Kaspi.kz JSC Earnings Call: Growth Amid Challenges

Kaspi.kz JSC Sponsored ADR RegS ((KSPI)) has held its Q1 earnings call. Read on for the main highlights of the call.

Kaspi.kz JSC’s recent earnings call revealed a mixed sentiment, reflecting both promising growth areas and significant challenges. While the company showcased strong performance in its e-Grocery segment and successful fundraising efforts, it also faced hurdles such as regulatory impacts on smartphone sales, increased funding costs, and macroeconomic uncertainties.

Strong Growth in e-Grocery

Kaspi.kz’s e-Grocery segment demonstrated impressive growth, with active consumers nearing 1 million. The segment’s Gross Merchandise Volume (GMV) surged by 64% year-over-year, and purchases increased by 66%, totaling 3.3 million in the first quarter. This growth highlights the company’s successful expansion in the digital grocery market.

Successful Eurobond Issuance

In a strategic move to bolster its financial position, Kaspi.kz successfully issued its first Eurobond, raising $650 million at a 6.250% interest rate, due in 2030. This issuance marks a significant milestone for the company, providing capital to support its international expansion, particularly in Turkey.

Payments Platform Performance

The payments platform of Kaspi.kz showed robust performance, with Total Payment Volume (TPV) growing by 23% year-on-year. This growth was driven by higher ticket sizes and inflation, contributing to a 21% increase in the bottom line, underscoring the platform’s resilience and adaptability.

Marketplace Take Rate Improvement

Kaspi.kz’s marketplace experienced a notable improvement in take rates due to the introduction of value-added services. This led to a 33% year-on-year revenue growth, outpacing the 20% GMV growth, indicating enhanced profitability and efficiency in its marketplace operations.

Impact of Smartphone Registration Requirement

New regulations in Kazakhstan requiring smartphone registration have led to increased prices and a decrease in demand, impacting Kaspi.kz’s growth by approximately 7 percentage points. This regulatory change poses a challenge to the company’s growth trajectory.

Increased Funding Costs

The high interest rate environment has resulted in increased funding costs for Kaspi.kz, with a significant rise in deposit rates over a short period. This has added pressure on the company’s financials, necessitating strategic adjustments.

Macro Challenges in Kazakhstan

Kaspi.kz faces macroeconomic challenges, including lower oil prices and commodity price volatility, which could affect GDP growth and currency stability in Kazakhstan. These factors may impact high-ticket discretionary transactions, posing risks to the company’s financial performance.

Regulatory Changes Affecting Income

Anticipated regulatory changes, including a 10% tax on revenue from investments and increased National Bank reserve requirements, could decrease Kaspi.kz’s net income by approximately 200 basis points. These changes present a financial challenge for the company.

Forward-Looking Guidance

Looking ahead to the first quarter of 2025, Kaspi.kz provided guidance reflecting mixed performance expectations. The payments segment is anticipated to continue its strong growth, with revenues expected to rise by 16% and net income by 21%. The marketplace is projected to grow by 20% year-over-year, with a 33% revenue increase and a 19% net income rise. Fintech origination volumes are expected to grow by 17%, translating into an 18% revenue increase and an 8% net income rise. However, due to new smartphone registration requirements and macroeconomic uncertainties, GMV growth guidance has been revised to 15%-20% from the previous 25%-30%.

In conclusion, Kaspi.kz’s earnings call highlighted a blend of growth and challenges. While the company is making strides in segments like e-Grocery and payments, it faces regulatory and macroeconomic hurdles that could impact its future performance. Investors and stakeholders will be keenly watching how Kaspi.kz navigates these challenges and capitalizes on its growth opportunities.