Hello, everyone, and welcome to today's Kaspi.kz's Third Quarter and 9 Months 2025 Financial Results Call. My name is Sam, and I'll be the call moderator today. I would now like to hand you over to today's host, David Ferguson, Head of Investor Relations at Kaspi.kz to begin. So David, please go ahead.

Yes. Hi, Sam. Thank you. Good morning, good afternoon, everyone. Welcome to our Kaspi.kz's 3Q 2025 Results Call. Apologies for starting a little bit late, but let's crack on. So on the call, you've got myself, David Ferguson; Mikheil Lomtadze, CEO and Co-Founder of Kaspi.kz; Tengiz Mosidze and Yuri Didenko, the Deputy CEOs of the company. As usual, Mikheil and myself will take you through the presentation, and then we'll open up the call to Q&A where the whole team is available. So on that note, Mikheil, over to you. Thank you.

Thank you, David. Let's dive into the presentation and briefly cover the quarterly results across all our platforms. We're presenting the results without excluding the impact of external factors. Payments showed a total payment volume growth of 18% and a revenue increase of 10%, resulting in a net income growth of 12%. The marketplace faced challenges primarily due to a smartphone supply shortage, particularly affecting iPhones. Year-over-year growth stood at 12%, but if we exclude the smartphone impact, GMV growth would reach 20%. Revenue would see a 32% increase without accounting for smartphones, while net income growth would be 16% excluding those effects, or 7% if included. Fintech also displayed strong performance with a 16% increase in total financial volume and 24% growth in revenue. Growth would be 28% if we exclude external factors such as taxes on government securities revenue. Including those, we still noted a 15% growth. Our overall top-line growth is 20% year-over-year, while it would rise to 23% if we exclude external factors, and to 21% if those factors are considered. We are also initiating a $100 million ADS buyback in November to enhance cash distribution, as it's a good investment considering our current stock performance. In terms of external impacts on our financial performance, the core business has remained strong. Notably, smartphone registration requirements and the shortage of iPhones accounted for an 8% impact on GMV and 3% on consolidated income. Despite this, we maintain that demand is robust, indicating a potential recovery next year. Additional external factors included a 10% tax on revenue from government securities, which was newly introduced in Kazakhstan, resulting in a 1% impact on net income. Increased minimum reserve requirements also affected us, leading to a 1% impact because those reserves generate no interest. An increase in the base rate from 15.25% to 16.5% had a 4% negative impact on consolidated net income. The current high-interest environment suggests that as inflation normalizes, we could see positive performance next year. Overall, excluding smartphones, our GMV growth would have been 25%, with particularly strong growth in our top categories: beauty and personal care with 69%, clothing with 51%, and home and garden with 35%. Despite the challenges from smartphone supply disruptions, we are optimistic about recovering next year and anticipate these categories will continue to support our growth. Our e-Grocery business is rapidly growing, with about 1.3 million customers. We achieved GMV growth of 53% and transaction growth of 55%. We're expanding by adding dark stores and entering more cities next year, aiming for continued engagement and value delivery to consumers through quality service and fast delivery. We've made significant strides in connecting with other banks and payment systems, achieving a 176% growth in total payment volume and processing 5.4 million transactions in the third quarter. Our QR code functionality has allowed for an even wider acceptance among banks and enhanced consumer flexibility. In the restaurant vertical, we've seen growth in our payment functionalities, with TPV increasing significantly and reaching over 1 million transactions in the third quarter. Additionally, we've integrated the Glovo delivery service into our Super App, allowing consumers seamless access and payment options. Our Kaspi Key Note event recently showcased major innovations, including our new pay by palm feature, which represents a significant step forward in our payment offerings. This unique feature will be available free to merchants for the first three months after its rollout. We continue to experience fast growth in advertising revenue on the marketplace, reflecting a 56% year-over-year increase. Our new services allow merchants to easily execute advertising campaigns across various platforms. We're also developing Kaspi AI technology to enhance user experience, focusing on creating high-quality product content quickly and efficiently. This assistant has already enriched over 500,000 products and will be available for merchants starting January 2026. Lastly, Hepsiburada is working on enhancing our ecosystem through improved delivery processes, BNPL options, marketing strategies, and user experience enhancements. We're seeing strong performance metrics, including a 16% increase in order growth in the third quarter. In summary, our overall growth and performance have been positive, driven by various strategic investments and innovations across our platforms. Back to you, David.

