Good day. Thank you for standing by. Welcome to the PT GoTo Gojek Tokopedia 3Q 2022 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ernest Fung, Head of Corporate Development and Investor Relations. Please go ahead. Thank you, Mel. Hello, everyone, welcome to GoTo Group's third quarter and nine-month 2022 earnings conference call. Joining us today from GoTo Group senior management are Andre Soelistyo, President, Director, Group CEO, and Co-founder; Patrick Cao, Group President; and Jacky Lo, Group CFO. Following the management's prepared remarks, we'll open up the call for questions. As a reminder, today's discussion may contain forward-looking statements about the group's future business and financial performance. These comments are based on assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements, including as a result of the factors described in cautionary statements and risk factors included in the company's earnings release regulatory filings to the OJK and IDX, by which any forward-looking statements made during this call are qualified in their entirety. This call also includes the discussion of certain non-Indonesian financial accounting standards measures such as gross revenues, contribution margin, and adjusted EBITDA. We believe these measures can enhance investors' understanding of our business performance when used as a complement to Indonesian financial accounting standards measures. Furthermore, to assist investors in comparison of our quarterly and half-year results, we have included accounts on a pro forma basis as if GoTo Group was formed on January 1st, 2021. During this earnings call, we will be going through our results of operations and earnings presentation, which can be found on our website. For more information and additional disclosures on our recent business and financial performance, please refer to our... I think we lost Ernest, but let me just continue on Ernest's opening. Thank you, everyone, for joining. Let me just start with the business highlights. Hello, everyone, and thank you for joining today's call. As we have mentioned in previous quarters, our strategy is built around three core areas. Firstly, focusing on sustainable high-quality growth. Secondly, accelerating our path to profitability. Thirdly, product-led growth bolstered by our ecosystem synergies. I'm pleased to say that we have made significant progress on all three fronts, with a particularly strong performance on accelerating our path to profitability. Let me begin by providing a quick overview of the key results in each of these areas. With respect to sustainable growth, we continue to demonstrate quality growth as evidenced by our Q3 GTV and gross revenue, with each growing by over 30% year-on-year and 7% quarter-on-quarter. GTV exceeded the top end of our guidance and gross revenue was in line with guidance. These gains were made despite our incentive reductions and growing macroeconomic pressure on consumer budgets. We believe that this was achieved as a result of our product-led focus on high-quality users, which has helped us maintain customer engagement and remain resilient. In Q3, we grew last 12-month annual transacting users by 20% year-on-year, while average spend per user increased by 18% and user transaction frequency increased by 13%. With respect to profitability, I'm particularly pleased to report that in Q3, contribution margin, one of our key profitability metrics, improved even faster than anticipated. In September, our focus on improving monetization and incentive optimization allowed us to reach an important milestone, achieving a positive contribution margin for the whole on-demand services segment several months ahead of target. As a group, our contribution margin reached - 0.7% of total GTV, up from - 1.3% in Q2. This is a 43% year-on-year and 41% quarter-on-quarter improvement, significantly beating the top end of our guidance by 46 basis points. The same improvement can be seen in our adjusted EBITDA. Our ability to manage our OpEx this quarter, combined with the uplift in our contribution margin, resulted in adjusted EBITDA improving by 11% year-on-year and 10% quarter-on-quarter. The progress we have made on our adjusted EBITDA reflects concerted efforts by the team to streamline recurring non-personnel costs. Going forward, on the back of the better than anticipated performance in Q3, we've identified additional levers that will help us to accelerate our path to profitability further. First, given how contribution margin has progressed to date, we are in a strong position to further accelerate our group and segment contribution margin breakeven timeline by one or two quarters compared to what we previously communicated. As we gain more visibility in the coming periods, we will update our guidance to reflect our expectations. Second, we have further identified additional OpEx savings in both personnel and non-personnel costs. The total cost savings identified from these exercises will reduce around 14%-16% on a pro forma basis of our fixed OpEx base year-to-date, excluding share-based compensation and one-off expenses. A significant part of this cost savings will be realized in quarter one, 2023, and the remainder in the following few quarters after that. Jacky Lo will provide more detail on both non-personnel and personalized cost reductions later on during the call. As part of the identified cost savings lever, as we announced last week, we have made the decision to reduce our employee base by around 12%, which in turn impacted 1,300 full-time employees within the group. As a people-centric organization, deciding to reduce headcount is painful for us, but it was an imperative step to support the long-term health of the business as we continue on our mission. I would like to publicly reiterate my gratitude to the employees impacted for their contribution in building GoTo and their dedication in serving our users and stakeholders. We are doing our utmost to help those affected to re-enter the job market and find future opportunities. With all of our cost-saving measures in place, we expect to be able to accelerate our group-adjusted EBITDA breakeven by three to four quarters, roughly 12-1 5 months following contribution margin breakeven. We'll look to provide more detailed guidance on this topic in subsequent quarters. Progress in this area has been rapid, and given the decisive action we have taken to improve margins and set