Earnings Call: Q2 2021

Jul 26, 2021

Good afternoon, everybody. For those of you who don't know me, I'm David Ferguson from CASB. Thank you for joining us today for our Q2 results call. As usual, I have the full team with me. Mikhail Lomtadze, our CEO and Co Founder, Yuriy Dudenko, Deputy CEO and Tengiz Masidze, Deputy CEO also. Mikael will run you through the first part of the presentation, strategic updates and I'll run you through the second part, the financials and that should leave plenty of time for Q and A. So on that note, I'll hand over to Michal to begin the presentation. Thanks Michal. Hello everyone. So I think we have exciting news to share. I will disconnect video from that moment. The Internet connection is not stable but just wanted to make sure that's me, that's not the artificial intelligence technology of GASP That is doing the presentation. So David, let's go straight to the next slide. So here we see quite a strong momentum across all our platforms. Our team did incredible job in the Q2 executing pretty much in every direction. So our Super App Mau is up 30%, reaching 10,200,000 Monthly active users. As we always said, our priority is to grow monthly users. But over time, you would also see as a daily engagement It's increasing as we add new services. So our daily active users increased remarkable 60 7% now reaching 6,000,000 users. The payments business is showing extremely strong growth of 155 percent year over year on TPV. As we also said before, The revenue generating TPV will be catching up with the TPV as we add more merchants and give more reasons for Our consumers to transact and merchants to accept payments. As a result, revenue generating TPV have grown 135% Year over year and net income of the payments business grown 128% year over year which is Again, driven by operating leverage network effect, but also the growth of our network, proprietary network. The marketplace GMV have grown remarkable 253% on the back of adding more merchants, increasing the SKUs. The retail street retail opening, as a result, e commerce has grown 171% year over year and mobile commerce Has grown 4 57% year over year and the net income 574%. The Fintech as we also discussed before is catching up now. So remarkable 4 6% year over year origination growth of TFE. The average portfolio is growing 29% And the net income 37% year over year and consolidated net income growing remarkably 94% And we're happy to also announce that our Board of Directors have recommended a dividend of around $80,000,000,000 for the Q2. So we're really excited about this quarter, but there are some strategic developments beyond our results. First of all, this is the first time when we are 50% Non Fintech Business and that has been our strategic priority and now we are officially more Then just a Fintech or financial services company and the payments in the marketplace are growing faster on higher margin businesses And they now take 50% of our bottom line. Next slide. Here you would see the MAU. So MAU growing again To 10,200,000 monthly users and DAO is now catching up as we add more services. And what is even more remarkable that daily users now coming to our Out of monthly users coming to our super app is 59%, which is one of the world's best Engagement KPIs from all other mobile apps in many other countries. We have priority to drive transactions and transactions have reached remarkable 39.3 transactions Per month per consumer. Again, this is an extremely important metric for us because that tells you First of all, how engaged our consumers are, but at the same time, when transaction actually happens, this is what we monetize, So we monetize transaction either on the merchant side or on the user side. So that's a remarkable achievement and One of the highest ratios of the transactions per consumer in the world to many other comparable companies. Actually some other companies Have this number for the year, close to that like PayPal for example. And in our case, we have close to 40 transactions Per month per active consumer. Here, this is the number which we also wanted Share with you again, we have multiple avenues of growth, right? So we're driving monthly users, we're driving their daily engagements, We are adding more merchants, we are adding more services and therefore those are really diverse range Of the growth opportunities. But at the same time, we do have core of our Kaspi KZ super app On the consumer side is our consumers that pay shop and manage their finance through our app. So we have 38% of our consumers using all 3 platforms, so the payments marketplace and Fintech. This is up from 33% 12 months earlier, but at the same time, it just gives you a perspective how much growth we have with our consumers that You know, love our products and getting engaged more and more, but we also constantly adding with new services. Next slide. This is the same as about the merchants. So we have actually really started to work With the suite of merchant services last year. So as you can see, basically starting from the Q4 of last year, we started Scale dramatically. And now we have reached 138,000 merchants in the Q2. That's a 3 40% increase From Q2 of 2020. And what is also important that as we onboard the payments merchants, The payments merchants then getting onboarded to the marketplace. So at the moment, only 40% of merchants is shared And we are growing extremely rapidly on the payment side. But if you think on the longer term perspective, that's also a significant opportunity As we continuously add the new services for the merchants. And just to take a step back again, our strategy for the merchant suite of products It's a super app for merchants. Kaspi KZ is a super app for consumers and the Kaspi Pay, which we launched last year, will be a super app for merchants with the services that help them to grow and manage their business. Next slide. This is just to remind you of some of the services that we launched last year or devices. Those are devices which are smart TOS for Kind of supermarket or high intensity environment transactions basically for the large retail chains. Mobile POS is for small and micro businesses that can download the Kasti Pay mobile app and basically within 5 minutes can start accepting payments. And QR checkout is our proprietary device which we have designed and developed as well in order to enable more user friendly interaction with the QR technology. And all those devices are powered by our technology and all those devices are powered by the QR technology, but the Smart POS can also accept any other Type of payments