GoTo Group reported a narrower third-quarter loss, helped by cost cuts at the Indonesian ride-hailing and e-commerce giant.
(Bloomberg) — GoTo Group reported a narrower third-quarter loss, helped by cost cuts at the Indonesian ride-hailing and e-commerce giant.
The adjusted loss before interest, taxes, depreciation and amortization shrank to 3.7 trillion rupiah ($235 million) from 4.2 trillion rupiah a year earlier, the Jakarta-based company said Monday.
Net revenue, which strips out incentives to driver and merchant partners and promotions to users, tripled to 4.6 trillion rupiah, a sign that appetite for online services keeps increasing in Southeast Asia’s largest economy despite accelerating inflation.
GoTo is trying to convince investors of its profit-making potential after its shares lost 38% since its initial public offering in Jakarta early this year.
The company, formed through a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, said last week it’s cutting 12% of its workforce, or 1,300 jobs, as it braces for a challenging economic climate.
Like technology companies worldwide, GoTo is confronting the effects of stiffer competition, economic slowdown and heightened investor focus on profitability.
The risk of customers becoming more budget-conscious in the face of an impending recession has triggered job cuts, closures of business units and other measures across the tech industry. Sea Ltd., Southeast Asia’s largest tech company, cut about 7,000 jobs in the past six months.
GoTo and its publicly traded peers Sea and Grab Holdings Ltd.
are rushing to assuage investor concerns over mounting losses after years of heady expansion succumbed to the global economic downturn. Grab last week reported a narrower third-quarter loss than analysts had estimated and increased its annual revenue guidance slightly to as much as $1.35 billion.
GoTo said contribution margin — a measure of profitability the company adopted that doesn’t account for certain items such as some sales and marketing costs — turned positive in September, ahead of schedule, for its on-demand segment, which includes ride-hailing and food delivery.
For the company as a whole, it expects a positive margin in the first quarter of 2024.
The company’s shares are set to face a potential test in the coming weeks, after a lock-up on some of its owners’ holdings ends on Nov.
30. Chief Executive Andre Soelistyo reiterated on a conference call that GoTo is in talks with holders for a controlled sale of their stakes, a move aimed at avoiding a possible stock slump. He said there are no assurances at this stage a transaction will take place.
For the full year 2022, the company predicted gross revenue will rise to 22.6 trillion rupiah to 23 trillion rupiah and gross transaction value to increase to 613 trillion rupiah to 619 trillion rupiah.
–With assistance from Fathiya Dahrul.
(Updates with comment from CEO in seventh paragraph)
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