Hello, and welcome to the Kaspi.kz and FY 2025 Financial Results. My name is Harry, and I will be your operator. I would now like to turn the call over to David Ferguson with Kaspi to begin the presentation. Please go ahead.

All right. Thank you, Harry. Good morning, good afternoon to everyone on the call. Welcome to Kaspi's Fourth Quarter and Full Year 2025 financial results. I'm David Ferguson from Kaspi. As usual, I'm joined by Mikheil Lomtadze, CEO and Co-Founder of Kaspi; Tengiz Mosidze; and Yuri Didenko, the Deputy CEO of the company. We'll take you through the strategic highlights, financial results for the final quarter of last year and provide guidance for this year, and then we'll open up the call to Q&A as usual. So on that note, first of all, I'll hand over to Mikheil. Mikheil, over to you.

Hello, everyone. Thank you, David. Let's dive into the presentation. Our results for the year have been robust. We are examining our underlying performance while accounting for external factors. Nevertheless, I believe we are at a point where we can keep investing in long-term growth and value creation, which is our priority, and also resume dividends due to our strong cash generation capabilities. We are suggesting a dividend of KZT 850 per ADS, pending shareholder approval. Overall, our net income has increased by 18%, not factoring in external influences we've discussed this year, such as reduced smartphone sales, supply shortages, tax changes, minimum reserve capital requirements, and the high-interest rate environment in 2025. Even when these factors are considered, our consolidated net profit grew around 10%, with underlying profit up approximately 18% for the year. Moving to the last quarter, despite numerous challenges, performance remained solid, with net income growth of 13%. We've experienced consistent growth across all businesses, especially in consumer engagement. A key metric is the monthly transactions per proactive consumer, which stands at 7. This figure is exemplary, and few businesses achieve such high consumer engagement, providing us with opportunities to create more value going forward. David will delve deeper into our various segments. Overall, we are pleased with our performance in a challenging environment in 2025. Our brand is our greatest asset and reflects the quality of our products and services. We are currently the top consumer brand in nearly every category by a significant margin. For instance, nearly half of survey respondents use our mobile application, which is six times more than the nearest competitor. In payments, we are 13 times ahead of the second brand, in e-commerce, three times, and in travel, over four times. We have a strong position in vehicles as well, being nine times the nearest competitor. This reflects both consumer and merchant trust, which is crucial for future value creation and a testament to our commitment to product quality. A recent example of our innovation includes the Pay-by-palm service, which we launched rapidly and has seen exceptional adoption. We have approximately 500,000 customers registered with Kaspi Alaqan in Almaty, and around 6,000 merchants are now accepting payments through this service, representing nearly 10% of transactions at those locations. This service is changing consumer behavior as we transition from cash to cashless payments, followed by mobile payments, QR codes, and now to Pay-by-palm. Adoption has been remarkable, with positive consumer feedback and a significant merchant penetration rate achieved in just three months which is impressive, considering it accounts for one-third of Almaty's population. Currently, we are expanding city by city throughout the year, updating our network to support all forms of payments with new devices specifically designed for Alaqan. I’d like to share some penetration numbers across our key services. Though not exhaustive, these figures will give you a sense of our achievements. Payments are the most penetrated service, and we believe B2B payments hold substantial growth potential. We're continuously rolling out innovations, particularly in e-commerce, which we view as a key growth driver. E-commerce fosters value creation for both merchants and consumers as it connects sellers and buyers nationwide and eventually to other markets. Similarly, our focus on merchant finance, which is rapidly growing, will continue, as will our responsible scaling of advertising. Maintaining high and relevant organic search results is essential. David will highlight how our take rate has seen growth from value-added services in delivery and advertising, while on the consumer side, our m-commerce is expected to grow as more merchants switch from m-commerce to e-commerce, providing more options and competitive pricing. We aim to be the leading e-commerce platform in the country and are expanding into e-grocery, which is becoming our fastest-growing online business. Now, regarding our progress in Turkey, we prioritize growing the number of engaged orders, aiming to cultivate loyal customers rather than relying on fleeting promotional incentives. We seek consumers who regularly return to use our services, as their engagement drives our future business. This strategy has proven successful in Kazakhstan, and we are seeing similar positive results in Turkey. In the fourth quarter, we experienced 19% growth, a significant progress for us. Purchase frequency rose by 29%, indicating strong repeat business, which is essential for our growth. We've also increased next-day shipping services from 47% to 63%, reflecting our commitment to improving delivery and customer satisfaction. Fostering engaged consumers and boosting purchases is central to our overall investment strategy. We are enhancing personalized service and meeting customers' needs efficiently. Our expanded payment options make it easier for customers to purchase items more affordably, creating a productive synergy that we believe will yield strong results. We're dedicated to aligning the metrics from Turkey and Hepsiburada with our overall goals for Kaspi. In comparing metrics, Kaspi has 7.4 million active consumers versus Hepsiburada's 11.8 million; however, our gross merchandise value per consumer is significantly higher. This is driven by our engaged customers who consistently shop and generate profits efficiently. We have seen a 66% increase in engaged consumers in Kaspi, while Hepsiburada's growth sits at 29%. By 2026, we anticipate managing Hepsiburada towards an EBITDA breakeven while maintaining targeted investments. We acknowledge concerns regarding our ability to develop Hepsiburada alongside resuming dividends and returning capital to shareholders. The answer is yes; we are confident in our current path and will continue to focus on delivering top-notch services to both consumers and merchants. I'll now pass it back to you.

