GoTo, one of Indonesia’s largest listed tech majors, cancelled its plan to use funds from convertible bond issuance worth US$ 500 million. As reported by Bloomberg, GoTo has concerns regarding the debt sale which could send a conflicting message to investors.
Recently, GoTo shut down the plan after discussions with BlackRock Inc., private equity (PE) firm PAG, and the World Bank’s International Finance Corp. Initially the plan was to raise US$ 1 billion from the bond sale, which was later downsized. However, GoTo has not commented on the issue as of yet.
“We have made considerable progress toward profitability, revising our guidance to turn adjusted EBITDA positive by Q4 2023, having delivered strong results over the course of 2022,” according to a GoTo spokesperson.
“With 29 trillion rupiah of cash on hand as of late-2022, we have a sufficiently healthy balance sheet to carry us to positive operating cash flow, without any need for additional external funding,” the spokesperson added.
GoTo was planning a convertible bond issue which was part of several options being pursued by GoTo to deal with its capital other than doing IPO in the US.
On several occasions, the company had also expressed its intent in divesting in non-core assets to expand its runway. Financially, GoTo had recorded a revenue worth IDR 3.38 trillion or 198.93% increase as of December 2022, however the company’s net income received a negative IDR 19.25 trillion or down by 96.19%.
Despite the good news, last year the company had reported wider losses due to goodwill impairment. However, GoTo still managed to receive positive revenues during the period. The company is targeting to be profitable in terms of adjusted EBITDA, and group contribution margin by Q4 2023, and Q1 2023 respectively.
“GoTo expects cash burn to be reduced by about 65% this year, and positive cash flow is expected in early 2024. It has sufficient cash to execute its business plan. In H1 2023, it is focusing on profitability and will not expand into other international markets aggressively. Product led, instead of incentive-led model, is pursued with emphasis on hyperlocal strategies,” based on Jeffrie’s Thomas Chong, Melody Chan, and Zoey Zong’s note.
