PT GoTo Gojek Tokopedia Tbk (GOTO) Earnings Call Transcript & Summary

Hello, everyone. This is Joel Ellis, Head of Investor Relations. Welcome to the PT GoTo Gojek Tokopedia Tbk Fourth Quarter and Financial Year 2024 Earnings Conference Call. Please be advised that today's conference is being recorded. On today's call, Patrick Walujo, President Director and Group CEO; and Simon Ho, Group CFO, will deliver prepared remarks. Following the commentary, we will open up the call for questions and be joined by Thomas Husted, our Vice President, Director, and President of Financial Technology; Hans Patuwo, our Chief Operating Officer; and Catherine Hindra Sutjahyo, our President of On-Demand Services. We would like to highlight that the information presented today has been prepared solely based on unaudited consolidated selected financial information for the 3-month period ended December 31, 2024 and 2023. We have also submitted and published our consolidated audited financial statements as of and for the 12 months ended December 31, 2024. 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 presentations, which can be found on our website. Our reporting currency is the Indonesian Rupiah, and we will denote the U.S. dollar equivalent by applying an exchange rate of IDR 16,162 to USD 1, based on the middle rates published by Bank Indonesia as of the end of December 2024. We will refer to pro forma figures to facilitate like-for-like sequential and year-on-year comparisons of our performance following the closing of our announced agreement with TikTok and a deconsolidation of GoTo Logistics. These pro forma figures assume that Tokopedia and GoTo Logistics were deconsolidated on January 1, 2023. 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 Patrick.