All right. So thank you, Mikheil. Let's go on and just talk about the performance of the core business, starting with the payment platform. I think that's the key message here on this slide. Payments growth remains robust but also consistent throughout the year. Volumes are up 14% in the third quarter, up 15% year-on-year for the 9-month period. And as we've talked about previously, this reflects the ongoing popularity of Kaspi Pay, bill payments, and the fast adoption of B2B payments. Strong volume growth translates plus growth in ticket size, translates into faster growth in TPV, up 18% in the third quarter versus 14% volume growth, up 21% for the 9-month period versus 15% volume growth. So again, strong and consistent trends. Within the 69% of our volume that comes from Kaspi QR and card, the shift continues to move in favor of QR, driving the take rate down, down 9 basis points in Q3, 8 basis points for the 9-month period. That trend is consistent, as we've seen in the last couple of years. The combination of strong top line growth, strong volume growth, strong TPV growth, but with take rate dilution results in lower revenue growth, plus 10% and plus 14% for the third quarter and 9-month period. As we've consistently seen, top line dropping through to the bottom line shows operational gearing and cost control, resulting in faster bottom line growth in payments of 12% and 17%, respectively. Moving on to marketplace, purchase volumes are very strong and again, consistent throughout the year, up 36% year-on-year in the third quarter, up 36% year-on-year for the 9-month period. Transaction growth on the marketplace remains fast. In terms of GMV growth, GMV growth up 12% and 15% year-on-year. This slide illustrates the impact of supply issues in smartphones, which, as you see, excluding smartphones, GMV is up by 20% for the third quarter and up 21% year-on-year. Keep in mind, the smartphone supply disruption is relevant not just for e-commerce, but for m-commerce as well. The marketplace's take rate continues to move up, hitting all-time high levels at 10.3% for the third quarter and for the 9-month period, driven by value-added services, namely Kaspi advertising and Kaspi delivery. Advertising revenue is up 56% in the third quarter, up 76% for the 9-month period. Looking into e-commerce specifically, we see a 12% GMV growth in the third quarter. Excluding smartphones, GMV growth up 25%. For the 9-month period, GMV is up 19%. Again, if we adjust for smartphones, GMV growth up 29% year-on-year. The performance of e-commerce ex-smartphones remains very strong. The smartphone supply disruption is a countrywide issue. Moving into next year from March, we have a very favorable comp, and we expect supply issues to naturally resolve themselves over the course of next year. The competitive position of e-commerce remains unchanged. The purchase side of the equation shows growth very strong, up 86% year-on-year and up 90% year-on-year for the third quarter and 9-month period, respectively, with e-Grocery contributing to that fast growth. M-commerce, always the slower growing marketplace platform, nonetheless remains important for onboarding merchants. GMV growth is up 12% in both periods, adjusted for smartphones, GMV growth up 17% and 15% in the third quarter and the 9-month period, respectively. The take rate has moved up slightly as we continue to add value-added services and marketing campaigns for our merchants. Travel continues to post decent growth, GMV up 13% in the third quarter and up 17% for the 9-month period. Here, too, the take rate is moving up nicely at 50 basis points in the third quarter and 60 basis points for the 9-month period, due to Kaspi Tours now accounting for around 10% of GMV. Travel's GMV launched around 2 years ago, seeing significant growth. The combination of GMV take rate expansion above GMV growth plus fast