Kaspi.kz - Q2 2023
July 24, 2023
Transcript
David Ferguson (Managing Director and Head of Investor Relations)
Good morning, good afternoon, everyone. Welcome to our second quarter 2023 results call. As usual, we're joined by our CEO and Co-Founder, Mikheil Lomtadze, our Deputy CEOs, Tengiz Mosidze and Yuri Didenko, and I'm David Ferguson. Usual format, Mikheil will take you through the strategic updates, I'll take you through the financial update, and then the whole team is available for Q&A. Looking forward to your questions, and on that note, I'll hand the call over to Mikheil. Over to you, Mikheil.
Mikheil Lomtadze (CEO and Co-Founder)
Hello, everyone. We would like to give you update on our second Q, which is very exciting and well-executed Q by the team at Kaspi.kz. I would start with the Juma update. As you know, the Juma is our three-day shopping event, the festival, which we launch two times a year. One is in summer, another one is in autumn. This one we had post two Q, in July, and has been a record engagement from our consumers and merchants, and the GMV is up 82%, which surpassing KZT 300 billion, which is another indication how powerful is our Marketplace platform for consumers and the merchants. Extremely happy about it. You know, still delivering some items to our consumers. Everybody is busy, that's good.
Next slide is just the highlights of our business. As you can see, we have strong growth across all the platforms. We have Payments business has been growing nicely, 46% year-over-year. Revenue 48%. Net income 55%. Our revenue is going down to the bottom line due to the operating leverage network effects that is in our super app business model. Marketplace growing also really well, 39% growth on GMV, 78% on revenue, and 52% on the net income. Our Marketplace now includes also e-Grocery, which is the 1P business. We'll talk about it later. The Fintech accelerating also nicely, 48% growth on the finance values, revenue 45%, and net income 36%. Consolidated basis, extraordinary performance, 51% revenue, 46% net income.
We're also pleased to announce another dividend, subject to shareholder approval of KZT 750 per GDR. We're also announcing another buyback program of up to $100 million. Just for information for our shareholders, we have completed GDR buyback of $222 million since April. Across the board, great growth on the top line and growth on the bottom line. The next details, I will explain some of the highlights of the performance. Payments in the Marketplace continues to grow and faster than Fintech, therefore now in our bottom line, 61% comes from non-Fintech, non-consumer finance and merchant finance businesses.
39% now is Fintech, 61% is faster growing Payments at the Marketplace, which obviously, you know, creates more value for all stakeholders, consumers, merchants, and the shareholders. We continue driving transactions, we again, our business is all about the transactions, that's where we create the value for merchants and consumers. Average monthly transactions per consumer, which another record high, 66 transactions per consumer per month, which is incredible number by itself. Our consumers are transacting more than three times a day through us. GMV per number of purchases continues a very nice growth, 37% growth quarter-over-quarter, year-over-year, and 40 million GMV purchases now on our Marketplace completed.
RTPV number of transactions, just a remarkable 1 billion transactions in the second Q, the growth year-over-year, 39%. We have a nice growth in the transactions. Transactions deliver value for sellers, for consumers, for merchants. When we deliver value for consumers and merchants, we deliver value for the company, and therefore its shareholders. We are continue growing our e-Grocery business. Here we have a remarkable growth. Now we've grown 4.5x GMV. We've grown the purchases 4.3x, now more than 1 million purchases completed in second Q. Active customers growing also nicely. All the growth just tells you how relevant our business model is, but also how we are excited about it.
Another sort of important number is our first dark store in Almaty in the second Q's net income positive. That's an extremely encouraging just another justification that our team is really execution-driven. When we'll be scaling business across the country, we'll be scaling it with the confidence that we basically verified the business model and economics around e-Grocery. Another nice highlight is the scale of it already. Our 5% of our GMV is now e-Grocery of our Marketplace, and the 12% of the purchases. Those are higher frequency, smaller ticket, and therefore it's higher share of the purchases in our e-commerce business. The one thing to keep in mind that this is just two cities.
We're just in Almaty and Astana only. We've just started. The first dark store is already profitable. Actually, e-Grocery itself is profitable. It already has a meaningful share of e-commerce GMV. You know, once we scale, that will become a quite important value generator for the company as well. With here is the first time we are discussing some of the take rate components, which are also quite encouraging. We have started sort of initial phase of the monetization of delivery and advertising. As you can see, 2% increase, points increase on the take rate, more than half is actually being delivered in advertising. I would like to reinforce that that's actually is early stage.
The way we deliver products to our merchants or consumers, that we want to make sure they bring the value. They bring sales to the merchants, and they're also efficient, and the merchants use them with the understanding that they actually bring them sales, bring the value. We'll be scaling this carefully, but just wanted to bring to you that initial signs of monetization are very, very encouraging, and we'll be scaling those services in the future. Next slide is Postomats. Postomats, we've building the last mile delivery network, which is an important source of competitive advantage. The way it has been growing and being adopted by consumers is also tells you that it brings a lot of value. We have now over almost 4.5 thousand Postomats across the country.
The number of deliveries have grown 9x compared to the second Q of 2022, 35% of all the deliveries are now through the Postomats. Just to remind everyone, that Postomats is a convenient way for our consumers to pick up items on the way home or from their office, in conveniently located locations. We locate the Postomats where our consumers actually shop or transact, so it's really a decision-making based on the data analysis. That's why we have such a high adoption. We're, you know, we're planning to have over 6,000 by the year end. Again, that would be the widest and the biggest last mile delivery network in the country for e-commerce. We'll also continue scaling B2B.