Thank you, Joe. Hello, everyone, and thank you for joining us today, as we share our Q4 and full year 2024 results. Throughout 2024, we remain focused on finding fresh and effective ways to win the intense battle for the Indonesian consumer. As a result, GoTo delivered its strongest ever -- its strongest year ever in 2024, breaking all-time highs for GTV, revenue, adjusted EBITDA and margins with consistent quarter-on-quarter improvement across each of these key metrics. Our Fintech business also continued on its record-breaking run. We expanded our loan book to a new high, while also closing the year with the highest number of monthly transacting users and GoPay app transactions we have ever seen. This progress meant we surpassed our target to achieve group level adjusted EBITDA breakeven for the year posting IDR 386 billion or USD 24 million. At the same time, our Fintech segment became adjusted EBITDA positive in the fourth quarter as per our guidance. Our ecosystem strategy and our culture of continual innovation are at the foundation of our performance. By innovating both operationally and at the product level, we are able to deliver more targeted and personalized services that match customer needs. This approach enhances customer experience, strengthens merchant partnerships and boost revenues. For example, in ODS, we deepened our penetration of GoFood Express delivery and higher-value mobility services, empowering users to choose what matters most to them, time or cost. At the same time, GoPay in its first full year as a stand-alone app gained millions of users, while the NPL and lending integration boosted mass market reach. Its service strengthens our ecosystem, creating synergy that fosters multiproduct adoption and deeper user engagement while improving user acquisition efficiency. This ecosystem synergy has driven increased usage of our services with monthly transaction users -- transacting users up 16% over the course of the year and 22% year-on-year in Q4 alone. This, in turn, has supercharged our top line with group core GTV hitting an all-time high of IDR 79 trillion or USD 4.9 billion, growing 66% year-on-year in Q4 and 58% over the full year. Gross revenue also hit all-time highs, reaching IDR 5 trillion or USD 307 million, an increase of 28% year-on-year in Q4 and 30% over the full year. We are innovating across the business to lower our unit costs and boost efficiency in areas like delivery, incentives and cloud computing, while our large language model, Sahabat AI, is poised to deliver a significant cost advantage across many enterprise use cases. Disciplined cost management has driven down recurring cash fixed costs as a percentage of GTV and revenue year-on-year in 2024. Taken together, these measures bolster operating leverage and reinforce our path to sustained profitability. I will now move on to our business units, starting with Fintech. In 2024, our Fintech business positioned from a driver of ecosystem growth to a driver of both growth and profitability. Notably, the success of planning initiatives popped out the segment to positive adjusted EBITDA in Q4, a full year ahead of previous guidance. This success was due to two key innovations the stand-alone GoPay app as well as the expansion of our consumer loan offerings. Turning first to the GoPay app. Since launch, the app has proven to be a powerful tool for user acquisition and deeper customer engagement, driving a 35% year-on-year increase in the number of monthly transacting users across the Fintech business to 20.2 million as of the fourth quarter. Ultimately, the stand-alone GoPay app serves as both a fund or for new customers and the growth catalyst for our ecosystem of financial products. By launching a lighter stand-alone GoPay app tailored to a broader user base, we significantly expanded our audience. As a result, adverse money transactions per user declined by 18% year-on-year in Q4 as customers increasingly use GoPay as their primary digital financial tool. Moving on to consumer loans. Our loan book expanded by 172% year-on-year in Q4, driven in large part by the growth of users across our ecosystem. This loan book growth has been driven credibly as our ecosystem data, which provides deep insight into our users, allows us to price risk effectively and maintain stable delinquency rates, even as our lending portfolio continues to scale this quarter. Another advantage that we have is low acquisition cost for new borrowers as these users are already part of our ecosystem. This significantly reduces our marketing spend compared to those typically required by nonecosystem learners. The result is a lending business that not only grows quickly, but do so with strong margins and manageable risk. This structural advantage has contributed significantly to our Fintech businesses profitability, and we will continue to drive the responsible growth of our loan book over the course of 2025. Moving now to On-Demand Services. In Q4, our on-demand services strengthened market leadership, achieving robust top line gains in both transport and food delivery. This strong performance produced a record-breaking quarter of adjusted EBITDA, which reached IDR 267 billion or USD 17 million, underscoring our ability to balance both growth and profitability. We successfully optimized incentive spending in 2024, driving a 28% year-on-year increase in ODS contribution margin to IDR 3.4 trillion or USD 209 million, an improvement of 61 basis points year-on-year as a percentage of GTV. As margins sequentially improved in the fourth quarter, we ended the year with real momentum, fueled by operational excellence across our ODS business. A key driver of our success has been ongoing product innovation and the optimization of our product mix. We continue to refine our offerings, so customers can choose to save time or save money, including expanding premium services in both food delivery and mobility. Express food delivery orders, for example, contributed 28% of total food GTV in the fourth quarter just 1-year after launch. We have optimized the Gojek app to deliver more targeted services across our user base. These improvements ensure that we are providing the right service to the right user at the right time. And as a result, we are seeing more users than ever, engaging with a wider variety of our products. In addition to revenue growth and premium offerings, our margin expansion has been driven by several product innovations. I will highlight three of them here. Firstly, our Special Delivery Fleet Program, assigns driver partners to operate exclusively within high demand areas, leveraging advanced data analytics, algorithms and order backing to channel a higher volume of orders their way. This approach reduces delivery costs, which is passed on to consumers, boost driver partners income and improves our profitability. Secondly, our advertising business is becoming a more significant driver of profitability. In 2024, advertising revenue rose 92% year-on-year, transforming what was once an early-stage offering into a significant revenue stream. This momentum carried through to the fourth quarter, as the advertising business' share of food GMV rose from 1.1% to 1.6% within just 12 months. These gains reflect our deliberate investments in ad relevance, soft-serve tools and return partnerships. We expect the advertising segment to continue growing faster than our already solid food GMV trajectory, and our expectation is to move the business significantly closer to global benchmarks over the next 3 years. Thirdly, merchant-funded promotions have been significantly enhanced through our ongoing product innovations, enabling more detailed targeting and segmentation, so merchants can reach the right customers. This creates real value for merchants while also delivering more relevant offers to users, elevating the overall customer experience. As a result, we have seen [indiscernible] merchant participation and willingness to invest in promotions with merchants' total spend increasing by 190% year-on-year in 2024. We are working especially hard to improve the return on investments for merchants, increasing their propensity to participate in funding promotions. This strategy leads to a reduction of our own incentive spending, while maintaining strong returns from merchants. At the group level, technology remains central to our ability to scale and enhance our business. In line with this focus, AI will increasingly shape our ecosystem, enhancing user interactions, helping merchants to operate more efficiently and redefining how people experience our services. At the heart of this evolution is Sahabat AI, an open-source large language model developed primarily in Bahasa, Indonesia, along with other local languages to address local needs. Launch in November 2024, proved a partnership with Indosat, NVIDIA, AI Singapore, and multiple Indonesian institutions including Kompas Gramedia and the University of Indonesia. Sahabat AI has demonstrated very strong results in numerous benchmark tests for Indonesian language-specific tasks, showing high accuracy when reading and interpreting local text compared with global AI models. We plan to leverage Sahabat AI for a range of applications. Currently, we are experimenting chatbots and optical character recognition, or OCR, for merchant menus, both aimed at enhancing customer experience and simplifying merchant onboarding. Ultimately, we see developing our own AI capabilities as a strategic advantage, reducing costs, improving user experiences and fostering local tech talent over the long-term. Our transition to Alibaba cloud and Tencent cloud announced in September 2024, exemplifies how we are refining our technology infrastructure to reduce costs and enhance data sovereignty. The migration is on track and set for completion within Q3, and we will reduce our cloud expenses by more than 50% compared to pre-migration levels, with the financial impact beginning to be realized in Q4 2025. Looking ahead, our team remains focused on 3 growth drivers that will strengthen our top line and drive margins, while maintaining our market-leading position in Indonesia. There is significant headroom for margin improvement, and we anticipate an upward trajectory over the course of 2025. In Fintech, our GoPay app will continue to fill expansion by bringing millions of new users into our ecosystem, while our lending book is set to exceed IDR 8 trillion or USD 495 million by the end of the year. By leveraging this ecosystem data and prudently deploying risk-based pricing, we will scale our lending portfolio while maintaining strong risk adjusted returns, driving further EBITDA growth. In On-Demand Services, we are running top line growth and margin improvement by targeting high spending segments and optimizing incentive spending. Meanwhile, we have enhanced margins on our affordable products. We serve as a panel for new users who can later transition to higher-value offerings across our ecosystem. By optimizing our product mix, while managing promotional costs more effectively, we have positioned ourselves for sustained revenue and earnings growth as we move into 2025. In summary, 2024 was a landmark year for GoTo, during which we demonstrated the strength of our integrated ecosystem and our commitment to operational excellence. Our strategy is working. As a result, we are today providing ambitious new profitability guidance for 2025, as we expect adjusted EBITDA to be in the range of IDR 1.4 trillion to IDR 1.6 trillion or USD 87 million to USD 99 million for the full year. Thank you for joining us today. I will now hand over to Simon, who will provide a review of our financial performance.

