Kaspi.kz - Q4 2023

Transcript

Operator (participant)

Hello everyone, and welcome to the Kaspi.kz 4QFY23 Financial Results Conference call, and thank you for standing by. My name is Daisy, and I'll be your operator today. If you would like to ask a question on Zoom, please use the raise hand button to ask an audio question, or if you've joined us via the phone, please press star then 1 on your telephone keypad. I would now like to hand the call over to your host, David Ferguson, from Kaspi to begin, so David, please go ahead.

David Ferguson (Managing Director and Head of Investor Relations)

Hey, hi everybody. Thank you, Daisy. Welcome to our full year 2023 results call. As usual, the full team are on the call. We've got Mikheil Lomtadze, Tengiz Mosidze, and Yuri Didenko. I'm David Ferguson from Kaspi. We'll do the usual format. Mikheil will run you through the strategic update. I'll take some of the financial slides, and then we'll open the call up to Q&A, and the whole team is available for your questions. On that note, I'll pass the call over to Mikheil. Mikheil, over to you.

Mikheil Lomtadze (CEO)

Hello everyone. So, it's our first call since we last listed on Nasdaq, so it's exciting to report our 2023 and Q4 numbers, and some of the strategic updates from me and some of the priorities which we're working on. So we can go through the presentation. I mean, first of all, you know, our main goal really to list on the Nasdaq was also to achieve the high liquidity. So as you can see from this slide, you know, average daily volumes are 12x of London Stock Exchange. So, we believe that's great for the company and its shareholders. And as we made an announcement also that we'll be approaching to delist from London Stock Exchange to consolidate liquidity. Our mission, to remind everyone, I think that's really important for us, our entire team, is to develop the products which are, you know, highly relevant.

You know, they are world-class mobile services, you know, high quality, but also innovate in order to improve people's lives. And we innovate through two sides of our sort of target, customer. That would be, on the one hand, would be the merchant, and on the other hand would be a consumer. And the merchant is the Kaspi Pay mobile app, and the consumer is Kaspi.kz. And both mobile apps are the Super Apps, what we call them. And our definition of the Super App is all these different services which are in a single mobile application, and those services are highly diverse and integrated around the regular needs of the consumers and the merchants.

So if we go to look into some of the services that we have in our apps, I'm not going to go through them, but I think, you know, as you might appreciate, very few companies have had such a range of the services for both consumer and the merchant. So on the one hand, we have, you know, consumer super app where we are serving 14 million monthly users, and here we have everything from e-commerce and grocery to travel and, you know, fintech, financial services, and buy now pay later or general purpose loan, the QR which is the backbone of our proprietary payment network.

So pretty much everything around shopping and the payments and moving money between the users on the one hand of the value chain for a consumer, and on the other hand, we have the services where the merchants can actually both connect to the marketplace but also run the advertising campaigns, manage the delivery, you know, access the merchant finance fully online, have a business account for their business. And, you know, those are the services which we have developed have been developing for merchants for the last several years, and, you know, we are kind of initial stage, actually, of the wave of innovations for the merchants.

On the one hand, you have everything around the daily needs and the regular needs of a consumer, and then on the other hand of our value chain, you have merchants that are actually selling the items to those consumers or accepting the payments from those consumers. Those two super apps are not, you know, separate from each other. Basically what that means, they're actually connected through different range of the services. David, next slide, please. Here what you have, you know, connected through the proprietary payment network, and that's really enables the merchants to accept the payments and the consumers to pay. The QR is the foundation for that proprietary payment network, and we just move money between the consumers and merchants and also between the merchants themselves and between the consumers themselves.

The marketplace enables if the payments enable to accept the payments or pay, then marketplace enables the merchants to sell their goods and items and services and consumers to actually buy those services and the goods. Then we have the logistics platform which also connects again. Merchants can onboard to our platform through their Kaspi Pay functionalities, and then consumers have the variety of the logistic sort of delivery options, you know, from Postomat, which is the automated parcel machine sort of locker functionality, to in-to-door delivery. And then advertising, which we are also scaling, and I will talk a bit about these services later. You know, it's actually an ability for the merchants to advertise those services to reach the right buyers at the right time with the right offer.

And that's a very nice functionality which also is useful for the consumers because it's highly personalized, but also for the merchants to increase their sales. So those two apps are connected to through this sort of what we would call four platforms, you know, the payments network marketplace, platform, logistics, delivery, and the advertising services. And they're seamlessly working between them. Our priority historically has been always to drive the engagement, to drive the transactions. And as you can see, just a reminder, you know, we are one of the highest engaged app compared to some other global apps, which you might know. So 65% is actually the share of the monthly users which visits our app daily. So 65 people out of 100 monthly visitors would come, 65 would come daily to our app.

That's really the result of all these different services around regular needs of the consumer which are in a single mobile application. And that's probably one of the also most important metrics just to underline how relevant our services are. And as we continuously adding the new services, the new verticals, enter the new businesses, you know, if you look at our business, we have been constantly innovating. We drive the transactions. And transactions are important just because that is actually our ability to deliver the value to the merchant and the consumer because transaction is all about buying something, you know, paying for something. And as you can see on the GMV side of things, we've grown very nicely last year, 38%. And we grown also nicely on the payment transactions, 38% as well.

So we processed 4.2 billion payments last year and almost 165 million purchase transactions. At the same time as we sort of continue driving all those services and they, you know, grow, individually, they contribute to the higher sort of transactional engagement for the consumers. As you can see now, we are doing 71 monthly transaction per active consumer. So that's up 17% from 60 transactions a month per consumer in 2022. That just basically tells you that, you know, consumers are, you know, transacting through our through our platforms, you know, two and, and more times a day. That's really a remarkable a remarkable number.

Again, the transactions are important because this is how we monetize, directly through the value of the acquiring fee, the seller fees, and now advertising and delivery, but also indirectly because this type of engagement really enables us to personalize highly the consumer experience and make sure that our business is constantly, you know, improving, shows improving efficiency and the growth. In terms of the financials, so we pretty much—I mean, we did the guidance on a six-month before going into the U.S. listing route. As you if you know, going back, basically, we pretty much exceeded every single guidance that we had on a six-month. The numbers on the financial performance are strong. Our revenue increased 51% to reach $4.2 billion,equivalent of KZT 1.9 trillion in 2023. Net income grew 44% to $1.9 billion.

And then the share, the earnings per share, have grown to, you know, $9.6 per share, which is 45% growth. And we are also happy to announce that there will be a dividend proposed, subject to shareholder approval, for Q4 2023, of about KZT 850 per share, dividend payment. As we continue growing different services, the payment and marketplace are the fastest growth. So here we're also happy to report that we're sort of becoming the increasingly diversified business, very unique in its nature, but also all these different revenue sources and different net profit sources which we constantly create by entering the new verticals. So as you can see, 66% of our net income in 2023 now comes from the payments and the marketplace. And those are the businesses which grow the fastest.

And actually they are, you know, front end of the consumer relationship. And they will continue growing faster than a fintech and will be taking increasing share of our bottom line, and also in 2023, in 2024, and beyond. This is cohorts. So we show cohorts in our annual numbers. So that basically is another indication of our growth. So you can see that we have been growing nicely. Our cohorts are showing a very nice, you know, sort of similar growth, year-over-year. And 62% of our consumer base, you know, comes from the four recent years. So those consumers will continue transacting, also in the future. And again, you know, you can see the years, you know, we're sort of in the five years consumers transacting, you know, we increase the TPV per consumer 12x.

