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.

All right, so thank you, Mikael. Let's go on and just talk about the performance of the core business, starting with the payment platform. So I think that's the key message here on this slide. Payments growth remains robust, but also consistent throughout the year. The volume's up 14%. In the third quarter, up 15% year-on-year for the nine-month period. And as we've talked about previously, just this reflects the ongoing popularity of CASB pay, bill payments, and the fast adoption of B2B payments. Strong volume growth translates, plus growth in ticket size, translates into faster growth in TPV. Up 18% in the third quarter versus 14% volume growth. Up 21% for the nine-month period versus 15% volume growth. So again, strong and consistent trends. um what you have within the 69 percent of our volume that come from caspy qr and card is the shift continues to move in favor of qr and that drives the take rate down down nine basis points in q3 eight basis points for the nine month period again that trend is consistent you've seen that actually playing out over the last a couple of years The combination of strong top line growth, strong volume growth, strong TPV growth, but with take rate dilution results in lower revenue growth, plus 10% and plus 14% for the third quarter and nine month period. Again, as you consistently see in top line dropping through to the bottom line, operational gearing and cost control, faster bottom line growth in payments of 12% and 17% respectively. Moving on to marketplace. So here, again, actually, you see the purchase volumes very strong and, again, consistent throughout the year, up 36% year-on-year. In the third quarter, up 36% year-on-year for the nine-month period. Transaction growth on marketplace remains fast. In terms of GMV growth, GMV growth up 12% and 15% year on year. This slide really illustrates the impact of the supply issues in smartphones, because you see excluding smartphones, GMV is up 20% for the third quarter and up 21% year on year. And you should keep in mind that the smartphone supply disruption is relevant, not just for e-commerce, but for m-commerce as well. Marketplace's take rate continues to move up, hitting the get once again, all-time high levels, 10.3% for the third quarter and for the nine-month period, driven by value-added services, namely Caspi Advertising and Caspi Delivery. As Mikel showed you, advertising revenue up 56% in the third quarter, up 76% for the nine-month period. If we look more specifically at e-commerce, 12% GMV growth in the third quarter. If we adjust for smartphones, GMV growth up 25%. For the nine-month period, GMV up 19%. And again, if we adjust for smartphones, up 29% year on year. The performance of Mark e-commerce X smartphones remains very, very strong. The smartphone supply disruption is a countrywide issue. As we move into next year, from March, we have a very favorable comp, and we'd also expect over the course of next year for supply issues to naturally resolve themselves. The competitive position of e-commerce remains completely unchanged. And actually on the purchase side of the equation, you see here again, growth very strong of 86% year-on-year and up 90% year-on-year for the third quarter and nine-month period respectively, with the grocery contributing to that fast growth. And commerce, always the slower growing of the marketplace platforms, but nonetheless still an important platform, particularly for onboarding merchants. GMV growth up 12% in both periods. Here too, if we adjust to smartphones, GMV growth up 17% and 15% in the third quarter, the nine-month period. take rate moved up slightly again as we continue to just add additional value-added services and marketing campaigns for our merchants and on travel travel continues to post decent growth gmb up 13 in the third quarter up 17 for the nine month period Here too, take rate moving up nicely, 50 basis points in the third quarter, 60 basis points for the nine month period. That is primarily due to the growth in Caspi Tours. Now account for around 10% of GMB, travels GMB, launched around two years ago. So it has grown nicely from zero and will continue as we move into next year to grow above travels overall GMB rating, buying further take rate expansion. So the combination of take rate expansion above GMV growth plus fast growth in grocery revenue translates into revenue growth in marketplace well above GMV growth, up 24% and 27% year on year for the periods. Here too, if we make the smartphone adjustment, you see revenue up 32% and 34%. So really just, again, reiterating the point that the supply disruption in smartphones, which