(Bloomberg) -- Indonesian ride-hailing and e-commerce giant GoTo Group reported a wider second-quarter loss on operating basis, a setback for its bid to convince investors of its profit-making potential.

The adjusted loss before interest, taxes, depreciation and amortization was 4.14 trillion rupiah ($279 million), compared with a pro-forma loss of 3.9 trillion rupiah a year earlier, the Jakarta-based company said Tuesday. Gross revenue on a pro-forma basis rose 45% to 5.5 trillion rupiah, a sign that appetite for online services keeps increasing in Southeast Asia’s largest economy.

Shares fell as much as 6.2% in trading on Wednesday. Like its rivals, GoTo has struggled to reassure investors of its ability to generate profits and its value is down about 8% since its initial public offering in Jakarta in April.

GoTo is trying to balance spending on growth with its effort to reach profitability as soaring inflation and rising interest rates weigh on the technology industry globally. Mobile-savvy consumers in Indonesia, a country of 270 million people, are shopping online on GoTo’s e-commerce platform Tokopedia, ordering rides and meals via its Gojek app and paying through its GoPay e-wallet.

Formed through a merger between ride-hailing provider Gojek and e-commerce firm Tokopedia, the company has spent years competing against rivals including Grab Holdings Ltd. in Southeast Asia’s increasingly fierce online market.

GoTo May Report Narrower 2Q Ebitda Loss, Higher Revenue: Preview

GoTo said the wider loss reflects the impact of Covid-related restrictions as well as higher cross-platform investments. Main competitor Grab last week reported a wider second-quarter Ebitda loss of about $233 million.

Key Insights

  • Second-quarter net revenue, which strips out incentives to driver and merchant partners and promotions to users, rose 63% to 1.9 trillion rupiah
  • Co. forecasts third-quarter gross revenue of 5.7 trillion rupiah to 6 trillion rupiah
  • Co. projects third-quarter gross transaction value of 151 trillion rupiah to 156 trillion rupiah
  • Co. expects contribution margin, a measure of profitability, to turn positive starting in the first quarter of 2024
  • On-demand segment to achieve positive contribution margin by the first quarter of 2023; e-commerce segment by the fourth quarter of 2023

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  • GoTo’s GTV, the sum of transactions flowing through its platform, grew 39% to 150.5 trillion rupiah
  • Annual transacting users for the last twelve months grew about 28% to 67.2 million

(Updates with share price in third paragraph)

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