ourself on a course for long-term financial sustainability, we believe our balance sheet is sufficiently healthy to take us to profitability. Our careful management of expenses enabled us to reduce our average monthly cash burn by 13% in Q3 to IDR 1.3 trillion versus IDR 1.5 trillion in Q2. We will continue our disciplined approach to deliver further sequential improvement in cash burn. That said, we will continue to review opportunities to bolster our balance sheet. For example, we have been disciplined with divestments, and we will continue to review divestment opportunities of our non-core assets and investment portfolio. Also, subject to market conditions, we can leverage our June AGMS approval for non-preemptive issuances of up to 10% of issued and paid up capital per annum to opportunistically raise new capital should we judge it to be prudent. Moving on to product-led initiatives. We continue to focus on innovation designed to make our customers' lives easier while deepening user engagement across core products in our ecosystem. GoTo Plus, our pilot subscription program, has achieved over 50,000 subscribers in a short period of time. Based on our preliminary data, Plus subscribers transact and spend more than 5x compared to non-subscribers to date. Perhaps the best example of a product-led innovation that enhances ecosystem synergies is GoPay Coins, our unified rewards currency, which we rolled across the whole ecosystem at the end of June. GoPay Coins allow customers to earn, redeem, and spend points for all transactions within the GoTo ecosystem. For instance, customers can earn points from a grocery purchase on Tokopedia and redeem them when ordering food on GoFood. By the end of Q3, we had issued GoPay Coins to approximately 21% of transacting users, and we have seen promising early results in the first three months. First, GoPay Coins support cross-platform user acquisition with 2.3x higher conversion than non-GoPay Coins incentives. Second, GoPay Coins is more efficient than standalone platform incentives with a 20% lower customer acquisition cost. Third, users of GoPay Coins have 25% higher retention than those who do not. GoPay Coins will be an important strategic product as we work to increase the number of cross-pollinated users on the ecosystem and increase their engagement while providing a more efficient promotion channel. This should be compounded as we improve the GoPay Coins experience and when combined with our cross-marketing and product integration initiatives. Everything that we have achieved with respect to growth can be linked back to our focus in developing products that customers need and that add value to our ecosystem. We look forward to sharing more progress on the behavioral impact GoPay Coins has on customers in the subsequent quarters. Let me now hand it over to Jacky to discuss each business segment in more detail. Jacky, over to you. Thank you, Andre. Good day to everyone who has joined today's call. Subsequent to what Andre shared regarding performance and product highlights, we want to double-click on each business segment, starting with on-demand service. In Q3, on-demand service GTV increased 24% year-on-year and 5% quarter-on-quarter. While gross revenue for on-demand service once again outpaced GTV, growing 31% year-on-year and 8% quarter-on-quarter in the quarter, driven by higher take rate. A big part of our strong showing is the result of returning demand as workers return to the office, students to school, and pandemic and mobility restrictions continue to ease. In turn, mobility GTV grew 111% year-on-year and recovered to 94% of pre-COVID levels. The return to work also helped our GoCar B2B offering, prompting GTV to grow 2.3x quarter-on-quarter. Our GoTransit offering, launched earlier in June, quickly became the market leader in online ticket sales for Indonesia's largest public transportation operator, commanding 74% of railway operator KCI digital ticketing as of the end of September. In September, the Indonesian government reduced fuel subsidies, which led to a 30% increase in subsidized fuel prices. The tariff for two-wheeler-based services will also increase on average by 10%. To date, there has been minimal impact to our mobility business and we will continue to monitor dynamics closely. For our food business, the average basket size remained stable, demonstrating the platform's resilience, a significant feat as more people are dining out. We continue to improve our monetization further by continued improvement on take rate from re-negotiated merchant commission and from platform fees. To continue to adapt to the current macro economic conditions, we have released products for users seeking value options given the increase in their cost base. We launched GoRide Hemat to provide a more economical option for riders in select cities in Indonesia and also GoFood Hemat, providing free or lower aggregator shipping for food orders within a 2 km radius if users are willing to wait a bit longer while maintaining food quality. The biggest improvement we have made in on-demand service is in contribution margin, which improved by 89% year-on-year and 86% Q-on-Q to negative 0.5% as a percentage of GTV in Q3 2022. This represents a 336 basis points quarter-on-quarter improvement. Our efforts in reducing incentives as well as the reduction on product marketing for our food business enable us to achieve a positive contribution margin for on-demand service in the month of September, several months ahead of target. Let us now shift our focus to e-commerce. In the third quarter, e-commerce GTV grew 15% year-on-year and 4% quarter-on-quarter, despite users spending more time offline and other macro headwinds. Average order value and frequency remained resilient year-on-year, driven by growth in the fashion and beauty category as well as digital goods expansion into new regions. The automotive category was also a key beneficiary of the economic reopening, bolstered by auto brands and traditionally offline dealers moving online. Growth revenue continued to grow faster than GTV at 27% year-on-year and 6% quarter-on-quarter. Year-on-year growth was driven by our revised C2C commission scheme implement at the end of June, introduction of consumer platform fees in August, and strong adoption of value-added services such as logistics result in improved monetization. Furthermore, we have reduced our incentive program by eliminating promotional