Welcome, everyone, to the Kaspi.kz third quarter and nine-month financial results call. My name is Carla, and I will be your moderator today. If you wish to ask a question during the session, please use the Raise Hand button if you have joined us here on Zoom. If you have joined us on the phone lines, please press star followed by one on your telephone keypad. I would now like to hand the call over to David Ferguson, Head of Investor Relations at Kaspi.kz, to begin. Please go ahead when you are ready.
All right, Carla. Thank you, and good morning, good afternoon, everyone. Very warm welcome to our third quarter nine-month 2026 financial results call. I am David Ferguson from Kaspi.kz. Joining me on the call, as usual, Mikheil Lomtadze, Yuri Didenko, and Tengiz Mosidze. Mikheil will start, run you through the key strategic updates for the quarter. I will take you through the financials and guidance, and then we will open the call up to Q&A. On that note, let us get started. Mikheil, over to you.
Thank you, David. Hi, everyone. Thanks for joining our quarterly call. Just a quick update on the financial performance and some of the metrics. Our e-Commerce GMV growth in a constant currency about 17%, which has been the fastest growing business in our Marketplace. Marketplace grew 8%. TPV continued to be a solid growth in a constant currency is 14%, and the portfolio reaching, exceeding 17 billion, growing 14%. Revenue in a constant currency about 18%, and EBITDA broadly flat. The board has approved the dividend of KZT 1,000, which is subject to the shareholder approval, and another quarter of the dividend is a reflection of our confidence of our long-term growth and the potential. Now let us move to the exciting part, which is about some of the strategic projects which we are working on.
Kasper, this is our personal AI assistant, which we launched in July, has shown a very strong performance and adoption from our consumers. Already 1.4 million consumers have been using Kasper, and the Kasper is showing a very strong performance from the consumers. The conversion rate is 1.5 x higher, and the average GMV per order is 2x higher than traditional text search. Just to remind everyone that this is our first step. Our goal is to have a personal assistant for everyday tasks across all our services. E-Commerce is the most applicable and relevant first of our services where we are launching Kasper. We are really excited about some of the feedback also we have from consumers, which is reflected in the usage.
We are currently working on the new generation of Kasper and the model behind it, which will enable our consumers to have this smart visual search. If you imagine, basically you just share the photo and then you describe to Kasper some of the things you are looking for or just want to have a feedback, then Kasper really will help you to find the right item and the product which fits that photo which you have just shared. Also the new generation Kasper will have more personalized information, more context, which will dramatically improve the relevance of Kasper to completing your everyday shopping. Again, this is just the beginning of our work. We truly believe that AI will change how the consumers interact with the mobile apps.
Building the personal assistant, which has the highest accuracy completing your everyday tasks, will create a lot of value for our consumers and therefore our business. We are really excited about it. The next generation Kasper, we are planning to introduce later this year. As you know, we have been working on the grocery, and the grocery is example when we actually build the business into a leading business. If you look at our e-Grocery, we have built in just five years the leading grocery business in Kazakhstan. So we already have 1.7 million consumers shopping in our e-Grocery. Almost KZT 450 million, KZT 500 million GMV. We have basically started this business from zero and have built to something which is one of our largest categories in our e-Commerce and is the fastest growing category in our e-Commerce.
This is a category which drives everyday engagement and delivers value every day to our consumers. Building on this success, our team has been working on entering the neighborhood grocery market. So, we have been working through the year, basically validating the business model. We have rolled out 42 partner stores in Almaty, and our team has done a remarkable job developing the standard, validating the model, making sure that the consumers are happy, making sure we can deliver on our mission of improving people's lives by doing something really differently and better. We are very pleased with the results, but also very pleased with the opportunity we have ahead of us.
Our pilot of 42 stores with partner stores, we have achieved 15% sort of EBITDA margin, just to make sure that we are doing the right thing from the financials and business perspective while we work on this project. We are planning 300 stores by end of the year, and our aspiration is to have 3,000 stores the midterm. The opportunity is huge, it is around 9 billion market, and I will walk you through some of the business model and the planning and estimates we have. So this business is what I would call a sort of partnership model, which means we are working with the local independent stores and converting them to our standard. So we have developed sort of three formats basically to fit different partner stores' formats with our standard, and that enables us to scale very quickly.
