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.

Okay, so moving on to the financials. I'll start with the payments platform. So transactions, transaction trends remain very strong. up 46% in the second quarter, up 44% year-on-year in the first half, so slightly stronger in the second quarter, despite, again, this is, as Mikel said, a pretty large business. The growth is being driven by all products led by CaspiPay QR B2B, but with bill payments still very, very robust. Strong volume growth translates into, therefore, strong TPV growth, albeit with a lower average ticket size, as consumers use us more frequently for more of their everyday needs. TPV up 32% in the second quarter, up 34% for the first half of the year. Take rate broadly decreased. stable, albeit with the impact of lower take rate CASB pay QR visible at the margin. And that is a trend that we've talked about over several years. B2B payments remains the fastest growing component of a payments platform, up to 5% of TPV from zero. just two and a half years ago, but with a long runway ahead, both in its own right and in terms of the other products and services that can naturally open up. Strong transactions, strong TPV drops through to good revenue growth. Just keep in mind here that as interest rates fall, liquidity revenue grows at a slower rate than transaction revenue. So transaction revenue in the second quarter up 26% year-on-year versus liquidity revenue up 12% year-on-year. Overall payments revenue for the quarter up 23% year-on-year and up 24% for the first half of the year. Tight cost control is ensuring that that strong top line drops through to the bottom line. I think overall the message on payments platform is that it is comfortably on track for delivering on the full year guidance. So moving on to the marketplace platform. As with payments, marketplace transactions remain or purchases remain strong and consistent, up 38% in the second quarter, up 36% for the first half of the year. The difference versus payments is higher ticket size, so that translates into faster GMV growth, up 62% year-on-year for both the second and first half of the year. E-commerce is the fastest-growing component of Marketplace, now almost half of Marketplace GMV, 45% in the first half of the year. And tape rate moving up, on the back of promotional events, namely CASB Juma, but also the value-added services that Michal talked about. So take rate of 100 bps both in the quarter, second quarter, and for the first half of the year. Looking at the individual components, E-commerce, e-commerce GMV up 113% in the second quarter, a similar number for the first half of the year. So e-commerce demand very, very strong, driven by number one, e-grocery, number two, general goods, and the promotional campaigns that we're running and the value-added services, delivery and advertising driving take rate up 30 basis points in the second quarter. and up 60 basis points for the first half of the year. We're just flagging here, we talked about, we introduced Caspi PosterMats around two to three years ago as a key strategic initiative, and just flagging now is sort of past that milestone, 50% of e-commerce orders delivered via PosterMats. So this is important because The initiative has proved extremely popular from a consumer perspective. Consumers like the convenience of poster mats and important for merchants because it's more efficient. It's bringing the cost of last mile delivery down. So adoption has been highly successful. We're targeting 7,000 poster mats by the end of this year. So there's still more we can do with this initiative. Caspi Travel, decent GMV growth during both the quarter and the half, up 33% and 38% respectively. Tours are now up to 8% of GMV in the first half. And tours are not only GMV growth enhancing, but are also take rate enhancing as well. And then moving on to commerce. M-commerce in the first half of this year has seen very, very strong GMB momentum, particularly as a result of the promotional campaigns that have driven higher ticket size, GMB ahead of purchases, and have also driven higher take rates, 100 bps, both in the second quarter and in the first half of the year. It's probably worth at this point just flagging that on Marketplace, particularly promotional events, Juma, Juma will take place three times this year. It took place in Q1, it took place in Q2, and it will take place in Q4. Last year, it took place two times in Q3 and Q4. So what that means for Q3, It's the only quarter of this year without Juma, number one. And number two, the comp is tough because it's up against the Juma events that took place in the third quarter of last year. The implications of that for the third quarter will be GMV growth at a lower rate and lower profitability before then a strong rebound in the fourth quarter. The decision to hold Juma three times a year is just a reflection of The assortment on Marketplace has expanded dramatically over the last couple of years. That includes items with high seasonality, like, for example, package tours. And by holding the event three times during the year, it gives us