Deconsolidating Tokopedia, GOTO Prints Net Loss of IDR 90,5 Trillion in 2023

PT GoTo Gojek Tokopedia Tbk (IDX: GOTO) realized positive adjusted EBITDA for the first time of IDR 77 billion in the fourth quarter. Positive adjusted EBITDA throughout 2023 was recorded to have shrunk 77% to minus IDR 3,6 trillion from minus IDR 16 trillion in 2022.

Based on the 2023 financial report, GOTO earned net income of IDR 14,7 trillion or grew 30% (YoY). Broken down by business line:

• Line gross income On-demand grew 4% to IDR 12,1 trillion (YoY); Adjusted EBITDA shrank from minus IDR 4,7 trillion to minus IDR 219 billion.
• Line gross income E-commerce grew 11% to IDR 9,1 trillion (YoY), adjusted EBITDA shrank from minus IDR 6,2 trillion to minus IDR 751 billion.
• Lini Fintech recorded the largest growth in gross income with 15% to IDR 1,8 trillion; Adjusted EBITDA shrank from minus IDR 3,2 trillion to minus IDR 1,5 trillion.
• Gross income Logistic fell 7% to IDR 2,1 trillion (YoY); Adjusted EBITDA shrank from minus IDR 1 trillion to minus IDR 477 billion.

However, GOTO will still suffer a net loss of up to IDR 90,5 trillion throughout 2023 due to the recording of value reversals goodwill worth IDR 78,8 trillion from the impact of the release of control over Tokopedia joins TikTok. Then, GOTO's operating loss shrank 66,1% to IDR 10,2 trillion from a loss position of IDR 30,3 trillion in 2022.

His party stated that the net loss was due to the reversal of value goodwill is non-recurring (non-recurring), non-cash, and has no impact on the company's adjusted EBITDA or cash flow.

In his performance presentation conference, Tuesday (19/3), GOTO CEO Patrick Walujo revealed that the company started 2023 with significant problems, mainly burning huge amounts of cash, resulting in a loss of IDR 16 trillion in adjusted EBITDA in 2022.

"If you look at market estimates [observations], runway we only have a year and a half left. For this reason, we set a target to drive positive adjusted EBITDA in the fourth quarter of 2023. Throughout that year we also saw that the e-commerce industry became increasingly competitive. Our efforts to pursue profitability and reduce incentives may not be realized as quickly. "This means that Tokopedia's [projected] growth and market share is declining because competitors have more funds to grow," explained Patrick.

GOTO's release of share control over Tokopedia is intended to reduce cash burn and turn it into a positive cash flow through a partnership with TikTok. By releasing share control over Tokopedia, GOTO will earn income from service fees E-commerce which will be recorded as of February 1, 2024.

"In summary, in 2023, we built a solid operational base, achieving adjusted EBITDA profitability in the fourth quarter, while deepening our partnerships with Bank Jago and TikTok."

Plan buyback saham

In line with improving cash flow and performance in 2023, GOTO also revealed that it will carry out repurchases (buyback) maximum shares of $200 million (around IDR 3,1 trillion).

The plan was approved by GOTO's board of directors a few days ago. However, its realization will depend on approval from regulators and shareholders which will be held at the upcoming AGMS.

"Our cash position is strong, and we are confident in our ability to continue to increase our cash flow. This buyback program is part of our commitment to increase shareholder value while maintaining prudence in capital allocation," said GOTO CFO Jacky Lo, on the same occasion.

With the new capital allocation currently being prepared, GOTO said it will focus on accelerating growth while maintaining an efficiency strategy this year. With business deconsolidation E-commerce, GOTO also no longer needs to disburse investment into Tokopedia.

"For this reason, capital expenditure in 2024 will be much lower than in 2022 and 2023. So in the last two years, the capital expenditure allocation was approximately less than IDR 300 billion per year."