KSPI Kaspikz JSC

TIDMKSPI

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JSC Kaspi.kz

25 July 2022

Kaspi.kz 2(nd) Quarter & 1(st) Half 2022 Financial Results

Kazakhstan, 25 July 2022 - JSC Kaspi.kz ("Kaspi.kz", "we", or the "Company") which operates the Kaspi.kz Super App, Kazakhstan's leading mobile Super App, today publishes its unaudited consolidated IFRS financial results for the quarter and half ending 30 June 2022.

Second quarter & first half 2022 highlights

-- Super App DAU increased 25% year-over-year to 7.4 million, a substantially faster rate than MAU, which increased 16% year-over-year to 11.8 million. DAU to MAU engagement up to 63%.

-- Average monthly transactions per active consumer up 42% year-over-year to an all-time high 55.8.

-- Kaspi Pay continues to scale at a rapid rate, significantly increasing its number of merchants.

o Active merchants up 159% year-over-year to reach 356K.

o 383K active Kaspi Pay POS devices by June 2022, up 113% year-over-year.

o By number of transactions, Kaspi Pay accounted for 89% of all Kaspi.kz in-store transactions, with third-party acquiring down to just 11%.

o With a large, expanding and highly engaged merchant base, we expect rapid growth in earlier stage merchant services over the next few years including Kaspi Delivery, Kaspi Marketing and financing for merchants and SMEs.

-- Kaspi e-Grocery, in conjunction with Kazakhstan's no.1 grocery retailer Magnum, is seeing extremely high consumer adoption and positive consumer feedback.

o e-Grocery GMV up 12.4x year-over-year.

o Active consumers up 7.8x year-over-year.

-- Kaspi Pay B2B emerging as a new transformative payments proposition for wholesalers, with B2B RTPV volumes up 5.7x year-over-year.

-- From start-up two years ago, Kaspi Travel is Kazakhstan's N1 online flight and rail booking service. GMV reached 10% of Marketplace GMV. With Travel, e-Commerce and m-Commerce, Marketplace now includes three large, diverse and fast-growing propositions.

   --     The breadth and depth of Marketplace's product proposition significantly enhanced. 

o Marketplace merchants up 243% year-over-year to reach 198K.

o E-Commerce SKUs up 2.2x year-over-year to 2.1 million.

-- We also continue to scale Kaspi Smart Logistics Platform, with total orders delivered up 142% year-over-year to 3.5 million.

o 96% of deliveries free for the consumer.

o 53% of orders delivered in <=2 days.

o 1,684 Kaspi Postomats operational in June across 20 cities, accounting for 12.4% of orders delivered. At scale we expect Kaspi Postomats to materially improve e-Commerce delivery economics.

-- During the first half of 2022, Kaspi.kz's business model continued to deliver strong financials. First half 2022 Kaspi.kz consolidated adj. net income up 39% year- over-year to KZT252 billion.

-- In the first half of 2022 we took a cautious approach to consumer credit origination (TFV) and reduced Marketplace Platform promotional campaigns. However, with credit quality extremely high, we are now accelerating TFV growth and expect business as normal credit approval levels in the second half of the year.

-- July's Kaspi Juma was our biggest Marketplace promotional ever with GMV up 175% compared to our previous event in 2019. We plan to repeat Kaspi Juma, in the final quarter of this year. With promotional activity back to normal we expect faster Marketplace GMV growth and higher take-rate dynamics in the second half of the year.

-- Upgrading Payments RTPV growth to around 50% year-over-year and net income profitability to above 60% in 2022.

   --      Upgrading Marketplace GMV growth to around 55% year-over-year in 2022. 

-- With our business continuing to deliver and the outlook improving, we now expect Kaspi.kz's consolidated adj. net income to grow between 27-30% year-over-year in 2022, at the top-end of our previously communicated adj. net income guidance range of 20-30%.

-- In the first half of 2022 our faster growing, high profitability Payments and Marketplace Platform's reached 55% of consolidated net income. The contribution from our Fintech Platform, will reduce again in the second half of the year.

-- Based on our first half 2022 results, our Board of Directors has proposed a dividend of KZT500/GDR, subject to shareholder approval.

