LinkAja reaches profitability despite fall in users as new strategies take off

LinkAja has hit a milestone. From June to August this year, the Indonesian fintech company finally achieved positive EBITDA after making changes to its business model.

The company made this shift in early 2022 amid intense competition in the B2C e-wallet sector, where the firm provides money transfer as well as telco and bill payment services within its app.

With the change, LinkAja has reduced 80% of its marketing expenses year to date, according to Reza Ari Wibowo, the company’s chief finance and strategy officer.

LinkAja is now taking a B2B2C approach, connecting companies with dealers and resellers of mobile credits.

The fintech company does this for state-owned telco giant Telkomsel. LinkAja believes that its strategy to link firms with retailers and distributors can be replicated for other government entities like energy giant Pertamina.

LinkAja has strong affiliations with these state-owned institutions. Formerly known as TCash, it was a financial service under Telkomsel. In 2019, LinkAja spun out into a separate entity as a joint venture by 10 state-owned enterprises (SOEs), including Pertamina.

Reza Ari Wibowo, LinkAja’s chief finance and strategy officer / Photo credit: LinkAja

Among its other cost-cutting measures, LinkAja also restructured last year, which resulted in some layoffs. It also eliminated nearly all cashback offers, Wibowo tells Tech in Asia.

While LinkAja is still incurring losses on an annual basis, Wibowo is optimistic about achieving a positive net income for 2024 thanks to several ongoing initiatives. In 2022, the firm’s EBITDA loss narrowed by more than 60%.

The improvement in earnings does not appear to be coming at the expense of sales growth. This year, the company anticipates a 30% increase in revenue and a 50% reduction in operational costs, mirroring last year’s results.

Nevertheless, LinkAja acknowledges that it has had a decline in monthly active users (MAUs), decreasing by 70% from 2020 to 2023.

“We no longer talk about MAUs as a performance indicator, but rather real unit economics,” Wibowo argues. He adds that the MAU drop is a temporary effect in achieving a lean and profitable business while maintaining quality user relationships.

Indeed, users are engaging in more transactions. The company’s average revenue per user has jumped 4x compared to three years ago, Wibowo says.

LinkAja achieved these milestones in spite of the ongoing controversies surrounding iGrow, a peer-to-peer lending firm the company acquired in April 2021.

Turning shareholders into strategic partners

IGrow’s legal issues remain