If you look at pretty much every cohort, they're behaving in a very similar way. So which means there is more opportunity to do, you know, sort of volumes of the business around the consumer needs. And, yeah, and we continue adding the more reasons for consumers to pay for. Another cohort is for our marketplace. So here you see, you know, the same, strong growth. 50% of our consumers are coming from the last four years. And then the marketplace continues, you know, growing very nicely. We are probably one of the few marketplace platforms which have continued continuously, just, you know, grew through the after the COVID, improvement. You know, that's really the reason behind that is just because we continuously enter the new verticals.

We've started, if you remember, travel several years ago, and we, you know, we entered grocery, and we constantly increase the assortment that is available for consumers to buy. So all of that really contributes sort of more reasons for consumers to shop. And then all the added value services like delivery or advertising, they're also helping and driving the growth because they're convenient for consumers and they're increasing sales of the merchants. This is the slide about the penetration of some of our existing services that we have. So as you can see, you know, we have services which are sort of lower penetrated, especially on the marketplace side of things. And again, that's pretty natural, right? The step number one for consumer to onboard is to actually pay. And they pay through our payment network and the QR transactions.

And then, you know, after payment, what comes is actually they can buy things. And, you know, they can buy things, which are, you know, e-commerce or the travel or the grocery. And all of that is really helping the merchants to first accept the payments, then they are listing their items, and we're helping with the delivery and other services to increase their sales. So that's a natural evolution of the consumer journey. And some of the lower penetrated services, you know, that would be growing much faster than everything else would be underpenetrated ones like grocery or e-commerce, for example, the travel. So all those services, you know, have the very good potential for the growth.

And then some of the new services which we have been scaling and launched, like online car finance, for example, which we're scaling as we speak. And that would be also the foundation for the car marketplace which we intend to create. So all of those, you know, services which you have now, basically some of them are, you know, will continue delivering the show growth just because they are under penetrated. But even the penetrated services that we have are growing fast, like QR payments, as you can see. You know, TPV has grew 43%. On the merchant services, it's kind of another side of the value chain, right? So but pretty much the same.

So the merchants are onboarding for the payments first, and then they're moving to the commerce and the marketplace and listing their items that we're selling with the delivery. And then they connect the delivery and advertising. So here again, you can see that e-commerce delivery advertising, which, you know, delivery and advertising sort of, you know, first, suite of the value-added services for the merchants, there will be, you know, growing nicely, contributing to the revenue growth and the take rate. I will speak about it in more details further. And then the merchant and micro business finance, that's really a good opportunity for us, underpenetrated on the market. The product is fully online. Merchants love it. And as we continue providing financing for merchants, they therefore are developing and growing.

And as they grow, they're fueling growth of our marketplace and the payments and so on and so forth. So there are a lot of network effects between different services in our merchant services, existing services. And then we have a pipeline for the new. A bit about the grocery, just one of the latest sort of services which we have launched, which will provide the significant growth opportunity for us. So the market is, you know, an estimated about $14 billion double-digit growth market. We are in the weekly purchase. That is why we have, you know, sort of 11,000 SKUs and average ticket around $25, sorry, $29. And then the delivery is sort of same-day delivery, and it's largely free of the basket above of, you know, KZT 5,000.

So, delivery speed, you know, is pretty much the same delivery. And we're delivering the orders from the one central location, which actually carries those 11,000 SKUs. So [it has] been showing a very strong growth as a grocery business itself. You know, one of the [key things] when you look on the screens, you can actually, you know, see how the whole value chain is shaping up. So it's fully mobile. You can select the everyday items from 11,000 SKUs. You know, it's the size or it's $29 dollars average order size. 99% is a delivery for free. You can actually select the time when it's convenient for you to get the delivery.

And then, because we're, you know, focused on the on the quality of the service, especially in the grocery, because that's a very repetitive, repetitive shopping experience, you really want to make sure that you constantly deliver high quality. So 92% of consumers rate service as excellent, which is extremely important because, again, you know, consumers shop weekly, right? So you want to make sure that you your experience is high quality experience is constant. And this is how you make it profitable. You're not losing customers, and you don't need to spend money on the marketing to bring the customers back, which, you know, could have been disappointed somewhere, in the in the process of, you know, shopping with you. So that's, you know, a simple overview of the of the shopping process with us. So delivered the very high growth in in 2023, we've grew 3.9x.

You know, around 500,000 consumers shopped with us in 2023. The average ticket grew slightly during the year to $29 now. Then we've enabled 5.2 million purchases in 2023, which is 3.3x growth. There has been a lot, you know, discussion about very few markets where this business has been profitable. So I think we just would like to put this discussion to bed, really. We told you last year that we would be focused on execution, delivering very consistent experience that results in profitability and efficiency. So this is the case study for Almaty. This is where we launched this service in last year. And as you can see, in just 12 months, you know, we are now we grew the revenue 154%. In Q4, we achieved net income margin of 6%.

Now, fourth Q is a good quarter for any retail, right? Because it's a sort of new year, you know, Christmas shopping. But still, we were already profitable in the third Q. We were profitable in the second Q, as I've, you know, reported, earlier, in the mid of last year. So that's, you know, basically an extraordinary achievement by itself. And then in the fourth Q, we processed 1 million payments orders, sorry, in the fourth Q. And we served 10% of the population. So, you know, around 218,000 consumers made the purchase in Almaty with our e-grocery proposition. So we're very excited about this business. And we're scaling now in Almaty and Astana, which are, you know, two largest cities.

We will be entering the third largest city, also during the year. So those would be almost half of the total retail trade in the country. And, yeah, we're confident and comfortable that we can grow efficiently this business, deliver outstanding consumer experience, which actually results in the efficiency and profitability for us. Tours, another example of our innovation last year. So we launched the Kaspi Tours, vacation packages marketplace, you know, basically end of 2022, and we're scaling through 2023. So now, what we have is full functioning marketplace. So you can search a vacation, 71% of all destinations, the most popular ones are actually Turkey, Emirates, and Egypt. Then you can select the hotel, and we have about 6,000 offers of vacation packages in our app. You can read through all the details.

Again, this is very important to keep in mind that this is a complicated user experience. So you want to make sure that you present the information fairly, the consumers are happy, they make the decision right, but you can also connect to the operators which are on the ground, which, you know, once you arrive to airport, you will be greeted and met and they will check you in the hotel. The good thing about this business is that it's in excess of $2,000 average ticket, which is very meaningful for household budget, but also, you know, very good for us as an extension for airline and railway tickets. Then it's fully integrated with our payments and fintech platform, so you can seamlessly pay.

And yeah, again, the consumer experience is extremely important, especially the family vacation. And almost 90% of consumers rate the service as excellent. So we have been scaling this last year, so happy to report that has been growing very nicely. So we grew during the year 185%. But what is actually important, and we achieved 5% of the GMV of the travel business in Q4. So we're just sort of starting, but already quite a meaningful contribution. But what is important is also the take rate, right? The take rate of this service on average has been around 8.7%. And that basically is the take rate enhancing business for us. But also, again, it's a very, very natural expansion for the travel value proposition for our consumers.

