Kaspi.kz - Earnings Call - Q4 2024

Transcript

Operator (participant)

Welcome everyone to the Kaspi Q4 and full year 2024 Financial Results webinar. My name is Brigitta, and I will be your coordinator today. If you wish to ask a question during the webinar, please use star followed by one if you have joined us on the phone, and please raise your hand if you have joined us on Zoom. I would now like to hand the call over to David Ferguson from Kaspi to begin today's presentation. Please go ahead, David.

David Ferguson (Head of Investor Relations)

Okay, thanks, Brigitta. Good morning, good afternoon, everyone. Thank you for joining us today. It's our fourth quarter and full year 2024 financial results. I'm David Ferguson from Kaspi. Joining me on the call are CEO and co-founder Mikhail Lomtadze, our Deputy CEOs Tengiz Mosidze, and Yuri Didenko. Standard format for the call, Mikhail will run you through strategic update of 2024. I'll run you through the financials. We'll open the call up to Q&A. The whole team is available to participate. So on that note, over to Mikhail.

Mikhail Lomtadze (CEO)

Thank you, David. Good to have you all on this call. Just to give you another reminder of the Kaspi Super App business model and this incredible range of diverse services for consumers and merchants. And just to, again, just to remind, those are we run the two super apps. One is for consumers, another one is for merchants. We connect the experiences of both through the payment network, Marketplace, FinTech, financial services. And on the consumer side, there is a huge range of the services which we continuously innovate. So, I mean, some of the things I will cover later in the presentation, but things like gift certificates, for example, which we launched last year. And again, consumers can shop, pay, manage their finance, delivery through our consumer Super App.

And then on the merchant side, we've mentioned the merchant side will be a strong pipeline for innovations for merchants just to help them grow their businesses, become more efficient, and really help them to onboard to the Marketplace, but also get access to the financing of their business. So as merchants grow and merchants are successful, we are successful. And actually, products of those merchants being either paid for or purchased through the consumer Kaspi.kz Super App. And some of the products which we have also launched and have been scaling this year are quite exciting. Things like deposit for business or Buy Inventory Now, Pay Later products, as well as around advertising and some of the product innovations we have later in the presentation.

Kaspi.kz business runs two super apps with a wide range of the services around daily needs of consumers and merchants. Just on the Q4 numbers, we have a very strong quarter. All our platforms showed a very strong growth. The Payments TPV grew 30%, and the net income on the Payments grew 22% with revenue 19%. Marketplace has been the fastest growing business for us. GMV grew 39%, revenue 43%, and net income 32%. As we also told you and guided you through the year, later in the year 2024, there will be a FinTech business we'll be catching up. Very sort of good, strong quarter for our FinTech business with financing volumes growing 21%, the net income growing 28%. Consolidated, we continue to be a business which drives transactions.

That's sort of the foundation of our business. Monthly transactions per active consumer 73, which is incredible. So again, this is not just sort of opening the mobile application or what we would call maybe soft metrics. This is really hard metrics when consumers pay, consumers shop, merchants transact, and so on and so forth. So these actual transactions, so 73 transactions per month per active consumer is a very, I mean, it's world-class. The revenue grew 28%, and the net income grew consolidated in the fourth Q 28%. So strong quarter performance. Our annual performance, not going to spend much time on it, but basically grew really well, and our net income grew 25% year-over-year with revenue 32%.

And again, as I mentioned, even though FinTech grew 12% over the course of the year, actually the last quarter was 28% net income growth on the FinTech. So FinTech was catching up. And the fastest growing on a net income during the year was our Marketplace. So 41% growth on net income during the year. As we continue developing our platform, so we're becoming increasingly diversified. So as you can see now, we have pretty much equal sort of bottom line from three other platforms, roughly one third each. And non-FinTech now is 69%. So another year of the growth. And again, our profits have been driven by faster growing Marketplace and the Payments. And that is reflected now in distribution of our net income. So well diversified across sort of three platforms, which is a good sign and has been our focus for a long time.

Consumer services penetration is. There are basically services which we have here, the selected services which are sort of transactional, I would say. And as you can see, even the higher penetrated services continue strong growth. Like on the payment side, for example, TPV grew 31%. And this is on the back of sort of Payments business being the highest penetrated. 94% of our consumers, for example, use QR and card transactions, or 85% of our consumers do household regular bills. At the same time, everything around sort of Marketplace is something which will be driving growth further due to the current penetration of e-commerce, but also in general as we add more shopping verticals. And e-grocery, for example, is just 6% of our consumers, which provides a really very strong. We believe that there will be a very significant growth in e-grocery.

And then on the FinTech side of things, products like card finance, for example, which we have been also scaling during the year, are the type of products which will also drive the growth in the future. The merchant services pretty much mirror really. So Payments, again, the highest penetration. And now most of our merchants are connected to our Payments, 95% of the merchants. But again, still sort of driving the transactions around merchants and consumers. And as with the consumers, the same is pretty much with the merchant around Marketplace, e-commerce specifically. Those are the sort of services which have the strong growth perspective due to the low penetration. E-commerce penetration is only 11% of our merchant base. And at the same time, advertising, which we have been scaling for the last couple of years, or delivery also have a potential to be value creating for merchants.

And therefore, the penetration will be driving the growth. We've also launched a couple of merchant-related products, both on the Payments and finance side and also savings. Just to give you a sense, like 10% of our merchants are using business deposit now. We just launched it later in 2024. It has been quite a remarkable engagement from merchants. Now merchants not only can accept the Payments through us, not only sell or advertise the goods they have and also connect to the delivery, but actually merchants can also save the money if they have excess cash. The Kaspi Deposit is a Kaspi Pay Business Deposit is a very good product which was very much welcomed by the merchants. If you look at the cohorts, well, cohorts continue a strong growth. The Payments cohort, as you can see, continues a nice growth.

Each cohort growing. 65% of our consumers are from the last five years. Again, as we continue, we already have a very strong engagement from the merchants and from the consumers. This platform is the highest engaged. The most of consumers and merchants are using it. By adding more reasons to transact, we'll be supporting the growth in the Payments business. Marketplace, even sort of higher potential really and the growth. You can see each cohort also demonstrates a very sort of strong growth. Again, 54% of consumers are actually from the last five years. Also every sort of cohort, the consumers are shopping more. This is really the result of us either entering the new verticals and on the e-commerce side or adding more products, items to buy, but also going into new businesses. We constantly launch something new, right?

e-Grocery is a good example. Travel, tours is another example. Cars and so on and so forth. So Marketplace will grow both as more consumers will use it, more merchants will connect, assortment will increase, the new services which we are constantly launching. The grocery business has showed a very strong growth. So we grew about 97% in the GMV and 84% in the transactions. Almost 10 million transactions last year. So just keep in mind that this business didn't exist a couple of years ago. So we have been able to scale it nicely, rapidly, with a good quality consumer experience and very high levels of engagement. We have been focused on the three cities during 2024. We have been adding more dark stores during the year, but also expanding the capacity of existing dark stores, increasing the efficiency.

