GoTo reports narrower adjusted ebitda loss of IDR3.7 trillion in 3QFY2022 results

For the FY2022, GoTo Group is expecting to pencil in between IDR613 trillion to IDR619 trillion for its GTV.

PT GoTo Gojek Tokopedia Tbk (GoTo Group) has reported an adjusted ebitda loss of IDR3.7 trillion ($324.9 million) for the 3QFY2022 ended Sept 30, which is narrower by 11% y-o-y and 10% q-o-q.

Group adjusted ebitda improved by 44 basis points q-o-q to -2.3% in the 3QFY2022 from the previous quarter’s -2.8%.

During the quarter, GoTo Group’s gross transaction value (GTV) grew by 33% y-o-y to IDR160.94 trillion, while its gross revenue stood 30% higher y-o-y at IDR5.9 trillion.

The group’s contribution margin as a percentage of GTV improved by 61 basis points q-o-q to -0.7%.

The higher profitability was attributed to the group’s On-demand Services segment, which turned the segment's contribution margin positive.

“On-demand services have been a key driver for overall growth in the third quarter on the back of continued improvement in mobility services, driven by the return to office and back-to-school demand,” says the group in its statement released on Nov 21.

The segment’s gross revenue for the 3QFY2022 grew 31% y-o-y, with its gross revenue growth rate again exceeding that of GTV in the third quarter. This is mainly attributable to a higher take rate as we intensified our efforts on merchant-funded incentives and refined voucher targeting.

In the 3QFY2022, GoTo Group’s last twelve months (LTM) annual transacting users (ATU) grew 20% y-o-y with the average spend per user up by 18% y-o-y. The group’s user transaction frequency was also up by 13% y-o-y.

In the same quarter, the group’s total quarter orders grew by 28% y-o-y to 693 million

“We had a strong third quarter, rapidly accelerating our path to profitability as revenues grew and adjusted ebitda losses narrowed,” says Andre Soelistyo, GoTo Group CEO.

“Group contribution margin significantly exceeded the guidance we shared last quarter and we achieved positive contribution margin for our On-Demand Services in September - well ahead of schedule,” he adds.

Further to his remarks, Soelistyo noted that the gains were driven by the group’s product-led focus on high quality users, in addition to its “disciplined approach” to cost management.

“The ongoing expansion of GoPay Coins is a good example of this, as it allows us to rationalize promotional spending while spurring sustainable growth by rewarding users who utilize our services the most,” Soelistyo points out, adding that the improved margins did not come at the expense of the group’s top line growth.

“The financial and operational results we achieved in the third quarter provide reassurance that we can accelerate even faster towards profitability, and we will continue to play to our strengths as the largest digital ecosystem in Indonesia,” he says.

Jacky Lo, GoTo Group’s CFO agreed, saying that the group’s “robust results” in the 3QFY2022 illustrated the group’s growth momentum and the strength of its model.

The sequential improvements came as a result of the steps taken to “embed structural efficiencies into [the group’s] operations”.

However, the ongoing global macro uncertainties, driven by rising inflation, interest rates and fuel and energy prices mean that it is prudent for the group to continue its focus on cost optimisation across the business, says Lo.

“Throughout the third quarter, we reduced incentives, eliminated promotional spend on cohorts of unprofitable users, further reduced product marketing spend and continued to develop a program of structural cost savings as we equip our business for the road that lies ahead,” he adds.

Looking ahead, the group says it expects to see continued sequential improvements in both contribution margin and adjusted ebitda over the coming quarters.

This will be driven by improvement in take rates, further rationalisation of promotional spend and the identification and retention of high-quality core users, it adds.

For the FY2022, GoTo Group is expecting to pencil in between IDR613 trillion to IDR619 trillion for its GTV. Its gross revenue is expected to come in between IDR22.6 trillion to IDR23.0 trillion for the full year.

Its full-year contribution margin as a percentage of GTV is expected to be between -1.09% and -1.06%, reaching between -0.6% and -0.5% in the 4QFY2022.

In addition, the group left its breakeven guidance unchanged, with the group contribution margin to turn positive in the 1QFY2024. Its On-demand segment is expected to achieve a positive contribution margin by the 1QFY2023. Finally, it expects its e-commerce segment to achieve a positive contribution margin by the 4QFY2023.

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