Sea Ltd. and GoTo Group, two of Southeast Asia’s largest internet companies, are embarking on fresh layoffs as the region’s once high-flying tech leaders retrench to focus on profitability over growth.
Singapore’s Sea is cutting fewer than 500 jobs at e-commerce unit Shopee in Indonesia, a person with direct knowledge of the matter said, days after the company reported a surprise first-ever quarterly profit helped by last year’s extensive firings. Indonesia’s GoTo is reducing 600 jobs as it reorganizes its business.
The regional heavyweights, along with peer Grab Holdings Ltd., are trying to convince investors of their long-term prospects in the face of a possible recession. The companies, which for years enjoyed rapid growth, are now putting profitability first as rising interest rates and elevated inflation make it harder to get consumers to spend more on online shopping and entertainment, food delivery and ride-hailing.
Sea already cut more than 7,000 jobs last year as layoffs rocked tech firms around the world, while Jakarta-based GoTo reduced 12% of its workforce.
Sea’s latest cuts affect full-time and contract workers in shopping unit Shopee’s customer service team in Indonesia, the person said, asking not to be named as the information is private. Chief Corporate Officer Yanjun Wang told analysts on Tuesday’s earnings call that Sea doesn’t foresee any further major changes with regards to headcount.
Southeast Asia’s largest internet firm racked up its biggest single-day gain in months on Tuesday after reporting the surprise profit — energizing investors hoping the company will pull off one of the biggest turnaround efforts the region’s fledgling tech sector has ever witnessed. Its shares were down about 1% in pre-market trading in New York.
GoTo’s reductions are part of a shake-up that will include a merging of certain units and a winddown of parts of the Mitra Tokopedia business, which works with small vendors in Indonesia, the company said Friday. The move comes a month after Indonesia’s biggest tech company undertook its biggest management reshuffle, consolidating power under Chief Executive Officer Andre Soelistyo.
The CEO said at the time the reshuffle was aimed at accelerating GoTo’s path to profitability. The shakeup included new leaders for three key business units: Melissa Juminto as president of e-commerce; Catherine Sutjahyo as president of on-demand business; and Hans Patuwo as president of fintech business.
GoTo will “scale down or de-emphasize businesses and projects deemed to be non-core, while prioritizing current business needs,” the company said in a statement Friday.
Tokopedia, the company’s e-commerce arm, launched rural commerce through the Mitra Tokopedia app in 2018, separate from its online shopping app for consumers. Through Mitra Tokopedia, mom-and-pop kiosks known as warungs were able to order instant noodles and other goods. While the platform allowed them to help customers without access to the internet to pay electricity bills and do other transactions, it led the company to burn cash.
What Bloomberg Intelligence says:
GoTo’s plan to cut 600 more jobs, having already cut 12% of its workforce, might ease pressure on cash flow that’s needed to sustain the company until its planned adjusted Ebitda breakeven by 4Q23. GoTo’s cash pile could last five quarters given $ 2.2 billion of cash liquidity and $ 450 million of average quarterly operating-cash burn, our analysis shows, vs. Sea’s 21 quarters and Grab’s 17 quarters.