including from Visa and Mastercard cards or the NFC transactions. But The majority of our payments are actually coming from CASB QR. So if we go to the next slide. This is what We have been growing really fast on the network. Our team is really strong in execution. And As you can see, it just took us 12 months to increase the market share in the devices network from just 9% in June 2020 To 51% in June 2021. So now we have almost 180,000 devices which are sort of creating our network of acquiring and merchants of all Industries of all scales from micro to large retail chains to international brands are actually signing up for our Acquiring business and we've increased the number of POS devices 11 times starting from June of last year during the last 12 months. As we roll out our devices, we obviously are increasing the share of our own acquiring. So, I remember the discussions that we had Last year, how much we either depend on interchange and this is sort of Traditional banking business, our business is nothing but traditional banking business. We are disrupting any sort of regular way of financial services or payments or shopping. So here what you see is the 68% now Of all our volumes of Kaspi Gold, which is the most popular payment card as well as virtual card In the country, 68% now is going through our own acquiring network and is growing extremely fast. If 12 months ago 93% was done through 3rd party acquiring networks, in June 2021, only 32% was done Through 3rd party acquiring. And our network continuously growing really fast. So we'll have a very nice sort of trends to show the second half of this year as well. As we scale our network and devices, there is another remarkable transformation that happened in Kazakhstan which is quite unique. And this is a QR code technology and how quickly QR code penetration increased It became basically the part of the daily transactions for both merchants and consumers. 80% of all our transactions now Our acquiring network is done through the Caspi QR technology. And only 16% is done with a plastic castic gold card and 4% other cards Of the banks in the country. So that have been growing dramatically. 26 times increase in the transactions, 156,000,000 transactions in the second quarter. And again, it's not just the fact that we have achieved such a remarkable result. I think it's basically the fact of Changing the country's landscape in acquiring and introducing the QR code And achieving such a remarkable penetration in just 12 months. This again just talks about how well our team can execute And how much merchants love our services, but also consumers are embracing our services, which we launched in our Super App. Again, all the QR transactions are done through Kaspi KZ SuperRep and accepted on the merchant side from CaspiPOS terminals which are also powered by CaspiQR technology. Another slide of Super App strategy, which we sort of communicated before and now we can see it in Together with you is the travel business which we launched last year. To be more specific, we actually launched the airline ticket sales In December of last year. So we acquired a small company in August. We redesigned the user experience using Caspi KZ technology and design expertise, but also taking the best What was there from the Santa Fe? And then we launched that service almost as a standalone app within our app. And now it's a section, Gatsby Travel. And we have achieved 26% market share as of June of 2021. So we have sold over 500,000 tickets, airline tickets in Q2 and the growth continues. It's a large market, we like it and we have incredible feedback from our users and actually airlines with whom we partner to help them develop this business, especially in these challenging times for them. Next slide. So as we launched the Caspi Travel, we also said the Caspi Travel From the name of it is basically digitalizing the travel experience for our users. So we will start with airlines But then we will launch other services. So we will launch railway ticket sales in June through Caspi Travel section of our super app. And just to show you some of the screens, it's just a remarkable product where you can select a destination, you can Search ticket, you can actually select seed in our Super App and then you can pay with the Kaspi Bold account or buy now pay later product. And we launched this in June. It was operational for the last 3 weeks of June and we already sold 55,000 tickets. And the total size of the market, we estimate around 17,000,000 railway tickets annually. So we are very excited about this Vertical. Another service which we've launched last year is GovTech, the government services in our app. So we work with the government Hand on hand helping to deliver the government services to citizens in extremely convenient and seamless way. So this is the section which now is one of the very popular sections. Almost a third of our users, 3,400,000 users I visited the section in June 2021. So it is almost 4 times up from last year. And in this section, What citizens can actually do, they can check the COVID status, for example, which is highly important During these days, so it's both merchants that enable users to sort of consumers to come in if they are tested negative, but also for peace of mind Of the users themselves. Then we have launched and received pension on the gold just recently. You can pay for state services with a QR code in the service centers of the government and you can also pay taxes, You can register business. So we are working with various government agencies and with the state again just to help to bring the products to the end users and make their life better and more convenient. So, we are also Pushing the delivery, this is something which was underestimated and again this is another example of our execution capabilities. So the deliveries have been scaled dramatically. So we have delivered 205% more items in the Q2 of this year than Q2 of last year, 2,300,000 And out of the delivery, what is even more remarkable that we are delivering more than half of those items in less than 2 days. And you can imagine the size of the country as well, which is quite important KPI for us. And then it's now free for consumers. So 98 Basically 100% of our deliveries are free from consumers and this is driving our e commerce. However, there was always a question, what stands behind our delivery? So we would like to share with you what actually our delivery strategy and the platform is. So if we go to the next slide. So here, basically to simplify, we have sort of 2 types of deliveries just for simplicity