You know, we started with airlines, if you remember, then we joined the train, and now we moved into the vacation packages. So really excited about this business. We continue growing this year. Postomats, that's another innovation which we've built during the last couple of years. Now we're almost 6,000, which, you know, was our target, if you remember. We're targeting this year 7,000, by end of 2024. We largely built the network. So the network of automated parcel machines now is the largest last-mile network for e-commerce, in the country. We've grew 78% the number of Postomats, and almost 40% of all the deliveries are now done through the lockers, Kaspi Postomats. And then again, just to remind you, right, the economics of it are quite simple.

Instead of delivering 70 parcels to individual apartments or the houses with a success ratio that actually is not, you know, it's, you know, you can have, you know, a person is not there, you know, the consumer needs to talk to the courier for a comfortable time arrangement and so on and so forth. So it's not really, you know, that convenient as postomats where you can actually go anytime you want. And consumers love this experience. We're scaling it. And that is a very important source of our competitive advantage. But also it's an important backbone now for our smart logistics platform, which, you know, we're developing.

So if we look at the value chain of our logistics platform, we have taken the view that, you know, in order to deliver the parcels to consumers from merchants, you don't really have to own that many assets and really employ self-delivery people almost the same way like, you know, you don't really need to own the taxi and employ the taxi driver in order to provide the riding services. So we took the view that we are building the platform, which manages the entire network, but, you know, it gets, you know, all the people and the entities participating in the value chain actually connect. So we have some technology, which enables the whole process management.

We have labeling, which is basically the entire same label sort of through the process, which is kind of extremely important for the efficiency. And then we have a technology, which is the machine learning AI-driven technology in the middle, which basically makes sure that the routes are and selected in the most efficient way. And then, you know, we have a front-end of relationship with the with the couriers where we have app, which actually manages the courier experience. So all of that really has been providing a very strong result. So we have grown 130% in orders, 88% of those orders free, and we deliver over half of those orders in less than two days.

Again, this is probably the largest technology platform for delivery in the region, and we are enabling this without actually owning, you know, huge assets or employing directly delivery people. But we create a lot of jobs. So, you know, the infrastructure itself, if we go to the next slide, is actually quite impressive. So we serve around 60,000 merchants. Almost 6,000 Postomats we have across the country. We provide the platform and technology for almost, you know, around 2,500 couriers. You know, we have delivery stations in the cities. We have the pickup points for the merchants so the merchants also can, you know, deliver their items. Consumers can pick up. So, yeah, B2B companies like airlines and big trucking companies. So the whole value chain we manage is actually quite massive.

156 cities we deliver. The country size is huge, right? It's the, and we're still making this efficiently and continuously fueling our marketplace profitability. So just, yeah, we're excited and we will continue developing that technology in order to enable even more orders delivered as our marketplace continues growing, in e-commerce specifically, which grew very nicely last year and continues growth this year. As we continue thinking about the merchants, we are also delivering the, what we call sort of added value services for merchants. So this is an example of advertising, which we have been carefully designing so we deliver value for merchants. Merchants actually get the value in a sales increase at the reasonable marketing costs. So merchants can actually. This is auction-based, right? So it's almost like, you know, Google Ads or Amazon Ads, very similar sort of functionality by nature.

You know, merchants can launch the campaign. Merchants can manage the campaign, select the kind of list the items which they want to advertise. They have analytics, which, you know, they can decide on the efficiency of the advertising. And we have been scaling this, quite carefully, again, just to make sure that, the merchants get the value for it, for the marketing, money they spent. And I'm happy to report that the growth has been, very nice. David, can I have the next slide, please? So growth has been very nice. So as you can see on the advertising and the delivery, we have grown almost 3x year-over-year. So 2.7x growth on value-added services. Another angle to look at is, take rate.

So take rate is 1.4% additional take rate to seller fees from delivery, 0.5% take rate to advertising. So added value services now contribute 1.9% of the take rate on e-commerce. And yeah, we're just really at initial stage of the monetizing value-added services and driving the growth. And those are just the two examples of those on top of the B2B payments. The B2B payments now is becoming a meaningful contributor to our business and the bottom line. So as you can see that, we have grown B2B to, you know, 2.1x in 2023, now $2.4 billion worth of transactions. And then, you know, almost 25 million transactions processed in 2023.

And again, this business is enabling the transaction when, you know, guys like, you know, Coca-Cola or Pepsi, Nestlé, you know, they're delivering their sort of packages, items, to the convenience store. You know, we're settling the invoices seamlessly between this convenience store and the brand or its distributor, or its wholesaler. So that is extremely, you know, powerful business because we deliver a lot of value. We make these transactions seamless, all, you know, like almost like P2P payments for businesses. And that is our first service we launched on the B2B side of things. It still continues growing very nicely, but, you know, when, if you take, if you combine together the payments and now we're thinking, you know, we're scaling advertising and delivery, all those services for B2B would be, you know, also added value services.

B2B services would be the first range of innovation from us. But they have delivered already a very nice growth and they contributed to the bottom line in 2023. As we've got the you know focus on the classifieds, and I've mentioned to you last year that you know probably buying the car is one of the most important sort of household family decisions after buying the real estate. So we like this fact that you know now we're thinking about actually organizing the experience around that important household decisions. So we are building the you know the car marketplace where we enable the transaction which is the dream for any classified right? You know can you get to the transaction actually from just advertising?

Here is an example of where getting this transaction enabled through our seamless online car loan financing. We leverage our fintech, again, scaling very nicely. So you can actually search the car. You can select the car. You can immediately get approved, like, which is an important functionality and our competitive advantage that we can actually approve seamlessly in seconds high-quality financing. And then, you know, you can pay all the fees that you need to pay around the car and its registration through our government GovTech platform, government services. And then you can pick up the car. So that's the process, which is very seamless, high quality. Yeah, so we are scaling now. The intention is to build the car marketplace. We're also piloting 1P car marketplace with very promising results.

Yeah, I will just take the opportunity to talk about it later in the year. But really excited about building the car marketplace and actually different services around the cars that the household can have. Yeah, to you, David, now.

David Ferguson (Managing Director and Head of Investor Relations)

Great. Thank you, Mikheil. Moving on to the financial performance of the business, starting with the payments platform. Firstly, volumes. Payments platform fundamentally is the driver of engagement and competitive advantage in the business. What you see here is 12.9 million consumers, up 14% YoY, 581,000 merchants. But as Mikheil talked about, the focus is not being growth in users. It's being growth using that large and engaged user base to drive transaction activity. And here you see very, very solid volume trends, up 30% in the fourth quarter, up 38% for the year.

Going forward, with reference to the cohort analysis you saw earlier, this growth just remains a function of us adding more opportunities for consumers and merchants to transact, more payment functionality. Moving on to monetization, TPV is the measure of monetization. You should keep in mind that inflation did moderate materially over the course of the year. And as a take rate business, both payments and marketplace are impacted by that. But irrespective, all key payment products continue to report very, very strong monetization trends. So that's Kaspi Pay, merchant and consumer transactions, B2B payments, and bill payments. And this is despite the fact that, they are our most penetrated products. The other takeaway from this slide is that while take rate was stable over the course of the year, it did move up in the fourth quarter to 1.3% from 1.2%.

That is a result of higher margin bill payments, and that will remain a theme in 2024. In terms of mix, what you see here is that, B2B payments is now 4% of TPV. It was 3% this time last year. So that is our fastest growing payment product. But still early days. This year, the focus is still on driving transaction volumes between merchants and their suppliers. But over time, this will open up more opportunities for more merchant or more vertical-specific products and services, both within payments and across the other platforms. Turning to revenue and profitability, with take rate moving up in the fourth quarter, revenue growth up 33% is ahead of volume growth of 30%. For the year, revenue growth of 44% is slightly ahead of volume growth.

