Joint Stock Company Kaspi.kz Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Payments: Robust growth in TPV, revenue, and net income. QR code payments expanding, with TPV up 176% and transactions growing.
• Marketplace: e-Grocery continuing to grow, with 1.3 million customers, GMV up 53%, and transactions up 55%. Integration of Glovo for restaurant delivery. Strong growth in top categories excluding smartphones.
• Innovations: Launched pay by palm (to roll out end of 2025, free for merchants for 3 months), advertising service with 56% Y/Y revenue growth, and Kaspi AI for merchants to enrich product content, enriching over 0.5 million products with significant boosts in clicks and sales.
• Hepsiburada: Investments in delivery, payment options, marketing, and user experience driving purchase growth. A/B tests showing GMV uplift from improvements in influencer channels and user experience redesigns.

Segment Performance

• Payments: TPV grew 18%, revenue up 10%, net income up 12%.
• Marketplace: GMV grew 12% year-over-year, with 20% GMV growth excluding smartphones. Revenue up 32% excluding smartphones, net income up 16% excluding smartphones. Top categories like beauty (+69% growth), clothing (+51% growth), and home/garden (+35% growth) saw strong growth. Impacted by smartphone supply shortage, but ex smartphones, GMV and revenue growth remained robust.
• Fintech: TFV grew 16%, revenue up 24%, net income up 15%. Excluding certain external factors, growth was stronger.
• Hepsiburada: Purchase volumes up 16% in the third quarter, with initiatives in delivery, payment options, marketing, and user experience driving growth momentum.

Guidance

• Marketplace GMV growth guidance adjusted due to smartphone supply, but excluding smartphones, expected 19-21% growth. TPV payment growth around 20%. TFV growth in line with previously provided guidance. Launched $100 million ADS buyback program, aiming for balance between investing in the business and returning cash to shareholders, with potential for dividend resumption in 2026.

Risks

• Smartphone Supply Disruption: Impacted GMV (8% impact) and consolidated income (3% impact) due to shortage of iPhones and registration requirements.
• Regulatory and Tax Changes: 10% tax on revenue from government securities (-1% impact on net income), increase in minimum reserve requirements (-1% impact), and base rate increase from 15.25% to 16.5% (-4% impact on consolidated net income).

Question and Answer

• Q: Ygal Arounian from Citigroup on Hepsiburada investment, competitive environment in Turkey, and advertising product numbers A: Mikheil Lomtadze stated Hepsiburada's priorities are on providing value through quality products and user experience. Competitive dynamics focus on quality over traditional competition. Advertising services growing rapidly, with merchants able to launch simple campaigns via smartphone, driving high engagement.
• Q: James Friedman from SIG on marketplace take rate and advertising A: Mikheil Lomtadze explained take rate growth is driven by additional value-added services like advertising and delivery, not seller fees. Advertising for merchants is simple, allowing them to select items to promote and target customers via data-driven, user-friendly settings.
• Q: Griffen Drebing from Wolfe Research on smartphone impact and non-smartphone growth A: David Ferguson noted smartphone supply disruption is country-wide, particularly affecting high-end models like iPhones. Excluding smartphones, marketplace and e-commerce growth remains strong. Non-smartphone verticals like beauty, clothing, etc., are growing robustly.
• Q: Reginald Smith of JPMorgan on marketplace growth, smartphone mix, grocery profitability, and dividends A: David Ferguson mentioned marketplace growth moderates in Q4 due to seasonality and smartphone impact. Smartphone issue affects high-value items like iPhones. Grocery business is self-sustainable and profitable, with investments in infrastructure to meet demand. Dividend resumption planned for 2026, with balance between investment and returning cash to shareholders to be determined.