Thank you, Patrick. It's a pleasure to speak with everyone today and thank you all for joining our call. We ended 2024 on a high note with robust revenue growth, disciplined cost management and our first full year of positive adjusted EBITDA. In Q4, group gross revenue grew by 28% year-on-year, contributing to a 30% increase for the full year. Meanwhile, we reduced recurring cash fixed costs by 3% year-on-year, demonstrating our commitment to efficiency. As a result, group adjusted EBITDA reached IDR 386 billion or USD 24 million for the full year. And in Q4, it surged 348% year-on-year to IDR 399 billion or USD 25 million. This strong financial foundation places us on solid footing to continue executing our strategies in 2025. We maintained a strong cash balance. As of December 31, 2024, we had IDR 21 trillion or USD 1.3 billion in cash, cash equivalents and short-term time deposits. Returning value to our shareholders remains a top priority. And as of the end of February 2025, we had repurchased around 23.6 billion shares amounting to approximately IDR 1.5 trillion or USD 91 million. Additionally, we completed the cancellation of treasury shares in November as expected, reducing the number of Series A shares in circulation by approximately 10.3 billion shares. In E-commerce, our service fee revenue in the fourth quarter from Tokopedia was IDR 204 billion or USD 13 million. Excluding VAT, the net total amount was IDR 183 billion or USD 11 million. This brings the total service fee revenue for the year to IDR 622 billion or USD 38 million, excluding VAT. Looking ahead, leveraging the foundation established in 2024, we are well positioned to drive top line growth, while maintaining disciplined cost management to further accelerate profitability throughout 2025. Finally, before we open the call to questions, I'd like to address the Indonesian government's guidance regarding holiday bonuses for driver partners. As a homegrown Indonesian technology company, GoTo recognizes that driver partners are the foundation of this business, and there well-being is directly tied to the sustainability of the company. GoTo generates significant income for driver partners amounting to a total average of IDR 1.5 trillion per month. While the Indonesian government acknowledges that driver partners are not employees, GoTo fully support its guidance to provide an additional holiday bonus during Hari Raya to driver partners who are productive and high performing. The company will manage the additional costs within its existing plans. With that, we would now like to open the call to your questions. Joe, please go ahead.

