GoTo earnings forecast tops estimates after cost reductions
Growth cooled from its breakneck pace as the firm pivots to focus on profitability
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[SINGAPORE] GoTo Group forecast earnings for this year above analysts’ estimates, giving the Indonesian ride-hailing and food delivery provider fresh momentum in its rivalry with Grab Holdings even as pressures mount for a takeover.
It predicted 3.2 trillion rupiah (S$241.4 million) to 3.4 trillion rupiah in adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda), according to a statement on Wednesday (Mar 11).
Analysts expected 3.1 trillion rupiah on average. Earnings on that basis for 2025 climbed to two trillion rupiah, while the net loss narrowed.
Since going public in 2022, Indonesia’s biggest Internet firm has steadily trimmed losses in a bid to win over investors and demonstrate it can turn a profit. It has cut staff, sold off peripheral assets and closed business lines to focus on its core market, where it competes with Singapore’s Grab and newer entrants including US-based inDrive and Russia’s Maxim.
The tough competition is keeping prices low and margins thin as the companies battle it out in the South-east Asian market of 675 million people.
GoTo’s growth has cooled dramatically from the breakneck pace of years past as it takes steps to focus on profitability. An increased customer base has left GoTo with less room for user gains, prompting it to introduce new features to entice consumers who are less willing to hail a ride or get food delivered to their door in a challenging economy.
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Seeking relief from intense competition, GoTo has been in talks about a takeover by Grab. The years-long effort has been delayed by regulatory scrutiny and differences over perceived valuation. In a recent hurdle, negotiations were snagged over wireless carrier Telkomsel’s roughly 2 per cent stake in GoTo.
Late last year, GoTo replaced its chief executive officer in a move that was seen as potentially speeding up a combination with Grab. Hans Patuwo, formerly the company’s operating chief, took over the top job after a campaign by prominent shareholders to remove his predecessor.
Shares of GoTo have lost about 30 per cent of their value over the past 12 months, with drawn-out discussions for a potential acquisition by Grab yet to yield concrete results.
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“The potential merger of Grab and GoTo would likely more than double the new entity’s annualised Ebitda to US$2 billion in 2028 through pro-forma synergies,” said Jason Low, analyst at Bloomberg Intelligence. “With a reported US$7-billion price tag and remaining regulatory hurdles, it’s in Indonesia’s interest to pursue the merger before the company’s market caps and revenue gap widen further.” BLOOMBERG
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