Joint Stock Company Kaspi.kz (KSPI) Q3 2025 Earnings Report, Transcript and Summary

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

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

Yes. Thank you, David. So let's go straight to the presentation. So briefly, the results for the quarter across all our platforms. What we're showing here is the results also without excluding effect of some external factors. So the Payments grew TPV, 18%; revenue, 10%; nice growth on the net income of 12%. The marketplace mainly impacted by the shortage of supply of the smartphones and iPhones more specifically. So our growth has been 12% year-over-year, but 20% GMV growth in case if we exclude the effect of the smartphones. And you can also see that our revenue would be 32% up, excluding effect for the smartphones and 16% net income growth, excluding effect of the -- largely of the smartphones, 7% growth if we consider that factor in. The fintech also has shown nice growth, 16% on TFV. 24% on revenue, and it would be 28% growth, excluding some of the effects like tax on the government securities revenue and other external factors. So I will go through them on the following slide, but 15% growth if we actually include them. And our top line growth of 20% year-over-year, and 23% if we exclude the external factors, and 21% if we exclude the external factors as well. And also considering where we are in terms of our performance and the next year, we are also starting ADS buyback in November for [ $100 million ] would like to bring forward -- considering our cash generation and performance, we would like to bring forward the distribution of cash, but also it's a good investment considering where we are in the stock. So this is just briefly some of the factors we have listed. For the external ones, which had the impact on our performance from the financial point of view, again, the core business has performed really nicely. Some of the things which have happened from external factors is the smartphone registration requirement and shortage of supply of iPhones that had about 8% impact on the GMV and 3% on the consolidated income. However, we still believe that the demand is there. So next year should be a good year to recover. 10% tax on revenue from government securities. I mean, in most of the markets, actually, the revenue is taxed. So Kazakhstan introduced the tax on the revenues from the government securities this year, and it's minus 1% on net income. Increase in minimum reserve requirements, but also we cannot -- those reserves are kept with the National Bank, and there is no interest accrued. So that had an impact of minus 1%. And the base rate decreased (sic) [ increased ] from 15.25% to 16.5%, again, impact on consolidated net income, minus 4%. We are in the environment of high interest rates. As the interest rates inflation normalizes, there is an additional performance positives for the next year. This is just to tell you and explain that actually the core business performing really nicely, and the growth rates are quite high. So if you exclude the smartphones, our GMV growth has been 25% and highest growth top 5 categories like beauty and personal care, 69% growth; clothing, 51% growth; and home and garden, 35%. So we're really growing across the board on many of the categories, and the smartphones because of the supply disruption really had an impact this year. But again, we believe that demand is there. So we should -- we expect to recover next year and base also will be supportive for the growth next year. e-Grocery, we continue building up the leading e-Grocery business. So as you can see, we continue growing very nicely. We have about 1.3 million customers now. We grew on the GMV 53%, and we are growing on the transactions, 55%. We're scaling across the board. We have -- as we speak, we had 9 dark stores in the third Q. We're just adding another one, and we plan to enter another at least 2 cities next year. So our -- we have ambitious plans. As you remember, the business is growing fast, but it's also profitable. So for us, it's a very exciting vertical, which both, drives the engagement, but also brings a lot of value to consumers just because of the speed of the delivery, and the quality of services we provide. Another update is also on the -- connecting to other banks and payment systems to our payment and the QR code -- ability to pay with the QR code. So now we have even more banks connecting to our platform. The growth has been very high, 176% in terms of the TPV, and 5.4 million transactions in the third Q. So transactions are going even faster. We have now 7 banks connecting to it, and we have Alipay, which enables our consumers to transact with the QR code in the countries where Alipay is present. And we have also introduced the functionality when users of Alipay coming to Kazakhstan can also transact with the Kaspi QR. So we're building up this flexibility for our consumers, which is also useful for the merchants and will continue growing very nicely and fast. We also are going for the specific verticals we have mentioned briefly during our previous calls. So the restaurants is one of the verticals, which we are excited about. It's a major vertical, and the spending in our lives. So we have been growing very nicely. This is the functionality to remind everyone when the consumer can actually pay with the QR code, straight in the restaurant instantly, but also can leave the tip, and all this happens in our mobile application. So TPV has grown 259x, and the transactions in excess of 1 million transactions in the third Q. So growth is there. The vertical is also very valuable service for the restaurants, and consumers love it, and we continue rolling this out. As we are going for the restaurants vertical, we also have integrated the third-party restaurant delivery platform. It's Glovo. It's a subsidiary of Delivery Hero in Kazakhstan. It's a top 3 player in the country. So now we have integrated them in our Super App. Basically, consumers can access the Glovo service through a single registration, which is Kaspi ID. And from the registration, they can have access to the full service of the Glovo app, and they can -- they are also integrated with our payments so the consumers can seamlessly pay with the Kaspi Pay. So it's a major step for us. So we're working with a third-party mobile application. And yes, it's exciting that the teams are now working together to develop the service further. But this is again around the restaurant vertical, and we're excited to continue building up services in the specific verticals in the future. We have also done -- Kaspi has been doing regularly the events called Kaspi Key Note event when we present the major innovations and demonstrate them and tell what the service is about. So we have launched 3 services on the Kaspi Key Note event: it's pay by palm, it's advertising service and the Kaspi AI. So pay by palm is probably one of the -- of our major innovations in the payments after we have introduced the QR code. And before that, we have introduced the payments and the wire transfer by the mobile number. We were the first one to do that. So it's very cool feature when you basically just connect through our mobile application and the device to