GoTo Confirms Adequate Funds to Achieve Profitability

GoTo Group has said that it has enough funds to last until it reaches profitability, in an attempt to alleviate investor concerns about its financial health. This follows a 70% slump in its stock price.

"Our balance sheet is in good enough shape to take us to profitability," Chief Financial Officer Jacky Lo told investors in an online meeting on Thursday. The Indonesian internet company expects "to be able to speed up" its breakeven timeline, will cut expenses and is thinking about selling non-core assets, he said.

Since the expiration of the lockup period on GoTo's major shareholders' stakes at the end of November, the company's stock has been under pressure as early backers reduce their holdings. GoTo is facing intensifying competition from rivals such as Grab Holdings Ltd. and a deteriorating global economy. Aletheia Capital has said that the company is about six quarters away from a cash crunch, and has recommended that investors sell the stock.

GoTo announced last month that it would be cutting 12% of its workforce, or 1,300 jobs. The company is facing increased competition, economic slowdown and heightened investor focus on profitability. The risk of customers becoming more budget-conscious in the face of an impending recession has led to job cuts, closures of business units and other measures across the tech industry.

"We are confident that our disciplined approach to reducing operating expenses will result in continuous sequential improvement in our monthly cash burn," Lo said. "We may also consider divesting some of our non-core assets and investment portfolio, and we will not make any new investments that do not contribute to an acceleration of our profitability."

The stock price of Indonesia's largest tech company plunged by 6.5% to 100 rupiah in Jakarta trading, leaving it down 70% since its April debut. The company is now valued at around $7.6 billion.

Early backers such as Alibaba Group Holding Ltd. and SoftBank Group Corp. were held to an eight-month lockup expiring Nov. 30. The lockup was aimed at supporting the stock price following the company’s initial public offering. However, GoTo’s plan to facilitate controlled stake sales by pre-IPO backers did not come to fruition, resulting in a bigger selloff.

GoTo, a ride-hailing and e-commerce provider, raised $1.1 billion in one of this year's largest IPOs. The company was formed via a merger of Gojek and Tokopedia.