Indonesia’s GoTo has narrower adjusted loss on cost cuts

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 job cuts could ease pressure on GoTo’s cash position, Nathan Naidu, an analyst at Bloomberg Intelligence, said in a note this month. The company has cash for five quarters, compared with 17 quarters at Grab and 21 at Sea, he said. 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. – BLOOMBERG