we expect to be temporary and to resolve itself over the course of next year, is the primary and actually only reason for the sort of slower growth that you are seeing in marketplace. Same comments on the net income side of things, up 7%. and 13% adjusted for smartphones, up 16% and 20%. Net income growth will grow below revenue growth, and that is just the mix effect of 1P eGrocery growing fast and taking a share within the mix. Finally, in Kazakhstan, moving on to the fintech platform, PFB growth remains very robust. of 16 percent and 17 percent in the third quarter and nine month uh period um so here too not just robust but again consistent over the course of the the year The TFV growth is being driven by merchant lending, which we expect to keep growing at a faster rate than the consumer lending products. That's actually nothing new. That's been the case over the last couple of years and should remain the case going forward. the um growth in origination is happening it's with stable uh pricing the fintech yields flat year on year at around 16 in the third quarter 18 for the nine month um period and you hear to you see strong growth uh in the loan portfolio of 30 and 32 percent year on year Growing at a faster rate than the deposit base, but here too the deposit base continues to see very robust and predictable trends. The new products that we've introduced and that we've talked about previously have seen solid month-on-month growth in deposits since their introduction. Cost of risk 0.6% versus 0.5% in the same period last year. Overall, credit trends remain strong and consistent, albeit, as we mentioned at the H1 numbers, currency depreciation in the first part of the year did necessitate higher macro provisioning in the first part of the year. um mpls have have moved up slightly um but again this is the trend that's been consistent over slightly best as the end of last year this has been the trend through um out the course of of this year and overall credit trends remain strong and consistent. A lower coverage reflects the growing share of the car loan and the growing share of the merchant financing. The car loan is secured. The merchant financing is sort of by nature a lower risk product and therefore requires less provisioning unchanged on the consumer side of the equation. So what you have is just a mix effect. With strong origination in previous periods, stable pricing, you have decent and accelerating fintech revenue growth of 24% in the third quarter and up 21% for the nine-month period. um faster revenue growth has also translated into accelerating net income growth um accelerating net income growth up to 15 from 10 in the nine month period that's despite the growth in interest expenses in the third quarter up 30 percent year on year Adjusted net income growth reflects the effects of the base rate increase. So you can see that if rates hadn't moved up in the first part of the year, actually the fintech platform would be on track, would have delivered 28% bottom line growth in the third quarter and 18% for the nine-month period. So here I think the point to illustrate is just how material the rate increases have been on the bottom line. But interest rates in Kazakhstan are at high levels and this can move the other way when rates trend downwards. So moving on to HAPC Barada, as Michal talked about, there's multiple product initiatives taking place around payment options, marketing, delivery, user experience, and so on. And one way you can sort of track the progress ultimately is in terms of purchases, driving purchases, frequency of transactions on the marketplace. And you can see here, that the initiatives that we have launched are gathering increasing momentum with purchase volumes of 16% for the third quarter versus plus 4% for the nine-month period. So that's a really encouraging increase in growth momentum as we look into next year. That mirrors in the GMV side of the equation. Financials are inflation adjusted. We're talking about real growth here. So I know there's been some sort of confusion around that in some of the commentary that I've seen. But here too, you see GMV growth moving up, up 15% for the third quarter versus 5% for the nine-month period. So the investments, the product improvements that we're making are starting to drive an improvement in the top-line performance of the business, and that's reflected in both 3P and the 1P sides of the business. The 15% and 5% GMV growth translates again into faster real revenue growth of 22% and 11% versus 11% for the nine-month period. So, year two, you see that the investments that we're making are starting to translate into a faster-growing business. That is