the Kaspi Pay-by-palm, Kaspi Alaqan, Alaqan in Kazakh means palm. And then you can simply put your palm on the top of our device, and the payment goes through. So it's very exciting innovation. We are planning to roll out it at end of this year. It will be free of charge for the merchants for the first 3 months. And we're -- in general, our view in the payments business is that we would like to give as much flexibility and the choice to consumers as possible. So now our consumers are able to pay with the card, obviously, can pay with the QR code, can pay with the palm. And in the future, we'll be -- we're also expecting to introduce some additional service. So we would like to give as much flexibility to the consumers as possible. And we're also working with the National Bank so that our consumers can also pay through any QR code at any merchant. So our consumers will have as much choice as possible, and this innovation will just bring additional very exciting way to transact in the stores, especially in the high intensity transactions. There is a video we have published both of Kaspi Alaqan and also the event. So you are welcome to check them out. It's really cool, and the service is really exciting, and initial feedback is really great. Advertising revenue has been one of the fastest-growing revenue drivers for us on the marketplace specifically, and we have grown ad revenue 56% year-over-year. And as we think about advertising, we constantly launch the services, which enable merchants to increase their sales, but also for consumers to make a very informed decisions. So we have launched, as we speak, the service when our merchants can advertise on the third-party platforms. So it's a pretty exciting and really cool service when you can immediately, almost like within the 1 minute, you can you can set up the campaign. You can manage the campaign from the screen of your smartphone. You can review the analytics and the third-party platforms, you can preview your ads and the platforms, which are -- merchants will be able to advertise on Facebook, Instagram, TikTok and Google, and we're very excited. This is just one more tool for our merchants to have a very efficient advertising campaigns, but also they can track them, they can manage them, and analytics are really in-depth around those marketing campaigns. So very excited about this new service in advertising we have just launched. We also have been working a lot behind the scenes on the on the AI, Kaspi AI Assistant. Our view of Kaspi AI Assistant is actually quite simple. We call him assistant because we believe that technology that we are developing at Kaspi will help to make daily tasks faster, simpler, more convenient, better quality. So we are looking for very specific use cases, which technology we're developing in Kaspi can enable. Again, technology has very wide -- as you guys know, very wide applications. However, we believe that to deliver the most value, we want the technology to be assistant in a specific tasks for either merchants and in the future consumers. So this is the first application of that technology, which we're launching. It's Kaspi AI Assistant for the merchants. So the way the service works is quite straightforward. David, can you switch to the slide? So basically, you can create -- the goal and the application of this service is to enrich the product content and create the rich content, which helps you to increase the interest from the consumers, and therefore, that converts into your sales. So it's basically, you are uploading the photos. You can see some functionality screens here. You're uploading the photo, then Kaspi AI creates a photos for your product. In this case, for example, the Kaspi AI will select the model, which will be wearing your hoodie. Then Kaspi AI also creates the description. Description is based on many different insights and parameters, which also includes the customer reviews and what is important for the customers in order to make the informed decision about this product. And afterwards, you can preview the product, and you can publish it. So it's really -- before that, it would take whatever per item may be, depending how complicated the item is, maybe 10, 15 minutes to upload the item and create the description, and that was the main -- one of the main pain points for the merchants. Now it just takes minutes, and everything is filled up automatically. You can even make a photo of the label, and then whole characteristics of the product will be filled up also automatically. And then -- we still call this an assistant, which means the control is with the merchant or with the user, so user can edit, user can confirm those descriptions, can select the photos, can ask AI to create more photos and so on and so forth. But that's really a very powerful tool, which has shown extraordinary results. As most of the technologies and the services we are developing, we run those services on ourselves first. And then we get convinced that technology is really working, and the service has the value. And after that, we offer it to customers and the merchants in that specific case. So we have enriched about over 0.5 million products. And I just can show just some of the examples. So for example, this one is the kettle and how much else you can say about the kettle in order to have more interest from buyers and to drive your sales? But actually, what Kaspi AI will suggest you to do -- and again, this is all generated by Kaspi AI. Those are actual screens and actual text, interaction works like -- similar like to the AI assistant. So it will create the photo in the interior. It will suggest to create the photo in the hand -- with the hand holding the smartphone, for example, because this is actually smart kettle. So it's not only boiling water, but it's doing a bit more of the functions. And also, it will suggest to create and will create the size of the kettle because then you can understand from those photos that actually this is the way it looks in interior. It's more than just a kettle. It's a smart kettle, and also it has sizes so you can understand how it stands in interior in terms of the size. And then it will create also the description, which will give you more details around each of those points. So this, for example, card product has been enriched, and the results were quite meaningful. So we have this product after enrichment increased by 35% in clicks, interest from consumers, and gave an 83% increase in the sales. And again, this is the product which was just photo or limited photo, limited description, and this is the rich content which sells, which also gives consumer more tools to make the right decision. Another example is tires, how much you can tell about tires? Obviously, tire is a tire. Everybody knows what tire looks like. However, Kaspi AI actually identified that if you create the infographic, which has, on the first page, which usually consumer sees, you need to say actually, 'What is the seasonality of this tire? And also list some main most important characteristics in infographics so that consumer can make a decision while looking at the photo." So this is how Kaspi AI created the whole thing. And then on top of it, it actually inserted the description and created a