[Operator Instructions] First question is from Ryan Davis at Citi.

Congratulations for the good performance. I'd like to ask several questions. For the first one, I think would you be able to walk us through the competition landscape, especially in the On-Demand Services? Second question would be quite interested to understand how the company will be able to provide any target for the e-commerce service fee growth in 2025? And then third, I think you have actually provided a full year 2025 guidance of group adjusted EBITDA of IDR 1.4 trillion to IDR 1.6 trillion. Would you mind to elaborate what is the outlook for the Fintech and also the On-Demand Services segment, especially in terms of growth and also profitability? Checking if you'd be able to provide medium-term guidance on EBITDA margin if possible? And also lastly, there remains some concern, I guess, across asset quality, on the banks that have been coming down in the past few months. Are you actually worried about the quality of the loan book itself?

It's a long list of questions. Can we just first text of the questions. Joe, can you just to -- make sure that we can address all the questions.

Sure. So first, we have competition landscape in On-Demand Services; second, E-commerce, so our target around the E-commerce segment. Three, regarding our guidance of IDR 1.4 billion to IDR 1.6 trillion. So what's our outlook for the Fintech as well as the ODS segment in 2025 in terms of growth and profitability. And then likewise, our asset quality -- around the asset quality for our Fintech business as well.

Okay. Maybe I'll let Catherine, the President of our On-Demand Services to answer questions regarding competition.

Thanks, Pat. Ryan, good to meet you again. Thank you for the question. So let me address this one. As you know, we recognize that this is a highly competitive space. But as Pat mentioned earlier in the remarks, right, we are confident in our market position. We are in 2024, not only maintained, but we actually strengthened our market leadership as well here. So this is where we are -- believe we will continue to strengthen as well going forward. I would like to highlight here basically how we see this is -- this is the power of our ecosystem. This is in GoTo, right, it's not just about the ODS services, where of course, we will remained committed to maintain our portfolio strategy between our premium, regular as well as the affordable product strategy, but also this is coupled with our robust Fintech arm. As you see earlier, right, by us combining this On-Demand Services products with our most prevalent e-wallets, GoPay is one of Indonesia most preferred wallets as well as integrated lending surfaces. This is where we bring the flywheel. This is where the synergy really added value to our users through this combination of the element in our ecosystem. So as mentioned, we continue to strengthen our market leadership in the three core ODS verticals. This is our 2-wheeler, our 4-wheeler transport as well as our food delivery. This leadership actually underpin our ability, as Pat mentioned as well in balancing growth and profitability. As you see in the last few quarters, we continuously showing how we managed to balance these two well. So going forward, how we are seeing, we will continue to establish this leadership is by a few key initiatives. It was mentioned briefly as well, if I may summarize a little bit. A lot of the innovation on our products, on our technology lynching on that. Number one, for example, is our Special Delivery Fleet. This is our innovation on our logistic cost saving. This is not only enable our customer to be able to get -- to be able to enjoy affordable kind of pricing, but also to maintain, if not boost, our driver partner product earning. That's number one. This is, of course, using our system and technology. Second one is our effort pricing business. Similarly, we are using our data, we're using our ML technology and stuff, how we are growing this business. As you see, it is now growing faster than the underlying GMV and becoming a very significant revenue driver. Third one is our merchant-funded promo. We know we have to continue to improve our margin. So one of the balancing act we have been successfully doing is basically by inviting our merchant to do their merchant-funded promotion as well. Of course, doing this, we have to make sure that they are having a good ROI as well. And as you see in our result, actually merchant participation on this MFP, we call it, as well as the retention for them to keep coming back and doing more and more of this proof that our product has shown a good result for them. Last but not least, we understand incentive remains to be one of our big cost items. So we will continue to optimize this leveraging technology. We invested a lot on our data and our kind of a recommendation engine and on our kind of optimization engine as well to continue work on this one. So yes, this is a competitive kind of a landscape. But having said that, through my answer, I hope you can say that we are very well positioned. We are very confident for us to continuously committed to our sustainable and profitable.

