Since Last Year's Pivot, LinkAja Claims Positive Performance Achievements

LinkAja has reported positive performance since pivot business is no longer focused on direct consumers (direct consumers) in the last year. Now LinkAja plays in B2B2C which relies on the BUMN ecosystem.

In an official statement, LinkAja Director of Finance & Strategy Reza Ari Wibowo said that this change in business model is in line with conditions in the global technology industry which are currently experiencing paradigm shifting. Always chasing before growth at all costs now be path to profitability and sustainability.

"At LinkAja, we have done it shifting going to profitability and sustainability gradually since 2021 by reading the direction of the industry movement. One of them is by strengthening B2B2C business models we are focusing on the BUMN ecosystem, which has proven to be very effective and efficient," he said.

In the B2C segment, LinkAja prioritizes low-cost user acquisition & retention which focuses on the BUMN ecosystem. This is claimed to be effective and efficient for the company. In the last year, the company implemented digital financial solutions with Telkomsel, Pertamina, and Himbara (Association of State Banks).

In the ecosystem Telkomsel, companies digitize supply chain leaders traditional Telkomsel in more than 300 thousand retailers with almost 90% increase in revenue. Going forward, this initiative will be continued to the distributor level.

Furthermore, for the Pertamina ecosystem, LinkAja strengthens positioning MyPertamina application, which has an impact on exponential revenue growth of 1.600%. Final, use case related to Himbara showed a very significant revenue growth of 80%.

As for B2B segment the company focuses on end-to-end value chains from the traditional and digital side, by entering payments, digital goods, and business lending.

In 2021, LinkAja acquires iGrow which is now transformed into LinkAja Modalin. There are three financing models provided, Invoice Financing, Retailer Financing, and Agri Ecosystem Financing. The user is Telkomsel, SIG (Semen Indonesia), and e-Fishery. Through this line of business, the company will improve its capabilities to support the BUMN ecosystem in a comprehensive way closed-loop.

Lose competitiveness

From the start, LinkAja was not equipped with big funds like similar players in the payment sector. While it's not a secret in the digital business world, the strategy of burning money is a quick way to become a dominant player —if playing in the retail (consumer) segment and focusing on pursuing growth. This has a direct impact on inflating marketing costs and hindering company profitability.

According to research carried out by Populix in the middle of last year entitled "Consumer Preference Towards Banking and E-Wallet Apps", showing 10 applications e-wallet the most widely used by the public. LinkAja ranks 5th (30%). Sequentially, GoPay is in first place (88%); DANA (83%), OVO (79%), ShopeePay (76%).

Quote from Investor.id, LinkAja is said to be going into business lending and targeting Pertamina and Telkom ecosystems. To support this, there will be a gradual injection of funds from Telkom and other state-owned companies.

According to the Deputy Minister of SOEs II Kartika Wirjoatmodjo, his party is encouraging several investors to give their commitments. Around March or April funds will be provided from Telkom and Himbara. "That's why we're pushing for it lending, but in the ecosystem of retailers and distributors, Telkom and Pertamina," said Kartika.

Financial performance

LinkAja describes last year's performance as follows:

• operating income (revenue growth) grew by almost 30% (in YOY)
• operating expense (operational expenses) fell by more than 50%
• marketing costs (marketing expenses) fell by more than 90%
• Cost operations and maintenance (O&M expense) fell by more than 30%
• The ratio of income to promotional expenses was reduced to 0.1x from 1.3x
• Average Revenue per User (ARPU) up 215%
• Basketball sizes ARPU up 55%
• retention rate up more than 70%
• EBITDA loss pressed more than 60%

According to Reza, with EBITDA loss which can be suppressed shows that the company is growing on-track to realize the commitment to achieve positive EBITDA in the near future.

Of note, EBITDA is useful in calculating a business's cash flow. If a company's EBITDA is negative, it has poor cash flow. But a positive EBITDA doesn't automatically mean a business has high profitability.

For this year's target, the company will continue to synergize with a more comprehensive and sustainable BUMN ecosystem. It is targeted to record revenue growth of more than 80% with a decrease in operating expenses by 35%, compared to the previous year.

Some of the strategic initiatives that will be carried out are B2B2C approach —where LinkAja will partner with several companies under the Ministry of SOEs to become service providers disbursement incentive. Thus, LinkAja was able to earn user base big character captive without acquisition and retention costs.

Reza continued, the consequences taken when deciding to focus on profitability sometimes have to be brave to close services or use case which has a higher cost component than revenue, while maintaining the quality of service to users.

It was claimed that this decision was able to make LinkAja the antithesis in the digital industry, marked by a significant increase in revenue and a drastic reduction in costs, in the midst of a challenging technology industry situation.

"In the future we hope to be role model in the technology industry in Indonesia through more business models profitable and sustainable, while continuing to provide integrated digital transaction services that are safe and comfortable [..]," he concluded.

In maintaining performance, the company also takes efficiency measures by laying off "layoffs" around 200 employees in May 2022. After the announcement, the company admitted that the company's operational expenses fell by more than 50%.