One extremely important business model, which is, I think it is, our team has really realized, and it is just genius that we are leveraging our existing dark store infrastructure, and we are delivering the items and stocking the stores from the dark stores, which we have already developed across the country. Basically, if you just think about it, during the day, we are delivering our items and our goods to consumers through our e-Grocery, and then during the night, every morning, we sort of deliver the SKUs to the partner stores which have been converted to our standard. The stores are very standard, which means, again, three formats I have mentioned, up to 4,000 SKUs depending on the format. It takes roughly around 45 days from signing site to actually opening it according to our standard, converting it. The partners are receiving 7% of the turnover, and we have validated our model.
The payback on the EBITDA level is about 18 months, which is remarkable. Again, what we have done is pretty much during the pilot stage, we have been EBITDA positive as well, which I think it is a very strong testament to the execution skill of our team, but also the business model. That makes us very excited because again, we can leverage our infrastructure, dark stores, we can leverage technology, we can leverage data, and we can scale city by city a standardized format quite rapidly. That is just a quick sort of overview of our standard. As you can see, we have pre-planned pretty much everything. You have sort of cafeteria area, you have grab and go, you have sort of bakery, I mean, fresh.
This is something which is very pleasing environment, but also everything has been standardized to the extreme, including some of the ideas like electronic labels and stuff like that. It is packed with our technology, and our partners have a mobile app where they can manage their assortment and things like that. That really is super important. If you want to scale something, it has to be highly standardized, and that is what we have been working on during our pilot stage very successfully. Just to walk you through sort of the how we are approaching the market potential sizing. If you think about some of the most relevant markets for us and where the convenience stores are also quite popular and have sort of similar kind of strategy.
We have taken Poland and Türkiye as an example, and basically the main conclusion from this analysis is that there are roughly about five stores per 10,000 people. Also top three shares of top three retailers in the grocery market accounts roughly to 1/3 of the market. There is a slight difference between Poland and Türkiye, but in general, sort of very similar dynamics. Also, if you think in terms of grocery spending per person, very similar between Türkiye and Kazakhstan. So we estimate that if you size it for around 21 million people in Kazakhstan, then it is 10,000 + stores that could be developed, or the neighborhood stores could be developed across the country. Then if you think in terms of the size of the market, again, you can take the different views.
You can say, okay, what can be the size of the market if there will be a sort of a major neighborhood stores in the country, and then roughly it is about 1/3 of the total grocery market. Here you would have roughly about sort of KZT 9 billion GMV, and then if you think in terms of number of stores, as I mentioned, is a bit over 10,000, and you get to the same number. Around KZT 8 billion, KZT 9 billion, that is sort of our estimate of the market. We obviously I mean, analysis is pretty straightforward. This is a huge opportunity for us. Again, the biggest difference from many other examples and many other markets is, on the one hand, we are sort of leveraging our infrastructure, and on the other hand, we are delivering the value to our partner stores.
First of all, we are working through the partner stores. I mean, that is important difference. Then we are converting them to the modern standard. We give them pretty much everything, and we take headache from them in terms of the supplies. We are supplying them with assortment, sort of managing the pricing in these stores real time. We give the brand, which also helps to drive the sales. It is a huge opportunity for us and one probably of the most exciting opportunities we have had and have been validating through our pilot in Almaty. If you think in terms of our sort of plans, we basically are, o ur goal for next year to reach around 300 stores. Then our aspiration is 3,000 stores, which with our market estimate of 10,000, still there is much more opportunity than that.
We believe that just entering this market, and we are entering, by the way, sort of nine cities next year, as we, a round our dark store infrastructure, because that is fundamentally very important. As soon as we do that, I think we believe we can start scaling very rapidly and very efficiently. Next year, we plan to have 300 stores in nine cities, and that is the foothold to continue expanding on that existing infrastructure and our dark stores. Another example of our strategy and approach for next year. We have about 8 million people market which we are entering, so those nine cities, pretty much some of the largest cities in the country. There are about 40,000 stores, food stores in this market. For us to reach 300 stores, it is less than 1%.