The entire team from e-commerce to the e-grocery operation has done a remarkable job by exciting consumers. This business is highly repetitive. Consumer experience is extremely important, fundamental. If consumers are happy and excited, they continue shopping with you. High-frequency business. Quality of the consumer experience is super important. In 2025, we are considering entering two new cities. Our existing cities will continue to grow and will continue to increase the capacity. But at the same time, in 2025, we'd like to enter two new cities with our e-grocery value proposition. The e-Cars, so the cars business, we have been also driving nicely. Again, we are going after the entire value chain, sort of helping the consumers to buy the car and to own the car, have shown a very good growth. Yeah, it's 3P mainly.

Then 1P, it's a highly targeted product basically, which will be for the sellers that want to get money fast and the buyers that want to get the money with the car, which has been sort of checked and verified for additional value created for both sellers of the cars and merchants of the car, sort of buyers of the car. But in general, it's largely sort of 3P integrated also with Kolesa, our number one car classified in the country. And yeah, and we're streamlining the entire value chain. And usually, they will move slightly in opposite directions. The larger is a 3P business, smaller is a 1P business, because eventually it's all about those same cars which are being sold but different way. 62% GMV growth, very encouraging. And the spare parts is our important priority this year and next year.

If you look at the value chain or what we're trying to do, this is just to give you a little bit of an overview. Consumers, sellers, and buyers of the cars, we help them to lease the cars. We help them to buy the car. They can get online car finance, which is a fully digital experience. You can buy spare parts. You can register the car with our government services. You can pay taxes for the car. You can issue a driving license. So those are sort of the main parts of the value chain between buying the car, owning the car, so very exciting to continue to digitalize the buying ownership experience of the car, and it's probably the second largest item on this household budget, so yeah, we just continue developing this business, really excited about good growth in 2024.

We've launched gift cards at the end of last year. So this is, it's just a very nice, cool feature, personalized. You can actually basically just give a gift card for the birthday of your friends or your coworkers when you don't really have to think about what you want to buy. So instead of it, you can give a gift card, and then the person can actually buy anything they want on Kaspi e-commerce. So it has been a very strong growth. We just launched the project, really. But it's already almost 50,000 purchases. So yeah, so very excited. There will be a range of the innovation around the gift card experience during this year. But it's cool. It's fun. Consumers love it. Net Promoter Score is incredible. So yeah, so it's really, really nice shopping experience.

The delivery on our e-commerce is our important, well, I should call it asset, so I think we are a world-class company in delivery in our e-commerce, so we grew our delivered orders 128% last year and almost 100 million orders delivered during the year. The important metrics of the delivery is basically almost for free, 84%, and almost half of those we deliver in less than two days, and very importantly, the lockers, Kaspi Postomats, which we rolled out for the last several years, is creating this unique opportunity of not just only exciting consumers by delivering on time with very high success ratios, but also keeping the cost under control on the delivery side, so very, very excited about this. Now we have largely built the network. At the moment, we have in excess of 8,000 Postomats.

Yeah, and we will just continue sort of maintaining and increasing the efficiency. But we have pretty much built the network which is required to cover the country. We have also launched and have been launched in 2023, I think. And then in 2024, we actually launched another much more advanced version of Kaspi POS Register. So that's something. This product is very interesting and very useful for the merchants. So basically, what you can do is you can enter the item which consumer wants to buy. First of all, you create the product catalog. Then you enter what consumers want to buy. And then you enter the price. You enter the quantity. You actually accept the payment through our POS. The software is integrated with our POS network. And then automatically, we'll be producing also digital tax receipts.

So, this is very sort of high-value additive product to the merchant operation. We provide it for free. But this just gives you a sense of that we're a company which is creating the value-added services and increasing the value of Kaspi as the company which helps merchants to develop. So, 35% of merchants now using the POS Register. And yeah, and we have processed 1.2 trillion KZT of the Payments through our register.

And again, if you think about the functionality and the value we can create in the future around this simple function of actually recording the transactions and the purchases, the value-added services which we believe we can develop around the sales reports, around the inventory, around advertising, and many other value-added services for merchants. But this is the product which has been showing extraordinary engagement. And again, more than one in three merchants are already using it.

It's completely free for merchants. We have been also developing further the advertising offering. As you recall, during the year, we launched brand advertising. Now we have two products. Now we have more. Last year, we had two products. We now are almost in March, right? Last year, we had two products. The one product is to advertise. You can advertise your goods, products which you have on our Marketplace in the e-commerce platform. Now also, if you have a brand, now you can also advertise your brand. It has been showing a very strong adoption. Now our Kaspi ad service is being used by 51,000 merchants and contributes significantly to both our revenue, but most importantly, really helps merchants and brands to reach the right customers at the right time with the right product.

Business Deposit, we launched last year. Again, that was something which I mentioned in the beginning of our call. It has been of extraordinary adoption. We just launched this product in the third quarter. And as you can see, 77,000 merchants were already saving, having Kaspi Business Deposit end of last year. Incredible growth in terms of the amounts, 443%. Now, this growth just during the year as we were scaling it. The unique feature of this savings deposit, if you take the merchant perspective, I'm in a trading business. I have a good week or a good month of the sales or a day driven by Kaspi Promotion campaigns, for example. So I have some extra cash, and I can fully online, fully digital. I can place this extra cash on the business deposit. Interest is accrued daily. And yeah, and this is very attractive for the merchants.

So now merchants not only can pay and we process Payments for them or help to sell the goods, but also merchants can now save money and make a revenue from the interest which we pay on the cash, which is extra, and you can place it on the savings account on the Kaspi Deposit with us. So impressive growth, and merchants welcome this product which we launched last year. Another product which we've launched end of last year, it's Buy Inventory Now, Pay Later. So basically, what that means is that you are in, to simplify, you are a convenience store. You have a supplier from on the B2B side of things, work with distributors, B2B Payments, as you know. So those suppliers come in to the convenience store, and they bring some products from FMCG brands.

So you can actually buy this inventory and pay 30 days later to us, but we'll pay to distributor straight away. And it's a fully online product. You can select the amount. You can select sort of the limit which you want when the transactions are happening, for example, on a daily basis by the employee. And then you pretty much scan the supplier's QR code which courier has, and you can pay a delivery. And then we pay immediately, and then you pay us 30 days later. So this product basically helps to streamline the B2B. It's another product on B2B side of things on top of B2B Payments. And yeah, it's an additional product which helps the merchants to grow and improve working capital. And the suppliers or distributors also helps to reduce the receivables.

And yeah, and we are in a risk management business, so we can do our job better than anyone else in the value chain. So another exciting product, and we'll be scaling it during this year in 2025. Just a couple of slides about Kaspi and our product in terms of consumer recognition and the brand perception. Again, this is something just important to keep in mind. This is probably the most important asset that we have, which is the result of high-quality products which we launch. So if you ask the consumer which mobile application is installed on your mobile phone, we'll be 5.5 times more mentioned than the nearest brand. Or which payment app you know and uses almost 20 times the nearest brand is Kaspi.kz.

