Revenue Growth: 21% year-on-year increase. Net Income Growth: 16% year-on-year increase. Payments Revenue Growth: 16% year-on-year increase. Marketplace Revenue Growth: 33% year-on-year increase. Fintech Revenue Growth: 18% year-on-year increase. Gross Merchandise Volume (GMV) Growth: 20% year-on-year increase. Fintech Origination Volume Growth: 17% year-on-year increase. e-Grocery GMV Growth: 64% year-on-year increase. e-Grocery Purchases Growth: 66% year-on-year increase. Eurobond Issuance: EUR650 million at 6.250% due in 2030. Interest Rate on New Deposits: Up to 18% for three-month maturity. Cost of Risk: Increased to 0.6% from 0.5% due to macro provisioning. Take Rate for Payments: 1.13%. Take Rate for e-Commerce: 12.5%. Take Rate for m-Commerce: Increased by 20 bps. Kaspi Travel GMV Growth: 22% year-on-year increase. Kaspi Travel Take Rate: Increased to 5.3% from 4.5%. Guidance for GMV Growth: Adjusted to 15% to 20% from 25% to 30%. Impact of Smartphone Registration: Temporary impact on demand, reducing GMV growth by 7 percentage points. Loan-to-Deposit Ratio: High, with a focus on growing the deposit base.

Warning! GuruFocus has detected 3 Warning Signs with KSPI.

Release Date: May 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Kaspi.kz JSC (NASDAQ:KSPI) reported strong revenue growth of 21% and net income growth of 16% year-over-year for the first quarter of 2025. The company's e-grocery business is expanding rapidly, with GMV up 64% and purchases up 66% year-over-year. Kaspi.kz JSC (NASDAQ:KSPI) successfully raised EUR 650 million through its first Eurobond issuance, strengthening its financial position. The company launched new high-interest deposit products, attracting 84,000 consumers and KZT 379 billion in deposits. Kaspi.kz JSC (NASDAQ:KSPI) is planning international expansion, including a strategic investment in Turkey with the acquisition of Rabobank.

Negative Points

The introduction of smartphone registration requirements in Kazakhstan negatively impacted demand, affecting GMV growth. High interest rates in Kazakhstan are a significant drag on earnings, increasing funding costs for the company. The Kazakh government is expected to introduce a 10% tax on revenue from investments, impacting net income. Macro uncertainty, including lower oil prices and currency volatility, could affect high-ticket discretionary transactions. The company's guidance for GMV growth was revised down to 15%-20% from the previous 25%-30% due to smartphone registration and macroeconomic factors.

Story Continues

Q & A Highlights

Q: Can you expand on the macro uncertainty in Kazakhstan and its impact on your operations? Also, how do the recent boycotts in Turkey affect your short-term outlook there? A: The macro uncertainty in Kazakhstan is primarily driven by lower oil prices, which can slow GDP growth, and currency volatility due to fluctuating commodity prices. This can lead to inflation and higher interest rates, impacting earnings. However, payment trends remain resilient. In Turkey, the boycotts have not changed our long-term outlook. Our focus remains on delivering high-quality products and services. (David Ferguson, Managing Director, Head of Investor Relations; Mikhail Lomtadze, CEO)

Q: Could you elaborate on the smartphone registration issue in Kazakhstan and its impact on your numbers? A: The new regulation requires smartphones to be registered with authorities, leading to increased prices and a temporary drop in demand. This affected our numbers in March and will likely continue into Q2. However, we expect demand to normalize in the second half of the year. The normalized e-commerce growth rate, excluding this impact, would be around 30%. (David Ferguson, Managing Director, Head of Investor Relations)

Q: How does the Rabobank acquisition fit into your strategy in Turkey, and what are your plans for the fintech platform there? A: We are in the process of obtaining approval for the Rabobank acquisition, which will provide us with a banking license to launch fintech products in Turkey. We see significant opportunities in digital and online services and plan to introduce fintech products once we have regulatory approval. (Mikhail Lomtadze, CEO)

Q: Can you discuss the impact of higher deposit rates on your funding costs and how you plan to manage this? A: We expect an increase in funding costs by 100 to 150 basis points this year due to higher deposit rates. Our strategy is to offer attractive deposit products to consumers, which will drive more transactions and provide funding for lending. This approach aligns with our long-term strategy of leveraging deposits to enhance our marketplace. (David Ferguson, Managing Director, Head of Investor Relations)

Q: What is the outlook for your payment platform, and how are macro factors affecting it? A: Our payment platform continues to grow, driven by cashless transactions and innovations like B2B payments. While macro factors like higher interest rates pose challenges, our payment business remains robust, with ongoing innovations supporting growth. We expect gradual take rate attrition as lower take rate services grow faster. (Mikhail Lomtadze, CEO; David Ferguson, Managing Director, Head of Investor Relations)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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