growth in grocery revenue translates into revenue growth in the marketplace well above GMV growth up 24% and 27% year-on-year for the periods analyzed. If we account for smartphones, revenue is up 32% and 34%. This just reiterates the point that the temporary smartphone supply disruption is the primary factor affecting the slower growth visible in the marketplace. The same comments apply to the net income side of things, which grew 7% and 13% year-on-year adjusted for smartphones, showing growth of 16% and 20%. Net income growth will grow below revenue growth, reflecting the mix effect of 1P e-Grocery growing rapidly and taking share within the mix. Finally, in Kazakhstan, moving on to the fintech platform. TFV growth remains robust, up 16% and 17% in the third quarter and 9-month period respectively. This robust and consistent growth has happened over the course of the year, driven primarily by merchant lending, which we expect to grow faster than consumer lending products. The growth in origination is also occurring at stable pricing, with the fintech yield flat year-on-year at around 16% in the third quarter and 18% for the 9-month period. Here, we see strong growth in the loan portfolio, up 30% and 32% year-on-year, growing faster than the deposit base, which sees significant growth trends. New products introduced have seen solid month-on-month growth in deposits since their introduction. Cost of risk remains at 0.6% versus 0.5% in the same period last year, while overall credit trends remain strong, albeit slightly affected by macro provisioning earlier this year due to currency depreciation. NPLs have slightly moved up, but this trend reflects consistency throughout this year. The lower coverage reflects the growing share of car loans and merchant financing. As these products are lower risk, they require less provisioning. With origination strong in previous periods and stable pricing, fintech revenue growth is accelerating, reaching 24% in the third quarter and 21% for the 9-month period. Therefore, this growth in revenue translates into faster net income growth, now up to 15% from 10% in the 9-month period, despite the significant rise in interest expenses of 30% year-on-year for the current quarter. Adjusted net income growth reflects base rate increase effects. If rates hadn't moved up this year, the fintech platform would have been on track for impressive gains of 28% in the third quarter and 18% for the 9-month period. The material rate increases have impacted the bottom line, but high levels might see further movement in either direction. Moving on to Hepsiburada, as Mikheil addressed, various product initiatives are being played around payment options, marketing, delivery, and user experience. A key metric is to drive purchases and transaction frequency on the marketplace. The initiatives we're launching show increasing momentum, with purchase volumes up 16% for Q3 compared to 4% in the 9-month period. This indicates an encouraging growth momentum as we anticipate the upcoming year. The financials, adjusted for inflation, showcase real growth. GMV growth moving up at 15% in Q3, compared to 5% in the 9-month period. These investments drive a faster rate for top-line performance, an objective of consistent, sustained revenue growth. These investments impact EBITDA, translating to a faster revenue growth rate. The goal is to achieve continued faster revenue growth over future years. Most investments specifically target improvements in payment options, BNPL strategies, marketing, and user experience. Regarding the third quarter of 2025, the main focus of these upgrades is on payment options, particularly BNPL integration with banks, which has markedly increased. Hepsiburada recently announced a $100 million share capital increase and is raising funds for the upcoming years. I hope this leaves us with a clear understanding.

