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QIWI Announces Third Quarter 2021 Financial Results
QIWI plc, a leading provider of cutting-edge payment and financial services in Russia and the CIS, today announced its financial results for the third quarter ended September 30, 2021.
3Q 2021 Key Operating and Financial Highlights1
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million(1) | ||||||||||
Consolidated Group results |
Revenue | 10,833 | 11,746 | 8.4% | 29,663 | 31,793 | 7.2% | 161.4 | ||||||||
Total Net Revenue | 6,637 | 6,419 | (3.3%) | 19,736 | 17,629 | (10.7%) | 88.2 | |||||||||
LFL Total Net Revenue(2) | 6,557 | 6,419 | (2.1%) | 18,122 | 17,629 | (2.7%) | 88.2 | |||||||||
Adjusted EBITDA | 4,020 | 3,834 | (4.6%) | 10,223 | 10,504 | 2.7% | 53 | |||||||||
Adjusted EBITDA margin | 60.6% | 59.7% | (0.8%) | 51.8% | 59.6% | 7.8% | 59.7% | |||||||||
Net Profit | 3,043 | 8,836 | 190.4% | 6,479 | 13,423 | 107.2% | 121.4 | |||||||||
Adjusted Net profit | 3,275 | 2,705 | (17.4%) | 7,785 | 7,470 | (4.0%) | 37.2 | |||||||||
Adjusted Net profit margin | 49.3% | 42.1% | (7.2%) | 39.4% | 42.4% | 2.9% | 42.1% | |||||||||
Payment Services (PS) |
PS Net Revenue | 6,108 | 5,855 | (4.1%) | 16,826 | 16,295 | (3.2%) | 80.5 | ||||||||
PS Payment Net Revenue | 5,303 | 4,856 | (8.4%) | 14,507 | 13,857 | (4.5%) | 66.7 | |||||||||
PS Payment Volume, billion | 435 | 490 | 12.6% | 1,153 | 1,332 | 15.6% | 6.7 | |||||||||
PS Payment Net Revenue Yield | 1.22% | 0.99% | (0.2%) | 1.26% | 1.04% | (0.2%) | 0.99% | |||||||||
PS Other Net Revenue | 805 | 999 | 24.1% | 2,320 | 2,438 | 5.1% | 14 | |||||||||
Adjusted Net profit | 3,633 | 3,231 | (11.1%) | 9,927 | 8,753 | (11.8%) | 44 | |||||||||
Adjusted Net profit margin | 59.5% | 55.2% | (4.3%) | 59.0% | 53.7% | (5.3%) | 55.2% | |||||||||
(1) Throughout this release dollar translation calculated using a ruble to U.S. dollar exchange rate of RUB 72.7608 to U.S. $1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of September 30, 2021.
(2) Like-for-like Total Net Revenue excludes discontinued Consumer Financial Services (Sovest) and Rocketbank segments.
Key events in 3Q 2021 and after the reported period
- Alexey Mashchenkov was appointed as CFO of QIWI.
- The Board of Directors approved an interim dividend for 3Q 2021 in the amount of 30 cents per share.
- QIWI completed the sale of its 40% stake (45% economic interest) in Tochka2 resulting in total gain on disposal of RUB 6.2 billion, including RUB 2.7 billion of accrued performance adjustment income contingent to Tochka’s earnings for the year 2021.
- The role of a single Unified Interactive Bets Accounting Center (ETSUP) was announced. Since October 2021 the newly-appointed ETSUP replaced TSUPIS of QIWI. The Company ensured a seamless transition of clients to the ETSUP. QIWI wallet remains a payment method for making bets and receiving winning payouts.
- Factoring PLUS was rebranded into ROWI.
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1 Total Net Revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted Net profit, adjusted Net profit margin, financial results on a like-for-like basis in this release are “non-IFRS financial measures”. Please see the section “Non-IFRS Financial Measures and Supplemental Financial Information” for more details as well as reconciliation at the end of this release.
2021 Guidance3
QIWI upgraded its FY 2021 guidance following strong results for 9M 2021:
- Total Net Revenue is expected to decrease by 10% to 15% YoY;
- Payment Services Net Revenue is expected to decrease by 5% to 10% YoY;
- Adjusted Net Profit is expected to decrease by 10% to 15% YoY.
Our outlook reflects (1) recent changes in the betting industry landscape described in the “Recent developments” section, (2) conservative projections of recovery of cross-borders operations, and (3) sale of stake in Tochka project, previously accounted for under the equity pick-up method.
These are our current views and expectations only which are based on the trends we see as of the day of this press release. If such trends were to deteriorate or improve further the impact on our business and operations could deviate from that currently expected.
