Joint Stock Company Kaspi.kz

Hello and welcome to the CASB.KZ 4Q and FY2025 financial results. My name is Harry and I'll be your operator. We will be taking questions from the audience after management's prepared remarks and presentation. To enter the queue for questions, please use the raise hand button on your Zoom toolbar or dial star 1 if you are joining us over the phone. I would now like to turn the call over to David Ferguson with CASB to begin the presentation. Please go ahead.

All right. Thank you, Harry. Good morning. Good afternoon to everyone on the call. Welcome to Caspi's fourth quarter and full year 2025 financial results. I'm David Ferguson from Caspi. As usual, I'm joined by Mikhail Lomtadze, CEO and co-founder of Caspi, Tengiz Mesidis and Yuri Yudenko, the deputy CEOs of the company. We'll take you through the strategic highlights and financial results for the final quarter of last year and provide guidance for this year and then we'll open up the call to Q&A as usual. So, on that note, first of all, I'll hand over to Mikhail. Mikhail, over to you.

Hello, everyone. Yes, thank you, David. So, let's move straight to the presentation. So, our results for the year have been quite strong, you know, we're obviously reviewing the underlying performance without influence of external factors. But at the same time, I do think that we are at the stage when we can continue investing into long-term growth and value creation, which we always prioritized. and also distribute and resume the dividends considering the strong cash generation which our business model allows. So we are proposing a dividend of 850 TGAP or ADA subject to shareholder approval. The underlying performance is quite strong. Our net income has grown 18% without the impact of Some of the external factors which we've discussed during the year, those are, you know, the smartphones, sales reductions and shortage of supply, some tax changes, minimum reserve capitals, and the interest rate, high interest rate environment during 2025. And in spite of those, if we include those factors, our net profit consolidated grew around 10% and underlying profit grew around 18% during the year. Next slide. In terms of the last quarter, last quarter, you know, considering all the headwinds, still was, you know, quite solid underlying performance, and the net income growth reached 13%. We have had good, reasonable growth across all our businesses, and some of the most important metric for us, which is, you know, consumer engagement, and one of those is monthly transactions per active consumer. It's 77 monthly transactions per consumer, which is, we believe, is a world-class indicator, and very few businesses can have such consumer engagement. And that is an important metric which, you know, going forward, we can create more value for the company. David will cover some of the verticals further, but in general we're pleased with performance in quite challenging environment in 2025. The biggest asset we have, or I would say the reflection of the quality of our products and services is our brand. And our brand is number one consumer brand pretty much in every category. and by wide margin. So here you can see just some of the selected metrics which which just tell you how strong our brand is you know for example the mobile application installed on your phone you know almost half of the respondents surveyed during the year are having our mobile application on their smartphone considering which is six times more than the nearest brand and the same sort of wide margin in payments were like 13 times the second brand e-commerce three times, you know, travel, you know, more than four times. And we have a very strong position in the cars, for example, nine times the nearest brand. And that's an important asset. That's something which notwithstanding what's going on around in terms of the external factors, which unfortunately are not entirely under our control, things we control and things we execute on are are reflected in the consumers using our products, merchants using our products, and the brand indicators. So the trust that we have from the consumers and the merchants is extremely important for us, and that's the reason to create the value long-term and just testament to the management really being extremely focused on the quality of our products. Another example of how this quality is actually reflected in some of the innovations is the pay-by-palm, which we just launched under 90 days. And, you know, clearly we have unprecedented adoption. I think very few markets in the world can showcase such an adoption of the innovative service. So we have now almost half a million customers in Almaty registered with Caspi Alakan. almost 6,000 merchants are accepting payments through the Alakan and that's almost 10% of the transactions in the stores where we have been merchants connected to Alakan. So it just tells you that pay by palm is it's it's truly changing the consumer behavior so we have changed consumer behavior from cash to to cashless to the mobile payments then to the qr code and and and and now to the to the pay-by-pub so we believe pay-by-pub has a has a bright future adoption has been remarkable consumer feedback has been remarkable everybody is really super excited and achieving 10% penetration at the merchants just in three months and having half a million customers. By the way, to put the half a million customers into perspective, this is almost third. of the population of the largest city of kazakhstan where we started to launch and you know we we are only in one city at the moment and we're scaling city by city and across the board during the year we're replacing the old network and we're installing the new devices which are equipped to accept those all kinds of payments and and are purposely built for for alakan as being an innovative company that's a testament of how consumers are using every your next product And the penetrations we're, again, achieving are unprecedented, remarkable. And in just three months, having a third of the population in the largest city registered in the service, that's really very encouraging. We're extremely happy, and we're just focused on really an execution and replacing the old network with the new devices. I also would like to walk you through some of the penetration numbers which we have across all our services now. This is our key services. You don't really have here all our products and services, but just to give you an overview, the payments being the highest penetrated, we still believe that B2B payments has a huge potential and there is a range of innovations which we have been working uh rolling out during the last year and and some of the services we plan to do this year e-commerce e-commerce in general we believe will be the driver for the growth e-commerce is something where we create the most value for both the merchant and the consumer e-commerce is when Merchant is making the decision to sell something pretty much anywhere across the country and then hopefully