description, which says a little bit more on every individual -- most important parameter of the tire so that consumer can make the right decision. Again, all of those are created by Kaspi AI, including the photos and infographics and description. So clicks actually increased to 40%. So they drive more interest from the consumers, and 53% of the sales increased just because of this change on that tire. So it's really exciting technology. We have been working on this behind the scenes for quite some time. We have been running different -- obviously running different experiments before we decided to launch on the merchants. Here, what you see on the screen is like we would normally do with any similar technology and innovation. We basically identified 30 days before -- let's assume there are two similar control groups, right? So red is the product which we improved -- enriched the content, and then the gray color is the control group. So those are the similar products, let's assume similar kettles or similar tires, and we observed them for 30 days. And as you can see, behavior is very similar because those groups are extremely comparable products. After that, we have had our Kaspi AI to enrich the content. So again, to create the products, to create the description and characteristics and so on and so forth. And as you can see, 30 days after the enrichment, the control group continue performing decently, but it's still giving some increase. However, enriched content has more than 2x interest and clicks from the consumers than the control group. So this is a very exciting technology. It's the first application out of many which technology can be applied, and we are rolling this out. It will be available for the merchants in January of 2026. But again, as I mentioned, we are ourselves using this technology, and ourselves are enriching already the content, and we have enriched about over 500,000 products on our marketplace e-commerce side. I would like also to mention just very briefly some of the important priorities Hepsiburada is working on. And our main goal is really to ensure that we have a very sort of strong performance and continue exciting the consumers and merchants, and there are four priorities. Number one is the delivery, and they are not in priority, right? So we're focused -- we are working on four of them: so -- the main areas of investment is delivery; BNPL and the payment options from the banks; marketing; and user experience. On delivery side, we are making the low-ticket items more beneficial for the merchants to ship. Before that, the delivery cost was more than the value of the item which was sold. So we have actually worked on making sure that delivery is economically viable for the merchants and especially in the low-ticket items because those items are the ones which also driving engagement. And also, we have launched the weekly delivery, which was not -- yes, weekly delivery basically was not the market practice. And we believe that if you are e-commerce business, you should be delivering on the weekends, especially if the traditional retail works on the weekends. BNPL from banks and payment options, it's a wider selection of the banks and the wider selection of the payment terms and specifically also in the low-ticket items, which again are driving the engagement. Marketing, that's another area of investments and improvements. Teams are working mostly to optimize performance to make sure that if we are marketing the products, those products are high quality on the good terms, and therefore, they generate more interest, more traffic and more views. And as soon as this traffic lands in your mobile application, of course, user experience improvements are targeted to redesigning the consumer shopping journey in order to have the higher conversion rates. So those are -- there are a number of other things we're working on, of course, but this is something which gives us both results, but also they are important both for merchants and for the consumers. So as a result of those -- for improvements and changes in some of the areas, we have shown a very nice growth in number of purchases, which is the main metric for us, which shows the growing engagement from both consumers and merchants. So the growth has been through the year. In the third Q, plus 16% in order growth, which is a really exciting trend. Obviously, we will continue making further improvements and investments, but that's already a reasonable result to share with you. Some couple of things just to give you a bit heads up like some of the things which we're sort of working on. Just to visualize those are really -- you don't have to be the rocket scientists. There are some really simple stuff that you can do. So in case of the payment options, for example, we have shown to the consumers number of payments you are making, but also the monthly payment that you might have with the BNPL payment option, and those results before and after gave us maybe a test 4.5% growth in the GMV. This is -- again, I'm just showing you some simple examples. Obviously, I'm not going to take your time to go through all the improvements we have done. Another slide is, for example, the redesigning some of the homepage items. So we have we have basically brought in more sort of personalization in order for consumers to easier understand some of the products that they are fit for them or interesting for them. So recently viewed products and especially for you sections on the homepage and also in principle, just to see more products on the homepage. So CTR increased almost 2x, from 15% to 31% in A/B test for recently viewed section. And especially for you section increased from 18% to 23% click-through rate. So it just tells you how much of the simple improvements on the user experience can bring the value. We're also working on the third-party platforms, in this case, is influencers, which Hepsiburada has a significant influencer channel, which drives the sales. And here, we have basically also made a very sort of important changes, basically helping the influencers and the merchants in this case, to launch the campaigns when you reduce the price, and you also have the reduction from the Hepsiburada, how much of the benefit you will get, how much of the sales uplift you will have, and you can also see the products which you can launch. So these A/B tests gave us more than 9% the GMV uplift. And again, this is the service when merchant can launch the prices, and the price reduction is also matched with Hepsiburada commission reduction. And then influencers -- again, influencers here can actually easier see the offers which they can market to their subscribers. So we have done -- you can easier see the brands, you can see the products, and those are also very much -- we're trying to match those -- this selection with specific influencer. So influencer channel is quite substantial and A/B test gave us also the same excess -- in excess of 9% GMV growth. So all in all, I mean, we have introduced some of the major innovations on the Kaspi side, and we're also achieving the growth in orders, which is very healthy because we're investing our efforts into delivery, marketing, payment options, BNPL and user experience improvements. And back to you, David.

