Kaspi.kz AO

NASDAQ:KSPI

Earnings Call Analysis

Strong growth in revenue and net income with promising market developments

In Q3 2024, Kaspi KZ reported an impressive 43% revenue growth and a 14% increase in net income year-over-year. The total payment volume (TPV) surged 28%, driven by strong transactions across its platforms. Notably, fintech revenues surged 18%, with a forecasted annual growth of 20%. The company anticipates a 25% annual increase in net income for the year, reflecting robust consumer demand and stable economic conditions. Moreover, Kaspi announced its acquisition of Hepsiburada, viewing Turkey as a significant growth opportunity, with plans to integrate their technology and expertise into the new market.

Strong Performance in Q3 2024

In the third quarter (Q3) of 2024, Kaspi demonstrated robust financial performance, emphasizing a solid growth trajectory. The company's total payment volume (TPV) rose by 28% year-over-year, while net income was up 25%. Overall revenue surged by an impressive 43%, driven by strategic marketing campaigns and increasing consumer demand for digital solutions.

Marketplace Growth Amid Marketing Changes

The marketplace is a significant driver of Kaspi's performance, showing a 24% increase in gross merchandise volume (GMV). However, Q3 results indicated a slower growth rate due to changes in marketing strategy—more promotions occurred in the previous quarter. Moving forward, guidance indicates expectations for accelerated growth in the fourth quarter, potentially rebounding as seasonal shopping peaks.

Fintech Division Gaining Momentum

The fintech sector also performed admirably, reporting an 18% revenue growth in Q3 with a notable rise in net income of 15% compared to the previous period. This uptick was partially attributed to a reduction in interest rates, enhancing the company's competitive edge. Kaspi projects that overall fintech revenue growth will target around 20% for the full year, indicating positive momentum in a stable economic backdrop.

Innovative Services Driving Consumer Engagement

Kaspi's introduction of innovative services continues to bolster its marketplace offerings. For instance, e-grocery services achieved an impressive 88% GMV increase year-over-year, with over 700,000 active consumers engaging with the platform. There’s a strong focus on scaling these services, which aligns with consumer demand and complements the company’s commitment to high-quality service delivery.

Acquisition of Hepsiburada: Expanding into Turkey

Kaspi's planned acquisition of Hepsiburada, a major Turkish e-commerce player, marks a significant strategic move to capture a larger consumer base and integrate valuable technology to enhance service delivery. This transaction aligns with Kaspi's vision of reaching a market of 100 million people, tapping into a growing e-commerce sector with significant potential for expansion.

Solid Guidance for Future Growth

Looking ahead, Kaspi maintains a projection of approximately 25% net income growth year-over-year for the consolidated performance in Q4 2024. While originally expecting 70% revenue growth from the marketplace for the year, this has been adjusted to 65% due to shifts in sales patterns with increasing contributions through third-party (3P) channels compared to one-party (1P) sales.

Focused on Merchant and Consumer Value

Kaspi is dedicated to creating value for both consumers and merchants, emphasizing sustainable growth over merely expanding market share. The recently launched gift card service, which features no expiration date, is expected to bolster marketplace transactions and drive consumer engagement significantly.

Expectations for Q4 and Beyond

The company is optimistic about the fourth quarter, anticipating stronger results driven by seasonal campaigns and robust marketing strategies. Growth is expected to be bolstered by expanding services such as travel packages, which have already seen a staggering 300% growth year-over-year. As the company finalizes the Hepsiburada transaction, stakeholders can expect an ongoing commitment to innovation and market leadership.

Earnings Call Transcript 2024-Q3

[Operator]

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. [Operator Instructions]

I would now like to turn the call over to David Ferguson at Kaspi to begin. David, please go ahead when you're ready.

[Unknown Executive]

Great. Thank you, Harry. Good afternoon, good morning, everyone. Welcome to our third quarter 9 months 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. We'll talk you through the presentation, Mikheil through the strategic updates, Michl 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, I would like to start with an update for our 3Q and 9-month performance. So as you can see, we have performed strongly in the third Q. The payments just continues growing nicely with TPV 28% up 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 need 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 a slower growth just because more marketing campaigns were in the second Q compared to last year. But still a very strong growth. The 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 growth, 18% revenue, 24% and net income now plus 15% year-over-year compared to 7% for the 9 months. So that just tells you that second half for fintech is -- would be a strong half of this -- of the year.

