Grab, the ride-hailing and food delivery app operator in Southeast Asia, has recently laid off over 1,100 employees, which is about 11% of its total staff. This marks the first time the company has conducted a major round of layoffs since 2020. Reportedly, Grab mentioned that the move is in response to changes in technology and the competitive landscape, as the company aims to be Group Adjusted EBITDA breakeven by the end of this financial year.
Anthony Tan, CEO and co-founder of Grab, downplayed the cost-cutting measure, stating that it is merely aimed at profitability. The affected employees will receive severance payments, medical insurance coverage, career transition consultations and other measures for those impacted.
Previously, Grab’s COO, Alex Hungate, assured Reuters that Grab wouldn’t conduct layoffs despite the weakening market conditions. Last year in September, the company doubled down on its commitment to avoid major cuts to its expenses. However, Grab’s competitors in the region, Sea and GoTo (GoJek’s parent company), have both made layoffs either to improve profitability or to preserve cash.
Grab, which trades on the Nasdaq exchange in the US, reported quarterly results that indicated slowing user growth and user spend amid an ongoing net loss. Additionally, the departure of Grab’s co-founder from the business further increased the pressure. The company has been facing heavy, ongoing price competition with rivals, including incentives for drivers, and a significant challenge has been the vastness of Grab’s business.
Throughout the years, Grab gathered a multitude of services and acquisitions, attempting to offer a super app that provides multiple services to the consumers. Recently, Grab acquired the Philippine-based motorcycle taxi platform Moveit, Jaya Grocer, a Malaysian supermarket chain, and Indonesian digital payment platform OVO, further adding to its size and complexity.
There are no confirmations from Grab about any potential future moves that might include divestments, sunsetting services, or more layoffs, with Tan saying that the primary goal of the exercise is to strategically reorganize ourselves so that we can move faster, work smarter, and rebalance our resources across our portfolio in line with our longer-term strategies. Grab’s market cap is now between $12 to $13 billion, compared to a valuation of $40 billion during their initial entrance to the Nasdaq exchange in 2021.