Thank you, Catherine. I will then ask Simon to address the questions about the e-commerce and also the guidance for profitability this year.

Thank you. So the e-commerce front, I just wanted to, first of all, remind everyone that our 25% stake in Tokopedia means that we don't actively manage that business on a day-to-day basis. During the course of 2024, you'll see that we received a service fee of around USD 39 million, and this is over the 11th month period, which is after the Tokopedia transaction. We would -- looking into 2025, we would expect that the combined Tokopedia and TikTok shop business to grow and also improve its market share and at the same time, improve profitability. I think those are currently the expectations for that business. Now moving on to your next question, which is about the 2025 guidance, of course, just providing a bit more color below the group adjusted EBITDA target of IDR 1.4 trillion, IDR 1.6 trillion and what that may look like in terms of some of our expectations between the ODS business and the Fintech business. So starting off with ODS first. We -- our expectation or our thinking currently is that the overall market for the ODS business will likely grow in the sort of low mid-teens range in Indonesia. Now I have to caveat that the global macro is looking a little bit uncertain right now. So I think we need to obviously take this into account. And within that, our goal is to -- we're aiming to match or exceed this market growth rates overall. So we will look to continue to strengthen our market leadership across each of the on-demand verticals in 2025. And also at the same time, we will -- as Catherine just highlighted, we will going to improve margins and some of those levers, initiatives, obviously, we've discussed, including logistics costs, advertising revenues, merchant-funded promotions and also optimizing our incentives into 2025. And if I look at the adjusted EBITDA for ODS, we -- our thinking right now is to -- we're going to aim for at least IDR 1.1 trillion in 2025. That is the adjusted EBITDA for the ODS business. And now if I may turn to the Fintech side of the business. Obviously, some of the expectations we're looking for here on the consumer payment side, GoPay, we will look to continue to onboard millions of new users and expand our overall Fintech ecosystem. As on the loan book, we've covered earlier, our guidance on loan book remains intact from what we gave in the last quarter, which is going to be more than IDR 8 trillion -- sorry, IDR 8 trillion by the end of 2025 compared to the IDR 5.2 trillion at the end of 2024. Our delinquency rates currently remain stable, and I'll let Tom address that in the next question. And overall, for the Fintech business, we're expecting adjusted EBITDA in 2025 of at least IDR 300 billion. And I hope that helps to give more color in terms of the two main business segments that we are expecting in 2025.

Thank you, Simon. Tom, would you be able to answer the question on asset quality?