the opportunity to focus on the right seasonal assortment at the right time. Package tours, for example, are a big focus in the June map. So this is something that is reflected in the full year guidance. But when you're trying to think about the phasing between Q3 and Q4, it's something to keep in mind. I suppose it's also worth saying that for FinTech and TFE, which is a big component of the Juma promotional campaigns, that also means you'll see lower TFE growth in the third quarter. But again, then the strong rebound in the fourth quarter and as we go into 2025. For the second quarter, what you see is that the strong volume trends, higher ticket size, faster GMV growth with take rate expansion translates into even faster revenue growth for marketplace, up 96% in the second quarter, over 100% for the first half of the year. And even with rapid growth from 1P, eGrocery and eCars, net income up 68% in the second quarter and up 72%. for the full year. So again, here for the full year guidance that was provided, marketplace very, very much on track. Finally, moving on to the FinTech platform. A strong TFV origination has been a theme for the last two years. That continues to be the case, driven by strong growth in marketplace. and specifically linked to buy now, pay later and merchant financing. So TFV growth up 43% in the second quarter, 45% in the second half, in the first half of the year. Portfolio conversion stable. So that tells you that customer behavior is normal. They are repaying quickly and in a consistent manner. Average loan term just over five months. And going forward, we still think that merchant financing, whilst it's now sizable at 17% of our TFV origination, it's the fastest growing component and the backdrop is still an underpenetrated market opportunity. So there's a lot more we can do there. In the first half of this year, for the first time in several years, net loan portfolio grew faster than deposits. In the second quarter, loan portfolio up 42% versus deposits up 26%. Similar trends for the first half of the year. What that's meant is that the loan-to-deposit ratio has moved up from 74% to 85%. The implication of that will be particularly from Q3. And again, in Q4, you'll see a step up in the profitability of the fintech platform. And again, that will be a run rate going into when you're thinking about 2025 growth. FinTech yield is lower as a result of BNPL merchant financing growing share within the mix. And again, that's something that we've talked about as a long-run trend that's been playing out over several years. In terms of risk metrics, whether you look at defaults, losses, collections, I think the message here is very simple, that trends are low and consistently stable. And again, that mirrors itself in cost of risk metrics, broadly stable year on year at 0.6%, on track for around 2% this year. And MPLs, again, broadly stable versus the beginning of the year, 5.6% versus 5.5% at the beginning of the year, and down from 6% this time 12 months ago. MPL coverage is lower in the second quarter, but over the course of the year, it should train consistently with what you've seen in previous years, so around 98%, 99%. The combination of strong Origination over the last two years, albeit with slightly lower yield, translates into decent, healthy fintech revenue growth of 23% and 25% for second quarter and first half, respectively. We lowered interest rates for the first time at the end of February. The deposit base takes 12 months to reprice fully. So at this stage in Q2, you don't see the rebound in net income and fintech profitability. But you will see that in Q3. And again, you'll see it to a greater extent in Q4. So again, you've got those moving parts in Q3. For marketplace, you've got lower GMV growth. and lower profitability rebounding in Q4. For FinTech, you've got lower TFC, limited near-term P&L implications of that, but you'll see the strong rebound in FinTech profitability kicking in. So again, sort of, as I said, different parts moving in different directions, but overall, FinTech also comfortably on track for the full year guidance that we've provided. So here is the consolidated performance. I think the summaries, the divisional platform summaries that I've given sort of are clear. A dividend of 850 Tenge declared. Just the message here remains consistent that whilst we have excess capital, we're happy to return it to our shareholders. In the press release, we do say that we're working hard to expand Caspi outside of Kazakhstan. And when we think both the time and opportunity is right, we won't hesitate to deploy capital in that way. So that's just to sort of preempt any questions around higher dividends, buybacks. That's the sort of the message on capital allocation priorities. Here is the guidance for the remainder of the year. So each of the respective platforms on track. CASB KZ on track for 25% net income growth for 2024. So overall, we expect to deliver another strong year, albeit that we'll be phasing. The growth in the second half will be Q4 weighted. That's it. So maybe, Elliot, we can open the call up to Q&A, please.

