Indonesia’s biggest tech company GoTo narrowed its losses by 61% in the six months ended June 30, 2024, showing significant progress on its profitability target.
GoTo’s losses for the Jan-June (H1) 2024 period stood at 2.85 trillion rupiah ($174.3 million), compared with 7.2 trillion rupiah in H1 2023, according to its filing with the Indonesia Stock Exchange (IDX).
Meanwhile, its losses in Q2 2024 fell 42% to 1.9 trillion rupiah compared with Q2 2023, according to a company statement which attributed the improvement in losses to higher revenue and lower recurring cash fixed costs.
GoTo’s filing showed its total costs and expenses dropped significantly to 9.5 trillion rupiah as of June 2024 from nearly 13 trillion rupiah a year earlier. Its net revenue was 7.7 trillion rupiah in H1 2024, compared with 6.9 trillion rupiah in H1 2023.
“Growth accelerated strongly in the second quarter as our strategic focus on mass market consumers, product innovation, and relentless execution continues to pay off,” Group CEO Patrick Walujo said in the statement on Tuesday.
“Addressing the needs of our consumers, whether they seek value or convenience, will continue to provide the foundation for our growth, as we aim to increase our top line while remaining committed to adjusted EBITDA breakeven for the full year,” he said.
*All group-related numbers are pro forma unless otherwise stated. Pro forma numbers assume Tokopedia and its related delivery and fulfillment businesses under GoTo Logistics were deconsolidated as of January 1, 2023.
GoTo’s group gross transaction value (GTV) reached 121.5 trillion rupiah in Q2 2024, up 26% from Q1 2023. Its group core GTV—which excludes merchant payment gateway—grew 54% YoY to 63.2 trillion rupiah.
Gross revenue in Q2 touched 4.4 trillion rupiah, dropping 24% YOY. Meanwhile, GoTo’s take rate reached 3.51%, up 32 basis points year on year.
“Gojek Plus subscriber numbers have doubled since the beginning of the year, while adoption of the GoPay app and our lending products has expanded significantly,” GoTo Group CFO Jacky Lo said in the statement.
Simon Ho will soon succeed Lo as GoTo’s CFO.
“This, combined with the progress of our mass market strategy, drove a 20% year-on-year increase in monthly transacting users across the group in the second quarter. This growth was achieved while we continued to reduce our costs, as we improved our reported adjusted EBITDA on a year-on-year basis for the eighth quarter in a row. As such, we believe we are on the right track to continue growing while remaining committed to our profitability goals,” Lo said.
The filing showed GoTo was running on a negative balance sheet. Net cash used in operating activities reached 598.7 billion rupiah as of June 2024, albeit down significantly from 3.1 trillion rupiah a year earlier. Net cash used in investing activities reached 10.6 trillion rupiah, a swing from nearly 26 billion rupiah generated from investing activities a year earlier.
Meanwhile, net cash generated from financing activities reached 5.9 trillion rupiah as of June 2024, compared with a negative 219 billion rupiah. In the first six months of 2024, GoTo received 6.4 trillion rupiah in third-party loans.
Meets expectations
Ari Jahja, head of Indonesia research at Macquarie Group, expects GoTo to make further improvements going forward. “We anticipate an improvement from a loss in H1 2024 to approximately breakeven in H2 2024,” Jahja said in his report published on July 17.
“GTV growth acceleration for on-demand services (ODS) is a slight positive. Our checks suggest intensifying promotions in Q2 2024 to stabilise market share vs Grab,” the report reads.
After the majority stake sale of Tokopedia to Bytedance, GoTo’s management developed a Buy Now Pay Later (BNPL) product with TikTok and launched it in July. Jahja noted that fintech is a crucial growth driver, but the BNPL ramp-up with likely be gradual.
Ryan Winipta, an equity research analyst at Indo Premier Sekuritas, had expected GoTo’s adjusted EBITDA to remain in the negative territory on the group level.
“Expect higher growth on ODS, but in general it’s competition-driven. Competition is indeed getting more intense lately in the food delivery space. So they need to make some reinvestments,” Winipta told DealStreetAsia prior to the result announcement.
In its previous earnings report, GoTo said its profitability will be driven by lower costs in running Tokopedia and increased income as Tokopedia is expected to grow faster following TikTok’s acquisition of the e-commerce platform.
As a result of its strategic partnership with TikTok, GoTo receives a quarterly e-commerce service fee from Tokopedia. This fee amounted to 171 billion rupiah in the second quarter, or a net 157 billion rupiah when VAT is excluded.
GoTo is also expected to secure growth in broad user demographics in its core on-demand services and fintech segments across the Indonesian market.
GoTo’s shares closed at 55 rupiah apiece on Tuesday, up 1.85%.
