Hello, and welcome to the Kaspi.kz 3Q and 9M 2024 Financial Results Conference Call. My name is Harry, and I'll be your operator today. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. I would now like to turn the call over to David Ferguson at Kaspi to begin. David, please go ahead when you're ready.

Great. Thank you, Harry. Good afternoon. Good morning, everyone. Welcome to our third quarter, nine-month 2024 financial results. We'll also talk about our decision to acquire a controlling stake of Hepsiburada. On the call, as usual, is our CEO and Co-Founder, Mikheil Lomtadze; our CFO and Deputy CEO, Tengiz Mosidze, and Deputy CEO, Yuri Didenko. I'm David Ferguson, will talk you through the presentation, Mikheil through the strategic updates, Mosidze through the financials, and Mikheil will talk again about the Hepsiburada transaction. So on that note, I'll hand over to Mikheil. Mikheil over to you.

Hello everyone. So, as usual, we'd like to start with an update for our 3Q and nine-month performance. So as you can see, we have performed strongly in the third quarter. The payment just continues growing nicely with the TPV 28% up and revenue 25% and net income 25% up year-over-year. The marketplace continues growing very strongly. If you remember, we have been emphasizing during the year that the change in the marketing campaigns, which is driven really by this broad arrangement, broad number of the services, which needs to feed the seasonality and things like that in our Super App. So the marketing promotions have changed during the year. So the third Q will be slower growth just because more marketing campaigns were in the second Q compared to last year. But still, very strong growth, revenue 43% up, 14% net income up, GMV 24%. And Fintech, if you remember, we also actually emphasized during previous calls that Fintech will be catching up nicely in the second half of the year. So this is what you actually see, the Fintech CSP grow to 18%, revenue 24% and net income now plus 15% year-over-year compared to 7% for the nine months. So that just tells you that second half for Fintech is a strong half of the year. And then consolidated, the performance has been strong, net income, 18% up and 28% up revenue, and we'll continue to have extraordinary monthly transactions for active consumers, which drives our business. In general, I would like to say that the fourth quarter usually, like in any other retail and services-oriented businesses and platforms, is the strongest quarter of the year. Next slide, David, please. Because we have been having sort of distorted a bit the growth of the marketplace due to the change in the marketing campaign. So it's better really to look at the nine months. And we are on a track to deliver around 25% net income growth year-over-year. And you can see the performance is very strong and the marketplace is the one which is driving our performance. And Fintech, as you can see, this is what I've mentioned that for nine months is 7% net income growth, but actually for the third Q is a 15%, which is again driven by reduction of the interest rate, but also the growth of the business itself. So we are having very diversified profits and diversified businesses really which connect merchants and the consumer. So as you can see, here 68% now is delivered from the payments in the marketplace, which is again, those are the fastest growing services in the universe of our services in the Super App. So really excited to see that we have very diversified profit sources and diversified businesses. The e-Grocery will continue to grow. So it's a continuous strong performance. Just to remind, we're in three cities and here we would say that's our focus, as we have said during the year, because those three cities really are the largest in terms of the population and largest in terms of retail trade. So GMV is 88% up year-over-year, 2.4 million purchases in the third Q. So active consumers are in excess of 700,000 and average ticket is around KZT14,000. So it's really a very exciting business. And again, as you always see, we are focused on the execution, which is the key. Our priority for this year is actually to continue scaling in those three cities. And it's incredible to be in the position when you actually have a service, which we believe is very high-quality, consumers like it. And actually, we are satisfying consumer demand, which is a good place to be. And that's what will be our focus on is scaling the efficiencies and dark stores in those three cities, and then the more cities come next year. Vacation packages, another testament of our pace of innovation. So if you remember, we launched that service last year, and now we have been generating nice growth. So it's over 300% growth year-over-year. It's a very good take rate and good quality service. We have very good feedback from our consumers, from the operating companies who we connect with our consumers as we organize the user experience on the vacation packages. And we've served around 26,000 tourists in the third Q, also growth of 284%. So it's really just another service which we have launched and we're very excited the way it's grown, but most importantly, we're inspired by the feedback that consumers give us. Another service we just launched, which is really cool service is a gift certificate. It's actually a fully online experience when you can select design for the occasion. You can actually select the amount to gift. You can write a personal message. And the photo you have here, this confetti is actually a video of when you're opening the envelope, which is really nice, cool and emotional. And you can also manage your gift cards from our mobile app, and you can spend the gift card once somebody gives you a present. We're excited about this because it's another sort of layer of the shopping experience, which we organize for our consumers. And we are having very positive feedback, and we're following our consumers. And that's a good start of the range of innovations, which we believe we can develop around shopping, around gift cards. This is the first stage for us when the gift cards originated as Kaspi Gift Cards. So it's really exciting and will drive engagement, but also it will drive marketplace transactions. So very exciting product, which consumers hopefully will love. We also introduced a new product, a business deposit for merchants. We've concentrated on ensuring the quality of the product and the retail experience. Launched in August, it experienced exceptional onboarding and engagement from merchants from day one. In just two months, we have 41,000 merchants actively using the product and it has generated deposits of KZT69 billion. This product is particularly valuable for merchants, as it allows them to see their interest rate daily and understand how their money is growing. We believe this will enhance merchant engagement. Historically, our strategy has been to create services and products that encourage consumers and merchants to keep their funds with us, naturally leading to increased spending. We are thrilled about this product, with impressive take-up from 41,000 merchants in just a couple of months and significant deposits, which also provide a long-term funding source. So David, I’ll hand it back to you to discuss platform performances.

