Q3 2023 Earnings Summary
- Kaspi is experiencing significant growth in its Small and Medium-sized Enterprise (SME) lending segment, with high demand from merchants and an acceptable risk profile, making SME financing an important priority for the company.
- The e-Grocery business is showing strong growth, currently operating only in two cities with significant potential for expansion, translating into profitability due to high customer retention and repetitive use.
- Kaspi's Marketplace is delivering standout performance, especially in e-commerce, which remains structurally underpenetrated in Kazakhstan, indicating significant growth potential for the company.
- Potential regulatory risk due to possible reduction of consumer interest rate caps to 44%, which could negatively impact Kaspi's Fintech lending business. Management acknowledges ongoing discussions but provides limited details. ,
- Lack of transparency on key metrics such as the take rate for B2B payments and profitability of new business segments like e-Grocery, raising concerns about operational performance in these areas. ,
- Increased competition in delivery models, with potential rivals aggressively pursuing home delivery, which could challenge Kaspi's reliance on Postomats and impact their last-mile delivery efficiency.
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Interest Rate Caps Impact
Q: How would rate caps dropping to 44% affect Kaspi?
A: Our diversified business model is resilient to pricing changes. With Fintech contributing over one-third of our bottom line and reducing rapidly, we are confident in our strong risk management, evidenced by a cost of risk below 2%. While lower caps might reduce competition, we believe operationally excellent companies like ours will continue to win in this environment. -
Marketplace Growth Drivers
Q: Why has Marketplace growth exceeded expectations?
A: Marketplace delivered a standout performance with 53% GMV growth driven by e-commerce, expansion in SKUs, both 3P and 1P, value-added services like Postomats, Juma sales event, promotion, and advertising. All these factors together contributed to the strong result, and e-commerce remains structurally underpenetrated in Kazakhstan. -
U.S. IPO Progress
Q: Any update on the U.S. IPO timing?
A: At this point, we're unable to add any detail beyond what we've said publicly. We have filed with the SEC but can't discuss timing or other aspects of the event. -
Services Driving Payments Growth
Q: How will services contribute to payments growth?
A: Services are structurally underpenetrated in Kazakhstan compared to other countries. As incomes grow, spending on services increases. We see services as a driver of long-term transaction activity growth, benefiting all our products like m-Commerce, Kaspi Pay, and BNPL. -
Car Financing Expansion
Q: Will car financing accelerate and affect risk?
A: Yes, our online car financing product is becoming very popular. We're entering the car market, providing financing and helping consumers buy cars at the right prices. Leveraging our strong risk evaluation capabilities, we view this as an exciting opportunity, maintaining an acceptable risk profile. -
Postomats vs. Home Delivery
Q: Are competitors shifting to home delivery over Postomats?
A: We focus on delivering a seamless user experience with our automated parcel machines, Kaspi Postomats. Consumers prefer the convenience of picking up items at their chosen time and location, rather than waiting for home delivery. Our growth shows consumers' preference for this model. We're committed to execution and improving the user experience. -
B2B Payments Growth
Q: What's the take rate and growth in B2B payments?
A: While we don't disclose the specific B2B take rate, our overall payments take rate has remained stable at 1.2%, even as B2B has become our fastest-growing payment product. B2B payments help brands, suppliers, and convenience stores settle invoices instantly, streamlining working capital and operations. This area offers significant benefits and is an exciting opportunity for us. -
SME Lending Demand and Risk
Q: How is SME lending growing and what's the risk profile?
A: SME financing is a significant opportunity. Around 21% of our merchants use SME lending, and demand is strong among others. We focus on providing high-quality products and excellent user experience. SME financing is a priority with an acceptable risk profile. -
e-Grocery Profitability
Q: How is e-Grocery segment profitability evolving?
A: e-Grocery is a highly repetitive business where delivering a high-quality user experience leads to customer retention and profitability. Our growth rate is very strong, and we're currently operating in only two cities. As we scale, we expect benefits to economics. -
International Expansion Plans
Q: Are there plans for international growth?
A: While we have scalable technology and experienced management across different industries and countries, we cannot provide specifics on international expansion. Our plans haven't changed from what we said in the previous call.