab Holdings Prepares Major Layoffs, Over 1000 Employees Affected
Grab, the internet company dominating ride-hailing and meal delivery in Southeast Asia, faces increasing competition, prompting significant staff reductions.
Grab Holdings, the Singapore-based company, has announced its most substantial round of layoffs since the Covid-19 pandemic. The company, facing intensified competition in the ride-hailing and meal delivery sectors across Southeast Asia, announce the reductions. On a letter sent to it's employees, it has revealed that the company will make an 11% cut - Over 1000 employees will be affected. This round of cuts will surpass the previous year's reduction of 5%, approximately 360 employees.
Although Grab currently dominates the ride-hailing and delivery markets in Southeast Asia, it is yet to achieve profitability due to its ongoing investment in growth initiatives. Rivals such as Indonesia's GoTo Group present stiff competition, resulting in pricing pressures. Grab's shares have plummeted by about 70% since its stock market debut in late 2021, despite reducing losses and committing to reporting a profit on an adjusted basis by the final quarter of 2023.
This significant round of layoffs indicates Grab's response to investor pressure for accelerated cost reduction. While its regional competitors, GoTo and Singapore's Sea, conducted massive job cuts in 2022, Grab refrained from such measures. In fact, Grab increased its workforce by over 3,000 employees last year, primarily due to the acquisition of supermarket chain Jaya Grocer, bringing its total headcount to more than 11,000.
Although Grab reported a narrower quarterly loss in May, its growth appears to be decelerating. The company's gross merchandise value only grew by 3% in the three months leading up to March, a significant decrease from the 24% growth seen throughout 2022. Additionally, Grab experienced a slowdown in user growth as competitors enticed customers with promotional offers and lower prices.
While Grab's adjusted losses before interest, taxes, depreciation, and amortisation narrowed to US$66 million (S$88.5 million) in the first quarter, analysts predict that the company will continue to reduce its losses.
However, on a net income basis, Grab is still a considerable distance away from profitability. In the first quarter, its net loss decreased to US$244 million from US$423 million the previous year.
Grab Holdings is preparing for its most significant round of layoffs since the Covid-19 pandemic due to intensified competition in ride-hailing and meal delivery across Southeast Asia.
The job cuts will surpass the previous year's reduction of 5% - approximately 360 employees.
Despite dominating the market, Grab has yet to achieve profitability and faces challenges from rivals, leading to a decline in its stock price.
Grab's decision to lay off employees aligns with investor pressure for faster cost reduction.
Slower expense reduction compared to regional competitors and recent acquisitions have contributed to Grab's current staffing situation.
The company's narrower quarterly loss indicates progress, but growth has slowed and user acquisition has been affected by competitors' strategies.
While adjusted losses are shrinking, Grab's net loss in the first quarter decreased but remains substantial.