We have another quarter of quite nice acceleration, so we continue growing this year on the back of quite large numbers already. The B2B is 2.6x growth in terms of the value compared to the 12 months ago, and the number of transactions 2.2x. Again, B2B Payments is when the businesses, you know, convenience stores and the merchants are settling their invoices with the distributors, brands, you know, wholesalers, and so on and so forth. Really a very interesting product, which we launched just less than two years ago, and now it's growing really nicely. It's already at 4% of our revenue-generating TPV and continues growing fast. We also would like to announce the acquisition of a 40% stake in the leading classifieds platform in Kazakhstan.
That's Kolesa Group, which owns two number one classifieds. In one is a real estate called Kolesa, another one is real estate called Krisha, and also has a leading classified, car classified in Uzbekistan. Just little bit about the companies themselves. You know, Krisha and Kolesa are by far number one brands in its respective verticals. You know, 13.5x stronger brand awareness of Kolesa compared to a second player, which is OLX, and in real estate, 4.5x stronger brand awareness compared to OLX in the real estate. Number one brands, which as Kaspi is a brand itself, obviously brings a lot of value. Another highlight about the business is the sort of the scale of them.
In terms of users, you know, those are also some of the most popular mobile apps in Kazakhstan. Kolesa.kz, the number of users is 5.2 million, and the Krisha.kz is 4.2 million. They are two largest and the number one in their verticals. We have presence in Uzbekistan, which is the leading car vertical as well. Through that acquisition, we're also getting a bit of a visibility on Uzbekistan as a market. The listings themselves also are pretty nice and powerful. We have around 1 million listings on cars. We will have the almost half a million listings on real estate.
Again, just to take a step back, you know, acquiring car, acquiring real estate, acquiring home is probably one of the most important household decisions that are taken. Through this acquisition, you know, we can be in the center of the most important household decisions, in the center of this transaction. The insights that we'll have will enable us and our teams now together, post-completion of the transaction, will enable to continuously innovate around those two important family household decisions of acquiring real estate or acquiring a car. Financial company is very strong and profitable and fast-growing. The revenue growth 300% year-over-year for six months, and the net income 82% growth of Kolesa, and the company has no debt.
It's a strong financial position and the fast growth, which makes this acquisition for Kaspi also attractive. If we go through sort of the rationale, I've mentioned some of those points. Again, number one, leading brands with a number one brand awareness, so natural fit with the Kaspi Classifieds, which we've launched last year. You know, the purchasing car, real estate, important decisions for the family. Kaspi and Kolesa would be in center of those decisions. You know, possibility for us to continue innovate based on the insights which we have. With Avtoelon.uz, so we're having visibility of Uzbekistan and have a footprint there. It's fast growth, profitable with no debt. Importantly, if we take a sort of step back, you know, post-completion of this acquisition, Kaspi has classifieds now across basically three countries.
What we currently, as you remember, we have Uzbekistan. David, can you move to the next slide, please? What we have, we have Kolesa for cars, Krisha, and the Kaspi Classifieds. In general, classified, there's three platforms in Kazakhstan. We have three leading platforms in Azerbaijan, which is Turbo.az for cars, Tap.az for general, Bina.az for real estate. We have also the leading car classified in Uzbekistan, and, you know, roughly over 10 million monthly users across all those platforms. Really, the leading regional platform for the three countries. That's not the only important point.
The main point is also that we have, you know, more of a consumer, merchant, sellers, listers insights, which will enable us to innovate through those platforms in those countries in the future. The transaction highlights, the acquisition is around 40% for $88.5 million. 11% of my shares, I'm a substantial shareholder in Kolesa. The remaining one, the acquisition is from the private equity shareholder, Baring Vostok managed funds. We'll have Kaspi will have 51% after I move 11% of my shares to held in trust, which will result in a control and the board control as well, and Kolesa will be consolidated with Kaspi.
We expect the transaction to be completed within this year, so the third or the fourth Q. The guidance which you have today excludes Kolesa, so we will update that guidance post-transaction, post-completion of acquisition from Kolesa. Very excited about it. We have two great management teams, and together, I'm sure we can bring the value to Kaspi by innovating around the merchants, sellers, and consumers in two important decisions: buying the car and buying the real estate. David, back to you on the performance of each of the platforms.
David Ferguson (Managing Director and Head of Investor Relations)
Great. Thank you, Mikheil Lomtadze. I'll run you through the performance of each of the three platforms, plus the guidance upgrade for the remainder of the year. As always, starting with the Payments Platform. Payments Platform, another quarter of good top-line growth ahead of our expectations. You've got a combination of a large and still growing merchant base, 529,000 merchants. More transactions, as Mikheil Lomtadze talked about, up 39% year-on-year, leads to RTPV, up 46% year-on-year. The take rate remains stable, and that has been the case for some time now. Within the business, each of the three platforms, each of the three products continues to deliver good growth and also actually, consumer growth.
The Payments Platform is the main customer acquisition tool, you can see here the growth in customers, consumers remains pretty decent, up 15% year-on-year to 12.1 million. To reiterate the point, Payments Platform is becoming more diverse, number one, and number two, each of the certainly the three key products, QR, Bill Payments, and B2B Payments, continues to deliver good growth. In fact, actually, Bill Payments, the most sort of mature, almost a day one product, is still really delivering good year-on-year growth. Across the board, strong numbers, as Mikheil talked about, B2B, growing RTPV 2.2x year-on-year, becoming more important in the mix, and we expect that to continue to step up and become more meaningful.