-- In April our Board of Directors approved a 3-month GDR repurchase program of up to $100 million. At expiry we had managed to repurchase GDR's equivalent to $51 million. Our Board has now approved a new 3-month repurchase program of up to $100 million. We continue to believe our market capitalisation materially undervalues Kaspi.kz and are determined to eliminate the valuation discount upon which our GDR's trade. Delivering consistently strong earnings growth and regularly returning excess cash are key pillars of our approach and we will use the combination of both dividends and buybacks to create value for our shareholders.

To the shareholders of Kaspi.kz:

Last week we held Kaspi Juma, our nationwide shopping festival. This was the first Juma since the start of the Covid-19 pandemic and it surpassed all our expectations. GMV increased 175% compared to our previous event in 2019. We are excited about this dramatic increase, which proves again that the relevance of our Super App to both consumers and merchants continues to increase. We'll talk in more details about Kaspi Juma at our third quarter results.

Returning to our second quarter results, yet again Kaspi.kz's business model has proven itself. The message from our performance is clear. Whether times are good or more challenging, we are always there for our customers, continually innovating to make their everyday lives better. I'm confident that our execution driven management team will deliver for consumers, merchants and very importantly you our shareholders, no matter what the external environment throws at us.

The underlying growth drivers of our business remain strong. Merchant onboarding to Kaspi Pay, m-Commerce and e-Commerce increased 159% year-over-year, to reach 356K active merchants. Transactions per consumer reached 55.8 per month, with revenue generating payment transaction (RTPV) and Marketplace purchases up 63% and 104% year-over-year respectively, during the second quarter. The combination of a rapidly growing merchant base and high levels of consumer engagement, will ensure that we continue to deliver fast RTPV and GMV growth in the second half of 2022 and beyond. Having reached 55% of net income in the first half, we expect our Payments and Marketplace Platforms to continue growing fast and contribute to a significantly larger share of profits every quarter.

Considering Payments and Marketplace Platforms growth, I'm pleased to confirm that we now expect Kaspi.kz's RTPV to grow around 50%, GMV to grow around 55% and consolidated adj. net income to grow by 27-30% year-over-year in 2022, at the top end of our previous 20-30% guidance.

During periods of increased uncertainty, we always remain focussed on our long-term strategy, which for us means relentlessly executing on our mission to develop innovative products and services that improve the everyday lives of consumers and merchants. Kaspi Travel is very good recent example of our ability to execute on this.

It took us just 2 years to bring Kaspi Travel from a start-up to the N1 airline and railway booking service in the country, selling 3.1 million tickets in the second quarter. Kaspi Travel has now reached 10% of Marketplace GMV. We have the same ambition for our new businesses, e-Grocery and B2B Payments. e-Grocery is scaling at a phenomenal rate and has the potential to be transformative to our relationship with consumers and financial growth over the next couple of years. B2B, which is a completely new market opportunity for us, now accounts for 2% of RTPV, which given the absolute scale of our payments volume is a substantial achievement, in very short period of time.

All in all, we're on-track for another good year and remain upbeat about our mid-term growth outlook. However, we also continue to believe that our current market capitalisation fails to adequately reflect the high growth, highly profitable and cash generative nature of our unique company. Narrowing the valuation discount upon which our GDR's trade is a top priority and we will leave no stone unturned.

To narrow the discount, we see the combination of buybacks and dividends as helpful tools. In April we commenced a 3-month GDR buyback of up to $100 million. Stock trading liquidity has been a constraint but this program has now concluded, with GDR's equivalent to $ 51 million repurchased. Our Board has once again allocated up to $100 million for a new 3-month buyback program. Given our valuation and growth outlook, we believe buybacks have the potential to be substantially earnings and dividend accretive over time.

Subject to shareholder approval our Board of Directors has also approved a dividend equivalent to KZT500/GDR. While we will always prioritise investments in growth, in the event of excess capital we will return this to our shareholders. Nothing has changed in terms of our long-term approach to capital allocation.

We also remain committed to taking steps to ensure Kaspi.kz is listed on the most appropriate exchange. Admittedly the timing of this event is difficult to predict but we stand ready to act as soon as market conditions are right.

