GoTo Gojek Tokopedia PT

Hello everyone, this is Joel Ellis, Head of Investor Relations. Welcome to the PT GoTo Gojek Tokopedia TBK 3rd Quarter 2026 Earnings Conference. Please be advised that today's conference is being recorded. On today's call, Hans Patuol, our President Director and Group Chief Executive Officer, and Simon Ho, Group Chief Financial Officer, will deliver prepared remarks. Following their commentary, we will open up the call for questions and be joined by Sudhanshu Raheja, our Group Chief Operating Officer, along with members of GOTO's Board of Directors. We would like to highlight that the information presented today has been prepared solely based on unaudited, consolidated, selected financial information. The three-month period ended September 30, 2026. As a reminder, today's discussion may contain forward-looking statements about the company's future business and financial performance, as well as certain non-Indonesian financial accounting standard measures as complements to the Indonesian financial accounting standard disclosures. Before using and or relying on these measurements and forward-looking statements, please take note of our disclaimer and cautionary statements disclosed in our earnings presentation and press release. During the earnings call, we will review the results of our operations and earnings presentation, which can be found on our website. Our reporting currency is the Indonesian rupiah, and we will denote the US dollar equivalent by applying an exchange rate of 17,998 rupiah, one US dollar, based on the middle rates published by Bank Indonesia as of the end of September, 2026. We will also refer to adjusted free cash flow, which is adjusted operating cash flow minus capital expenditures. For more information and additional disclosures on our recent business and financial performance, please refer to our earnings press release and supplemental presentation, which can be found on our IR website. With that, I will turn the call over to Hans.

Thanks a lot, Joel. Hi, everyone, and thank you for joining us today. This was a very eventful quarter and we will unpack it on today's call. In the third quarter of 2026, Gotoh delivered a net income of 441 billion rupiah. This is an improvement of almost 700 billion rupiah versus a year ago. And also our third consecutive quarter of net profit. Operating income, which is a profit we earn from core day-to-day operations, reached R351 billion, rising more than R400 billion from a year ago. Furthermore, our adjusted EBITDA reached R950 billion, up 84% year-on-year. Please note that this is after absorbing the lower 8% commission cap on GoRide, our two-wheel transport business, which took effect on July 1st. On top-line performance, we continue our strong double-digit growth, with core GTV rising 89% to Rp194 trillion. and net revenue rising 17% year on year to 5.6 trillion rupiah. On the back of this performance, we are now raising our full year guidance for group adjusted EBITDA. We now expect 3.5 to 3.7 trillion rupiah, up from 3.2 to 3.4 trillion rupiah. For on-demand services, we are widening the range to 1.4 to 1.6 trillion rupiah, up from previously 1.4 to 1.5 trillion. This wider range allows for uncertainty around the 8% commission cap. As for FinTech, which continues to perform well, we are raising guidance to 1.9 to 2 trillion rupiah, up from previously 1.7 to 1.8 trillion rupiah. Next, let me turn to our business units, starting first with on-demand services. Earlier this month, more details regarding the presidential regulation was made available. Beyond the 8% commission cap, it classifies our driver partners as micro entrepreneurs rather than employees. We believe that this is an accurate representation and it's a positive welcome development. Regarding how the 8% commission cap might affect our delivery business, we are currently awaiting follow-on regulations from the Ministry of Communication and Digital Affairs. We are actively engaging and will update as soon as the regulation is final and available. However, regulations are not the entire story for on-demand services in Q3. We are pleased to share that our mass market strategy began showing positive results in Q3, with completed orders increasing 9% year-on-year. In fact, Gojek's total completed orders in Q3 was the highest since 2019. Now we did this while growing adjusted EBITDA 3% year-on-year. even as we absorb the 8% commission cap on GoRide for the full quarter. Specifically in mobility, completed orders grew 10% year on year, driven by higher frequency as our mass market initiatives scale up. As we bring in more mass market riders, average order value is reduced, which is the trade-off we had expected from this strategy. Adjusted EBITDA was 159 billion rupiah, down 16% year on year, with margin at 2.5%, down 50 basis points. We would like to point out that this decline is entirely due to the 8% cap. Back in July, we had released guidance that the 8% cap would have a