Goto Group Reports Third Straight Quarterly Profit in Indonesia

Indonesia's Goto Group has reported its third straight quarterly profit on an adjusted basis, a positive development in its efforts to reduce costs and drive sales in a competitive ridesharing and delivery market. Adjusted earnings before interest, taxes, depreciation, and amortization were 393 billion rupiah ($23.4 million) for the first quarter, compared to a pro forma loss of 101 billion rupiah a year earlier. Net revenue, excluding incentives to drivers and merchant partners, rose by 37% on a pro forma basis to 4.2 trillion rupiah. The Indonesian internet leader has been focusing on cost-cutting and profitability, impressing investors with its financial performance. The company has streamlined operations, cut jobs, and closed unprofitable business units to enhance margins amidst cooling user growth and rising competition from Grab Holdings and other regional rivals. Grab is considering a takeover of Goto at a valuation exceeding $7 billion, though regulatory hurdles remain a challenge. Goto's shares have declined approximately 70% since going public in Indonesia in 2022 but have rebounded by over 30% in the past year. The company's cost-cutting initiatives include selling its loss-making e-commerce arm Tokopedia to Bytedance's TikTok in a $1.5 billion deal and exiting Vietnam operations to focus on profitability in Indonesia and Singapore. Goto aims to achieve adjusted EBITDA of up to 1.6 trillion rupiah for the full year. Fintech and on-demand services are expected to drive Goto's earnings growth, with the fintech segment likely contributing at least 20% of EBITDA this year. The outlook for fintech and on-demand services is strong, paving the way for Goto's profitability trajectory. On-demand services will continue to be the main profit driver, supported by the expansion of faster and premium food delivery services and advertising from merchants. Analyst Nathan Naidu believes that Goto's solid net-profit trajectory positions it well for future success in fintech and on-demand services.