Sure. I'm happy to do that. Ryan, thanks for the question. It's an especially good one right now, given the market dynamic that we're in. But as a team, I can assure you that we are closely following the macroeconomic trends in Indonesia and globally, and as well as the asset quality of our competitors and the big banks. Fortunately, our situation has been a little bit different. We -- in Q4, we were able to grow our loan book by 20%. And at the same time, we did not see any material deterioration in credit quality. And we've been thinking about this quite a bit, and I think there's a number of factors that are really working in our favor. First, we have a different ecosystem, and we think it provides a very unique data set, especially for the consumer lending business. And I want to highlight that the success of the GoPay app in 2024, which was really the first year that was fully launched and scaled significantly launched a bunch of new products on that. So now you have multiple products on the GoPay app, and that makes our data set even better. Secondly, on our risk model, it's dynamic, and we can adjust it relatively quickly to market changes. And on top of that, we're constantly running lending experiments to validate the risk model output, and making adjustments based on those experiments. Thirdly, and I think this is another thing that sets us apart from maybe some of the other lenders, not our competitors, but some of the more traditional lenders. Our loan book has a fairly short duration than what you typically see, especially in banks. The average life of the portfolio and this would be excluding the vehicle financing we typically see around 3 months of an average life. And this is important because we can make quick changes if we see some worrisome credit signals in the future. And the way I think about it is if we were to significantly tighten our credit standards in the light of say -- some really negative signals coming out, then the immediate impact would be one to our loan growth, but the loan quality would probably be okay as the runoff on the portfolio is very fast, again, due to this short duration. So it's been an interesting journey, and I think this lending business has really made a fundamental change to GTF in 2024. A lot of work. And finally, I want to say that on the lending business, this remains highly profitable even in this market today. And the team is highly focused on execution of this business in 2025. And as Simon alluded to, we're guiding to a loan book of more than IDR 8 trillion versus the IDR 5.2 trillion that we closed '24.

The second question is going to be from Ari Jahja from Macquarie.

Well done for a record-breaking quarter. And first, on the merger news flow. What are your thoughts on the recent media reports regarding the possible corporate actions in involving Grab? And then second set of questions On-Demand Services. How do you see the growth outlook for mobility as compared to food delivery this year? And can you also please share updates on how the subscription services have contributed to growth? I'll start here.

Thank you, Ari. In regard to your questions about present media reports, we are aware of recurring media speculation about this potential M&A discussion. I would like to refer analysts and investors to the disclosure that we made on the Indonesian Stock Exchange in February this year when we were asked by the Indonesian Stock Exchange about the rumors, and nothing has changed since then. We continue to focus on our business execution. The market is still has a lot of potential. We strive to continue to strengthen our market leadership in Indonesia, grow our Fintech business, to become the most popular financial solution in Indonesia. And we also are focusing to improve our profitability. It's a lot of work. We are confident that -- we are confident in our ability to deliver, and we will continue to stay focused on that. We cannot comment further on market rumors and speculation, right? And then the next question about on-demand services, subscription service. I'll have Catherine address that.

Thanks, Pat. Ari, thank you for the question. So I'll address one by one. The first one, your question on the growth of the mobility and deliveries. I think Simon mentioned it earlier that we remain committed this year from -- for mid-teens growth. This is continuing our last year growth as well. As I mentioned, this is -- our goal is to strengthen -- further strengthen our market leadership. So this is across the board of all of our key products. This is namely the 2-wheel urban transport as well as the food deliver -- as well as the deliveries. I would like to highlight here maybe to your question, how do we see this? So we are going even deeper this year more granular in how we are seeing the of the potential growth. I think Patrick mentioned a little bit earlier about the focusing on the customer segment, the higher spending customer segment in this product. As you see, our premium products has a great kind of a track record trajectory of the growth. At the same time, we are also continuing to build the lever, right, to also acquire new users still as well. So yes, we are summing up, we are -- remained growing on the mid- to high teens at the rate for both our products. On your question on the subscription. Thank you for asking this question. This is definitely one of the highlights of 2024 in terms of the product that we launched and managed to grow in 2024. Gojek PLUS subscribers rose 70% in the past 6 months. So this is -- if you remember, sometimes in last year, we expanded the subscription product we have from -- originally when we launched it only to cover food product, now is to all of the product portfolio in Gojek, right? So this is reflecting a very strong kind of the quality of our users as well. What is really interesting about the subscription is basically it generate the subscriber, the user who is subscribing to Gojek PLUS. They generate around 3x higher GTV than nonsubscriber. And we spent a lot of time last year to continuously improve the profitability of these users as well, right? So because of -- basically, we are deepening the wallet share of these users by encouraging them to do more frequent kind of usage. We cross-poly between different products, some user previously only used transport maybe because of the Gojek PLUS, they started trying out food or the other way around. And this is basically improve the wallet share of the users and thus improve their margins as well in our portfolio -- in our ecosystem. Another one that's really interesting here, I would like to highlight the subscription also proved to be a really, really good tools for us to improve retention of these users. As mentioned earlier, this is a very competitive landscape here, having effective retention tools is very, very important. This is what so far Gojek PLUS has been successful in helping us to do so. So yes, I think going forward, we will continue to focus on the furthering the subscriber's growth. We believe there is still room in that. At the same time, further harnessing the profitability of this transaction of this user segment. And we are also currently going to be expanding the Gojek PLUS products partnership with other offerings as well. Yes, that's I believe I answered both of your questions.