Thank you. If you would like to ask a question, please press the raise hand icon if you have joined the call by Zoom. If you have joined us on the phone, please press star one on your telephone keypad. When preparing to ask a question, please ensure your line is unmuted locally. Our first question today comes from Darren Peller with Wolf Research. Your line is open. Please go ahead.

Guys, thanks. Some of these initiatives are great to see the momentum on, but I just wanted to first touch on a financial question. And I know you kind of hinted or touched on that a little bit just at the end there, but you're reiterating your fiscal year expectations. Obviously, the underlying assumptions call for somewhat of a deceleration in second half relative to first half, just given the guide on the segment level detail relative to first half growth rate. So if you could just help us understand if it's just comps and maybe building in some element of conservatism given how strong some of the trends have been in first half. So we understand the second half cadence. If there's any nuances on a per segment basis, we should keep in mind. Thanks.

All right, Darren. Well, I think sort of Really, I just reiterate what I've said there. So I think the key things you need to be aware of when you're thinking about Q3, Q4 is the Juma promotional event. It's important. And what's different this year is it's taking place three times. It only took place two times last year. And the phasing of marketing campaigns can always vary. This year, those campaigns are taking place in Q1, Q2, and Q4. Last year, those campaigns took place in Q3 and Q4. So the point really is that Q3 is the quarter without that sort of big, important promotional event. It manifests itself in a number of ways. It manifests itself in lower GMB growth. lower marketplace profitability, lower TFV growth, although the nature of TFV, it feeds into the P&L over a longer period of time. So from a P&L implication, it's not material in the third quarter. You've also got the added dynamic, not related to Juma, of just the rebound in profitability in the FinTech division, starting from the third quarter of this year. But the takeaway ultimately is you will see lower growth across the board, across payments, sorry, across marketplace and for the group as a whole in the third quarter. Significantly higher growth in the fourth quarter. And that's important because that gives you a sense of the run rate going into 2025. But the full year guidance that you have, that's the right number that you should be working to. So to your point about conservatism, use that as your number. It's realistic guidance.

All right. Thank you, David. Just one quick follow-up on the international efforts and aspirations. I know last time we spoke, you know, there was a hope that it could come as early as maybe even the end of this year into next year in terms of some sort of momentum on any of those fronts. Any update there in terms of progress or just a sense of opportunities you're looking at in regions you're seeing the most opportunity in?

Yeah.

Sure. Hi, Dan. Thank you for your question. I mean, in general, I would say that we continue working on this just to reinforce basically our... really the desire and capability to bring this business outside of Kazakhstan. As some people are saying during our discussions, you know, basically bring the Caspian magic to other markets. And the good news is that we are passing, you know, basically we're not pursuing some opportunities, just to tell you that how selective we are and there is a healthy pipeline of some of the companies we're working on. I wouldn't speculate about region or a specific target that we would like to work on or we're working on at the moment. But yeah, we are clearly sort of working on this, putting our resources, the time mostly, and, you know, working with advisors on different opportunities, basically. So, but we are, again, we're careful. We want to make sure that we get it right. We want to make sure that the company and the market we look at that is added value from us, again, from knowledge, technology, experience, perspective. But, you know, I think we are at the at the stage when we're also lucky that some of the companies and the targets we look at are really high-quality companies and high-quality targets, which means we're looking at how we can complement to those companies' management teams to become even better, considering Caspi's unique experience, technology, and the business model. So, again, really excited. We're working on it. you know, at the moment can't really tell you any specifics of any project that we're executing.

Thanks, Miguel. Thanks, David. Nice job, guys.

Thank you. Thank you, Dan. Thank you.

Our next question comes from Reggie Smith with J.P. Morgan. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking the question. I appreciate the color on the brand advertising launch. I was hoping to get a little bit more information Did you guys say exactly when that went live? Mostly curious about how many brands are on the platform today. And maybe talk a little bit about the process of adding brands. I'm not sure if you've got an outreach program to sales or like that. I'm curious how that actually, how that plays out. Thank you. I got to follow up.

Sure. Thanks for your question. Basically, we are in a really interesting position as a company in a sense that some of the ideas are really coming from the use cases that we already have. And they are almost requests from our merchants or the brands whether we could launch the services. So that's something which is really exciting to be in the type of position as we are. Because, you know, basically what that means, when we launch the service, there is already market for it. So that's why it's exciting. The brand advertising, you know, we are, at the moment, it's at the scaling stage. Already have, you know, FMCG brands working with us just because we have become one of the largest groceries in the country. and not just in Almaty, with the fastest growth compared to anyone on the market. So the brands on FMCG's side basically are working with us on the advertising, and we already have the contracts in place with them, so you will see a very healthy growth on the side of the brands which are selling grocery through us. On the other hand, General Goods, you know, the same brands – I mean, I've just shown the Samsung as an example. It's actually one of the brands that is working with us as we speak. And on the general goods, there are pretty much either the brands which are sort of global or the merchants which have their own brands, like locally selling, basically. They want to promote their awareness. In terms of the size of this opportunity, You know, I would say that something which, and another, it's a good question that you asked, because another thing you need to keep in mind, we're launching the product when most of the brands have allocated budgets to this type of advertising, especially the global players, you know, they make the decisions end of the year. So, and even in this environment, we're able to successfully scale. So opportunity is, you know, in my sort of opinion, you know, probably, equal to the size of the, if not more of the opportunity when merchants are promoting their own goods. So yeah, so it's a big, it's really a big opportunity and we're just sort of scaling it and it's not reflected in the numbers which you see in advertising. The numbers at the moment are not material, but they will be growing really fast the second half of the year because we have contracts in place already with those brands. So I'm highly excited about it.

Yeah, no, it sounds like a really good business. How are you thinking about KPIs for that segment? I know it's early days. You may not have anything mapped out, but anything you can share there? And I have one follow-up after that. Sorry.

