The recent round of cost-cutting measures undertaken by super app company Grab, coming two-and-a-half years since it last executed a significant retrenchment exercise, was necessary given the firm’s financial situation, said analysts.
Its move was the latest in a spate of cost-cutting measures by high-profile tech firms, some of which have laid off workers, with one analyst describing Grab’s decision as a “matter of survival”.
Grab earlier in mid-December circulated a memo to its employees outlining the firm’s latest measures to reduce spending, such as hiring and salary freezes, but it did not go as far as to retrench staff.
The last time the Nasdaq -listed company was reported to carry out a significant retrenchment exercise was in 2020 when it laid off 350 workers. Some top executives left Grab around the middle of this year as the company adjusted its fintech business unit.
While Grab’s staff members declined to comment when approached, delivery riders and private-hire drivers told TODAY that they were essentially not worried by the news of cost-cutting unless they see their income further impacted.
Experts said that further cost-cutting measures cannot be ruled out as macroeconomic conditions continue to be challenging in the near future, with high interest rates and the prospects of a global recession among the factors motivating companies to cut costs.
“I see the tough decisions that Grab and some of these other companies are making, these are basically decisions which you might say are a matter of survival,” said the associate professor at the Singapore University of Social Sciences (SUSS).
“(In comparison), established tech platforms generally have substantial cash reserves and also more capacity to raise funds based on their proven track record.”
In terms of its balance sheet, Grab’s net cash liquidity as of November is US$5.3 billion (S$7.2 billion), according to unaudited figures. In comparison, Meta, which had over 87,000 employees as of end-September and axed 11,000 in November, has cash reserves of around US$41.78 billion as of Sept 30, 2022.
Grab’s regional competitor, GoTo has about 31.6 trillion ruppiah (S$2.75 billion) in its reserves, which is smaller than Grab’s.
Grab’s adjusted EBITDA, for the 3rd quarter of 2022 ending Sept 30 stood at negative US$161 million. This is an improvement of 24% compared to negative US$212 million for the same period last year.