The combination of strong RTPV growth with stable take rate, combined with growth in interest-free balances, up 20% in the second quarter. For the first half, up 15%, consistent with the full year guidance, drops through to both strong and consistent top-line growth. The beauty with the Payments Platform is that top-line continues to drop through to the bottom line, its operational gearing, and that's just a combination of tight cost control around sales and marketing, up 17% year-on-year, so well below revenue. Administrative costs, up 2% year-on-year, so basically flat. Incidentally, that's the theme across all of the platforms. Drop through to good margin improvement in the second quarter, adjusted net income margin up around 300 basis points. Moving on to the Payments Platform.
Again, a similar message to Payments. Marketplace delivered good GMV growth above our expectations. Just to be clear, Juma happened last week, so in Q3, not in Q2. In addition to strong top-line momentum, GMV take rate moves up, mainly driven by e-commerce and the points that Mikheil made earlier. Incidentally here, too, a very decent growth in number of consumers, 6.6 million consumers. That compares with 13.2 million consumers overall. Still good scope to grow the Marketplace consumer base. Again, here now we have three segments, all with a level of scale, all continuing to deliver growth. Within e-commerce, as Mikheil talked about, we now have 3P. We've always had 3P, that's the core Marketplace e-commerce business, and 1P today, that's e-Grocery.
E-Grocery is scaling quickly within e-commerce to around 5% of that 34% that you see there. Breaking down by product segments, Marketplace always continues to deliver good numbers. Volume of purchases up 19% year-on-year, combined with inflation, higher ticket size, that drives GMV up 35% year-on-year. The m-commerce take rate benefiting from normalized promo activity. You should remember, again, looking back to the first half of last year, there was a lot of distortion in terms of both demand and in terms of our promotional campaigns due to different external events that were ongoing. This bit platform on track, good top line, dropping through to good take rate expansion. Within e-commerce, there's a couple of different dynamics going on here.
Again, actually, the first point to make here is that the base for e-commerce, the year-on-year comp for e-commerce is tough. In the first half of last year, demand was subdued in the first quarter, but there was a strong rebound in demand, particularly in the latter part of the second quarter, and that's relevant across Marketplace, but particularly for e-commerce. That's the first thing. The second thing would be overall good growth. Number of purchases in excess of GMV primarily reflects the inclusion of e-Grocery. Now e-Grocery is part of e-commerce, and that will remain the case going forward. e-Grocery is lower ticket size, hence the dynamic of more purchases versus GMV.
You also still continue to have the effect of adding more SKUs to the e-commerce platform, which is something we've talked about before, and remains ongoing. SKUs increased 1.9x, 3.9 million. We're adding more of the things that you buy on a day-to-day basis. Typically, they come at lower price points, hence GMV growth, below number of purchases growth. Mikheil made the point earlier, but you can see both the impact of e-Grocery, 5% of GMV, 12% of volume orders, despite actually still really being in start-up mode in only two cities with nationwide expansion still to come. The take rate here moves up much more materially, 200 basis points year-on-year, with the majority of that increase coming from both advertising and initial monetization of delivery.
These are initiatives that we've been mentioning to people for some time. They are in early stage mode, and now you're starting to see them come through into the financials, although again, as Mikheil said, it's still relatively early days for these initiatives. e-Grocery adds around less than 2% to e-commerce GMV, both in the quarter and for the full year guidance. Actually, the strong growth is driven by the underlying or the organic performance of the business. Travel continues to deliver good numbers, outperforming Marketplace overall. GMV in excess of ticket sales, primarily a function of inflation. Take rate moving up, again, a function of higher margin rail versus flights.
As we talked about previously, we launched package holidays in May, not particularly meaningful in Q2, but over the next 12 months, we'd expect travel to remain additive to Marketplace growth and package holidays to remain additive to travel top line, and for that matter, travel take rate, but that's more for next year. Clicking on, well, the combination for revenue, the combination of strong top line, decent take rate expansion, results in revenue growth in excess, materially in excess of GMV growth, 78% versus 39%. Moving on to the margin side of things here, the reported margin declines because of the impact of e-Grocery, but to provide more color on that, you see actually that the underlying Marketplace business in the third quarter actually saw slight margin expansion. That reported margin decline is entirely due to e-Grocery.
That shouldn't come as a surprise to anyone, that e-Grocery is a lower margin business. Again, e-Grocery has turned net income positive and actually is already delivering very, very good bottom line profitability by retail standards. Moving on to the Fintech Platform. We've talked earlier about higher interest expense being a theme over the last 12 months. You can see, though, that we're getting the return on that cost in the form of higher deposit customers, up 32% year-on-year. Growth in loan customers at a slower rate, consistent with previous quarter trends, lending more to existing high-quality customers rather than necessarily growing the overall loan base. Strong TFV growth, driven by a combination of Marketplace buy now, pay later, number one.
Number two, by merchant financing, which is growing at a very rapid rate and now actually meaningful in the mix. Conversion remains healthy. This is telling you that customers are borrowing, repaying quickly, borrow, transact, repay, repeat, indicative of a healthy consumer and consistent with our full year guidance of around 2x. Here, too, you see that the Fintech business now comprises a number of different products, which continue to grow fast and have scale, with merchant financing reaching mid-teens part of origination. It is growing fast. In the second quarter, it was up close to 200% year-on-year. It won't grow at those rates going forward, but it is now at a point where if it grows fast, it makes a difference to the overall growth in TFV.