The usual takeaway from this slide, though, is that payments profitability or operational gearing remains as strong as it ever has been. Our proprietary network and the elimination of third-party costs, tight cost control and operational gearing, again, resulted in profitability reaching all-time high levels, with, for the year, net income up 55% versus revenue up 44%. Looking forward, we expect payment platform to continue to benefit as existing consumers spend more with us. Our leading market position in deposits, local currency deposits, will also be helpful in that regard. We'll keep adding more opportunities for both merchants and consumers to transact. B2B expands the addressable market further, and we'll stay disciplined on costs going forward, keeping the operational gearing intact. Moving on to marketplace. Just as with payments, the focus in marketplace is on growing transaction levels.

Here too, you see very solid results, transaction levels up 26% in the fourth quarter. You should keep in mind that there cannot be some variability on a quarter-on-quarter basis linked to the timing of different promotional campaigns, but a very healthy number, up 38%, for the year. While not the focus, the growth in the number of marketplace consumers, up 18% to 7.1 million, that's remained strong and consistent throughout the year. There's clearly more to go for in that regard. Moving to marketplace GMV. GMV growth is ahead of volume growth. Again, the real takeaway here is the increase in take rate, 9.2% for the year versus 8.2% this time last year. That's a function of sort of two things playing out. e-commerce is growing faster than m-commerce, and e-commerce is higher take rate.

e-commerce, in addition, is benefiting from value-added services, primarily advertising and delivery that Mikheil talked about. Going forward, you can expect more of the same as merchants migrate from payments and m-commerce to e-commerce. And if marketplace was the standout platform, within marketplace, e-commerce delivered the standout results. So here, very clearly, you see that strong volume growth coming through, with volumes up 77% in the fourth quarter, up 122% YoY for the full year. GMV growth is below volume growth, and that reflects the addition of volume from lower ticket size items, primarily grocery. And on that, you see that grocery or 1P is now up 4% of marketplace of e-commerce GMV, which is a good result within a relatively short period of time.

The take rate improvement is most pronounced for e-commerce, moving up to 11% from 9.4% for the full year, driven by value-added services and delivery. While going forward, there is and will be a migration to e-commerce as the least penetrated of the core marketplace products, m-commerce still continues to report very, very robust growth, with m-commerce GMV up 18% year-over-year, ahead of volume growth. Here also, take rate expansion for the year, moving up to 8.6% from 8.2%, a function of successful promotional activity over the course of the year. Then moving to Kaspi Travel. Like e-commerce, a very, very strong result for the year. All key elements, flights, rail, and tours, playing their part. But as Mikheil talked about, tours in particular have gone from 0% of GMV to around 5% in less than 12 months.

So one, tours are GMV additive, and two, tours are also take rate additive, 8.7% take rate on tours. That's the driver of that increase in take rate for the year to 4.3% from 3.8%. And clearly here, it's still early days in terms of the rollout of that product and more to go for in 2024. So what does this mean for marketplace financials? With revenue, with take rate moving up, revenue growth is in excess of GMV growth, up 87% YoY for the full year, boosted also by grocery. The inclusion of grocery in revenue growth does result in net income growing at a slower rate, but net income growth of 63% is still a very, very strong result. Going forward for marketplace, we will continue to add new shopping categories to drive transactions per consumer.

With regard to e-commerce specifically, e-commerce in 2022 still only accounted for 8% of retail, and so is underpenetrated and a fast-growing structural growth opportunity. m-commerce will benefit as services, or again, take share within the economy from a low base. In the context of e-grocery, it's still very much early days, with an autos marketplace also likely to become more meaningful over the medium term. Autos is a market which is offline, ripe for digital disruption. On top of all this, you'll have advertising, marketing services, and delivery all continuing to play their part as well. Moving on to the fintech platform, we said that really the focus last year was on growing the deposit side of the business. I think the numbers are pretty clear here.

Growth in deposit consumers, up 27% YoY versus growth in fintech or loan consumers, up 12% YoY. What you also saw, the context of a stable economic backdrop is that lending origination remains at very, very healthy levels, up 36% YoY in the fourth quarter, up 47% for the full year. Growth in deposit customers is indicative of a strong consumer environment. Portfolio conversion of 2.2 times is indicative of a strong consumer environment, as consumers borrow, repay, are quickly. Growth is being driven by Buy Now Pay Later, our most important merchant, our most important fintech product. But increasingly, merchant financing, which is our fastest growing lending product, is now of a level of decent scale at 15% of origination, where it can continue to make a big difference.

So we see both merchant financing and car financing as being structurally underpenetrated in Kazakhstan. Expect both of these integrated lending products to move up as marketplace continues to evolve. A similar message really on this slide. Deposit growth for the year, up 43%, ahead of loan portfolio growth, up 32%. A small reduction in loan-to-deposit ratio year on year. But ultimately, we have good potential here, this deposit base, to drive more payment transactions and/or to scale up lending origination further over the medium term. Yields move down slightly year on year, and that is a reflection of Buy Now Pay Later and merchant financing growing their share within the mix, but is consistent with everything we've talked about previously. Looking at risk metrics, are healthy trends across the board. So that's both credit origination and credit collection.

That ultimately translates into a 2% cost of risk, stable year-on-year and consistent, again, with the trends that we've talked about throughout the year. NPLs move down year-on-year to 5.5%. There can be here too seasonality in the quarterly numbers, but overall, going forward, we'd expect the NPLs to stay at broadly around current levels. Looking at our fintech financials, the combination of decent TFV growth, normalized origination really over the last 18 months is translating into good revenue growth, albeit with some slight yield reduction. The growth in the deposit base and the increase in the cost of the funding does have an impact on net income. Net income growth, 23% versus revenue growth of 38%. But over the medium term, assuming rates fall, this should be positive for net income growth again.

As we've mentioned earlier, that enlarged deposit base is fundamentally a competitive advantage. So going forward for fintech, consumer lending remains structurally underpenetrated, as does merchant finance, in fact, to a greater extent. And as the leader in local currency deposits, we're well positioned to benefit from structural growth in fintech products. Consolidated performance for the year. I mean, I won't sort of repeat anything that I've said previously. I think the simple point to take away here is these numbers exceed the guidance we provided at the H1 stage just prior to going into the U.S. SEC process, and they materially exceed the guidance we started 2023 with this time, 12 months ago. So looking to 2024 and the guidance for this year, we are simplifying our approach. We will now just guide on revenue and net income. This is more consistent with our U.S. peer group.

The individual KPI components that make up revenue and net income, we will continue to disclose in the usual way. It's just that the guidance will ultimately reflect the end results. Running through these, just as this year, marketplace is expected to deliver the strongest performance. So again, that trend of merchants moving from payments to m-commerce and from m-commerce to e-commerce, e-commerce and e-grocery being the biggest top-line drivers. e-commerce, I mentioned earlier, structurally underpenetrated. e-grocery, still day one in Kazakhstan, with delivery and advertising also additive to revenue growth. 1P, primarily e-grocery, does result in lower net income growth versus revenue, up 40%, but that is still a pretty robust bottom-line growth number. Payments, a similar trends to those that we've just discussed for 2023. Revenue growth on the back of robust consumer and merchant trends, B2B additive to top-line.