All right. So thank you, Mikheil. Let's go on and just talk about the performance of the core business, starting with the payment platform. So I think that's the key message here on this slide. Payments growth remains robust, but also consistent throughout the year. Volumes up 14% in the third quarter, up 15% year-on-year for the 9-month period. And as we've talked about previously, just this reflects the ongoing popularity of Kaspi Pay, bill payments, and the fast adoption of B2B payments. Strong volume growth translates plus growth in ticket size, translates into faster growth in TPV, up 18% in the third quarter versus 14% volume growth, up 21% for the 9-month period versus 15% volume growth. So again, strong and consistent trends. What you have within the 69% of our volume that come from Kaspi QR and card is -- the shift continues to move in favor of QR, and that drives the take rate down, down 9 basis points in Q3, 8 basis points for the 9-month period. And again, that trend is consistent. You've seen that actually playing out over the last couple of years. The combination of strong top line growth, strong volume growth, strong TPV growth, but with take rate dilution results in lower revenue growth, plus 10% and plus 14% for the third quarter and 9-month period. Again, as you've consistently seen top line dropping through to the bottom line, operational gearing and cost control, faster bottom line growth in payments of 12% and 17%, respectively. Moving on to marketplace. So here, again, actually that you see the purchase volumes very strong and again, consistent throughout the year, up 36% year-on-year in the third quarter, up 36% year-on-year for the 9-month period. Transaction growth on marketplace remains fast. In terms of GMV growth, GMV growth up 12% and 15% year-on-year. This slide really illustrates the impact of the supply issues in smartphones, which as you see, excluding smartphones, GMV is up 20% for the third quarter and up 21% year-on-year. And you should keep in mind that the smartphone supply disruption is relevant not just for e-commerce, but for m-commerce as well. marketplace's take rate continues to move up, hitting once again, all-time high levels, 10.3% for the third quarter and for the 9-month period, driven by value-added services, namely Kaspi advertising and Kaspi delivery. As Mikheil showed you, advertising revenue up 56% in the third quarter, up 76% for the 9-month period. If we look more specifically at e-commerce, 12% GMV growth in the third quarter. If we adjust for smartphone, GMV growth up 25%. For the 9-month period, GMV up 19%. And again, if we adjust for smartphones, up 29% year-on-year. The performance of e-commerce ex smartphones remains very, very strong. The smartphone supply disruption is a countrywide issue. As we move into next year, from March, we have a very favorable comp, and we'd also expect over the course of next year for supply issues to naturally resolve themselves. The competitive position of e-commerce remains completely unchanged. And actually, on the purchase side of the equation, you see here again, growth very strong, up 86% year-on-year, and up 90% year-on-year for the third quarter and 9-month period, respectively, with e-Grocery contributing to that fast growth. M-commerce, always the slower growing of the marketplace platforms, but nonetheless, still an important platform, particularly for onboarding merchants. GMV growth up 12% in both periods. Here, too, if we adjust the smartphones, GMV growth up 17% and 15% in the third quarter, the 9-month period. Take rate moved up slightly, again, as we continue to just add additional value-added services and marketing campaigns for our merchants. And on travel, travel continues to post decent growth. GMV up 13% in the third quarter, up 17% for the 9-month period. Here, too, take rate is moving up nicely, 50 basis points in the third quarter, 60 basis points for the 9-month period. That is primarily due to the growth in Kaspi Tours now account for around 10% of GMV, Travel's GMV launched around 2 years ago. So it has grown nicely from 0% and will continue as we move into next year to grow above Travel's overall GMV rate, implying further take rate expansion. So the combination of GMV -- take rate expansion above GMV growth plus fast growth in grocery revenue translates into revenue growth in marketplace well above GMV growth, up 24% and 27% year-on-year for the period. Here, too, if we make the smartphone adjustment, you see revenue up 32% and 34%. So really just again, reiterating the point that the supply disruption in smartphones, which we expect to be temporary and to resolve itself over the course of next year is the primary and actually only reason for the sort of the slower growth that you are seeing in marketplace. Same comments on the net income side of things, up 7% and 13%, adjusted for smartphones, up 16% and 20%. Net income growth will grow below revenue growth, and that is just the mix effect of 1P e-Grocery growing fast and taking share within the mix. Finally, in Kazakhstan, moving on to the fintech platform. TFV growth remains very robust, up 16% and 17% in the third quarter and 9-month period. So here, too, not just robust, but again, consistent over the course of the year. The TFV growth is being driven by merchant lending, which we expect to keep growing at a faster rate than the consumer lending products. That's actually nothing new. That's been the case over the last couple of years and should remain the case going forward. The growth in origination is happening with stable pricing. The fintech yield flat year-on-year at around 16% in the third quarter, 18% for the 9-month period. And here too, you see strong growth in the loan portfolio, up 30% and 32% year-on-year, growing at a faster rate than the deposit base. But here too, the deposit base continues to see very robust and predictable trends. The new products that we've introduced and that we've talked about previously have seen solid month-on-month growth in deposits since their introduction. Cost of risk, 0.6% versus 0.5% in the same period last year. Overall, credit trends remain strong and consistent, albeit as we mentioned at the H1 numbers, currency depreciation in the first part of the year did necessitate by a macro provisioning in the first part of the year. NPLs have moved up slightly. But again, this is the trend that's been consistent over -- slightly versus the end of last year. This has been the trend throughout the course of this year. And overall, credit trends remain strong and consistent. Lower coverage reflects the growing share of the car loan and the growing share of the merchant financing. The car loan is secured. The merchant financing is sort of by nature, a lower risk product and therefore, requires less provisioning, provisioning unchanged on the consumer side of the equation. So what we have is just the mix effect. With strong origination in previous periods, stable pricing, you have decent