Shares of Indonesia’s GoTo fall more than 4% as 2022 loss swells to $2.6 billion

Shares of GoTo Group fell as much as 4.62% on Tuesday after the Indonesian tech giant’s annual net loss for 2022 widened.

The full-year net loss came in at 40.4 trillion Indonesian rupiah ($2.63 billion) last year, according to its latest earnings report.

Here are the key takeaways:

• Net revenue: 11.3 trillion rupiah, vs. 5.2 trillion rupiah in 2021
• Adjusted loss before interest, taxes, depreciation and amortization: 16 trillion rupiah, vs. 16.5 trillion rupiah in 2021
• Net loss: 40.4 trillion rupiah, vs. 25.9 trillion rupiah in 2021

And in the fourth quarter of 2022:

• Net revenue: 3.4 trillion rupiah, vs. 4.5 trillion rupiah in the third quarter
• Adjusted EBITDA loss: 3.1 trillion rupiah, vs. 3.7 trillion rupiah in the previous quarter

GoTo, the combined entity between ride-hailing giant Gojek and e-commerce marketplace Tokopedia, went public on the Indonesia Stock Exchange last April.

“GoTo has managed to whittle down its adjusted EBITDA loss [in the fourth quarter of 2022] to 3.1 trillion rupiah, marking a 16% quarter-on-quarter uptick,” said Sachin Mittal, head of telecom & internet sector research at DBS Bank. Adjusted EBITDA is a measure of profitability after removing various one-off and non-recurring items from EBITDA.

The improvement comes as GoTo’s mobility services segment saw “transport fully recovered to pre-pandemic levels and showed healthy growth despite increases in fuel prices and higher tariffs,” said the company, in a press release.

During the earnings call Monday, GoTo Group CEO Andre Soelistyo said the company focused more on retaining the most profitable customers as these customers require less incentivization.

“This strategy enabled us to reduce incentives and product marketing in fourth quarter 2022 by 34%, or 2.8 trillion rupiah, year-on-year. We expect such savings to increase over future quarters,” he said.

“While the reduction in losses is commendable, it falls short of the 30% improvement that Grab Holdings has achieved,” said Mittal of DBS Bank, referring to GoTo’s Southeast Asian ride-hailing and food delivering rival. “Additionally, Sea Limited has managed to steer itself towards profitability in fourth quarter 2022,” he said referring to e-commerce giant Sea which competes with GoTo’s Tokopedia.

Grab‘s adjusted EBITDA loss in the fourth quarter was $111 million, down about 31% from the previous quarter. Meanwhile, Sea Limited posted positive net income for the first time in the fourth quarter of 2022.

GoTo has been struggling to be profitable.

During an earnings call in November, management promised further cost cuts and said they expect a “significant part” of the those cuts would be realized in the first quarter of 2023.

GoTo expects to turn operationally profitable within the fourth quarter of 2023. However, the tech firm expects an adjusted EBITDA loss of between 4.6 trillion to 5.3 trillion rupiah for full year 2023.

“As we look ahead, the first two months of 2023 show even faster progress, meaning we are on track to reach positive adjusted EBITDA within the fourth quarter of 2023,” said Soelistyo, in the firm’s latest press release.

This month, GoTo conducted another round of layoffs affecting 600 roles, the company announced. In November, it had said that it was laying off 1,300 workers.