Take rate expansion due to higher take rate from bill payments will ensure that revenue grows faster than TPV. But the main takeaway, again, is that payments operational gearing remains intact, so bottom-line growth of 25% ahead of revenue growth of 20%. Then finally, moving on to fintech, expect another decent year. The TFV origination over the last 6-9 months will drive revenue growth in 2024. Broadly stable trends in terms of yield. On the cost side, broadly stable trends in terms of risk. An enlarged deposit base and a higher cost of funding still impacting bottom-line in the near term. So overall, we're looking for consolidated bottom-line growth of around 25% year-over-year. So another year of fast-standing growth at scale, and within that, marketplace and payments are faster growing and more profitable segments continuing to take share within the mix.

Just the other point that I would add with regard to the London delisting, just draw people's attention to there is a Q&A provided in the press release today. So if there are any questions specifically on the London delisting, you might find it helpful. That Q&A section, you might find it helpful. So I just draw that to people's attention. But on that note, Daisy, let's open the call up to Q&A, please.

Operator (participant)

Of course. As a reminder, if anyone would like to register a question on Zoom, please use the raise hand icon to register an audio question. Or if you've joined us via the phone line, please press star followed by one on your telephone keypad. So that's the raise hand icon on Zoom. Or if you've joined us via the phone, please press star one on your telephone keypad. We'll just pause a moment as we allow people the chance to register. Our first question today is from Gabor Kemeny from Autonomous. Gabor, please go ahead. Your line is open.

Gabor Kemeny (Equity Analyst)

Hi. Thanks for this detailed presentation. My first question is on e-commerce and specifically on the merchant base. Now, you show that e-commerce merchants are 11% of your total merchant base now. And I think you flagged the opportunity to onboard more of your merchants to e-commerce. So can you talk a bit about this opportunity, what initiatives you have in place, and what do you see as the potential size of your e-commerce merchant base? My other question was also on e-commerce take rate. You flagged that you are in the early stages of monetizing the value-added services. I wondered what your latest thoughts were on the pace of monetizing these value-added services. And my final question is on the payment take rate.

I understand you expect stable take rate this year, but flag the take rate addition from the higher take rate for the higher margin bill payments merchants. What is the take rate in that segment? If you can help us understand what do you expect to offset this whereby you assume stable payments take rate for the full year. Thank you.

David Ferguson (Managing Director and Head of Investor Relations)

All right, Gabor. So thank you very much for your questions. I'll take your question on payments guidance and then hand over to Mikheil for your questions on e-commerce merchants and value-added services. So we're not going to disclose product-by-product line in payments. What I would just say, you've got different dynamics there. So on the sort of downside, you have Kaspi Pay. So actually, it's well known in the public domain that that's at 95 basis points, so below the average take rate. And then you also have other products some above, some below. It's certainly true that bill payments have seen some take rate increase as the mix changes there, particularly driven by digital payment services. But overall, I think still to think about broadly stable take rate is a pretty clear message, and it wouldn't make a big deal in either direction.

Mikheil Lomtadze (CEO)

Okay. So you want me to take the question about e-commerce and merchants, right?

David Ferguson (Managing Director and Head of Investor Relations)

Yes, please.

Mikheil Lomtadze (CEO)

So in terms of the merchant base, you know, even though it's a nice number really to look at, I think you know in general, our strategy is just to make sure that the consumers can find the right assortment they're looking for. So you know the demand for our marketplace is extremely high from the merchants just because you know if you imagine 14 million monthly users, those are the commercially minded buyers with the payments and the funding functionality. So on our side, really, the merchant number is just, I would say, probably just the resulting number. So you know what we are focused on is just to make sure that we are enabling the merchants to buy the items they're looking for. So that's basically about the merchants.

It's just a natural migration of the merchants to the e-commerce just because you know we just give them a lot of in high-quality sales uplift. But again, we're focused on making sure that the existing merchants can sell, making sure that the consumers can buy the items that they want to buy. In terms of the take rate, our strategy has been quite consistent. We want to make sure that if you are a merchant and you are spending money with us, we actually deliver value. So if you are advertising, for example, then we deliver the value that your sale is going up. But at the same time, we have to make sure that we are providing high-quality experience for both consumers and the remaining merchants.

We don't want to be in the environment like many other leading marketplaces when you cannot sell if you don't advertise. So that's not our strategy. Therefore, I wouldn't expect that the take rate will be growing at astronomical rates. You know, it will be still a very reasonable growth within the revenue guidance we've provided. But again, that is just another stream of the revenue. The one thing which I would like to mention is we entered grocery just basically briefly, right? So you know our team is doing a great job on scaling that at a very efficient, profitable way with the happy consumers. And we have pretty much become one of the leading grocers now in Almaty, which is the largest city in the country.

As we become the largest grocer, now we have quite a lot of fast-moving consumer goods companies coming to us and asking us to develop the products, advertising products for them. So that would be another revenue stream which does come from the merchants themselves, but actually comes from some of the brands and and the companies that manufacture the items which we sell. And that's a great place to be in for any company. If your user base is coming to you and asking you to develop the products for them, I think this is probably the the best position that any business can be. You just listen to your merchants and your consumers and make sure you provide the high-quality products. Thank you.

Gabor Kemeny (Equity Analyst)

Very interesting. Thank you.

Operator (participant)

Thank you. Our next question today is from James Friedman from SIG. James, please go ahead. Your line is open.

James Friedman (Analyst)

Hi. Thank you for taking my question. So I wanted to ask a much more high-level question, and it kind of combines Slide 8 and then Slide 11. And thank you for this incremental disclosure on Slide 11. But in Slide 8, I was just wondering if you could help orient us as to this continued sharp increase in engagement, 71 versus 60 in terms of the monthly actives, up 13% up 17%, excuse me. Yeah. So what services or products in particular resonated in 2023 to drive that kind of increase? And then I guess Slide 11, this would be a longer view. But if you were to look at the Year 5 cohort, which is up 12x since 2018, how have you seen the profile of that engagement evolve? I mean, clearly, the number is powerful.

I'm just curious as to what type of product or services over that duration has really expanded the engagement to that magnitude? Thank you.

David Ferguson (Managing Director and Head of Investor Relations)

Okay. Thanks, James. Mikheil, over to you.

Mikheil Lomtadze (CEO)

Yeah, sure. Well, in terms of the number of transactions per consumer, I mean, if you think what we have been creating, it's you know something really unique. But there is a simple view that we are expanding around the regular needs of the consumers, right? I mean, initially, we started with the payments and sort of just a you know moving money between your you know your accounts and friends of family. And then we moved towards merchants. And as we continue growing the merchant base, we just give you, as a consumer, more reasons to spend. So all the money which comes in is basically digital money, right? It's all cashless transactions. And they start from us, the spending, around their household budget. So you know that's what is really driving the transactions.

You know, it's almost like a replication of how many times you open up your wallet during the day in order to pay for something. In Kazakhstan, you don't need the wallet anymore because it's the Kaspi.kz app in your pocket. So that's basically a proxy for our intensity. So we're just going through, you know, we're going around everything that you as a consumer are spending money for. And we just made the whole spending exercise digital. And we replaced your wallet with our mobile app with the digital money on it. So that's basically what drives the transactions. In the going forward, there will be another uplift just because we're digitalizing grocery. And grocery is a high-frequency, you know, transactions.

