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Kaspi.kz’s Strategic Growth and Financial Performance

GOOVER DAILY REPORT July 5, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Kaspi.kz’s Credit Rating Upgrade by S&P Global
  3. Kaspi.kz’s Business Model and Strategic Growth
  4. Financial Performance in 2024
  5. Market Presence and Consumer Engagement
  6. Academic and Market Recognition
  7. Conclusion

1. Summary

  • The report comprehensively covers the strategic growth, financial performance, and global recognition of Kaspi.kz, a leading fintech company with an innovative Super App model. Key areas explored include the company's credit rating upgrade by S&P Global, significant achievements within its Payments, Marketplace, and Fintech Platforms, and its wide market presence and user base. The report highlights Kaspi.kz’s robust business strategy, superior asset quality, and strong financial framework, leading to its credit rating upgrade from BB to BB+ by S&P Global. Kaspi.kz’s two-sided Super App model, consisting of the Kaspi.kz Super App for consumers and the Kaspi Pay Super App for merchants, facilitates numerous transactions and services, boasting 14 million monthly active users and 581,000 merchant partners in 2023. Additionally, Kaspi.kz’s successful listing on NASDAQ in 2024 marks a milestone in its global financial credibility. The leadership of CEO Mikhail Lomtadze has been instrumental in driving this success.

2. Kaspi.kz’s Credit Rating Upgrade by S&P Global

  • 2-1. S&P Global upgrades Kaspi.kz's credit rating to BB+

  • On July 5, 2024, S&P Global upgraded Kaspi.kz’s long-term global scale credit rating to 'BB+' from 'BB', reflecting the company’s strong financial performance and strategic business operations. The national scale rating was also raised to ‘kzAA+’ from ‘kzAA-’.

  • 2-2. Stable Outlook and National Scale Rating

  • The credit rating upgrade comes with a stable outlook, signaling confidence in Kaspi.kz’s ability to maintain its strong financial position. The stable outlook ensures investors of the company's reliable performance. On the national scale, the rating was improved to ‘kzAA+’ from ‘kzAA-’, further enhancing its creditworthiness in Kazakhstan.

  • 2-3. Reasons for Credit Rating Upgrade

  • The upgrade by S&P Global was based on several factors including Kaspi.kz’s unique strategy, leading brand, superior asset quality, and strong financial track record. Kaspi.kz has successfully diversified its business by rapidly expanding its Payment and Marketplace Platforms, thereby stimulating customer loyalty and creating synergies. Over the past five years, Kaspi.kz’s Return on Equity (ROE) has averaged 80%, demonstrating superior earnings generation. The company has also significantly strengthened its capitalization, reflecting its robust and well-managed financial framework.

3. Kaspi.kz’s Business Model and Strategic Growth

  • 3-1. The Two-Sided Super App Model

  • Kaspi.kz operates a unique two-sided Super App model, which consists of the Kaspi.kz Super App for consumers and the Kaspi Pay Super App for merchants. This model allows both consumers and merchants to access Kaspi.kz's Payments, Marketplace, and Fintech Platforms. The goal is to significantly enhance users' everyday experiences by enabling seamless transactions and connections through Kaspi.kz's proprietary payments network. In 2023, the Kaspi.kz Super App was the most popular mobile app in Kazakhstan, boasting 14 million monthly active users (MAUs), with 9.1 million accessing its services daily. Moreover, the Kaspi Pay Super App had 581,000 merchant partners in 2023.

  • 3-2. Growth of Payment and Marketplace Platforms

  • Kaspi.kz has strategically grown its Payments and Marketplace Platforms, which are integral to its Super App model. The rapid expansion of these platforms has stimulated customer loyalty and created synergies between consumers and merchants. Kaspi.kz’s mission to improve lives through innovative mobile products and services has led to the development of highly relevant digital products, and this growth is reflected in substantial top-line gains and a profitable business model.

  • 3-3. Steady Expansion and Diversification

  • Kaspi.kz’s diverse business strategy includes the continued development and diversification across its primary platforms. The combination of a large, highly engaged consumer and merchant base, and a capex-lite approach has enabled Kaspi.kz to innovate continuously while maintaining strong financial growth. This diversified approach has driven strong capital generation and substantial returns on equity, averaging 80% over the past five years. Furthermore, Kaspi.kz’s strategic growth has been recognized by S&P Global, which upgraded its long-term global scale rating to 'BB+' from 'BB' and its national scale rating to 'kzAA+' from 'kzAA-'.

4. Financial Performance in 2024

  • 4-1. Q2 and H1 2024 Financial Announcements

  • Kaspi.kz (KSPI US) has announced that it will report its financial results for the second quarter and the first half of 2024 on Monday, 22 July 2024. The company will hold a conference call and webcast at 8.00am EST (1pm GMT, 5.00pm Astana time) to review and discuss the results for this period. To attend the call, interested participants can pre-register at the provided link to receive access details via email.