Our third question will come from Adrian Joezer of Mandiri Sekuritas.

Congratulations, Patrick and Simon and the GoTo team for the great results. So three questions from myself. The first one is, I think you did mention about the a bit of the guidance for the ODS, right? So just wondering, I mean, what's going to be the medium-term target for the EBITDA margin? Because I think when I look into the Q4, you have actually reached about 1.6% EBITDA margin. But if I actually take a look into your guidance for '25, which is low to mid-teens. And if we assume 12% to 15%, and with IDR 1.1 trillion EBITDA, that means you're assuming a flat margin of 1.5% to 1.6% for this year. So that's a question on the margin. And the second one is actually, I think you did touch a lot on the premium offerings and the trend. So my question is with regards to the mass market and the affordable products. Can you actually provide some updates? And the last question is actually just a bit of color on the loan book that is being channeled to Bank Jago. And going forward, how should we actually see the contribution to your loan bookings through Jago?

Thank you, Adrian. I have Simon address your question about EBITDA margin in the medium term for ODS. And then I'll ask Cath to talk about our mass market, affordable strategy. And Tom will be answering your question about our operation with Bank Jago. Simon?

Yes. Thank you. Thank you, Adrian. We've -- I mean, you make a very good observation there. I would say that we did obviously stress that those are sort of our minimum goals and targets. So hopefully, I think as the year progresses, we will continue to execute on those -- those drivers that we've been highlighting, and we would obviously continue to see some expansion -- continued expansion in the adjusted EBITDA margin for the ODS business. Look, I think we don't provide -- haven't provided any long-term targets. But I think directionally, what we're trying to achieve, I hope, is very clear. We have seen obviously, margin improvements for several consecutive quarters right now, and we are also expecting directionally continued improvement over the course of 2025. So -- we do hope that as we continue to innovate on our products, achieve operating efficiencies and some of the strategic initiatives continue to take hold that we will continue to expand our margins in the ODS business in both the mobility and the delivery side. I hope that helps to give a bit more color to your question, maybe.

Yes. Thank you. I'll answer your question on the mass market affordable strategy. Thank you. Thank you for asking this question. You're right. So I think I hinted on it previously. We still believe that -- we do believe, and result has shown as well to prove our strategy of this -- the effectiveness of what we call the portfolio approach, right? As you know, we talk about premium product. We talk about regular product. We talk about the mass market/affordable products. Again, the way we see it is this is not just talking about the user segment, but also the use cases. I think I mentioned last time that we truly believe that, for example, during lunchtime, I just want to save money. I will go for a more affordable product. But on weekend, I want to splurge, I'll go for the premium product. And as you see, both of these products has continued to grow in our portfolio. Pat mentioned about the Food Express, for example, which is now contributing to 28% of our food businesses. Similarly, on our affordable product in transport also continued to grow. One thing that we are being very, very mindful here as well. This is our test to continue balancing between the group as well as the profitability. So very happy to share here as well, including our mass market affordable products that actually the margin improvement quarter-on-quarter has been there as well. This is being done by us using our technology to do better than getting, better kind of segmenting of this product to the customer as well as the use cases that we are today. One thing I also would like to highlight here, the one that's really interesting is, we believe this portfolio strategy is actually playing to the ecosystem synergy. What do I mean by that, right? About 70% of the users who are using affordable service is basically it's become an entry point for them. The moment they start using our services, they start upsell, cross-sell using all other products, this is where deepening, again, I mentioned about the wallet share, depending their wallet share and thus improving the user level profitability as well. So again, we are seeing this different product portfolio is complementing each other. We are focusing on how we can be better targeting on them. So as an overall, it's become a better engine of growth as well as the profitability there.