We are going after weekly purchases at the moment. But that's not going to be our finish line. So that's you know something also basically just gives you another sort of uplift in terms of the frequency and the transactions around the consumer. So that's about the transactions per consumer, James, and engagements. And then around the slide number 11, David, I think was a question. Okay. Great. So here, what do you see that's an extra? It's almost like this question is around the same question, right? So it's like why the transactions per consumer are growing. So you know again, we've started in 2018. You know we just had much fewer reasons for consumers to pay through us. We're just only in the beginning of building the payment network.

We were just entering the e-commerce space with, I don't remember how many SKUs we had, but you know we had maybe 200,000, something like that, if not less. And now we have close to 5 million SKUs on our e-commerce platform. So you know again, as we continue in the merchant base, you know almost 600,000 merchants you can spend money with. So as we continue as we build the merchant base, we build the consumer base, and we connected them to each other through the payment network, and we gave more reasons for a consumer to use digital money rather than the cash, you know that all of that basically has been the growth driver.

Going forward, we you know again, we will be from the services that we have today, you know the services like grocery, for example, will be the ones contributing to the transactions as well as services industry, which is an interesting target for us as well. Services, I mean anything that cannot be delivered, right? So you know it can be restaurants or barbershops and things like that. I'm just making a general statement about the service industry. I don't want to speak about exact innovation plans that we have on this call. I would rather have you to see our results rather than talk about them.

James Friedman (Analyst)

Perfect. Thank you both.

Mikheil Lomtadze (CEO)

Thank you, James.

Operator (participant)

Thank you. Our next question is from Will Vu from Wolfe Research. Will, please go ahead. Your line is open.

William Vu (Equity Research Associate)

Hey, guys. This is Will on for Darrin Peller here at Wolfe. Just two questions from me. The first one just on the fintech yield expectation in fiscal year 2024. I mean, just looking at your guidance, it calls for stable fintech yield year over year despite you know kind of seeing a higher mix towards BNPL. And you know looking broadly with interest rates coming down, maybe just kind of walk us through some of the puts and takes on this dynamic here. And then the second question that I had was just around the car marketplace's opportunity. You know you guys talked about car marketplaces being a more of a strategic priority for Kaspi in 2024. Maybe just expand upon that a little bit. You know how should we think about the TAM? And you know ultimately, why why now?

David Ferguson (Managing Director and Head of Investor Relations)

Okay, Will. So thanks a lot for your questions. I'll take the first one on the yield guidance. So stable doesn't mean identical. It means broadly similar. I think if you look at the trend over the last couple of years and you look at the trend last year, last year, the yield moved 26% from 27%. And that sort of delta is not inconsistent with previous years. So the puts and the pulls are on what's bringing the yield down. It's buy now, pay later. But that could be structured in different ways. But one way is 0% for three months. And that's not the only way, but that's a component of it. And merchant financing, which is a lower-yielding product. So that's on the one side.

On the other side, the higher-yielding products are primarily the general-purpose loan, which has declined in the mix and will continue to decline in the mix. So they're the sort of two sides of the equation. But I wouldn't expect again, it's like the Gabor's question on payments take rate. The point about stable is to indicate not sort of some dramatic change in trend year on year, around the same plus or minus, I think consistent with what you've seen previously. And then I'll hand over to Mikheil on the car marketplace opportunity.

Mikheil Lomtadze (CEO)

Sure. I mean, I would prefer to describe later in the year in a bit more details. I will just take a step back and maybe I just explain, you know, the strategic view of certain things, how we actually operate. You know, there is just a decision consumer is taking to buy a car. And when you think about the buying a car, there are so many services related to, you know, that decision, right? You need the tires. Well, you need to register the car, first of all. Or you need to get the financing to buy a car. Then you need to register a car. Then you need, you know, to buy the tires. Then you need to fill up the car with the gas.

Then you need to buy some of the spare parts during the year. And if something major breaks, then you actually go to the service station and you do that. And if you think about some of the services which can be built around this decision of a consumer are quite exciting, right? I mean, we so from that perspective, what we are really excited about is once we now have the decision point for a consumer, the consumer can buy a car because we have the largest classified on the car side, you know now we've just would like to build an organized consumer experience around that decision point. So that's basically why we are excited about it. It just happens that we are already number one tire-selling marketplace in the country already.

And we are, you know, you know, the largest car registration platform when people change the ownership. And we have also the probably now number one in car lending, online car loan business as well. So all that is really just excites us that we can organize the consumer experience and just make it more seamless and therefore deliver more value for a consumer and then deliver more value for the merchants that participate in all these car-related activities. So your question was why why why now? And is it just because now we have this decision point about the car because we acquired the leading car marketplace last year?

At time of acquisition, I mentioned that the decision of buying the car is the most important the reason why the car market the car classified is a great addition is not because it's number one car classified, but it's because now we have a consumer making the decision about the car in in our user story. We can build from there. Really excited. Later in the year, we will be giving you a bit of more details and the specific use cases like we've done before. Travel, e-grocery, B2B payments, all of those advertising, all of those businesses we've started from use cases. Now they're growing very rapidly.

William Vu (Equity Research Associate)

Great. Thanks.

Operator (participant)

Thank you. Our next question today will be from Joshua Samuel from Mawer Investment Management. Joshua, please go ahead. Your line is open.

Joshua Samuel (Equity Analyst)

Hey, thanks. So just one question on the e-commerce marketplace. You know I've been reading that you've got competitors like, I think, Wildberries, Ozon, investing quite heavily in Kazakhstan. Could you just walk me through, maybe Mikheil, how are you positioning the company to defend your position in the, you know, a very strong position in the e-commerce marketplace? And you know how do you, I guess, like, you want to avoid an outcome like Alibaba, right? So you know as a market leader, how do you prevent such outcomes in the future?

Mikheil Lomtadze (CEO)

Sure. Well, I mean, if you look at our business, the most important competitive advantage we have is the consumer is transacting with us, you know, two times a day, more than two times a day. And that's a single mobile application. So the consumer is not just coming to buy something from the marketplace. They're actually coming to for a daily usage around their entire, you know, daily activity. So that is the most important competitive advantage in our case. And compared to, you know, Ozon or Wildberries, you know, it's just the business model that we have has such a strong network effects that for these guys, you know, they can invest. You know, they can invest and provide the discounts and run the crazy promotional campaigns and might have uplift on the temporary basis.

But then consumer will buy from you at a very heavy discount. And then they come back to our platform because they open our app, you know, multiple times during the day. So our consumers, you know, are actually, you know, very much involved in our business. So you cannot take just like e-commerce as a or marketplace as a standalone basis, right? That's a very important difference from others. The second, I would say, that we are marketplace, which means we are not apart from the grocery part of our business. We're not, you know, trading the items. So we actually help the merchants to grow. And we give them tools to grow.

From that point of view, any entrant that is coming on the market, they are not competing just against us. They're really competing against all this universe of the merchants which are selling items through us. And we just give them technology, right? So from that perspective, I think it's also a very powerful part of our business. And then the third piece is that we are constantly building the networks, right? So we have the largest last-mile delivery network, for example, in the country with almost 6,000 automated parcel machines. And delivery is also a source of very important competitive advantage. So yeah. So we are, you know, we are put our heads down.