Yes, sounds good. Thank you, Mikheil. So I'll talk you through the respective platform performance, starting, as always, with the payments platform. So you can see here that in the third quarter still very robust trends in terms of transaction volumes from payments up 38% year-on-year in the third quarter, up 42% year-on-year for the nine months. Of the three platforms, payments is the one that is less impacted by the timing of the different marketing events, primarily Juma. Strong transaction volumes have translated into strong TPV growth, up 28% year-on-year in the third quarter, up 32% year-on-year for the nine months. As has been a trend we consistently highlighted that the growth is core products Kaspi Pay QR and Kaspi Pay QR B2B payments. B2B remains the fastest growing component of TPV and is now up to 5%. Take rate is broadly stable in the third quarter, 1.2% versus 1.18% in the third quarter of 2024 versus 1.2% in the same period in 2023. So stable, albeit that Kaspi Pay and B2B are a slight drag at the margin on take rate. So the combination of strong volume trends, strong TPV trends with broadly stable take rate translates into decent revenue growth of 25% year-on-year in the third quarter, a similar performance for the nine months of 24%. As interest rates fall, that does mean lower revenue, interest revenue on current account balances, and that's most relevant here. When you're looking at the nine-month trend, with tight cost control, strong top line is dropping through to the bottom line, almost identical bottom line growth at 25% and 24%, respectively for the third quarter and nine months at the net income level. Looking forward for payments, robust consumer and merchant trends are expected to continue. Broadly stable take rate and given tight cost control, payments remains on track for bottom line growth of 25%, which is consistent with guidance throughout the year. Moving on to Marketplace Platform, which is the fastest growing part of the business. Again, strong purchase trends up 45% year-on-year in the third quarter, up 39% for the nine months. Marketplace is the most impacted by Juma taking place in June, versus July. Stronger purchase growth, however, in the third quarter, stronger versus the nine-month trend, just reflects the growing importance of particularly grocery, which is high volume, low ticket size. Looking at GMV growth, strong volume trends translates into decent GMV trends, up 24% in the third quarter. So that is lower than the nine-month run rate of plus 46%. But as Mikheil said, that is something we flagged very clearly at the H1 results in June. It reflects the timing of marketing campaigns, and you should expect to see GMV growth accelerate in the fourth quarter. All attention now or all efforts now are on making Juma in November as successful as possible. Take rate up year-on-year in both the third quarter and the nine months and that reflects in part the success of value added services, again, something we've consistently flagged advertising and delivery, which are contributing around 180 bps in total to the take rate. E-commerce is now the fastest growing component of Marketplace having just overtaken slightly m-Commerce in the GMV mix. Turning specifically to e-commerce, here you see strong purchase trends of 132% in the third quarter. All the different components of e-commerce, general goods, e-Cars and e-Grocery playing their part, but if you're looking at it a purchase level, grocery is skewing the volume mix. GMV still very robust, up 71% in the third quarter, up 95% year-on-year for the nine-month period. So e-commerce as a whole delivering very, very strong growth in the business. Take rates moving up marginally in the third quarter, more materially for the nine-months. And again, that reflects the growing importance of advertising and delivery revenue. Moving on to m-Commerce, so m-Commerce is the part of the marketplace that is most impacted by the timing of the Juma promotional events. That's probably less obvious at the purchase level of 12% for the third quarter or 10% for the nine months, but it is obvious at the sort of the ticket size level with GMV down 5% in the third quarter, but still up 18% in the fourth quarter. With Juma back in the fourth quarter, it's reasonable to expect a good end to the year from the m-commerce proposition. Again, take rates in m-Commerce up marginally in third quarter, more materially for the nine-month period. And then moving on to travel. Travel just continues to deliver very, very good numbers, as Mikheil flagged. In particular, package holidays, we launched just over a year ago, they are now becoming more material in the mix at just under 10% of travel's GMV. Growing very, very fast, up over 300% in the third quarter, and with a take rate of around 8% overall, not just growth enhancing for travel, but take rate enhancing for travel. And you see that in take rate expansion, overall up to 4.5% in the third quarter and also 30 bps to 4.5% for the nine-month period. So travel continuing, three years post-launch to continue to post very, very healthy growth numbers. With GMV trends still strong, but take rate up, that translates into very fast marketplace revenue growth ahead of GMV growth, up 43% for the third quarter, up 76% for the nine months. Slower growth in net income does reflect the changing mix, namely 1P, the growing contribution from 1P, which is primarily e-Grocery and to some extent e-Cars. But overall for marketplace trends remain robust. We expect 65% revenue growth for the full year. That is down from 70% originally guided for, and that just simply reflects that 3P car sales outgrowing at a materially faster rate than 1P car sales. And given that the growth is coming from 3P, there's really sort of no impact there on the profitability guidance which remains plus 40% for marketplace. We expect marketplace to see accelerating revenue growth and accelerating bottom line growth relative to the third quarter in the final quarter of the year, a strong finish is planned. Then on Fintech, Fintech is to a lesser extent affected by marketing and Juma. You see that in the context of lower origination growth of 18% versus the nine-month trend of 34%. And so, we're here to expect to see an accelerating growth in the fourth quarter of the year. The consumer and for that matter the merchant environment remains stable and predictable and that's evidenced by repayment trends or conversion rate stable year-on-year at 2.1 times. This just illustrates the consumer and merchant is borrowing and repaying normally without any sort of material change. Buy Now Pay Later, the biggest component of TFV still, but merchant and microfinancing growing very fast, and now car financing growing very, very fast also. Since the second quarter, there's been a change in the trend, i.e., loan portfolio growing faster than the deposit portfolio. You see that very clearly in both the third quarter and the nine months. Loan portfolio for the third quarter up 39% year-on-year. Deposits or savings up 25% year-on-year. And this is consistent with what we talked about in previous years. There's been a big focus on growing the deposit base. That's not necessarily over a deposit base growth of 25% and 28% is still very strong, but you can see that the liquidity is being better utilized as evidenced by the loan to deposit ratio moving up to 8%. The yield on the lending, the gross yield or the pricing on the lending products is stable year-on-year in the third quarter and largely so for the nine-month period as well. Credit trends remain consistent and predictable and that, again, just fits with the backdrop that I described consistently across all three of the platforms of a still healthy and consumer and merchant environment, specifically to Fintech, that manifests itself in both the origination, but also very strong collection trends. The result of that is stable cost of risk year-on-year in the third quarter, 0.5%. And that again is actually consistent with what you've seen over the nine-month period, run rating around 2% for the full year. NPL trends have remained stable year-to-date. The decrease in coverage is due to the growth in the car loan product, which is collateralized and therefore requires less provisioning. It also reflects the strong ongoing collection of NPLs on the balance sheet. As a result, more NPLs are being retained on the balance sheet instead of being written off. Having more NPLs on the balance sheet means that less provisioning is needed. We expect the 91% figure to remain broadly stable or to increase slightly over the next 12 months. So, Fintech revenue growth on the back of origination TFV growth over the last 12 months remains robust, up 24% for both periods, third quarter and the nine months. What is clearly different in our Fintech is that, in the third quarter, it's really the first time you started to see bottom line growth accelerate up 15% for the third quarter versus up 7% for the nine-month period. So that reflects funding costs are coming down. We lowered our deposit rate at the end of February. We talked about taking a full 12 months for that benefit to work its way through the P&L combined with the increase in the loan to deposit ratio. You see Fintech profitability step up in the third quarter, and it would be a reasonable assumption and implied by the guidance to see Fintech profitability step up again in the fourth quarter and into 2025. So for Fintech overall, we continue to expect revenue growth around 20% for the full year, indicative of strong consumer demand, stable economic backdrop, and broadly stable yield over the course of the year. With lower funding costs leading to accelerated revenue growth, we anticipate significantly improved performance in the second half of the year compared to the first half. For the full year, we expect FinTech profitability to increase by 15%, compared to a 7% increase in the nine-month period. This reflects our consolidated performance. I want to emphasize what I've mentioned earlier; the divisional details are clear on their own. We have declared a dividend of KZT850 per ADS for the period, pending shareholder approval. As for our guidance, I won't repeat what I've already stated, but I will note that the fourth quarter has begun positively with a healthy and predictable environment for consumers and merchants. And accelerating top line growth in both Marketplace and Fintech, accelerating top line. And bottom line, we're very much on track for consolidated net income growth of around 25% year-on-year, which is consistent with guidance throughout the year. Probably just worth adding the point here that as is customary, we'll talk about guidance for 2025 at our full year results update at the end of February next year. So sort of pre-empt that question. It's too early for us to make any commentary around next year's guidance. And that is consistent, again, with how we've always approached things, so just please keep that in mind. On that note, I'll hand back to Mikheil to talk about the Hepsiburada transaction. Thank you.