the aim, to invest and drive the top-line performance of this business up to a faster rate for a sustained period of time. And that is also being helped at the revenue level by growth in advertising and growth in external delivery services, hence the faster revenue growth versus GMB growth. You can see the impact of the investments that we're making. The investments are targeted primarily into those sort of four areas that we've talked about, delivery, payment options, marketing. and user experience, and you see that impact on the EBITDA level, but you can see that these investments are translating into faster revenue growth and for the owners for that faster revenue growth to be sustainable as we go into future years the investments impact the bottom line but what you can see here if we look at the third quarter of 2025 is that the main area of that investment is on the payment options, the buy now, pay later options that we're integrating with third-party banks. That's the main increase, performance advertising and delivery to a lesser extent. PepsiGarata has also announced a $100 million share capital increase. And again, you know, it is raising funds with a view to ensuring that that business is well capitalized to pursue its different objectives over the course of next year. So what does all of this mean? For Caspi in Kazakhstan, you see decent and consistent revenue growth of 20% in both periods. here you see again at the revenue level at a group level the impact of smartphones uh gm uh revenue would be up 23 and 22 um respectively of the third quarter and the nine month um period and then at the net income level here you have the impact the 21 net income growth in the third quarter and the 24 net income growth reflects the impact of smartphones the higher base rate and the other external factors, regulatory and tax changes that have been introduced over the course of this year. But it helps you to understand the underlying operating performance of the business to put some perspective on this. If you think about at the beginning of the year when we guided for net income growth of around 20%, you can see that without these external factors that have occurred subsequently, we're actually trending very close, exactly on track for that. The underlying core business growth drivers remain unchanged. Here is the consolidated numbers in just the culmination of Kazakhstan and Turkey together. And then in terms of the guidance, on the middle column here, you see the updated guidance. So lower GMB growth. This reflects the absence of the recovery in smartphones in the fourth quarter. Again, just to reiterate, from March 2026, if nothing else, we have a very, very favorable base effect going forward. There's no reason to think that the supply disruption won't resolve itself over the course of next year. We're just for smartphones. You can see that marketplace is on track for 19% to 21% GMV growth. TPV payment growth around 20% that's at the top end of the range we provided at the beginning and summer periods and TFD growth in line with the guidance that we provided at the summer period around 15% so it's really only the smartphone issue that's affecting the top line trends Bottom line of around 10% growth in Kazakhstan. That is lower than the around 15%. And that reflects smartphones. It reflects the tax and regulatory changes. And again, the impact of the higher base taxes. If you X out those factors, the business will be on track for around 18% to 20% growth next year. And this gives you some indication of what can grow here as the smartphone issues resolve themselves. Interest rates at some point move down. The tax and regulatory factors at least move into the base. We've also launched the $100 million, or we will launch and post this call, the $100 million ADS buyback program. And I think what we've said in the press release as we look into 2006, we expect to be able to achieve a balance between investing in the business, returning cash to our shareholders via both buybacks This 100 million ADS buyback programme doesn't have to be the end. It can be the start. And the resumption of dividend payments is too early to go into the detail, just to pre-empt that question around exactly what dividends can be. But I think being pretty consistent, this year was an investment year. We've made those investments to put the foundations in place for future growth. That was what we said 12 months ago. Our message has been consistent, and our message now is we can achieve a balance between investing in our growth and returning cash next year. So I hope that's sort of pretty clear to people. So on that note, let's open the call up to Q&A, please.

