Joint Stock Company Kaspi.kz

Hello and welcome to the CASB KZ second quarter first half financial results conference call. My name is Elliot and I'll be your coordinator today. If you would like to ask a question, please press the raise hand icon if you have joined the call via Zoom. If you have joined us on the phone, please press star one on your telephone keypad. I would now like to turn the call over to David Ferguson. Please go ahead.

Thanks, Elliot. Good afternoon. Good morning, everybody. I'm David Ferguson from Caspi. Welcome to our 2Q first half 2024 financial results. As usual, joining me on the call, I have our CEO and co-founder, Mikhail Lantata, our CFO, Tengiz Mesidis, and our head of capital markets, Yuri Didenko. Standard sort of procedure for the call. Mikael will take you through the strategic product updates. I'll run you quickly through the financials and the guidance for the remainder of the year. Then we'll open the call up to Q&A. So on that note, handing over to you, Mikael. Over to you.

Hello, everyone. So pleased to report our second queue. results, performance. So we have done pretty well in the second quarter and for the first half year 2024. You know, pretty much see the growth across all our businesses and the new services showing a remarkable growth. Obviously, all that is a result of our teams historically known execution capabilities. Our consumers continue sort of strong engagement. So we have 72 monthly transactions per active consumer. And that's an important, as we build on this engagement, all the platforms and individual services, and this is really driving our innovation. So the payments TPV is up 32% year over year. Shows the growth is strong on top of a really big business. Revenue up 23%, and the net income up 22%. Marketplace has been showing a very strong performance and now is our fastest growing business. You know, GMV is up 62% year over year and revenue 96% and net income 68%. And again, marketplace is something which is really excites us because that's a business where we add the value of connecting the sellers and merchants. And, you know, most of the innovations from us actually will be coming from our marketplace business. Fintech growing nicely on the TFC 48. 3% year-over-year, revenue 23%, and net income plus 2%. As TFV, which is basically the volumes of our origination, are growing very nicely, you can actually see in the third Q and the rest of the year quite rapid acceleration of our net income. And on top of it, the interest costs and interest rates have been going down. And as a result, you will see profits going through our P&L and the net income growth accelerating. Our consolidated revenue, consolidated financials showing very strong performance. So our revenue 36% up year over year, and the net income is 25% up. We have been historically sort of diversifying across our three platforms and happy to report they're more or less equal now in size. So 68% comes from payments in the marketplace and the marketplace and the payments have been historically growing faster than fintech and now marketplace is the one that grows fastest from all three. So we're really excited about this diversification from all three and really excited about the new services which actually also driving our growth. In terms of the e-grocery, which, you know, we just started a couple of years ago, we're really excited about this business. You know, execution skills are, you know, top quality from our team across operations, you know, marketing, the product, and the And the user experience, so you can see that active consumers now reached 639,000 consumers in the second queue, almost doubled the GMV, 99% growth. And the average ticket remains very high of 14,000 Tenge, which is basically the weekly purchase. So it's not the quick commerce sort of small ticket transactions. And then in terms of number of purchases, we bypassed. 2 million purchases in the second quarter and up 83% from the last year. We are expanding our existing dark stores, which means just adding more capacity. We always work on two fronts. Number one is increase the capacity, which means increase the size of existing dark stores, but also work on the efficiency, which means throughput rate of a dark stores. And both are giving us very good results, but demand is so high from our consumers that, you know, we are now investing into building another large dark store in, in, in Almaty. And as a result, we'll be able to basically support the growth and the demand we have from consumers. We're now present in three larger cities, Almaty, Astana, and Shymkent, uh, And those cities represent roughly about half of the total food retail trade in the country. So for the remaining of this year, those cities would be our priority. And again, we just continue to execute it. Consumers are delighted. Demand is extremely strong. So we are just scaling in terms of the capacity, building the new dog stores, but also expanding the capacity of existing dog stores. So really excited about this business and and the growth rates that we're achieving. Again, on the back of the consumers loving the service, and we have a very strong demand in this vertical. We have been also scaling from last year another new service, which is vacation packages. Incredible growth, 644% from last year. This is the business when our consumers basically can book their vacations across several countries. And now we are going into the season, and the growth is really due to the fact that we have a very strong seasonal offering pretty much from every tour operator in the country. The good thing about this service is not just – then it gives us the volumes and consumers love it. But also it's a high take rate business for our travel. So it's really enhancing take rate. And that business in the second queue is showing 7.9% take rate. So we're really excited. We're still going into the season. So summer will be strong because, you know, differently from many other countries, our consumers actually don't plan their vacation sort of six, months ahead, so they usually plan in a month, several weeks before actually taking the vacation. So there is a very good season in front of us. Really excited about this business. We are continuing scaling and innovating across the value-added services. So as you can see, we have increased dramatically the size of that business. That's advertising, classifieds, and delivery. So almost, you know, more than four times increased from last year. And, you know, now out of 9.5% of total take rates in the marketplace, 1.6% is actually coming from the added value services. And that compared to 0.6% of last year. Again, added value services in our case is the services which we develop for merchants so they can, you know, promote their products. They can deliver their products across the country. And the reason why we call them value-added, because actually they generate additional sales. And we are, again, I would like to emphasize, we are carefully scaling those services because we want to make sure they add value to our merchants. But even with such a careful scaling, it's showing a remarkable result. So we're really excited about innovations which come in from us and for our merchants in those areas. This example of the recent launch is the brand advertising. So this is the service which we just basically launched that's a service for the brands or the merchants that have their own brands and advertising agencies. So you can increase the brand awareness by launching this service. You can sort of go from very simple steps. You basically create the campaign, You sort of select the products which you would like to promote. You select the sellers which you believe should be participant of your promotional campaign. Then you upload your materials, which are banners to be shown in different locations of our Caspi KZ Super App. And then you can see your ads in our mobile application. So that's a service which we like because we are actually going after different revenue stream. We're going after digital and online marketing services, which come from the global brands, local brands, and some of the merchants that actually are promoting their own brands. And just to remind everyone, that's a second service because our initial service, which we have launched for merchants, was to promote their own products. So that's the different segments. If I'm the merchant, I want to increase the sales. I want to increase sales of a specific product I use, uh, product advertising. However, if I'm a brand advertising agency or the merchants with my own brand, then I use brand advertising. And that really is all about top of mind, uh, promoting brand awareness views and things like that. So really excited about this addition, uh, and, reception has been really good. Uh, so hopefully that's another service, which we will continue sort of scaling successfully and, uh, and developing innovations around it over time.