And then consolidated performance has been strong net income, 18% up and 28% of revenue, and we continue to have extraordinary monthly transactions per active consumer, which drives our business. In general, I would like to say that 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 [indiscernible]. And we are on a track to deliver 25% -- 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 for 9 months is 7% net income growth, but actually for the third Q is a 15%, which is again driven by a reduction of the interest rate, but also the growth of the business itself.

So we are having a very diversified profits and diversified businesses, really, which connect merchants and the consumers. So as you can see, here, 68% now is delivered from the payments and 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 a very diversified profit sources and diversified businesses.

E-grocery, we continue to grow. So it continues a very strong performance. Just to remind, we're in the 3 cities. And here, we would say that's our focus, as we have said during the year because those 3 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 now in excess of 700,000 and average ticket is around KZT 14,000. So it's really a very exciting business. And again, as you always see, we are focused on the execution, which is the key. And our priority for this year is actually to continue scaling in those 3 cities. And it's incredible to be in a position when you actually have a service, which is -- 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 in dark stores in those 3 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 sort of 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, good quality service. We have very good feedback from our consumers, from the -- from operating companies who we connect with our consumers as we organize the user experience on the vacation packages. And we have 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 growth, 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 certificates. It's actually 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 [indiscernible] is actually -- it's like -- it's basically a video of how 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 -- you can spend the gift card once somebody gives you a present, you can spend it on the Kaspi shop. 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 a very positive feedback, and we're following our consumers, and that's a good start of the range of the 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 launched another product, which is business developed deposit for merchants. So again, we have been really focused on the quality of the product and the merchant experience. We launched it in August. And actually, from day 1, we launched it, it had remarkable onboarding and engagement from the merchants. So we're basically in just like 2 months, we've got 69,000 merchants starting using the -- sorry, the 41,000 merchants using the product already, and it's a KZT 69 billion deposit. So this is an exciting product because that actually gives the value to the merchants. It fits their purpose of -- they are not cash rich, but the product is designed that you can actually see your interest rate like daily, basically, how it's how the money value is increasing. And we believe that will drive the engagement with the merchants. And our strategy historically has been always if consumers or merchants design the services and the products which they use to keep their money with you, then the spending of this money naturally flows from those -- from this behavior. So we're really excited about this product. Take-up from the merchants is extremely impressive, 41,000 merchants in just a couple of months and around KZT 69 billion of deposits and also obviously another source of the funding long term, but we're very excited about this product as well.

So David, back to you for the sections about platform performances, please.

[David Ferguson, executive]

Yes. Sounds good. Thank you, Mikheil. So I'll talk you through the respective platform performance, starting as always with 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 9 months. Of the 3 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 9 months. This has been a trend we've consistently highlighted that the growth is core products, Kaspi Pay QR and Kaspi Pay 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. Sorry, 1.18% in the third quarter of '24 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, up 25% year-on-year in the third quarter, a similar performance for the 9 months, up 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 9-month trend, with tight cost control, strong top line is dropping through to the bottom line with almost identical bottom line growth of 25% and 24%, respectively, for the third quarter and 9 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 9 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 9-month trend just reflects the growing importance of particularly grocery, which is high-volume, low ticket size. Looking at GMV growth, strong volume trends translate into decent GMV trends, up 24% in the third quarter. So that is lower than the 9-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 9 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, up 132% in the third quarter. All the different components of e-commerce, general goods, e-commerce and e-grocery playing their part. But if you're looking at it at a purchase level, grocery is skewing the volume mix. GMV still very robust, up 71% and in the third quarter, up 95% year-on-year for the 9-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 9 months. And again, that reflects the -- or largely reflects the growing importance of advertising and delivery revenue.

Moving on to [indiscernible]. So m-commerce is the part of the marketplace that is most impacted by the timing of the June promotional event. That's probably less obvious at the purchase level, up 12% for the third quarter, up 10% for the 9 months, but it is obvious that the sort of the ticket size level with GMV down 5% in the third quarter, but still up 18% in the fourth quarter with tumor 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 that quarter more materially for the 9-month period. And then moving on to Travel. Travel just continues to deliver very, very good numbers as Macau 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 travels 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 up 30 bps to 4.5% for the 9-month period. So travel continuing 3 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, but 43% for the third quarter, up 76% and for the 9 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-commerce. 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 the 3P car sales are growing at a materially faster rate than 1P car sales. And given that the growth is coming through 3P, there's really sort of no impact there on the profitability guidance, which remains plus 40% for marketplace. 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 as planned.

