Joint Stock Company Kaspi.kz

Welcome everyone to the CASB 4Q and 4 Year 24 Financial Results Webinar. My name is Brika and I will be your coordinator today. If you wish to ask a question during the webinar, please use star followed by one if you have joined us on the phone and please raise your hand if you have joined us on Zoom. I would now like to hand the call over to David Ferguson from CASB to begin today's presentation. Please go ahead, David.

Okay, thanks, Brika. Good morning, good afternoon, everyone. Thank you for joining us today. It's our fourth quarter and full year 2024 financial results. I'm David Ferguson from Caspi. Joining me on the call, our CEO and co-founder, Michele Lontaza. our deputy CEOs, Tengay Mesidis and Yuri Dedenko. Standard format for the call, Mikhail will run you through strategic update of 2024. I'll run you through the financials. We'll open the call up to Q&A. The whole team is available to participate. So on that note, over to you, Mikhail.

Thank you, David. Good to have you all on this call. Just to give you, you know, another reminder of the, you know, Caspi super app business model and this incredible range of diverse services for consumers and merchants. And, you know, just to, again, just to remind those are, we run the two super apps. One is for consumers, another one is for merchants. We connect the experiences of both through the payment network, marketplace, you know, fintech, financial services, and on the consumer side, there is a huge range of the services which we continuously innovate. So, I mean, some of the things I will cover later in the presentation, but things like gift certificates, for example, which, you know, we have been – we launched – last year. And again, consumers can shop, pay, manage their finance, delivery through our consumer super app. And then on the merchant side, we've mentioned the merchant side will be a strong pipeline for innovations for merchants just to help them grow their businesses, become more efficient and really help them to onboard to the marketplace, but also get access to the financing of their business. So as merchants grow and merchants are successful, you know, we are successful and actually products of those merchants being either paid or for or purchased through the consumer Gaspi KZ Super App and some of the products which we have also launched and have been scaling this year are quite exciting. Things like deposit for business or, you know, buy inventory now, pay later products as well as around an advertising and some of the product innovations we have you know later in the presentation but just to remind everyone you know unique business runs to super apps with wide range of the services around daily needs of consumers and merchants Just on the fourth Q numbers. So we have a very strong Q quarter. So, you know, all our platforms show the very strong growth. The payments, TPV grew 30% and the net income on the payments grew 22% with revenue, 19%. Marketplace have been the fastest growing business for us. So GMV grew 39%, revenue 43%, and net income 32%. And as we also told you and guided you through the year, you know, the later in the year of 2024, there will be a, you know, fintech business will be catching up. So, you know, very sort of good, strong quarter for our fintech business with financing volumes growing 21%, the net income growing 28%. Consolidated, you know, we continue to be a business which drives transactions. That's sort of the foundation of our business. Monthly transactions per active consumer 73, which is incredible. So again, this is not just sort of opening the mobile application or what we would call maybe soft metrics. This is really hard metrics when consumers pay, consumers shop. you know merchants transact and so on and so forth so this actual transaction so 73 transactions per month per active consumer is a is a very is i mean it's the world class uh the revenue grew 28 and the net income grew uh consolidated in a fourth queue 28 so strong quarter performance Our annual performance, you know, not going to spend much time on it, but basically grew really well. And our net income grew 25% year over year with revenue 32%. And again, as I mentioned, even though FinTech grew 12% over the course of the year, actually the last quarter was 28% net income growth on the FinTech. So FinTech was catching up. And the fastest growing on a net income during the year was our marketplace. So 41% growth on net income during the year. As we continue developing our platforms, so we're becoming increasingly diversified. So as you can see now, we have pretty much equal sort of bottom line from three of our platforms, roughly one third each and non-fintech now is 69%. So another year of the growth. And again, in our our profits have been driven by faster growing marketplace and the payments. And that is reflected now in distribution of our net income. So well diversified across sort of three platforms, which is a good sign and has been our focus for a long time. Consumer services penetration is there are basically services which we have here, the selected services, which are sort of transactional, I would say. And we, as you can see, even the higher penetrated services continue strong growth, like on the payment side, for example, TPV grew 31%. And this is on the back of sort of payments business growth. being the highest penetrated. 