GoTo to exit entertainment biz, target budget consumers as it eyes profits

Photo credit: GoTo Group

GoTo Group is inching closer to its profitability targets. But new CEO Patrick Walujo noted that breaking even is just one milestone of a larger goal: sustainable and profitable growth.

In the company’s most recent earnings call, Walujo outlined a strategy that boils down to expanding its consumer base while being “extremely disciplined” about costs.

What does cost efficiency look like for GoTo? There’s layoffs: Walujo pointed out that GoTo had reduced its workforce by 24% over the past three quarters while reducing non-personnel fixed operating expenses by 10%.

Another is culling businesses that are perhaps a drain on resources. Some of the criticism leveled at Gojek in its pre-IPO days concerned its diversified business, especially when compared to rivals like Grab.

Walujo pointed out that GoTo is exiting the entertainment segment as it is “no longer part of the core strategy.” While the CEO did not name them, its offerings in the space include streaming site GoPlay and ticketing platform GoTix.

The exit is reminiscent of Gojek’s move to shut down GoLife, its on-demand lifestyle services unit, early in the Covid-19 pandemic.

See more: Gojek’s GoPlay is more like Spotify and Amazon Prime Video – not Netflix

Another cost efficiency initiative is to improve synergies across its ecosystem. Walujo said that “integration issues have meant we were not fast enough to capitalize on the promise of the Gojek-Tokopedia merger.”

That means launching buy now, pay later products, rolling out cash loans on Tokopedia, and deepening GoTo’s integration with digibank partner Bank Jago.

Group CFO Jacky Lo noted that most of GoTo’s loan book is financed by Bank Jago. Walujo also pointed out that a deeper partnership would mean a long-term reduction in GoTo’s cost of funds.

Then, there is GoTo Logistics (GTL), which currently supports 20% of Tokopedia’s deliveries. Previously called Swift Logistics Solutions, GoTo acquired the company at the start of this year.

Walujo said that GoTo has reduced shipping subsidy cost per order by 15% year to date. He aims to double that amount by year-end with GTL.