Then on fintech. Fintech is to [indiscernible] to a lesser extent, affected by marketing and [indiscernible]. You see that in the context of lower origination or lower origination growth of 18% versus the 9-month trend of up 34%. And so here too we 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. Our conversion rate stable year-on-year at 2.1x. It just illustrates the consumer and [indiscernible] borrowing and paying normally without any sort of material change. By now, I'll pay later, the biggest component of TFE still both merchant and micro financing 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 9 months loan portfolio for the third quarter, up 39% year-on-year. Deposits or savings of 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 and 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 9-month period as well. Credit trends remain consistent and predictable. And that again, just fits with the backdrop that I described consistently across all 3 of the platforms of a still healthy and consumer and merchant in environment, specifically to fintech that manifests itself in both the origination, but also very strong collection trends. The result of that is stable. Our 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 9-month period, run rating around 2% for the full year. NPL trends also stable year-to-date. Lower coverage reflects growth in the car loan product. That is a collateralized product and requires, therefore, less provisioning. It also reflects just ongoing strong collection of NPLs that are on balance sheet and as a result, more NPLs are being kept on balance sheet versus being written off.

More NPLs on balance sheet means lower provisioning, again, required. Expect this number to be the 91% number to be broadly stable to slightly higher for the 12-month period. So fintech revenue growth on the back of origination TLP growth over the last 12 months remains robust, up 24% for both periods, third quarter [indiscernible] 9 months. What is clearly different in fintech is that in the third quarter, really the first time you started to see bottom line growth accelerate up 15% for the third quarter versus up 7% for the 9-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 again, in the fourth quarter and into 2025.

So for fintech overall, we continue to expect revenue growth around 20% up to the -- for the full year, indicative of strong consumer demand, stable economic backdrop and broadly stable yield over the course of the year, but with lower funding costs translating into accelerating revenue growth. You see a dramatically stronger performance in the second half of the year versus the first half of the year and for the full year. We expect fintech profitability up 15% versus up 7% in the 9-month period. That is the consolidated performance.

I want to sort of repeat really what I've just said previously. I think the divisional explanations speak for themselves. Dividend of $850 million Kazakh Tenge declared per ADS for the period, subject to shareholder approval. And here is the guidance, again, I won't sort of reiterate a repeat what I've already said. For the quarter, the fourth quarter has started well with a healthy and predictable consumer and merchant environment, number one, 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 to preempt 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 the things. So just please keep that in mind.

On that note, I'll hand back to Mikheil to talk about the [indiscernible] Barada transaction. Thank you.

[Mikheil Lomtadze, executive]

Thank you, David. So we're extremely excited to -- with the [indiscernible] transaction and also Turkey as a, we believe, a very attractive market for us. I mean if you look at the -- we have said previously that we're looking forward to be a company which is serving 100 million people market and -- and therefore, we have been working on this for quite some time. The Turkey itself is a very exciting market for us over 85 million people very large retail market, and e-comm penetration is 16.3%, and there is the same ways in Kazakhstan. There is a long way to go in and growth going forward. And GDP growth is at very healthy levels. So -- and there is actually a lot of commonly between Kazakhstan and the Turkey, for example. Turkey is -- just to give you one example is the most favorable destination for tourism from Kazakhstan.

We like the company. Again, as we have mentioned many times, we are really looking for the most importantly, the companies and in this case, founders, which have shared the same vision of building the companies which care about the consumers, care about the merchants and are not focused just on a growth at all costs. And if you would compare [indiscernible] business with Kaspi, I mean in general, it's -- Kaspi in the e-commerce side only, it's comparable in size with serving 12 million consumers and the GMV growth at a healthy levels and 100,000 merchants compared to Kaspi's 64,000. But what is the most important is really the cultural fit. As a company was built by [indiscernible] that is focused on the quality and the shares that use with us. You know that 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 open 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, would 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 5 years, you are all -- 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.

Next slide, David, please. So as you can see, this is sort of more kind of summary again. So we like the market. We like the fact that the market is underpenetrated. And again, I would like to make the point that you don't feel -- you don't see us like we're focused on the quality of the products, and we're focused on the quality of the merchants. We're not anticipating asking questions, number 1 or number 2, whatever it is, this is -- the numbers is a result of our strategy. Our most important priority is always to have disproportionate care on the consumers and the merchants. And we really like that is the strong cultural fit. The way that the founders, [indiscernible] and the management team have been building the business. is really a strong fit and makes us to believe that there is a quite a strong fit with the Kaspi, so Net Promoter Score is really high. Company is EBITDA positive, which means the company has not been growing at all costs and really was focused on delivering the value to the consumers and merchants.

