PT GoTo Gojek Tokopedia Tbk (GoTo), the largest digital ecosystem in Indonesia, has on Friday announced that it has further accelerated its profitability timelines.

The company said in a statement that it expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to become positive within the fourth quarter of 2023.

It also said the group contribution margin is set to become positive within the first quarter of 2023, accelerated by four quarters compared to previous guidance.

The new profitability timeline, which will bring the company very close to positive operating cash flow, comes as a result of GoTo’s strategic plan based on revenue optimization, cost management and ecosystem product growth.

“The success of our business has long been understood in terms of our rapid pace of growth, driven by our ability to solve problems at scale, while providing value to consumers, merchants, drivers and society as a whole,

“However, having achieved such scale, we must now prioritize sustainable profitability over rapid growth, while continuing the product innovation that will ensure long term value creation for GoTo and its stakeholders,” said Andre Soelistyo, GoTo Group Chief Executive Officer.

According to him, over the past year, the firm been implementing a plan designed to accelerate its profitability, based on revenue optimization, cost management, as well as ecosystem product growth.

“As a result of the ongoing successful implementation of this plan, we expect to turn adjusted EBITDA positive within the fourth quarter of 2023,

“We have the right team in place, and sufficient funds to execute on our plan, as we focus relentlessly on building Indonesia’s most impactful technology ecosystem that creates value for all,” he added.

According to GoTo Group Chief Financial Officer Jacky Lo, the firm has been making great progress.

“Contribution margin in the fourth quarter of 2022 has exceeded guidance, while gross transaction value (GTV) and gross revenue were both well within our guidance range, demonstrating our ability to grow healthily while progressing rapidly towards profitability,

“We are conducting regular reviews to ensure optimum implementation of these strategies with a focus on building our core businesses, while reviewing divestment opportunities for non-core assets, as we center our efforts on reaching our profitability objectives by the end of this year,” he added.

GoTo’s strategic plan, implementation of which began in early 2022, is based on revenue optimization, cost management and ecosystem product growth.

The revenue optimization covers commission structure improvement opportunities in on-demand services and e-commerce including those announced in December 2022 and January 2023.

It also covers the development of new, higher margin revenue lines such as advertising, premium transport services as well as the ongoing introduction of new lending products.

Meanwhile, cost management is an ongoing, top to bottom analysis of every line item to ensure every cost provides the necessary return on investment that supports the company’s profitability timeline.

This involves the optimization of incentive spending through better targeting, common rewards and more focused marketing, as well as a broad range of additional cost saving initiatives.

Such initiatives include the development of shared technology infrastructure, middle layer applications and tools, optimization of the cost of operations and further assessment of organizational effectiveness and efficiency.

GoTo’s competitive advantage also lies in its unrivaled product ecosystem across on-demand services, e-commerce and financial technology.

The company will focus on further developing the foundational products that will leverage this advantage, enabling it to solve more problems for customers leading to higher quality growth over the long term.

The firm also announced that the group remained resilient in the fourth quarter of 2022 with group GTV growing by 18 percent year-on-year to IDR 162 trillion ($10.69 billion).

On a quarter-on-quarter basis, GTV growth for 4Q 2022 was within the guidance range provided during 3Q 2022 earnings, with all segments seeing positive growth.

GoTo has also achieved 4Q 2022 gross revenue in the upper range of the provided guidance.

The Group’s consistent focus on the path to profitability has also enabled the group contribution margin as a percentage of GTV for 4Q 2022 to exceed the guidance provided during 3Q 2022 earnings.

For the full year, the company has also shown solid growth with overall group GTV increased by 33 percent year-on-year on a proforma basis to IDR 613 trillion, meeting the FY 2022 guidance.

Overall group gross revenue for FY2022 was in the upper range of the provided guidance.

Its FY2022 contribution margin also exceeded the guidance range.

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