Written By GoTo, a leading technology platform in Southeast Asia, has reportedly scrapped its plans to raise $500 million through debt sale talks. The move marks a shift in the company’s strategy towards achieving profitability, following years of aggressive expansion.
According to sources familiar with the matter, GoTo’s decision to abandon the debt sale talks was driven by concerns over the high cost of borrowing, as well as the company’s desire to prioritize profitability over growth. GoTo, which was formed through the merger of Indonesian ride-hailing giant Gojek and e-commerce platform Tokopedia earlier this year, has been expanding rapidly in recent years, investing heavily in new businesses and markets.
However, the company has yet to turn a profit, and has faced growing pressure from investors to demonstrate a path to profitability. In an interview with Bloomberg earlier this year, GoTo’s CEO Andre Soelistyo acknowledged that the company’s focus had shifted towards profitability, stating that “we are very mindful of how we deploy capital.”
GoTo’s decision to abandon the debt sale talks comes amid a broader shift in the tech industry towards profitability, as investors grow increasingly skeptical of high-growth, cash-burning companies. Several major tech companies, including Uber and WeWork, have faced significant financial difficulties in recent years, leading to calls for greater discipline in capital allocation.
For GoTo, the decision to focus on profitability may require the company to make difficult choices about where to allocate resources. In recent years, the company has invested heavily in a wide range of businesses, including ride-hailing, food delivery, payments, and e-commerce. While these businesses have allowed GoTo to become a dominant player in Southeast Asia’s tech ecosystem, they have also proven costly, with some analysts suggesting that the company may need to divest certain businesses in order to achieve profitability.
Despite these challenges, GoTo’s leadership remains confident in the company’s long-term prospects. In a recent interview with CNBC, Soelistyo stated that “we are very optimistic about the long-term growth of the Southeast Asian region,” adding that GoTo is well-positioned to capitalize on the region’s rapidly expanding digital economy.
As GoTo continues to navigate the challenges of achieving profitability, the company’s decision to scrap its debt sale plans is likely to be closely watched by investors and industry analysts alike. With the tech industry facing increasing pressure to deliver sustainable growth, GoTo’s focus on profitability may serve as a bellwether for the broader direction of the industry in the years to come.
