Shares of Indonesian tech giant GoTo Group surged as much as 4.96% on Friday morning a day after the group said it will hit its profitability targets earlier than expected.
The stock has since pared and is currently trading at 3.3%.
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GoTo, which is made up of ride-hailing giant Gojek and e-commerce marketplace Tokopedia, went public in April last year.
GoTo said in a Thursday release that adjusted earnings before interest, taxes, depreciation and amortization will likely “become positive within the fourth quarter of 2023.”
EBITDA reflects the operating profits of a company.
Last week, the company announced a new leadership structure as it drives towards profitability.
The company expects group contribution margin, which shows revenue after variable costs, to become positive by March — that’s four quarters ahead of previous guidance.
“Over the past year, we have been implementing a plan designed to accelerate our profitability, based on revenue optimization, cost management, as well as ecosystem product growth,” said Andre Soelistyo, GoTo Group CEO, as he shared the company’s accelerated profitability strategy during a townhall meeting.
The group also outlined a positive performance for the whole of 2022 in the release — full-year earnings are due out in March.
“Contribution margin in the fourth quarter of 2022 has exceeded guidance, while GTV [gross transaction value] and gross revenue were both well within our guidance range,” CFO Jacky Lo said in the release.
“We currently estimate adjusted EBITDA to turn positive in 2025e, with the new target implying this would come 2 years earlier than our forecast,” said UBS analysts in a report.
“The earlier than expected break-even is on the back of both revenue (higher take rates) and cost (decline in incentives and reduction in headcount) measures that GoTo has taken, combined with the ecosystem benefits from Gojek-Tokopedia merger,” the analysts said.
GoTo, as well as other tech giants Grab and Sea Limited, have been racing to stem losses as global economic challenges put pressures on their net profit.