Kaspi.kz is at the forefront of the new digital revolution, redefined by Super Apps. The combination of our scale with consumers and merchants, reinforced by our Super App strategy, puts us in a completely unique position to capture the multi-year structural growth opportunity offered by digitalisation in Kazakhstan and over time across the broader region.

As always, I would like to thank our team for their incredible efforts and our shareholders, for your ongoing trust and support.

Mikheil Lomtadze

Kaspi.kz CEO and co-founder

Kaspi.kz 2Q 2022 user & engagement highlights

11.8 million Kaspi.kz Super App users. 56 transactions per consumer/month

Kaspi.kz's Super App is Kazakhstan's most popular Super App and gives our Payments, Marketplace and Fintech Platforms unrivalled competitive advantages. During the second quarter of 2022, Super App user and transaction levels continued to hit all-time highs.

DAU (Daily Active Users) increased 25% year-over-year to 7.4 million, a substantially faster rate than MAU (Monthly Active Users), which increased 16% to 11.8 million.

Highly relevant transaction linked products and services make the Kaspi.kz Super App integral to consumers' daily lives. The ratio of DAU to MAU was 63%, which is amongst the highest levels of user engagement of any Super App globally and another step-up, compared to 59% in the second quarter of 2021.

Growing adoption of our existing products, along with new product launches facilitates higher engagement and transactions across more areas of regular household spending. Average monthly transactions per active consumer, increased by 42% year-over- year to 55.8 from 39.3, during the second quarter of 2021.

We continue to prioritise onboarding as many merchants, as rapidly as possible to drive future engagement and transactions even higher. During the second quarter of 2022, growth in the total number of active merchants increased 159% year-over-year to reach 356K. We expect growth in our merchant base to remain at elevated levels for some time to come.

We design best-in-class digital products to monetise transactions volumes. During the second quarter of 2022, RTPV transactions increased 63% year-over-year and Marketplace purchases increased 104%. High levels of growth in monetizable transactions, despite economic volatility illustrate the important role we play in the lives of consumers and merchants and the potential to keep growing monetization.

Products like Kaspi QR, m-Commerce and Instant Invoicing all facilitate merchant acquisition. In turn, as our merchant base scales, we will increasingly grow earlier stage merchant services including B2B payments, Kaspi Delivery, Kaspi Marketing and financing for merchants and SMEs. These products all help our merchants invest in their business, increase their sales, reach new customers and the growth opportunity ahead is substantial.

Similar to our merchant strategy, products like P2P, Bill Payments, BNPL, Kaspi QR and our GovTech Platform are the basis of our day-to-day relationship with consumers. Going forward, we will grow less mature services including m-Commerce, e-Commerce, Kaspi Travel and our e-Grocery proposition. These services all help our consumers discover the products they need, at the best possible prices, from local merchants, with the convenience of free delivery, ultimately saving consumers time and money. With consumer penetration across our full range of Super App services still low, here too the opportunity ahead remains significant.

In 2022 and beyond, we will prioritise Kaspi e-Grocery, which is a significant future opportunity. Initial consumer feedback is extremely positive and if we're successful, e-Grocery can have dramatically positive implications for Super App engagement and Marketplace GMV growth. During the second quarter of 2022 e-Grocery GMV increased 12.4x year-over-year, with the number of customers up 7.8x.

From start-up status, Kaspi Travel is now Kazakhstan's N1 online flight and rail booking service. Kaspi Travel reached 10% of Marketplace GMV in the second quarter of 2022 and going forward we will continue to broaden Kaspi Travel's offering. Combined with the recovery in international travel, we expect Kaspi Travel to remain additive to Marketplace growth for some time.

Kaspi B2B, which was born out of Bill Payments, is an example of how we can grow transactions by targeting new segments, in this case wholesalers.

We will also continue to launch new services and our product pipeline looking into the rest of this year and beyond is as healthy as always.

Kaspi.kz 2Q and 1H 2022 financial highlights

Revenue up 38% and adj. net income up 32% YoY in 2Q22

During the second quarter of 2022, total revenue, increased 38% year-over-year to reach KZT296,587 million. For the first half of 2022, total revenue increased 41% to reach KZT560,908 million.