  • 4-2. Summary of Financial Results for the Half-Year

  • Kaspi.kz has indicated that the financial results for the first half of 2024 will be shared during a dedicated conference call. This announcement will provide comprehensive insights into the company's performance for the period ending June 30, 2024. The details of the call, including how to participate, were shared in the company's press releases dated June 27, 2024.

  • 4-3. Key Performance Indicators

  • For the first half of 2024, Kaspi.kz is expected to highlight several key performance indicators (KPIs) reflecting its operational and financial health. These KPIs will include metrics from its Payments, Marketplace, and Fintech Platforms. Furthermore, the company will detail the activities and engagement rates of its 14 million monthly active users (MAU) and 581 thousand merchant partners recorded in 2023. These figures are crucial as they demonstrate the scale and engagement of users on their Super App platforms, which ultimately contribute to the company's top-line growth and profitability.

5. Market Presence and Consumer Engagement

  • 5-1. User Base and Monthly Active Users

  • As of 2023, the Kaspi.kz Super App, which is Kazakhstan’s most popular mobile app, boasts 14 million monthly active users (MAU). Out of these, 9.1 million users engage with the app on a daily basis. This substantial user base reflects the app's significant penetration and frequent usage within the country.

  • 5-2. Kaspi.kz Services for Consumers and Merchants

  • Kaspi.kz operates a dual-sided Super App model designed to cater to both consumers and merchants. Consumers access the Kaspi.kz Super App, while merchants use the Kaspi Pay Super App. In 2023, the Kaspi Pay Super App served 581,000 merchant partners, making it a digital partner of choice for many businesses and entrepreneurs in Kazakhstan. These Super Apps provide access to Kaspi.kz’s Payments, Marketplace, and Fintech Platforms, facilitating numerous consumer and business transactions through a proprietary payments network.

  • 5-3. Innovative Mobile Products and Services

  • Kaspi.kz’s mission is to enhance people’s lives through innovative mobile products and services. This mission is executed via the unique Super App model which offers highly relevant digital products designed to meet users’ everyday needs. The combination of a large, engaged user base and a capex-light approach underpins Kaspi.kz’s strong top-line growth and profitable business model. Such innovation has earned academic recognition, with Harvard Business School authoring two case studies on Kaspi.kz that are part of its Masters curriculum.

6. Academic and Market Recognition

  • 6-1. Case Studies by Harvard Business School

  • Harvard Business School has produced two case studies on Kaspi.kz, which continue to be used in their Masters programs. These case studies highlight Kaspi.kz's unique business strategies and impressive performance metrics.

  • 6-2. Listing on NASDAQ

  • Kaspi.kz has been listed on NASDAQ since 2024. This listing marks a significant milestone for the company, enhancing its market visibility and financial credibility on a global scale.

  • 6-3. CEO Mikhail Lomtadze’s Leadership

  • Under the leadership of CEO Mikhail Lomtadze, Kaspi.kz has achieved notable success. Lomtadze has been instrumental in implementing the company's Super App strategy, which integrates Payments, Marketplace, and Fintech Platforms. This strategy has been widely recognized, including a credit rating upgrade from S&P Global to BB+. Lomtadze's leadership has also been praised for Kaspi.kz's significant growth, strong financial track record, and commitment to innovation.

7. Conclusion

  • The findings of the report on Kaspi.kz emphasize its strategic growth, effective leadership, and robust financial performance, making it a benchmark in the fintech industry. The company’s two-sided Super App model significantly enhances user experiences, leading to a strong market presence with 14 million monthly active users and 581,000 merchant partners. The credit rating upgrade by S&P Global to BB+ reflects Kaspi.kz’s stable financial outlook and superior asset quality. CEO Mikhail Lomtadze’s vision has driven substantial growth and innovation, which has been recognized academically through Harvard Business School case studies and marks the company's successful listing on NASDAQ. Although Kaspi.kz demonstrates strong growth and financial performance, the report suggests monitoring market dynamics and technological advancements to sustain its leadership position. Future prospects include continuous innovation in mobile products and services, potentially expanding Kaspi.kz’s market presence beyond Kazakhstan. Practical applicability of the findings supports investor confidence and strategic business decisions focused on long-term growth and financial stability.

8. Glossary

  • 8-1. Kaspi.kz [Company]

  • Kaspi.kz operates a Super App providing integrated services across Payments, Marketplace, and Fintech Platforms. It is widely recognized for its strategic growth and financial success, with a large user base and a substantial market presence in Kazakhstan. The company has been listed on NASDAQ since 2024 and is often studied in academic circles like Harvard Business School.

  • 8-2. S&P Global [Organization]

  • S&P Global is a leading credit rating agency that rated Kaspi.kz BB+ due to its unique strategy and strong asset quality. This upgrade reflects Kaspi.kz’s stable financial outlook and improved national scale rating.

  • 8-3. Mikhail Lomtadze [Person]

  • Mikhail Lomtadze is the CEO of Kaspi.kz, credited for the company's strategic vision and leadership. Under his guidance, Kaspi.kz has achieved substantial growth, market presence, and a noteworthy NASDAQ listing.

9. Source Documents