negative impact of 300 billion rupiah in 2026. That's about 150 billion rupiah per quarter, give or take. And Q3 came in very much in line with our previous guidance. Without it, mobility-adjusted EBITDA would have been about 300 billion rupiah, up roughly 60% year-on-year, and margins would have been around 5%, up from 3% a year ago. The underlying business is healthy. The pressure on EBITDA comes from the 8% cap, not from the mass market strategy. Having now absorbed the commission cap's impact, we are confident that the initial growth driven by our mass market strategy will build further in the coming orders. Last but not least, we have also made progress on GoRight profitability. During our last earnings call, we mentioned that GoRight has turned adjusted EBITDA negative in July, which was the first month of the 8% commission cap. Over the past two months, it has improved and is now trending towards breakeven. Shifting gears to deliveries. Completed orders increased by 7% year on year. Very similar to our mobility segment, our mass market strategy naturally leads to smaller basket sizes and lower average order values. This is again in line with our expectations of driving higher transaction frequency with smaller individual order values from mass market consumers. Furthermore, as the 8% commission cap did not apply to delivery, these results offer a clearer picture on how the mass market strategy is performing. Not only did the completed orders grow, adjusted EBITDA also grew. up 20% year on year to 227 billion rupiah. While at the same time, margins expanded 33 basis points to 2.1%. Hence, our delivery business is growing both orders and profit at the same time, which is what we are aiming for across all of on-demand services as we strive to have product-driven growth led by innovation rather than discounting. Turning now to fintech, we continue to grow rapidly both in top line and profitability. Transactions climbed 86% year on year to 2.8 billion. Net revenue also rose 49% to 2.3 trillion rupiah. Profitability also increased as adjusted EBITDA rose more than 300% year on year to 550 billion rupiah. More people are using more of our services and doing so more frequently. This in turn is driving the increase in our loan book, which expanded by 51% year on year, reaching 12 trillion rupiah. We remain, however, extra prudent on credit risk. As we shared in our last call, we preemptively tightened credit in Q2 for our highest risk cohorts. This is paying off, as in the third quarter, we saw only a very limited deterioration in credit quality. We remain very vigilant and continue to rely on our ecosystem advantage, where we lend exclusively to existing users in our ecosystem, and a short tenure of our loans lets us adjust quickly as conditions change. Finally, I would like to address our share price and our capital allocation strategy. We are acutely aware of the recent pressure on our share price following the IDX removal of the 50 rupiah price floor and this is something that we take very seriously. That pressure is driven by macro and technical factors. including the share overhang from index funds due to our deletion from the MSCI and FTSE indices earlier in the year. This is in contrast to our operational performance, which remains solid as our results today show. At these levels, management believes that our shares are undervalued. And because we see such a deep discount in our stock, we have been actively buying back shares. Since the removal of the 50 rupiah price floor, we have deployed 985 billion rupiah to repurchase 36 billion shares, amounting to around 3% of the company. is leaves 2.5 trillion rupiah available under our current buyback authorization, which runs through to June, 2027. Furthermore, at our recent extraordinary general meeting of shareholders on October 14th, shareholders approved the cancellation of 32 billion treasury shares bought during previous buyback exercises. This represents around 2.7% of all outstanding shares. And retiring these shares permanently ensures our share buybacks translate into improved shareholder value. Both these actions, buyback and cancellation of treasury shares, return value to our shareholders and reflect our disciplined capital allocation. To conclude, this was a quarter of resilience. We absorbed a full quarter of the 8% commission cap on Gorai, while still delivering our third consecutive quarter of net profit. Growth is returning in our on-demand services business as our mass market strategy takes hold, and our fintech business is going from strength to strength. Both business segments are profitable and our core fundamentals continue to strengthen as reflected in our increased guidance for the year. Beyond executing our operational strategy, we have also returned value to our shareholders. For sure, challenges remain. However, we remain focused on what we can control and will continue doing the best we can. Thank you, and I will now hand it over to Simon.