Great. All right. So thanks a lot, Mikheil. Let’s run through the respective platforms. Firstly, regarding payments in Kazakhstan, we saw a TPV growth of 14% year-on-year in the fourth quarter, 19% for full year '25. This aligns closely with our guidance of around 20% TPV growth for the year, driven by solid and consistent trends in transaction volumes of 12% for the fourth quarter and 14% for the full year. The slight take rate attrition is just a result of Kaspi Pay and Kaspi B2B lower take rate products growing in share. The combination of decent TPV growth with some take rate dilution led to slightly lower revenue growth at 7% in the fourth quarter and 12% for the full year. It’s a natural flow through there. Overall, the more moderate rate of growth reflects the scale now of this business. At the bottom line, growth was 4% in the fourth quarter and 13% for the full year. We need to keep in mind that the fourth quarter was at least partially impacted by costs related to the launch and scaling of Alaqan, which will normalize as we move into this year. Moving on to the marketplace in Kazakhstan, underlying growth was strong, with 12% GMV growth in the fourth quarter and 19% for the full year. GMV from smartphones was down around 24%, so this explains the Q4 dynamics. What’s more encouraging is that the smartphone category did return to growth in January of this year, implying we expect marketplace growth to normalize in the first half of 2026. Purchases were exceptionally strong, consistent at 34% in the fourth quarter and 35% for the full year. Demand remains robust, and as Mikheil mentioned, the ongoing trend of take rate expansion continues. Take rates across the marketplace, especially e-Commerce, reached all-time highs driven by advertising and delivering those value-added services. If we focus on e-Commerce, the fastest-growing part of the marketplace, we saw GMV growth of 9% in the fourth quarter and 16% for the full year, with e-Commerce being notably impacted by smartphones. We saw 27% GMV growth for the full year, excluding smartphones. Growth in purchases illustrated strong demand, up 70% and 83% for the fourth quarter and full year respectively. The competitive positioning of the e-Commerce platform remains unchanged, with take rates hitting 13.1% for the fourth quarter and 12.7% for the full year. Advertising has grown quickly, up 45% year-on-year in the fourth quarter and up 64% for the full year. Grocery continues to be our fastest-growing major product line with GMV growth of 53% for the year, while the number of consumers is now well over 1 million. We expect grocery to keep posting significant growth into the medium term. Another positive development is the rapid migration of both merchants and consumers from m-Commerce to e-Commerce, which provides a material competitive advantage. While m-Commerce is seeing lower growth, the relationships with offline merchants allow us to transition them online, unlike pure online players. The take rate for m-Commerce remains strong, consistent at 9.4% in the fourth quarter and slightly up for the full year. However, it's clear that the primary growth driver of the marketplace is e-Commerce. Fintech in Kazakhstan saw a 4% growth in TPV in the fourth quarter, with 13% growth for the full year, driven by extensive growth in the merchant and micro-business financing sectors. The trends in the fintech industry have been stable over the year, with the yield remaining flat at 24%, and the cost of risk also unchanged at 2.2%. Our expectations for 2026 involve actively managing Hepsiburada around EBITDA breakeven, maximizing efficiency, reinvesting into improving services, and boosting engagement in a growing loyal consumer base. That wraps up the review of the respective segments, so let’s open the call up to Q&A, please.