94% of our consumers, for example, use QR and card transactions, or 85% of our consumers do household regular bills. At the same time, everything around sort of marketplace is something which will be driving growth further. due to the current penetration of e-commerce, but also in general, as we add more, as we add more, you know, shopping verticals and e-grocery, for example, is just 6% of our consumers, which provides a really very strong, We believe that there will be a very significant growth in e-grocery. And then on the fintech side, I think products like car finance, for example, which we have been also scaling during the year, are the type of products which will also drive the growth in the future. The merchant services pretty much mirror really. So payments, again, the highest penetration, and now most of our merchants are connected to our payments, 95% of the merchants, but again, still sort of driving the transactions around merchants and consumers. And as with the consumers, the same is pretty much with the merchant, everything around marketplace, e-commerce specifically, you know, those are the sort of services which have the strong growth perspective due to the low penetration. E-commerce penetration is only 11% of our merchant base. And the same time advertising, which we have been scaling for the last couple of years, or delivery also have a potential to be value creating for merchants. And therefore, the penetration will be driving the growth. And we've also launched a couple of merchant related products, both on the payments and the finance side, and also savings. Just to give you a sense, like 10% of our merchants are using business deposit now. And we just launched it like... later in 2024. So it has been quite a remarkable engagement from merchants. And now merchants not only can accept the payments through us, not only sell or advertise the goods they have and also connect to the delivery, but actually merchants can also save the money if they have access cash and the Gatsby deposit is a The KaspiPay business deposit is a very good product, which was very much welcomed by the merchants. If you look at the cohorts, well, cohorts continue a strong growth. So the payments cohort, as you can see, continues a nice growth. Each cohort growing. 65% of our consumers are from the last five years. And again, as we continue, we already have very strong engagements from the merchants and from the consumers. This platform is the highest engaged, the most of consumers and merchants are using it. So by adding more reasons to transact, we'll be supporting the growth in a payments business. Marketplace, even higher potential, really, and the growth. And you can see each cohort also demonstrates a very strong growth. Again, 54% of consumers are actually from the last five years. But also, you know, every sort of cohort, you know, the consumers are shopping more. And this is really is a result of us either entering the new verticals and on the e-commerce side, you know, or adding more products, items to buy, but also going into new businesses like, you know, we constantly... launch something new, right? E-grocery is a good example, travel, tours is another example, cars and so on and so forth. So, you know, marketplace will grow both as more consumers will use it, more merchants will connect, assortment will increase, but also the new services which we are constantly launching. The grocery business has shown a very strong growth. So we now grew about 97% in the GMV and 84% in the transactions. Almost 10 million transactions last year. So just keep in mind that this business didn't exist a couple of years ago. So we have been able to scale it nicely, rapidly, quickly. with a good quality consumer experience and very high levels of engagement. We have been focused on the three cities during 2024. We have been adding more dark stores during the year, but also expanding the capacity of existing dark stores, increasing the efficiency. So the entire team from e-commerce to the e-grocery operation has done a remarkable job by exciting consumers. This business is highly repetitive, so consumer experience is extremely important and fundamental. If consumers are happy and excited, they continue shopping with you. So high frequency business, the quality of the consumer experience is super important. And in 2025, we are considering entering the two new cities. Our existing cities will continue to grow and will continue to increase the capacity. But at the same time, in 2025, we would like to enter the two new cities with our e-grocery value proposition. The e-cars, so the cars business, we have been also driving nicely. And again, we are going after the entire value chain, sort of helping the consumers to buy the car and to own the car, have shown a very good growth. And yeah, it's 3P mainly. And then 1P, it's a highly targeted product, basically, which will be for the sellers that want to get money fast and the buyers that want to get the money with the car, which has been sort of checked and verified for additional value created for both sellers of the cars and merchants of the car, sort of buyers of the car. But in general, it's largely sort of 3P integrated also with Kalyosa, our number one, classifieds, car classifieds in the country. And yeah, and we're streamlining the entire value chain and they're, usually they will move slightly in opposite directions. The larger is a 3P business, smaller is a 1P business because eventually it's all about those same cars which being sold but different way. 62% GMV growth, very encouraging and the spare parts is our important priority this year and next year. you look at the you know value chain or what we're trying to do this just to give you a little bit of an overview you know consume consumers sellers and buyers of the cars you know we we help them to to to lease the cars we help them to buy the car you know they can get online car finance which is the fully digital experience you can buy spare parts uh you can register the car with our government services you can pay taxes for the car you can issue driving license so those are sort of the main uh the main um uh parts of the value chain between buying the car owning the car so very exciting you know continue to digitalize the the the buying ownership experience of the car and it's probably the second largest uh item on this household budget so yeah so we just continue developing this business really excited about good good growth in 2024. We've launched gift cards at the end of last year. So it's just a very nice, cool feature, personalized. You can actually basically just give the gift card for the birthday of your friends or your coworkers