I mean, this is really different. I mean, for the KPI, or let's say the targets that we have sort of on the quality level on the merchant, when merchants are advertising their goods directly, this is This is their own listings on our marketplace. You know, here we are making sure that it's efficient so they get the sales and they not overspend. So that's something which is very important for us on the goods advertising side of things. And the revenue stream there comes from the merchants themselves, you know, as a part of the GMV which they sell for us. So for example, you know, just the one example, if we see the merchants, you know, uh, exceeding sort of 5% of their GMV in advertising, uh, investments on, on that piece. Uh, you know, we sort of, you know, work with the merchants to make sure that this is something which they really want because then, you know, the, the profitability of their business has to be respected, right? Right. I mean, 5%, you know, not many merchants can, can really afford to, or to invest into, into marketing and advertising, uh, So we just need to make sure they understand the product and anything we can improve. So that's on the side when actually merchants are launching their own listings and it's called sort of product advertising. When we're talking about the brands, that's actually as a different service altogether because that's brands, they actually want to promote the brand awareness, whatever, the global FMCG players or or the local brands. And that means they're not necessarily looking just for sales straight away, but they are looking for people to know the brand and the monetization there is really more on the reviews rather than on the sales. And they have budgets allocated also globally. So that's basically is the very big difference. And also from a consumer perspective, it's a different product. The goods advertising, It's like Amazon ads or Google when you have the product in the listings when you search in our app. And the brand advertising is the visuals. We start from banners. When you see the item, you see the brand. And then you go to the products after you click the banner. It's a different object. It's a different real estate of the app. And therefore, it's a different pricing. And it's a different revenue stream. And it's a different payers. Brands pay us or advertising agencies. So from that perspective, we are... We just need to make sure that on the side of the brand advertising, we are more efficient and we're competitive. So we are competing with the platforms like Instagram, for example, at the moment, which are providing this type of capabilities. And the first tests show us we're multiple times more efficient than Instagram and the brands are happy to move their budgets to us. So that's why we're excited about this opportunity.

That sounds exciting. If I can squeeze one more in on Juma, I guess you always have to be careful about fatigue there, but is this a product or an experience that you see that could happen four times a year, like once every quarter? And then last piece on that, what do you tend to see post-Juma? Do you see a lift in engagement and usage on the app in general? I was just curious, is there any positive benefits to you guys? after Juma in terms of engagement and things like that. Thanks.

Well, when you think about Juma in general, you can compare this to like a national sort of shopping events which happen in other countries. I mean, it would be Black Friday or Amazon Prime and the things like that. So this is really like a nationwide event. And pretty much there is nothing else. So there is no other event. There is no other Black Friday. So it's really Caspi Juma where, you know, thousands of merchants really participate. So that's number one. Number two is Juma is great in a sense that it gives us, as you said, you know, it's an opportunity to get uplift on the engagement. You know, it's a concentrated three-day shopping festival which basically give us an ability to introduce some of the new categories we've launched, some new merchants, products. So it's really sort of the opportunity for the consumers in a very highly concentrated three-day period to basically acquire some of the items and therefore for us to promote these new categories, which we would like to promote because it's quite big. It's also big in terms of moving consumers from offline to online. So for example, I would say that the vast majority of Electronics are now, you know, bought online rather than offline just because we have been able to change this sort of consumer and the merchant experience. So all of that is, you know, basically Juma has been, you know, quite a success. As David said, again, the number, you know, one reason why we are moving into the seasonal because different categories just have different seasonality, you know. You move from one type of clothing to another during the spring and then you move back to another clothing during the winter. So from summer and autumn to the winter clothing or the travel. So the variety of products is such a, you know, I mean, it's unmatched. There is no other company in the world that has such an assortment of different goods and services which have such a high seasonality. And therefore, we basically reply to our consumer needs and the merchants. And this year, it will be a bit, I would say, unfair comparison to last year, quarter on quarter. But in general, we think that three years is good. Answering your question, we will see because we have another promotion, which happens in August, September, which is back to school. So it's not Juma, but that's something which is also big. And that's why we're not really launching the fourth one sort of end of this summer, beginning of autumn, because we want to see how, you know, consumer demand will be shifting as a result of this multiple Jumas during the year. But once we get all these learnings, then next year will be, you know, both much easier to compare, but also it will be, you know, from our side, just much more, I would say, it's not the word predictable, but, you know, much more comparable year over year. But Juma itself just shows incredible results, really, on all fronts, during the Juma and after the Juma. Shoppers continue to shop, basically.

Our next question comes from James Freedman. Please announce your company name and proceed with your question.

Hi, Jamie. Maybe you're on mute. We can't hear you.