of our presentation. So we have local delivery when the delivery can be done basically within the city after the order is placed From merchants to the buyer, either directly or through the courier and then the countrywide delivery. And the countrywide delivery is a huge country, So we took a challenge of organizing technology platform which pushed together every Sort of part of the value chain of delivery. So there is a merchant, there is a delivery station, which is sort of what we call mid mile Between the warehouse or the hub, there is a couriers, then there is a hub in 1 city, there is a line haul sort of courier companies That delivered the parcels by trucks, trains or airlines. We actually work with 3 airlines, for example. And then we have delivery station in a city where the parcel is being delivered. And what is our strategy around the delivery is again, I mean, You don't really have to own an iPhone manufacturing. Hello? David, can I be heard? Yes, we can still hear you Mikhail. Carry on. Okay, great. So there is no The strategy that we have is you don't really have to own the manufacturing company for production of iPhones. I mean, or you don't have to own the taxi and the drivers in order to provide the taxi services And so on and so forth. So we basically took on the challenge that technology is the most important aspect. So we have organized the platform which coordinates all those Participants of this entire value chain. So if you take like the country, David can you go back? I just wanted to make One point. So the technology, even though it's sort of the broad sense, I wanted to specify a couple of specific things about our Logistics platform. 1st of all, it's labeling. So the entire value chain is standardized to our label. So if you imagine, In some other countries, when you get the deliveries, you would have your label over label over label. So it's like every courier company puts their own label. Now it's not inconvenient for you, but that's actually quite inconvenient for the entire value chain. In our case, we introduced the standard. So everyone operates in a single standard of Caspi e label, which means that items can be tracked easily and items can be also rooted Because then I am going to the second point, which is routing and sorting. So routing means that we are actually forecasting as we manage 1,500 delivery Our technology enables us to prioritize routeings in a way that we deliver To our consumers in the promised time. And then App4 Couriers, which enables Couriers to basically provide the last mile service. And as we put this together around the logistic platforms, we are actually quite optimistic about the different types of services that We can develop in the future around the logistics and the delivery. However, at the moment, we are focused on the scale. So if you go back to the next slide, Here is basically just to reinforce the scale of our logistics platform. So, for example, we have 20 companies That employ 1,000 couriers. And those are the 1st mile, the last mile couriers that actually work both ways. So we have regional sorting hubs done by the warehousing companies. There are 4 hubs exclusively working for us at the moment. Delivery stations, this is sort of middle point where you actually get the small parcels accumulated. So we have 14 delivery stations. And I mentioned that we have line haul companies Doing all this trucking around the country and we have 11 companies like that and they work for example with 3 airlines. So we are delivering 98 for free, 98% of deliveries and 54% is delivered in less than 2 days. And as we continue scaling this infrastructure, that delivers enormous value Both for users and the buyers as well as the merchants. Next slide. And we discussed many times that We have a presence in Azerbaijan. We're growing our business there nicely. It's just not material from sort of $1,000,000,000 kind of Net profit perspective at the moment. We are also looking at Ukraine and we mentioned this before. So now Just to give you a brief sort of update that we have signed an agreement with the payment company in Ukraine. So this is the market of 40 2,000,000 people. It clicks all our criteria for entering the market, which is sort of the cash economy, low penetration Digital payments, low ecommerce penetration, low consumer leverage, but also very importantly, high smartphone penetration. And all those metrics, Ukraine ticks the box, right? 44, almost half is cash withdrawals, e commerce just 8% of retail trade and the consumer lending only Below 5% of GDP and above 70% of population have sort of smartphones. And we're buying the company which again as I mentioned With the Santo Feo Travel Business, so we're buying a company which has a solid business, 100 plus people working in the company, It has licenses from National Bank of Ukraine but also accreditation and certification from Visa and Mastercard and they have business relationships with the merchants and different service providers like utility companies, very similar to the bill payment business which we have in Kazakhstan. So we're excited to acquire this company subject to approvals in the Q4 of 2021. And as a result of that, we will be Looking to enter the Ukrainian market and work with both merchants and the banks to develop the services which will Digitalized the country's payments landscape and we don't expect any material financial impact on the On Kaspi Gezat itself. So it's a great entry point for us and we're very excited about going into Ukraine Over 40,000,000 people country. David, I guess you can take this forward Tommy? Yes. So thanks, Mikhail. So I'll run you all through the financial performance for the Q2, starting with the payments platform. So as well as being important from a financial perspective, our payments Platform is indicative of the health of the broader ecosystem. What you see in the Q2 is despite also being Our largest platform from a user perspective, still very, very robust growth in terms of new consumers, up 34% year on year. But as Mikael talked about and as we've communicated to investors over the last 6 months, The strategic priority for this year is to add new merchants. New merchants will drive consumer engagement, will drive transactions and ultimately will to drive monetization. And what you see in the Q2 is growth in new merchants increased just short of 450% to 135,000 merchants, principally as a result of the rollout of CASB Pay. That's a phenomenal result, and to give some perspective on the momentum in the business, that equivalent number was around 270% year on year