PT GoTo Gojek Tokopedia Tbk (GoTo), the Indonesia merged entity of Gojek and Tokopedia, announced Monday that its gross revenue up 30 percent year on year to Rp5.9 trillion ($375 million), above middle point of guidance range, as all segments registered growths.

In a statement, GoTo said in the third quarter of 2022, the firm continued to drive monetization, incentive optimization and cost reductions, making strong progress toward profitability.

Thus, its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss narrowed by 11 percent year on year and 10 percent quarter on quarter to Rp3.7 trillion.

Despite challenging macroeconomic conditions, its gross transaction value (GTV), up 33 percent year on year to Rp161 trillion, beating guidance.

Its group contribution margin also improved by 43 percent year on year and 41 percent quarter on quarter, significantly beating guidance.

The group’s on-demand services segment also turned contribution margin positive in September.

Its on-demand services have been a key driver for overall growth in the third quarter on the back of continued improvement in mobility services, driven by the return to office and back-to-school demand.

The segment third quarter gross revenue grew 31 percent year on year, with its gross revenue growth rate again exceeding that of GTV in the third quarter. This is mainly attributable to a higher take rate as we intensified our efforts on merchant-funded incentives and refined voucher targeting.

Its E-commerce also achieved solid GTV growth of 15 percent year on year in the third quarter of 2022, despite customer behavior shifting toward more offline activities.

The segment gross revenue growth continued to outpace GTV growth, up 27 percent year on year. This was driven by an increased customer to customer (C2C) take rate as it implemented a new commission scheme for C2C merchants, the introduction of platform fees in July, and the strong adoption of value-added services, including ads and logistics.

The group’s financial technology services business also maintained its strong headline growth, with GTV and gross revenue increasing by 78 percent and 48 percent year on year, respectively. This is predominantly attributable to our efforts to deepen GoPay e-wallet penetration across the ecosystem and improve user base quality.

“We had a strong third quarter, rapidly accelerating our path to profitability as revenues grew and adjusted EBITDA losses narrowed. Group contribution margin significantly exceeded the guidance we shared last quarter and we achieved positive contribution margin for our on-demand services in September – well ahead of schedule,” said Andre Soelistyo, GoTo Group Chief Executive Officer.

According to him, these gains were driven by our product-led focus on high quality users, alongside its disciplined approach to cost management.

“The ongoing expansion of GoPay Coins is a good example of this, as it allows us to rationalize promotional spending while spurring sustainable growth by rewarding users who utilize our services the most,” he said.

He also said the improved margins have not come at the expense of top line growth, demonstrating the resilience of the group’s business and the relative strength of the Indonesian economy.

“The financial and operational results we achieved in the third quarter provide reassurance that we can accelerate even faster towards profitability, and we will continue to play to our strengths as the largest digital ecosystem in Indonesia,” he added.

Meanwhile, GoTo Group Chief Financial Officer Jacky Lo said robust results in the third quarter of 2022 illustrated GoTo’s growth momentum and the strength of its model.

“We have taken steps to embed structural efficiencies into our operations, enhancing our ability to deliver on our growth and profitability targets. As a result, we have seen ongoing sequential improvements,

“GTV grew 33 percent year on year to Rp161 trillion and gross revenues were up 30 percent year on year to Rp5.9 trillion, while group adjusted EBITDA improved by 44 basis points quarter on quarter,” he said.

He also said global macro uncertainties driven by rising inflation, interest rates and fuel and energy prices, mean it is prudent to continue its focus on cost optimization across the business.

“Throughout the third quarter, we reduced incentives, eliminated promotional spend on cohorts of unprofitable users, further reduced product marketing spend and continued to develop a program of structural cost savings as we equip our business for the road that lies ahead,” he added.

According to the statement, GoTo will remain focused on its path to profitability as its top priority.

The firm expects to see ongoing sequential improvements in both contribution margin and adjusted EBITDA over the coming quarters, which will be driven by improvement in take rates, further rationalization of promotion spend and the identification and retention of high-quality core users.

For the full year 2022, the company currently expects its GTV to be between Rp613 trillion and Rp619 trillion; gross revenue to be between Rp22.6 trillion and Rp23.0 trillion; contribution margin as a percentage of GTV to be between -1.09 percent and -1.06 percent, reaching between -0.6 percent and -0.5 percent in the fourth quarter.

GoTo’s 2Q revenue up 45 percent to $370.38M