and accelerating fintech revenue growth, up 24% in the third quarter and up 21% for the 9-month period. Faster revenue growth has also translated into accelerating net income growth. Accelerating net income growth up to 15% from 10% in the 9-month period. That's despite the growth in interest expenses in the third quarter, up 30% year-on-year. Adjusted net income growth reflects the effects of the base rate increase. So you can see that if rates hadn't moved up in the first part of the year, actually, the fintech platform would be on track for -- it would have delivered 28% bottom line growth in the third quarter and 18% for the 9-month period. So here, I think the point to illustrate is just how material the rate increases have been on the bottom line, but interest rates in Kazakhstan are at high levels, and this can move the other way when rates trend downwards. So moving on to Hepsiburada. As Mikheil talked about what -- there's multiple product initiatives taking place around payment options, marketing, delivering, user experience and so on. And one way you can sort of track the progress ultimately is in terms of purchases -- driving purchases, frequency of transactions on the marketplace. And you can see here that the initiatives that we have launched are gathering, increasing momentum, with purchase volumes up 16% for the third quarter versus plus 4% for the 9-month period. So that's a really encouraging increase in growth momentum as we look into next year. That mirrors in the GMV side of the equation. Financials are inflation adjusted. We're talking about real growth here. So I know there's been some sort of confusion around that in some of the commentary that I've seen. But here, too, you see GMV growth moving up, up 15% for the third quarter versus 5% for the 9-month period. So the investments, the product improvements that we're making are starting to drive an improvement in the top line performance of the business, and that's reflected in both 3P and the 1P sides of the business. The 15% and 5% GMV growth translates again into faster real revenue growth of 22% and 11% for the 9-month period. So here, too, you see that the investments that we're making start to translate into a faster-growing business. That is the aim, to invest and drive the top line performance of this business up to a faster rate for a sustained period of time. And that is also being helped at the revenue level by growth in advertising and growth in external delivery services, hence, the faster revenue growth versus GMV growth. You can see the impact of the investments that we're making. The investments are targeted primarily into those sort of four areas that we've talked about: delivery, payment options, marketing and user experience. And you see that impact on the EBITDA level, but you can see that these investments are translating into faster revenue growth. And the aim is for that faster revenue growth to be sustainable as we go into future years. The investments impact the bottom line. But what you can see here, if we look at the third quarter of 2025, is that the main area of that investment is on the payment options, the buy now, pay later options that we're integrating with third-party banks. That's the main increase, performance advertising and delivery to a lesser extent. Hepsiburada has also announced a $100 million share capital increase. And again, it is raising funds with a view to ensuring that, that business is well capitalized to pursue its different objectives over the course of next year. So what does all of this mean. For Kaspi in Kazakhstan, you see decent and consistent revenue growth, up 20% in both periods. Here, you see again at the revenue level, at a group level, the impact of smartphones, revenue would be up 23% and 22%, respectively, over the third quarter and the 9-month period. And then at the net income level, here, you have the impact, the 21% net income growth in the third quarter, and the 24% net income growth reflects the impact of smartphones, the higher base rate and the other external factors, regulatory and tax changes that have been introduced over the course of this year, but it helps you to understand the underlying operating performance of the business. And to put some perspective on this, if you think about at the beginning of the year, when we guided for net income growth of around 20%, you can see that without these external factors that have occurred subsequently, we're actually trending very close, exactly on track for that. The underlying core business growth drivers remain unchanged. Here is the consolidated numbers in -- it's just the culmination of Kazakhstan and Turkey together. And then in terms of the guidance, on the middle column here, you see the updated guidance. So lower GMV growth. This reflects the absence of the recovery in smartphones in the fourth quarter. Again, just to reiterate from March 2026, if nothing else, we have a very, very favorable base effect going forward. And there's no reason to think that the supply disruption won't resolve itself over the course of next year. If we adjust for smartphones, you can see that marketplace is on track for 19% to 21% GMV growth. TPV payment growth around 20%. That's at the top end of the range we provided at the beginning and summer periods, and TFV growth in line with the guidance that we provided at the summer period around 15%. So it's really only the smartphone issue that's affecting the top line trends. Bottom line of around 10% growth in Kazakhstan, that is lower than the around 15%, and that reflects smartphones, it reflects the tax and regulatory changes and again, the impact of the higher base. If you ex out those factors, the business will be on track for around 18% to 20% growth next year. And this gives you some indication of what growth would be as the smartphone issues resolve themselves. Interest rates at some point move down, and the tax and regulatory factors at least move into the base. We've also launched the $100 million, or we will launch post this call, the $100 million ADS buyback program. And I think what we've said in the press release as we look into 2006 (sic) [2026] we expect to be able to achieve a balance between investing in the business, returning cash to our shareholders via both buybacks. This $100 million ADS buyback program doesn't have to be the end. It can be the start and the resumption of dividend payments. It's too early to go into the detail just to preempt that question around exactly what dividends can be. But I think we've been pretty consistent. This year was an investment year. We've made those investments to put the foundations in place for future growth. That was what we said 12 months ago. Our message has been consistent, and we can achieve -- and our message now is we can achieve a balance between investing in our growth and returning cash next year. So I hope that's sort of pretty clear to people. So on that note, let's open the call up to Q&A, please.