growth in the Q1. So you can see that merchant sign ups are continuing to accelerate. Another way of looking at the health of This is funds flow in TPV. And here what you see is a very, very consistent performance In the Q2, up 155 percent year on year, very comparable with the Q1 and therefore first half of the year. That's despite the fact that the P2P platform is one of our most mature product propositions. The whole logic for the rollout of Castiti Pay is to increase the proportion of commercial monetized transactions or RTPV. And here too you see a very, very strong trend up 135% year on year. Again, to put some perspective on that, the equivalent number was 98% year on year growth in the Q1. So, momentum accelerating and today we upgrade RTPV full year guidance from around 95% to around 100% year on year. Although the focus is on merchants and monetization, it's fundamentally important that P2P Remains the sort of an important source of funds into the ecosystem. And again here you see a very, very consistent, a very, very solid trend in terms of the importance of P2P and bill payments for that matter to TPV. And then in terms of RTPV, however, what you do see is that CASB QR and card transactions are of growing in share within the mix. Another way of looking at all of this is average interest Free balances, funds consumers keep with us on wallet. Consumers transfer funds to CASB to transact. That's the basis of the strategy. And here too you see very, very strong growth, up 58% in the Q2 year on year. And again, we upgrade guidance for full year 2021 to around 60 Strong RTPV growth, take rate consistent with our guidance around 1.2% Translates into revenue growth in excess of RTPU growth, RTPV growth up 92% year on year. As we move the proportion of transactions that are processed on our own network and away from Visa or Mastercard, we're scaling our own internal cost base, Scaling our own network and the benefits of that gearing is clearly dropping through to the bottom line with 128% bottom line growth versus 92% top line growth, a material margin upside or margin progression in both the second quarter and the first half of the year. To remind you, as Michal said, 12 months ago, 93% of gold transactions were running through Visa or Mastercard. Today, 68% of transactions are running through our own network. Moving on to marketplace, the focus on adding merchants isn't just about payments. Strategically, Kaspersky Pay is a product for onboarding merchants. Once a merchant is onboarded to pay, we aim to Upsell the merchant onto 1st, M Commerce and then e Commerce. And you see evidence that this is now starting to Playout, 130% growth in marketplace merchant growth in the 2nd quarter. That number was around 52% in the Q1. So clearly pay is now starting to drive marketplace merchants and hire merchants, A wider number of SKUs on the marketplace drives consumer growth, up 35% in the Q2. That number was around up 20% in the Q1. So here too you see and acceleration. This translates into GMV growth, very, very strong GMV growth, 253% in the quarter and take rate 8.5 Sensa continuing to move up year on year, 6.3% in the Q2 of 2020. There's a number of factors behind that principally its mix effect, higher take rate categories growing the GMV at a faster rate than average. Increased success of marketing campaigns where merchants play a higher take rate to participate in and to a lesser extent initial monetization of CASB Marketing Services, Advertising and CASB logistics. The latter two points are not material in the context of the take rate increase this year, that have the potential to play their part in 2022 and thereafter. Breaking down GMV trends by platform, you see that e commerce GMV accelerated again in the Q2. That's despite a relatively tough comp versus 2Q 2020 when Countries globally went into lockdown and ecommerce because companies were beneficiaries of that. And then on Mcommerce, our Marketplace solution for street merchants, offline merchants, you see a substantial acceleration in growth 457 percent year on year and in part that reflects base street retail closed to a large extent in the Q2 of 2020, but it also reflects what I talked about, that's the addition of merchants, The translation of Pay merchants now moving, upgrading to mcommerce and they're doing that through the the the Kaspi Pay app. M Commerce is now around 50% of 58% of GMV just short of 60%. E commerce is just short just over 40% and you see the mix change back in favor of M Commerce and that just reflects The Q2 of 2020 was disproportionately weighted to e commerce for COVID related reasons. I mentioned earlier that the reason for the take rate increase number 1 is principally a result of mix And here you see increasing disclosure around that high margin or high take rate categories like Home, garden and furniture, like beauty and personal care are growing above average and that That is very helpful, although it's not the only factor to the take rate increase that you're seeing in the marketplace platform. The combination of accelerating GMV trends in the second quarter take rate moving up substantially year on year Resulted in 3 43 percent revenue growth year on year. The nature of this Marketplace platform, namely Asset Light. You see that that is translating into again operational Gearing with material earnings growth 5 74% year on year in the quarter and a substantial increase in profitability 67% versus 44% at this time 12 months ago. 67% margin It's consistent with where we guided for marketplace at the beginning of the year, namely a margin around high 60s and that remains unchanged today. Moving on finally to the Fintech platform, TFV growth of 456 percent year on year, again base effect is playing its part here. In the Q2 of 2020 country moves into lockdown. We, like most other lenders, applied a more cautious approach to new origination. Today where we are is origination trends have largely normalized. So that's one factor. But what you also see, which is is important, is the increase in the conversion rate from 1.5 times 12 months ago to 2 times. So what this means is that, a, this is this is a function of the product. Number 1, small ticket. Number 2, consumers can take exactly the amount they need, When they need it, often integrated into the point of purchase, they can repay at any point interest free and without penalties. So that drives high frequency turnover conversion of the balance sheet. It drives transactions across the ecosystem and the small ticket short duration nature of the lending drives lower cost of risk. If we look at