Our first question today will be from Luke Holbrook with Morgan Stanley.

I'm just going to send mine on Hepsi and Turkiye. The first is that you're obviously seeing more positive changes regarding the order trajectory, more same and next-day delivery. But in that context, with two-thirds of orders now saying more next phase, is this a year where we could potentially see peak losses? Or do you see more investment required here to improve the selection and the delivery offering? By extension on that, my second question is just about Rabobank and the $300 million of investment. I'm just trying to work out if you could be clearer on what that investment looks like and the type of products that we could expect to see in timing should the acquisition complete? And then the final question, just entering more on Turkiye and the broadening of potentially e-Grocery offerings. I'm just wondering where you stand, particularly in light of Uber's more activity with Gati and trend go in the sector and whether you see it as a necessity at some stage for Hepsi's proposition.

All right, Luke. Thanks a lot for your question. Regarding the role in Turkiye, I'll pass that along to Mikheil, including losses, Rabobank, and e-Commerce in Turkiye.

Yes. Sure. Thank you for your questions. In terms of our strategy and investments, again, we'll manage the Turkiye business around EBITDA breakeven, which basically means that we'll be investing in consumer engagement. Increasing consumer engagement comes from faster delivery, all around data and personalization so that consumers can find their products. We're investing in technology and scaling technology out of Kazakhstan as we speak. We're making investments in organizing data in a way that it's 360 degrees around consumers and merchants, allowing us to deliver better quality services. Those will be the investment areas. So when you think about what you call or think about the losses, we prioritize not just on the size but definitely on creating a more valuable business that excites merchants and customers. That would be our strategy for this year, and then we’ll see how it proceeds in the future. In terms of what we will be showing you the progress throughout the year, of course, in terms of the investments into things like delivery and marketing, those investments are targeting consumers, growing the share of engaged consumers who shop with us frequently. Regarding financial services or fintech, we already have the capability to provide fintech products through the microfinance company subsidiary, which is fully owned by Hepsiburada. Some of the products we plan to launch notwithstanding the full banking license. However, when we talk about the banking license, this gives us an opportunity to launch a wide range of financial products, especially around savings and lending for both consumers and merchants. The $300 million investment comes together with capital, and we’re working through the regulatory approval. Once we reach specific steps on the products, we'll be updating you accordingly. We tend to avoid speaking about future products, but the $300 million investment is already considered when we're addressing resuming dividends. Lastly, regarding e-Grocery, which is exciting, the entry of Uber into this sector indicates that Turkiye is an attractive market. While we’re not in the quick commerce business, we focus on e-Grocery, which is about stocking household essentials efficiently. We're currently operating with the data guiding us on what consumers want, and therefore will develop those services accordingly. For this year, we aim to continue the same strategy from last year focused on growing engaged consumers while understanding what items they want and working with merchants to enable this assortment. At this stage, we do not intend to move into quick commerce.

Understood. And just to clarify, there's no specific indication that this year will represent peak investment in Turkiye from what you've just said there. It just depends on ROI and trajectory throughout the course of the year?

