SINGAPORE - Goto Group will not be pursuing an international initial public offering (IPO) mentioned in its prospectus and approved by shareholders.

In an earnings call for its Q3 2023 results, Mr Patrick Walujo, GoTo’s CEO, said the company’s cash position remains strong with ample liquidity, and that it has no immediate need for further external funding. Cash and cash equivalents stood at 24.6 trillion rupiah ($2.1 billion) as at Sept 30, down from 29 trillion rupiah as at Dec 31, 2022.

As a result, the company no longer intends to execute an international IPO mentioned in its prospectus and approved by shareholders at the annual general meeting in December 2021.

“Should we decide to carry out an international IPO in the future, we will seek a renewed shareholders’ approval,” he said.

For Q3 2023, GoTo reported lower losses at 2.4 trillion rupiah ($205.8 million) compared to 6.7 trillion rupiah in Q3 2022.

Revenue for the quarter edged up 1 per cent to 5.9 trillion rupiah, from 5.8 trillion rupiah the year prior.

The lower losses were driven by a reduction in incentives and product marketing spend, which fell 36 per cent year on year, or 2.1 trillion rupiah. Operating expenses were also cut as part of GoTo’s path to profitability, with a 19 per cent fall in fixed operating expenses and a 25 per cent drop in cloud and infrastructure costs amounting to 2.5 trillion rupiah in annual cost savings.

Further savings have been identified, with about 450 billion rupiah to be recognised over time.

GoTo is forecasting that it will achieve positive group adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) by the fourth quarter of 2023, and a full-year 2023 group adjusted Ebitda of between negative 4.5 trillion rupiah and negative 3.8 trillion rupiah.

But Mr Walujo sees there is increased risk to achieving positive group adjusted Ebitda in Q4 due to heightened competition and the likely narrowing profit pool of on-demand services and e-commerce than what was expected. GoTo’s quarter-on-quarter growth of gross transaction value (GTV) is key for the company.

“We feel it is important for us to maintain tactical flexibility to preserve our GTV healthiness, because we have learnt that once we lose momentum, it is a lot more expensive for us to regain that,” he said.

Nonetheless, GoTo will not be changing its guidance for positive adjusted Ebitda in Q4.

The company has seen an improvement in adjusted Ebitda across all business segments for the quarter. However, all segments are still reporting negative Ebitda.

In the on-demand services segment, which includes both ride-hailing and food-delivery services, adjusted Ebitda improved from negative 962 billion rupiah in Q3 2022 to negative 48 billion rupiah in Q3 2023. Contribution margin for the segment also turned positive for the quarter, with GoTo reporting 675 billion rupiah from a negative 35 billion rupiah the year prior.

The company said adjustments in the driver commission rate in Singapore will have minimal impact on contribution margin, with the international business expected to remain contribution margin positive. Revenue for the segment remained flat at three trillion rupiah.

“We continue to progress on our path to profitability, with our on-demand services unit reaching adjusted Ebitda positive before the allocation of corporate costs in the third quarter,” said Mr Jacky Lo, chief financial officer of GoTo.

The e-commerce segment posted a 6 per cent increase in revenue from 2.1 trillion rupiah in Q3 2022 to 2.2 trillion rupiah in Q3 2023. Contribution margin also turned positive, while adjusted Ebitda stood at negative 222 billion rupiah.

The fintech segment also saw a rise in revenue, up 5 per cent from 427 billion rupiah in Q3 2022 to 450 billion rupiah in Q3 2023. Contribution margin similarly turned positive, while adjusted Ebitda came in at negative 388 billion rupiah.

“We will maintain tactical flexibility as we defend our market-leading position, while continuing to prioritise the long-term investment that our strategy is built upon,” said Mr Walujo. THE BUSINESS TIMES