the mix, what again here you see a similar point to the point on our marketplace as things are now normalized. We are more confident about making general purpose loans. Last year there was a strategic The bias towards buy now pay later in the context of a heightened risk in environment and you've seen general purpose which is also higher yield, grow back within the mix to a more normalised level in the Q2 of this year. The reason for the difference in 456 percent TFE growth and Balance sheet growth of 29% is the point I made earlier about increased frequency of conversion, Yield of around 30%, consistent with the full year guidance of around 30%. And here too, another sort of lead indicator to the health of the Our system ongoing strong growth in deposits, OpEx just showed a 40% year on year. It's deposits that will fund origination. The loan to deposit ratio has moved up to 69% from a low of 63% in the Q3 of last year and potentially can move up further going forward. On number of consumers, up 32% year on year, deposit consumers on loan consumers up 22% year on year. And again, you would expect that number to increase as given what I've talked about in terms of stabilization in the macroeconomic environment. So finally that translates into An improvement in revenue growth, up 23% year on year. Faster origination takes time to feed into the P and L, so you will see that that 23% Accelerates again in the Q3. The 23% is dropping through to the bottom line and the main reason for the drop bottom line drop through is cost of risk, which at 1.5% is coming in better than we initially guided for at the beginning of the year and that just reflects as the entire ecosystem scales, Our data capture scales and our ability to originate, the quality of our origination improves 1.5 percent cost of risk. So as a result we move our TFB origination guidance up for the year. To above 110%. Previously, It was around 100% and we lower our cost of risk guidance for the 2nd time this year to around 2%. Previously it was below 2.5%. To wrap things up here are the consolidated numbers for the group revenue growth of 54% material drop through to the bottom line, 94% bottom line growth, net income adjusted margin A touch below 50% and a material increase year on year with all platforms playing their part. As I've run through the respective sections, I've highlighted the guidance changes, so namely that's to payments, RTPV growth and average balances and to FinTech, TFV growth, Cost of risk and also profitability, we previously guided for mid-thirty percent net income margin, now we're looking for a high 30% margin, marketplace continues to perform broadly in line with our plan and is delivering the very strong numbers We expected where does this leave us? Consolidated net income guidance around £425,000,000,000 for 20 And 2021 previous guidance was above €410,000,000,000 We provided that guidance in our Q1 numbers in April. At that point, that was also an upgrade on the numbers we communicated in March. So maybe on that note, I'll wrap things up. This is just a summary of the guidance for all divisions, I won't run through it. So we can open up the call now for Q and A. Sam, if you're ready. Thank you. We have a question from Andre Stefan. Please state your company name and proceed with your question. Hi, it's Andrey from HSBC. Thank you for the call. I have a couple of questions, please. First, how does the acquisition in Ukraine Fit into your international expansion strategy. This is not the big one we were waiting for, right? And so in general, do you think it makes No sense to start greenfield in other countries. So therefore, will it have to be Partnerships or pure M and A rather than starting from scratch. And my second question is on the marketplace Business outlook. Given the seasonality of this segment, are you being too conservative on the full year Guidance. I mean, the GMV growth specifically, I understand the COVID impact last year, which may have distorted the growth in Q2 and commerce in particular. But is there something else happening with regards to the second half outlook that could Make those growth rates different from what we saw in the first half. Thank you. Okay. So thanks, Andre. Maybe I'll take the second question on guidance and guidance from marketplace and Evan Mikhail can take the question on international expansion. So whether it be for marketplace payments or fintech, you should take the guidance as real guidance. On the one hand, across all platforms, momentum is clearly very strong. On the other hand, there are still risks It's related to COVID and that in particular could, in the event of tighter restrictions on retail, That would could impact to M Commerce. There's nothing to suggest that that will happen today but but it's it's it's it's possible. That's something you should just bear in mind. And so overall I would just take the view that the guidance is Realistic and as we go into the final quarter of the year, we had a good end to last year. The comp will be more difficult. So let's see how we do. Great. And on the international expansion, I mean, We always sort of describe the way we look at it. I mean nothing is, I mean we are very Realistic and we look at different ways to enter the markets. So on the one hand, I would say nothing Is it possible means either Greenfields or the larger acquisitions if they fit our strategy. However, that specific acquisition, we are having several actual facts why we did it. So first of all, The company is licensed by the National Bank of Ukraine. The company has been certified by Visa and Mastercard. The company has 100 employees and also has a relationship with thousands of merchant service providers as well as Ukrainian banks. So if you put all that together, basically what we're doing with this sort of small Acquisition in our context is we're buying time to market. So the same thing we've done with the travel business in Kazakhstan. So we are acquiring all those components in order to launch our products faster than we would be doing greenfield. That's basically the whole justification for this acquisition and we're very excited about the country opportunity for the scale of it And also the way that again the cashless penetration is underpenetrated digital payments, E commerce and financial services. So we do see opportunities in the country across the board, but we have this Possibility to shorten our time to market through the payments platform, which is a core of our ecosystem in many other markets will be also important component Of scaling. So that's the whole justification