GoTo Earnings: Encouraged by Positive Signs of Growth and Profitability, but Execution Risks Remain

We maintain our fair value estimate for GoTo at IDR 66 after the company reported second-quarter revenue of IDR 3.66 trillion while its operating loss margin narrowed by 3600 basis points. This indicates the company is no longer incurring heavy cash burn after it sold its e-commerce business, Tokopedia. This quarter is the first time GoTo has reported earnings under its new business structure without Tokopedia, and its on-demand service has become the main focus for investors. ODS' gross transactional volume increased 17% year on year, an improvement and reversal from the previous six quarters of year-on-year decline. ODS operating margin improved only slightly by 20 basis points sequentially. Still, together with its GTV growth, we are encouraged by these positive signs as we believe GoTo is now in a better position to focus its resources and execution on a single business without the distraction of Tokopedia’s heavy cash burn.