Analysts are hopeful that GoTo’s new CEO, who has a banking background, will help the Indonesian superapp and e-commerce platform keep up with regional rivals and achieve profitability.
GoTo Group has nominated Patrick Walujo as CEO, replacing Andre Soelistyo, who is slated to become deputy chairman. The changes are pending approval by shareholders on June 30.
The company was formed in May 2021 through the merger of two big local startups: ride-hailing company Gojek and e-commerce platform Tokopedia. Both made their mark as unicorns, or private companies valued at more than USD 1 billion, but continued losses have tested investor patience.
“The pressure from investors on the management probably accumulated to a tipping point where a leadership change was needed,” Jianggan Li, CEO of Singapore-based consultancy Momentum Works, told Nikkei Asia.
GoTo’s shares have tumbled since listing on the Indonesia Stock Exchange on April 11 last year. On Thursday, the stock closed at IDR 116 (USD 0.008) a share, around just a third of its initial public offering price of IDR 338 (USD 0.02). The company’s market capitalization stands at IDR 137.39 trillion (USD 9.2 billion).
At the same time, GoTo’s peers, such as Singapore-based Sea, which runs the e-commerce platform Shopee, are emerging from their own profitability funk. “This may have added to the pressure for a management change,” Li said.
Sea in March reported its first quarterly profit since going public five years ago, as restructuring efforts that included cutting thousands of jobs and freezing salaries started to pay off.
“A few measures have been undertaken by the [GoTo] management to address the profitability and competitive landscape issue, but investors probably felt these are inadequate, especially when Shopee has demonstrated that a Southeast Asian platform can be profitable after ruthless but effective cost-cutting,” Li said.
Indonesian e-commerce company Bukalapak also became profitable for the first time in 2022.
GoTo’s net losses, meanwhile, have continued, though bright spots are visible. The red ink narrowed 40% to IDR 3.86 trillion (USD 257 million) in the January to March quarter from the year before. For the full year 2022, its net loss was IDR 40.4 trillion (USD 2.69 billion).
GoTo attributed last year’s loss to factors such as an IDR 11 trillion (USD 733 million) goodwill impairment related to the merger of Gojek and Tokopedia. Additionally, it cited an increase in share-based compensation expenses and one-off restructuring costs. Amid intensifying competition with regional rivals like Grab, GoTo has also been spending on promotions and incentives to attract drivers and customers.
But Soelistyo and other company executives have exuded optimism, focusing on becoming profitable on an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) basis, a goal they expect to reach during the fourth quarter of this year.
“Our focus on high-quality, profitable consumers, along with a disciplined approach to costs, has significantly increased our efficiency and gives us a glimpse of what the future looks like for GoTo,” Soelistyo said when the company announced its first-quarter earnings in April.
Walujo’s nomination is not seen as a radical change. “I see this as a transition from one strong leadership to another, which should bring the company closer to achieving its profitability goals,” Piter Abdullah, executive director at Jakarta-based Segara Research Institute, told Nikkei Asia. “The nomination of Patrick Walujo is a welcome change, where his years of private-sector experience and involvement since Gojek’s early days will be crucial in growing the company further.”
Though not a founder of either Gojek or Tokopedia, Walujo is no stranger either. He is co-founder and managing partner of the Northstar Group, an early investor in Gojek, according to GoTo’s website. And he has experience outside Indonesia, starting his career at Goldman Sachs, with stints in London and New York.
Some analysts view Walujo as having the potential to lead effectively by favoring neither side of the merged business.
“We have to see that Patrick is neither from Gojek nor from Tokopedia,” said Sachin Mittal, an analyst with DBS Group Holdings. “He would introduce a fine balance between the two businesses because he does not have a legacy with either business.”
Indeed, Soelistyo, in a statement accompanying the announcement of Walujo’s nomination last week, said GoTo’s aim has been to “move beyond founders towards long-term professionalization.”
Momentum Works’ Li sees Walujo as well qualified to run a steady ship. “As a banker and investor [who has stayed] in the background, Walujo will probably be able to make some difficult decisions without getting too emotionally attached to the side effects,” he said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.