Indonesia’s GoTo Group brought forward its profitability targets by a year, as Southeast Asia’s regional tech giants race to reverse losses and win over investors after a slump in stock prices.
GoTo said it expects adjusted earnings before interest, taxes, depreciation and amortization to turn positive in the fourth quarter of 2023, about a year ahead of its previous target. In November, its chief executive officer said on an earnings call that GoTo expected to reach that around late 2024 at the earliest.
The ride-hailing and e-commerce company and money-losing peers Grab Holdings Ltd. and Sea Ltd. are trying to convince investors of their long-term prospects just as the tech industry is grappling with geopolitical tensions and a potential global recession. Jakarta-based GoTo, which for years enjoyed unparalleled growth, has cut 12% of its workforce to reach profitability, joining a wave of layoffs rocking Silicon Valley giants and startups.
CEO Andre Soelistyo on Thursday outlined a plan to bring GoTo closer to achieving positive operating cash flow. The company won’t carry out further mass layoffs, he said, but didn’t rule out normal attrition as it reviews its cost structure.
The company will make changes to ride-hailing and e-commerce commissions, ensure its incentive spending is more targeted and develop higher margin services including new lending products. Last week, the company sidelined several key executives and switched up its board in its biggest management shakeup to date.
“We are going to accelerate our path to profitability,” Soelistyo said in an interview. He said GoTo now has an internal motto which translates as “every line item matters,” to emphasize its focus on containing costs.
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GoTo said fourth-quarter gross transaction value rose 18% from a year earlier, while gross revenue was toward the upper end of its forecast. The company is scheduled to report full earnings for the period in the coming weeks.
Shares of GoTo have fallen more than 60% since its market debut in April.
Like tech companies worldwide, GoTo faces increasing pressure to cut costs as it grapples with a potential global recession. Consumers are pulling back on spending as rising interest rates and prices weigh on their finances.
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Formed via a merger of ride-hailing provider Gojek and e-commerce firm Tokopedia, GoTo raised US$1.1 billion in one of last year’s largest initial public offerings. Early backers such as Alibaba Group Holding Ltd. and SoftBank Group Corp. were held to an eight-month lockup to support the stock price following the IPO.
Then the market soured. Southeast Asian food delivery spending grew at the slowest pace in at least four years in 2022, highlighting the challenges faced by GoTo and its rivals. Its plan to facilitate controlled stake sales by pre-IPO backers — aimed at avoiding a bigger selloff at once — fizzled.
