Joint Stock Company Kaspi.kz

Hello everyone and welcome to today's CASB.KZ's third quarter and nine month 2025 financial results call. My name is Sam and I'll be the call moderator today. All participant lines are currently muted. After the prepared remarks, there'll be a question and answer session. If you would like to register a question throughout the call, please use the raise hand button on your Zoom toolbar. If you have dialled into the call today, you may register a question by pressing star followed by one on your telephone keypad. I'd now like to hand you over to today's host, David Ferguson, Head of Investor Relations at Catchery.kz. To begin, so David, please go ahead.

Yeah. Hi, Sam. Thank you. Good morning. Good afternoon, everyone. Welcome to our CASBKZ's 3Q2025 results call. Apologies for starting a little bit late, but let's crack on. So on the call, you've got myself, David Ferguson, Mikhail Lomtadze, CEO and co-founder of CASBKZ, Tengiz Mesidis, and Yuri Dudenko, the deputy CEOs of the company. As usual, Mikhail and myself will take you through the presentation and then we'll open up the call to Q&A where the whole team is available. So on that note, Mikhail, over to you.

Thank you. Yeah, thank you, David. So let's go straight to the presentation. So, briefly, the results for the quarter across all our platforms. What we're showing here is the results also without excluding effect of some external factors. So, the payments grew TPV 18%, revenue 10%, the nice growth of the net income of 12%, the marketplace mainly impacted by the shortage of supply of the smartphones and iPhones more specifically. So our growth has been 12% year-over-year, but 20% GMV growth in case if we exclude the effect of the smartphones. And you can also see that our revenue would be 32% up, excluding effect for the smartphones, and 16% net income. growth excluding effect of the larger of the smartphones. 7% growth if we consider that factor in. The fintech also has shown nice growth, 16% on TFE, 24% on revenue, and it would be 28% growth excluding some of the effects like tax on the government securities revenue and other external factors. I will go through them on the following slide. but 15% growth if we actually include them. And our top-line growth of 20% year-over-year, and 23% if we exclude the external factors, and 21% if we exclude the external factors as well. And also, considering where we are in terms of our performance and the next year, we are also – starting an ABS buyback in November for $400 million. We would like to bring forward, considering our cash generation and performance, we would like to bring forward the distribution of cash, but also it's a good investment considering where we are on the stock. So this is just briefly some of the factors we have listed. for the external ones, which had the impact on our performance from the financial point of view. Again, the core business has performed really nicely. Some of the things which have happened from external factors is the smartphone registration requirement and shortage of supply of iPhones that had about 8%. impact on the GMV and 3% on the consolidated income. However, we still believe that the demand is there, so next year should be a good year to recover. 10% tax on revenue from government securities. I mean, in most of the markets, actually, the revenue is taxed, so Kazakhstan introduced the tax on the revenues from the government securities this year. And it's minus 1% on net income. Increase in minimum reserve requirements, but also we cannot, you know, those reserves are kept with the national bank and there is no interest accrued. So that had the impact of minus 1%. And the base rate increased from 15.25% to 16.5%. Again, impact on consolidated net income minus 4%. We are in the environment of high interest rates. As the interest rates inflation normalizes, there is an additional performance positives for the next year. This is just to tell you and explain that actually the core business performing really nicely. The growth rates are quite high. So if you exclude the smartphones, our GMV growth has been 25%. And, you know, highest growth top five categories, you know, like beauty and personal care, 69% growth. Closing, 51% growth. And home and garden, 35%. So we're really... growing across the board on many of the categories and the smartphones, you know, because of the supply disruption really had an impact this year, but again, we believe that demand is there, so we should, you know, we expect to recover next year, and base also will be supported for the growth next year. eGrossery, we continue building up the leading eGrossery business. So as you can see, we continue growing very nicely. We have about 1.3 million customers now. We grew on the GMV 53%, and we're growing on the transactions 55%. We're scaling across the board. You know, we have, as we speak, we had nine dark stores in the third queue. We're just setting another one. And we plan to enter another at least two cities next year. So we have ambitious plans. As you remember, the business is growing fast, but it's also profitable. So for us, it's a very exciting vertical, which both drives the engagement but also brings a lot of value to consumers just because of the speed of the delivery and the quality of services we provide. Another update is also on the connecting to other banks and payment systems to our payment and the QR code, ability to pay with the QR code. So now we have even more banks connecting to our platform. The growth has been very high, you know, 176% in terms of the TPB and 5.4 million transactions in the third user transactions are going even faster. We have now seven banks connecting to it and we have Alipay which enables our consumers to transact with the QR code in the countries