for this acquisition. Okay. And if I may follow-up on this, we've talked about Uzbekistan at one point. That is not off the cards, you're still looking around in the neighborhood, so to speak. Yes, of course. Uzbekistan is a large country and again, we reinforce our strategy And the team mentality that we have at GASP, none of the services were launched were first Individually products. If you take individual products, we have not been first on the market with individual products. We have been first on the market With the Super App strategy, with the technology, user experience design, I mean, our products just are much more Beautiful. There are many other products that you would see with other players in the market. But again, we have taken the market share And we disrupted the value chain in traditional players just because we were technology driven and innovative And super focused on execution, right? So from that perspective, any country which is larger than Kazakhstan is definitely on our radar, but we're not rushing into the country. We just need to make sure we have the right strategy And we have the right platform to enter. So yes, Uzbekistan is one of the countries we look at. But Ukraine is the one when we make actual Move as we speak, if the transaction gets approved by regulatory bodies. Understand. Thank you very much. Question comes from Gabor Kemani. Please state your company name and proceed with your question. Hi, this is Gabor from Autonomous Research. A few questions from me, please. First one is on the marketplace where you are You're guiding for an 8% take rate and the trends seem to be pointing in the right direction. You mentioned the business mix It's moving towards higher margin stuff and potentially value added services could start adding to your take rate. So why the 8% Guidance on the take rate for this year. A little more color on this would be useful. Second question, can you confirm that you don't expect the Ukrainian acquisition to impact your dividends? And just on the dividend topic, are you Switching to or are you planning to do quarterly dividend payments from now on? And just a final question on the logistics where it seems that you are operating with a large number of partners. Are you expecting any potential significant capex or opex to improve the logistic platforms like delivery stations or sorting hubs. Thank you. Okay, Gabor. So maybe I'll start with those and then maybe Mikhail will jump in. So on the Ukraine transaction today, although financials aren't Those aren't disclosed. I can say that it's it's not material in the context of of of CASB. And you see today that the board of directors proposed A dividend for the Q2 of the year, so it's had no impact on on on that. More generally, cash flow generation capacity of the business remains as strong as ever. So that's number 1. Secondly, on marketplace, So the first half of the year the take rate was 8.3%. So I'm not sure that that's inconsistent with the guidance of around 8%, depends how you want to interpret the word around but to me they are those those two numbers sort of are not unreasonable. So I suppose you could take the view that it's unlikely that the take rate will finish the year below 8%, but around 8% isn't inconsistent with what we're seeing currently. So that's probably as much as we can say on that. And then on capex for logistics, I mean the simple answer to you is you know we've described a CapEx light strategy that leverages our volumes and technology. So the answer to your question is no. Nothing has changed in terms of our capital allocation, particularly with regards to logistics. Very useful, thank you. Just a quick follow-up. So are you planning to pay dividends on a quarterly basis? So the dividend announced today is for the Q2 of 2021, So yes, we're moving to quarterly dividends going forward. Understood. Thank you. Our next question comes from Simon Nellis. Please state your company name and proceed with your question. Hi. Thanks, David and Michal for the call. I guess my first question would just be on the e commerce Business, you're showing that you have 63% market share. Can you tell us what the GMV is behind that calculation And what the competitive environment is like? Is Alibaba still the 2nd largest? And are you worried at all? I think Ozone said that they're thinking of entering the market. Are you seeing any New entrants and could that potentially impact your business at some point? Should I go 1 by 1 or should I continue with some of my other questions? I'll take that one very quickly. So on the market share, it's based on 2020, our 2020 GMV. So I have that number in front of me, but you can find it, but that's how you how you would calculate, in that case, it was PwC, their estimate for total market size. That's just the e commerce part, not the m commerce part, right? Right. Okay. Yeah, so that's sort of your first question. In terms of is the competitive environment changing? Well, you can see that last year we talked material market share in e commerce. You can see that the growth rates we're posting and what we're guiding for this year. So only time will tell if we increase or decrease market share but our performance looks pretty solid. So I think overall I would say that we haven't seen any material change in the competitive environment and you should You know bear in mind that how we think about things is not just about sort of e commerce as a standalone entity, We think about a super app where we offer consumers multiple ways to to live their lives of which e commerce is just a component and we offer merchants Multiple tools to sell, whether it be CASPI Pay, whether it be Marketplace, whether it be CASPI Merchant Financing, CASPI Logistics and so on, CASB Marketing Services. So if you take this more sort of holistic solution then it's not obvious that anyone coming along with just an element of that I would have enough to sort of dramatically change the market dynamic. Okay. And I would like to add Very quickly to what David said in terms of the competitive environment in general. When talking about competitive dynamics, I think it's important to talk about competitive advantages at the same time. And from quarter to quarter we have been building up our competitive advantages. Now logistics platform is our competitive advantage. Number of merchants is our competitive advantage. It provides a selection, it provides price competition, but also value for merchants And both merchants and users. The financing for merchants is building another layer of competitive advantage. Kaspi Pay Super