Thank you, Hans. Moving on to our financial results, my commentary today will focus on year-on-year comparisons for the third quarter of 2026. We delivered robust top and bottom line growth in the third quarter, demonstrating the resilience of our model, even as we absorbed the impact of the 8% commission rate cap on GoRide. At a group level, net revenue grew 17% to 5.6 trillion rupiah, or 309 million US dollars, led by strong performance in FinTech. Importantly, our cash recurring fixed costs grew by just 5%, reflecting a much slower pace than our revenue growth. This combination of strong top-line expansion and sustained operating efficiency drove our adjusted EBITDA up 84% to 950 billion rupiah or 53 million US dollars. These operational gains flowed directly through to our bottom line. Operating income which includes share-based compensation, depreciation and amortization expenses, and also non-recurring items improved by 402 billion rupiah to reach 351 billion. It is worth noting that this quarter included an additional tax provision of 230 billion rupiah related to one-off tax examinations. Excluding this provision, our operating income would have been higher at approximately 581 billion rupiah. Ultimately, we achieved a net profit of 441 billion rupiah or 25 million US dollars, which includes our 164 billion rupiah share of Tokopedia's net profit. Even if we exclude this gain from Tokopedia, our net profit remained positive for the third consecutive quarter, a significant milestone for our path to sustained profitability. Now let's turn to our specific segments. In on-demand services, both our top and bottom lines improved year on year, despite the 8% commission rate cap on GoRide that took effect on July 1st. Net revenue increased 3% to 3.3 trillion rupiah or 184 million US dollars, while mobility revenue declined 5%, primarily due to the commission cap. Delivery revenue grew 6% in line with the growth in completed orders. adjusted EBITDA for the segment increased by 3% to 347 billion rupiah or 19 million US dollars with the year-on-year improvement in delivery offsetting the decline in mobility due to the impact of the commission rate cap. Moving to FinTech, our growth momentum remains very strong. Net revenue surged 49% to 2.3 trillion rupiah or 128 million US dollars. This was fueled by strong user growth, rising payment transaction volumes, and the continued expansion of our loan book. As a result, FinTech adjusted EBITDA reached 550 billion rupiah or 31 million US dollars, an increase of more than four times year over year. In e-commerce, service fees from Tokopedia increased to 235 billion rupiah or 13 million US dollars. Given our strong year to date execution, particularly the strong performance in FinTech, we are updating our guidance. We are raising our 2026 adjusted EBITDA guidance for the group to 3.5 to 3.7 trillion rupiah up from our previous range of 3.2 to 3.4 trillion For fintech specifically, we are raising guidance to 1.9 to 2 trillion rupiah, up from 1.7 to 1.8 trillion. This upgraded fintech outlook fully absorbs the impact of new Bank Indonesia regulations, which came into effect on October the 1st, and which lowered the merchant discount rate to zero from 0.7%, for QR code payment transactions that are under 100,000 rupiah. While we estimate this will impact fourth quarter revenue and EBITDA by roughly 50 billion rupiah, the underlying strength of the FinTech segment still allows us to raise our full year expectations. For ODS, we are widening our 2026 Adjust EBITDA guidance to 1.4 to 1.6 trillion rupiah from the prior 1.4 to 1.5 trillion. This reflects our current positive operating trends while prudently allowing for potential uncertainty around the 8% commission cap for deliveries, which was highlighted in the presidential regulations that was made available on October 8th. Before I close, I want to direct your attention to a new disclosure in our investor presentation that highlights the significant intrinsic value of our business. When evaluating our business from an enterprise value perspective, we believe our shares are currently trading at a steep discount. If you back out the net cash on our balance sheet and the current value of our stake in Bank Jago, our core operations are trading at only 3.3 times our 2026 midpoint EBITDA guidance. This is materially below the EBITDA multiples of our peers, which trade at roughly about 13 times in the FinTech and ODS space. And this also implies a valuation discount of roughly 75%. We hope this new breakdown clearly illustrates the fundamental value and the substantial upside potential we see in our shares. In closing, this quarter's strong performance underscores our disciplined execution and our ability to successfully navigate regulatory shifts. We remain highly confident in our full year outlook and our continued ability to drive long-term profitable value for our shareholders. With that, I will turn the call back to Joel.