Thank you. As a reminder, if you would like to register a question, 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 a one on your telephone keypad. Please hold whilst we allow questions to queue. Our first question comes from the line of Igal Aronian from Citigroup. Igal, please unmute and proceed with your question.

Hey, good morning, good afternoon, guys. Maybe I'll start with Hep C in Turkey and the updates there on the investment is really helpful. Can you just help sort of paint a picture on kind of where we're going from here, particularly around like the investment level needed when we can get to reverse the trend in terms of the operating losses and how you found the competitive environment so far to be, in Turkey, better than expected, worse than expected. Sort of any insights around that. And then second question, back to Caspi in Kazakhstan and the advertising product numbers. I mean, Real strong growth there, and it looks like still very early in terms of penetration. You've got a lot of different products. So just help us out how to think about advertising, kind of if you benchmark against global peers, how big it can be, which areas that you can drive more advertising or less, just kind of help think through that product as well. Thanks.

All right, Miguel. Thanks for your questions. Miguel, do you want to take both of those questions?

Yeah, sure. So on the Kepse Gurata side, you know, we are again as a part of our priorities and the strategy is always to make sure that, you know, the products or the services and both for consumers and merchants is the is the one which brings the value. So that is our priority, which means when you think in terms of the growth or in terms of consumer engagement and the merchant side, that's our most important priority. So the growth is a result of those changes, and we believe that by building up the highest quality products and the user experience, those are the, yeah, those are the priorities which generate the value for us going forward. So that is our priority, has been our priority for this year and the teams are working on the, yeah, basically on bringing the quality of the products to the next level. So the investments that you really see, those are the investments which, again, on the delivery side, we want to deliver both faster but also have more engagement from merchants. And on the consumer side, And the marketing side, those are the investments which bring traffic, which converts the increasing rate into the sales. And most of our initiative strategic priorities are around the mobile application, which we are obviously prioritizing. That's where we are. We don't really see the huge need for capital investments going forward. But again, if those are justified by improving the quality of the services and the speed of delivery and infrastructure for the delivery, then we'll bring those investments into the company. So that's basically our priority is really growth. But growth, high quality growth, which means growth of happy engaged customers and happy engaged merchants. So that's on the Hepsiburada side. Yes, and in terms of the overall competitive dynamics on the market, again, I think we have been saying this many times that we do pay attention to competition. But at the same time, we believe that our priority needs to be quality of the services and bringing excitement by the quality of the services to the merchants and consumers. So we don't think about competition in a traditional way like maybe some other companies would think. So that's on the Hepsigurata side. In terms of Kazakhstan, I think we are... developing the full range of the advertising services which are in different stages of the development. So you can advertise products now through the product listings. We have advertising service for the brands. We have advertising service when you can actually introduce these points or rewards as a merchant. We also are thinking how we can enhance the merchant experience in the app itself in order for the merchants to bring a very highly targeted engaged consumer base to their products and to their shop in Kaspi KZ itself. So, yeah, so it's growing very nicely. The merchants giving us a very good feedback and, yeah, we believe that we can continue growing this business and it will grow faster than the rest of the we believe it will grow faster than the rest of the revenue on advertising we just launched I think we've talked during the last presentation if I'm not mistaken that we launched gift certificates even for offline retailers So all of those things at some point will start contributing meaningfully to the growth. So advertising is really exciting, and that's our core competency. It's all about data, it's all about user experience, and it's all about the merchant experience in the mobile application. So, yeah, we're very excited about the advertising services, and they will continue growing much faster than the rest of our revenue.

Great. Thank you so much.

Thanks.

Our next question comes from the line of James Friedman from SIG. James, your line is now open. Please go ahead.

Hi. Good morning, guys. Good evening. I wanted to ask about the, so on the, The marketplace side, the take rate was up again 80 basis points. I was hoping you could elaborate on some of the components that are driving that. And then on the advertising side, can you just explain kind of in simple terms when you say you'll run the advertising campaigns for the merchants on the super app? Just try to understand what it means to run it for them. So one on marketplace, one on advertising. Thank you.

Sure. So on the take rate, the main drivers of the take rate are really additional services and advertising more specifically and also the delivery revenues. So that's the main driver of the take rate. You know, we are not, as you remember historically, We believe that we want to deliver the value to the merchants by additional services, not by constantly increasing the seller fees. So that's not our strategy. So the increases that you actually see, they are driven by additional added value services, and those are at the moment specifically advertising and delivery. So that's on the take rate. In terms of the advertising, I mean, it's quite straightforward, right? So the current technologies enable us to develop a very sort of simple user experience when the merchants from the screen of their smartphone, they can select the items they want to promote and advertise, and then they just tell us a bit the type of customers they want to reach. So it's a very simple service, all the data-driven. We truly believe that advertising – needs to be developed in a way that, you know, you can launch an advertising campaign on Caspi with the one hand by driving a car, you know, if you are a small merchant. And this is how we are looking into this. So this is not something which complicates the merchant's life. They just quickly launch it, a very simple settings. They just need to tell us the type of consumers they want to reach, and then we'll do the rest of the job for them. And behind this, of course, is a number of technologies which we're developing. and the data which enables us to have this very high prediction, high accuracy advertising services or advertising campaigns for merchants, which deliver them the value at an affordable cost. That's basically the way we look at the advertising. It's simpler than many other big advertising platforms just because we do a lot of work for the merchants rather than merchants going through the complicated quest of setting up the advertising campaign. So this is why the services are

you know showing higher engagement in the growth rates thank you so much thank you thank you our next question comes from griffin dreving from wolf research please unmute locally and proceed