Thank you, David. We are very excited about the Hepsiburada transaction and believe that Turkey represents an attractive market for us. We have previously stated our goal of serving a market of 100 million people, and we have been preparing for this for quite some time. Turkey is particularly exciting, with over 85 million people and a large retail market, where e-commerce penetration stands at 16.3%. Much like Kazakhstan, there is significant potential for growth. The GDP growth in Turkey is strong, and there are many similarities between Kazakhstan and Turkey. For instance, Turkey is the most popular tourism destination for people from Kazakhstan. We appreciate the company and, as we've mentioned before, we are primarily looking for companies and founders that share our vision of building businesses that prioritize consumers and merchants, rather than simply pursuing growth at any cost. And if you would compare Hepsiburada's business with Kaspi, I mean, in general, Kaspi in the e-commerce side, only it's comparable in size, but serving 12 million consumers, and the GMV growth at the healthy levels and 100,000 merchants compared to Kaspi's 64,000. But what is the most important is really the cultural fit. As the company was built by Hanzade Dogan that is focused on the quality and shares the views with us. You know that in Kaspi, for us, the most important is actually the quality of services we develop and how we fulfill our mission of improving people's lives. And we do find a lot of similarities. The one thing I would like to mention, expecting still a lot of questions that we know that quite often companies would take, would make an acquisition and that will make all sorts of immediate promises. And in our case, we have been different in both in our business and also in our statements. We believe that we'll work hard. We'll take a long-term view of the business, and we're excited about the country. And hopefully, our technology and experience will help us to bring even more innovation. And combined with Hepsiburada, we'll be able to do remarkable things and continue delivering on the mission of improving people's lives and merchants and the consumers. And the ones that have followed us for five years, you know that we are all about execution really. And therefore don't expect from us a lot of promises, because we believe that results should speak for themselves and that would be the same approach we'll take here. But we believe we clearly are excited about this opportunity and the fit between the companies.

