PT GoTo Gojek Tokopedia Tbk (IDX: GOTO), more commonly known as GoTo, is Indonesia’s version of Grab Holdings Ltd (NASDAQ: GRAB) and Shopee by Sea Ltd (NYSE: SE).
GoTo is the merged entity of Gojek and Tokopedia. Gojek is the on-demand multi-service platform and digital payment technology group, while Tokopedia is the e-commerce company.
Now to first manage expectations, GoTo is the bigger company if compared side by side with Grab in terms of scale. But in terms of market capitalization, Grab is currently worth USD 11.39 billion, while GoTo is USD 8.3 billion.
So how does GoTo’s results and share price performances compare against Grab’s?
1. Both stocks are down by more than -70% since their respective IPO
Both companies not only share similar business models but also the same share price predicaments.
Even though Grab went public much earlier, it is currently trading at USD 2.93 per share. GoTo, on the other hand, went public in April 2022 and also sees its stock price down by 72%.
2. GoTo’s low revenue growth due to low take rates
Since both companies do not share the same annual fiscal year, we will use the latest quarterly results of Grab, 4Q22 released in Feb 2023 to compare against GoTo’s latest results.
Revenue growth of GoTo is up by 14% YoY while Grab’s was up by 310% YoY.
But in terms of GMV (Gross Merchandise Value) and GTV (Gross Transactional Value), GoTo grew its GTV by 6% YoY while Grab grew its GMV by 11%.
The lower revenue achieved by GoTo is due to its low take rate of just 4%, while Grab is hitting home runs with its take rate or commission rate hikes.
3. GoTo has better EBITDA margins
Even with lower revenue growth and lower take rates, it is surprising to see GoTo having a better group-adjusted EBITDA.
GoTo’s adjusted EBITDA is at -1.6% against GTV, while Grab’s 4Q22 adjusted EBITDA came in at -2.2% against GMV.
So in the race to achieving a full fiscal year of positive EBITDA, GoTo is leading and should beat Grab to positive earnings.
4. Slowing GTV for GoTo – foreshadowing for Grab?
One of the main reasons for the pessimism of GoTo is its slowing GTV growth. According to the press release of its 1Q23 results, GoTo expects GTV growth to slow in 2Q23.
On the other hand, Grab seems to be bullish in terms of its FY 2023 revenue growth. Even though it did not mention the GMV growth explicitly, Grab’s stretched revenue growth outlook for 2023 will come with GMV growth and/or even improved take-up rates.
But the million-dollar question is when will Grab eventually face a drop in GMV growth like GoTo?
Similar business models, different approaches, different operations
Prior to analyzing GoTo, I have always thought that the take rates, growth, and profitability of the company should be somewhat similar to Grab.
But after diving deeper into the figures and comparing it against Grab’s results, no doubt the business models share similarities. But in terms of growth rates and prospects, both companies are quite different.
There are 2 sides to a coin to looking at this comparison: Grab has proven that it can still grow aggressively for the upcoming fiscal year, while GoTo is already anticipating a drop in GTV, which is a sign of growth tapering.
The other side to the coin is this: How long can Grab continue growing before it hits a bottleneck or similar situation as GoTo finds itself right now?
Food for thought.