And we're just, you know, making sure that we deliver the outstanding quality of the products for the consumers and innovation for the merchants so they grow the sales. And yeah, reinforced by the payment network, reinforced by the delivery network, reinforced by the Super App network function, you know, that provides a very important source of competitive advantage. So that's basically our view of the and we constantly expand the new categories, right? So that's an important part of our business as well.

Joshua Samuel (Equity Analyst)

Thank you. Sorry, but just a follow-up. Do you feel the need to, you know, I guess, price defensively in any of your categories? I think I've heard Wildberries is yeah, I think they're potentially like lowest priced at the moment for some products.

Mikheil Lomtadze (CEO)

Well, they can be lower priced on some products if they want to. In our case, we are working around the consumer and merchant needs, you know, sort of overall. So, you know, we don't really feel anything and any pressure for us to provide any kind of, you know, price discounts. Again, these guys are just bleeding the money, right? They run promotional campaign. Consumer would buy and buy something, get a heavy discount. But then they come back to us for actual, you know, real purchases. And what we just need to make sure that, you know, we have the items which they want to buy and they're looking for.

You know, if you look at our growth rates and the development that we have, yeah, we don't feel like we need to compete on the price. But our merchants, you should understand, right? So when one item has, you know, 50 offers, 60 offers from the merchants, you know, the actually merchants themselves are providing very competitive prices, right? So that's very important to keep in mind. So it's not Kaspi competing against Ozon as a merchant, right, or their merchant. It's our merchants, actually.

Because we have such a high number of the merchants and the price liquidity and the our prices of the items that we have are actually quite very competitive compared to the prices which other players are offering. Then the speed of delivery, it's making a very important delivering very important value to the consumer.

Joshua Samuel (Equity Analyst)

Got it. Thanks.

Mikheil Lomtadze (CEO)

Thank you.

Operator (participant)

Thank you. Our next question is from Sam Griffiths from Vergent Asset Management. Sam, please go ahead. Your line is open.

Sam Griffiths (Analyst)

Hi, guys. Thanks for the call and congratulations on the successful listing and a great set of numbers. I have three questions, please. The first is, like, how you think about the TAM for the number of consumers that you could finance. You know, when you look at your active consumer base, you've got a lot of data on these people. How you know, how are you thinking about the penetration there? Where can that get to? That's the first one. The second question is on the merchant services. As you grow that business, whether it be in B2B payments or merchant financing. Is there any appetite to grow kind of any products on the funding side, maybe, you know, going aggressively after merchant deposits or whatever? Any comments there would be great. Then finally, on the logistics platform.

I just wanted to check, is this just for e-commerce? Or is there also an opportunity to plug into more general supply chains within the country? Thank you.

David Ferguson (Managing Director and Head of Investor Relations)

Thanks, Sam. Do you want to take those, Mikheil?

Mikheil Lomtadze (CEO)

Yeah, sure. So in terms of the target market, I would say that, you know, the way to think about our business model is that the businesses which are front end of the merchant and the consumer relationship, those are the ones which are driving the financing or the fintech side of things, right? So, you know, you basically don't need money as a consumer. You want to buy something with it. You want to buy a car. You want to buy an iPhone, you know. You want to buy a TV and you want to buy tires and so on and so forth. So actually, the driver of the fintech side is the shopping and the payment activity of our consumers.

So that's a very important point about the growth. Therefore, the marketplace and the payments and marketplace specifically, they will be growing faster because they are front end and the fintech is actually back end. You know, merchants, they don't need just money. They need money to buy the same sort of inventory which they sell in our marketplace. So that's basically on the financing side of things. So the sort of in terms of the target market, you can just think, you know, whatever consumers are buying and the merchants are buying to sell and consumers are buying from those merchants. And again, the consumer finance is extremely underpenetrated.

And the merchant finance, we believe, has even more underpenetrated because there are very few products on the market which would be seamless and fully online. And the car finance, you know, we're just scaling as we speak. In terms of the merchant services, I mean, I would say that we are, you know, we are innovating around the needs of our consumers and the use cases which we see from the consumer or the merchant behavior and the data. So from that perspective, you know, we are excited about building the business around the merchants. The merchant financing and the B2B is one of those. This year, we still want to focus on building the payments as a foundation of transactions between the businesses because that's how we have done before.

You know, if you think about the consumers the same, right? We build the payments initially and then connect with consumers and the merchants. And then we start building on top of it value-added services. So the same will happen with the merchants. There are some of the services which we already provide, like a cash register, for example, we provide to merchants for free. But that again enables us to, yeah, to work with the merchants more closely and help them with inventory and finance that inventory with the merchant finance and enable the B2B payments to actually get this inventory delivered and settled invoice with the brand. So yeah, merchant services, there will be a wave of the innovation.

And in terms of the logistics platform, at this stage, we're really focused on enabling the consumer and the merchant. So basically, pick up from merchant, deliver to a consumer through the Postomat directly to the door. And that would be our important priority. Again, we're growing at such a rate that we want to make sure that we build the foundation. It's almost like build the foundation for the skyscraper before which you start adding the services. And at this stage, that would be our priority, especially this year. But then, you know, you probably know, Sam, better than me that, you know, logistics, you know, can go all sorts of ways, right? It can go different ways. It can go between the consumers. It can go between the merchants. It's really a platform which can be leveraged.

But at this stage, we are focused on delivering the items from the merchants to a consumer and to build the scale.

Sam Griffiths (Analyst)

That's super helpful. Just one follow-up, please, Mikheil. When you think about like the overall funding profile of the lending business, do you expect that to stick mainly on the consumer side, you know, going forward as the business evolves? Or is there more there more room for maybe, you know, funding from merchants to to play a part as well?

Mikheil Lomtadze (CEO)

Yeah. Yeah. Sorry, I missed that piece of your merchant services question. You know, it's we are basically driven by the merchants. So and again, this is the great place to be. That's the advantage of our business model. So now, for example, we started with the payments. There is an actual business account of the merchant in our super app, which is fully validated and KYC'd. And now, you know, where we actually are is that the merchants have some you know, they increase their sales, especially after our promotional events. They have some cash on their accounts. So if you would be a merchant, you would be asking us to develop the deposit product because there is a cash sitting on your accounts. So that would be a response to your question. You know, the merchants are asking us to do that product.

And we are yeah, we feel there is a use case for it. And there is a scale. And we can deliver the value by building the best merchant deposit product on the market.

Sam Griffiths (Analyst)

That's very clear. Thank you.

Mikheil Lomtadze (CEO)

Thank you.

Operator (participant)

Thank you. Our next question is from David Shapiro from Vanshap Capital. David, please go ahead. David has removed his question. So I'm going to move on to our next question. Our next question is. David has registered a question again. So I'm going to open David's line now.

Joshua Samuel (Equity Analyst)

Hi, David. Go ahead, if you are still there.

David Shapiro (Analyst)

I'm still here. Sorry about that. Congratulations on the listing. Thanks to management and all the employees for working hard on behalf of the shareholders. Just three quick questions. First question regarding the capital return and how you guys are thinking about it. Obviously, you listed, the float is still rather limited. So how do you balance the ongoing share buyback program, which is obviously at the current price extremely attractive and well thought out versus, you know, wanting to encourage more liquidity on the exchange itself? So that's one question. Second question around foreign expansion. You know, as you look to maybe neighboring countries, right now, what do you see as the biggest hurdles besides, obviously, the big plate of items that you have domestically?