spending on cohorts of unprofitable users through a spending cap. These efforts led to the contribution margin improving by 27% year-on-year and 20% quarter-on-quarter to negative 1.1% of GTV, a 33 basis points quarter-on-quarter improvement. Moving on to financial services, we remain focused on deepening GoPay penetration across the ecosystem and improving the quality of users in the third quarter. This result in a 78% year-on-year increase in GoTo Financial GTV. We are seeing real momentum in this space. Consumer payments saw closed loop user penetration across Gojek and Tokopedia reaching new highs. This means more and more users are using GoPay to pay for products and services within the GoTo ecosystem. GoPay user penetration increased in Tokopedia from 52% to 58% quarter-on-quarter, while penetration increased in Gojek from 55% to 60% Q-on-Q. The quality of these users has also been improving. GTV per GoPay user has increased 47% as of the end of the third quarter versus a year ago, meaning the average GoPay user is spending more and doing so more frequently. As mentioned, we also make progress on our consumer lending program. Since we launched GoPayLater Cicil, our installment product on Tokopedia, we have white-list about 4 million consumers. This complements our existing Pay Later product, Akulaku, which was added to Tokopedia at the end of last year, allowing consumers to pay for services across the ecosystem in one easy monthly payment. We are taking a conservative approach to growing our loan book. Given the current credit cycle and rising rates, we are using the opportunity to put the right risk management infrastructure in place, and we are ready to scale up as needed in 2023 or as economic conditions improve. Meanwhile, FinTech's growth revenue was up 48% year-on-year. Our merchant payments GTV grew faster than consumer payments, which result in a slight decline in the blended tech rate. However, we grew our closed loop penetration and saw increased revenues from lending, post-launch of installments on Tokopedia this quarter. For contribution margin, we improved by over 30% quarter-on-quarter. Moving forward, we'll continue to target improvement in contribution margin through promotional targeting efficiency and shift the revenue mix to higher margin products. As an example, in early October, we pilot cash loans on the Gojek app, our third consumer lending product. We hope to share more detail in the coming quarters as consumer lending ramps up. Let me now focus our financial highlights. We saw positive momentum despite macro headwinds and shifting consumer behavior. To reiterate, GoTo's GTV increased by 33% year-on-year to IDR 161 trillion, exceeding the high end of our guidance range. Our group's overall tick rate remained steady year-on-year, resulting in gross revenue growth of 30% to IDR 5.9 trillion, which is above the midpoint of the guidance range we provided last quarter. We achieved these results while maintaining our market leadership position amid a challenging operating environment. We cautiously reduced incentives to customers, eliminate promotional spend on cohorts of unprofitable users, and further reduce product marketing spend. These initiatives have resulted in a quarter-on-quarter improvement of 61 basis points of our group contribution margin to -0.7% as a percentage of GTV, which is the equivalent of IDR 837 billion in improvement. commendable achievement of the group and significantly exceeding the high end of our guidance range. This quarter, we heightened our focus on rationalization and optimization activities to improve our adjusted EBITDA. OpEx optimization, combined with the uplift in our contribution margin, drove adjusted EBITDA improvement of 11% year-on-year and 10% quarter-on-quarter. In terms of margin, it is 44 basis point improvement quarter-on-quarter to -2.3% as a percentage of GTV, which is the equivalent of IDR 429 billion. As part of our ongoing cost optimization program, we further reduced non-people costs. As Andre mentioned, the total non-personnel cost savings we have identified reached close to IDR 1 trillion as of the end of the third quarter to be realized over multiple years. Approximately IDR 269 billion has already been realized year-to-date, of which about IDR 144 billion is related to fixed OpEx. The largest savings came from technology work streams, including cloud software and apps renegotiated contracts. A large portion is also driven by marketing work streams with consolidated volume for TV, digital media, and KOL purchases across GoTo. Further efficiency has also been realized through reducing personnel costs. As Andre Soelistyo mentioned, we announced our decision to reduce our employee headcount last week. This decision was made in order to optimize our product, operational, and functional team across the organization to enhance efficiency. Such steps are important to establish a more sustainable foundation for our business in order to maximize our efficiency and productivity. As a result of this, as well as additional people-related cost reduction measures, we expect to save between IDR 915 billion and IDR 965 billion annually, represent roughly 14% ongoing savings compared to our September personnel cost baseline, which will result in substantial improvement to OpEx next year. Moving forward, we'll identify areas where we can improve our cost structure while prioritizing profitability and cash flow management. There are also further savings to be realized across outsourcing, office rental, and other initiatives which are currently in progress. On a pro forma basis, the future savings we have identified would bring our current fixed OpEx base down by a further 14%-16%. Before we discuss guidance, I would like to highlight the refinement of our estimation process in allocating incentives to corresponding revenues from customers to present a more representative view of net revenues and sales and marketing expenses when accounting for the offsetting of customer incentives against revenues. We have started refining the estimation process since the beginning of the year, and we completed the refinement in the third quarter, which was then applied to all the transactions starting from January 1st, 2022. This change in estimate result in an increase to both net revenues and sales and marketing expenses of roughly IDR 2.2 trillion in this quarter, including IDR 751 billion and IDR 761 billion