where Alipay is present. And we have also introduced the functionality when users of Alipay coming to Kazakhstan can also transact with the Kaspi QR. So we're We're building up this flexibility for our consumers, which is also useful for the merchants. And, you know, we continue growing very nicely and fast. We also are going for the specific verticals we have mentioned briefly during our previous calls. So the restaurants is one of the verticals which we are excited about. It's a major vertical in the spending in our lives. So we have been growing very nicely. This is the functionality to remind everyone when the consumer can actually pay with the QR code straight in the in the restaurant instantly, but also can leave the tip and all this happens in our mobile application. So TPV has grown 259 times and the transactions in excess of a million transactions in the third queue. So growth is there. The vertical is also a very valuable service for the restaurants and consumers love it. And then we continue rolling this out. As we are going for the restaurants vertical, we also have integrated the third-party restaurant delivery platform. It's Glovo. It's a subsidiary of Delivery Hero in Kazakhstan. It's a top three player in the country. So now we have integrated them in our super app. Basically, consumers can... can access the global service through a single registration, which is just the ID and from the registration they can have access to the full service of the of the global app, and they're also integrated with our payments, so the consumers can seamlessly pay with the CaspiPay. So it's a major step for us. So we're working with a third-party mobile application, and yeah, it's exciting that the teams are now working together to develop the service further. But this is a game around the restaurants vertical, and you know, we're excited to continue building up services in the specific verticals in the future. We have also done, you know, Caspi has been doing regularly the events called, you know, Caspi Keynote event when we present the major innovations and demonstrate them and tell, you know, what the service is about. So, we've launched a three services on the Kaspi keynote event. It's Pay by Palm, it's an advertising service and the Kaspi AI. So Pay by Palm is probably one of our major innovations in the payments after we have introduced the QR code and And before that, we have introduced the payments and the wire transfer by the mobile number. We were the first one to do that. So it's a very cool feature, you know, when you basically just connect through our mobile application and the device to the Kaspi Pay by Palm, Kaspi Alakan. Alakan in Kazakh means palm. And then you can simply put your... your palm on the top of our device and the payment goes through. So it's very exciting innovation. We're planning to roll out at the end of this year. It will be free of charge for the merchants for the first three months. And we're, you know, in general, our view in the payments business is that we would like to give as much, you know, flexibility and the choice to consumers as possible. So our consumers are, you know, able to pay with the card, obviously, can pay with the QR code, can pay with the palm. And in the future, we're also expecting to introduce some additional service. So we would like to give them as much flexibility to the consumers as possible. And we're also working with the National Bank so that our consumers can also pay through any QR code at any merchant. So our consumers will have as much choice as possible. as possible, and this innovation will just bring additional very exciting way to transact in the stores, especially in the high-intensity transactions. There is a video we have published both of Caspi Alakan and also the event, so you are welcome to check them out. It's really cool, and the service is really exciting, and initial feedback is really great. Advertising revenue has been one of the fastest growing revenue drivers for us in the marketplace specifically and we have grown at revenue 56% year over year. And as we think about advertising, you know, we constantly launch the services which enable merchants to increase their sales, but also for consumers to make very informed decisions. So we have launched, as we speak, the service when our merchants can advertise on the third-party platforms. So it's a pretty exciting and really cool service when you can immediately, almost like within one minute, you can – You can set up the campaign. You can manage the campaign from the screen of your smartphone. You can review the analytics. And the third-party platforms, you can preview your ads. And the platforms which merchants will be able to advertise are Facebook, Instagram, TikTok. and Google, and we're very excited. This is just one more tool for our merchants to have a very efficient advertising campaigns, but also they can track them, they can manage them, and analytics are really in-depth around those marketing campaigns. So very excited about this new service in advertising we have just launched. We also have been working a lot behind the scenes on the on the AI, Kasti AI Assistant. Our view of Kasti AI Assistant is actually quite simple. We call him Assistant because we believe that technology that we're developing at Kasti will help to make a daily tasks faster, simpler, more convenient, better quality. So we are looking for a very specific use cases which technology we're developing in Caspi can enable. Again, technology has very wide, as you guys know, very wide applications. However, we believe that to deliver the most value, we want the technology to be assistant in a specific tasks for either merchants and in the future consumers. So this is the first application of that technology, which we're launching. It's