GOTO - 2Q23 results broadly in-line as loss narrows

GOTO - 2Q23 results broadly in-line as loss narrows GOTO’s profitability metrics was improved in 2Q23 as Adj. EBITDA loss declined 24.4% qoq in 2Q23 to IDR1.21 tn, while contribution margin enlarged 64.3% qoq. This was attributable by cost-discipline, in which resulted in variable costs to decline 7.0% qoq in 2Q23. Meanwhile, GOTO’s net revenue managed to grow 6.6% qoq in 2Q23 to IDR3.55 tn amidst higher net take rate at 2.5%, which is in-line with our 2Q estimate, driven mostly by on-demand and e-commerce segment. In contrast, GOTO’s GTV inched down 3.2% qoq in 2Q23, dragged by lower e-commerce following normalization during holiday season in 2Q23 as well as reduced incentives that decreased from 1.8% to GTV in 1Q23 to 1.6% in 2Q23. During 2Q23 call, management reiterated commitment to continue its cost-discipline strategy, while highlighting its expansion plan to tap further into profitable budget segment, as well as consumer lending through strategic partnership with Bank Jago (ARTO). Management also retains Adj. EBITDA breakeven target by 4Q23. (Source : Company, KBVS Research) Comment : GOTO’s 2Q23 shows meaningful progress on its profitability strategy, which surpassed our 2Q estimates. Soft GTV was also already factored-in in our estimate. Despite recent improvement in GOTO’s on-demand take-rate, we may see a limited headroom for further increase amidst tightening competition. Meanwhile, on-commerce, management strives to expand its assortment to appeal to large base of customers. We are still revisiting our model and may come up with revised estimates.