So we are, again, excited about our business and the things that we could actually do and make this good company even better, but we clearly are in -- we believe we're a very good starting point. Transaction is still subject to regulatory approvals. So therefore, there is an important process -- so at the moment, we've signed definite agreements but we'll be going through the regulatory approvals in order to close the transaction.

David, anything you want to add or -- anything to add?

[David Ferguson, executive]

No, I think that is a good summary. Maybe I'll just preempt what I think will be the sort of the first question on [indiscernible] with regard to 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 [indiscernible] remaining shareholders around such an offer. We note that both companies will continue to maintain the 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.

[Operator]

[Operator Instructions] Our first question today is from the line of Darrin Peller of Wolfe Research.

[Darrin Peller, analyst]

Darren, I think you might be on mute. We can't hear you. We still can't hear you. Maybe Harry move on, if Darrin comes back, we will return to him later.

[Unknown Analyst]

This is Gabor from Autonomous. A few questions. First one on the Hepsiburada acquisition. Can you give us some flavor on what you think you can add to the Hepsiburada franchise. I think you alluded to technology. We've been one of them, but I would be interested to hear your thoughts in a bit more detail, please. You highlighted that Hepsiburada has not been is profitable, but fair to say that not as profitable as Kaspi. Is this something you would expect to be able to change over the coming period? Or is this something which is specific to the current stage, current high-growth stage in Turkish e-commerce and the competitive situation.

Third question would be just for the time of the acquisition. So by the time the full payment has been made, are you expecting to sustain dividend and then an unrelated question, which -- with regards to the allegations around the former shareholder. Just wondering what kind of reassurance do you think you could offer on the KYC processes Kaspi has implemented.

[Unknown Executive]

All right, [indiscernible] for your questions. Mikheil will take the questions on Hepsiburada. I would just comment to your last question. I mean, I think we have already commented in detail to this question. We've talked about being in full compliance with all local and international sanctions, rules and regulations. You may have also seen that the regulator in Kazakhstan, commented publicly on Kazakhstan about Kaspi's transparency and particularly with regard to sanctions its efforts to our work within the rules of the law. And that is exactly the same with regard to local regulations and laws around money laundering, we're in full compliance with all applicable laws and regulations. And there's absolutely nothing to suggest to the contrary.

Keep in mind in this business is probably sort of unique relative to other companies that you look at. The vast majority of the transactions are between Kaspi consumers and Kaspi merchants, and there are no sort of third parties in between in most cases. And that's quite unusual to have that level of visibility on the full sort of flow of the money between usually the consumer match and to fully identified consumer, a fully identified match. That's not necessarily the price in financial services or payments. But beyond our sort of in most companies, but beyond our sort of commentary, there's really little more we can add on this subject.

So I'll hand over to Mikheil on Hepsi.

[Mikheil Lomtadze, executive]

Yes, Gabor, thank you for asking questions. I mean, in general, I would say that again, you're not going to hear from us promises, projections, targets because that's something which we will address in due course. And again, we prefer the results to speak for ourselves. I think what is important to focus on is the kind of DNA or the culture which businesses have developed and -- and we have experience across many different services, but the bottom line is we are the company which is developing the wide range of services around the merchant and around the consumers and we are driven by their needs. An ability to develop such a high-quality services has been the most important competitive advantage we had.

Again, we don't have a target in terms of market shares. We don't have targets in terms of the vast majority of our team in terms of the financial targets. We really have our focus on the quality of the service and how we can excite the consumers and merchants. And what we are excited about is that Hepsiburada has been built as a company with this type of views and divisions and the values and principles. And yes, we have been really excited and proud and honored to meet the founder, Hanzade. And we believe that's the opportunity, which will give us an ability to jointly continue innovating and exciting merchants and the consumers. Anything else just becomes really the result of what we do.

We -- as David mentioned, again, we are -- Hepsiburada will remain on its own standing as the brand, as the company, organizational structure. And hopefully, with sharing between the 2 companies, we can just have pace of innovation at the rate which will excite the merchants and consumers. But the foundation we have, we believe is very exciting because the foundation is clearly whether we share the same sort of values and the company has been built by a visionary founder, the quality of the services and the Net Promoter Score is high. So yes, so that's basically what excites us. anything else, timing of acquisition you have in our release, the profitability. The starting point is very strong in Hepsiburada and the rest we just keep working hard alongside with Hepsiburada.

[Gabor Kemeny, analyst]

And just on the dividend?

[Mikheil Lomtadze, executive]

Well, we have mentioned also in our press release that we are intended to close the transaction with cash from earnings and cash on hand, which there are things, which there are things which we generate as a company, but also -- we have received investment grade 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 investment grade trade 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 is just we have investment credit rating that we obtained in September.