If you ask about e-commerce apps that you know used almost three times more than the nearest brand, which travel apps size sort of you use, you know its nearest brand is three times more. Again, the travel didn't exist several years ago, so we've built this business from scratch. Where you would take a loan, it's four times nearest brand. Where you would put your deposit funds with, three times nearest brand. And then on the car and real estate, if you yeah, consumer basically in terms of the cars, where you would buy a car, 10 times the nearest brand. So number one car vertical on the market. And then where you would buy real estate, 4.4 times better than the nearest brand. And again, all those broad metrics are just a reminder that while we are on just a 20 million people market, we are innovating.

We're launching the new services. We're driving the engagement, and every service, and some of them I've just showed you earlier, they are receiving increasing adoption. The foundation for this is actually quality of the services and the quality of our operations, and we do care about the consumers and the merchants, and that is a result of it, is a strong brand perception, which is an important asset, and we just continue to innovate, exciting our customers, but yeah, the consumers and the merchants love us for the quality of the services we develop. Yeah, would like to mention just a high-level preview of the Hepsiburada transaction, so we basically closed the transaction in January, end of January, and we received all the regulatory approvals, and we paid the first part of the acquisition price.

The second part of the acquisition price will be paid basically by midsummer, not later than six months post-closing. Just wanted to mention the transaction is being funded from our cash flow. The first payment and the second payment, our dividend for the fourth quarter in the first half. Yeah, we just wanted to make this clear. We did mention this end of last year, but still just to clarify. Then yeah, we'll update later in the year second half about the return of the cash, excess cash to our shareholders. Again, we have been very disciplined about this historically. Every single time on this call, I did mention that investing in the future, investing into the growth is the important priority. I do hope it doesn't come as a surprise, but we did mention this on every call for so many years.

Just a couple of things and the review of the opportunity. Again, the population, 85 million people, Turkey is really exciting market for us. It brings us to 100-plus million people. The retail is obviously much bigger than Kazakhstan. E-com penetration still allows a very nice growth. GDP growth forecast about 4.4%. And then clearly, the macro inflation outlook is showing sort of signs of the normalization. We believe that this year should be still challenging from the consumer perspective as this transition to the macro and inflation sort of stability continues through the year. But the medium term is an exciting opportunity for us. And the Hepsiburada is a strong foundation and platform which we would like to build on in the country on top of it, Kaspi itself. Yeah, Kaspi itself looking to launch some services in Turkey.

Hepsiburada has been quite disciplined post-COVID and focused on stabilizing its financials and moving to positive cash flow. So that has been a very important priority for the company and its founders and the management teams have done a very good job. And now, over time, this would be also an opportunity where we can build on and probably switch to more of a product development and innovations on this strong foundation. And then a couple of things about the Hepsiburada in terms of the size. It's about 3.5 billion GMV. So GMV is a reasonable size. It has been growing around 17%. We're presenting to you, by the way, those are sort of nine-month numbers and Hepsiburada definition of its financials. I would hope you appreciate Hepsiburada is a public company and therefore it's communicating its own results on its own merit.

Therefore here, what we have is actually the nine-month numbers which are publicly available. You can also see it from Hepsiburada on the nine-month. But GMV growth has been 17%. Share of 3P is 70%. So 1/3 is 1P. 3P is two-thirds of the business roughly. Active consumers, 12 million, which is a good foundation. Active merchants around 100K. All of this really, most importantly, is just a good foundation for us to enlarge our market and basically a strong start for our international expansion, which we always had as a target for many years. David, back to you.

David Ferguson (Head of Investor Relations)

Thanks, Mikhail, so I'll run you through the financial results for 2024, guidance outlook for 2025, so starting on the Payments platform foundation really of the business, the overall message from this slide is that Payments growth remains strong and actually highly predictable and consistent throughout the year, so this is volumes, volumes of 33% year-on-year in the fourth quarter and up 40% for the full year. Ongoing strong volume growth reflects the strength of the respective products. Ongoing growth in the merchant base, it was up 27% year-on-year for 2024, and a healthy end customer environment, both consumers and merchants, consumer balances in wallets were up 22% year-on-year, volumes then translate into TPV growth, again, the drivers here remain very, very predictable, led by QR and B2B products. B2B in 2025 will continue to outperform.

Mild take rate dilution, that is a reflection of changes in mix, QR and B2B becoming more important in the mix, the lower take rate products. And that dilution is consistent for those of you who have followed us since 2020. That dilution is consistent with long-run trends. In terms of what that then means for revenue, lower take rate year-on-year, and also lower as what happened over 20 for interest rates for 11 months of the year moved down, that meant lower liquidity revenue. So the result is overall Payments revenue growth, below transaction growth, but still up 23% for the year, up 19% for the fourth quarter. Again, for those of you who have followed us since 2020, consistently with Payments, you've seen tight cost control, operational gearing, top line dropping through to the bottom line. In 2024, that remained the case.

Bottom line growth of 22% in the fourth quarter versus 19% revenue growth and 24% for the full year ahead of 23% revenue growth for the year. Bottom line growth for 2024 of 24%, pretty much bang in line with the around 25% guidance that we provided exactly 12 months ago. So moving on to then the Marketplace platform. Marketplace is and should remain the fastest growing platform within the business. What you actually saw this is purchases and acceleration in purchases in the fourth quarter, up 48% year-on-year versus plus 42% for the full year. A combination of promotional offense and grocery being the reason for that acceleration. And overall, very, very solid trends.

In terms of what purchases mean for GMV growth, we talked at both the H1 stage and at the Q3 stage how we expected strong GMV trends in the fourth quarter and acceleration versus the third quarter, primarily because of the timing of Ramadan, and that is exactly what played out. Q4 GMV growth up 39%. If you remember, Q4 GMV growth up 39%. Q3 GMV growth was up 24%, and for the year, full year GMV growth up 44%. In terms of the drivers behind that, what's important now is that Payments is equal in size to e-commerce. So if you think about what's been happening directionally over time, is that Payments merchants migrated to m-commerce, m-commerce merchants have migrated to e-commerce, and e-commerce now has real scale and should continue to see very, very fast growth.

Ongoing take rate expansion primarily reflects the benefit of value-added services, advertising, and delivery. Mikhail talked about them at the beginning. And they're adding around 170 basis points to GMV growth. For 2025, in terms of the quarterly timing of major events, you should assume it's consistent with 2024. So e-commerce, the fastest growing component of Marketplace, very, very strong numbers pretty much across the board, general goods, e-Cars, and e-grocery all contributing. And in particular, as Mikhail flagged earlier, e-grocery, very, very strong. E-commerce is the main beneficiary of the value-added services, particularly delivery. That's relevant really only for e-commerce. And you see that in take rate moving up again, both for the fourth quarter to an all-time high of 11.6% and for the year to 11.3%.