App, it's not just a payment services. It's actually the suite of the services for the merchants provides another layer of competitive advantage. So if you Put together all these competitive advantages you need to benchmark this against the competition. And what we are focused on and what Just David said, we are focused on we are a product company. So we are focused on creating an incredible User experience and merchant experience. And that's why our Net Promoter Score is extremely high. So we continue delivering on our services. We continue Building up competitive advantages, that is a formula for our long term success. And competition Comes in, makes statements. As long as we run this company for so many years, there's always somebody making some statements. Understood. Okay. Yes, just on Ukraine again, maybe it's too early to ask this, But what are the plans to develop that business? What kind of CapEx do you think that will require? How rapidly can you kind of scale it up and make it material To the P and L. So we won't talk about financials, but maybe Mikhail will give I'll call up on strategy and maybe you can infer some things from that. Sure. I mean our strategy For Ukraine from today's perspective, with that specific acquisition is to scale The bill payment and the payments business in general. So that's the company is even though it's Sort of small from the people perspective, 100 people but actually does have an access to the merchants and the service providers and utility companies. So it's very similar Business profile to our bill payment business and also our payments business actually in general, things like B2B for example. Differently from Kazakhstan strategy, we would like actually to build the partnerships As much as we can and partnerships are both on the bill payment side or on the bank side as well, local banks in Ukraine. We believe that by partnering with different participants, we can actually scale significantly in the medium term but also You know, with a reasonable investment. And at the moment when we think about this, the investment, it will be Basically, knowing our services to the users, knowing our services to the merchants and launching our Services through the mobile app and all of that together implies basically this will be mostly Marketing expenses related to user acquisition. Got it. And then just Maybe one last technical question from me on the dividend. Was it not included in the equity or is it Excluded from equity and same question for regulatory capital that you disclosed as of end 2Q. Tengiz, do you want to take that question please? Yes, sure. It's already included in So the regulatory capital is without dividends already. The ratio that you see is already considering dividends and the same for capital. The same for equity, okay, but it'll actually be paid out in the Q3, is that right? I mean for the bank, right. And for Kaspi KZ Capital, it will be paid in August. So it is not considered yet, but it's considered in bad capital Ratios for Basel and for Gullazur. Okay. But for the group equity of Yeah, it will be It's also deducted, right? Yeah. It will be deducted. It will be deducted after that. Not yet. Not yet. So the reported 2Q equity We now have a question on the telephone line from Andrew Keeley from Sperry B. Andrew, your line is now open. Please go ahead. Hi, good afternoon. Thank you for the call. Just another follow-up on Ukraine. I'm just wondering, is the plan basically to kind of apply for a full kind of banking license, Which will allow you to see things like deposits and lending or at the moment that's not the case. Maybe I'll take the questions 1 by 1. Okay. David, I can take this one. I In general, I would say working with us the way we sort of Would like to talk about our plans is really when they are sort of happening that when we talk about our products, we launch them or it's publicly available in a better test with our users. And the same is for Ukraine strategy. So for Ukraine, again, we'll be We're starting with the payments and the specific acquisition. If there will be any other acquisitions coming in, we'll be Communicating those for Ukraine or any other market. Regarding the plans to Have the sort of full blown banking operation. Again, as I mentioned before, we have an incredible technology behind our business And we actually generate assets on the banking side through this technology, both risk assessment or transaction controls and things like that under the licensed entity. And in Ukraine, therefore, we will be looking forward To build the partnerships with the financial institutions in order to scale with scale faster. So we would rather leverage our technology. Do we need the banking license to do some operations as part of our ecosystem and product and services? Yes, there are some products and services that would enable us to do that. But again, we would be looking for Partnering with the banks as well as we enter the Ukraine. That's as much as I can say now. Okay. No, that's very helpful. Thank you. A second question just on kind of Caspi Travel, which it's very impressive in terms of the kind of market share You've gained already and expanding out to rail tickets. I'm just wondering whether kind of generally you see this Kind of service as a source of monetization or it's more about kind of adding The range of kind of useful kind of lifestyle services for your customers to kind of tie them in further into the super app, would just be good to get your thoughts? Thank you. Well, I mean, again, the way we look at our business, we're making sure that we're building a profitable company. So We don't like the services which others call lifestyle and there is nothing earned. And Traditional banks are using these services in order to increase the sales of their credit. And we look at the businesses as a standalone basis. So as a result of that and I've mentioned before, the travel business is already breakeven, which is very unusual. And on a standalone, we're building this business on a standalone basis. So it does both. We actually are having revenue stream And we also have engagement on both sides. But we don't do services just because it's nice to have them and we brand them as a lifestyle For whatever reason, we are not branding our services lifestyle. We are branding our services which are important for consumers But also deliver value for Kaspi and the partners as well. So Kaspi Travel is a stand alone business that we manage for revenue and profits. Okay. That's clear. Thank you. And just a question on your onboarding of merchants. So went up 