Just to put things into perspective, we need sort of to convert to our partner stores less than 1% of the food stores in the market we are entering. Again, that is something which is the foundation for a next stage of our growth. Yeah, we are really excited about this opportunity, and the team has done a great job piloting the format for quite some time, and now we feel ready and confident that we can profitably scale. Yeah, and consumers love the experience, so we are really excited about one of the largest opportunities we had before. Just a quick update also on the Fintech and Hepsiburada. As I mentioned on our previous call, we have rolled out our shopping loan and the BNPL in Türkiye, in Hepsiburada.
This product itself is aimed to make sure that there is a seamless experience in a shopping journey when you are shopping on Hepsiburada. We have achieved quite a good success. It is already 8% of the smartphones GMV in October is supported by the Hepsicredit product, which is, on the one hand, a very strong testament that this is getting a good adoption, and consumers sort of love having, on the one hand, a simple, transparent product, but also seamless experience, which we pride ourselves in being some of the, o ur team is some of the best designing the best-in-class user experience and front end. We will continue scaling. We are very comfortable with the risk, which we rolled out the risk management system around this product.
You will see in 2027, as we move forward, you will see more Fintech products for consumers and merchants, which will drive both engagement, but also the business, and will delight merchants and consumers with our innovative Fintech products in Türkiye. Back to you, David.
Okay. Thanks, Mikheil. I will give you all a quick run through on the financials and then go into the guidance. First of all, starting with e-Commerce, constant currency GMV growth in the third quarter across both Kazakhstan and Türkiye, up 17% year-on-year. That is being driven almost entirely on volume, number of purchases, up 16% year-on-year. As we have talked about before, purchases, or more specifically, engagement, is sort of the best illustration of the health of the e-Commerce platform. You see purchases per consumer up to 16.3%. That is a 27% increase year-on-year. That is the first sort of point to take from this slide. The second point would be on economics. You see the take rate moving up to 16.3% from 14.2%. That is a good 210 basis points increase.
Engagement and economics both improving on the e-Commerce Marketplace. To talk a little bit about currency, I guess there is sort of two points to take away from this slide. The first is the more obvious and simple one. KZT has performed unusually strong over the year. TRY depreciation relative to the KZT , 32% year-on-year. That just impacts reported revenue and growth rates, number one. The second point is what it also means specifically in Kazakhstan and on the Marketplace business. Most items on the Marketplace business are imported into Kazakhstan. Now merchants are able to buy more for less, number one. Number two, what you have on a Marketplace business is hundreds of thousands of merchants competing against each other, and increasingly, that price advantage is being passed on or at least shared in part with consumers.
If we look on the next slide, the summary is the items sold. This is e-Commerce in Kazakhstan specifically. Items sold up 24% year-on-year, but the price of those items down 8% year-on-year. Where this is most pronounced is on, number one, categories that are imported into the country, and number two, within those categories where the merchant basis is highly fragmented. You see that, for example, in sports and travel, 17% reduction in pricing. You see that in electronics, 15%, and autos being the most obvious category. That is one thing to take away from the slide. The opposite is true for something like e-Grocery, where most of the merchandise is sourced locally. There, you see actually here both strong volume growth for the reasons Mikheil talked about.
It is in expansion mode, but also you see decent ticket size growth there, up 8% year-on-year. That is probably the second thing to take away. The third thing to be aware of is on smartphones. You can see here actually that from a GMV perspective, smartphones are now growing 20% year-on-year. This is a good example of a category that saw disruption last year. We said it would be temporary. You can actually see that in the third quarter, despite being a very mature segment, it was one of the fastest-growing categories. The dynamics are a little bit different. Here, you have got volume decline. That is consistent with global trends. But, what probably a lot of you also know is that Apple has been increasing prices, and you see that.
Here, a category where prices are controlled centrally by a few large manufacturers or suppliers, and you see that they are driving through price increases. There is a slightly different dynamic there, but I know that investors have asked a lot about this category and when it would return to growth, and I think you see that quite vividly here. Overall, 23% constant currency e-Commerce revenue growth across Kazakhstan and Türkiye, with value-added services growing faster, up 42% year-on-year on a constant currency basis. That is advertising and delivery that is driving the 210 basis points increase in the take rate that I talked about. For Marketplace as a whole, this is e-Commerce plus primarily m-commerce and travel, constant currency growth of 8%, revenue outperforming, up 20% year-on-year. Decent improvement in economics, 90 basis points to 11.9%, and EBITDA profitability up 8%.