Our Payments Platform continues to deliver excellent results due to the success of Kaspi Pay. In Marketplace, having significantly expanded our Marketplace merchant base, demand remains strong with m-Commerce and e-Commerce transactions up 87% and 103% year-over-year respectively, during the second quarter. Kaspi Travel GMV growth is additive to overall Marketplace growth. Higher Fintech origination throughout 2021, translated into strong revenue growth in the first half of 2022, but our cautious approach to TFV origination more recently, will lead to more moderate Fintech revenue growth in the second half of the year.

During the second quarter of 2022, adj. net income increased 32% year-over-year to KZT135,273 million. Adj. net income profitability decreased to 45.6% from 47.8% in the second quarter of 2021. For the first half of 2022, adj. net income increased 39% to reach KZT252,386 million, with 45% profitability broadly stable year-over-year.

As our proprietary payments network scales, we continue to benefit from our Payments Platform's operational gearing. This was however partially offset by slightly lower Marketplace profitability, due to our planned step-up in investment in free consumer delivery and reduced promotional activity. In Fintech, the combination of lower yield and higher funding costs all lowered profitability, though here too trends remain consistent with our full-year 2022 guidance.

With our faster growing and higher profitability Payments and Marketplace Platforms continuing to deliver strong bottom-line growth, they accounted for 55% of adj. net income in the first half of 2022, up from 50% in the same period in 2021. In the second half of 2022, we expect the contribution to net income from our Payments and Marketplace Platforms to increase further.

Our cash generation capacity remains as strong as ever. As a result, our Board of Directors has now approved a new up to $100 million GDR buyback program. This follows on from the GDR's worth $51 million repurchased between April and July. In addition, subject to shareholder approval, our Board has proposed a dividend equivalent to KZT500/GDR.

Payments Platform

RTPV up 53%, revenue up 54% & adj. net income up 60% YoY

Our Payments Platform has always offered consumers a highly convenient way to shop, pay bills and make peer-to-peer (P2P) payments via the Kaspi.kz Super App. As has been the case globally, in Kazakhstan there has been a huge shift to digital and mobile payments, with consumers demanding a seamless and integrated digital experience no matter where they shop. Kaspi Pay is our response to help merchants exceed their customers' expectations and grow their businesses.

Payments Platform products are also amongst our most important tools to attract new customers and increase engagement, making their popularity fundamental to Kaspi.kz's growth outlook. We continue adding new opportunities to spend and pay, which is a function of new merchants and product development.

In the second quarter of 2022, Payments Platform merchant onboarding remained strong, up 164% year-over-year to 356K merchants. The benefits of this will be seen in the second half of 2022 and beyond as existing merchants shift more of their volumes to Kaspi Pay, leading to high ongoing growth in RTPV.

In the second quarter of 2022, there were 383K active Kaspi Pay POS devices, up 113% year- over-year.

By creating our own closed-loop proprietary payments network, we have eliminated the need for third-party processors and Kaspi Pay offers merchants and consumers at scale, a best-in-class end-to-end experience. This resulted in Kaspi Pay acquiring accounting for 89% of all Kaspi Gold POS in-store retail transactions during first quarter of 2022, with third-party acquirers now only processing 11% of our transactions.

As we add new opportunities to pay, consumer growth has remained robust. Payments Platform active consumers increased 20% year-over-year, to reach 10.5 million, in the second quarter of 2022.

During the second quarter of 2022, Total Payment Value (TPV) increased 38% year-over-year to reach KZT16.4 trillion. Revenue Generating TPV (RTPV) increased 53% to reach KZT4.6 trillion. RTPV continues to grow significantly faster than TPV, a trend that is a result of our success rolling out Kaspi POS devices. Going forward, we will continue working hard to ensure Kaspi Pay keeps playing its part in Kazakhstan's transition to a cashless digital economy. For the first half of 2022, TPV and RTPV increased 41% and 56% to KZT29.2 trillion and KZT8.2 trillion respectively. Average interest free balances increased 23% year-over-year in the second quarter of 2022 to KZT593 billion.

During the second quarter of 2022, Payments Platform revenue growth increased 54% year- over-year to reach KZT76,157 million. For the first half of the year, Payments Platform revenue growth increased 56% to reach KZT139,744 million. Take-rate in the second quarter and first half of 2022 was broadly stable year-over-year at 1.2%.