Whoops. Sorry about that, David. Good evening. It's Jamie at Susquehanna. I wanted to ask, by the way, good results here, but I had two questions about take rates. I'll just ask them up front. So first on slide 11, this is about the payments take rate. When you have this outsized growth in QR code And I think B2B, are those deflationary to take rates? Because I know you talked about this in the past. You talked about it today, but one of the perspective on take rates for payments. And then I'll just ask the other one, too, which is about e-commerce take rates. So how should we think about unpacking the components of take rates in e-commerce between, say, e-grocery and general goods? So slide 11 and slide 16. Thank you.

You want me to pick it up? Well, I will start with the payments and then you can jump in, right? So, James, thank you for the questions. In terms of the payments, what, you know, we have been sort of saying historically that the QR payments, which is sort of increasing, you know, network, basically the service of accepting the payments, You know, it's a 0.95%, basically. That's the fee. So what you would see that, you know, simply over time, this is something which will be getting, you know, closer to that number. We have been, you know, lucky or not lucky. I mean, because we have been diversifying the services and entering into different verticals. you know, the take rate has been quite sustainable in general around 1.2, but we decided to provide this more details, not just 1.2, but basically what it is 1.19, 1.18, 1.24, which we had last year, just to give you that it's slightly sort of gets towards a bigger share of the QR payments. So that's basically how to think about the payments. There are a couple of, uh, um, Yeah, there are new things we're working on, which will be added value, which will be higher take rate. But those things on the payment side probably will come from us later in the year. So we'll be excited to share with you. But it seems like very exciting services. On the e-commerce side of things, the take rate that you have is basically on the 3P. So the 1P is e-grocery. that's not in the take rate. So that's basically a, you know, gross profit net income business. And we basically are, yeah, the e-grocery, it's not part of the take rate. That's a simple answer. The e-grocery itself continues to create a strong performance, even though we're investing, it's still 7%, 8% net income margin business. And our gross margin is going in excess of 30% just because There is more demand from the consumers, but also the type of assortment strategy and relationship with the suppliers really enables us to also increase the gross margin. But e-grocery, it's not a part of the take rate. Take rate is only on 3P. David, anything you want to add?

Yeah, I mean, just overall, I think the message on payments take rate is, that it's broadly stable. We've shown you an extra decimal point today, but I wouldn't read anything too dramatic into that. Take rate is broadly stable.

Got it. Thank you both. I'll drop back in the queue.

Thank you, James.

Our next question comes from Sumit Data. Please announce your company name and proceed with your question.

Yeah, hi there. It's Sumit Adda from New Street Research. Thanks very much for the call and the extra detail. A couple on fintech, if I could, please. Firstly, in terms of the improvement in fintech net income through the second half, that seems to be predicated on deposit remuneration dropping back down. Can you just talk through the phasing of that? Is that a sort of rolling process where depositors kind of roll back over time? Will that have played out in Q3, Q4? Anything on the phasing of that? And as a follow-up, how do you see the mid-term loan-to-deposit ratio for the fintech businesses? As you say, it's moved around a little bit this quarter. Just curious how you see that over time. And then if I could just on the same vertical, just Mikhail, interested in your perspective on tax increases in Kazakhstan, which I think if they go through will impact the fintech business rather than the other businesses. Just curious what your take was on the likelihood of that happening and potential timing. Thank you.

All right, Sumit, thanks for your question. Maybe I'll just try and expand on the fintech question and fintech profitability and then hand over to Mikael for regulation. So I'd say it's two things. It's one, rates coming down. So whilst the MBK rates have been coming down since the autumn of last year, our first cut in deposit rates was at the end of February. So that's the first thing. And then it's the second thing is it's the balance sheet being used more effectively or the loan to deposit ratio moving up, either because we're loaning more money or because people are spending more money and saving less or a mix of those factors. So that's why. In terms of phasing, deposit customers are repriced at maturity. It takes 12 months to work through that process. If you think that the first rate cut was in February and it was end of February this year, it starts to be visible immediately, but it only becomes more pronounced with each month that goes by. So in Q3, for the first time, the combination of those factors, loans deposit ratio moving up, cost of funding moving down, I think it will be visible to you. And you'll see, I mean, you can yourself just simply work out what is implied by the guidance for fintech net income growth in the second half of the year. Q4 will be more than Q3, but that sort of tells you. Longer term, there's sort of no reason why the loan deposit ratio can't move up to maximize use of all of the 10-gay liquidity that we have.