So the combination of value-added services, the timing of promotional events, two more in Q4 contributing to that very strong sort of take rate at the end of the year. On M-Commerce, as I sort of flagged, that is the slower growing component of m-commerce. We talked about in the Q3 numbers how m-commerce is very promo sensitive. You might remember that in Q3, GMV growth was down 5% year-on-year. You see that in the fourth quarter, it was up 21% year-on-year. So again, that's what we described, the benefit of promotional campaigns in the fourth quarter. GMV up 21% for the fourth quarter and solid overall, 19% for the full year. While the growth may be slower again, m-commerce take rate hitting all-time highs are a reflection of the value this product brings to the merchants.

And again, even with slower growth, an additional value proposition is that this drives merchant onboarding for e-commerce as merchants become more sophisticated and ready to sell remotely. Kaspi Travel, really just solid trends for both the fourth quarter and the full year, 30% GMV growth in the fourth quarter, 34% GMV growth for the full year. Take rate moving up to 5% for the fourth quarter, approximately 40 basis points, and up to 4.6% for the full year. Again, sort of all-time high take rates. The reason is that Mikhail flagged at the beginning is travel. Travel is tours, tours both additive to GMV and additive to ticket size and now representing 9% of the mix from pretty much 0, 18 months ago.

So to wrap up sort of on the Marketplace, what you've then seen is sort of that strong GMV growth, 39% in the fourth quarter, 44% for the full year, plus take rate expansion, mainly as a result of value-added services. Here, this is adding up to faster revenue growth, up 43% in the fourth quarter, up 64% for the full year. Net income growth is slower, and that reflects changing mix as 1P, primarily grocery, and also 1P cars grow in share, something we've sort of talked about over the last 18 months. But even taking that into account, Marketplace still delivered bottom line growth of 41% for the full year, making it on all sort of metrics our fastest growing platform. And then finally, moving on to the FinTech platform, actually TFV, loan origination, you've seen very healthy and consistent trends now over several years.

That remained the case over the last 12 months, origination up 21% in the fourth quarter, up 30% for the full year. Conversion, 2.1 times. That's an indication of how quickly people repay their loans. And the message there is that the trend is stable. A healthy consumer is repaying normally, roughly on average within six months. Number one and number two, in terms of the growth drivers, again, the growth drivers are loan products integrated with Marketplace. So that's buy now, pay later, but increasingly really merchant financing and car financing, which are both integrated with Marketplace and car financing, specifically with e-Cars. And contrast that. And this is the sort of relative expense of the general purpose loan, which will continue to decline in share. Loan portfolio sometime now growing faster than deposits, so more efficient use of the balance sheet.

In the fourth quarter, loan portfolio up 37% versus deposits up 23%. And for the full year, the loan to deposit ratio moving up to 88% from 78% in 2023. So that, again, was one of the factors that contributed positively to the acceleration in FinTech earnings growth in the final, particularly in the final quarter of the year. That is even taking into account some yield dilution. So that yield dilution again is a reflection of sort of mix changes, product mix changes, and is consistent with the trend that you've also seen now for many years in the business. And I think would be a reasonable base case to assume continues as BNPL and merchant financing grow their share within the mix.

The deposit growth of 27% for the full year, while it's slower than the loan portfolio growth, still actually incredibly strong growth, particularly given the context of our scale in local currency deposits. In terms of sort of risk and credit metrics, really no change at all. Metrics very, very consistent over the last 12 months and over a longer period of time. That's both on the origination and on the collection side of things. And again, it's just indicative of a very stable, predictable end customer consumer merchant environment, which you see throughout the business, whether we're talking about Payments or we're talking about trends in savings or some of the other areas. And so again, I think this is a realistic base case to carry forward.

Best indication of that is actually probably in cost of risk, 2.1 times, sorry, 2.1% for full year 2024 versus 2% for full year 2023. So it's stable now over a sort of long period of time. BNPL coverage is lower. This is something we flagged at the H1 and Q3 results. And that just reflects growth in the collateralized car loan product. It's collateralized. It requires less provisioning. And number two, just continued sort of strong and actually improving collection stats from BNPLs. We expect this to sort of stay broadly stable or increase slightly in 2025. So then finally, to sort of wrap up on FinTech revenue, strong, healthy origination, even with yield dilution, translates into strong, healthy revenue growth of 26% in the fourth quarter, up 25% for the full year.

We flagged both at H1 and we flagged at Q3 that the combination of sort of the faster growth in loans versus deposits, number one, and interest rate cuts earlier on at the beginning of 2024 would translate into slower growth in funding costs and faster growth in FinTech earnings in the second half and in particular the fourth quarter of the year and again, that's exactly what you saw play out. Bottom line growth of 28% in the fourth quarter, up 12% for the full year. I think the caveat to that would be what you did have in, or the partial caveat to that would be what you did have in December, is that rates, once again, actually moved up, so certainly when we talked to the market in October, that wasn't something that I think any of us were expecting.

That did have implications for the bottom line in December. So when you look at the sort of 12% growth versus guidance of around 15%, that's why rates moving up in December. And also what it means for 2025, sorry, yeah, 2025, what we had said last year is that as rates continue to move down, FinTech earnings would be a beneficiary of that. I think you should look into 2025 now. A reasonable assumption would be that rates will stay higher for longer. I mean, this isn't actually inconsistent with sort of trends in many parts of the world. And that probably means that FinTech bottom line growth goes slower, grows slower than FinTech top line growth in 2025.

Overall, to sum it all up, strong growth in line with guidance across all of our platforms, ultimately 25% bottom line growth for the year, exactly in line with the around 25% guidance that we provided on this date 12 months ago. So pretty good results across the business. Again, particularly when you take into account the scale that we now have. This slide really is just summarizing what I've just talked through. So I'll sort of leave that one there. Moving on to the guidance for 2025, I think I would just say that number one, we are sort of simplifying our approach. Guidance is GMV, TPV, and TFV versus last year revenue. Actually, this reflects investor feedback, a preference. So these are sort of very high-level metrics. Number one.

Number two, as the business becomes more complicated, we'll provide guidance, just bottom line guidance, just for the consolidated business as a whole rather than at a platform level. From a reporting perspective, nothing changes. This is simply a change in sort of approach to guidance, but all sort of metrics, including net income on a platform level, will continue to be provided. Ultimately here, we're looking for bottom line guidance of around 20%. This excludes Kolesa. It's our intention for the remainder of this year to guide, excluding Kolesa. But I think over time, it would be a reasonable assumption that it would be brought into the guidance from a midterm perspective. So that wraps up on the guidance side of things. I would reiterate two points that Mikhail made.