when you don't really have to think about what you want to buy. So instead of it, you can give a gift card and then And then the person can actually buy anything they want on Kaspi e-commerce. So have been a very strong growth. We just launched the project really. So, but it's already, you know, almost 50,000 purchases. So yeah, so very excited. There will be a range of the innovation around the gift card experience during this year, but it's cool. It's fun. Consumers love it. Net promoter score is incredible. So yeah, so it's really, really nice shopping experience. The delivery on our e-commerce is our important, well, I should call it asset. So I think we are a world-class company in a delivery in our e-commerce. So we have grew our delivered orders 128% last year and almost 100 million orders delivered during the year. The important metrics of the delivery, it's basically almost for free, you know, 84%. And almost half of those we deliver in less than two days. And very importantly, you know, the lockers, Caspi Postumans, which we rolled out for the last several years, you know, is creating this unique opportunity of not just only exciting consumers by delivering on time with a very high success ratios, but also keeping the cost under control on the delivery side. So, you know, very, very excited about this. Now we have largely built the network At the moment, we have in excess of 8,000 postmats. And we will just continue sort of maintaining and increasing the efficiency. But we have pretty much built the network which is required to cover the country. We have also launched and have been launched in 2017. I think. And then in 2024, we actually launched another, you know, much more advanced version of Caspi POS register. So that's something, this product is very interesting and very useful for the merchants. So basically what you can do is you can enter the item which consumer wants to buy. First of all, you create the product catalog. Then you enter what consumers want to buy. and then you enter the price, you enter the quantity, you actually accept the payment through our POS. The software is integrated with our POS network and then automatically will be producing also digital tax receipts. you know, this is very sort of high value additive product to the merchant operation. We provide it for free. But this just gives you a sense of that, you know, we're a company which is creating the value added services and increasing value of Gatsby as the company which helps merchants to develop. So 35% of Gatsby merchants now using the POS register. And we have processed the 1.2 trillion of the payments through our register. And again, if you think about the functionality and And the value we can create in the future around this simple function of actually recording the transactions and the purchases, you know, there are value-added services, which, you know, we believe we can develop around the sales reports, around the inventory. around advertising and many other valuated services for merchants. But this is the product which has been showing extraordinary engagement. And again, more than one in three merchants already using it. And it's completely free for merchants. We have been also developing further the advertising offerings. So as you recall, during the year, we launched brand advertising. So now we have... Two products. Well, last, no. Yeah, now we have more. Last year, we had two products. We now are almost in March, right? So last year, we had two products. The one product is to advertise. You can advertise your goods. So products which you have on our marketplace and e-commerce platform. And now also, if you have a brand, now you can also advertise your brand. And has been showing a very strong adoption. And now... Our Caspi ad service is being used by 51,000 merchants and contributes significantly to both our revenue, but most importantly, really helps merchants and brands to reach the right customers at the right time with the right product. Business Deposit, we launched last year. Again, that was something which I mentioned in the beginning of our call. Has been extraordinary adoptions. We just launched this product in the... in the third queue. And as you can see, 77,000 merchants were already saving, you know, having the Caspi business deposit end of last year. You know, incredible growth in terms of the amounts, 443% now is a growth of just during the year as we were scaling it. The unique feature of this savings deposit, if you take the merchant perspective, you know, I'm in a trading business, I had a good week or, you know, a good month of the sales or day driven by Caspi promotion campaigns, for example. So I have some extra cash and I can, you know, fully online, fully digital, I can place this extra cash on the business deposit, interest is accrued daily, and yeah, and this is very attractive for the merchant, so now merchants not only can pay and we process payments for them or help to sell the goods, but also merchants can now save money and make a revenue from the interest, which we pay on the cash, which is extra and you can place it on the savings account on the Kaspi deposit with us. So impressive growth and merchants welcome this product, which we launched last year. Another product which we've launched end of last year, it's buy inventory now, pay later. So basically what that means is that, you know, you are, to simplify, you are a convenience store. You have a you have a supplier from, you know, on the B2B side of things, work with distributors, B2B payments, as you know. So those suppliers come in to the convenience store and they bring some, you know, products from FMCG brands. So you can actually buy this inventory and pay for, 30 days later to us, but we will pay to distributors straight away. And it's a fully online product. You can select the amount, you can select the limit which you want when the transactions are happening, for example, on a daily basis by the employee. And then you pretty much scan the supplier's QR code, which Courier has, and