Payments Platform adj. net income increased 60% year-over-year to KZT47,755 million, with net income profitability of 62.7% up significantly from 60.3% in the second quarter of 2021. Payments Platform profitability continues to benefit from our proprietary payments network's operational gearing. For the first half of the year, Payments Platform adj. net income increased 65% year-over-year to reach KZT87,193 million, with net income profitability increasing to 62.4% from 58.8% in the same period last year.

In 2021, Kaspi Pay B2B emerged as a new and fast-growing component of our RTPV. Our B2B proposition is primarily targeted at wholesalers and small merchants, allowing them to settle invoices instantly and conveniently. During the second quarter of 2022, B2B RTPV increased 5.7x year-over-year to KZT102 billion and reached 2% of RTPV. Although it is still early days, we believe Kaspi Pay B2B can emerge as a transformative product, put us in pole position to design other innovative merchant products and is another way we can help Kazakhstan's SMEs go from strength to strength.

For the remainder of 2022, we will continue to ramp-up our merchant base and expect this to 1) contribute to ongoing strong growth in RTPV and 2) a more diverse mix of Payments Platform revenue streams including B2B payments. We continue to expect growth in average balances of around 20% year-over-year. This moderation from prior years is a natural consequence of growth in Payments Platform consumers stabilising but is none the less robust, as opportunities to transact expand.

With strong top-line trends continuing, we now expect Payment's Platform to deliver 2022 RTPV growth of around 50% year-over-year, at the top-end of our previous 40-50% guidance range. As a result of tight cost control and operational gearing we now expect Payment's full-year adj. net income profitability above 60%. This is an upgrade compared with the around 60% guidance we provided earlier.

Marketplace Platform

GMV up 50%, revenue up 40% & adj. net income up 33%

Our Marketplace Platform connects both online and offline merchants with consumers, enabling merchants to increase their sales using an omnichannel strategy and consumers to buy a broad selection of products and services, at the best possible prices from a wide range of merchants. In particular, Kaspi Marketplace champions domestic Kazakh brands and merchants.

m-Commerce is our mobile solution for shopping in person, while consumers can use e- Commerce to shop anywhere, any time with free delivery. Kaspi Travel allows consumers to digitally book domestic and international flights and domestic rail tickets. Together we offer a unified shopping experience, irrespective of online or offline, making us relevant across practically all areas of consumer spending.

Just as with our Payments Platform, the rapid expansion of our Marketplace merchant base is now an important area of our attention. We're focused on digitally onboarding Kaspi Pay merchants to Marketplace and during the second quarter of 2022, Marketplace merchants increased to 198K, equivalent to 243% year-over- year growth. Over the same period, Marketplace consumers increased 42% year-over-year to 5.4 million.

We expect merchant growth to remain at high levels throughout 2022, with more merchants and enhanced shopping categories leading to ongoing fast growth in consumers and transactions per consumer. An enlarged merchant base will contribute to rapid growth from earlier-stage products like Kaspi Delivery and Kaspi Marketing over the medium-term.

Throughout the first half of 2022 we took reduced Marketplace promotional campaigns due to the negative backdrop. We also prioritised adding new lower ticket shopping categories. This positively impacted number of purchases but negatively impacted GMV growth, especially in e-Commerce which is higher ticket and therefore more promo sensitive than m-Commerce. Despite these factors, Marketplace GMV still increased 50% year-over-year to KZT618 billion in the second quarter of 2022. For the first half of 2022, Marketplace GMV increased 50% year-over-year to KZT1,045 billion.

m-Commerce had an excellent second quarter and first half 2022 with 53% and 58% year-over- year GMV growth respectively. m-Commerce GMV was KZT350 billion and KZT599 billion during the second quarter and first half 2022.

e-Commerce demand was strong with orders up 103% year-over-year in the second quarter of 2022. GMV increased 23% year-over-year to KZT205 billion during the same period, accelerating from 14% year-over-year growth in the first quarter. GMV growth below order growth, reflects expansion in the breadth and depth of everyday items, at lower price points. For the remainder of 2022, we expect items sold to continue growing faster than GMV. However, as new categories grow in share, faster GMV growth will follow and with Juma planned to take place twice in the second half of the year, we expect e-Commerce GMV growth to continue accelerating. In the first half of 2022, e-Commerce orders and GMV increased by 89% and 19% year-over-year respectively. e-Commerce GMV reached KZT347 billion during the first half of 2022.

