Shulou(Shulou.com)11/24 Report--

On the evening of April 19, Beijing time, it was reported that GoTo, Indonesia's largest technology company, had completely abandoned its $500 million financing plan and focused on achieving its profit target.

GoTo initially planned to raise $1 billion by issuing convertible bonds (CTOnews.com Note: currently about 6.88 billion yuan), but later reduced its financing to $500m (currently about 3.44 billion yuan), people familiar with the matter said today. Now, after months of negotiations with potential investors, GoTo has called off the talks and abandoned the financing plan altogether.

GoTo's final decision not to issue bonds was worried that the move would send a conflicting message to investors, according to people familiar with the matter. GoTo has told investors that by the end of 2022 it had about $2 billion in cash and cash equivalents, enough to achieve operating cash flow without any additional external capital.

A spokesman for GoTo declined to comment but said the company had made progress in achieving profitability.

Analysts say the cancellation of the financing plan is an unusual shift for GoTo. Previously, the company relied heavily on outside investment to fund its lossmaking business.

Like its counterparts in Southeast Asia, GoTo is trying to convince investors of its profitability potential. The company, formed by the merger of ride-hailing service provider Gojek and e-commerce company Tokopedia, laid off another 1300 jobs last month after cutting 1300 jobs in 2022. GoTo says these measures have helped the company cut spending a lot. To that end, GoTo advanced its profit target by one year in February and is now expected to make a profit in the fourth quarter of this year.

Cost-cutting is easing the financial pressure on GoTo, which now has cash for 10 to 12 quarters, up from the previous five quarters, said Nathan Naidu, an analyst at Bloomberg. By comparison, competitors Grab and Sea have 17 quarters and 21 quarters, respectively.

Mark Goodridge, an analyst at Morgan Stanley, said last month that the reduced cash consumption of GoTo meant the company had a potential path to sustainable development without external financing.

On March 20, GoTo released its results for the fourth quarter of 2022, with gross revenue of $410 million (currently about 2.821 billion yuan), up 19% from a year earlier. The net loss is $1.27 billion (currently about RMB 8.738 billion), compared with a net loss of $690 million (currently about RMB 4.747 billion) for the same period in 2021. For the whole of 2022, GoTo gross revenue was $1.49 billion (currently about 10.251 billion yuan), an increase of 35% year-on-year. The net loss was $2.6 billion (currently about 17.888 billion yuan), a year-on-year increase of 55.9%.

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