The EBITDA margin moving up to 26% during the quarter from around 21% year-on-year. You see good underlying user trends, you see good improvement in economics, and profitability is also moving up. Quickly to look at the other segments. Payments, relatively straightforward, 14% constant currency TPV growth, consistent with full-year guidance of around 15%. Constant currency, there is a small amount of volume growth coming from Türkiye. It is a couple of percent in volume terms, but overall, 14% decent growth. Take rate trends, take rate decline, consistent as you have seen over many, many years due to mix, albeit that decline much less pronounced than it has been in previous quarters and years. Revenue growth in Payments is impacted by lower interest rates, so Payments and liquidity revenue on interest rates. When interest rates go down, it earns less liquidity revenue. Liquidity revenue is around 24% of Payments revenue.
EBITDA profitability flat, primarily due to investments in the rollout of pay-by-palm. Moving on to Fintech. Decent loan portfolio growth of around 14%, consistent with the full-year guidance of around 15%. Revenue moving up ahead of loan portfolio growth, and that's on the back of, we talked previously about longer duration loans that generate revenue for longer. You see the duration has moved up to nine months from 7.9 months year-on-year. So faster revenue growth, up 19%. You still see in this quarter the impact of high funding costs. Cost of funding of 14.9%, so up 150 basis points year-on-year, number one. Number two, what you also saw in the quarter is very strong deposit growth, up 21%, so ahead of loan portfolio growth.
As rates appear to have peaked in the country, what you saw is consumers rushing to sort of lock in peak rates over the summer period. So you see this very strong growth in deposits, so it's both volume and pricing that weighs on profitability, hence again, flat EBITDA trends. But as I think you also know, we lowered our deposit rate on one of our products, our three-month deposit product, by 100 basis points in August. We lowered again by 100 basis points in October. So it takes three months to fully reprice these products from the point of initial repricing. So you'll start to get a more material benefit. You'll see a lower cost of funding in the fourth quarter, and again, that should be magnified as we go into next year.
If you think about also the trends that we're seeing in the Marketplace business, that would point to inflation in the country. That would be a good lead indicator for inflation in the country continuing to fall, and therefore for interest rates continuing to fall. So this should turn into a much more positive bottom line picture, as we've all sort of been waiting for, starting from the fourth quarter, but particularly as we go through next year. Credit trends broadly stable and unchanged, most sort of clearly illustrated by cost of risk, 0.6%, so flat year-on-year. NPL ratio, NPL coverage trends broadly unchanged versus where we were at the first half results.
The trends that we've talked about, faster growth from merchant financing, faster growth from the car loan product, versus slower growth from the consumer BNPL product, are the sort of drivers behind changes in NPL ratio and the required levels of coverage. But overall, the picture on risk and sort of broad consumer trends fairly sort of predictable and as we expected. To sort of wrap things up, consolidated revenue growth in constant currency of 18% year-on-year during the third quarter. EBITDA up 1%, impacted by ongoing investments in Türkiye, and higher funding costs, and net income growth moving into positive territory, albeit slightly, for the first time in a long time. As we've talked about in the press release and on this call, number one, interest rates benefit expected to become more meaningful, number one. Number two, investments in Türkiye expected to fall significantly next year.
To wrap things up on the guidance, full-year GMV growth now expected in constant currency to be around 12% versus previous expectation of 20%, and that is driven entirely by the sort of lower ticket size resulting from sharp KZT appreciation that I have talked about. Thereafter, everything is pretty much as we would expect them to be. TPV growth up 14% for the nine-month period versus guidance of around 15%. Loan portfolio growth outperforming slightly, up 18% versus the guidance of 15%. Even with softer GMV trends, the benefit of primarily sort of lower rates ensures that net-net at the EBITDA level coming out still at around 5% EBITDA growth for the year, which is exactly where we expected it to be at the beginning of the year.
That also took into account investments in Türkiye being more second-half weighted, and I think you are seeing that in the numbers. On that note, I will pause, and Carla, let us open up the call to Q&A, please.
Of course. If you would like to ask a question and have joined the call via Zoom, please press the Raise Hand icon on your screen. If you have joined us on the phone, please press star followed by one on your telephone keypad. When preparing to ask your question, please ensure that your line is unmuted locally. We will pause for a few seconds for the questions to be registered. Our first question comes from Gabor Kemeny. Please state your company name and proceed with your question.