Yeah, and David, thank you for your questions. I will add a bit more color in terms of our strategy and the way the products work. So in our business, always consumer comes first, right? So we are very unusual compared to some traditional banks with the traditional savings deposit accounts, which means when we're increasing the rate we're increasing the rate for everyone. So for, you know, basically we reprice deposits upwards and everybody gets benefit of it. And when we reduce the rates, the rates are reduced over time at the maturity. So what that means in terms of the numbers, in February we decreased the deposit rate by around 1%. And as a result, you know, the full savings portfolio which includes both new saving accounts and existing saving accounts, they will be repriced at this reduced rate by the February of next year. And as David said, that actually means in the third queue it will be more and the fourth queue more, but they will be actually fully repriced in the first queue of next year. Our business is on a fintech side of things, also to put things into perspective, the interest rates increased over the last several years from 8% to 15% on the saving account. So that's basically when the saving interest rates will normalize, it might take a bit longer than everybody thought across pretty much most of the economies, but we'll still see this natural reduction of interest expense. But the good thing about us is that we also acquired consumers with the money and we've built the capability and we have become the largest savings institution in local currency in the country during this period. So we are thinking about consumers, consumers always come first. So that's about the interest expense and how the savings work in our case. In terms of the loan to deposit ratio, you know, we see a very increased flow of the new saving accounts during the uh, you know, this, uh, the end of the second quarter and the third quarter. So really excited about that, uh, again. Um, but at the same time, the origination is growing, especially on the new products such as merchant financing, you know, car, car financing will be the fastest growing in a, in a third queue now fully online sort of products, which, you know, we are number one in car financing in the country as we speak, uh, So that really will be driving our financing volume. So loan to deposit ratio probably would be broadly stable. So that's basically about your first two questions. In terms of the taxes and in general changes in the regulatory landscape, there has been several changes, which I think might be useful for everyone to know. So first of all, there was a change on the NPLs, which means The banks or microfinance companies cannot sell their MPLs to collection companies. That was a one change. CASPI never done this, so there is no impact on us. But there has been the change in the regulation regarding selling your portfolios to collection companies. So no impact on CASPI at this stage. Then there was a change that you cannot accrue the interest after 90 days delinquency. on the consumer lending. CASPI has never been accruing interest after 90 days and, you know, already for, you know, 10 years. So that has no impact on us as well. And the third change is an interest rate, which is currently discussed. Currently is a 56%. The interest rate, which is suggested, is 46% for consumer lending. on both banks and the microfinance companies, and I think 170% on paid debt loans or something like that. That segment, we're not playing so, but I think it's around 170%. So again, it doesn't have really a material impact on us, but that change has not been in place. It's in the process of a discussion. In terms of the taxes, in terms of taxes, I think, there are several sort of, you know, projects which, and the draft of legislation change, which have been put in place and still under the discussion. And I think it's just too early to draw sort of any conclusions and discussion has been also last year. And there is a general discussion also currently, but there is nothing really. If all the other things which I've said, I think that there is a, either happened or have a realistic chance to happen in terms of the taxes is difficult to say at the moment. I think there are a lot of pros and cons, and I think different government bodies are involved together with the financial institutions. The good thing about the tax changes, by the way, which I think are important, is reduction and simplification of taxes for SMEs. And that's a really exciting thing, because if that taxes are simplified and reduced for small and medium enterprises, which is the majority of our merchants, and both on the payments and the marketplace, that will fuel another source of the growth. And I think that's an exciting piece of what's happening. In general, there is really nothing major from us to here that would have material impact on us. If there would be something, we'll be the first one to tell you.

Very clear. Thank you.

Thank you.

Our next question comes from Gabor Kemeny. Please announce your company name and proceed with your question.

Hello, this is Gabor Kemeny from Autonomous Research. Just two quick follow-ups from me, please. The first one is on Juma. Are you able to quantify roughly how much of the GMV in Q2 came from Juma? Just to give us a sense. of how much of the Q2 GMBs could be recurring, and possibly if you have a budget for the Q4. Juma, you are planning, please. And the other question was on cost of risk, which I believe is slightly higher this time, maybe around 2.45% if we annualize. I mean, you mentioned resilient asset quality, but is there anything... specific you can call out, like have you set aside overlay provisions or any reason for the slight increase? Thank you.

Okay. So, you know, in terms of Juma, we've historically suggested that, you know, in general, that's roughly about, you know, 15, sort of 20% of our, you know, GAV of that month you know, roughly of an increase. I think it's difficult to extrapolate for this year, right? Because again, the seasonality has changed and, you know, the GMV is different because again, different seasonal products, assortment is different. So you should really just, you know, sort of bear with us through the year and we'll give you sort of more details, you know, especially let's see how the, third Q performance because there are changes on all fronts, you know, before Juma, after Juma, you know, basically consumers are waiting for Juma. So they are making more purchases during three days, but afterwards they continue to buy more in a different verticals. And yeah, so I think historic performance, you know, has been, it would be different from what we have this year, you know, basically two Jumas in the sixth month of this year, there would be substantially more than one Juma that we had in the summer. But again, I think we'll provide you details as we go through. We just would like to see how the merchant and consumer behavior is changing with our seasonal approach and the strategy. In terms of cost of risk, I mean, you know, our sort of guidance, you know, and the cost of risk, you know, we see no indication of, having, you know, anything really to report. So there is some seasonality on some specific products, you know, like merchant financing is already sort of 17% of our business. And so seasonality, you know, plays a bit differently. But for the year, and especially in the third queue, you know, we have no reasons to be concerned about the cost of risk. So it's stable. You will see basically no increase.