[Operator Instructions] Our first question comes from the line of Ygal Arounian from Citigroup.

Maybe I'll start with Hepsi in Turkey, and the updates there on the investment is really helpful. Can you just help sort of paint the picture on kind of where we're going from here, particularly around like the investment level needed when we can get to reverse the trend in terms of the operating losses? And how you found the competitive environment so far to be in Turkey, better than expected, worse than expected, sort of any insights around that? And then second question back to Kaspi and Kazakhstan and the advertising product numbers. I mean, real strong growth there, and it looks like, still very early in terms of penetration. You've got a lot of different products. So just help us think about how to think about advertising kind of -- if you benchmark against global peers, how big it can be, which areas that you can drive more advertising or less? Just kind of help think through that product as well.

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

Yes, sure. So on the Hepsiburada side, we are -- again, as a part of our priorities and the strategy is always to make sure that the products or the services and both for consumers and merchants is the one which brings the value. So that is our priority, which means when you think in terms of the growth or in terms of consumer engagement and the merchant side, that's our most important priority. So the growth is a result of those changes. And we believe that by building up the highest quality products and the user experience, those are the -- yes, those are the priorities which will generate the value for us going forward. So that -- that is our priority, has been our priority for this year. And the teams are working on the -- yes, basically on bringing the quality of the products to the next level. So the investments that you really see, those are the investments which, again, on the delivery side, we want to deliver both faster, but also have more engagement for merchants. And on the consumer side and the marketing side, those are the investments which bring traffic, which converts at the increasing rate into the sales. And most of our initiatives, strategic priorities are around the mobile application, which we are obviously prioritizing. So that's where we are. And we don't really see the huge need for capital investments going forward. But again, if those are justified by improving the quality of the services and the speed of delivery and the infrastructure for the delivery, then we'll bring those investments into the company. So that's basically on this -- and our priority is really growth. So that's -- but growth, high-quality growth, which means growth of happy engaged customers and happy engaged merchants. So that's on the Hepsiburada side. Yes. And in terms of the overall competitive dynamics on the market, again, I think we have been saying this many times that we do pay attention to competition. But at the same time, we believe that our priority needs to be quality of the services and bringing excitement by the quality of the services to the merchants and consumers. So we don't think about competition in a traditional way like maybe some other companies would think. So that's on the Hepsiburada side. In terms of Kazakhstan, I think we are developing the full range of the advertising services, which are in different stages of the development. So we have -- you can advertise products now through the product listings. We have advertising service for the brands. We have advertising service when you can actually introduce these points or rewards as a merchant. We also are thinking how we can enhance the merchant experience in the app itself in order for the merchants to bring a very highly targeted engaged consumer base to their products and to their shop in Kaspi.kz itself. So yes, so it's growing very nicely. The merchants giving us a very good feedback. And yes, we believe that we can continue growing this business, and it will grow faster than the rest of the -- we believe it will grow faster than the rest of the revenue on advertising. We just launched -- I think we've talked during the last presentation, if I'm not mistaken, that we launched gift certificates even for offline retailers. So all of those things at some point, they will start contributing meaningfully to the growth. So advertising is really exciting. And that's our core competency. It's all about data. It's all about user experience, and it's all about the merchant experience in the mobile application. So yes, we're very excited about the advertising services, and they will continue growing much faster than the rest of our revenue.