Number one, on the dividend, our track record, I think, of returning the excess cash to our shareholders is long established. Funding of the $1.1 billion investment in Hepsiburada will come from operating cash flow generated between Q4 and across the first half of this year. We'll be in a better position. We'll be able to update on cash returns, whether that be dividends or buybacks in the second half of the year. That was one point to reiterate. The second point to reiterate, again, on Hepsiburada, please keep in mind, it is an independent publicly traded company. Its own management, independent board members, and very importantly, its own shareholders. Important developments need to be communicated by them. It wouldn't be appropriate for us to sort of front-run their communication. Please keep that in mind.

But on that note, let's open the call up to Q&A, please.

Operator (participant)

Thank you, David. We will now begin the question and answer session. If you would like to ask a question and you have joined us on the phone line, please press star followed by one on your telephone keypad. And if you have joined us on Zoom, please use the raise hand icon if you have joined us via Zoom. Okay, so let's take Darrin from Wolfe's question first, please. Perfect. Darrin, your line is now open.

Thanks, guys. Nice job exiting the year in this growth format. Can I just ask about guidance for a moment? I mean, when you look at the 20%, I guess there's puts and takes both on the FinTech from a net income standpoint and interest income standpoint.

But more importantly, the drivers, really the drivers that you're looking at exiting the year are materially higher than what you're implying in your underlying growth assumptions from a KPI standpoint. Just looking at Marketplace, GMV expected, I think you said 25%-30%, or even Payments in the 15%-20% versus the exit rates. Can you just touch on maybe what's conservatism built in versus any implications or factors that are going to drive some sort of a deceleration in those manners on those KPIs, or is it just size of the business?

David Ferguson (Head of Investor Relations)

So thanks for your question, Darrin. I'll make two points, and then maybe Mikhail will want to add something. So the first thing is, is guidance conservative? Is guidance aggressive? Just take it on face value. That would be sort of my advice, and it wouldn't sort of over-interpret. That's one simple point.

The second point, more specific to your question, I think that all the trends that I've just described there in 2024, pretty much you can assume carry forward into 2025. So for example, on Payments, we talked about sort of a rate dilution, long-run trend as Kaspi QR and B2B grow in the mix. On FinTech, again, we talked about yield dilution as certain products grow in the mix. These things are sort of what explain the difference between top line and bottom line. And then also, again, particularly I think on the FinTech, I think that the scenario, the situation we're in today is different to where the world was three months ago. Three months ago when we had this call, or four months ago when we had this call, we were talking about rates potentially continuing to move down, a nice tailwind for FinTech bottom line.

Actually, not only are they not moving down, but they've just moved up, or they moved up at the end of last year, and we'll see what happens over the next couple of months. But that's clearly a change in the outlook. But overall, 20% guidance versus 25% last year is a reflection of the scale of the business.

Right. Okay. That's helpful. I mean, so it sounds like it's really just the larger base more than anything underlying in the business changing much. And then my follow-up would just be on a quick follow-up on Turkey and Hepsiburada. Just maybe just remind us of the timeline and your hopes. What are you hoping to see in terms of integration and opportunities there and just further internationalization more broadly by the end of this year and maybe into 2026?

It's a broader question, but I know that was great to see the closing of that in just a couple of months ago.

Mikhail, do you add anything on Hepsiburada or Turkey?

Mikhail Lomtadze (CEO)

Well, I mean, just to kind of repeat myself, it's a big market. We do see a lot of opportunities in the mobile services and, yeah, on the merchants, the consumer side. So, yeah, I mean, it's a good, strong foundation for us. The country's economic policies are providing its positive effect of normalizing the inflation and the macro outlook. As it happens with these type of changes, the consumer sentiment might be a bit challenging during the year. But yeah, other than that, yeah, we're excited about the opportunity. And Hepsiburada is serving 12 million consumers, so 100,000 merchants is a good platform. And we are also considering launching exporting services as Kaspi itself. So, yeah.

In general, it's a really exciting market, very similar to Kazakhstan from the consumer dynamics perspective. But again, David said that, and I said that Hepsiburada is a public company, so they will focus on their own numbers. Yeah, we'll be focused on the quality of the products, innovations, and things like that, which Kaspi has a very strong track record of executing. Keep in mind, we're like three, four weeks, right? We just closed transaction January 29. There is one thing also to keep in mind. I think everybody who has been with us for many years, we always prefer the results for ourselves. I think that would be the same approach. It's not like I think we just want to. Yeah.

Work on the products, work on the services, work on the consumer and merchant services quality, but also innovations and launching some services, and again, including Kaspi launching its services itself on a standalone basis.

Got it. All right, guys. Thanks very much.

Operator (participant)

Thank you. Your next question comes from James Friedman with SIG. Please go ahead.

Hi. Good afternoon. Good morning. So you had some observations about the macro environment in Kazakhstan. If you could just reiterate what it is that you're seeing and anticipating. I know there's been a lot of movement in interest rates, but also on the inflation front, sometimes that could be a good guy, bad guy. Anyway, any perspective that you're sharing on Kazakhstan macro would be helpful.

David Ferguson (Head of Investor Relations)

All right, James. So I'll just take macro very quickly. I think, again, the simple message here is that we see, for the most part, a very sort of stable, predictable environment with consumer trends, consumer and merchant trends consistent really with the last sort of 18 months, if not longer. And I guess ultimately, the evidence of that is you can look at the guidance, Payments. Payments is a big business for us and in the context of the country. And growth is still sort of an issue of guiding for 15%-20%. So that is indicative of those sort of volume numbers we showed you for both Marketplace and purchases. That is indicative of, at least in part, it's not just macro, but in part, sort of stable macro environment. So that's the main factor. I'd say there's the one caveat. I wouldn't overplay it.

It's really only relevant for our FinTech business, and it's probably just sort of a timing issue. The combination of sort of currency weakness, currency weakness translates into higher inflation. Higher inflation translates into interest rates moving up. That's sort of the only real change that I can point to over the last couple of months. But again, let's not overplay that. I think it's not inconsistent with sort of global trends that inflation is moving down more slowly, that rates are moving down more slowly. And the good news is that rates and funding costs for our business are high. And so whilst it may be timing and take longer to come down, directionally, I think it's still a reasonable assumption over the next few years that they will come down.

And that will have potential to be a nice tailwind for the business, maybe not in 2025, but in 2026 onwards. So let's just see how things evolve over the next couple of months.

Mikhail Lomtadze (CEO)

Yeah. And David, just to add, also the sort of temporary or end-of-the-year interest exchange rates increasing, I think it also was very encouraging to see and the testament to the National Bank and the government that they patiently sort of worked through this process. And it was basically driven by the market. And yeah, it was very encouraging to see that the free market and exchange rate flexibility actually eventually improved. So the exchange rate now is back below or around 500, about 5% less than it was end of the year. So that was, yeah, that's good.

Sort of well-managed, but also it was pretty much the market sort of driving up and down, which is a testament to the patience of the government and National Bank doing it, managing this properly, and then a question about Hepsiburada.

