Release Date: July 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Kaspi.kz JSC (KSPI, Financial) reported strong growth across all business segments, with payments TPV up 32% year-over-year, revenue up 23%, and net income up 22%.
- The marketplace segment showed remarkable performance, with GMV up 62% year-over-year, revenue up 96%, and net income up 68%.
- The fintech segment also grew significantly, with TFV up 43% year-over-year, revenue up 23%, and net income up 2%.
- The company’s e-grocery business saw a 99% growth in GMV and reached 639,000 active consumers, indicating strong demand and successful execution.
- Kaspi.kz JSC (KSPI) introduced new services like vacation packages, which grew by 644% year-over-year, enhancing the company's take rate and diversifying its revenue streams.
Negative Points
- The company anticipates a deceleration in growth for the third quarter due to the absence of the Juma promotional event, which will impact GMV and profitability.
- The fintech segment's yield is lower due to the growing share of BNPL and merchant financing within the mix, which could affect overall profitability.
- Interest rates have been volatile, impacting the deposit base and fintech profitability, with full repricing expected to take 12 months.
- The company faces regulatory changes, including potential tax increases and new rules on BNPL, which could impact future operations and profitability.
- The cost of risk showed a slight increase, with annualized figures at 2.45%, raising concerns about asset quality and potential future defaults.
Q & A Highlights
Q: Can you help us understand the second half cadence and any nuances on a per segment basis we should keep in mind?
A: The key thing to be aware of for Q3 and Q4 is the Juma promotional event. This year, Juma is taking place three times, unlike last year when it took place twice. The phasing of marketing campaigns can vary, and this year, those campaigns are in Q1, Q2, and Q4. Therefore, Q3 will have lower GMV growth and profitability, but Q4 will see a significant rebound. The full-year guidance remains realistic and on track.
Q: Any update on the international expansion efforts and opportunities?
A: We are actively working on expanding outside Kazakhstan, looking for high-quality companies where we can add value with our experience and technology. While we are selective and careful, there is a healthy pipeline of opportunities. However, we cannot provide specifics at this moment.
Q: Can you provide more details on the brand advertising launch and its current status?
A: The brand advertising service is currently scaling, with FMCG brands already working with us due to our significant presence in the grocery market. We have contracts in place with these brands, and the business is expected to grow significantly in the second half of the year. The opportunity is substantial, and we are excited about its potential.
Q: How are you thinking about KPIs for the brand advertising segment?
A: For product advertising, we focus on efficiency and ensuring merchants do not overspend. For brand advertising, the focus is on promoting brand awareness and views, competing with platforms like Instagram. Initial tests show we are more efficient, and brands are moving their budgets to us.
Q: Can you explain the improvement in fintech net income through the second half and the phasing of deposit remuneration?
A: The improvement is due to lower deposit rates and a higher loan-to-deposit ratio. Deposit customers are repriced at maturity, taking 12 months to fully reflect the rate cuts. The first rate cut was in February, and its impact will be more pronounced in Q3 and Q4. The loan-to-deposit ratio is expected to remain broadly stable.
Q: What is your perspective on potential tax increases in Kazakhstan and their impact on the fintech business?
A: Several regulatory changes have been discussed, including interest rate caps and tax changes. However, these are still under discussion, and it is too early to draw conclusions. We are monitoring the situation closely, but there is no immediate material impact on us.
Q: Can you quantify how much of the GMV in Q2 came from Juma?
A: Historically, Juma has contributed roughly 15% to 20% of the GMV for the month it occurs. However, this year's seasonal approach may result in different figures. We will provide more details as the year progresses.
Q: What is the average duration of your deposits, and how is the competitive landscape for deposit pricing?
A: Our deposits are annual, and we have a single product on the market. We typically lead the market in pricing, and other players usually follow our lead. We focus on consumer engagement and quality rather than just cost of funding.
Q: Can you describe the e-cars and e-grocery business models and their value propositions?
A: The e-cars business combines elements of Carvana, CarMax, and AutoTrader, offering a comprehensive range of services from car sales to spare parts. The e-grocery business is similar to Amazon Fresh, focusing on weekly purchases with around 10,000 SKUs. Both businesses are profitable and growing rapidly.
Q: Do you offer BNPL for e-grocery purchases?
A: While BNPL is available, it is not commonly used for e-grocery purchases due to the relatively small ticket size. Consumers prefer to use their own money for these transactions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
