How GoTo’s on-demand segment is driving it to profitability

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](.  ---------------------------------------------------------------  Written by Simon Huang  Journalist  Hello {NAME} It’s election season in Indonesia, with general elections - which will determine the next president - scheduled for February next year. You can’t visit the country without seeing large posters for the three presidential candidates along major roads. Regardless of who wins, you can be sure that the new president will take an interest in how tech companies like GoTo (GOTO, IDX) will continue to help develop the country. The local tech champion has unveiled a slew of new products recently, with a view to manage costs while growing its market share. These include GoCar Hemat, which offers more affordable car rides, and GoRide Transit, which allows users to combine rides with public transportation. As my colleague Budi details in this week’s featured story, GoTo’s on-demand services business is nearly in the black, at least on an adjusted earnings basis. However, the unit still has a way to go, lagging archrival Grab’s (GRAB, NDAQ) equivalent mobility and deliveries businesses in earnings. One area that can help is reducing reliance on third-party solutions and moving toward more proprietary technology. Grab has also done this: for example, by developing its own mapping technology. Investors will expect GoTo to go in the black at some point, as well as to generate free cash flow. But it seems to be figuring things out and headed in the right direction. -- Simon  ---------------------------------------------------------------  THE BIG STORY [GoTo’s on-demand segment charts its roadmap to profitability]( Among recent initiatives rolled out by its transport business to manage cost is GoCar Hemat, which has reached more than 60 areas in Indonesia. ---------------------------------------------------------------  3 TRENDS TO KEEP EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Ant Financial makes 4x return from Zomato bet: Ant Financial has [sold]( a 3.4% stake in India-listed food delivery platform Zomato (ZOMATO, NSE) for US$400 million. The Chinese fintech firm offloaded a similar-sized chunk for US$196 million last year, but it retains a 6.4% stake in the company. This comes as Zomato’s shares have risen by 75% over the past year. Don’t be surprised if Ant Financial continues to reduce its holdings in Zomato. The changes in the former’s business since it first made the investment in 2018, along with the very different macroeconomic and geopolitical situation today, means that the best thing it can do is take profit on a good financial investment and focus its efforts elsewhere. 2️⃣ Microsoft is watching: Microsoft (MFST, NDAQ) will take a [non-voting, observer position]( on OpenAI’s board, CEO Sam Altman said. This gives the US software and cloud computing giant, which has a 49% stake in the genAI pioneer, the right to attend board meetings and access confidential information. The move comes after Microsoft was caught by surprise following the sudden defenestration of Altman as CEO by OpenAI’s board last month. Ultimately, Altman made a successful comeback, while most of OpenAI’s previous board was replaced by directors seen as more friendly to the commercialization of the firm’s tech. The question is how long such an arrangement will suit the needs of Microsoft, especially given the importance of genAI to its future. 3️⃣ Byju’s marked down: Tech investor Prosus (PRX, AMS) has [marked down]( the value of its 9% stake in Indian edtech startup Byju’s by 86%. The move comes as the edtech platform faces many challenges and works to restructure its operations. For a company that has raised over US$5 billion to now be valued at below US$3 billion is egg on the face for Byju and its backers. It also helps explain why Amsterdam-listed Prosus, which is best known for being an early investor in Chinese internet giant Tencent (0700, HKG) - in which it still retains a [26% stake]( - trades at a significant discount to its book value. Prosus holds illiquid stakes in many other startups, and it's hard to assign a value to these when their valuations can change so dramatically.  2 EYE-POPPING NUMBERS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [140%]( The jump in shares of newly listed Tata Technologies (TATATECH, NSE) after its trading debut last Thursday. - [US$84 million]( The amount that Indian fintech firm MobiKwik could raise from its planned IPO in Mumbai. THE ONE YOU DIDN'T SEE COMING We spotlight the story that had everyone talking and social media buzzing during the past week. Jack Ma’s sense of urgency: Jack Ma, the founder of Alibaba (BABA, NYSE), sent an internal message to the company’s employees earlier this week, where he [urged]( them to “reform for the future” and be “willing to pay any price and sacrifice” in order for the ecommerce firm to “correct its course.” This comes as the company struggles to find direction after years of intervention from the Chinese government and intense competition in its domestic market. Plans to split Alibaba into six units, which were [announced]( earlier this year, have also been partially reversed. Ma has kept an unusually low profile in recent years but may have felt compelled to speak up as the company’s business has lagged behind that of upstart rival Pinduoduo (PDD, NDAQ) recently. The company’s shares have risen by 25% since it released third-quarter results that beat revenue forecasts last week, partly on the back of the success of its cross-border platform Temu. In contrast, Alibaba’s efforts to build an ecommerce business outside of China have been less successful. Last Thursday, Pinduoduo had eclipsed its more established rival in terms of market capitalization. As founder, Ma is uniquely positioned to turn things around at Alibaba. However, whether he is able to do so will also hinge on the Chinese government’s stance toward private enterprise and entrepreneurs, which can charitably be described as erratic in recent years.  That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. 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