Our next question comes from the line of James Friedman from SIG.

I wanted to ask about the -- so on the marketplace side, the take rate was up again 80 basis points. So I was hoping you could elaborate on some of the components that are driving that. And then on the advertising side, can you just explain kind of in simple terms when you say you'll run the advertising campaigns for the merchants on the Super App. Just I'm trying to understand what it means to run it for them? So one on marketplace, one on advertising.

Sure. So on the take rate, the main drivers of the take rate are really additional services and advertising more specifically and also the delivery revenues. So that's the main driver of the take rate. We are not -- as you remember, historically, we believe that we want to deliver the value to the merchants by additional services, not by constantly increasing the seller fees. So that's not our strategy. So the increases that you actually see they are driven by additional added value services, and those are at the moment, specifically advertising and delivery. So that's on the take rate. In terms of the advertising, I mean, it's quite straightforward, right? So the current technologies enable us to develop a very sort of simple user experience when the merchants from the screen of their smartphone, they can select the items they want to promote and then advertise, and then they just tell us a bit the type of customers they want to reach. So it's a very simple service, all the data-driven. We truly believe that advertising needs to be developed in a way that you can launch an advertising campaign on Kaspi with the one hand by driving a car, if you are a small merchant. And this is how we're looking into this. So this is not something which complicates the merchant's life. They just can quickly launch it a very simple settings. They just need to tell us the type of merchants they -- sorry, the type of consumers they want to reach, and then we will do the rest of the job for them. And behind this, of course, is number of technologies which we're developing and the data, which enables us to have this very high prediction, high accuracy advertising services or advertising campaigns for merchants, which deliver them the value at an affordable cost. So that's basically the way we look at the advertising. It's simpler than many other big advertising platforms just because you don't really -- we don't really -- we do a lot of work for the merchants rather than merchants going through the complicated quest of setting up the advertising campaign. So this is why the services are showing high engagement in the growth rates.

Our next question comes from Griffen Drebing from Wolfe Research.

Griffen Drebing on for Darrin. Just wanted to touch on the smartphone impact again. I know last quarter, you mentioned there would not be an improvement, so the 8 points impact to GMV largely as expected. But just any color on current trends through October, first week of November or updated thoughts on the potential duration? And then how you're viewing the sustainability of non-smartphone marketplace growth given so much strength across the top verticals?

All right, Griffen, thanks for your question. So maybe I'll just really start on that one. So just for the benefit of everyone, I think there's sort of two issues to be aware of. The VAS first was number one. New registration requirements, those were introduced in the spring, and that was the sort of the initial cause of the supply disruption. What -- subsequently that -- how that's evolved into then just a shortage of the latest models, iPhone type 17 models across the entire country, and you have a situation where now people who are long overdue a new smartphone don't want to go out and purchase the old model when they know that the new model will be available shortly. So that's what's going on in the market. There's nothing to show any improvement currently. Supply remains, particularly of new models in incredibly constrained. But Apple will get new phones into the country over the next couple of months. So number one, as I mentioned earlier, you've got a very favorable comp. It kicks in, in March of next year. So that's your base if nothing else, favorable comp. And number two, there's no reason to believe that whilst it's taking a little bit longer than we would have hoped that the supply disruption won't normalize over the next couple of months and certainly through the first part of next year. So that's on smartphones, and we've shown you just how material that is and how meaningful that can be when it does turn, and it will turn. So that's the first thing. But then the second thing we've showed you is that ex smartphones, marketplace and particularly e-commerce growth in all of the verticals is really, really strong. So again, as you look into next year, when smartphones come back, other verticals should also remain pretty decent, and you have marketplace and e-commerce sort of returning to its more normalized growth trajectory. There's no change in marketplace's competitive position, and the supply disruption is not unique to Kaspi. It's a country-wide issue, and it's in one vertical. Everything else is pretty much performing as we'd expect it to within marketplace. So that would be my main comments.

[Operator Instructions] Our next question comes from Reggie Smith of JPMorgan.