Our first question comes from Ygal Arounian at Citigroup.

Maybe I'll start with Hepsi in Turkey, and the updates there on the investment are really helpful. Can you just help sort of paint the picture on kind of where we're going from here, particularly around the investment level needed to reverse the trend in terms of operating losses? How has the competitive environment been so far in Turkey? Any insights around that? And then back to Kaspi in Kazakhstan and the advertising product numbers. Strong growth there looks like it is still early in penetration. Could you help us think about how to assess advertising against global peers and which areas to drive more or less advertising?

All right, Ygal. Thanks for your questions. Mikheil, do you want to take both of those questions?

Yes, sure. On the Hepsiburada side, again, as part of our priorities and strategy, we aim to ensure the products or services, for both consumers and merchants, bring value. That's our focus, and this will drive growth and consumer engagement. Our priority is high-quality growth which generates value. We don't see a huge need for capital investments beyond those justified by improving service quality, speed of delivery, and infrastructure. The competitive dynamics in the market have entailed staying aware, but we prioritize the quality of service over competition. In Kazakhstan, we are developing a full range of advertising services at various development stages. We’ve implemented advertising services for products and brands, introduced reward points, and enhanced merchant experience within the app. The merchants provide positive feedback, and we're optimistic that advertising will experience faster growth than the rest of our revenue.

I wanted to ask about the marketplace side, where the take rate was up 80 basis points again. Could you elaborate on some components driving that? And regarding advertising, can you explain simply what it means when you say you'll run the advertising campaigns for the merchants on the Super App?

Sure. On the take rate, drivers mainly hinge on additional services, particularly advertising and delivery revenues. We're not focused on increasing seller fees as a growth strategy, so the increases you're seeing are from added value services. Regarding advertising, we're developing a straightforward user experience; merchants can select items they want to promote and specify the types of customers they want to target right from their smartphones. It's designed to be quick and simple, allowing small merchants to launch ad campaigns easily.

I wanted to touch on the smartphone impact again. You mentioned that previous expectations hold. Is there any color on current trends through October or early November? Also, how do you view non-smartphone marketplace growth sustainability amid strength in top verticals?

All right, Griffen, thanks for your question. To clarify for everyone, there are two key issues to understand regarding smartphones. The first involves new registration requirements introduced in the spring, which caused the supply disruption. This evolved into a deficiency of the latest models, such as the iPhone 17 across the entire nation, leading to consumers foregoing older models. Unfortunately, there's currently no evidence of improvement in supply. However, Apple is expected to introduce new phones in the upcoming months. Looking ahead, there is a favorable comp beginning in March next year. We believe supply issues will normalize over the next couple of months and through the first part of next year. Meanwhile, excluding smartphone sales, marketplace and e-commerce growth in all verticals appears strikingly strong.

I have a quick follow-up on the marketplace question. Year-to-date, you show 16% GMV growth, and I understand you guide for 12% to 14% for the year. Does that imply low single-digit GMV growth in Q4? Is this mostly driven by seasonality around cellphone purchases? Additionally, please address the mix of smartphone sales between iPhones and Android.

Yes, I mean, you will see marketplace growth moderate in the fourth quarter. Marketplace encompasses e-commerce, m-commerce, and travel. As mentioned, we expect slower growth during this time. Specifically, it will significantly affect high-end smartphones, especially new models like the iPhone 17, as they are launched. This delay means potential missed GMV. However, overall purchases did not waver, with transaction numbers indicating significant consumer engagement.

The GMV growth combines item value sold. The smartphone category's value primarily hinges on products like iPhones. The demand is there, and while the supply of high-end smartphones remains constrained, we anticipate changes. The number of marketplace transactions signals continued healthy engagement, with notable percentage increases in consumer engagement.

I have a question about grocery and delivery businesses scaling now. Are these businesses expected to be self-sustaining and profitable long-term, or are they primarily engagement tools to retain users on the platform?

The grocery business is indeed self-sustainable and profitable, as previously demonstrated. We are investing in infrastructure and dark stores to accommodate escalating demand. While the investments necessary for expansion can be significant, our primary objective remains meeting demand while ensuring profitability.

Considering dividends, we will evaluate the appropriate balance between growth and cash returns, including buybacks and dividends. Historically, we prioritized both the growth and stakeholder returns, and moving into next year we hope to achieve a suitable balance.

Thank you, everyone.

Thanks, Sam. Thanks, everyone, for your time. We've done it now 20 minutes, but we have another meeting starting shortly. So we'll wrap things up now. Happy to follow up one-on-one post the call if you have follow-up questions. Thanks a lot for your time, and speak to you soon.

And this concludes today's webinar. Thank you all for joining. You'll now be disconnected.