you can pay a delivery. And then we pay immediately and then you pay us 30 days later. So this product basically helps to streamline the B2B. It's another product on B2B side of things on top of B2B payments. And yeah, it's additional product which helps the merchants to grow and improve working capital and the suppliers or distributors is also helps to reduce the receivables and yeah and we're in a risk management business so we can do our job better than than anyone else in the value chain so in other exciting products and we'll be scaling it during this year in 2025. Just a couple of slides about Gatsby and our products in terms of consumer recognition and the brand perception. Again, this is something just important to keep in mind. This is probably the most important asset that we have. which is the result of high quality products, which will launch. So if you ask the consumer, you know, which mobile application is installed on your mobile phone will be 5.5 times more mentioned than the nearest brand or which payment app, you know, and uses 20, almost 20 times the nearest brand is Gaspi KZ. If you ask about e-commerce apps that, you know, use almost three times more than the nearest brand, which travel apps, you know, sites sort of use, you know, its nearest brand is three times more. Again, the travel didn't exist several years ago. So, you know, we've built this business from scratch. Whether you would take a loan... you know it's four times needed brand where you would put your deposit funds with you know three times nearest brand and then on the on the car and real estate you know if you yeah consumer basically you know in terms of the cars where you would buy a car 10 times the nearest brand so number one car vertical on the market and then where you would buy real estate, you know, 4.4 times better than the nearest brand. And again, you know, all those brand metrics are just a reminder that while we are on just a 20 million people market, we are innovating you know we're launching the new services we're driving the engagement and every service you know and some of them i've just you know showed you earlier they are in receiving increasing adoption the foundation for this is actually quality of the services and the quality of our operations and we do care about the consumers and the merchants and that is is a result of it is a strong brand perception which is an important asset and And we just continue to innovate, exciting our customers. But yeah, the consumers and the merchants love us for the quality of the services we develop. Yeah, I would like to mention just a high-level preview of the HepsiBorada transaction. So we basically closed the transaction in May. in January, end of January, and we received all the regulatory approvals and we paid the first part of the acquisition price and the second part of the acquisition price will be paid basically not mid-summer, not later than six months post-closing. Just wanted to mention the transaction is being funded from our cash flow. and the first payment and the second payment our no dividend for the fourth Q in the first half. Yeah, we just wanted to make this clear. We did mention this end of last year, but still just to clarify. And then we'll, yeah, we'll update later in the year, second half about the return of the cash, excess cash to our shareholders. Again, we have been very disciplined about this historically, but you know, every single time on this call, I did mention that the, you know, investing in the future, investing into the growth is the important priority. So I do hope it doesn't come as a surprise, but we did mention this on every call for so many years. Just a couple of things in the review of the of the opportunity, again, you know, the population, 85 million people, you know, Turkey is really exciting, you know, market for us, it brings us 200, plus million people. The retail is, you know, obviously much bigger than the Kazakhstan. Ecom penetration is, it still allows a very nice growth, GDP growth forecast about 4.4%. And then, you know, clearly the market inflation outlook is showing, you know, sort of signs of the normalization, you know, We believe that this year should be still challenging from the consumer perspective as this transition to the macro and inflation sort of stability continues through the year. But the medium term is an exciting opportunity for us. And HEPC Burrata is a strong foundation and platform which we would like to build on in the country, on top of it, CASP itself. Yeah, Kaspi itself looking to launch some services in Turkey. Hepsiburata has been quite disciplined post-COVID and focused on destabilizing its financials and moving to positive cash flow. So that has been, you know, a very important priority for the company and its founders and the management teams have done a very good job. And now, you know, over time, this would be also an opportunity where we can build on and probably switch to more of a product development and innovations on this strong foundation. And then, you know, a couple of things about the Hepsiburata in terms of the size, you know, it's about 3.5 billion GMV. So GMV is a reasonable size and has been growing around 17%. We're presenting you, by the way, those are sort of nine-month numbers and Hepsiburata definition of its financials. You know, you... I would hope you appreciate Habsigurad is a public company and therefore it's communicating its own results on its own merit. And therefore here what we have is actually the nine month numbers which are publicly available. you can also see it from Hepsiburata on a nine month. But GMV growth has been 17%, share of 3P is 70, so one third is 1P, 3P is two thirds of the business roughly. Active consumers, 12 million, which is a good foundation and active merchants around 100K. All of this really, you know, most importantly is just a good foundation for us to to enlarge our market and basically a strong start for our international expansion, which we always had as a target for many years. David, back to you.