[Operator]

Our next question today is from the line of Soomit Datta with [indiscernible] New Street Research.

[Soomit Datta, analyst]

Congratulations on the deal when it closes. Maybe just a couple on that, please. One, could you maybe -- I appreciate you can't give and I'm not looking to give forward comments, but could you give maybe a quick state of play as to how the market looks today on the on the e-commerce side in Turkey was reading around a little bit to try and play catch up. And I see Ts in the market. there's a strong #1 player. Just to maybe get a sense as to how you see the positioning of that business today would be super helpful.

Secondly, please, what does this imply for any future M&A i.e., I think we are awaiting maybe a little bit of news flow on Uzbekistan and the network's interest there. But aside from these 2 things, is that kind of it for M&A for the foreseeable future. And maybe if I dare ask just a follow-up on the dividend, if that's okay. Would you anticipate paying a dividend for the fourth quarter, i.e., before the transaction closes? Thank you very much.

[David Ferguson, executive]

All right, Soomit. Maybe I'll 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. 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 sort of the potential to pay dividends. But against Mikheil's point, whilst there's nothing to communicate with certainty today that investment-grade rating for 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, buy back stock or whatever else might be on the agenda. But 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. First [indiscernible] is closing this transaction.

[Soomit Datta, analyst]

Okay. So on the -- again, the market structure, I think pretty much really sort of the same view. We're not -- when we're going into the services and different services in our home market, which is Kazakhstan and now sort of Hepsiburada, developing further in Turkey, again, subject to closing all of that, what will be our priority is, again, the quality of the services we develop.

We're not -- we don't have a target. We want to be number one. But we want to be #1 in the leader. Hopefully, that's what we are have been sort of, we believe, have been experiences in is being #1 in consumer quality and #1 in merchant. So that has been our priority with our products. And therefore, with the structure, I think there is a lot of public available information. I think that Hepsiburada is publicly listed company. So there is quite a lot of information about the Turkey. Structure of the market in general looks attractive to us, both in terms of the size, but also in terms of the penetration of e-commerce, for example, and some other indicators. But that I would really view I will leave you guys with -- you are much better qualified to dissect the market and make the conclusions. We believe that Hepsiburada, is clearly having the same DNA that we can build from together with -- between the 2 companies.

In terms of the other M&As, again, we never speculate. There has been a lot of work that is going on. On Uzbekistan itself, we basically are waiting for the requirements to the acquirer to be announced and published. So that's pretty much what we can say about the letter of interest, which we have supplied for the privatization of 1 of the 2 payment networks, and we're just waiting for the criteria to acquire to be published and announced.

[Operator]

Our next question will be from the line of Darrin Peller of Wolfe Research.

My apologies there. So our next question will be from the line of James Friedman of SIG.

[James Friedman, analyst]

Congratulations on these results. I wanted to ask about how you're thinking about take rate for the remainder of the year. The reason I ask is -- correct me if I'm wrong, but it seems like the outsized growth in e-commerce in the third quarter because e-commerce has such a high take rate was accretive to the consolidated take rate for the third quarter. I think you're anticipating M-commerce improving sequentially, maybe as a percentage. So any high-level thoughts on the components of take rate would be helpful.

[David Ferguson, executive]

Mikheil, do you want to take that?

[Mikheil Lomtadze, executive]

Yes. I mean, sure. I mean, in general, I would say that our take rate is driven quite substantially by value-added services, which is delivered in advertising. So they are about 1.8% of our GMV. So again, our take rate is not the result of repricing the seller fees or anything like that. But I mean it goes back again to my point that we're focused on delivering the value and the value now we're delivering to the merchants not only through ability to sell through our platforms, but actually ability to sort of deliver and deliver with multiple delivery choices and also launched an advertising campaign. So that's basically the the drivers of the take rate. The one thing which you also should keep in mind while we have also explained before that actually the e-commerce payments and commerce and then e-commerce. Those -- this is sort of the journey of the merchants with us. And therefore, the e-commerce now is also -- growth is driven by the fact that the merchants are onboarding to our services from from m-commerce. So eventually, we believe that m-commerce will be the suite of the services for merchants in an offline environment, but digitalizing their in-store experience and then services industry, which we are currently working on.