Oh, I'm sorry. Yeah, David.

David Ferguson (Head of Investor Relations)

Yeah, just one thing also to keep in mind that Kazakhstan is not immune also from the regional geopolitical trends, and that also obviously perception of investors is there, and that has its own impact as well. Positive, negative, whatever it is, it clearly has played its own factor in the dynamic, so just to keep in mind as well. But you know this better than me, of course.

And then in terms of Hepsiburada, so one question we get is about the margin characteristics of their business versus your business.

Is that a conversation or assignment that Kaspi.kz will be engaged with, or is that all under their auspices? We're just trying to figure out who's authoring the margin messaging.

And James, if I understand the question, I think now you should let's not over-complicate it. Hepsiburada's management reporting to Hepsiburada's board. Kaspi.kz controls Hepsiburada's board. So any company, it's a conversation between senior management and the board on all aspects of financial performance. It's nothing different at Hepsiburada versus any other sort of company. So is there a plan to drive margin expansion in Hepsiburada? So again, the same comment. Hepsiburada reports quarterly. It provides quite detailed updates on its strategy. Its strategy can evolve, and it needs to be communicated by them.

But I think it would be unfair on Hepsiburada's other shareholders if we said that they have to listen to the Kaspi call to find out what's going on at the company. That would not be the appropriate way for Hepsiburada to communicate.

Okay. Got it. I'll jump back in the queue. Thank you.

Operator (participant)

Thank you. James, we now have Darrin Peller. Please go ahead.

Hey, good morning. Good afternoon. Maybe first just to focus on the Marketplace segment. And in the letter, Mikhail, you talked about that continuing to be the most important growth engine this year. Got a number of initiatives that are still pretty early. As we think about this year, maybe this year, next year, are those the key initiatives that we should expect to be the major focus or new initiatives that are kind of coming down the pike?

How should we think about that? And I know it's early on Hepsiburada and Turkey and kind of all the things you talked about, but is there a plan or intention to kind of roll out products like auto and grocery and some of the newer ones that are working really well in Kazakhstan out in Turkey as well?

Mikhail Lomtadze (CEO)

Yeah. Good to hear from you, and thanks for the questions. In terms of the Marketplace, the way to really think about it is the way that historically, and as we also sort of explained this trend before, both consumers and merchants, they initially come to our Payments business, then they move to the app commerce, and then eventual destination is e-commerce. And this is both true for merchants and consumers because e-commerce is actually a much more advanced, fully digital experience, fully online, fully mobile, like 100%.

There is no offline part of it apart from us actually managing the delivery in the real offline world. So from that perspective, the nature of the Marketplace growth and also the fact that the services of the Marketplace, and especially e-commerce, are the least penetrated. So those are the factors which will support the growth of the Marketplace. Again, if you look at the previous years, our Payments was growing faster, then our e-commerce was growing faster, and now e-commerce. So this is the value chain that you see. Grocery sort of being the least penetrated businesses has the biggest potential.

But we are in the type of business which operations of our grocery, operations of our e-commerce, which means the window for the grocery and also the marketing guys we have been doing and the consumer experience. We all have been doing this incredible job of generating highly satisfied consumers, which means they are staying with us and they are highly repetitive. Therefore, the only or the major limitation to the growth of the grocery is actually us creating, entering the cities, building the dark stores, and starting to run the operations and basically providing the suppliers to these dark stores in terms of assortment, which we sell. So this is demand is there. We're really encouraged and excited to see demand is there. We're just building the infrastructure. The good news is that we are so execution-driven that we're doing it quite efficiently.

But that's basically so e-grocery will grow together with expansion of the dark stores, us entering the new cities, but also growing and increasing efficiency of existing operations, which is a never-ending exercise for our management team. And then we're just looking at some specific verticals as well. Again, the way to look at this is that we historically started from electronics with the high-ticket transactions. If you look at the size of our transactions, it's very different from any other e-commerce players. Usually, people start from low-ticket transactions, and they hope to get up and make business profitable. In our case, we started from high-ticket transactions, which was electronics. And now we're moving downstream. And the size of average transaction is actually increasing, and we are driving the frequency.

But this is really exciting because then when you're driving frequency means you're driving more business, and you already have the network which can deliver those items. So you can sustain your profitability while growing e-commerce because other guys are usually going from the opposite direction. So we're going for a new category. We started with electronics, and some of the categories which we are now becoming increasingly strong would be home and garden, would be fashion, and some other categories. But they are built up on the existing network of the delivery, existing consumers, payment options, and so on and so forth. So that's why the Marketplace will grow faster for so many reasons.

In terms of Hepsiburada, for Hepsiburada, I would say that for us, it's yeah, it's just a company which has been built on a very sound financial foundation, which is an important point, and 12 million consumers and 100,000 merchants is also a very good foundation, but again, I don't know how to say it. We want just to take our time, basically, and just make sure that, yeah, the services which are considered can be provided on the market and innovation around those services, but you also should keep in mind that, as I mentioned before, Kaspi can and probably will launch services on a standalone basis as Kaspi, right, as a company in Turkey as well, so all of those things would currently be considering. Okay. Just a quick follow-up on that.

David Ferguson (Head of Investor Relations)

Can you just explain the rationale, what the advantage is in launching Kaspi standalone versus pulling everything off under Hepsiburada or what would be a Hepsiburada product? What would be a Kaspi product? Well, I mean, we are looking for the ability to launch the services. It does matter who is launching it, right? So if there is ability and there is knowledge and technology to launch the services, we'll be taking those opportunities. There is nothing sort of short-term in this. But again, our target is to launch the services and provide services to the merchants and consumers. That's our goal. And where the services are born or where the service is being developed, it really depends where the capabilities are and where the knowledge is and technology and experience.

All right. Understood. And one more quick follow-up on the macro.

You probably know better than at least I do, so I just want to understand. You talked about the investor perception on the geopolitical trends and the regional conflict kind of comes to an end. What's the reality in terms of the Kazakhstan consumer and exposure to the conflict and how much help the other might get if that does come to an end? Thanks.

Mikhail Lomtadze (CEO)

Do you mean if conflict is over, what impact that would have on Kazakhstan consumers? That's the question?

Yeah.

Well, I think in general, I mean, I would say that it will, I mean, of course, it will have a positive impact on numerous fronts, right?

I still would put in front of everything that I think peace and for people in the region. I think all of us have again, I mean, it's just, I mean, peace is good for everyone, and I'm highly confident that the geopolitical stability in the region will have a very positive impact on pretty much every country in the region and consumers. I don't know, David, anything that you can add to this, but I do think that it will have a multiplier effect, and it will be positive for everyone. I mean, most importantly, people will stop dying. That's as far as I'm concerned, but also for the countries and economies, I think should be positive for the whole region.

David Ferguson (Head of Investor Relations)

Yeah. I mean, I can't really add much beyond that.