in other countries. And then consumer is making decision to buy something. So it's a front end of consumer and merchant relationship. All the services around e-commerce like delivery, advertising, value-added services around financing, payments. So when a merchant sells, he needs to get the financing. When a consumer buys, he needs to pay for it, and the merchant accepts the payment. So all the universe of our services is highly applicable to e-commerce. So e-commerce is our important focus, and it's focused in Kazakhstan, and it will be focused in Turkey as well. And then, of course, merchant finance, which has been the fastest growing product. And delivered and advertising, which we're scaling very responsibly. Again, we want to make sure that delivery is not going against consumer in terms of the organic search, for example. So the results have to be highly relevant, high accuracy. But we have a very strong result, and, you know, David will show you the take rate is increased due to the value added services of delivery and advertising, which we have launched. And on the consumer side, only half of our consumers use e-commerce. And as we get more merchants migrating to e-commerce, especially from e-commerce, when we have, you know, more consumers and more selection and more price competitiveness, which – which we have been driving. You know, we are regarded as one of the lowest and the best price e-coms in the country. So that really drives the liquidity and the transactions. And, of course, e-grocery, which we are scaling across the country. E-grocery is the fastest growing e-commerce business for us. So those are the things which will be focused during the year, and they will be driving our growth. And, you know, Caspi Delivery and Caspi Advertising being highly scalable, high margin businesses will contribute to our profitability. Next slide is about Turkey. So I just want to spend really more time about our – progress in Turkey. So as you can see from this slide, our focus has been the growth of number of orders. And we have been focused on growing number of orders through growing consumer engagement. And consumer engagement, in our case, is a very simple sort of metric, which talks about the health of our services. And we would rather have 1 million basically of the engaged consumers which frequently transact with us and are coming back and love our service, then have 10 million consumers which are one-offs because of whatever the promotion, one-time promotion or some other temporary benefit which after that they leave. So we are focused on engaged consumers. Engaged consumers will drive future of the business. That has been the playbook in Kazakhstan. It will be the same in Turkey. We have tested different parts of our models, and I'm really happy that all those, you know, our expertise in technology, in the personalization, in search, in the marketing, and improvements in delivery, they are giving and yielding very similar results. And this is an example. We have been growing our orders quarter on quarter. And in the fourth quarter, we had the 19% growth, which is a very high growth for some time already for the company. In terms of some other improvements or, yeah, improvements which we have received during the year is all our efforts around, again, which I mentioned, the consumer engagement. So engaged number of purchases I've mentioned increased 19%. We are not focused on growing demand. monthly active consumers, right? But we're really happy that the monthly active consumers grow 15%, which is a very good number in the fourth year. But what is more important for us is that the growth of engaged consumers have been 29%. And those are the consumers which repeatedly buy with you and those are the ones which generate the value. And then, of course, we understand the relationship between the quality and speed of delivery with the customer happiness and the growth of the business. So, next day shipping, we have improved also coverage from 47% to 63%. So, you know, those are not All metrics we're working around, but those are the ones which just give you a bit of a flavor what really we're focused on. And again, growing engaged consumers, growing number of purchases is for us the very important focus which results in all the investments and the time we're spending on key components of that, right? Again, that is about... personalization, meeting customer demands within the right product in the right time through the right channel, then we have a marketing and we have focus on delivery and the quality and speed and the broadening the payment options. And the broadening payment options means actually that the customers can buy more items more affordably. So all those things, you know, working together give us these results. We're very encouraged and are really focused on, yeah, we're just focused on continuously bringing the, you know, the Turkey and Hapsiburata metrics to custody. So if you look at and compare the Caspi and Hapsiburata metrics, those are the ones which just give you a view of this, what we call sort of engagement opportunity, right? So if you think about, compare this Caspi and Hapsiburata across those metrics, you can see that active consumers in Caspi is 7.4 million, which is... And Hepsiburata 11.8 million, so Hepsiburata has 1.6 times more consumers. However, GED per consumer is 1.6 times less in Hepsiburata than in Caspi. And then if you think, okay, what is actually driving such a difference? You know, one simple metric that the frequency of purchases in Caspi is almost... four times more than in Hapsiburada. So in Caspi, 24.8 purchases per consumer per year and 6.7 in Hapsiburada. And then when you think, okay, what drives that in purchases which are translated into profits is actually the English consumers that are coming repeatedly and the costs related to those consumers are more and more sort of efficient, right? You know, the consumers are coming back. There is limited marketing costs and so on and so forth. So 66% growth of engaged consumers in Caspi, despite of its, you know, scale, continues to grow and Hepsiburata with opportunity in front of it, 29%. So 2.3 times less. so again everything we do is we're focused on growing number of engaged consumers growing number of frequency of purchases and interactions and those will result in the in the economics and profitability uh going forward and that's our strategy in 2026 we'll manage for segurata around uh and Turkey business around EBITDA breakeven and will continue targeted investments. But we also believe, you know, if there is a question always from investors, can you continue developing Hapsi Gurada and the Turkey and at the same time, you know, resuming dividends and returning capital to shareholders? So the answer is yes. We are, you know, we're resuming that and now we're comfortable with all the things we have actually tested that we're on the right path and we'll just continue executing to deliver the world-class services to consumers and merchants. David, back to you.