Hey, Gabor, you might be on mute.
Can you hear me okay?
Yeah, we can hear you now. Please, go ahead, Gabor.
Hi. Thanks. This is Gabor Kemeny from Autonomous Research. First question would be on the Fintech funding costs, please, and you explained why your funding costs were still up in Q3, but it would be interesting if you could talk us through how you expect the funding costs to mitigate, to decline from here? You mentioned that you cut the rates on a third of your deposit base, but I believe the rates have been coming down more quickly than consensus assumed a few times. So it would be interesting to hear at what stage do you expect the rest of the book to reprice and how that feeds into your 2027 NIM outlook. Secondly, I noticed the divergence in your take rates. I think your total Marketplace take rate eroded a bit in Q3, while the e-Commerce take rate was up relative to H1.
Maybe you could elaborate a little bit on these trends here to help us figure out what we should model.
Sorry, Gabor, can you just repeat that second one? What was the first I missed the first part of it.
Yeah, the second one was on the take rate divergence. I believe you had an increase in the e-Commerce take rate from H1 to Q3, but I think you had a bit of a decline in the total Marketplace take rate. If you could shed some light on the divergence there to help us figure out what to model going forward. Then the final question would be on the grocery operation, which seems like an interesting venture. You mentioned that you would fund the stores as well. Do you see a financing opportunity here, and is this something which might visibly impact your Fintech outlook? Thank you.
All right. I'll just do the take rate question. If I understood it correctly, year-on-year Marketplace take rate increased by 90 basis points. I don't see a decline. Maybe I misunderstood the question, but I don't see a decline there. On your third question, if you think about, we've talked about 300 stores by the end of next year versus around 40 currently, and we've said that CapEx per store is around $225,000 per store. Roughly, that's about $60 million for net just under $60 million for next year. That would just be funded via cash flow. If you think about in the business, over the last year, cash flow has been used to fund the rollout of lockers, postomats, more recently to capitalize Hepsi Bank in Türkiye.
Sort of those uses of cash drop away, and cash can be deployed to this area. It'll have no impact on cash returns, if that's something that investors are thinking about. But I'll hand over to Mikheil to talk more generally about that and sort of approach to how we think about funding costs.
Yeah. I think Gabor Kemeny's question was about some relationship with Fintech rather than funding the expansion probably. I am not sure.
Yeah, it was if you see an opportunity from funding this project, merchant financing. Is this something which could feed into the project, and if this could have a visible impact on Fintech. Secondly, my Marketplace take rate question was comparing the 11.9% you printed in Q3 with the 12.1% you printed in Q1.
12.1%, yeah.
Thank you.
Yeah. I mean, in terms of the Marketplace, I wouldn't be really looking much behind it, 12.1%, 11.9% between the quarters. I mean, it's a seasonality, timing of the promotional events, and things like that. I wouldn't be really looking too much into the trends from that perspective. This is the take rate on the Marketplace. In terms of our e-Grocery business, I mean, this is something which is opportunity is huge. There is a demand for when you want to buy something, some groceries, and you want to cook fast, being at your doorstep, this just feeds a different need for our consumers. We are delivering now very fast, within three hours. One thing I actually forgot to mention, that this is also a footprint for us to enter a 30-minute delivery.
When we'll be delivering items to our consumers, to their door from our partner stores across the country. It's not only the standalone business which is attractive, but also leveraging it further for the fast delivery. Then we will see again, it's the same consumer, the same sort of partner stores we're currently working on, so there are a lot of opportunities for added value services. It's not only Fintech, Gabor. I mean, it's the whole range of the services that you can develop around this in the most regular business need from the consumers and the significant part of the budget of any family, it actually going into this everyday groceries and things like that. Again, big network, a lot of value for the partner stores, and the bigger is the network, the more opportunities are to develop other added value services.
Fintech, yeah, it will be part of it, but maybe it won't be the biggest part of it. There are so many other things we can do around it. The fast delivery probably is the most important one, and we're testing the fast delivery already in November.
Thank you. Anything on funding costs, please?