Thank you, Mikheil. This is a summary of our perspective. We are optimistic about the market, particularly because it has room for growth. It's important to emphasize that our focus is on the quality of our product and the merchants we work with. We are not merely anticipating numbers; these figures result from our strategy. Our top priority is to take exceptional care of our consumers and merchants, and we believe there is a strong cultural alignment with the way the founders, Hanzade, and the management team have developed the business. The alignment with Kaspi is encouraging. Our net promoter score is high, and the company is EBITDA positive, reflecting that we prioritize delivering value to our consumers and merchants rather than purely chasing growth. We are enthusiastic about what we can achieve and how we can enhance this already good company. However, we understand we are at a strong starting point. The transaction is still pending regulatory approvals, so we are currently in a crucial process. We have signed definitive agreements but will need to complete the regulatory procedures before finalizing the transaction. No, I think that is a good summary. Maybe I'll just pre-empt what I think will be the sort of the first question on Hepsi with regard to the tender offer. So as Mikheil said, we're looking forward to closing this transaction in the first quarter of 2025. This transaction, as announced last week, does not trigger a tender offer. There have been no discussions with Hepsi's remaining shareholders around such an offer. We note that both companies will continue to maintain their distinct brands and operating structure. And at this stage our focus is on closing the transaction as quickly and as smoothly as announced. There's probably not much more we can add beyond that. So probably on that note, Harry, let's open the call up to investors, please.

Certainly. Thank you. Our first question today is from the line of Darrin Peller of Wolfe Research. Darrin, please go ahead. Your line is now open.

Guys, thanks, and congratulations on the deal.

Hey, Darrin. I think you might be on mute. We can't hear you.

Can you guys hear me now? David, can you hear me?

Still can't hear you.

Can you hear me now?

