Mar 20, 2023
Indonesia’s GoTo Has Narrower Adjusted Loss After Cost Cuts Bite
(Bloomberg) -- GoTo Group reported a narrower adjusted loss for the fourth quarter, helped by extensive cost cuts at the Indonesian ride-hailing and e-commerce provider.
The adjusted loss before interest, taxes, depreciation and amortization shrank to 3.1 trillion rupiah ($202 million) in the quarter through December from 6.5 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 3.4 trillion rupiah, highlighting resilient demand as people in Southeast Asia continued to shop, book rides and order takeout even amid a cost-of-living squeeze.
Like its Southeast Asian peers Grab Holdings Ltd. and Sea Ltd., GoTo is trying to convince investors of its profit-making potential after its shares lost almost 70% since its initial public offering in Jakarta last year. After enjoying years of rapid growth, the company has turned its focus on profitability just as consumers struggle with elevated inflation and higher interest rates.
GoTo, formed through a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, cut 600 roles from its workforce this month, adding to the 1,300 jobs it axed last year. The company said the cuts helped it reduce monthly fixed expenses by about 20% in January and February of this year, and it’s also slashed marketing spending. Last month, it brought forward its profitability targets by a year, expecting adjusted Ebitda to turn positive in the fourth quarter of 2023.
The cost reductions are easing pressure on GoTo’s finances, with its cash now set to last 10-12 quarters, said Nathan Naidu, an analyst at Bloomberg Intelligence. That’s up from five quarters previously, and compares with 17 quarters at Grab and 21 at Sea, according to Naidu. GoTo said its cash and cash equivalents — at 29 trillion rupiah at the end of 2022 — is “sufficient to reach positive operating cash flow without any additional external funding.”
Net loss widened to 19.5 trillion rupiah in the fourth quarter, mainly because of a goodwill impairment charge related to the merger, GoTo said. The company also had one-time costs related to job cuts as well as the closure of JD.com Inc.’s regional business in which GoTo held a stake.
Even as the challenging economic outlook threatens to leave consumers with less to spend on shopping, entertainment, food delivery and ride-hailing, GoTo and its internet peers are betting on online services gaining ground. Singapore’s Sea this month reported its first-ever surprise profit, marking a major turning point for the company.
(Updates with comment from analyst in fifth paragraph.)
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