GoTo posts fourth straight adjusted profit, helped by cost cuts

[SINGAPORE] Indonesia’s GoTo Group notched a fourth consecutive quarter of adjusted profit, making progress with reining in expenses and boosting revenue amid stiff competition in ride-hailing and delivery.

Adjusted earnings before interest, taxes, depreciation and amortization were 427 billion rupiah (US$26 million) for the second quarter, GoTo said in a statement on Wednesday (Aug 13). That compares with a pro-forma loss of 64 billion rupiah a year earlier. Net revenue, which excludes incentives to driver and merchant partners and promotions to users, climbed 23 per cent on a pro forma basis to 4.3 trillion rupiah.

GoTo has been making strides in its effort to cut costs and prove to investors it can make money. The company has slashed jobs and shuttered business units as user growth cools and competition from Singapore’s Grab Holdings and smaller regional rivals weighs on margins.

Investors remain cautious, with GoTo’s stock price down about 80 per cent since it went public in Jakarta in 2022. Still, the shares have advanced more than 20 per cent over the past 12 months as GoTo’s earnings have showed signs of improvement.

In a move that would upend the regional market, Grab has been weighing a takeover of GoTo at a valuation of more than US$7 billion, Bloomberg News reported. Still, Grab has played down a potential deal, saying in June it’s not in talks to buy GoTo “at this time.”

“GoTo’s e-commerce, once a key top-line driver, has taken a back seat after it sold 75 per cent of that business to ByteDance’s TikTok Shop. GoTo earns e-commerce fees from that deal at no incremental costs,” said Nathan Naidu, analyst for Bloomberg Intelligence. “Fintech should expand more as a closer tie-up with TikTok fuels its buy now, pay later loans, while it continues to lead in Indonesian on-demand services.”

In a bid to accelerate cost savings, GoTo handed over its loss-making e-commerce unit Tokopedia to ByteDance’s TikTok in a US$1.5 billion deal. The company also exited Vietnam to concentrate on achieving profitability in its core markets of Indonesia and Singapore, while pushing into growth areas like consumer lending.

The company reaffirmed it expects to post adjusted Ebitda of as much as 1.6 trillion rupiah for the full year. BLOOMBERG