- Industry monetisation is accelerating, with US ad revenue up over 20% y/y, while Southeast Asia saw a 31% rise in advertisers and 42% higher average spend
- US policy tailwinds such as income tax exemption for driver tips (+2.5% to driver earnings) help improve driver supply and reduce churn
- Southeast Asia's super app model continues to drive engagement, with cross-service usage up 4.5x and 1Y customer retention improving from 47% to 79%
- Ride-hailing, food delivery, and digital lending industries are projected to grow at CAGR of 9.6%, 9.4%, and 23% respectively between 2024 and 2030
- Growth for ride-hailing players to be driven by improving usage frequency and positive cost outlook
A big rise in advertising revenue and policy tailwinds in the US. We believe US players are in better shape to secure superior EBITDA margins in the long term as they (i) do not need to pay big incentives to drivers as most US drivers own their cars and avoid leasing unlike Southeast Asian drivers who pay 30-50% of their daily earnings to lease their cars, and (ii) US consumers tend to pay 15-20% of the order value in tips to the drivers for food delivery service compared to less than 5-10% in Southeast Asia. Furthermore, recent federal legislation exempting tips from income tax is expected to increase driver earnings by 2.5% in the US and improve driver supply, which is a critical factor for reducing churn and supporting service reliability.
Globally, advertising is emerging as a fast-growing vertical, supported by innovations in in-app placements and vehicle-based advertising formats. In the US, advertising revenue across the industry is expanding at over 20% y/y, contributing to margin uplift. In Southeast Asia, advertising revenue growth is also accelerating, with a 31% y/y increase in active advertisers and 42% rise in average spend per advertiser. This momentum is supported by the evolution of ride-hailing platforms into multi-service ecosystems, including fintech, which has significantly boosted user engagement and retention. Super app integration has led to a 4.5x increase in cross-service usage and lifted one-year customer retention from 47% to 79%.
US and Southeast Asian ride-hailing players’ 1Q/2Q25 results show improving profitability with steady FY25 guidance. Uber led the ride-hailing pack in 1Q25 with USD1.9bn in adjusted EBITDA (+35% y/y), surpassing consensus on strong mobility demand and cost discipline, with guided 2Q25 bookings above street expectations. Lyft delivered the sharpest turnaround, posting a surprise net profit of USD2.6mn vs a prior year loss, with rides and EBITDA margins at record highs. Its 2Q25 guidance points to steady gains. Grab’s 2Q25 results were stable, with EBITDA of USD109mn (+70% y/y) in line with forecasts, but it outperformed on deliveries Gross Merchandise Value due to product innovation. While Uber dominates on scale and margin, Lyft shows improving profitability momentum, and Grab is gaining share through innovation and regional expansion. All three maintain a confident FY25 guidance despite macro pressures.
Prefer players with a dominant market share in ride-hailing and delivery services. Players offering both ride-hailing and delivery services can (i) broaden their appeal to a younger demographic of customers for new services, (ii) deploy their delivery resources for ride-hailing services outside the peak hours, and (iii) offer cross-selling benefits from the use of loyalty points and other promotions. On-demand players in Southeast Asia have expanded into fintech services due to a huge potential for digital lending services. Although not profitable, fintech services are seeing continuous reductions in adjusted EBITDA losses as marketing expenses have peaked already.
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