And then e-commerce will be everything that we can deliver. And again, the take rate is growing by the fact that we are delivering the advertising and delivery services and some other services that we work on for the merchants. The one important number to -- not a number, but approach from us to keep in mind you will not see like incredible, how should I say, too high of an expansion of a take rate. Take rate has been expanding because the verticals we have been adding, for example, jewelries [indiscernible] that than electronics, but we don't believe into overmonetizing merchants. You're not going to see from us whatever, 50%, 60%, 70% average take rate in our marketplace. This is not something which we intend to do. We -- you will see expansion of the take rate mostly by the fact that we are delivering added value services to the merchants which for us is important because we don't want to over monetize merchants and we are supporting the merchants to grow. And if the merchants are growing successfully, this is how -- it's a measurement of our success because we are getting paid basically from every successful transaction really. So from that perspective, is it important to keep in mind the way we approach the take rate.

[James Friedman, analyst]

Got it. And then if I could just follow up, Mikheil. With regard to the gift card initiative on Page 8, I know these gift cards are very popular and certain -- I'm trying to read up on and they're very popular in certain markets. And have been in the developed markets at times too. So how should we be thinking about the the strategic relevance of gift card, the seasonality of gift card because I would imagine it's quite seasonal. Any way to unpack the significance of gift card would be helpful.

[Mikheil Lomtadze, executive]

Yes, thank you. That's a good question. At the moment, I would say that we are just launching this exciting service to have the consumers get engaged. And that's basically a gift card on our own shopping on our own marketplace, e-commerce platform. So that would be sort of for us the important strategic priority. It will basically helpful to driving the GMV itself. The one huge difference which you should keep in mind is basically that our gift cards have no expiration date. So in other markets, gift cards -- the way that people actually make money is counterintuitive -- people make -- from the consumer perspective, you make money because you forget about your gift. So somebody makes money because you forget spending your gift card. And this is exactly what we are not doing. So it has no expiration date. It will be in our -- we believe it will be driving the GMV growth and the consumer engagement, especially in different verticals. And at the moment, there is as much as I can say. But as we progress with new services, we'll launch around gift cards, we will be reporting over time. And I think this will be quite exciting sort of quite exciting suit of the services around the gift card. But at the moment, it's really growth of the GMV when the consumers are engaged and of course, beautiful design, which makes consumers really happy and excited about it.

But that for us, it's really a medium term, I would say, goal with the gift cards, and we'll be explaining to you some of the impacts and economics as we move forward with the service.

[Operator]

And our next question today is from the line of Reggie Smith with JPMorgan.

[Reginald Smith, analyst]

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 this your approach to integrating an acquisition and 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 like where might there be gaps that Kaspi can make 2 plus 2 something more than 4 as it relates to [indiscernible] have a follow-up.

[David Ferguson, executive]

Reggie, I mean in terms of your question, again, I think probably looking at our track record and the history of innovation and how we actually are working through different services that has #1 priority, which is be very high quality. So that's what you would expect from us. Now in terms of the forward-looking statements, the projections, anything like that. Again, we are -- would like the results to speak for themselves. I think the bottom line is still conclusion is very important that there are quite interesting aspects between those 2 companies, which are very similar, right? So -- and the fact that the company is being focused on sustainable growth and being EBITDA positive, it's a testament to the current shareholders, to the founder and the management team because there are a lot of companies which finance the growth at the expense of the shareholders.

And in case of Hepsiburada, this was one of the attractions for us. So again, this is -- it's a strong company in e-commerce segment. It has a good brand. It values the consumer's opinion. And what Kaspi can really bring is just more experience, more technology from us as we have quite a much wider range of the services in our -- in our mobile app. So I think there are a lot of exciting knowledge and technology that we can really share between the 2 companies. And again, Kaspi itself has a lot to learn from Hepsiburada because Hepsiburada is specialized on e-commerce, which is the largest part of its business. And hopefully, following closing the transaction, I can't really wait when the 2 teams can share the knowledge. I think there will be -- when you're asking the question 1 plus 1 is 3, I think that needs to be plus -- one plus one three in terms of us and the teams sort of working together and continue launching the innovative services and learning from each other and that would be our most important priority. Once we achieve that, everything else is just a result of our joint work. So we're waiting for transaction to close, and I can't really wait when the guys will be able to talk to each other. I think it will be incredible. In my opinion, will be a very exciting cooperation between like-minded management teams.

[James Friedman, analyst]

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 [indiscernible]. You guys announced or decided how many [indiscernible] events there will be in 2025 and just generally speaking, like 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 the assume growing on a kind of like-for-like basis?