Hey, guys. Griffin Drew being on for Darren. Just wanted to touch on the smartphone impact again. I know last quarter you mentioned there would not be an improvement, so the eight points impact to GMV largely as expected. But just any color on current trends through October, first week of November, or updated thoughts on the potential duration, and then how you're viewing the sustainability of non-smartphone marketplace growth given so much strength across the top verticals.

All right, Griffin, thanks for your question. So maybe I'll just really start on that one. So just for the benefit of everyone, I think there's sort of two issues to be aware of. The first was number one, new registration requirements. Those were introduced in the spring and that was the sort of the initial cause of the supply disruption. What subsequently that's evolved into then just a shortage of the latest models iPhone Type 17 models across the entire country. And you have a situation where now people who are long overdue a new smartphone don't want to go out and purchase the old model when they know that the new model will be available shortly. So that's what's going on in the market. There's nothing to show any improvement currently. uh supply remains particularly of new models in in incredibly constrained but apple will get new phones into the country over the next uh couple of months so number one you as i mentioned earlier you've got a very favorable comp it kicks in in march of of of next year so that's your base if nothing else favorable comp and number two there's no reason to believe that whilst it's taking a little bit longer than we would have hoped that the supply uh disruption won't um normalize over the next uh couple of months and certainly in through the the first part of of next year So that's on smartphones, and we've shown you just how material that is and how meaningful that can be when it does turn, and it will turn. So that's the first thing. But then the second thing we've showed you is that X smartphones marketplace, and particularly e-commerce growth in all of the verticals, is really, really strong. So, again, as you look into next year, when smartphones come back, Other verticals should also remain pretty decent. And you have marketplace and e-commerce sort of returning to its more normalized growth trajectory. There's no change in marketplaces' competitive position. And the supply disruption is not unique to CASB. It's a countrywide issue and it's one vertical. Everything else is pretty much performing as we'd expect it to within marketplace. So that'd be my main comments. Thank you.

Thank you. As a reminder, if you'd like to ask a question today, please use the raise hand feature on Zoom. Or if you've dialed into the call, please press star followed by one on your telephone keypad. Our next question comes from Reggie Smith of J.P. Morgan. Reggie, your line is now open. Please go ahead.

Perfect. Thank you. I guess one quick follow-up on the marketplace question a second ago. I guess it was a quick math. I think year-to-date you guys are at 16% growth in marketplace GMV. I think your guys are also like 12% to 14% for the entire year. Just wondering, am I thinking about that? Does that assume like a low single-digit GMV growth? in the fourth quarter, and is that primarily like seasonality around the cell phone purchases? And then one other piece with that, I know you mentioned iPhone. Is this an issue for like all phones, so like Samsung phones, Android phones as well? I need to talk a little bit about the mix of, I guess, iPhone sales versus Android in the country, just to give us some background. I have one follow-up after that. Thank you.

Well, I'll start. Yes, I mean, you will see marketplace growth moderate in the fourth quarter. So remember, marketplace is not just e-commerce, it's e-commerce, e-commerce and travel. But yeah, you will see that that happens, number one. And number two, I would say, on the smartphone issue, well, particularly at this time of year, it's high-end smartphones it's particularly the likes of an iphone 17 so it's not just that but um that that sort of this is when the latest models are released and if you think about it if a smartphone is 1500 um that's a lot of missed gmv but it's a lot of gain gmv when it comes back and a a lot of missed revenue versus uh an average ticket size on marketplace and on e-commerce that's materially um below below that so they would be my comments i don't know if michelle wants to add anything about the the market as a whole yes well i think that the