Kaspi Travel's GMV increased 3.9x year-over-year to KZT63 billion during the second quarter of 2022, with ticket sales up 6.1x to 3.1 million. Travel's GMV reached 10% of Marketplace GMV, which is impressive scale in less than two years. For the first half of the year, Travel's GMV increased 328% year-over-year to KZT99 billion.

The expansion of Kaspi Smart Logistics Platform to more cities and introduction of free delivery for consumers is helping us grow our e-Commerce merchant and consumer base. In the second quarter of 2022, orders delivered increased 142% year-over-year. Delivery now accounts for 91% of orders, was free for the consumer for 96% of orders, with 53% of orders delivered within 48 hours.

During the third quarter of 2021, we started to roll out Kaspi Postomat and had already added 1,684 lockers by the end of June. These lockers are now installed in 20 cities across the country and accounted for 12.4% of e-Commerce deliveries. We use Kaspi.kz's proprietary big data to identify the most appropriate locations and consumer feedback is positive. By the end of 2022, we plan to have around 3,000 Postomats, which should give us Kazakhstan's largest locker and last mile delivery network.

At scale, the addition of Kaspi Postomat to the Kaspi Smart Logistics Platform significantly enhances its value proposition for consumers, merchants and delivery partners. We're very happy with our investment in free delivery, which is giving our consumers a superior shopping experience, helps local merchants to sell nationwide and differentiates Kaspi e-Commerce vs other digital shopping platforms.

Marketplace take-rate declined to 7.7% from 8.3% in the second quarter of 2021 and resulted in Marketplace revenue growth of 40% year-over-year to KZT48,380 million. For the first half of 2022, Marketplace take-rate declined to 7.6% from 8.2% in the first half of 2021, with 1H22 Marketplace revenue growing 40% year-over-year to KZT81,054 million. The majority of the decline in year-over-year take-rate reflects the blended contribution from Kaspi Travel which is GMV growth enhancing but take-rate dilutive.

We are now disclosing m-Commerce and e-Commerce take-rate separately. During the second quarter of 2022, m-Commerce and e-Commerce take-rates were 7.7% and 9.0% respectively. Reduced promotional activity contributed to lower take rate but as mentioned previously promotional activity is now increasing. Lower underlying e-Commerce take-rate year-over-year also reflects growth in supermarkets GMV which is a substantial revenue opportunity but take-rate dilutive. The inclusion of Kaspi Travel reduces reported Marketplace take-rate, although Travel's take-rate increased to 3.8% from 2.9% in the second quarter of 2021, due to the growing share of higher take-rate rail bookings.

During the second quarter of 2022, Marketplace Platform adj. net income reached KZT30,596 million, representing a 33% increase year-over-year. Net income profitability was 63.2% from 67% in the same period in 2021, due to investment in free delivery. For the first half of 2022, Marketplace adj. net income increased 35% year-over-year to KZT50,677 million, with profitability of 62.5% from 65% in the first half of 2022.

In 2021 we started testing e-Grocery, in partnership with Magnum, Kazakhstan's largest food retail chain. Kazakhstan's grocery market was valued at $12 billion in 2021, making it the largest possible spending opportunity Marketplace can address. Under this partnership Magnum is responsible for operating dark stores, purchasing SKUs (currently 33K) and same day, free delivery to consumers. Our main role is to generate orders and sales, define assortment and pricing. We also provide integrated payments via Kaspi Pay and use Kaspi Marketing to run highly personalised advertising campaigns.

We started pilot testing e-Grocery last year and within month's volumes scaled so fast that we quickly became Kazakhstan's N1 e-Grocer, albeit in a nascent market. In the second quarter of 2022, 88K consumers made 265K orders. Average ticket size was around $25. Going forward, scaling e-Grocery is now one of our most important priorities and although average ticket-size and take-rate are lower than our e-Commerce average, we would expect a strong e-Grocery proposition to be materially additive to engagement and Marketplace mid-term growth.

