Indonesian ride-hailing and food delivery provider GoTo Group forecast earnings for this year above analysts’ estimates, a sign of confidence as it battles intensifying competition from Grab Holdings Ltd.
It predicted 1.4 trillion rupiah ($85 million) to 1.6 trillion rupiah in adjusted earnings before interest, tax, depreciation and amortization, topping the 1.3 trillion analysts expect on average. It reached its goal of positive earnings on that basis for full-year 2024 and reported fourth-quarter revenue that exceeded estimates.
The forecast highlights GoTo’s efforts to reverse years of losses through drastic measures, including thousands of job cuts and large reduction in marketing spending. Following years of rapid growth, the company has turned its focus on the bottom line after its shares lost 75% since its initial public offering in Jakarta in 2022. But Singapore’s Grab is proving a tough rival, keeping prices low and margins thin for both companies as they battle it out in the Southeast Asian market of 675 million people.
Fourth-quarter adjusted Ebitda rose to 399 billion rupiah from 89 billion rupiah a year earlier on a pro forma basis, GoTo said. Net revenue, which strips out incentives to driver and merchant partners and promotions to users, jumped 90% to 4.2 trillion rupiah on pro forma basis, exceeding the 4.03 trillion rupiah average analyst estimate.
GoTo has also struck deals to improve its profitability. In 2023, GoTo agreed to relinquish control of its e-commerce arm Tokopedia to ByteDance Ltd.’s TikTok. And in a move that would upend the regional market, Grab is now weighing a takeover of GoTo at a valuation of more than $7 billion. While the regulatory hurdles are considerable, both companies have accelerated talks for a combination to end years of losses, Bloomberg News reported.
“If any inorganic opportunities come by, we would have to assess each one of them,” GoTo chief financial officer Simon Ho said in an interview on Bloomberg TV, declining to comment on Grab specifically. “It has to make sense and create value to shareholders.”
GoTo will continue to buy back shares “strategically” this year, Ho said. The company announced a $200 million repurchase program last year, its first ever, and has bought back just under half of that amount at this point, he said.