Fast conversion means that the balance sheet grows at a slower rate than origination. We're churning the balance sheet more effectively, up 37% year-on-year, versus TFE origination, up 48% year-on-year. Yield guidance, yield of 26.2%, consistent with our full year guidance of around 25%. That reflects the impact of buy now, pay later, and merchant financing becoming more important in the mix. Here, too, you see the impact of the growth in the deposit base, savings up 49% year-on-year. The loan-to-deposit ratio moves down to 74% from 80% this time last year. Clearly, we have flexibility to lend more for that number to grow over the medium term. Moving on to credit quality.
I've talked to you in the Payments Platform about payment transactions, surprising on the upside in Marketplace platform. Marketplace price ahead of expectations. Those two platforms themselves are indicative of consumer health. We've also talked about within Fintech, strong growth in deposits, rapid conversion or repayment of loans. Consumer credit metrics, therefore remain extremely high quality. Whether you look at first, second payment default, numbers are very, very low and stable. Moving on into delinquencies, again, low and stable. Both origination and collection trends remain very, very healthy and consistent, if not better than our expectations for the year. Again, you see that here on the next slide, cost of risk, 2%.
We've talked about around 2% for full year, again, exactly where we'd expect it to be, an improvement on this point last year. Again, on non-performing loans, 6.1%, consistent with the trends that we talked about on multiple previous calls, including the last call, where we talked about seasonality. Slightly higher in the first quarter, coming down in the second quarter. In practice, we're talking about 10, 20 basis points here. Overall, it is stable and expected to remain around those levels for the remainder of the year. What does all that mean? It means that the combination of decent TFV growth, yield trends consistent with our guidance structure, means decent revenue growth, up 45% year-on-year.
The margin is impacted by higher funding costs, up 75% year-on-year. We have been able to partially mitigate that by tight cost control of sales and marketing, down 15% year-on-year, down G&A, down 16% year-on-year. Higher interest rates will remain a theme in the. It will depress, impact margins in the second half of the year. We are now working, you know, through that sort of comp effect. Most of the pace interest rate rises went through in the first nine months of last year, so the impact on the base becomes less meaningful, particularly as we move into the fourth quarter and next year.
To wrap all of that up, I mean, I think it's pretty clear that the top line is being driven by all platforms, particularly Marketplace revenue and Fintech revenue. The bottom line being driven positively by Payments Platform with the offset at the profitability level from the inclusion of e-Grocery in Marketplace. Moving on to guidance, I'll spend a bit more time on this than sort of usual. I guess there's a couple of things to say here. The first thing to say is, number one, every platform, Payments, Marketplace, and Fintech, the top line, RTPV, GMV, and TFE, the guidance is moving up, number one. That's the first point, and it's led particularly by Marketplace.
Secondly, for Marketplace specifically, the take rate guidance is moving up as well, from around 8.5%-9%, and that is on the back of advertising delivery and the strong performance of Juma in the third quarter. We'll repeat Juma in the fourth quarter. To preempt the usual question around, is guidance conservative? We tried to build Juma into the updated guidance that we've provided to you. That's the second thing. As a result of that, the third point is guidance to the bottom line moves up. Adjusted net income goes from around 25% to above 30%. Within this, we're including the effect of e-Grocery, so you know that e-Grocery, I mentioned earlier, will contribute just short of 2% to Marketplace GMV.
Told you, we've told you that it's bottom line net income positive, so you can extrapolate the estimate, the impact there. That's on e-Grocery. The other point to make, and Mikheil said it, is Kolesa is not reflected in these numbers. When the transaction closes, we will include it. That's the first thing, as I say, on guidance. The next slide. What is happening in the business? Business is getting bigger. The business is getting more diverse, with different business models at different stages of their development. Marketplace is the best example on that, where, for example, you've got a mix of e-Grocery. We all know that e-Grocery is a large revenue opportunity, but a low-margin business. Post the closure of Kolesa, classifieds is a lower, smaller revenue pie, but a very high-margin activity.
You've got different dynamics there. The change in the reported margin, therefore, is not the sort of the best explanation of the like-for-like performance of the business. Going forward, we will now guide for net income growth rather than net income margin. In practice, you can calculate one from the other, but it better reflects the performance of the business. In the interest of transparency, however, at this point, we've given you our old guidance in both formats, net income margin, net income growth, our new guidance, net income margin, net income growth. Whatever way you want to look at it is there and fully transparent for you to see. As we move into Q3 and Q4, this will be the way that we present the numbers.
Not everything, as usual, except the point about net income growth. That's it on the guidance. I think I'll, on that note, we'll pause there, and Harry will open the call up, please, to questions.
Operator (participant)
Great. Thanks, David. If you would like to ask a question and you've joined us via Zoom, please use the Raise Hand button on your Zoom toolbar. If you're dialing in over the phone today, please dial star followed by one on your telephone keypad. We'll just leave a moment here for any questions to be registered. Our first question of the day is from the line of Catherine O'Neill from Citigroup. Catherine, your line is now open if you'd like to proceed.
Catherine O'Neill (Managing Director)
Great, thanks very much. I have a few questions, actually. The first one is on the classifieds acquisition, and whether you could talk a bit more about the plan for classifieds, and the opportunities from integrating that within Kaspi, 'cause I know sort of car loans is one of the areas, you show separately as well. Also on the classifieds, margin looks low relative to other classifieds we look at where they're dominant, so is there quite a significant margin opportunity there as well? Secondly, I wanted to ask about advertising, which you mentioned has been a relatively decent driver of the take rate in e-commerce.
Again, could you provide a bit more detail on how you see the contribution of advertising longer term, and what type of products you have now, and the potential going forward? Then finally, on B2B, I think in the slide you talk about innovative products that you're at the start of on the B2B Payments. Again, could you maybe give a bit more detail around some of those products and where you see the most potential on those?
