GoTo Group of Indonesia said that its nine-month total losses increased from a year ago, even though the company’s quarterly losses decreased as a result of cost-cutting measures.

In comparison to the loss of 11.58 trillion rupiah reported a year ago, GoTo incurred losses totaling 20.32 trillion rupiah ($1.29 billion) between January and September.
GoTo’s stock was down 6% on Tuesday morning and has dropped 48% since going public.

GoTo reported an adjusted EBITDA loss of 3.7 trillion rupiah ($235 million) for the third quarter, which is 11% less than the 4.2 trillion rupiah adjusted EBITDA loss reported a year earlier. Additionally, it represents the third consecutive quarter of declining losses and is 10% smaller than the 4.1 trillion rupiah EBITDA loss announced for the second quarter. Earnings before interest, taxes, depreciation, and amortisation, or EBITDA, is a metric of profitability.

According to Andre Soelistyo, CEO of GoTo Group, during the earnings call on Monday night, “as we have mentioned in previous quarters, our strategy is built around three core areas: first, focusing on sustainable, high-quality growth; second, accelerating our path to profitability; and third, product-led growth supported by our ecosystem synergies.”

On all three fronts, he continued, “we have made substantial progress, with a particularly outstanding performance on quickening our road to profitability.”
Gojek, a leader in ride-hailing, food delivery, and payments, and Tokopedia, an online marketplace, came together to form GoTo Group, one of Indonesia’s largest tech companies. In April, the group listed for $1.1 billion, becoming publicly traded.

According to GoTo, positive contribution margin was achieved by on-demand services in September, “many months ahead of expectations,” including ride hailing and food delivery. Profitability is measured by contribution margin, which displays the total revenue left over after variable costs.

Back-to-school and return-to-work demand, according to GoTo, contributed to the improvement in mobility services.

According to Soelistyo, “the increased margins have not come at the expense of top line growth.”
According to Jacky Lo, CFO of GoTo Group, “during the third quarter, we reduced incentives, eliminated promotional spend on cohorts of unprofitable users, further reduced product marketing spend, and continued to develop a programme of structural cost savings as we prepare our business for the road that lies ahead.”

More cost cuts expected

Global macro uncertainties brought on by rising interest rates and inflation have compelled tech companies, such as GoTo, Grab, and Sea Limited, to intensify cost-cutting efforts.
GoTo management promised additional cost cuts on the earnings call on Monday night and said a “substantial part” of the savings would materialise in the first quarter.
According to Soelistyo, the company also decreased average monthly cash burn by 13% in the third quarter to 1.3 trillion rupiah from 1.5 trillion rupiah in the second quarter.

On Friday, GoTo said that it would eliminate 1,300 employees, or 12% of its workforce. According to media reports, employees have also been let go by other Southeast Asian businesses like Sea Limited and Foodpanda this year.
We aim to save between 915 billion and 965 billion rupiah yearly as a result of this, in addition to various people-related cost reduction efforts, which will lead to a significant improvement in opex the next year, added Lo.
According to Soelistyo on the conference call, GoTo anticipates that these cost-cutting measures will enable it to cut the time between contribution margin breakeven and group adjusted EBITDA breakeven by three to four quarters, or around 12 to 15 months.