Well, I mean, the investments we're making, again, if you say, we’ll our profitability in 2027 will be higher compared to 2026; the investments we’re making are if we see that investment increases frequency and brings back consumers, we’ll continue investing. If we believe that improving delivery speed and quality retains those consumers and ensures they return to us, we’ll continue those investments. This strategy served us well in Kazakhstan, and we plan to replicate it in Turkiye. We've tested all these elements during 2025, and we see how consumers react positively. We’ve launched weekend deliveries, which were previously unavailable, accelerating our delivery speed. Also, we’re running an operation that can potentially process more orders but targeting specific segments with lower volumes means that your running network won’t be fully utilized. When comparing to Kaspi, with almost 6 to 7 times more order frequency per consumer during the year. It illustrates the opportunity we have in Turkiye, and while we’re building capabilities, utilization rates won’t be as high in Turkiye as in Kazakhstan this year, since we have significant growth potential to achieve in increasing frequency of purchases. I'm not providing any forecast on whether 2027’s investment will be lower than 2026, but I can assure you that we believe our investments in building a loyal engaged consumer base will be beneficial in the long term.

This is Gabor here from Autonomous. To continue on Turkiye, can you comment further on the competitive environment? You have one large competitor, and there are several smaller ones. I wondered how you perceive their behavior as you accelerate volumes at Hepsi. The second question is regarding the EBITDA guide; can you give us a flavor of how you expect the bottom line to develop with all the moving parts around regulatory changes, taxation reserves, etc., to help us understand the dividend capacity of the business? Lastly, could you provide insight into the sustainable dividend payout going forward?

Yes. Well, maybe I'll take the second one and pass it to Mikheil to talk on Turkiye. So we've declared 850 Kazakh tenge per share for the final quarter of last year, which we believe is sustainable for the remainder of the year. You can extrapolate that to derive the potential total dividend for this year. As for the payout ratio, the 850 tenge per share is the same as we paid in the final quarter before the Hepsiburada acquisition. So you can estimate that ratio for 2024, and we expect a similar figure for 2026. We're maintaining this amount as sustainable going forward. We're not looking to cut the dividend next quarter. On the other aspects, while we can't provide guidance on net income, we are aware that there are no reductions in interest rates currently, and there's an increase in taxes in Kazakhstan for 2026, which will add about 200 bps to the tax rate, and higher national bank reserve requirements may also impact the bottom line as well. These factors need to be considered this year, while also noting that some of them should level out by year-end 2026, and hopefully, we might see interest rates moving down, which would aid us next year. However, as I mentioned earlier, we’re not banking on that yet.

In answer to your question about the competitive dynamics, we are respectfully observing the competitive dynamics, which are not different between Kazakhstan and Turkiye. Our priority, however, remains on providing high-quality products and services which ultimately lead to the consumers returning and the merchants doing business with us. Our focus is more on operations and increasing engaged customers, which will ultimately lead to ordering frequency.

I wanted to ask first, David, a question regarding the modeling. In reference to Slide 19, is this completely pro forma? I'm looking at the guidance slide in the press release that includes Turkiye. I'm trying to determine if the '25 number is fully pro forma so we have a solid base to work from.

Yes. The 2025 numbers include Hepsiburada; the only consideration is that we only acquired Hepsiburada at the end of January last year. Therefore, it comprises 12 months of Kaspi and 11 months of Hepsiburada. But this is the pro forma base to work from.

Got it. And then, Mikheil, in your prepared remarks, you were mentioning you preferred focusing on the frequency of use as opposed to the total number of users. Can you elaborate on that as you migrate to Turkiye with Hepsiburada?

Well, first of all, 2026 will be a full year where we can compare figures easily. This is good news, as we can compare the consolidated business of 2026 to 2025. Secondly, although our customer growth was 15% in the last quarter, what’s more critical is engaged consumers. These people repeatedly interact with you and buy from you. Thus, marketing costs and operating costs needed to serve them are lower, leading to a more favorable business model going forward. We know this works in Kazakhstan and expect it to work in the same way in Turkiye. Additionally, we will work on building various services around consumer needs beyond just e-Commerce. We’re excited about the breadth of services related to consumers and merchants; this opportunity is massive. We provided a comparison focused on the e-Commerce side because that is currently our immediate focus.

All right, so thanks, Harry, for the call. Thank you all for joining. Please get in touch with any questions. We are in the U.S. this week. Keep in touch. Happy to take questions offline. Thanks, everyone, for your time, and speak to you soon. Thanks a lot. Bye-bye.

This concludes today's webinar. Thank you all for joining. You may now disconnect from the call.