The breadth and depth of our merchant proposition is one of the most important drivers of transactions per consumer growth and our long-term competitive advantage. In this regard, we expect to continue merchant onboarding at high levels. We expect to see continued strong growth from Kaspi Travel as consumer adoption increases, new products are added and demand for international travel recovers. We also expect rapid growth of e-Grocery and on the back of our enhanced merchant offering, Kaspi Smart Logistics will continue to scale.

Marketing activity is now normalising and in the second half of 2022 we expect to see accelerating Marketplace GMV growth. We now expect Marketplace Platform to deliver 2022 GMV growth of around 55% year-over-year, an upgrade from our previous around 50% guidance. We will continue to invest in free consumer delivery but given the growing scale of the business this will have less of an impact on Marketplace profitability in the second half of the year and for full year 2022 we continue to expect a Marketplace net income margin in the mid-60% region.

Fintech Platform

TFV up 17% YoY, Buy-Now-Pay-Later 47% of origination & 2.2% CoR

The short-term nature of all our financing and more specifically Buy-Now-Pay- Later (BNPL) products allow us to quickly ramp-up or scale back origination as we observe changes in the consumer environment. During the second quarter of 2022, Total Finance Value (TFV) increased 17% year-over-year to KZT1,166 billion. More modest growth reflects our deliberate decision to take a more cautious approach to origination. We have now reaccelerated TFV growth and are planning for business-as-usual approval levels in the second half of the year. For the first half of 2022, TFV increased 19% year-over-year to KZT2,038 billion.

Our average net loan portfolio increased by 50% year-over-year, to reach KZT2.4 trillion during the second quarter of 2022. Total deposits increased by 20% year-over-year to KZT2.9 trillion, leading our loan to deposit ratio to increase to 80% from 69% in the second quarter of 2022 but fall from 88% in the first quarter of 2022. We view our current loan to deposit ratio as broadly optimal. For the first half of 2022, our average net loan portfolio increased by 58% year-over-year and total deposits increased by 23%.

Portfolio conversion of 2.0x in the second quarter of 2022, in line with the same period in 2021, reflects ongoing higher early repayments levels, as healthy consumers borrow, transact and repay regularly. With consumer credit quality remaining extremely high, we expect to continue benefiting from rapid portfolio conversion throughout 2022. However, Juma will lead to a slightly higher avg. ticket size and longer maturity. With the event planned to take place twice in the second half of this year, we now expect 2022 portfolio conversion to be around 2x instead of the above 2x we previously guided for.

Low risk, small ticket, short duration Buy-Now-Pay-Later (BNPL) loans accounted for 47% of TFV in the second quarter of 2022, making them our most important Fintech Platform product. Our Merchant and Micro Business Finance products continue to see good traction.

Fintech yield was 27.3% and 27.1% during the second quarter and first half of 2022, reflecting the growing share of BNPL and Merchant Finance loans. Juma leads to a higher share of lower yielding BNPL loans and we continue to expect our full year 2022 yield to be around 25%.

During the second quarter and first half of 2022, our underlying credit cost of risk was 2.2% and 1.9% respectively. Low credit cost of risk reflects the low-risk nature of our products, especially BNPL, ongoing improvements in our data driven origination capabilities, as well as our efforts to constantly improve the efficiency of our collection processes. As near-term macro assumptions are amortised in the second half of 2022, we continue to expect our full year reported credit cost of risk to be around 2%.

Consumer credit performance is always in focus for investors when the economic situation appears to worsen. To expand on why our credit quality remains high, it is important to remember that with Kaspi.kz BNPL, our consumers do not maintain a continually revolving line of credit, that was approved in a different economic climate. Instead each transaction is a separate borrowing event, that allows us to check using our proprietary technology and data that our consumers are not overextending themselves. In addition, because our average loan term is short, just over 6 months, in the event of a downturn are older loans are quickly paid off.

Fintech Platform revenue increased by 32% year-over-year, reaching KZT172,050 million during the second quarter of 2022. As a result of both lower Fintech origination and a higher shower of lower yielding BNPL in the first half of 2022, Fintech revenue growth will moderate in the second half of the year, although this should prove short lived, given that we have started to accelerate TFV growth again. For the first half of 2022, Fintech Platform revenue increased by 37% year-over-year, reaching KZT342,533 million.