If Darrin comes back, we'll assist him later. Hello, Harry?

Hello.

Hi, Gabor, we can hear you. So do you want to go ahead with your question?

Sure, thank you. This is Gabor from Autonomous. I have a few questions. First, regarding the Hepsiburada acquisition, can you elaborate on how you plan to enhance the Hepsiburada franchise? You mentioned technology as one aspect, but I’d like to hear more specifics. You pointed out that while Hepsiburada is profitable, it’s not as profitable as Kaspi. Do you anticipate being able to improve this in the near future, or is this situation primarily due to the current growth phase in Turkish e-commerce and the competitive landscape? My third question relates to the timing of the acquisition; once the full payment is made, do you plan to suspend dividends? Lastly, on a different topic, regarding the allegations concerning the former shareholder, what can you tell us about the KYC processes that Kaspi has put in place? Thank you.

Thank you for your questions, Gabor. Mikheil will address the inquiries about Hepsiburada. Regarding your last question, we have already provided a detailed response. We remain fully compliant with all local and international sanctions regulations. The regulator in Kazakhstan has publicly acknowledged Kaspi's transparency and its commitment to adhering to these rules. We also comply fully with local laws concerning money laundering, and there is no indication to suggest otherwise. It's important to note that our business model is quite unique compared to other companies. Most of our transactions occur directly between Kaspi consumers and merchants, with minimal involvement from third parties. This level of visibility into the money flow between identified consumers and merchants is not typical in financial services or payment sectors. Beyond what we've discussed, there isn't much more information we can provide on this topic. I will now turn it over to Mikheil for comments on Hepsi.

Thank you for your questions, Gabor. Generally speaking, we won’t be making any promises, projections, or targets at this time, as we prefer the results to speak for themselves. It is important to focus on the culture and DNA that our businesses have developed, given our experience across various services. Fundamentally, we are the company that is creating a wide array of services designed to meet the needs of both merchants and consumers. Our capability to offer high-quality services is our key competitive advantage. We don't set market share or financial targets; our emphasis is on service quality and how we can engage and energize both consumers and merchants. We are particularly excited that Hepsiburada has been built with this perspective and shares our vision and values. Meeting the founder, Hanzade, has been a source of pride for us, as we see a great opportunity to continue our innovation together, benefiting merchants and consumers. Ultimately, the results will reflect our efforts. As David mentioned, Hepsiburada will maintain its own brand and organizational structure, but by collaborating, we aim to enhance our rate of innovation, which we believe will thrill both merchants and consumers. The strong foundation we have, aligned values, visionary leadership, and high service quality as indicated by our Net Promoter Score, is what truly excites us.

Thank you. And just on the dividend?

Well, we have mentioned also in our press release that we are intending to close the transaction with the cash from earnings and cash on hand. So there are things which we generate as a company, but also we have received the investment credit rating in September. So again, there are no discussions, or negotiations regarding the capital debt markets at this stage, but the fact that we have an investment-grade credit rating, I think it's quite encouraging. And Kaspi as a company is debt-free, which is a very good position and strong position to be in. So we might explore the debt capital markets just because it's nice to have in the structure of the capital structure, the type of instruments. But again, no specific discussions, no negotiations on debt capital markets have been in place. It's just we have investment credit rating that we obtained in September.

Thank you.

Hello. I hope you can hear me. Thank you very much, and congratulations on the impending deal. I have a couple of questions regarding that. First, while I understand you can't provide forward-looking comments, could you share a brief update on the current e-commerce market in Turkey? I did some reading and noticed there is a dominant player in the market. It would be helpful to understand your perspective on the positioning of that business today. Secondly, what does this mean for any future mergers and acquisitions? We're expecting updates on Uzbekistan and the network's interest there, but beyond those two, is that all for M&A in the near future? Lastly, if it's alright to ask, do you anticipate paying a dividend for the fourth quarter before the transaction closes? Thank you very much.

All right, Soomit. Maybe I'll just try on the dividend question and then hand over to Mikheil to talk about the sort of broader market. So, I think the message is relatively clear. Well, number one, we paid the dividend, or we've announced an intention to pay the dividend for the third quarter. So I think number two, the assumption you could make is that, the next call on cash generated in the fourth quarter and/or between now and the transaction closing is to fund the transaction. And you can draw your own conclusion on that with regard to the potential to pay dividends. But again, to Mikheil’s point, once there's nothing to communicate with certainty today, that investment-grade ratings of Kaspi.kz is a good thing to have. It gives us medium-term financial flexibility to do various things, whether that be investment, pay dividends, buyback stock, or whatever else might be on the agenda. Clearly, it's always good to have optionality and increasingly it looks like we may have scope in that regard, but near term, first priority is to get this transaction closed.