David Ferguson (Managing Director and Head of Investor Relations)
Thanks a lot, Catherine, for your questions. I think all of those questions are for Mikheil.
Mikheil Lomtadze (CEO and Co-Founder)
Hi, Catherine. Thanks for questions. In terms of the Kolesa, I mean, and in general, the way we look at them is more, it's a platform where users, sellers, and the consumers interact, right? Whether you want to sell a car or whether you want to sell a real estate. Because they're leading platform, you know, we will be able to come up with insights around those two extremely important decisions. When our two teams work together, you know, things related to enabling those transactions would be, of course, an important theme. Again, Kaspi itself is a transaction-driven business. That's what Kaspi knows to do. I think there we'll have a bit more of a insights going forward.
In terms of the. Again, I mean, just to reinforce, right, you can't, you can't really discount the fact that buying an apartment or buying a car, those are really important decisions that you take. You know, some of the insights on the surface are obviously if you're buying a car, you need tires, and if you're buying apartment, you probably might do some cosmetic refurbishment, or you can buy furniture and electronics. Those are the type of things which I think we'll be, we'll be able to just make sure that, you know, there is additional value to be created from those insights.
At the moment, again, we haven't really closed the transaction yet, so we don't really want to go into too far sort of details, but those are the leading brands working together that can create the value for it, for Kaspi. The second question was, Catherine, you mentioned, I'm not sure I understood. What about products of Kaspi?
Catherine O'Neill (Managing Director)
Yeah.
Mikheil Lomtadze (CEO and Co-Founder)
Advertising?
Catherine O'Neill (Managing Director)
It's on advertising. You singled it out with-
Mikheil Lomtadze (CEO and Co-Founder)
In advertising.
Yeah, in advertising, well, it's right now it's, you know, pretty straightforward. We're talking about advertising on e-commerce when the merchants can advertise their listed products. The merchants are paying for clicks, basically, and it's auction-driven, so it's very similar to many other models that you would see on other marketplaces. However, it's also important to keep in mind the way we operate, and I've also describing this quite consistently, that we want to make sure that merchants get the value. We're not really managing advertising for monetization at this stage or delivery. You know, we're careful. We want to make sure that the merchants get the value. We want to make sure that those are the type of tools which help you to increase the sales.
We want to make sure that those are not the type of tools that if you don't onboard on them, you cannot sell. Again, additional tools, creating the value, and that's what we're really focused. The initial sort of monetization and merchant feedback is excited, and we just wanted to really give you the driver of the growth of the take rate. Again, the current product is you as a merchant can advertise the products that you list on our e-commerce platform. On the B2B, again, your question was about some future products that we were developing or?
Catherine O'Neill (Managing Director)
I think on the slide, on the top of the slide, it talked about being at the start of sort of innovative products for B2B. I just wondered if you could give us any more detail on that?
Mikheil Lomtadze (CEO and Co-Founder)
I mean, we prefer not to talk about our future products, so I can just maybe describe the way we look at and the way we formulate our strategies, right? We are focused on the transaction, which means step number one is always, let's enable the transaction, and that's where we create the value, because we help the seller to buy and so seller to sell and buyer to buy. In this case, those are just two businesses transacting together. Obviously, you know, outside of a transaction, there are other services which can be developed by the by for both businesses, which create value, and those are more added value services.
One of the services which we currently are developing, for example, which is useful for business in the future, is Kaspi Shopping Register. That basically means that, you know, we'll be developing a register which enables merchants to issue the, the state, the sort of fiscal invoices for the tax purposes, but also you are spelling out items that you have been selling. Obviously, things like inventory and stuff are becoming important and visible, and we probably can help with that in the future. Again, at the moment, the business is growing itself very strongly, and we are always focused on the important priorities.
Our priority right now is just to build foundation for future innovations and look for the use cases like B2B came out of the some of the P2P transactions in our Payments business insights. That's how we came up with this big vertical.
Catherine O'Neill (Managing Director)
Okay. Thank you. Can I just come back to Kolesa briefly, actually, just on the transaction?
Mikheil Lomtadze (CEO and Co-Founder)
Sure.
Catherine O'Neill (Managing Director)
I just wondered if there's sort of any particular reason why you retained the stake, as opposed to Kaspi acquiring 100%?
Mikheil Lomtadze (CEO and Co-Founder)
Well, I'm not selling Kaspi, I'm not selling Kolesa. It's a simple explanation. It was a good, I think it was good, attractive investment for Kaspi to make, considering the value that can be created. You know, Kaspi is making this attractive acquisition. I'm not the seller of either.
Catherine O'Neill (Managing Director)
Okay. Thank you.
Operator (participant)
Thank you. Our next question is from the line of Gabor Kemeny from Autonomous. Gabor, your line will be open if you'd like to unmute locally and proceed.
Gabor Kemeny (Managing Director and Senior Analyst)
Sure. Thanks. I have a couple of questions. One is, a broader question on your take rate. If you could give us a sense how you see your take rate trending, maybe beyond the next quarter or two? I'm asking this in the context of your merchant base, becoming, over time, like, more mature in size and, you know, seeing, e-commerce companies, ecosystems, elsewhere with significantly higher take rates. I wondered how you saw the longer-term trends here. The second one would be on the Uzbek expansion.
What are your thoughts about scaling your Uzbek presence after this first step of acquiring a classifieds platform? Interested to hear your thoughts on that. Just finally, on the U.S. IPO, can you confirm whether are you assuming that the current shareholders are selling shares if this transaction will go ahead or were you planning to raise any new capital? Thank you.