The Company reserves the right to revise guidance in the course of the year or when additional information regarding the effect of the ongoing events becomes available.
3Q Results
Net Revenue breakdown by segments4
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million | ||||||||||
Total Net Revenue | 6,637 | 6,419 | (3.3 | %) | 19,736 | 17,629 | (10.7 | %) | 88.2 | |||||||
LFL Total Net Revenue | 6,557 | 6,419 | (2.1 | %) | 18,122 | 17,629 | (2.7 | %) | 88.2 | |||||||
Payment Services (PS) | 6,108 | 5,855 | (4.1 | %) | 16,826 | 16,295 | (3.2 | %) | 80.5 | |||||||
PS Payment Net Revenue | 5,303 | 4,856 | (8.4 | %) | 14,507 | 13,857 | (4.5 | %) | 66.7 | |||||||
PS Other Net Revenue | 805 | 999 | 24.1 | % | 2,320 | 2,438 | 5.1 | % | 13.7 | |||||||
Consumer Financial Services (СFS) | 64 | – | (100.0 | %) | 1,067 | – | (100.0 | %) | – | |||||||
Rocketbank | 16 | – | (100.0 | %) | 548 | – | (100.0 | %) | – | |||||||
Corporate and Other | 449 | 564 | 25.6 | % | 1,295 | 1,334 | 3.0 | % | 7.8 | |||||||
Total Net Revenue from continued operations decreased by 2.1% YoY to RUB 6,419 million ($88.2 million) driven by PS segment Net Revenue decline. Including discontinued operations of Sovest (reflected in CFS) and Rocketbank Total Net Revenue decreased by 3.3% YoY.
PS Net Revenue in 3Q 2021 was RUB 5,855 million ($80.5 million) – 4.1% lower compared to last year driven by decrease of PS Payment Net Revenue.
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3 Guidance is provided in Russian rubles
4 Total Net Revenue, PS Net Revenue, PS Payment Net Revenue, PS Other Net Revenue, СFS Net Revenue, Rocketbank Net Revenue, Corporate and Other Net Revenue in this release are “non-IFRS financial measures”. Please see the section “Non-IFRS Financial Measures and Supplemental Financial Information” for more details as well as reconciliation at the end of this release.
PS Payment segment breakdown by verticals5
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | |||||||||
RUB | RUB | % | RUB | RUB | % | USD | |||||||||
PS Payment Volume (billion)(1) | 435.4 | 490.5 | 12.6% | 1,152.6 | 1,332.1 | 15.6% | 6.7 | ||||||||
E-commerce | 133.9 | 118.8 | (11.3%) | 343.3 | 312.4 | (9.0%) | 1.6 | ||||||||
Financial services | 65.2 | 71.8 | 10.1% | 186.5 | 200.5 | 7.5% | 1.0 | ||||||||
Money remittances | 185.9 | 261.1 | 40.5% | 472.4 | 694.9 | 47.1% | 3.6 | ||||||||
Telecom | 36.2 | 28.6 | (21.0%) | 118.9 | 89.3 | (24.9%) | 0.4 | ||||||||
Other | 14.3 | 10.2 | (28.3%) | 31.5 | 35.0 | 10.9% | 0.1 | ||||||||
PS Payment Net Revenue (million)(2) | 5,303 | 4,856 | (8.4%) | 14,506 | 13,857 | (4.5%) | 66.7 | ||||||||
E-commerce | 3,123 | 2,286 | (26.8%) | 8,523 | 6,361 | (25.4%) | 31.4 | ||||||||
Financial services | 331 | 134 | (59.6%) | 931 | 462 | (50.4%) | 1.8 | ||||||||
Money remittances | 1,605 | 2,316 | 44.3% | 4,274 | 6,553 | 53.3% | 31.8 | ||||||||
Telecom | 143 | 115 | (19.2%) | 573 | 392 | (31.6%) | 1.6 | ||||||||
Other | 102 | 4 | (95.7%) | 206 | 90 | (56.4%) | 0.1 | ||||||||
PS Payment Net Revenue Yield(3) | 1.22% | 0.99% | (0.23%) | 1.26% | 1.04% | (0.22%) | 0.99% | ||||||||
E-commerce | 2.33% | 1.93% | (0.41%) | 2.48% | 2.04% | (0.45%) | 1.93% | ||||||||
Financial services | 0.51% | 0.19% | (0.32%) | 0.50% | 0.23% | (0.27%) | 0.19% | ||||||||
Money remittances | 0.86% | 0.89% | 0.02% | 0.90% | 0.94% | 0.04% | 0.89% | ||||||||
Telecom | 0.40% | 0.40% | 0.01% | 0.48% | 0.44% | (0.04%) | 0.40% | ||||||||
Other | 0.71% | 0.04% | (0.67%) | 0.65% | 0.26% | (0.40%) | 0.04% | ||||||||
(1) PS Payment Volume by market verticals and consolidated payment volume consist of the amounts paid by our customers to merchants or other customers included in each of those market verticals less intra-group eliminations.