I mean, I just would add that I suppose keep in mind that from a political perspective, Kazakhstan has navigated a very challenging situation, I think, admirably over the last couple of years. So that's one point I would make. But I think beyond Mikhail's points on the sort of the human impact, this would manifest itself in just broader geopolitical de-risking across the entire region. So from a risk perspective, a risk normalization perspective, it clearly would be helpful.

Understood. Thanks.

Operator (participant)

Thank you. We have next question from Dan Michailov with Vergent Asset Management. Please go ahead.

Dan Mikhaylov (Investment Analyst)

Hi, Mikhail. Hi, David. Congratulations on the results. I just have two quick questions on Hepsiburada. When we look at Hepsiburada, one thing that stands out, they were among the I think they were the first in the Turkish market to do credit in e-commerce.

I think they were the first ones to launch BNPL products. They've applied for a deposit license. What do you think in your analysis of the company, what do you think you guys can do very differently to the Hepsiburada's existing management in sort of making sure that the credit franchise actually translates into meaningful growth? And the second question, do you plan to kind of do you plan to keep any of sort of existing senior executives at Hepsiburada, or will you be bringing a lot more Kaspi people to run the business as you become more familiar with it?

David Ferguson (Head of Investor Relations)

Mikhail, is there anything you can add on those, please?

Mikhail Lomtadze (CEO)

Yeah, sure. I think I did actually respond to this also on the previous call. So our goal is really to build in capabilities on the ground.

There is no intention whatsoever. We're not the usual sort of strategic guys which just come in and suddenly start teaching everyone what's the best way to do business. I think Hepsiburada, on a standalone basis, has a very strong management team that delivered profitable, sound growth and have worked through the very challenging times. And they have, together with the previous founders and the shareholders, have done a job, a remarkable job, which is a strong foundation for us to take forward. So we're not in the business of we're in the business of creating the incredible products which are innovative and improve people's lives. And they're mobile-driven and technology-driven. We are in this business, and there is a wealth of knowledge which can be shared between the teams.

Again, if there are some products which can be launched, we'll be focused on the launching of those products. We're a product company. So we're not yeah, Kaspi is not a political animal corporate structure. We're extremely lean. From that perspective, no, there is no intention whatsoever to start flying people. It's also expensive. I'm just kidding. No. There is no such intention. I think we're very happy and looking forward to working together with the Hepsiburada team that have done a very good job the last several years. In terms of the and then there was a question about the credit. I mean, we will see, right? The credit is a good product which Hepsiburada also has developed. At the same time, the market in Turkey is very wide from that perspective.

There are also financial institutions and the banks that provide products. Yeah. So we will see. I mean, you always should keep in mind that even though we are innovative and we innovate on the things which are driving and needed for consumers and merchants. So if we see innovation is needed on the credit side, we'll look into it. But again, we follow consumer. We follow merchant. We make their lives better. And it's an exciting opportunity. There are a number of things that can be done on the digital services, mobile services side for both merchants and consumers. And it's a big market. And yeah, so we'll put our heads down, work, and hopefully, the results will speak for itself.

But we don't want to. I don't know, David, how to say it, walk and talk, or what's the expression for it?

Dan Mikhaylov (Investment Analyst)

Yeah. Look, it's easy to promise a million things. I think what you should look at is how we've reported on Kazakhstan over the last five years. We provide updates on real execution, not promises. Everything you sort of saw in the first part of that presentation was real initiatives, many of which you'd not even heard of 18 months ago that are now being rolled out and have got strong momentum behind them. You should expect more of the same going forward in whatever market we're talking about.

Mikhail Lomtadze (CEO)

Yeah. And then just the one thing to add that Hepsiburada is an e-commerce company. So that's the core expertise and the core knowledge, which is a good foundation and the platform.

So largely a very, very strong, very experienced e-commerce company.

Operator (participant)

Thank you. We now have Gabor Kemeny with Autonomous Research. You may proceed.

Gabor Kemeny (Analyst)

Hi, team. A few clarifications from me, please. The first one is a higher-level question on your guidance. So the 20% profit growth you guide is just a slight slowdown from what you delivered last year. Whereas if we look at the volume dynamics, those suggest more of a slowdown. So my question is, where do you see margins improving and what is driving that? I believe you indicated FinTech margins possibly coming down this year. So that would leave us with Marketplace and Payments. Any color would be useful here. The second one is on the currency, which has been volatile. You mentioned it has bounced back a bit, but I think still 6% weaker against the dollar than it was in 2024.

I guess the question is, do you have any hedges, any balance sheet position we should be aware of? Or shall we translate the FX moves to your P&L one-to-one when we think about it in dollar terms? Yeah. And my last question is on Hepsiburada. Is resuming the dividends in the second half dependent on the buyout of the minorities? That's it from me. Thank you.

Mikhail Lomtadze (CEO)

David, I'll let you take it.

David Ferguson (Head of Investor Relations)

Yeah. All right, Gabor. So I'll do them, I think, in reverse order. So on buyout of minorities, I think I would simply just say that at this point in time, we are focused on we just closed the initial sort of 65%. We've made an initial payment. We have a remaining payment to make over the next six months, which will take us up to sort of $1.1 billion. That's our focus.

There's no proposal on the table for anything else today. So that's important to be aware of that. And again, that point, there's different things that can happen across the business. You highlighted one. There are multiple other sort of moving parts. In the second half of the year, we'll be in a better position to take into account everything and make a call at that particular point in time. Again, our track record, I think, shows if we have excess cash, we return it to shareholders. We've said quite clearly here, we can look at both dividends and/or buybacks, and we'll update on the second half of the year. In terms of minorities, there's really no proposal on the table today. So that's the last question. Question on hedging. No material hedging in the business. That's a sort of simple answer there.

Largely, this is a tenge revenue and a tenge cost business for the most part. Your first question, again, similar to Darrin's question. So again, I think I can only sort of reiterate that volume trends will be very, very strong in the business this year. I mean, you think about our scale, Marketplace growth of up to 30% year-on-year, Payments growth of up to 20% growth year-on-year. These are decent volume numbers for a business that's north of $2 billion in net income. So the business is big. The growth is still forecast to be strong. I think ultimately, you just have to look at the complete picture. So if 2024 was 25% growth, it's probably an unrealistic assumption that 2025 will be 25% growth as well. 20% does not seem like a sort of dramatic change in outlook.

It just seems like natural sort of scale effects within the business to make. This is Kazakhstan. Of course, going forward in the medium term, there can be contributions to income from other parts of the world. Very helpful.

Gabor Kemeny (Analyst)

Thank you.

Operator (participant)

Thank you. We now have Reggie Smith with JPMorgan. Please go ahead.

Reginald Smith (Analyst)

Thank you. Good morning. Congrats on the quarter. Most of my questions have been asked, but I did have a follow-up. You mentioned it sounds like that your impact or influence over Hepsiburada will primarily come through board meetings. My question is, has the new reconstituted board met yet, and how frequently do they meet? Do you want to take that? I'd like to hear from you.