David Ferguson (Managing Director and Head of Investor Relations)
All right. Gabor, thanks for your questions. Maybe I'll take just the U.S. listing and then pass the floor to Mikheil for long-term take rate and long-term Uzbekistan. I guess, just on the U.S. listing, let's say a couple of things. Number one, I'll draw your attention to comments in previous press releases and on previous conference calls, including as of three months ago. That's the first thing. The second thing would be today's press release, quite clear, we remain committed. We'll update the market at the right time. I would just add to that these processes come with rules, regulations about what can be said and when it can be said. Let's just sort of wait and see in that regard.
To your point specifically, or your question, specifically, primary versus secondary, well, I would just simply say that, as you know, this company prints cash. We're paying dividends, we're buying back stock, we're making acquisitions, so there's no need for the company to raise primary funds. Given that one of the main reasons for any potential listing is to increase liquidity, that would involve a secondary component from existing shareholders, but at this point, it wouldn't be appropriate to sort of go into any more detail than that. Mikheil?
Mikheil Lomtadze (CEO and Co-Founder)
Sorry, should I go ahead with the other questions?
David Ferguson (Managing Director and Head of Investor Relations)
Yeah, please.
Mikheil Lomtadze (CEO and Co-Founder)
Okay. On the take rate, I think we really try to, you know, give a visibility on the things which are sort of kind of like trends in our take rate, right? The portion of the increase in the take rate is just a mix of the things which our merchants trade, consumers buy. As you know, we have been moving over time from electronics, which was primarily vertical. We worked several years ago, now we have to, you know, diversified range of the, of the products. They are higher margin products. That's the result of the growth. Advertising and the delivery, those are, for us, the important services.
Again, we're very careful, in making sure that we scale them in a way that we create value for the merchants. The only thing I could say that the guidance we're providing for the year end is pretty much based on our view of how the trend on the take rate will be developing during this year. In terms of the Uzbekistan business, we will see. I mean, we don't really want to speculate at this stage. I mean, it's a business which has a nice, currently nice presence in the car vertical, and gives us an opportunity to be sort of more engaged with the market.
That's is also a very early stage when Azerbaijan actually are very well-established verticals already, and they're leading verticals, I mean, from the size of them. Uzbekistan is actually early stage, but it's good for us to start sort of having the insights about the country and dynamics on the consumers and the lister side of things.
Gabor Kemeny (Managing Director and Senior Analyst)
Right. Thank you. Can I just quickly follow up on Kolesa? Have you made any calculations how many new clients have you acquired in Kazakhstan? I just wondered about the overlap and the new client acquisitions.
Mikheil Lomtadze (CEO and Co-Founder)
Well, I mean, I think we are at the stage of our strategy sort of acquisition, or sorry, strategy implementation, when, you know, even though we're growing quite nicely still on the users and the merchants and listers, in case of the completion of acquisition of Kolesa. We're really thinking in terms of transactions and in terms of value of the business we generate around those merchants and around those consumers. You know, with Kaspi already having such a huge user base in the country, you can hardly think that you are acquiring any meaningful user base from anyone else, especially when you are growing yourself, right? From that perspective, we're just going.
You should think more in terms of we're going into the new verticals, into larger share of wallet, new insights, new spending, and things like that. It's more of a new, basically, the new verticals for the household. I mean, there is no, there is no transaction that can drive Kaspi user base in a meaningful way, especially if Kaspi is growing by itself, overlap is very substantial, basically.
Gabor Kemeny (Managing Director and Senior Analyst)
Makes sense. Thanks very much.
Operator (participant)
Thank you. Our next question today is from the line of David Shapiro from Vanshap Capital. David, your line will be open now if you'd like to unmute locally and proceed.
David Shapiro (Managing Partner)
Thank you, Mikheil. Thanks, David, again, thank you for all the hard work you guys do and the team at Kaspi. On a job well done. Appreciate it. Just two quick questions on the grocery. I'm just wondering the cadence of the rollout and how aggressive you intend to be. Clearly, the early signs, you know, are very encouraging, I do wonder whether the first locations naturally would be the best ones, you know, in Almaty, therefore, you know, you might not get the same margin or volumes through the latter ones. I just wanted to know how you guys intend to roll that out, if it's gonna be aggressive or more methodical.
Secondly, on the Fintech unit, obviously, with the loan to deposits falling, I guess you're in a strategy that you're taking in more deposits and customers than you need. If you can maybe flesh out what you hope to gain from that on conversion later, when obviously you can re-accelerate lending opportunities. Just maybe any strategic thinking around sort of why you're allowing more deposits than you really need to come into the business at the high cost of funds. That's it. Thanks again, gentlemen.
David Ferguson (Managing Director and Head of Investor Relations)
Thanks, David. Over to you, Mikheil.
Mikheil Lomtadze (CEO and Co-Founder)
Okay, the first question was customers, right?
David Ferguson (Managing Director and Head of Investor Relations)
No, e-Grocery, I think.
Mikheil Lomtadze (CEO and Co-Founder)
Yeah, okay.
David Ferguson (Managing Director and Head of Investor Relations)
Time allow to be grocery-
Mikheil Lomtadze (CEO and Co-Founder)
Oh, sorry.
David Ferguson (Managing Director and Head of Investor Relations)
Almaty, Astana.
Mikheil Lomtadze (CEO and Co-Founder)
Well, I mean, it's just a, I mean, it's such a under-penetrated market. It's basically just, you know, we're starting from zero. From that perspective, there is a lot of opportunity to drive the value, and to grow. What you actually will always see in the case of us, that, again, we don't believe in the concept of first mover, we believe in the concept of right mover. We want to make sure that the business we develop is delivering value to its shareholders, not only because of the growth prospects, but long-term value, because it's gotta be profitable. You know, we don't like to run unprofitable businesses, as you can see from our portfolio.