a Caspi AI assistant for the merchants. So the way the service works is quite straightforward. David, can you switch this slide? So basically you can create the goal and application of this service is to enrich the product content and create the rich content which helps you to increase the the interest from the consumers and therefore that converts into your sales. So, you know, it's basically you're uploading the photos, you can see some functionality screens here, you're uploading the photo, then Casp AI creates the photos for your product. In this case, for example, the Casp AI will select the model, which will be, you know, wearing your hoodie, Then Gatsby AI also creates the description. Description is based on many different insights and parameters, which also includes the customer reviews and what is important for the customers in order to make the informed decision about this product. And afterwards, you can preview the product and you can publish it. So it's really, before that, it would take whatever per item may be, depending how complicated the item is, maybe 10, 15 minutes to upload the item and create the description, and that was one of the main pain points for the merchants. Now it just takes the minutes, and everything is filled up automatically. You can even make a photo of the label, and then whole characteristics of the product will be filled up also automatically. automatically. And then we still call this an assistant, which means the control is with the merchant or with the user. So user can edit, user can confirm those description, can select the photos, can ask AI to create more photos and so on and so forth. But that's really a very powerful tool which has shown extraordinary results. As most of the technologies and the services we're developing, we run those services on ourselves first. And then we get convinced that technology is really working and the service has the value. And after that, we offer it to customers and the merchants in that specific case. So we have enriched about over half a million products. And I just, you know, can show just some of the examples. So, for example, this one is the cattle. And, you know, how much else you can say about the cattle in order to, you know, have more interest from buyers and to drive your sales. But actually, what Caspi AI will suggest you to do, and again, this is all generated by Caspi AI. Those are actual screens and actual texts, you know. The interaction works similar to the AI assistant. So it will create the photo in the interior. It will suggest to create the photo with the hand holding the smartphone, for example, because this is actually smart cattle. So it's not only boiling water, but it's doing a bit more of the functions. And also it will suggest to create and will create the size of the kettle, because then you can understand from those photos that actually this is the way it looks in interior. It's more just the kettle is a smart kettle, and also it has sizes so you can understand how it stands in interior in terms of the size. And then it will create also the description, which will give you – more details around each of those points. So this, for example, card product has been enriched and the results were quite meaningful. So we have this product after enrichment increased 35% in clicks interest from consumers and gave 83% increase in the sales. And again, this is the product which was just a photo or limited photo you know, limited description and this is the rich content which sells, which also gives consumer more tools to make the right decision. Another example is tires. You know, how much you can tell about tires. Obviously, you know, tire is a tire. Everybody knows what tire looks like. However, Kaspi.ai actually identified that you know, if you create the infographic, which has on the first page, which usually consumer sees, you need to say actually, what is the seasonality of this tire, and also list some main, most important characteristics in infographic, so that consumer can make a decision while looking at the photo. So this is how Gasp AI created the whole thing, and then on top of it, it actually inserted the description and created the description, which says a little bit more on every individual most important parameter of the tire so that the consumer can make the right decision. Again, all of those are created by Gatsby AI, including these photos and infographics and descriptions. So clicks actually increased 4%, so they drive more interest from the consumers, and the 53% of the sales increased just because of this change on that tire. So it's really exciting technology. We have been working on this behind the scenes for quite some time. We have been running different, obviously running different experiments before we decided to launch on the merchants. Here what you see on the screen is like we would normally do with any Similar technology and innovation, you know, we basically identified 30 days before, let's assume there are two similar control groups, right? So red is the product which we improved, enriched the content, and then the gray color is the control group. So those are the similar products, let's assume similar cattles or similar tires. And we observed them for 30 days. And as you can see, behavior is very similar because those groups are extremely comparable products. After that, you know, we have had our Gatsby AI to enrich the content. So again, to create the products, to create the description and characteristics and so on and so forth. And as you can see, 30 days after the enrichment, the control group continued performing decently and is still giving some increase. However, enriched content has more than two times interest and clicks from the consumers than the control group. So, this is a very exciting