Is there anything that's challenging getting into foreign markets, such as, you know, regulatorily speaking or lack of adequate targets or prominent targets that would be good for Kaspi to enter to? So I just wanted to see what the major hurdles were at this point. And lastly, when you look at your guidance for 2024, just broadly speaking, are there any sort of big regulatory challenges that you can see locally, either on tax rate or perhaps interest rate caps, especially with the new administration? I'm sorry, the new cabinet that is coming in for the current government? So anything that you want to flag potentially that's incorporated in your guidance or that could, you know, potentially change some of those thought processes around underlying profitability?

David Ferguson (Managing Director and Head of Investor Relations)

All right, David. Thanks for those questions. I'll take the capital allocation and pass over to Mikheil for the remaining questions. So the sort of simple answer is that the U.S. listing doesn't change anything over the medium term in terms of our approach to returning capital or in terms of our approach to capital allocation. So number one, first call on cash is always investing in the business, unchanged. Number two, if we have excess cash, we return it to shareholders, unchanged. The track record of returning cash via both dividends and buybacks speaks for itself. And specifically with regard to buybacks, I think since we started the program, we've bought back $277 million. So roughly over 18 months like yourself, we feel that the stock's valuation does not adequately reflect the growth outlook.

It's true that there's no new buyback program as of today, but we reserve the right to step in at any point in the future. We talked about an opportunistic approach in the press release, but I think you're right at this stage. So soon after the US listing, it would be nice to see what the real level of liquidity is in the market. And that might take a little bit longer for us to find. So just let's see how things evolve. On the rest of it, I'll pass over to Mikheil.

Mikheil Lomtadze (CEO)

Sure. Thank you. David, thank you for those questions. I would make another just comment in terms of our liquidity and capital allocation. We are focused really on the company and its growth. And we are making decisions. What is in the best interest of the company because that's something which we don't control the stock price, you know, but we actually are responsible for execution. So things that we are focused on really and is the company itself because we have very much long-term focus on our business. In terms of the two other questions, expansion. It's just a really good place to be for us in the we have companies across many markets just approaching us on different levels with different ideas for us how we can get involved.

So it's really very preliminary at this stage. Nothing specific for me to report, but it's not the question if. It's actually a question when and which target and which market. So that's as specific as I I can be. And I've mentioned several times that, you know, that's a number one priority on our management the management list of things to be done. And, you know, if Kaspi's management gets something into their priority list, it gets done. That's as simple as it is. In terms of the guidance, I would say in general, you know, there is nothing really for us to report.

The country's leadership and President Tokayev, you know, he has mentioned about executing the reforms and wants those reforms to be done on the basis of the economy growing and the investment climate also growing and becoming even more attractive for the investments. So I think that's basically the foundation and extremely important for everything else is really important details, obviously. But most important is that the country, you know, and the president, they have the view that it, you know, needs to be a good place for investors to invest. And I think that's an important foundation for everything else. So our guidance, basically, there's nothing really specific for us to report. And as you guys know, we never speculate about things.

David Shapiro (Analyst)

Thank you, gentlemen.

Joshua Samuel (Equity Analyst)

Thanks, David.

Operator (participant)

Thank you. We have time for one more question today. If you can kindly just limit yourself to one question, and we will be taking it from Can Demir from Wood & Co. Can, please go ahead. Your line is open.

Can Demir (Equity Research Analyst)

Yes. Hi. Thank you for taking my question. I actually want to ask a more broad question. As I'm following the per-active customer TPV on the payment side of things, that number has reached $430 per month, give or take. And the average wage in Kazakhstan is around, I think, $700 or $800, of course, for working people. So Mikheil, how should we think about this? Because people seem to be spending a lot relative to what they earn. So I just wondered what you would make out of the numbers that I mentioned. Thank you.

David Ferguson (Managing Director and Head of Investor Relations)

You want to take that, Mikheil?

Mikheil Lomtadze (CEO)

Yeah, sure. I mean, in general, I would say that this payments the movements around the consumers' money is also all about, you know, the savings that they have with us when they are you know, we are the largest savings institution in local currency at the moment. And the average ticket size is about $3,000 for consumers. So the consumers are not just spending with us, but the top of our funnel is the consumers actually saving with us as well. So that would be just the one sort of simple you know, simple example. I think we do have a number of savings consumers here, right, David? I think it just to.

David Ferguson (Managing Director and Head of Investor Relations)

Yeah.

Mikheil Lomtadze (CEO)

Just as an example. No, you yeah. No, no, no. Yeah.

David Ferguson (Managing Director and Head of Investor Relations)

4.8 million.

Mikheil Lomtadze (CEO)

So let's say 4.8 million consumers saving with us. So that's just the one sort of you really one use case, right? So then on another thing about the payments per consumer is also the consumers are moving money between themselves. And you saw that, you know, the P2P, which is monetized, the penetration rate of this is what is about I don't remember specifically. It's about, yeah, 13%-34%. So the TPV, which consumers have with us, it's also about the consumers actually moving money between themselves, friends, and family. So it's just much more than the average salary that the person is getting.

Can Demir (Equity Research Analyst)

Okay. Okay. So P2P is now chargeable because I remember in the past, it wasn't really chargeable.

Mikheil Lomtadze (CEO)

The vast majority of the P2P transactions is free of charge.

But the P2P transactions, which at the moment are monetized, those are the transactions when you are moving the money, for example, from our wallet to the other card or, you know, you're spending money abroad or moving the money abroad. So those are the kind of monetized. The vast majority of the transactions, which are between accounts and between the consumers, they are free of charge. Nothing changed in our pricing policy. It remains exactly the same.

Can Demir (Equity Research Analyst)

Okay. But maybe just one clarification. Sorry for delving deep. But so you're saying 34% of the current chargeable volume is related to those chargeable P2P transactions?

Mikheil Lomtadze (CEO)

Correct. It's the 34% of, yeah. If you take, this is the share. David, can you pull up the slide, please, on the penetration of consumer product?

David Ferguson (Managing Director and Head of Investor Relations)

Yeah.

Mikheil Lomtadze (CEO)

The next one. Yeah. Great. So 34%, actually, if you look at the P2P penetration as a P2P service itself, it would be close to the 90%, basically. So that's the penetration of 34% is only the P2P transactions, which are not monetized. Sorry, which are monetized. Which are monetized.

Can Demir (Equity Research Analyst)

Okay.

Mikheil Lomtadze (CEO)

Much more is almost, you know, 90% would be the penetration of P2P, which is not monetized. We're just showing here for the purposes of revenue, and that's why, you know, and TPV. That's why you have here only monetized transactions. But unmonetized is almost 90% penetration.

Can Demir (Equity Research Analyst)

Okay. That's super helpful. Thank you.

Mikheil Lomtadze (CEO)

Thank you, Sam. Can. Yeah.

David Ferguson (Managing Director and Head of Investor Relations)

Okay. So I think, Daisy, that wraps things up. So thank you, everyone, for participating in the call. Thank you for your questions. I know there are some written questions we haven't been able to answer, so apologies, but happy to follow up directly. Thank you much thank you very much, everyone. And we'll speak to you at our Q1 results in April. Thank you. Bye-bye.

Mikheil Lomtadze (CEO)

Thank you. Bye-bye.

Operator (participant)

Thank you, everyone, for joining today's call. You may now disconnect and have a lovely day.