Mikhail Lomtadze (CEO)

Yeah. It's, I mean, it's proper board dynamics really for a company which is listed on NASDAQ.

We have a very good, very good, strong board with three independent directors, and yeah, it's actually have been, yeah, they've been working in accordance with all the governance requirements which are applicable for a NASDAQ-listed company in the States. We haven't had yet a formal board meeting.

Reginald Smith (Analyst)

Yeah. Okay. I think the requirement or the standard is just one meeting per quarter, but some companies will meet more frequently. I guess my question is, is the plan to meet more frequently, or just the standard is kind of the standard?

Mikhail Lomtadze (CEO)

Well, I think the board will do whatever they consider appropriate for any point. There is no, I think we shouldn't be putting any limitations, whether it's quarterly or it's monthly. I think the meetings will take place either like in Kaspi, the meetings take place when important decisions need to be made. Yeah.

And the board needs to review, or so, different committees that have to do their job. So I think it's yeah, it just needs to be guided by the requirements of the company and the governance policies which the companies have. And the governance policies are actually quite good, detailed, and substantial, and in a sense, similar between Kaspi and Hepsiburada.

Reginald Smith (Analyst)

Got it. And just to make sure that I understand this correctly, your influence, you being Kaspi's influence on operations, strategy, or whatever as it relates to Hepsiburada will happen through board meetings as opposed to somebody just calling up and saying, "Hey, we want you to do this or look at this," or something to that degree. Am I interpreting that correctly?

Mikhail Lomtadze (CEO)

I'm just trying to understand where you're going with this question.

Reginald Smith (Analyst)

No. So I guess typically when I think of an acquisition, and this is different because you guys acquire the entire company, companies can come in and really have a super hands-on approach to changes. And I guess I'm trying to understand the distinction here and making sure that I fully appreciate that it's not going to be super hands-on, but it's not a passive investment either. So just trying to understand where it falls in that continuum. You follow me?

Mikhail Lomtadze (CEO)

Yeah. Yeah. Of course. I mean, I think in general, we're just excited to launch the services in Turkey with our experience and our execution skills. And we are shareholders in the company, and we invested into the company or bought the company because we believe that e-commerce has high potential.

So whatever we can add to value, and we're not private equity funds, and we're not an asset management company. We are actually a strategic investor, right?

Reginald Smith (Analyst)

So yeah.

Mikhail Lomtadze (CEO)

So we'll do things which are yeah, which are applicable for a strategic investor company. We're not going to be, of course, working only on the board level.

Reginald Smith (Analyst)

Right. Okay. That makes sense. I appreciate it. Thank you. Congrats on the quarter. Look forward to watching this evolve.

Mikhail Lomtadze (CEO)

Sure.

Operator (participant)

Thank you. We have Can Demir with Wood & Company on the line.

Hi, Gentlemen. Thank you for taking my question. So the first question is, the BNPL for merchants, is that a Marketplace product, or is that a FinTech product? So I just wanted to clarify that.

And secondly, on the government's comments that merchants should advertise both cash and the BNPL finance price for their products, I was wondering what your take on that is, and how do you think that would affect your m-commerce business, or is that more a noise that we should maybe overlook? And thirdly, on Ukraine, we know that you have a Payments company there. Would you focus on going back there if there's a peace deal? That's the first question. Thank you very much.

Mikhail Lomtadze (CEO)

Sure. Well, again, yeah, you can take all three questions. Or, David, do you want to do it?

David Ferguson (Head of Investor Relations)

Because if you do, and maybe broaden out anything else on the regulatory side that you think is relevant to raise.

Mikhail Lomtadze (CEO)

Yeah. Okay. In terms of Ukraine and others around the region, I would say let's just hope that there will be a peace, and then I think we will revisit our strategies. But at the same time, I can almost imagine you guys asking us when we will go to Ukraine, and then when we will go to Ukraine, you will ask us, "Why did we go to Ukraine?" Fair enough. Yeah. And then you will ask us, "What's your five-year detailed plan strategy?" and things like that. So anyway, just joking. But I think let's just keep in mind, I think let's just hope the peace will be there, mutually beneficial for everyone, and we'll explore opportunities down the line. In terms of the buy now and pay later, it's both FinTech and the Payments product.

So it actually works on both sides because we're processing the payment, and we're also taking the credit risk for 30 days, which is very low risk. So it basically works on both platforms. It works on the credit risk side, of course, it's a credit. It's a FinTech side. On the payment side, it's still processing the Payments because it's built also on top of the B2B Payments. But this is just another innovation on the top of B2B. When we launched the B2B Payments, I did tell you guys several years ago, we want to get the scale. We want transactions running. And once distributors and convenience stores have transactions between them, at some point, we will start innovating on top of those transactions like we did in every other vertical. And that's what's happening now.

So it's another B2B product which we've launched. And again, the credit risk side is on the FinTech and credit risk and the interest rate. I mean, the FinTech and then the payment processing side is on the payment side. So that's on buy now, pay later. But in terms of regulation, well, I mean, in general, I would say there was general discussion. There's really nothing sort of, I don't know, nothing really specific to report. Yeah. So I mean, in general, there is a discussion also about the VAT tax sort of, and this discussion is going with a wide audience and the businesses and the retailers. So yeah, there is discussion ongoing on the VAT, for example. There is a discussion going on the payment network as well, the national payment network. So we are involved in all those discussions. I don't know.

Anything else, David, I'm missing?

David Ferguson (Head of Investor Relations)

No. There's nothing material to report. As you've followed us for several years, Ken, there's always different aspects of regulation being discussed. Different stakeholders contribute different opinions. We're one stakeholder. But I think what you've seen over the last five years, there's never really been a regulatory decision that's sort of had a dramatic impact on the business model or investment case. We've generally been well-positioned as the regulatory landscape has changed, and there will be changes in the future. And we'll look to make sure we're well-positioned for those changes, but there's nothing imminent that we need to flag to you or to other investors.

Reginald Smith (Analyst)

Okay. Super. Thank you both. Thank you.

Mikhail Lomtadze (CEO)

Thank you.

Operator (participant)

Thank you. I would now like to hand it back to David for some final comments.

David Ferguson (Head of Investor Relations)

Yeah. Thanks, Bridget. So we've gone on for over an hour and a half.

I'm conscious there are some questions remaining in the queue, but we do need to wrap things up to move to another meeting. So thank you for your time today. Happy to follow up offline if we didn't get to your question. Apologies, and happy to follow up offline if we didn't get to your question today. Happy to continue discussion with everyone over the next couple of weeks. So thanks a lot for your time. Thanks for the questions, guys, and speak to you all quite soon. Thanks. Bye.

Mikhail Lomtadze (CEO)

Thank you. Thank you for good questions. Bye.

Operator (participant)

Thank you all for joining today's call with Kaspi.kz. You may now disconnect from the webinar, and please enjoy the rest of your day, and thank you all again for attending.