Perfect. I guess one quick follow-up on the marketplace question a second ago. I guess there was some quick math. I think year-to-date, you guys are at 16% growth in marketplace GMV. I think your guide calls for like 12% to 14% for the entire year. Just wondering, am I thinking about that right, does that assume like a low single-digit GMV growth in the fourth quarter? And is that primarily like seasonality around the cell phone purchases? And then one other piece with that. I know you mentioned iPhone. Is this an issue for like all phones, so like Samsung phones or Android phones as well? Maybe just talk a little bit about the mix of, I guess, iPhone sales versus Android in the country, just to give us some background. And I have one follow-up after that.

Well, I'll start. Yes, I mean, you will see marketplace growth moderate in the fourth quarter. So remember, marketplace is not just e-commerce, it's e-commerce, m-commerce and travel. But yes, that you will see that, that happens, number one. And number two, I would say, on the smartphone issue, well, particularly at this time of year, it's high-end smartphones. It's particularly the likes of an iPhone 17. So it's not just that. But that sort of -- this is when the latest models are released. And if you think about it, if a smartphone is $1,500, that's a lot of missed GMV, or it's a lot of gain GMV when it comes back, and a lot of missed revenue versus an average ticket size on marketplace and on e-commerce, that's materially below that. So that would be my comments. I don't know if Mikheil wants to add anything about the market as a whole.

Yes. Well, I think that -- well, the GMV growth is a combination of also the value of items which are sold. And as David said, the highest value item in the smartphones is specifically the iPhones. And since the new model has not reached in the requested volumes, the country, it's not only Kazakhstan specific, then basically the people don't have a trigger to change their phone. But we just believe this thing will change in the future because demand is there. But Reggie, in terms of looking at the trends and the engagement, I think that the number of transactions is -- or number of purchases is actually extremely sort of valuable number just because that actually tells you how many purchases consumers make, how many times they interact with your marketplace and not just the value of items they buy. And you can see that actually the value of the marketplace purchases went up 36% and -- not the value, sorry, the number of the marketplace purchases went up 36%. And e-commerce, which is taking share from the m-commerce is actually plus 86%. So I think, again, transactions on the marketplace, 36% up, transactions on e-commerce, 86% up quarter-on-quarter. So this just tells you that there is a very healthy engagement, and our core business continues performing well, and those external factors eventually will have to -- we believe will disappear because demand is there, and supply will be reinstituted. It's just unfortunate that it's not happening as quickly as all of us wanted.

Yes. And that makes sense. It's interesting. I hear you talk about the iPhones, and I'm thinking about, here in the States, $1,500 for a phone, a lot of Americans are pulling back on those types of purchases. So I'm surprised that folks are still, I guess, hungry for new iPhones out in Kazakhstan. One last one for me. Thinking about grocery and delivery. I know obviously, those businesses are scaling now. But remind me you're thinking about -- are those businesses like self-sustainingly profitable on their own longer term? Or are you still thinking about them as kind of engagement tools to keep people on the platform so you can monetize them through other ways? That's it for me.

Yes. The grocery business is very much self-sustainable. We are on the profitability side. I think some time ago, we did show the profitability of e-Grocery. So you can go back to those numbers, and those numbers are the same pretty much. So yes, it is still sustainable. It's profitable. But as we are also having more demand for our products than the capacity to fulfill, we are building up dark stores, which is not -- which is not just an investment which is huge, but still to build once, the state-of-the-art dark stores, which we are opening depending on the size, but it can be an investment from, what is it, $10 million, $15 million, something like this, which can hold inventory for at least 15, 20 days on 10,000-plus SKUs. So those, when we say we're entering the new city, we are building the dark store sort of first or renting it if its rent is very affordable. So those are the investments we're taking because we need to build the infrastructure to meet the demand. But the good news is that demand is there, and it's almost like always demand is more than we can serve. So we are following the demand. At the moment, as we speak, we have about 10 dark stores, and we will enter a couple of new cities next year. And so we'll continue sort of building that infrastructure.

Got it. If I could just sneak one more in. I know this is important to investors. The dividend, I saw you guys are going to reinstate that next year. Should we think about that being at a similar level to where it was or maybe even higher given that the income base is higher today than it was before you paused it?

Well, Reggie, I'd just say on that. You should keep in mind, I mean international will require further expansion. So that's something to keep in your base case and will remain an important priority. International was never there pre-2025. So that's number one. Number two, having -- again, having said that, we can have a balance between the two. Our track record of returning cash primarily via dividends, but also via buybacks speaks for itself, and we get that this is something that is important to our investors. It's precisely why we've actually started the buyback, or it's one of the reasons why we've started the buyback earlier than we'd initially indicated. In our H1 numbers, we indicated cash returns would start from the beginning of the year. So we'll do our best to get the balance right between investing in future growth and returning cash via different methods, both buyback and dividends, and we can decide what is appropriate as we move into next year at the right point in time. But it's -- it wouldn't be right at this stage to go into specifics around what payout ratios can be.

Thank you. Unfortunately, we have run out of time for any further questions. At this time, I'd like to hand back to David for any closing remarks.

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

Thank you, everyone.

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