July 23, 2024
Loans

Imagine if Uber offered car loans, not just rides. Its Indonesian analog will do this soon • The Register


Indonesian superapp provider GoTo will soon offer to take you for a ride – or loan you money to buy your own.

“We’re developing a vehicle financing program for our drivers that at some point will move out to consumers as well,” group CFO Thoms Husted told investors on the biz’s Q1 earnings call yesterday.

The car loans slide hustle will be introduced as part of an expanded financial services portfolio.

“I’d say we’re fortunate that we have a bunch of embedded markets for [the Fintech] business,” Husted mused, adding that the business had a “captive consumer segment” thanks to the 170 million or more downloads of its flagship app.

It already offers cash loans through its GoPay app and operates a legacy buy-now-pay-later (BNPL) program.

Husted said that GoTo’s lending book had been kept “very small relative to the opportunity” after a “tactical decision” made in 2023 – but now the business is ready to ramp up.

“We grew the loan book by 43 percent in the first quarter and that was while maintaining good credit quality. We haven’t seen any abnormalities at this point on the credit quality. And then we’re fortunate to end the quarter with a loan balance of IDR2.7 trillion ($166 million) which is about 3x on a year over year basis,” Husted said.

Bulking its loan book is part of an effort to flip GoTo’s fintech segment to positive EBITDA by the end of 2025. The overall business is already in that territory as of last quarter.

“We met our target to achieve positive adjusted EBITDA in the fourth quarter,” enthused CEO Patrick Walujo.

Quarterly revenues improved by 18 percent year-on-year to IDR4.2 trillion ($246 million). The firm made a net loss, but is closing in on a profit.

“The Group booked a net loss of IDR420 billion ($25.8 million) for the first quarter, a reduction of 85 percent year on year, supported by improvements in revenue and fixed costs efficiencies,” an earnings announcement [PDF] revealed.

Execs explained that performance was driven by user growth, BNPL in e-commerce, and accelerated integration and payments adoption associated with TikTok. Walujo pledged to do more of the same.

It also doesn’t hurt that GoTo has reduced spending, including – like many other tech companies such as Singapore-based rival Grab – through layoffs. GoTo, which is considered Indonesia’s largest tech firm, announced at the end of 2022 that it would lay off 12 percent of its workforce, amounting to 1300 workers. It added another 600 in March of last year.

A positive TikTok story

TikTok may be in trouble in the US and Europe, but GoTo is chuffed with the early success of its strategic partnership with ByteDance’s flagship app.

Under a deal that came into effect in January, the Indonesian group’s Tokopedia e-commerce business combined with TikTok’s effort in the field. The deal allowed the joint entity to conduct social commerce – e-commerce tied to a social media app – despite Indonesia banning the practice.

Walujo credited the deal with having “immediately [turned] our e-commerce segment cash flow positive.”

The CEO reassured call participants the joint entity is “in full compliance with the relevant regulations, having fulfilled our provisions set by the Ministry of Trade during the transition period.”

GoTo has already worked with TikTok to make it easier for users to link their GoPay account with Shop Tokopedia. Next on the agenda is a BNPL product with TikTok, to be launched on Shop Tokopedia within a few months.

Walujo declared that “all e-commerce activities on TikTok are now being carried out on Tokopedia Electronic Systems and this has been implemented in a way that ensures users can shop seamlessly on the TikTok app.” ®



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