Motorcyclists travel past a billboard promoting GoTo’s initial public offering in Jakarta, Indonesia, on Friday, April 8, 2022. GoTo, formed through the merger of Gojek with e-commerce pioneer Tokopedia, raised $1.1 billion in one in all the worlds biggest stock debuts this 12 months and is slated to list in Jakarta April 11.
Dimas Ardian | Bloomberg | Getty Images
Indonesia’s GoTo Group reported its nine-month accrued losses surged from a 12 months ago, whilst quarterly losses shrank as the corporate cut costs.
GoTo accrued a lack of 20.32 trillion rupiah ($1.29 billion) between January and September, excess of the 11.58 trillion rupiah loss reported a 12 months ago.
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Shares of GoTo were down 6% Tuesday morning and down 48% since its listing.
For the third quarter, GoTo reported an adjusted EBITDA lack of 3.7 trillion rupiah (about $235 million), about 11% smaller than the 4.2 trillion rupiah adjusted EBITDA loss posted a 12 months ago. That is also 10% narrower than the 4.1 trillion rupiah EBITDA loss reported for the second quarter and marks the third consecutive quarter of shrinking losses. EBITDA is a measure of profitability that shows earnings before interest, taxes, depreciation and amortization.
“As we’ve got mentioned in previous quarters, our strategy is built around three core areas: firstly, specializing in sustainable, high-quality growth; secondly, accelerating our path to profitability; and thirdly, product-led growth bolstered by our ecosystem synergies,” said Andre Soelistyo, GoTo Group CEO, throughout the earnings call Monday night.
“We have now made significant progress on all three fronts, with a very strong performance on accelerating our path to profitability,” he added.
GoTo Group is the results of a merger between two of Indonesia’s largest tech corporations — 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 ride hailing and food delivery, achieved positive contribution margin in September, “several months ahead of schedule.” Contribution margin measures profitability by showing the mixture amount of revenue available after variable costs.
GoTo said return to office and back-to-school demand helped drive that improvement in mobility services.
“The improved margins haven’t come on the expense of top line growth,” said Soelistyo.
“Throughout the third quarter, we reduced incentives, eliminated promotional spend on cohorts of unprofitable users, further reduced product marketing spend and continued to develop a program of structural cost savings as we equip our business for the road that lies ahead,” said Jacky Lo, GoTo Group CFO.
More cost cuts expected
Global macro uncertainties from rising inflation and rates of interest have forced tech corporations, including GoTo, Grab and Sea Limited, to double down on trimming costs.
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Through the earnings call Monday night, the GoTo management promised further cost cuts and predicted a “significant part” of the savings can be realized in the primary quarter.
The corporate also reduced average monthly money burn by 13% within the third quarter to 1.3 trillion rupiah compared with 1.5 trillion rupiah within the second quarter, in accordance with Soelistyo.
Last Friday, GoTo said it would cut back its headcount by 12% — or about 1,300 jobs. Other corporations based in Southeast Asia, including Sea Limited and Foodpanda, have also laid off employees this 12 months, in accordance with media reports.
“Consequently of this, in addition to additional people-related cost reduction measures, we expect to save lots of between 915 billion rupiah and 965 billion rupiah annually, which can end in substantial improvement to opex next 12 months,” said Lo.
With these cost saving measures, GoTo expects it could possibly speed up group adjusted EBITDA breakeven by three to 4 quarters, roughly 12 to fifteen months, following contribution margin breakeven, said Soelistyo throughout the call.