Thank you, Cath. Tom, would you like to give an update of our working relationship with Bank Jago.

Yes, sure, happy to do that. Adrian, it's good to hear your voice again, and thanks for the question. In regards to Jago, I think it's important to be honest. I think all sides acknowledge that we had a relatively slow start to our partnership. However, I think we're really gaining momentum now. And to be clear, Jago remains our primary bank partner, and there's really two reasons for that. Okay. First, I mean, as you know, we own 21% of the bank and have held that position for some time. And secondly, what people have not seen in the background is that we spend a lot of time and effort doing deep product integrations with the bank. And probably the most important one is the loan channeling systems that we have at Jago. And when I step back and kind of think about 2024 and the journey we took in 2024, it's clear that it was really a breakout year for the GoTo lending business. And frankly, along with that, it was a test of the Jago channel systems. So just to throw some numbers out last year, we grew the lending book by 2.7x, and in aggregate, more than 70% of those loans were channeled to Jago. Very few hiccups smooth, and we've worked quite well with the team over there. So at this point, my observation is that everything has worked well. I expect the relationship to be ongoing and to be positive, and we continue to expect to channel the majority of the loans to Jago going forward, even as we kind of enter into this 2025 growth season. I hope that answers the question, Adrian. Thank you.

For our final question, we will open up the line for Pang Vit of Goldman Sachs.

Two questions from my side. Number one, just wanted to go back to the questions around the macros, right? I think not just on the loan's perspective, but just wanted to ask you about the latest trend that you see in terms of consumer spending and everything. I think there's been a growing concern overall from the investor looking into Indonesia across segment that there might be some weakening in the spending. So if there's anything you could share around that would be helpful. That's question number one. Question number two, going back to the questions on the On-Demand segment. I think one thing that we are just trying to understand is how the market share shift was in last quarter. I think if we're looking at your quarter-on-quarter growth last quarter, it seemed to come in at low single digit versus your competitor that seem to deliver in high single digits. So I'm wondering whether there's anything that you see in particular that could explain the difference here?

Okay. Thank you, Pang. Good to hear your voice. On the macro, I think we are all watching this very carefully at this moment. We acknowledge that the global macros seems to be causing concern, something that we have to closely monitor. I think what I can say is that based on our 2025 early results, the business performance has met our expectations, just at the seasonality and all that. This is -- again, this is something that we are monitoring closely. And our business plan and our guidance, we believe, is quite well thought of considering all these macro risks. And we will react -- we are ready to react quickly if there are reasons for us to be concerned. And then the second question is about market share. We believe that we remain to be market leaders in On-Demand Services across our different products. And that is the most important thing. We balance our growth with profitability and fluctuation 1% or 2% is something that we monitor. But again, it's about balancing between growth and profitability. So I think that's all I can say at this moment.

Perhaps can I actually just ask one quick follow-up. You mentioned earlier in the opening remarks around Ramadan bonus. Just wondering whether there's any further color you can provide in terms of how this may impact the margin trend coming into this first quarter.

I think what Simon mentioned reflects the whole information we have so far, and as Simon mentioned, the holiday bonus is designed for our most productive and best-performing driver partners in the ecosystem. And so far, we believe that the impact is within all the guidance we have provided. And until further notice, I think that's all that we can share at this moment.

Thank you very much, Pang, and thank you, everyone, for participating in the call. With that, we will call the session to a close. Have a good evening.