impact from the first and second quarters respectively. There was no impact on gross revenue contribution margin or adjusted EBITDA. We look ahead to Q4 and 2023, we will continue to focus on quality users and improve efficiencies to accelerate our path to profitability. The past three years have shown us how unpredictable the future can be. With the backdrop of continued geopolitical and macroeconomic uncertainty, post-COVID headwinds and market rationalization, we expect that growth will moderate as we focus on self-sustainability without relying on additional external capital. For full year 2022, we expect group level GTV to be between IDR 613 trillion-IDR 619 trillion, an equivalent of 33%-34% year-on-year growth, and gross revenue to be between IDR 22.6 trillion and IDR 23 trillion, or 33%-35% year-on-year growth. Our top priority remains unchanged, and that is to accelerate our profitability timeline. We expect to see continued sequential improvement in both contribution margin and adjusted EBITDA in future quarters. On the back of a continued improvement during our strong Q3, we expect Q4 group contribution margin to reach between -0.6% and -0.5% as a percentage of GTV. Further, as previously mentioned, based on our contribution margin outperformance in Q3 and strong progress with optimization initiatives, we believe there is room for us to potentially accelerate our contribution margin breakeven targets for the group and our segments by one to two quarters. For on-demand services, we achieved a positive contribution margin in September ahead of schedule. We are also anticipating positive trajectory for e-commerce, which we expect the business to turn contribution margin positive by Q4 2023 and positive, possibly earlier. In terms of group adjusted EBITDA, we expect to be able to accelerate the breakeven point by three to four quarters, roughly 12-15 months following CM breakeven. We'll look to provide specific guidance on this on future earnings calls. Moving forward, we see further room to improve monetization as we enhance our value-added services across the ecosystem on top of further driving costs of revenue efficiency and promotion optimization. Given our strategic shift, coupled with global macroeconomic uncertainty, we believe it is prudent to continue our focus on cost optimization across our business with the goal of building a stronger foundation. With that, I'll pass the call back to Andre for closing remarks for our presentation. Thank you, Jacky. In summary, we accomplished what we set out in Q3, delivering solid growth across each of our core business segments and making good progress towards profitability. Our momentum is strong. With a significantly improved contribution margin for the group and positive contribution margin for on-demand services in September, we are on track to accelerate our path to profitability. This is fortified by our focus on high-quality users and improving efficiencies as we leverage the competitive advantages of our ecosystem through product innovations like GoPay Coins. We will also maintain our focus on Indonesia, one of the world's most resilient economies, in which GDP growth is expected to reach 5% in 2022, balanced by 4% inflation, even after a 30% around 30% fuel price increase and a 29 basis points interest rate rise year- on- year. In Q3, we saw persistent global volatility with rising inflation and interest rates, global supply chain issues, and increasing geopolitical risk. We cannot predict when things will improve, and we are not immune to the potential impact, so we will continue to evolve. We remain committed to quality growth, and as we've said before, a focus on quality will come with more moderate but more profitable growth in future periods. Lastly, in connection with our shareholders, we want to address the upcoming lock-up expiry. As a reminder, post the statutory eight months lock-up after our IPO in April, pre-IPO shareholders will be able to trade their shares on the IDX at the beginning of December. As a newly listed company, we believe there is naturally going to be some churn in shareholders, and we are exploring options to support selling shareholders, as well as bring new long-term institutional capital into our cap table. This could include a secondary offering, an option we announced we are exploring on October 26 to help pre-IPO shareholders sell to investors in a coordinated manner. Any transaction will be subject to market and macroeconomic conditions among other factors, and there is no assurance at this stage that a transaction will take place. We may also receive additional liquidity in our stock from index inclusion next year. To date, GoTo has been included in some local indices, including IDX 30, LQ45, IDX 80. The increased free float that the lock-up expiry will bring will mean that we also become eligible for inclusion in the FTSE All-World All-Cap Indexes and or MSCI between March and May 12, 2023. With that, this concludes our prepared remarks. Thank you very much for your time. We will now open up the call to questions. Thank you. Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue. Please stand by. Our first question comes from the line of Henry Wibowo from JP Morgan. Please go ahead. Your line is open. Hi, everyone. Thanks, Andre and team for the presentation and congrats on the result. I have two questions. My first question is on e-commerce. Could you please provide some color on how the e-commerce market is going right now? Seems like some of the logistic guys are guiding a contraction on the past ten-ten, eleven-eleven, and the recent months of e-commerce growth. At the same time, when we speak to the merchant, seems like there has been very high commission increase up to, like, 5%-9% in terms of take rate on some of the e-commerce promotion, which I think is good for Tokopedia. If you can share more color on the e-commerce side, that'll be great. maybe I'll stop there first for the first question. Thanks. Thank you. Thank you, Henry. I'll take that question first. First of all, as mentioned, during the last quarter and also this quarter, we do see a softening in terms of consumer demand, especially those with lower economic segment. As a result, in a while, the, some part of the sales in terms of the double digits and stuff, is actually, we, you know, when we see, across the market, some platform actually, you know, kind of, experience some contraction. I think for