Well, the GMV growth is a combination of also the value of items which are sold. And as David said, you know, the highest value item in the smartphones is specifically the iPhones. And since the new model has not reached in the requested volumes the country, it's not only... Kazakhstan specific, then basically the people don't have a trigger to change their phone. But we just believe this thing will change in the future because demand is there. But Reggie, in terms of looking at the the trends and the engagement, I think that number of transactions or number of purchases is actually extremely sort of valuable number just because that actually tells you how many purchases consumers make, how many times they track with your marketplace and not just the value of items they buy. And you can see that actually the value of the marketplace purchases went up 36%. And not the value, sorry, the number of the marketplace purchases went up 36%. And e-commerce, which is taking share from the e-commerce, is actually plus 86%. So I think, again, transactions in the marketplace, 36% up 36%. transactions on e-commerce 86% up, quarter on quarter. So this tells you that, you know, there is a very healthy engagement and our core business continues performing well and those external factors eventually will have to, you know, we believe will disappear because demand is there and supply will be restituted. It's just unfortunate that it's not happening as quickly as all of us wanted.

Yeah, that makes sense. You know, it's interesting. I hear you talk about the iPhones, and I think about here in the States, you know, $1,500 for a phone. A lot of Americans are pulling back on those types of purchases, so I'm surprised that, you know, folks are still, I guess, hungry for new iPhones out in Kazakhstan. One last one for me. Thinking about grocery and delivery, I know obviously those businesses are scaling now. But remind me, you're thinking about, you know, are those businesses like self-sustainingly profitable on their own longer term? Are you still thinking about them as kind of engagement tools to keep people on the platform so you can monetize them through other ways? That's it for me.

Thank you. Yes. The grocery business is very much self-sustainable. We are on the profitability side, I think. Some time ago we did show the profitability of a grocery, so you can go back to those numbers and those numbers are the same pretty much. So yes, it is sustainable, it's profitable, but as we are also having more demand for our products than the capacity to fulfill, you know, we are building up dark stores, which is not like... which is not just an investment which is huge, but still, you know, to build the state-of-the-art dark stores, which we are opening depending on the size, but it can be an investment from... what is it, $10, $15 million, something like this, which can hold inventory for at least 15, 20 days on 10,000 plus SKUs. So those, when we say we're entering the new city, we are building the dark store sort of first or renting it if its rent is very affordable. So those are the investments we're taking because we need to – build the infrastructure to meet the demand but the good news is that the demand is there and it's almost like always demand is more than we can we can we can serve so we are following the demand at the moment as we speak we have about 10 dark stores and we will enter a couple of new cities next year and so we'll continue sort of building that infrastructure

I'd like to sneak one more in. I know this is important to investors, the dividend. So you guys are going to reinstate that next year. Should we think about that being at a similar level to where it was, maybe even higher, given that the income base is higher today than it was before you paused it?

Well, Reggie, I'd just say on that, you should keep in mind, I mean, international will require further expansion. So that's something to keep in your base case and will remain an important priority. International was never there pre-2025. So that's number one. um number two though having again having said that um we can't have a balance between the the two our track record at returning cash primarily by dividends but also by buybacks speaks for it for itself and we get that this is something that is important to our investors is precisely why we've actually started the buyback or it's one of the reasons why we've started the buyback earlier than we'd initially indicated in our h1 numbers we indicated cash returns would start from the beginning of the year so we'll do our best to get the balance right between investing in future growth and returning cash about a different methods, both buyback and dividends, and we can decide what is appropriate as we move into next year at the right point in time. But it wouldn't be right at this stage to go into specifics around what payout ratios can be.

Yeah, that's helpful. Thank you. Thank you so much.

Thank you. Unfortunately, we have run out of time for any further questions. At this time, I'd like to hand back to David for any closing remarks.

All right. Thanks, Sam. Thanks, everyone, for your time. We've done about 20 minutes, but we have another meeting starting shortly, so we'll wrap things up now. Happy to follow up one-on-one, post the call, so get in touch if you have follow-up questions. Thanks a lot for your time, and speak to you soon. Thanks, everyone. Bye. Thank you, everyone.

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