Market structure remains largely unchanged. As we expand into services in our home market of Kazakhstan and as Hepsiburada advances in Turkey, our main focus is on the quality of the services we offer. While we don't specifically aim to be number one, we do aspire to lead in consumer quality and merchant satisfaction. This has been our guiding principle with our products. There is plenty of publicly available information regarding market structure, especially since Hepsiburada is a publicly listed company. The market in Turkey appears promising not only in size but also in e-commerce penetration and other metrics. However, we’ll leave the market analysis to you, as you have the expertise to draw conclusions. We believe that Hepsiburada shares a similar vision that we can leverage in collaboration with them. Regarding other potential mergers and acquisitions, we don’t speculate. A lot of work is ongoing, particularly in Uzbekistan, where we are awaiting the announcement of requirements for the acquisition. That sums up our involvement with the letter of interest submitted for the privatization of one of the two payment networks.

Okay, thank you.

Yes, thanks. Can you guys hear me now?

Yes, we can hear you Darrin, go ahead.

Can you guys hear me?

Hi, good evening, and congratulations on these results. I wanted to ask about your outlook for take rate for the rest of the year. It seems that the significant growth in e-commerce during the third quarter, given its high take rate, positively impacted the overall consolidated take rate for that period. I believe you expect m-commerce to improve sequentially as a percentage. Any general insights on the factors influencing take rate would be appreciated.

Mikheil, do you want to take that?

Our take rate is significantly influenced by value-added services, particularly delivery and advertising, which contribute approximately 1.8% of our GMV. It's important to note that our take rate isn't simply a consequence of changes in seller fees. We are committed to providing value to merchants, enabling them not only to sell on our platforms but also to offer various delivery options and launch advertising campaigns. These factors are the main contributors to our take rate. Additionally, as we've mentioned previously, the journey for merchants involves transitioning from m-commerce to e-commerce. The growth in e-commerce reflects merchants integrating our services, starting from m-commerce. Ultimately, we believe that m-commerce will encompass a range of services for merchants in physical retail settings, enhancing their in-store experiences and expanding into the services sector, with e-commerce representing the full scope of what we can offer. The take rate is influenced by our provision of advertising and delivery services, along with other services for the merchants. It’s important to note that we do not expect to see a significant increase in the take rate. While the take rate has been growing due to the addition of new verticals, such as jewelry, which typically has a higher take rate than electronics, we do not want to over-monetize our merchants. We will not aim for an average take rate of 15%, 16%, or 17% in our marketplace. Our focus is on delivering added value services to merchants, as we prioritize their growth. If our merchants are successful and growing, that reflects our success as we earn from each successful transaction. Therefore, it’s crucial to understand our approach to the take rate.

Got it. I would like to follow up with Mikheil about the gift card initiative mentioned on Page 8. I understand that these gift cards are quite popular in certain markets, particularly in developed areas. How should we view the strategic importance of gift cards and their seasonality? I assume there is a seasonal aspect to them. Any insights on the significance of gift cards would be helpful. Thank you.

Thank you for the question. Currently, we are launching an exciting service designed to engage consumers through our own marketplace e-commerce platform by offering gift cards. This initiative is a key strategic priority for us and is expected to contribute to our gross merchandise volume. A significant difference to note is that our gift cards do not have an expiration date. In other markets, gift cards can generate revenue when consumers forget to use them, but that’s not the case with our cards. Our approach fosters customer engagement and drives GMV growth, particularly across various verticals. While I can only share so much at this stage, we plan to introduce additional services related to gift cards and will keep you informed over time. We believe this will create a fascinating range of offerings. For now, our main goal is to grow GMV by ensuring consumer engagement, complemented by appealing designs that excite consumers. This is a medium-term objective for the gift cards, and we will provide insights into the economic impacts as we develop the service further. Thank you.

Hey, good afternoon. Thank you for taking the question and congrats on the deal as well. I appreciate you guys don't want to give financial guidance, and I totally get that. I was just curious, maybe you could put a little more meat on the bone around your approach to integrating an acquisition in kind of growing a business. This is a little larger than I would have expected in terms of the size of the company you're buying. And it sounds like there are a lot of parallels, but like where might there be gaps that Kaspi can make two plus two something more than four as it relates to Hepsi. We got a follow up. Thank you.