The early results are just encouraging because there are things which we're working between all our teams. The profitability is actually a result of a data-driven sort of approach to the, you know, pricing or to the SKUs or to the efficiency of the courier services, because we're delivering those items. That's basically where we are, I mean. The dark stores, we also are. Our business is to deliver very reliably and deliver fast. You know, most of our items are basically delivered within sort of, you know, several hours windows. As a result, the, you know, dark stores are also located in conveniently in the crossroads, and are not located outside of the cities. Again, I mean, it's. I don't even.
I can't even tell you what's the penetration of the online sort of grocery in the whole country, because it's extremely small. The one city for us is just verifying sort of the business model kind of exercise, and we have done it successfully. What you will not see in Kaspi, you will not see us launching the business, burning the money, showing the growth, and then trying to fix it to become profitable. We prefer to make sure that we understand the business and we're comfortable investing further, and that's what you would see in the grocery.
That's why even though it's growing fast, we are still focused on the two cities to make sure that we can then invest into regional expansion with the confidence. On the deposit side of things, again, our strategy is all about consumers and the consumer needs, in the high-interest environment, there's an opportunity just to acquire more consumers.
We don't think in terms of the savings, size of the savings or the portfolio, because if you have a view as Kaspi, which is, you know, the long-term view of many years in front of us, the consumers which we acquire today, because the high-interest environment allows us to acquire consumers with savings, those are the consumers whose actually over time will be, you know, high-quality consumers for shopping, and the Marketplace will be low-risk consumers for Fintech. We're just taking this opportunity to acquire consumers. When the interest rates will be going down, those consumers are staying with us because then they are engaged in all other services that we have.
You know, they will become even more valuable consumers going forward, and also they will generate for us more value and the profits, because interest rates will go down, but consumers hopefully will stay with us just because of our super app driven business model. We're not thinking in terms of interest expenses for this year, we're thinking about those consumers being with us another three to five years. That's how we think about the consumers with savings.
David Shapiro (Managing Partner)
Thank you, Mikheil, and again, thanks to the entire team.
Mikheil Lomtadze (CEO and Co-Founder)
Thank you, David.
Operator (participant)
Thank you. Our next question is from the line of Mikhail Butkov of Goldman Sachs. Mikhail, your line is now open if you'd like to unmute locally and proceed.
Mikhail Butkov (Equity Research Senior Analyst)
Yes, thank you. Congratulations on the results. I have one question on the acquisition and on Kolesa. We can see in other markets that it is quite common for real estate classifieds and car classifieds to have banking partners for lending. It is not a strategy of Kaspi to have longer-term lending products, but considering, yeah, the experience in some of some peers, it seems that there can be some synergies, like providing mortgages for property classifieds, and expanding the car lending as well. This is especially taken into account your deposit, strong deposit position. Can you potentially expand into the longer-term products with this acquisition?
If not, what synergies do you see with your Fintech segment, which you mentioned in the press release? Thank you.
David Ferguson (Managing Director and Head of Investor Relations)
Mikheil, do you want to take that?
Mikheil Lomtadze (CEO and Co-Founder)
Yeah, sure. I mean, first of all, we are, you know, I mean, thinking much wider, right? We're thinking more in terms of use case, in terms of insights of the consumers around their sort of daily activities, around their decisions, and things like that. There are a lot of insights about the consumer, if you think that how much of a car-related or apartment-related transactions, you know, purchases, the payments, and so on and so forth, any household would make. That's basically is a quite wide range of the things which we're interested in. Specifically on Fintech side of things, car is an interesting segment for us, and we expect the growth there.
Again, we already have car products developed together with Kolesa for some time ago and, you know, we would be interested to grow it further and grow it faster. Regarding the real estate sort of mortgages, there are a lot of government state programs for the mortgages, which do their job of, you know, allowing people to get mortgage at a reasonable interest rates. On top of it's a long-term transaction, so we don't really believe that in the mortgage specifically, there is enough value that we can create. I think there are other players that could actually do it, and it's a long-term funding which required for that.
When we think about, again, real estate and apartment, there are other things on a purchases transaction level which we could explore. Basically, I think the most important thing, just to take a step back, some of the major decisions households are taking, car and apartment, house, real estate, and I'm sure we can innovate around those two important decisions.
Mikhail Butkov (Equity Research Senior Analyst)
Okay. Okay, thank you very much.
Mikheil Lomtadze (CEO and Co-Founder)
Thank you.
Operator (participant)
Thank you. Our next question is from the line of Sam Griffiths of Vergent Asset Management. Sam, your line is now open if you'd like to unmute locally and proceed with your question.
Sam Griffiths (Investment Analyst)
Yeah, hi, guys. Congrats on the results. Just one quick question, please, Mikel. Obviously you've, you know, over a period of years now, been delivering really strong execution, developing and rolling out your own products. How do you think about, you know, opening up the platform to third parties? Like, is that something that's on the agenda? Is it something that you're thinking about near term, long term? Are there any kind of obvious products that, you know, you would like on the platform one day, but you wouldn't really want to do in-house? Thank you.
Mikheil Lomtadze (CEO and Co-Founder)
I mean, in general, I would say that, I mean, we are as open as can be, right? I mean, for the merchants and for the consumers, for example, or for distributors, right? We basically are... Or for airlines, or for operators of the vacation tours. I mean, anything around the consumer and the merchant and the household and their daily, and the daily activities, you know, we are open to all of them. We're not the, you know, we're not making that smartphone or that furniture which we're selling, right?
