Indonesia’s GoTo raises earnings guidance as financial services keep powering its growth
Its GoPay e-wallet is driving expansion, with more than 500 million transactions in September alone
Lionel Lim
[SINGAPORE] GoTo Group, Indonesia’s largest digital ecosystem, reported 4.7 trillion rupiah (S$363.4 million) in net revenue for its third quarter on Wednesday (Oct 29), an increase of 21 per cent over the same period last year.
The company reported an adjusted pre-tax profit of 62 billion rupiah for the three months ended Sep 30. It also raised its adjusted earnings before interest, taxes, depreciation and amortisation guidance for the year to a range of 1.8 trillion to 1.9 trillion rupiah, from 1.4 trillion to 1.6 trillion rupiah previously.
This was on the back of its Q3 performance, which was boosted by its financial services segment – it has been growing rapidly, albeit due to a lower base.
The segment’s expansion follows the group’s efforts to tailor its financial offerings to people outside Jakarta and the Gojek ecosystem. In July 2023, GoTo launched a separate payment app called GoPay, and this has allowed the company to cater to markets beyond Indonesia’s major cities.
“When it started, we had 25 different key messages we wanted to test,” Sudhanshu Raheja, the president and director of GoTo Financial, told The Business Times in an interview before the release of the earnings results.
In Q3, financial services revenue rose to 1.5 trillion rupiah, a 55 per cent increase on the year, driven by expanding consumer loans and steady growth in payment transactions.
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The company also revealed that in September, GoPay had exceeded 500 million transactions for the first time.
Revenue for GoTo’s on-demand services, including delivery and ride-hailing, reached 3.2 trillion rupiah in the quarter, a 10 per cent increase from the year-ago period. The improvement was supported by increased advertising revenue and disciplined incentive spend.
GoTo’s fintech growth
GoTo has been investing in its financial services segment to boost its growth beyond on-demand services. In an earnings call last October, the group also began reporting results for financial services ahead of on-demand services – signalling the fintech arm’s growing importance.
The GoPay e-wallet has been a key part of GoTo’s financial services strategy. About 3 per cent of Indonesia’s gross domestic product is processed within the GoPay ecosystem, and around 12 per cent of the country’s adult population use the app monthly, based on the company’s calculations.
It said on Wednesday that GoPay is “growing significantly within the mass market”, due primarily to the utility of the app. Digital payments via QR codes are widely accepted across Indonesia, and the app also has interactive features such as daily check-in rewards and mini-games that support user retention.
“What we realised was that we were very strong in the affluent segment, but we had (fewer) users in the mass market segment – and we realised that... to grow further in the mass market, we needed a different surface,” Raheja said.
While GoPay is available on the Gojek app in Indonesia, the company launched a standalone app for the e-wallet in 2023. One reason for the move was that a separate app does not consume as much mobile data, making access easier for users in developing cities outside Jakarta whose smartphones may be less powerful.
A separate app also allows the company to market offerings that are perhaps more useful to people in Tier 2 and 3 cities, such as free transfers and lower costs for bill payments, Raheja said.
He added that such features help get more users on board the GoPay app, explaining that the strategy taps people who were not already Gojek users, but nonetheless had problems the group could help to solve, such as moving money and paying bills.
While he revealed that “a significant amount of growth” for GoPay is coming from Tier 2 and 3 cities, Raheja declined to share specific numbers.
For Q3, gross transaction value for GoTo’s financial services segment was up 30 per cent year on year at 170 trillion rupiah.
Besides serving as an e-wallet through GoPay, the group is seeing opportunities to reach Indonesia’s large unbanked or underbanked population.
Fintech firms make money from charging interest rates on loans. While they can be a revenue driver, GoTo hopes that GoPay users will move beyond using the app for loans and payments to begin accessing banking services, such as opening a savings account.
The group holds a 22 per cent stake in Bank Jago, and this partnership allows GoPay users to access banking services through the app.
Regular digital banking activities would enable GoTo to accumulate even more data that could augment its existing consumer loan business. They could also lead to other revenue-generating services, such as investment and insurance products.
“Everything is inside the GoPay app – every functionality that we work (on) with any partner is available inside the app. They don’t have to go anywhere else,” Raheja said.
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