I mean, I can put it this way.

Thank you.

Thank you, Mikhail. Just a quick clarification here. When you said 15 to 20% a month, your previous guidance for Zuma was that? So should that be like a quarter? Sorry, should that be like a third for the quarter? So is it a monthly number?

You know, let us give you the details, you know. I just don't want to tell you something which, which wouldn't be the right number.

Sure. No problem. Thank you.

Yeah.

Sure. Our next question comes from Mikhail Butkov. Please announce your company name and proceed with your question.

Good day. Thank you very much for the presentation. I have two questions. One is a clarification on the deposit side. what is the average duration of your deposits? And also, do you see the other players on the market also reducing the deposit costs right now? What is the competitive landscape on the deposit pricing, which you see right now? It's the first question. And the second question, we could see in some articles that there were some, like, investor interest to build large warehouses in Kazakhstan and in Almaty to make it a hub for international deliveries into the Central Asia and into Europe. Do you see any way how the Caspi can benefit from this cross-border potential deliveries, e-commerce? Is it something that you at all consider possible? in your pipeline for the international expansion, the cross-border sales? I mean, thank you.

So in terms of deposits, I mean, our deposit is quite straightforward. It's basically an annual deposit. So it's a very simple product. And at the moment, we have only one product on the market. So we're unusual compared to everybody else, you know, because everybody else, they have a, I don't know, they have a different type of deposits and they might have deposit for winter, deposit for spring, summer, whatever. And we just had one deposit because we believe people just want to basically make money on the liquidity, which they have. And therefore we've launched a simple product and everybody is pretty much pricing all of our product. So from that perspective, you know, I would say we're more or less in the market. If we reduce the rate, then most of the people usually reduce it. So that's regarding the deposits in general. We're not thinking like traditional institution. We're not thinking just purely in terms of cost of funding. We're thinking in terms of consumers and the quality of the engagement. And we know that consumers with the money and the ability to shop and buy are the best consumers for our marketplace and the rest of our products. So that's regarding the savings accounts. Regarding the, in general, e-commerce infrastructure, I think it's in general, it's great news because that's, you know, something which will be sort of promoting another wave of the e-commerce growth on the market. We are having sort of building the quite a significant size warehouses now for our e-grocery. So that's not something which, you know, is new for us. I mean, during some of the investors, we had the trip, we showed some of the operations, which I think are, you know, quite impressive. And they're actually large. It's not like, it's like, you know, basically a, a big, you know, sort of 10,000 square meter kind of warehouses. And, uh, And yeah, so we use that only for the grocery at this stage. In terms of cross-border, that's something which is interesting to explore. We are careful about it in a sense that we are in the business to promote the local merchants and we are doing everything to help them to develop. And as a result, that's a central part of our strategy. So for example, if we would be you know, flooding our marketplace with some, with some cheese, with some, um, sort of cheap, not bread, not breaded items, uh, that will be detrimental to our merchants. And we have been able, you know, historically successfully compete with other marketplaces, uh, and stand our grounds. But again, we're not standing, you know, either. So which I do or whatever, I don't know how to say English word, but we are basically working on different, uh, ways to support the local merchants and the cross-border might be interesting from that perspective for us. But we're not going to, you know, ourselves directly go into the cross-border, at least at this stage. Okay, thank you very much. We support local merchants. And some of the warehouses which are built in Kazakhstan, they're also for, not just for Kazakhstan itself, but, you know, for maybe some regional ambitions, I don't know. But these warehouses have been built for a long time already. So when you read Mikhail something in the press, you should come and see the warehouses themselves.

Yeah. But yeah, great, great, great. Thank you very much for the color provided on this. Thank you. Thank you.

Our next question comes from Candemir. Please announce your company name and proceed with your question.

Yes, good afternoon. This is John with Woodland Company. I wanted to ask two questions. Can you maybe describe the e-cars business model and your value at that, because e-cars is now a substantial portion of the e-commerce GME, so I think that would help. And also in e-grocery, can you describe the business model? It's been a growing business, but I mean, I personally don't know what the business model there exactly. And do you also offer BMPLs for e-grocery purchase as well? That's the other question about e-groceries. Thank you very much.