[Mikheil Lomtadze, executive]

Okay. Well, I mean, from our -- from next year, basically, will be quite comparable to this year. So the main thing what happened in 2024 is that David, can we move the slide, so it's not confusing to the Yes. So basically, we -- what actually happened during this year is that seasonality of the campaigns and marketing has followed the consumer and the merchant demand. Again, we are quite unique, right? We believe we're quite unique company compared to many others. So we have a wide range of different industries, services verticals. And each of those verticals have their own seasonality. So this is what happened this year. So basically, we followed our merchants and we followed our consumers, and we have taken on board their feedback. And therefore, we are running roughly quarterly -- roughly quarterly marketing promotional campaigns.

The biggest campaigns in general, I would say, the biggest campaigns are the [indiscernible] in the first Q, [indiscernible] in a second Q, back-to-school, which is happening in August, sort of September and the new year. And sorry, [indiscernible] in the fourth Q. So that's basically the promotional campaigns you had this year, and we believe that we can have the same sort of seasonality for next year. So the next year will be quite comparable to 2024 and we're just trying to explain this year because between second Q and the third Q, there is a big distortion on the GMV, but next year, we'll have pretty much the same strategy as this year.

[James Friedman, analyst]

Got it. And I guess, is there a way to frame how quickly that in is growing? Is it faster than the corporate average lower? Just curious about penetration and the opportunity there with [indiscernible].

[Mikheil Lomtadze, executive]

No, no. I mean, again, it's a promotional campaign, right? So what actually happens is as we become bigger and as you have the range of the services through the seasonality. So you just have less dependence on 1 specific campaign, right? So it's actually a very good news because then basically, we have more -- from your perspective, guys, this year next year, there will be more predictability in terms of planning our quarterly growth. And we'll give you a bit updates here and there, but in general, it's almost -- we started -- history was, we started with 1 Juma, which was big event in a year. Then we move to 2 Jumas, then we have 3. And now we have different campaigns through the year just because initially we started from electronics and now we are in pretty much everything, including the travel. So therefore, now you have really much more manageable seasonality for this year and the next year.

For Juma is again promotional campaign like Amazon Prime, single days in China, Black Friday and things like that. It's just in Kazakhstan that is pretty much Juma. There is no Black Friday. There is no -- is basically us sort of running the campaigns for our merchants and the consumers. Okay. Any more questions?

[Operator]

Your next question is from the line of Mikhail Butkov, Goldman Sachs.

[Mikhail Butkov, analyst]

Yes, I have one more question, if I may, on Hepsiburada, and more broadly on the new projects where you expressed interest in Uzbekistan, for example, the question is and obviously, I appreciate that you cannot -- as you mentioned, projections, targets now, but in terms of your thinking of the time which the core management of Kaspi allocates between the different assets of the group, be it the new potential asset in Turkey, some new interest in Uzbekistan and the core operations in Kazakhstan, how do you see the time which the Kaspi management allocates between these assets, given that the -- especially the Turkish asset is relatively large insights and in some -- on some KPIs, it is of the comparable size with the [indiscernible], Kazakhstan.

[Unknown Executive]

Well, I mean, I think this question really goes goes back to our philosophy and strategy. There is no metric how much time would we allocate. There is -- Hepsiburada, company with a strong position, the strong management team and we believe, with a strong brand. And I would even say probably our -- we as a customer and e-commerce side of things have a lot to learn from Hepsiburada team because they have been focused on e-commerce 100% or majority of their business is really e-commerce when our business is quite diversified. So there is no such metric how much time we're going to spend. I can tell you one thing, there is no -- we don't operate under like other companies would do that here, you see the smartest guys in the -- that come and start suddenly teaching everyone how to do business. This is not the way Kaspi operates. Hepsiburada has a very good management team. We will be [indiscernible] sharing the technology, allocating resources just to help the company to become even better. And there are services which we have a lot of experience with, which we'll be sharing.

But again, myself, personally, I will be spending time in Turkey and Hepsiburada, just to share as much of a knowledge and vision from our experience, right? But again, this is not -- I mean, 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 will 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 the experience, but again, that's basically the -- fundamentally the way we sort of approach this transaction from our side.

[Operator]

And unfortunately, due to time, we will only be able to take the 2 questions. And our next question will be from the line of David Shapiro of Vanshap Capital.

[David Shapiro, analyst]

Thank you guys for your strong execution and transparency as always, it's much appreciated on behalf of the shareholders. Just 2 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 -- I know you probably can't get into too much detail, but 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 the Turkey acquisition you've done. You're waiting on be [indiscernible] 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 in these 3 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?

