An official press release published on Wednesday (31/1/24) by GoTo, announced the completion of a previously announced transaction between PT GoTo Gojek Tokopedia Tbk (“GoTo”), the largest digital ecosystem in Indonesia, and TikTok, a leading global entertainment platform that aims to drive long-term growth for Indonesia’s MSMEs and digital economy.
Tokopedia and TikTok Shop Indonesia’s businesses are now officially combined under the PT Tokopedia entity, which is now jointly owned by GoTo and TikTok as strategic partners in Indonesia, with TikTok holding a controlling stake. The integration and migration process for a seamless shopping experience within Tokopedia and the TikTok app in Indonesia has been making good progress and is set to be completed within the trial period in consultation with the relevant ministries and in line with prevailing regulations.
In addition, GoTo Group showed strong performance at the end of 2023, enabling it to achieve positive Adjusted EBITDA for the whole of the fourth quarter while exceeding the top end of its full-year Adjusted EBITDA guidance range. Details of this will be provided at the company’s 4Q and full year 2023 results to be released in March.
GoTo Group CEO, Patrick Walujo, said: “Today marks the completion of a partnership with TikTok that will continue to bring benefits to Indonesia and its MSMEs. It is also a big step forward for GoTo Group. Having reached positive adjusted EBITDA for the fourth quarter of 2023, we can now look forward to accelerating our progress, driven in part by supportive ecosystem partners. As our profitability and cash flow continue to improve, we will optimize our capital usage in line with a newly developed capital allocation plan, which may include a share buyback initiative, subject to regulatory and shareholder approval.”
Executive Director, E-commerce, TikTok Indonesia, Stephanie Susilo, said: “We are proud to officially work with Tokopedia, its stakeholders, and its employees. We view this moment as a significant milestone in our commitment to contribute to Indonesia, its MSMEs and the growth of its digital economy alongside GoTo as a partner.”
As previously announced, TikTok has committed to investing over USD 1.5-billion in the enlarged entity over time to provide future funding required by the business without additional dilution to GoTo. GoTo benefits from the growth of the enlarged entity and remains an ecosystem partner to Tokopedia, through its digital financial services via GoTo Financial and on-demand services via Gojek. GoTo also receives an ongoing revenue stream in the form of an e-commerce service fee from Tokopedia commensurate with its scale and growth, making the agreement cash-generative for the group as it continues to focus on its long-term profitability.
The partnership commenced with the Beli Lokal campaign last December, which has supported thousands of Indonesian merchants and resulted in an increase in their sales of 125-percent during the campaign period. A recent survey of participating merchants found that 97-percent have felt benefits from the collaboration between TikTok and Tokopedia, while 90-percent reported an increase in income as a result of the Beli Lokal campaign. A majority also increased the number of people that they employ since the collaboration began.
As part of a commitment to support the development of Indonesia’s digital talent, TikTok has also worked with GoTo and Gadjah Mada University to partner in the establishment of the GoTo x TikTok x UGM Technology Center – a digital talent development center at UGM’s Innovation and Creativity Gallery. The partnership will facilitate an internship and employee exchange program, through which participants can grow their skills by being assigned to different TikTok offices around the world.
Furthermore, TikTok and Tokopedia have initiated an MSME empowerment program through the #MelokalDenganBatik campaign, involving hundreds of local batik entrepreneurs in Solo and Yogyakarta. This initiative aims to support small businesses by providing them with production support technology, including advanced production tools, insights on trends, and inventory management.
These initiatives are part of a broader strategy to transform Indonesia’s e-commerce sector, creating millions of new job opportunities over the next five years, particularly in the MSME sector.
Goldman Sachs acted as the financial advisor to GoTo Group on this transaction.
About GoTo Group
GoTo is the largest digital ecosystem in Indonesia. GoTo’s mission is to ‘empower progress’ by offering technology infrastructure and solutions that help everyone to access and thrive in the digital economy. The GoTo ecosystem provides a wide range of services including mobility, food delivery, groceries and logistics, as well as payments, financial services, and technology solutions for merchants. The ecosystem also provides e-commerce services through Tokopedia and banking services through its partnership with Bank Jago.
TikTok is the leading destination for short-form mobile video. Our mission is to inspire creativity and bring joy. TikTok’s global headquarters are in Los Angeles and Singapore, and its offices include New York, London, Dublin, Paris, Berlin, Dubai, Jakarta, Seoul, and Tokyo.
Source: GoTo Company Press Release