our platform, we continue to actually see small growth. This is actually something that we don't do often, as often as other platforms. We only do the 11/11 equivalent. We don't have the examples of the other double dates in the last quarter. I think the combination of the increasing in goods, cost of goods and also the logistics price have actually dampening some part of the, you know, vertical sales. Having said that, I think as mentioned during this earnings script as well, you know, I think in Tokopedia, we always believe in being the everything store in Indonesia. Therefore, when certain categories is actually softening, we've seen increase in other categories. In this case, this quarter has been the automotive category, and we've seen actually a significant jump in into that as well. That's why despite the softening in consumer demand, we continue to see a healthy growth year- on- year for Tokopedia. This is on the back of obviously a very strong Q3 last year. If you remember, Q3 last year was one of the first quarter where there's actually significant jump post the COVID days. So Q3 and Q4 last year is particularly strong. This year, not only it's softening consumer demand, but there's also a lot more activities offline as well, where people goes shopping offline. Being able to actually continue to grow in a healthy manner year- on- year is a testimony of our diversity and also our focus on the high quality users. Hopefully that answers the first question. Thank you, Andre. Yes, it did. My second question is regarding the CM positive for on-demand. Can I just check, given that September is already CM positive, why is the guidance for CM positive for on-demand is actually first quarter next year and not fourth quarter? Thank you. You know, great question. We did mention in the earlier remarks that, you know, because of all the progress we've seen in Q3, not only for on-demand services but as a group, we actually are expecting that we will be able to improve the group's contribution margin by one or two quarters. That translates into each of the segment being accelerated in their contribution margin positive as well. So that's how we should think about it. Yep. All right. Thank you very much. Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Ferry Wong from Citi. Please go ahead. Your line is open. Yeah, hi. Thank you GoTo team. Congratulations on the pretty decent result. Two questions from me. One, on the more on the financial. Basically, could you please explain a little bit more on your variable expense increases in the third quarter? Also could you also please explain on the net revenue jump from, what, IDR 1.9 trillion to IDR 4.6 trillion? That's my first question. The second question, practically could you elaborate more on the competition on the e-commerce front, especially from the TikTok, because that's when we talk with the some of the logistic companies, they have mentioned that their revenue actually have reached around one-third of the Shopee volume practically? Just wanted to get the view from your end. We know that basically it's not directly competing head-to-head with you, but more towards Shopee. Yeah, could you please elaborate? Thank you. Thank you, Ferry. First question, can I ask Jacky to help answer it and I'll help answer the second one. Yeah, Ferry, I think, let me address the net revenue first. As I mentioned during the prepared remarks, this is like a change in accounting estimate, so it has no impact on our growth, revenue, contribution margin or adjusted EBITDA. This is more like as you recall, like for the accounting of all the incentives to our customers, we actually reduce it first with our revenues, and then if there's any excess incentives, we'll reclassify that as sales and marketing expense. I think, as I mentioned during, since the beginning of the year, we have been refining, like how to actually offset these incentives to different revenue streams from our customers. There's partly that's coming from like system enhancement. The roughly around the beginning of Q3, we complete the refinement of this estimation process. That way we can actually have more representative way to actually allocate all these incentives to different revenue streams within the from different customers. That result in the increasing of our net revenue, but at the same time increasing in our sales and marketing expense. As I mentioned, it was a cumulative adjustment or catch-up in Q3 of IDR 2.2 trillion. But about IDR 750 billion and IDR 760 billion, that's coming from the impact from Q1 and Q2. I hope that answers the questions on net revenue. The second on the variable expenses. Yeah. For, I think for on-demand service, that's mainly coming from, like the, just more efficient in terms of our LTL spend, the promotion and incentive spend. If you look at the total incentive as a percentage of GTV, that's improved by roughly about 138 basis points or IDR 85 billion. That's coming from, like, reducing both our supply incentive as well as demand incentive. Kind of like, across our markets, we have reached a supply and demand equilibrium. We are able to reduce the incentive we spend for both on the supply and demand side. Also, for food, we have been actually reducing the subsidies to some of the non-profitable customers cohort, leveraging a spend cap. These are all the initiatives for the on-demand service side. And for e-commerce, also we have seen like a 35 basis point reduction in terms of incentive. That's translating to roughly about IDR 167 billion. That's mainly just being more like targeting our promotion and then reducing the incentive spend for certain customer groups, as I mentioned, like the more profitable cohort. These are some of the initiatives we have undertaken to improve the overall incentive spend and tying to the variable expense Thank you, Jacky. On your second question, Ferry, on TikTok, I think firstly, I am, you know, I do note that their growth has actually been quite fast over the last few quarters. Similar notes that you have gotten from logistics partners and stuff, we also heard it from our logistics providers and also merchants as well. I think I would like to note first the main difference in terms of the approach. As you all know, in Tokopedia, we built a platform to ensure that everything that our customer wants to buy, they can get it with high quality experiences. It's something that we continue to invest in areas