50,000 or so in the second quarter. How much higher do you think this can go? I mean, you've got 100 and 40,000 almost now. Or is it now more the focus is more about, as you've mentioned, converting Merchants from the kind of payment platform to the marketplace platform, or you think there's just still quite a bit of growth potentially in actually bringing merchants on board to begin with. Well, with the merchants, the strategy It's first of all very similar that we had with the consumers again, which means we drive First, we drive merchants like in Caspe KZ Super App, we drive users. And simultaneously, we're driving engagement, which means Providing them different services from the payments to the M Commerce and e Commerce and then delivery to e Commerce merchants and so on and so forth. So providing financing to help them grow. So we're doing we're simultaneously executing on several fronts. That's what our team is capable of. So we're not sort of single-minded. We're working on all the fronts. And at the moment, as you see the growth rates, We are growing across the board. We are growing from micro to the largest retail chains and to the largest petrol stations, to largest fast food companies, International Brands. So we're signing up the merchants across the board. So we believe that we still have a significant growth in front of us On the merchants onboarding on the payment side and there is no sign of the slowdown. And at the same time, we'll be migrating them through different layers of services As well as they get engaged. I mean, it's highly likely that merchant in just a couple of months signs up for mobile Mobile Commerce after they get traction with the payments business together with us and they get financing in another couple of months because they are growing fast and they need Working capital to grow. On the other hand, we are thinking about Even though sort of what you see today, the custody pay is sort of the kind of payments related services, the majority Of the relationship with the merchants, in the future, Kaspersky Pay will become a super app for merchants and we are thinking about any other additional Services that we give to the merchants in order for them to manage the businesses and Kasti Marketing is one of them. It doesn't matter Where the merchant is, everybody wants to promote their products on our super app and we believe that we'll be A significant source of monetization. As David mentioned, we are at the initial stage of monetizing it, but we have a very strong traction And even international brands are now signing up for marketing campaigns through our Caspi app. So hopefully, next year, We will have interesting data to share in the marketing activity and the marketing budgets and the market It's a very interesting market for us. Okay. Thank you, Mr. And just quickly, finally, what are the plans from CASB Juma this year? Well, I mean, that's a great question. I think everybody is waiting. I mean, consumers are asking, the merchants are asking. But again, we are extremely mindful of the still living in the COVID environment. So What our management team has done is with the growth rates we're showing across the marketplace, we have compensated for this nationwide shopping event by continuously adding the merchants and actually marketing campaigns And the marketing service is also helping with that. So we don't really have any specific plans We can discuss. I can say one thing that from the moment we decide that we can do Jumah And it will not be detrimental to the sort of COVID environment in the country and merchants and users will be comfortable And the country will be comfortable basically. It takes us maybe, I would say, 1 month, maybe plus a couple of weeks To launch it. So we constantly discuss our plans, but at the moment, I can't really specifically say what the situation will be In October. I mean the dates for Jumia is November and either June or July Basically, those are the dates. So this Jumai is not on our summer Jumai is out of the picture. So let's see what this pandemic will look like later in the year. But this, everybody expects it, everybody He's asking for it. We're just mindful of the health of our users and the merchants in the country. That makes sense. Okay. Thank you very much. Thank you, Andrew. We now have a question from Ravi Vish. Ravi, your line is now open. Please go ahead. Thank you. Good afternoon. This is Ravi Desh from Linear Capital. As CASB grows larger and bigger and faster, can you talk about any potential headwinds from the regulatory side? David, do you want to take it or you will take it? I don't know. I can take it. Yeah, go ahead, Michel. Okay. I mean, we basically are we're a company which It's extremely responsible in terms of its business and the high quality of products and the pricing of our products. I mean just to give you a sense, Kaspi Pay POS network which we have launched and acquiring fees which we We're having our lowest acquiring fees on the market and we moved all the savings to the merchants. So from that perspective, I think We are on the one hand our strategy implies that we are digitalizing the country, we're creating High quality products, the users are happy, the merchants are happy. We're working with the government on its own Digitalization agenda, that's why the government services and the gov tech section in our app has now become the primary source of interaction for And as with digitalized economy, everyone is benefiting. So The economy is growing. The cash transactions are dramatically reducing, one of the fastest growth cash transactions in the world. And we are working closely on regulation Or what things can be improved actually to give even more access to the users and the merchants on the digital side. So basically just providing as many online services as possible. So there is a very sort of productive, fruitful relationship and We are a very responsible company so we do take our business seriously and the scale is not playing To our detrimental neither to quality of our services nor to the value we deliver for the country and for the merchants and users. Thank you, Pierre. Unfortunately, we have run out of time to take any further questions. So I'd like to hand over to your host for any closing remarks. Great. So thanks a lot, Sam. Thanks everyone for participating in the call today. We are out of time, unfortunately, but please if you have any follow-up questions, you're welcome to contact me directly. So thanks a lot again for everyone's time and speak to you all soon. Thank you. Bye bye. Thank you. Bye bye. Thank you.