Okay. So a bunch of questions about our business model. I will take a step back. for a second and before going to this specific verticals, I would mention that, you know, we are going now and really excited about it is we are going into specific verticals and, you know, building our use cases on the specific user experience, right? So basically buying a, I don't know, buying a, a, The package vacation, for example, is not the same as buying iPhone or a car or pumpers for the kids. So really different user experience. So we've started that initially with the travel. Then we went into the grocery, and then we went into the cars. And what you would see over time from us and maybe second half of this year, really cool ideas about what else we're doing around specific verticals in our marketplace. So we're just pulling out a specific need of a consumer and merchant, and we are creating the user experience, which is specifically designed for that vertical. So that's the general, the way we're creating this new wave of innovation across our services, which will continue sort of supporting our growth in Kazakhstan. In terms of the, In terms of the cars, the way you should think about the cars really is if you combine together, well, I would take the U.S. market as an example. If you combine together Carvana, you know, Carmox in a certain sense, like the biggest sort of, you know, one is fully online dealer. The biggest after trader, I think, is the biggest classified, if I'm not mistaken, in the U.S. And then you would combine some platform which sells the spare parts, which I think nobody has been successful in many other countries. And here we are working really hard to crack that. So that's a huge market. And now you're thinking, you know, in our car marketplace and on top of GND and generating businesses, you know, it does seem that you don't really know much about our business, but things like, you know, drivers can issue the driving license in our app. They can register car ownership. They can pay car taxes so that they can buy tires. So there is, oh, they can buy car, actually car. So there is a lot, they can get car finance. So the huge, you know, universe of different services around the car. So we are excited about that business just because it's after an apartment, a real estate, probably the biggest household spendings. both buying, servicing, maintaining the car and selling it afterwards. And we are in this market, you know, and we started to this strategy from acquiring the largest car classified business last year. So now we're basically number one player in the car vertical, but we're just starting to innovate because there are some things we're really excited about the maintaining and serving the car vertical. So that's about the car.

So e-cars, just to clarify, so e-cars is actually the business you got with Colessa. Did I understand it?

A portion of it. In the e-cars we combined together, we're number one in tires. You could actually see in our first few numbers the breakdown. I think we provided a breakdown for spare parts, cars 1P, car 3P. Got it. It includes pretty much everything around you know, selling and servicing cars. And we're number one in car sales. We're number one in tire sales, as we speak. And we inspired to become number one in a spare part sales. And, you know, other services that you can imagine around the car. I don't want to talk, you know, too much about some of the things we're working on. So it's everything around the cars, whatever you can imagine. Fueling your car, everything around the car. So there will be some cool stuff talking later this year about it. The grocery is pretty much e-grocery, you know, business. We went into the business. We have around 10,000 SKUs. We deliver you weekly purchase home, and we are working directly with the suppliers and, you know, whatever, Amazon Fresh, something like that. And the main difference of our business compared to many other businesses globally that we have been able to make it in just 12 months I think 7% at income margin business so it's profitable it's growing and actually we are our challenge is to cope with the demand because there is such a strong demand for that service and this is a huge market we're talking about you know sort of the 14-15 billion dollar market in front of us so and we are in three cities and we just started one city in spring of this year so that's something which will be scaling and It includes delivery, it includes stock store, everything relationship with FMCG brands to our marketing platform, but also with the brands and suppliers and distributors. And we are the biggest grocery player, I think, now in Almaty already. So we're really excited about that. So that's about the grocery business. I'm not sure if you had any other questions.

The last question was, do you also offer BMPLs for grocery purchases?

Well, I mean, BNPL in our case is basically a substitute of a credit card, right? So we offer our consumers an ability to have the payment options which are related to your own money or BNPL. So consumers decide. And what happens with the consumers is consumers don't use BNPL actually for grocery because that's a relatively small ticket transaction and they actually prefer to pay with their own money, but our, our, our consumers have a choice of using any payment option they want. Then we basically completely killed the credit card business because we make approval, you know, within 99% and whatever seconds, you know, less than two seconds, I think. And it can be, it can, it basically people don't need the credit card, which has a fees and untransparent products pricing and, and, as far as I'm concerned, credit card business does not exist in Kazakhstan anymore, just because we build such incredible transparent product for our consumers.

Okay. Thank you, Mikhail.

Thank you. That's all the time we have for our Q&A. I'll now hand back to David Ferguson for any final remarks.

All right. So thanks, Elliot. Thank you, everyone, for your time. Thank you for your questions. Let's wrap it up for today. Happy to take any questions further questions offline, but if not, thank you and speak to you in the autumn. Thanks a lot. Bye-bye.

Thank you. Thank you, everyone. Thank you, everyone. Thank you, everyone. This concludes today's webinar. You may now disconnect from the call.