like logistics, our customer service, our payment capabilities and whatnot. A lot of the kind of analogy that we are using were very discovery and also everything that you wanted to search as a user, we will be able to provide immediately, right? Whereas people goes to TikTok to actually browse for social content and stuff, and incidentally in a few of the instances, especially when KOLs or influencer are promoting certain items, you'll be able to purchase that. Now, it's not paired with a lot of investment in a lot of the customer care, customer service, things like escrow, dispute settlement, and even areas like logistics and also payments are quite limited. Therefore, a lot of the purchases, as far as I know, has been on a lower, what you call AOV items, but with higher margins because. Mm-hmm. The cost for any of the merchants who wants to sell, especially getting the attention from the audience, the cost they have to pay for influencer is quite high. That's why the categories that is actually selling really well right now is things more high margin, low ticket items. A lot of that is actually related to fashion, and that's why you mentioned the comparison to Shopee. This is actually the criteria. We're continue to focus on, building this everything store commerce with high-quality experience to our customers so that whenever people buy, there's no issues with the item. Items can be delivered fast, and they can get anything they want. Then they can search it in Tokopedia. This is gonna be our continued focus. Having said that, we're obviously not undermining the emergence of TikTok. We also have done a lot of things that actually leverage social media platforms to actually do our affiliate kind of programs and stuff. That allows us to also get access to those audiences and bring them over back to our platform as well. All that, we're gonna continue to, you know, innovate on those things and to ensure that, this, you know, continued growth that we are actually projecting, can continue to happen with high-quality experiences in mind. Hopefully that answers the question. Yeah. Thank you, Andre. Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Ari Jahja from Macquarie. Please go ahead. Your line is open. Hi, everyone. Thank you, Andre, Jacky and GoTo team for the updates. My first question is on the fourth quarter guidance. It looks like the GTV and gross revenue could still slightly increase on a quarter-over-quarter basis. Can you please elaborate on the key drivers on the segment basis behind it? It looks quite resilient despite the macro pressures out there. I'll start here with the first question. Thanks. Jacky, do you wanna take that answer? Answer our question. Sure, yeah. I think, yeah, the, if you look at the guidance basically for Q4, GDV is roughly IDR 161 trillion-IDR 167 trillion. Gross revenue is between IDR 6 trillion and IDR 6.2 trillion. If you break that down by segment, so for on demand service first, right? Let's go through. For transport, basically we expect there will be continued recovery, but it will be slower demand due to the year-end holiday, there will be more outbound travel. At the same time, we expect there will be like significant reduction in terms of like a supply incentive, as we mentioned earlier, and yeah, same with the demand incentive. For food, we expect that will be faster growth sequentially because of the higher year-end due to the year-end festivity. I guess like in terms of e-commerce, yeah, that will be, yeah, basically it's like a flat or like a slightly moderate growth versus Q3. I think Andre addressed this like during the earlier question. So, and also like, if you consider year-on-year, it will be lapping last year's Q4, which is like the tailwind from COVID. Yeah, that's kind of like how we look at the for the two like segments of demand versus in e-commerce. I guess like for FinTech it will be like slower than Q3 as well. It's mainly because, first of all, we are like rationalizing intensive spend, especially in the open loop and the offline. Yeah, I think overall merchant payment it will be affected by the overall like slower market momentum as well. That's kind of Ari, the thinking behind the Q4 guidance. Got it. Thanks, Jacky for the color there. My second question is just trying to get a better handle on the contribution margin, because looks like the guidance which we created in line with what GoTo provided in the second quarter results. Shouldn't there, shouldn't be any positive impact on the CM given that there is the classification on the certain sales and marketing expenses from that basically resulting in the net revenue improvement, which basically being linked to the GNA, which effectively are impacting about IDR 700+ billion, as Jacky pointed out earlier. Just wanna get a better handle on that. Thanks. As I explained, the change in that current estimate on the incentive net off, it has no impact on our contribution margin or gross revenue. It's more like closing up the net revenue and the sales and marketing expense. Okay. Basically, the calculation is basically modified, right? Across the board. Yeah. Ari. Go ahead. The CM is calculated net of, off any incentives.. Yeah. Any movement doesn't change the CM calculation. Yeah, 'cause the CM. Right. Is both revenue reducing all the incentives. It doesn't matter if in, like a reduction of revenue or in sales and marketing. It's all reflected in CM. Got it. Okay. Thanks for the additional color there. Just for clarification, Ari. Sir, how do you understand this report? Sorry, just for clarification. Our Q3 CM is 46 basis points better than the guidance that we gave. Just wanna make that clarification. Understood. Thank you. For that. Then third, just to basically try to triangulate the recent OpEx announcements, right? How do you think about these kind of OpEx cost savings realization heading into 2023? How far would be the adjusted EBITDA target would be following the pandemic margin positive target? I think I hear earlier around 12- 15 months or so. Thanks. I think we actually shared this during the prepared remarks. I think it will be coming from a combination of both non-personnel costs as well as personnel cost optimization. As we mentioned, like, from the announcement we had last week in terms of reducing the headcount, so that comes across all of our product, operation and, like, support functions team. If you compare that to the September personnel cost base, it's roughly about 14% reduction. So that's gonna be, like, reducing our cost base moving forward. In dollar amount, that's roughly about, like, IDR 915 billion-IDR 965 billion. On the non-personnel costs, as mentioned, we have identified so many different initiatives, like covering IT costs, marketing costs, outsourcing, office rental, all these different initiatives. Year to date, we have roughly about IDR 1 trillion savings identified. We have realized so far about IDR 269 billion in this year. The rest will be realized like next year and yeah, and going forward. That's also gonna lower our cost base for non-personnel costs. In total, like combining personnel and non-personnel costs, we believe if you compare to the September OpEx base that we have, it's gonna be roughly about 14%-16% lower moving forward. Got it. Thanks, Jacky, for the color. All the best with the team. Goodbye. Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Adrian Joezer from Mandiri Sekuritas. Please go ahead. Your line is open. Thank you. Thanks for the opportunities, Andre and Jacky Lo and also Ernest Fung. Two questions from me. I think the first one is with regards, I think, to a follow-up to the previous questions with regards to I think you provided the bridge to the personal and non-personal cost savings just actually. Wondering as regards to when you actually want to achieve the adjusted EBITDA breakeven, could you also provide some colors as regards to what kind of a take rate, sorry, actually is remaining in this assumption? Sorry. I missed a little bit of that question. Jacky. Yeah. You're asking, like, in terms of adjusted EBITDA, what will be our thinking on that, right? In terms of timing. No, I think there was a take rate, the question was. Yeah. actually just wondering, I think, if you can provide the bridge, to reach, the PM breakeven and also the adjusted EBITDA breakeven, let's say, as regards to the take rates. Maybe I can answer that, Jacky. First of all, you know, we're not providing detailed guidance in terms of how each of the components will actually contribute in the future. Having said that, Adrian, I think from, as mentioned, the improvement in adjusted EBITDA comes from three or four main buckets. The first is obviously growth. We, and in this case, we're actually continuing to focus on high quality growth and despite the a little bit moderation coming from the macroeconomy. From a take rate perspective, I think the improvement that you've seen on a quarter-by-quarter and year-on-year basis, we continue to believe that it will continue to accelerate further. One of, You know, there's a few factors towards it. The first is, especially for Tokopedia and GTF, GoTo Financial, we continue to see there is actually room for the take rate to actually continue to improve coming from the baseline of things like commission, but also a lot of the work that we're doing on value-added services. In Tokopedia, I think we're investing a lot in logistics and fulfillment, so we will be able to fulfill more from what we call Layanan Tokopedia or equivalent to fulfillment by Amazon. This is actually obviously has higher monetization as well and as well as increasing kind of a lot of the spend per user as we speak. Advertising is also our big focus. I think a lot of the contribution of the take rate increase has been from this. On the GoTo Financial side, I think what you've seen in this quarter is the kind of a flat take rate. Having said that, in this quarter and the recent quarter as well, we've added two more additional consumer lending product. One is Cicil, which launched in Tokopedia last quarter, and we're ramping up to about 4 million whitelisted users. Very soon, a lot of the contribution from the loan book growth and also the revenue associated with that will start to get meaningful. In addition to that, we also launched cash loan in Gojek app in this quarter. Relatively small experiment, I think, you know, coming early next year, we will start to ramp it up, of course, with a lot of the moderation with risk management and stuff. All that combined, I think we will continue to be able to improve take rates as a blended, quite, you know, consistent year-over-year. I think the way that you should also think about it is looking at our CM progression. Of course, Q2- Q3 was a really big jump. I think quarter-over-quarter, I think we've been able to improve the CM as a percentage of GTV by about 0.2% in average. If you do a simple math with that logic, you'll see how we actually be able to reach positive CM. Of course, over time, we'll actually start generating cash flow to start paying off the fixed costs as well. That's kind of where that plus a lot of the work that Jacky has mentioned on fixed costs, the OpEx, personnel and non-personnel costs optimization, that's quite significant. That actually will translate into the desired adjusted EBITDA positive that we mentioned earlier. Hopefully that help answer the question, Adrian. Thanks, Andre. I think moving on to my second question, I think it's regards to, you mentioned that the high quality users of GoTo and the ecosystem trying to actually help the resiliency of your GDP in the third quarter, when you actually monetize and given the macro headwinds. Actually just wondering, simply as regards to how do you actually classify your ATU based on the profitability cohorts in terms of, you know, how do you segment them? How does this translate into the GDP concentration towards the profitability, I mean, the profitable and the non-profitable users? Yes. great question. I think you'll notice that in the last quarters, we talk about the cross-platform users, Adrian. I think what we're working on right now is to be able to define it more comprehensively. That actually will be in the proximity of kind of a multi-service user in the ecosystem. Then there's also a lot of internal analysis in terms of looking at the profitability as a whole group on that user basis. Of course, as mentioned during the, maybe a few quarters ago, in every of our businesses or products, we maintain a very high quality of definition in terms of the correlation between the frequency of usage and also the profitability as well. To be able to combine it into one, requires a lot of work and requires a lot of tools that we're actually building right now to be able to leverage, so that we can actually address those users in a more one GoTo way. This