Hi, Reggie. In response to your question, I think it's important to focus on our history of innovation and our commitment to delivering high-quality services. As for our future projections, we prefer that our results will speak for themselves. The key takeaway is that there are interesting similarities between the two companies. Hepsiburada's focus on sustainable growth and maintaining EBITDA positivity is commendable and reflects well on its shareholders, founder, and management team. Many companies prioritize growth at the expense of their shareholders, but Hepsiburada's approach was a significant attraction for us. It’s a strong player in the e-commerce space with a respected brand that values consumer feedback. What Kaspi can offer is additional experience and technology, as our mobile apps provide a broader range of services. I believe there is a wealth of knowledge and technology that can be mutually beneficial for both companies. Kaspi has much to learn from Hepsiburada, given its expertise in e-commerce, which is the core of its operations. I am eager for the two teams to collaborate and share insights after we finalize the transaction. It’s essential for us to work together effectively and continue to launch innovative services while learning from one another. Achieving this synergy will be our top priority, and once we accomplish it, everything else will naturally follow from our joint efforts. We look forward to the transaction's completion and the valuable conversations that will ensue. I anticipate it will be remarkable.

That makes a lot of sense. I don't know if you can share at this point, like what products specifically where you see an opportunity. And then I had a question on Juma. Have you guys announced or decided how many Juma events there will be in 2025? And just generally speaking, how quickly is that business growing? I don't know if there's a way you guys can kind of triangulate that in terms of penetration within your base and spend like how fast is Juma growing on a kind of like the like basis? Thank you.

From next year, we expect our performance to be fairly similar to this year. Essentially, what transpired in 2024 is that the seasonality of our campaigns and marketing aligned with consumer and merchant demand. We believe our company stands out due to our diverse array of industries, services, and verticals, each exhibiting its own seasonal trends. This year, we adapted to follow our merchants and consumers, incorporating their feedback, which led us to implement quarterly marketing promotional campaigns. The key promotional campaigns were Juma in the first and second quarters, Back to School in August and September, and another Juma in the fourth quarter. We anticipate the same seasonal patterns for next year, so 2025 should be quite comparable to 2024. We are just clarifying this year since there was some distortion in GMV between the second and third quarters, but we intend to maintain a similar strategy as we had this year.

Got it. I guess, is there a way to frame how quickly that event is growing? Like is it faster than the corporate average, slower? Just curious about penetration and the opportunity there with Juma.

No, it's a promotional campaign. As we grow and expand our service offerings throughout the year, we become less reliant on any single campaign. This is positive news because it increases predictability for planning our quarterly growth over the next year. We'll provide updates periodically, but generally, we started with one major event known as Juma each year, then increased to two, then three. Now we have multiple campaigns throughout the year. Initially focused on electronics, we've since expanded into various areas, including travel. This gives us much more manageable seasonality for this year and the next. Juma is our main promotional event, similar to events like Amazon Prime Day or Black Friday, but in Kazakhstan, it primarily revolves around Juma as there are no Black Friday events. We essentially run these campaigns for our merchants and consumers.

Thank you very much for this call. I have one more question regarding Hepsiburada and the new projects you're interested in, such as those in Uzbekistan. I understand that you cannot provide projections or targets at this time, but I’d like to know how the core management of Kaspi allocates their time among different assets. Specifically, how does the management balance their focus between the new potential asset in Turkey, interests in Uzbekistan, and core operations in Kazakhstan, especially considering that the Turkish asset is relatively large and comparable in some KPIs to Kaspi in Kazakhstan? Thank you very much.

I believe this question relates to our philosophy and strategy. There isn’t a specific metric for how much time we will allocate. Hepsiburada is a strong company with an effective management team and a solid brand. In fact, we as customers in the e-commerce space have much to learn from the Hepsiburada team, as their focus is predominantly on e-commerce, while our business is more diversified. There’s no defined metric for our time allocation. I can assure you that we do not operate like other companies where external parties come in to teach everyone how to conduct business. That is not the approach Kaspi takes. Hepsiburada has a capable management team, and we will share technology and allocate resources to help them improve even further. And there are services which we have a lot of experience with which we'll be sharing. But again, this metric for us doesn't exist. We don't have how much time we need to spend. We will have Hepsiburada teams coming down here and we'll be just doing whatever we need jointly to continue exciting the merchants and the consumers and innovating really and sharing as much as we can. I think that's the beauty of this deal and the transaction that we are investing in the company, which is in our opinion, in our view, and we believe is a very good company. And there are things which we can help, we can add, we can share experience, but again, that's basically the fundamental way we approach this transaction from our side.

