Indonesia-listed tech giant PT GoTo Gojek Tokopedia Tbk, popularly called GoTo, narrowed its net loss by 47.5% year-on-year in the six months ended June 30, 2023, showing progress in meeting its target of clocking positive adjusted EBITDA this year.
GoTo said on Tuesday that its losses for the first half of 2023 stood at 7.2 trillion rupiah ($466.6 million), compared with 14.2 trillion rupiah in the same period of 2022. GoTo’s losses for the April-June period (Q2 2023) came in at 3.3 trillion rupiah, down 56.1% compared with the same period a year earlier.
The group’s net revenue doubled to 6.9 trillion rupiah in Jan-June, from 3.4 trillion rupiah a year earlier. Meanwhile, its net revenue in Q2 2023 rose around 90% to 3.6 trillion rupiah, compared with 1.9 trillion rupiah a year earlier.
GoTo’s adjusted EBITDA for the three months ended June 30, 2023, stood at -1.2 trillion rupiah, a 72% improvement from the -4.3 trillion rupiah in Q2 2022. In H1 2023, GoTo clocked an adjusted EBITDA of -2.8 trillion rupiah, a 69% improvement from -9.18 trillion rupiah in the same period a year earlier.
“Our commitment to reaching positive adjusted EBITDA this year remains on course, however, breaking even is not the end goal—we must go on to deliver sustainable and profitable growth… we intend to expand our consumer base, without the use of unsustainable incentives, among budget [-conscious] consumers who prioritise value for money. We will continue to operate with absolute cost discipline as we pivot our product mix towards the mass market,” said Patrick Walujo, GoTo Group CEO, in a statement.
Walujo, the founder of private equity firm Northstar Group, took the helm of the company in early June, replacing Andre Soelistyo.
Group slashes expenses
The GoTo group’s gross transaction value (GTV) dropped 5% YoY to 143.7 trillion rupiah in Q2 2023 due to reduced incentives and product marketing. GoTo also attributed the drop to seasonal factors such as the higher number of public holidays in the period.
GoTo managed to cut its total costs and expenses—including sales and marketing expenses, and general and administrative expenses—in the first half of 2023 to 12.99 trillion rupiah from 19.18 trillion rupiah in the same period a year earlier.
Robertus Hardy, head of research team PT Mirae Asset Sekuritas Indonesia noted that salary and benefits are one of the biggest expense heads for GoTo. “They may lay off several employees again to reduce the expenses,” Hardy told DealStreetAsia.
GoTo laid off 1,300 employees in November 2022 and 600 staff in March 2023. The tech company also closed its office in India, which impacted 30 employees.
GoTo said it has cut its salary and benefits costs in Q2 2023 by 13.1% YoY to 1.4 trillion rupiah. It also cut its sales and marketing expenses by 37.5% YoY and consumer incentives by 36.7% YoY during the period.
Looking at the big expenses, Hardy said that GoTo should focus on the business divisions that can generate bigger income and profits for the company. GoTo Financial is considered to be the engine that can help GoTo to book profitability faster.
Local investors, according to Hardy, are still waiting for GoTo to book profitability before investing in the stock. “Local and foreign investors still consider investing in India, China, and Korea’s tech companies’ stocks given the huge margins posted by startups in those countries,” he said.
In Q1 2023, GoTo had shown an improved performance in its on-demand services and e-commerce segment. This, argued the company, showed healthy progress toward profitability.
GoTo has been laser-focused on profitability since the beginning of 2023 with reductions in incentives and operating expenses. GoTo is even happy to see low-quality users drop off.