In the second quarter of 2022, Fintech Platform's adj. net income increased by 15% year-over-year to reach net income of KZT56,922 million. Adj. net income margin of 33.1% compares with 38% in the second quarter of 2021. Declining profitability mainly resulted from higher year-over-year funding costs. For the first half of 2022, Fintech Platform adj. net income increased by 26% year-over-year, reaching KZT114,516 million, with adj.net income margin of 33.4% compared with 36.4% in the same period in 2021.

We expect TFV origination to accelerate and approvals to normalise in the second half of the year but given our cautious approach in the first half, full-year 2022 TFV growth is now expected to be around 25% year-over-year, which is lower than our previous 30-40% guidance. Although we will continue to prioritise our BNPL product, we also expect Kaspi Business merchant financing and SME products to continue scaling rapidly. BNPL integrated with Kaspi Travel is also expected to see strong growth.

In 2022 our Fintech Platform should see solid top-line growth, even considering more modest origination and some yield reduction. With ongoing low cost of risk and tight cost control, we expect another year of healthy profitability growth, even taking increasing deposit interest rate costs into account. We continue to expect our 2022 Fintech net income margin guidance to be around low-30%, which is consistent with our guidance throughout this year.

Guidance for full-year 2022

During March we deliberately scaled back credit origination (TFV) and postponed promotional campaigns for our Marketplace Platform. However, the underlying drivers of Kaspi.kz's business, including consumer and merchant trends remain strong. We also continue to see high levels of credit quality. As a result, we're now scaling up credit origination and in July hosted our biggest Juma ever. We plan to repeat Juma, in the final quarter of this year.

Taking this into account, we are now upgrading our RTPV and GMV growth guidance for 2022 and this more than offsets lower TFV growth guidance. In addition, we now expect Kaspi.kz's consolidated adj. net income to grow by 27-30% year-over-year in 2022, which is at the top end of our previous 20-30% guidance.

GDR buyback program

Since the launch of our GDR buyback program we have spent around $51 million and repurchased 998,429 GDR's. This is equivalent to 0.52% of GDR's outstanding prior to the buyback. Total GDR's outstanding as 30 June 2022 were 191,958,533. Total GDR's outstanding as 22 July 2022 were 191,684,203.

Conference call information

On Monday 25 July 2022 the management of Kaspi.kz will hold a conference call and webcast at 1.00pm (London) (8.00am U.S. Eastern Time, 6.00pm Nur-Sultan time) to review and discuss the company's results for the second quarter and first half 2022.

Second Quarter and First Half 2022 Financial Results Conference Call

To pre-register for this call, please go to the following link:

https://ige.netroadshow.com/registration/client/11278/kaspikz's-2q22-financial-results-conference-call/

You will receive your access details via email.

Kaspi.kz Consolidated Financial Statements

About Kaspi.kz

Kaspi.kz's mission is to improve people's lives by developing innovative mobile products and services. At our core is the Kaspi.kz Super App, the leading mobile app in Kazakhstan.

The Kaspi.kz Super App serves as a single gateway to our Payments, Marketplace and Fintech Platforms and is an integral part of our users' daily lives. As people's lives become increasingly digitalised, Super App usage is expected to grow supported by accelerating adoption of cashless payments, e-Commerce and digital financial services.

Kaspi.kz Super App business model ensures the growth and development of one service contributes to the growth and development of other services, creating a powerful virtuous cycle. Increasing usage of a growing number of services puts Kaspi.kz in a strong position to keep innovating, delighting our users and fulfilling our mission.

Kaspi.kz has been listed on the London Stock Exchange since 2020.

For further information david.ferguson@kaspi.kz +44 7427 751 275

Forward-looking statements

Some of the information in this announcement may contain projections or other forward- looking statements regarding future events or the future financial performance of Kaspi.kz. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might", the negative of such terms or other similar expressions. Kaspi.kz wish to caution you that these statements are only predictions and that actual events or results may differ materially. Kaspi.kz does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Kaspi.kz, including, among others, general economic conditions, the competitive environment, risks associated with operating in Kazakhstan, rapid technological and market change in the industries the Company operates in, as well as many other risks specifically related to Kaspi.kz and its respective operations.

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July 25, 2022 02:08 ET (06:08 GMT)