Grab made big news the past couple of days, after planning to cut about 1000 of its employees. Anthony Tan sent out an email regarding this, which you can find here.

If you are wondering what this is about or how it will affect Grab, here are the 4 quick takeaways for you to understand.

#1 1000 Employees is about 11% of Grab’s Workforce

1000 employees encompass about 11% of Grab’s workforce, putting its total workforce at about 9000. However, details from its annual report 2022 show that Grab has about 11,934 employees as of 4Q 2022.

Most of its employees are in the operations and support job functions, encompassing about 53.3% of its workforce. This is followed by research and development (27.9%), general and admin (11.4%), and sales & marketing (7.4%).

#2 Grab is reorganizing itself amid rapid change in the tech market landscape

Here is the exact wording from Anthony Tan.

“I want to be clear that we are not doing this as a shortcut to profitability. Over the past couple of years, we’ve been consistent in managing costs tightly in all areas of our operations and in improving platform efficiency…. While important, our profitability milestone is only a step in a longer journey. Our focus is on what comes after. We must adapt to the environment in which we operate. Change has never been this fast. Technology such as Generative AI is evolving at breakneck speed. The cost of capital has gone up, directly impacting the competitive landscape …  Restructuring thus emerged as a painful but necessary step, to set Grab on the correct trajectory towards our longer-term future.”

How should we interpret this? To me, the main point is that Grab is cutting down on its workforce to make profits in the future and reorganizing its workforce to incorporate A.I. technologies.

Undoubtedly, A.I. will replace some people, and many technology companies in the world are already doing this. The likes of Amazon, Microsoft, and Apple, will come into mind amid the trend towards laying off staff now.

#3 Aiming to achieve EBITDA breakeven by the end of the year (but still making losses)

Now, this is tricky here. Many news outlets have been reporting that Grab is aiming to break even but did not specify exactly what it means.

I went and read the statement by Anthony Tan, and it is not what you think it is. Grab is aiming for Group Adjusted EBITDA breakeven.

For readers, EBITDA is not the profits that you think it is. It stands for Earnings before Interest, Tax, Depreciation, and Amortisation.

In a nutshell, this means that Grab would probably still be losing money as profits will need to take into account expenses of interest payment on loans, tax, depreciation, and amortization from EBITDA.

Here’s a breakdown of Grab’s financial statement from Revenue to EBITDA to Profits. See how EBITDA losses are smaller than profits at the bottom.

#4 Employees that are cut will still have access to some benefits until the end of the year

In addition to severance pay, laid-off Grab employees will still have access to some of these benefits until the end of the year to ensure that they have some form of support structure until they find new jobs.

• Extended medical insurance coverage until the end of this year, where possible, subject to local insurance terms;
• Maternity and paternity leave encashment for female Grabbers who are expecting and male Grabbers whose wife is expecting, as of the last date of employment.
• Completion bonus for those who are required to provide transition support;
• Career transition and development support in the form of free 1-year access to LinkedIn Premium subscription and LinkedIn Learning, and access to sessions with a professional coach;
• Well-being support via the Grabber Assistance Programme until the end of this year;
• Repatriation support (for Grabbers on work passes); and
• Option to keep Grabber’s pre-assigned laptop.