GoTo Cuts Losses by 56% and Eyes Profitability

Indonesian tech giant GoTo Group slashed its losses by more than half.

The company — whose offerings include eCommerce, financial services and ridesharing — said its losses for its second quarter came to 1.2 trillion rupiah (about $78.3 million), compared to 4.3 trillion rupiah (about $281 million) a year earlier, according to a Tuesday (Aug. 15) earnings release.

The reduction is the result of what CEO Patrick Walujo said in the release was a strategy of “cost discipline,” which included job cuts earlier this year, as the company strives for profitability.

“This will require sharper execution with the utmost urgency as well as increasing our total addressable market,” Walujo said in the release. “Having built a strong presence among the convenience consumers, we intend to expand our consumer base, without the use of unsustainable incentives, among budget consumers who prioritize value for money.”

GoTo — created from the combination of ride-hailing firm GoJek and eCommerce provider Tokopedia — went public in Jakarta last year with a $32 billion valuation.

However, the company — as well as Singapore’s Grab — has suffered since going public as investors have soured on super apps. That isn’t to say there’s no enthusiasm for an “everything app,” as research by PYMNTS and PayPal has shown.

“Roughly 40% of millennials reported being very or extremely interested in using a hypothetical super app, more than 60% higher than the 25% share of the overall population that said the same,” PYMNTS wrote in July.

Meanwhile, Bloomberg News reported Tuesday that Citigroup analysts Ferry Wong and Ryan Davis project a somewhat improved outlook for GoTo in the second half of the year “due to more government spending and liquidity ahead of the election in Indonesia, though we think that the eCommerce landscape is likely to remain competitive as TikTok remains aggressive.”

TikTok has begun talks with regulators in Indonesia to get a payments license in that country, which would let the company benefit from transaction fees and help local creators and sellers on its platform.

TikTok has 125 million monthly users in Indonesia, with 5% of the country’s eCommerce transactions taking place on the platform last year, the bulk of that from livestreaming. The company announced earlier this year that it was planning to invest billions of dollars in Indonesia and Southeast Asia as it looks to bolster its online shopping income.