is something that we're working on, and there's actually a lot of progress quarter-over-quarter. I think we believe that early next year, we will be able to share a much more definitive and comprehensive breakdown in for it that is actually actionable and relates to our growth as well. As well as obviously the tools that is required to be able to move that numbers quite significantly. So this is actually a work in progress. But maybe in a, in a separate kind of analyst one-on-one that we will have in the next 24, 48 hours, we can actually, you know, give some indications on that as well. Yep. Thank you. Thank you, Andre, and thank you, Jacky. Also thanks for the opportunity to ask questions. Thank you. We'll now move on to our final question. Please stand by. Our final question comes from the line of Thomas Chong from Jefferies. Please go ahead. Your line is open. Hi, good evening. Thanks, management, for taking my questions. My first question is relating to our headcounts optimization. We have been seeing other peers so optimizing their headcounts. I think, we're also seeing that the headcounts optimization is a bit dynamic. Some of the business departments are still increasing the headcount, while some of the non- core business are scaling back. I just want to get some color from the management with regard to the headcount optimization. Are we increasing the headcount in some of the core areas? If so, what color can be shared? My second question is about the investment that we are thinking about in the long run. Given the fact that we are striving for profitability and the CM in the coming quarters, how should we think about our long-term strategies after profitability is achieved? How should we think about our spending after reaching the profitability milestone, and on that front, could we think about the annual transacting users over the long term as well? Would we invest more on the user growth after we are reaching the milestone? Thank you. Thank you, Thomas. On the first question on headcount, I think the principle that we took in this organizational optimization was mainly two. The first is, as you pointed out, we wanted to move and be able to continue to invest in the core things that we do. Obviously the three main segment plus our logistic plus fulfillment is we continue to believe that it's super core for the long-term value creation for GoTo. Which means that a lot of the non-core initiatives, some part of the resources is moved to the core, and the rest of it, unfortunately, as mentioned, was reduced. The second principle was to look into the ways of operating, ways of working, in identifying a much better, if effective or organization effectiveness and efficiency, by combining teams, especially for supporting functional, in the company as well. Therefore, we will be able to do more with less, and being able to serve the whole group with this, you know, execution as well. That combined was translated into the, you know, total considerations. It is not about performance of the individual, but it's the identifying redundancies of roles and also focusing a lot of our resources into core. We do believe that it continues to have an adequacy in terms of our ability to actually continue to execute for the future, despite the obviously needing to actually continue to improve our top line growth as well. We will continue to be very, you know, moderating a lot of the OpEx growth by being very selective in adding resources and stuff, only those who are actually gonna translate into the core initiatives. For the second question is the long one. Investment given. Yeah, I think the profitability point is not the end, right? You know, the company's view is not, you know, once we become break even, then we will relax. That's not the point because we continue to believe that this business, especially in each of the segments, have a very clear profitability milestones and margins along the way, right? This is actually an area where we will continue to do what's right in terms of focusing on the growth, sustainable growth and also to improve margins by really like right sizing the costs to ensure that we can actually translate that into comparable margins with some of the global peers. I think you had a question about growth in users. I think that's a good, really good one. When we mention about high quality user, by the way, it's not always associated with middle to high income individuals. Obviously if we only focus on that, it will cap our growth, right. There's only certain kind of a population that will be categorized in that manner. A lot of the contributions for the organic and profitable growth that we've seen, comes from that segment, but slowly and surely, we've been able to invest in ways to make sure that even the lower to middle income segment of our population can be high quality as well. How do we do that? For instance, things like thinking about how the delivery costs can be cheaper, significantly cheaper for them, is one area that, you know, we are investing a lot. I think you've seen us speaking in the remarks about the launch of a few things. Mode Hemat in GoFood allows us to reduce the delivery cost by aggregating the delivery for our customer, for those who actually seek for value, but don't mind to actually wait slightly more. Not too long more, but slightly more. And this is an area that we continue to invest, and that's why a lot of our investment goes into logistics and fulfillment. I continue to believe that those who we be able to continue deliver speed, but in a much cheaper manner by aggregating a lot of the orders. Because in GoTo, we have the equivalent of many hyperlocal use cases, we have the best chance to be able to get there. This is actually an area where we're investing quite significantly so that a lot of the lower and middle income segment can be high quality as well, where we don't have to actually engage with them, just simply by giving discounts and stuff. Because we have a much superior cost against our competitors in being able to serve them, and this is actually an area where we've seen a lot of contribution so far. Going forward, it will be bigger and bigger as well. Hopefully, that answers the question. Yeah. Thank you. Thank you. I'll now hand the call back to you for closing remarks. Thank you, Mel. We wanna thank everyone for joining us tonight. We look forward to speaking with you all again in the next quarter. Thank you.