[Unknown Executive]

Okay, David, 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 the Hepsiburada and I think that 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 Hanzade clearly cares deeply about the company, which he build. And as you would care about baby, any entrepreneur would care about the companies they have built. So Hanzade 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 the -- again, the Hepsi is a public company. So the way the company has been developing -- I think there are already things in place. Again, we are not coming with the attitude there are things -- the things which we know that work and there are things which Hepsiburada knows work. So I think 1 plus 1, 3 would be really our approach as explained. So in our case, we just looking forward to really putting the grain mines together, and we are the top managers in Hepsi. Top managers are also very experienced. We're just looking forward to keeping this rate of innovation and excitement in the company.

But still subject to closing, but looking forward to meet the the Board members and so on and so forth, it's still -- we are still in the transaction approval process, right? So I wouldn't really break too much towards it. But again, this whole -- this thing is exciting because it started from 2 entrepreneurial companies and sort of founders really getting excited about -- just we believe how many similarities are between 2 companies. So I think that's very important. And I have enormous respect for what Hanzade has achieved with Hepsiburada and the Turkish market, really exciting for us.

[David Shapiro, analyst]

That's great. And then on the international question, do you feel that you guys are kind of satiated between these 3 core markets that you have the potential now to deepen your product [indiscernible].

[Unknown Executive]

Well, I mean, again, if you -- the way we always said that 100 million -- over 100 million people market, it's like 100 million people market. It's really something which really excites us because that's something we can deliver on our mission on the much broader markets. And at the moment, we're working -- we'll be working through approval processes in Turkey, and we are basically just waiting for Uzbekistan to understand the requirements for the acquirer. So that's pretty much the status on the payments company. In general, I would say those markets by itself are really exciting and have a wide coverage of the region. So again, I wouldn't really make any sort of make a lot of promises in general, but I think those markets are really exciting and surely can keep us busy to develop the services which delight consumers and merchants.

[Operator]

And the final question in the queue today will be from the line of Ronak Gadhia with [indiscernible].

[Unknown Analyst]

Congratulations on the results. Just maybe more or less follow-ups from what many of the previous callers have been asking. With regards to the [indiscernible] 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 [indiscernible], from what you've seen from the discussions you had, does the 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.

[Unknown Executive]

Ronak [indiscernible] cynical question. So I think the answer is no. On the payout ratio, so I think it wouldn't be appropriate to talk about medium term. I mentioned earlier that we're making the dividend payment for the third quarter. Clearly, this transaction has to be funded, both from cash on hand and cash that we generate between now and closing, Q4 and Q1. And then thereafter, I think you should just look at the company's track record. So there's a couple of things that you could sort of look to there one or was a company that is willing to invest number one, but also, number two, a company that invests in a sustainable way with an emphasis on growth, profitable growth. I think you can apply that to whatever market we're present in, number one.

Number two, I think again, you've covered us for a long time or followed us for a long time, a company that doesn't sit on cash that it doesn't need. It will return cash. And again, we've made dividends, we paid dividends consistently. We've also bought back stock for a long period of time when we were in London. And then the third point, which myself and [indiscernible] already made, actually, going forward, we'd hope to have more flexibility, given the potential for debt financing, which is something that over the last 5 years or historically, we've we've not explored. So I think if you show just on sort of what you've seen in the past, and make that a similar base case going forward. That wouldn't be unreasonable, but we can't really sort of get into specifics about what the dividend might be in 2 years or 3 years to today.

And then I'll hand over to Mikheil to talk about control of the -- getting control of the business.

[Mikheil Lomtadze, executive]

Well, yes, I don't think there is anything in this question, which I haven't really explained. I do think that like-minded people can get the incredible things done. So -- from that perspective, I think we're just really excited because the company profile and the way we have been able to structure the transaction as well. I mean, there is -- we're not looking for 100% happiness, right? That will we're not $100 bill to be loved by everyone. But the one thing I can tell you that it's -- when buying by shares, I think our shares are are undervalued. And we always said that we will put cash to work when we see the -- when we see the opportunity. And I think this is -- and I truly believe this is the opportunity which presents itself and it's really exciting. And again, the one thing which excites me is that like-minded people are getting together. That's -- that's the most important, in my opinion, because like-minded people then can get all sorts of things done either from the transaction itself or actually the -- the future development and innovation and growth. So that's the most important foundation of the future risk. Like-minded people can always figure out the things which can work the best for consumers and the merchants.

[Operator]

Thank you. This will conclude the Q&A session. I'd now like to hand back over to David for any closing remarks.

[David Ferguson, executive]

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 on to another call, but happy to continue the discussion off-line. So please get in touch. Thanks again for your time today. I hope to see you and speak to you over the next couple of weeks, and thanks a lot.

[Mikheil Lomtadze, executive]

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

[Operator]

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