Yeah, on funding costs. Do you want to answer that one? I don't think there's anything else we can add. There is a savings product which is roughly 1/3 of our savings, and we have been repricing the products as the interest rates have been going down. So, we repriced it in August, and there was another repricing in October, so total around 2%. The full effect on the savings will come in 2027, and there will be some effect in the 4Q . That's the third of our savings accounts, which have been priced before roughly around 20%.
Thank you.
Thank you. Our next question comes from the phone line from Maxim Nekrasov with Citi.
Yes. Hello. I have a few questions, if I may. The first on Türkiye, and you mentioned that you expect investments to moderate significantly in 2027. Just wanted to ask, are you satisfied with Hepsiburada's progress so far, and how substantial that reduction can be, considering you plan to fund the Fintech rollout? The second question would be on the convenience stores and the grocery business. Maybe just again to clarify a few things on the economics of the stores. So, we got it correct that you would own the stores, and 15% margin, it is store level before paying back to the partners. So essentially, the economics of what Kaspi.kz w ould be getting from those stores, just wanted to clarify.
And also, the final question on, considering you mentioned lower investments in Türkiye and lower funding cost outlook, do you see the room for increasing the shareholder remuneration, increasing dividend, or potentially launching a share buyback, considering there are some kind of volumes and some sale of shares going by some of the shareholders? Thank you.
Thanks, Maxim. Maybe I'll just take the last question and then hand over to Mikheil. I think we've talked about reasons why we could expect better earnings trends next year, underlying growth in the business, falling interest rates, lower investment in Türkiye. I think the simple answer is, if you see earnings growth, you see upside risk to cash returns, and that can take the form of either dividends and/or buybacks, but that's a conversation for next year rather than at the Q3 numbers. Q3 is just about the KZT 1,000 that we're already returning.
In terms of the convenience stores, it's basically, if you think about it's the partnering with our existing partners. We basically give them an equipment, we give them a standard, we give them brand, we give them technology, we give them assortment. The main responsibility of our partner is actually to carry day-to-day operations of that store. Carrying day-to-day operations of that store, they receive roughly about 7% of the turnover of that store. There is a huge value in terms of daily headache when you run your own store with actually getting the compensated for serving customers, and you don't really worry about anything else. That's the partnership model that we're scaling. It's almost like reverse franchising, basically. We carry the investment in refitting the store, so it's roughly about 200,000 per store, depending on the size, obviously.
In terms of the real estate, you know what I mean, basically it's a rent, so there is no significant capital investments at least at this stage into the real estate. In terms of the EBITDA margin, I mean, that's the EBITDA margin of the business, and basically including all the expenses which we carry, including the fee which our partners are getting. Is this answering your question?
Yes. I just wanted to understand that too, the 15% margin, that includes all the expenses.
Yes.
Great. On Türkiye-
Most importantly, if you think about it, this is incredible, right? I mean, if you think about how we actually started building the dark store, our team has, I mean, execution driven like crazy, right? Especially in this business. When we started with the dark stores, we were thinking and focused really on increasing the turnover per square meter of a dark store, and we have taken this to the extreme. That's why the business has grown successfully, and we have been turning during the month roughly about 2x the inventory of that store. That's how efficient it is. This was to consumers when we delivered on daily basis.
Now, if you think about the efficiency of those dark stores, when we suddenly start to deliver at the times when we don't deliver to the consumers and we deliver to our partner stores, then efficiency of these dark stores is multiplying dramatically. This is why we're excited about it, and our team has done a fantastic job developing this unique business model, which is highly scalable and standardized. We like scalable and standardized.
Hi, Carla. I think we can take the next question, please.
Just as a reminder that if you would like to ask a question, please use the Raise Hand button here on Zoom or star one in your telephone keypad. The next question comes here from Zoom from Reggie Smith. Please go ahead. Reggie Smith, could you check if you are not on mute?
Okay, Carla, let us move on, please.
Thank you. As we have no further questions in the queue, I will hand back over to you, David, for any closing comments.
All right. Thanks a lot, everyone, for your time today. Please reach out if you would like to follow up and discuss anything else. I look forward to speaking and seeing some of you over the next couple of weeks and into the end of the year. Thanks a lot, and speak soon. Thank you, everyone.
Thank you.
Thank you, everyone. This concludes today's call. You may now disconnect. Have a good rest of your day.