Indonesian GoTo Announces Larger Nine-Month Loss

Motorcyclists pass a billboard advertising GoTo’s initial public offering in Jakarta, Indonesia, Friday, April 8, 2022. GoTo, formed by Gojek’s merger with e-commerce pioneer Tokopedia, raised 1.1 billion in one of the world’s largest stocks is making its debut this year and is set to list in Jakarta on April 11.

Dimas Ardian | Bloomberg | Getty Images

Indonesian group GoTo said its nine-month cumulative losses rose from a year ago, even as quarterly losses narrowed as the company cut costs.

GoTo racked up a loss of 20.32 trillion rupees ($1.29 billion) between January and September, far more than the 11.58 trillion rupees loss reported a year ago.

Shares of GoTo are down 6% on Tuesday morning and 48% since its IPO.

For the third quarter, GoTo announced an adjusted EBITDA loss of 3.7 trillion rupees (approximately $235 million), about 11% less than the adjusted EBITDA loss of 4.2 trillion rupees recorded one year ago. It is also 10% less than the Rs 4.1 trillion EBITDA loss recorded for the second quarter and marks the third consecutive quarter of declining losses. EBITDA is a measure of profitability that shows earnings before interest, taxes, depreciation and amortization.

“As we have mentioned in previous quarters, our strategy is built around three main axes: first, to focus on sustainable and high-quality growth; second, to accelerate our path to profitability; and third, a product-driven growth, enhanced by the synergies of our ecosystem,” said Andre Soelistyo, CEO of GoTo Group, during the earnings call Monday evening.

“We made significant progress on all three fronts, with particularly strong performance on accelerating our path to profitability,” he added.

GoTo Group is the result of a merger between two of Indonesia’s biggest tech companies – ride-hailing, food delivery and payments giant Gojek and e-commerce marketplace Tokopedia. The group went public with a $1.1 billion listing in April.

GoTo said on-demand services, including ridesharing and food delivery, hit positive contribution margin in September, “several months ahead of schedule.” Contribution margin measures profitability by showing the total amount of revenue available after variable costs.

GoTo said back-to-office and back-to-school demand contributed to this improvement in mobility services.

“The improvement in margins has not come at the expense of revenue growth,” Soelistyo said.

“Throughout the third quarter, we reduced incentives, eliminated promotional spend on unprofitable user cohorts, further reduced product marketing spend, and continued to build a structural savings program as we equip our business. for the road ahead of us,” said Jacky Lo. , Chief Financial Officer of GoTo Group.

More cost reductions expected

Global macroeconomic uncertainties from rising inflation and interest rates have forced tech companies including GoTo, Grab and Sea Limited to double down on cutting costs.

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During Monday night’s earnings call, GoTo management promised further cost reductions and predicted that a “significant portion” of the savings would be realized in the first quarter.

The company also reduced average monthly cash burn by 13% in the third quarter to 1.3 trillion rupees from 1.5 trillion rupees in the second quarter, according to Soelistyo.

Last Friday, GoTo announced that it would cut its workforce by 12%, or about 1,300 jobs. Other Southeast Asian-based companies, including Sea Limited and Foodpanda, have also laid off workers this year, according to media reports.

“Through this, together with additional people cost reduction measures, we expect to save between Rs 915 billion and Rs 965 billion per annum, resulting in a substantial improvement in opex l next year,” Lo said.

With these cost reduction measures, GoTo expects to be able to accelerate Group Adjusted EBITDA breakeven by three to four quarters, or approximately 12 to 15 months, after contribution margin breakeven, a said Soelistyo during the call.

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