Thank you, gentlemen. Can you hear me?

Yes, David. Go ahead.

Thank you. Thank you, guys, for your strong execution and transparency, as always. It's much appreciated on behalf of the shareholders. Just two quick follow-ups since most of my questions have been asked. I think the implication is that current management and the founder is going to stay in place in Hepsi. And if that's correct, I guess, how do you keep them motivated since obviously, you've taken out the controlling share? So just some high-level thoughts on how you keep them motivated since you guys think so highly of them? And then another quick question. So you talked about, obviously, there's this Turkey acquisition you've done. You're waiting on Uzbek. Would it be a safe assumption to say that you have your plate full with deepening your product lines in Kazakhstan, Turkey, and if Uzbekistan is successful, these three countries, and you're probably good for now as far as international expansion would go. Would that be a fair assumption or is that incorrect?

Okay, David. Yes, thank you for asking those questions. I mean, in general, on the personal note, I'm really very honored and proud being able to meet Hanzade, the founder of Hepsiburada. And I think our ability to actually do this transaction was based on the fact that the companies and the values and the vision is very similar. And then Hanzada clearly cares deeply about the company which he built, you would care about the baby. Any entrepreneur would care about the company they have built, so Hanzada will be working with us to make sure that the transaction is and the ownership transition is as smooth and as productive as possible. In terms of Hepsi, it is a public company and has been developing in ways that I believe are already established. We are not approaching this with the mindset that we know everything that works and neither does Hepsiburada. Instead, we see the potential for collaboration. We are eager to combine our expertise with that of the top managers at Hepsi, who are also very experienced. We aim to maintain a pace of innovation and excitement within the company, although we are still in the process of transaction approval. While I don’t want to delve too deeply into it, the prospect is thrilling as it begins with two entrepreneurial companies and founders finding many similarities between them, which I think is significant.

Thank you. Congratulations on the results and thanks for taking my questions. Just maybe more or less follow ups from what many of the previous callers have been asking. With regards to the Hepsi acquisition, could you just share your thoughts in terms of the structure of the transaction? It's an all-cash deal. Wouldn't it have made more sense given that you're entering a new market to maybe keep the owners involved as you're getting your feet under the table. So that's the first question. And the second question, I guess you've spoken a lot about your payout ratio. You've already talked about it quite a bit about what happens in the short term. But maybe could you maybe speak about what the implications of this transaction could mean to your payout ratio in the medium term? When you look at Hepsi, from what you've seen and from the discussions you've had, does a company need any significant cash injections to continue its growth momentum? Is that why the owners are trying to now sell out because they're not able to raise the cash?

Hey, Ronak. I think the answer is no regarding the payout ratio. It wouldn't be appropriate to discuss the medium-term implications. As I mentioned earlier, we're making the dividend payment for the third quarter, and this transaction needs to be funded from our available cash and the cash we generate leading up to the closure of Q4 and Q1. Looking at our company's history, we are always willing to invest and we do so sustainably, focusing on profitable growth, which applies across all markets we are in. Additionally, since you have followed us for a while, you know that we don’t sit on excess cash; we return it to our shareholders, and we have consistently paid dividends. We have been buying back stock for quite some time when we were in London. Additionally, as Mikheil and I have already mentioned, we hope to have more flexibility going forward due to the potential for debt financing, something we haven't really explored over the past five years or historically. If you base your expectations solely on what you've seen in the past, that wouldn't be a reasonable assumption for the future. However, we can't provide specific details about what the dividend might look like in two or three years. Now, I'll pass it over to Mikheil to discuss the control of the business.

I believe I have addressed the concerns raised in this question. I am excited about the progress we’ve made as a company and how we’ve structured the transaction. Our goal isn't to please everyone, but I genuinely feel that our shares are undervalued. We've consistently stated that we will invest our cash when the right opportunity arises, and I believe this is that moment. What truly excites me is the collaboration among like-minded individuals, as this synergy can lead to remarkable achievements in both the current transaction and future innovation and growth.

Thanks guys. And congrats once again.

Thank you.

All right, so thanks a lot, Harry. Thank you, everyone, for participating in the call. I can see that there are a couple of people still in the queue to ask questions. We've unfortunately got to jump onto another call, but happy to continue the discussion offline. So please get in touch. Thanks again for your time today. Hope to see and speak to you over the next couple of weeks and thanks a lot.

Thank you very much. We'll go back to building businesses. Have a good week, everyone.

Ladies and gentlemen, this concludes today's webinar. Thank you for joining. You may now disconnect from the call. Goodbye.