technology. It's the first application out of many which technology can be applied and, you know, we're rolling this out. It will be available for the merchants in January of 2026. But again, as I mentioned, we are ourselves, we're using this technology and ourselves are enriching already the content. And we have enriched about over 500,000 products on our marketplace e-commerce side. I would like also to mention just very briefly some of the important priorities, you know, Hepsi Burata is working on and, you know, our main goal is really to to ensure that we have a very strong performance and continue exciting the consumers and merchants. And there are four priorities. Number one is the delivery. And they are not in priority, right? So we're focused, we're working on four of them. So the main areas of investment is delivery, BNPL, and the payment options from the banks, marketing, and user experience. On delivery side, you know, we are... making the low ticket items more beneficial for the merchants to ship. Before that, the delivery cost was more than the value of the item which was sold. So we have actually worked on making sure the delivery is economically viable for the merchants and especially in the low ticket items because those items are the ones which also driving engagement and also we've launched a weekly delivery which was not yeah, weekly delivery basically was not the market practice and you know we believe that if you are e-commerce business you should be delivering on the weekends especially if the traditional retail works on the weekends BNPL from banks and payment options is a wider selection of the banks and the wider selection of the payment terms and specifically also in the low ticket items, which again, you know, are driving the engagement. Marketing, that's another area of investments and improvements. Teams are working mostly to optimize the performance to make sure that if we are marketing the products, those products are high quality on the good terms, and therefore they generate more interest, more traffic, and more views. As soon as this traffic lands in your mobile application, of course, user experience improvements are targeted to redesigning the consumer shopping journey in order to have the higher conversion rates. So there are a number of other things we're working on, of course, but this is something which gives us both results, but also they are important both for merchants and for the consumers. So as a result of those, for instance, improvements and changes in some of the areas, we have shown a very nice growth in number of purchases, which is the main metric for us, which shows the growing engagement from both consumers and merchants. So the growth has been through the year, and the third Q plus 16%. in order to grow, which is a really exciting trend. Obviously, we will continue making further improvements and investments, but that's already a reasonable result to share with you. So a couple of things just to give you a bit heads up, like some of the things which we're sort of working on, just to visualize those are really, you know, you don't have to be the rocket scientist. There are some really simple stuff that you can do. So in case of the payment options, for example, we have, you know, we have shown to the consumer's number of payments you are making, but also the monthly payment that you might have with the BMPL payment option and And those results, you know, before and after gave us maybe a test 4.5% growth in the GMV. This is, again, I'm just showing you some simple examples. Obviously, I'm not going to take your time to go through all the improvements we have done. Another slide is, for example, the redesigning some of the homepage items. So we have we have basically brought in more personalization in order for consumers to easier understand some of the products that are fit for them or interesting for them. So recently viewed products and especially for you sections on the homepage, and also in principle just to see more products on the homepage. So CTR, you know, increased almost two times from 15% to 31% in AAB test for recently viewed section, and especially for used section increased from 18% to 23% quick-through rate. So it just tells you how much of the simple improvements in the user experience can bring the value. We're also working on the third-party platforms, in this case it's influencers, which, you know, Hepziburada has a significant influencer channel which drives the sales and here we have basically also made the various sort of important changes basically helping the influencers and the merchants in this case to launch the campaigns when you reduce the price and you also have the reduction from the from the Hepsiburata, how much of the benefit you will get, how much of the sales uplift you will have, and you can also see the products which you can launch. So this A-B test gave us more than 9% of the GMV uplift, and again, this is the service when merchant can launch the prices, and the price reduction is also matched with Hepsiburata commission reduction. And then influencers, again, influencers here can actually easier see the offers which they can market to their subscribers so we have done you can you can you can easier see the brands you can see the products and those are also very much we're trying to match those select this selection with the specific influencer So, the influencer channel is quite substantial, and the AB test gave us also the same, in excess of 9% GMV growth. So, all in all, I mean, we have introduced some of the major innovations on the CUSP side, and we're also achieving the growth in orders, which is very healthy, because we're investing our efforts into delivery, marketing, payment options, BMPL, and user experience improvement. Back to you, David.