From that perspective, I guess everything around the payments and shopping, we're actually are very open, because we are on board seamlessly and we have a strong biometrics technology and some other, it helps us to, you know, keep the risks in check. From that perspective, I would say that, you know, we are as open as can be. In the future, you know, we're just having our core business, which is growing very strongly, and our technology, which can be used by wide variety of verticals, right?
From that perspective, you know, we're still would like to focus on the things which are, which where we you know, have competitive advantage and the things which we are doing now, extending our platform to some additional services, right? I mean, take delivery. Delivery, even though Postomats is something which we actually, is device which we actually install because we believe that we can install it faster and more efficiently than anyone else. I mean, we're not actually doing our own delivery on our e-commerce side of things in 3P. We have, you know, courier across the country. We have, you know, sorting station companies. We have a smaller companies now when the person would buy just a small minivan and would start delivering for us. We are building the technology platform.
We're not doing this ourselves, actually, but we're giving them technology, we're giving them volumes, we're giving them standards, and we're developing them tools so they can run their businesses more efficiently. From that perspective, I guess, you know, we are the platform. The only thing which I would say we're doing from A to Z is Fintech, it's savings products, and financing products. I mean, that's something which we have just built such a capability when we can make, you know, 99% of decisions in six seconds, it's very high quality. If there is, you know, if there is any other player that could do that, you know, would love to see it.
It's such a seamless product that, you know, from that perspective, we basically are doing it's ourself. Everything outside of our Fintech is open platform for everybody to engage and to onboard, and we're just providing technology really, to grow their businesses. I don't know, David, anything you want to?
David Ferguson (Managing Director and Head of Investor Relations)
No, I think that's, that covers everything.
Sam Griffiths (Investment Analyst)
Okay. That's, yeah, that's very clear. Thank you.
Mikheil Lomtadze (CEO and Co-Founder)
Yeah.
Operator (participant)
Thank you. Our next question is from the line of Catherine O'Neill from Citigroup. Catherine, your line is open. Please go ahead.
Catherine O'Neill (Managing Director)
Thanks. Sorry to come back again. I just had one more that I meant to ask you about, and it's quite broad. I wanted to ask you about generative AI, given Kaspi is very data and AI-driven anyway. Just how do you see the impact for Kaspi over the longer term as generative AI is developed and what the opportunities could be there?
Mikheil Lomtadze (CEO and Co-Founder)
Well, I mean.
David Ferguson (Managing Director and Head of Investor Relations)
...
Mikheil Lomtadze (CEO and Co-Founder)
Sorry?
David Ferguson (Managing Director and Head of Investor Relations)
Definitely one for you, Mikheil.
Mikheil Lomtadze (CEO and Co-Founder)
Okay. Yeah, Catherine, welcome back. Well, in terms of the AI, I mean, first of all, we already employ the AI in our current business. If you watch, for example. If you look at the number of people that we have in our company since an IPO, that number of people starting from 2020, 2021, 2022, actually reduced the headcount of our employees. Now, how many companies that are growing like us, that are coming up with the new businesses like us, and that are profitable, you know, well, profitability, okay, most of the companies are not profitable, but they're not growing the headcount.
That is actually a result of us, you know, having the AI just to give you one example, on the virtual assistant. We have virtual assistant, which is actually equal to, you know, hundreds of people when accepting the calls or when complimenting the chat, or reminding at the right time of the payment schedules and things like that. We already do that. The way that we always look at the technology is not just a sort of, you know, nice statement to impress our shareholders, is actually, or the investment community, or you, it's actually how we use it.
One specific use case for us is reflected in the number that instead of growing our headcount, we have actually developed the virtual assistant, which has taken the vast majority, while significant share of most of the consumer interactions across all our consumer interaction channels. That's the one example for you. We have face recognition, which enables us to control the risks. That's another example. Risk, which you have, which is, you know, less than 2% sort of cost of risk, world-class. Again, it's driven by machine learning, artificial intelligence, instruments, which enable us to analyze the vast amounts of data in just six seconds. I mean, can you imagine how much, how your technology needs to be developed so that you can make high-quality credit decision in six seconds?
That's basically all these tools, they're allowing us to do it. Our view is very simple. You know, we believe that we can deliver the value to consumer and merchant, and we can do it cost efficiently. You know, we use or develop ourselves the tool like artificial intelligence and any technology, as a matter of fact. Virtual assistant is one of the examples which we have been quietly rolling out for the last, you know, several years actually. Has been very successful.
Catherine O'Neill (Managing Director)
Okay, great. Thanks. For you, it's more sort of incremental evolution, generative AI, given how embedded AI already is?
Mikheil Lomtadze (CEO and Co-Founder)
Well, we will see. I mean, it is, yeah. Let's see the value it delivers, right? We're not going for fashion. We're going for delivering the value and making our business more efficient type of AI at this stage. We're not a university where you can use the chatbot to develop your essay. We're transaction-driven business.
Catherine O'Neill (Managing Director)
Okay, great. Thanks very much.
Mikheil Lomtadze (CEO and Co-Founder)
Thank you, Catherine.
Operator (participant)
Thank you. I'm afraid we have no time for any further questions today. It'd be my pleasure to hand back to David and Mikheil for any further remarks.
David Ferguson (Managing Director and Head of Investor Relations)
All right, thanks, Harry. Thanks everyone for joining us. We're gonna wrap things up for today. If you have follow-up questions, please get in touch directly. Happy to speak offline. Thanks everyone, see you in the autumn. Thank you.