(2) PS Payment Net Revenue is calculated as the difference between PS Payment Revenue and PS Cost of Payment Revenue (excluding D&A). PS Payment Revenue primarily consists of merchant and consumer fees. Cost of PS Payment Revenue primarily consists of commission to agents.
(3) PS Payment Net Revenue Yield is defined as PS Payment net revenue divided by Payment Services payment segment volume.
In 3Q 2021 PS Payment Net Revenue decreased by 8.4% YoY and amounted to RUB 4,856 million ($66.7 million) as a result of a decrease of PS Payment Net Revenue Yield by 23bps YoY partially compensated by an increase of the PS Payment volume by 12.6%.
PS Payment Volume increased by 12.6% to RUB 490 billion primarily due to the Money remittance and Financial services verticals.
- Money Remittances vertical went up by 40.5% YoY reaching a historical high level of RUB 261 billion represented by increased volumes across key streamlines, namely (i) B2B2C payments from QIWI wallet accountholders and payouts on cards (up 110% YoY) resulting largely from the development of our product offering for self-employed and increase in peer-to-peer operations, and (ii) repayment of customers’ betting winnings on the QIWI wallet (up 29% YoY).
- Volume growth in the Financial services vertical by 10.1% YoY was driven by increased bank and micro loans repayments.
- E-commerce vertical Volume went down by 11.3% YoY on decrease in payment volumes to foreign merchants due to temporary restrictions imposed by the CBR6 in December 2020 and expired in May 2021 which were partially offset by increased TSUPIS operations and recovery of tourism.
- Telecom volume decreased by 21.0% YoY to RUB 29 billion on lower volumes coming through MNOs7 and adverse impact of the downsizing kiosk network.
- Other category comprising a broad range of merchants in utilities and other government payments as well as charity organizations to which we offer payment processing services decreased by 28.3% YoY to RUB 10 billion.
We note significant growth within the B2B and B2B2C streamlines as we continuously enhance our customer value proposition. These transactions mostly represent use-cases connected to peer-to-peer transactions, light banking, collection of proceeds services we provide to self-employed customers, etc. We believe that significant growth in revenue from peer-to-peer transactions may not be representative of revenue from such transactions in future periods.
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5 Please see the section “Non-IFRS Financial Measures and Supplemental Financial Information” for more details as well as reconciliation at the end of this release.
6 Disclosed in the Report of Foreign Private Issuer on Form 6-K furnished to the SEC on December 9, 2020.
7 Mobile network operators.
A decline in PS Payment Net Revenue Yield by 23bps to 0.99% was mainly driven by a combination of (1) decreased E-commerce Net Revenue Yield by 41bps to 1.93% and (2) lower share of E-commerce vertical in total PS volume by 6.5ppt to 24.2%, both resulting from the temporary restrictions imposed on higher-yielding cross-border payments.
Any changes in the regulatory regime or in the interpretation of current regulations that affect the continuation of one or more types of transactions currently facilitated by our system may materially adversely affect our results of operations.
PS Other Net Revenue breakdown
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million | ||||||||||
PS Other Net Revenue | 805 | 999 | 24.1 | % | 2,320 | 2,438 | 5.1 | % | 13.7 | |||||||
Fees for inactive accounts and unclaimed payments | 506 | 441 | (12.8 | %) | 1,497 | 1,295 | (13.5 | %) | 6.1 | |||||||
Other Net Revenue | 299 | 558 | 86.8 | % | 823 | 1,143 | 38.9 | % | 7.7 | |||||||
PS Other Net Revenue increased by 24.1% YoY and stood at RUB 999 million ($13.7 million).
Fees for inactive accounts and unclaimed payments were RUB 441 million ($6.1 million) or 12.8% lower compared to 3Q 2020 due to extension of inactivity terms from 6 to 12 months as well as decreased number of QIWI wallet accounts.
Other Net Revenue largely composed of interest revenue, revenue from overdrafts provided to agents, and advertising increased by 86.8% YoY up to RUB 558 million ($7.7 million) mainly driven by higher interest revenue on more efficient cash allocation underpinned by increased interest rates.
Payment Services other operating data
September 30, 2020 | September 30, 2021 | YoY % | |||||||||||||
Active kiosks and terminals (units)(1) | 117,137 | 96,369 | (17.7 | %) | |||||||||||
Active QIWI wallet accounts (million)(2) | 19.7 | 14.9 | (24.5 | %) | |||||||||||
(1) We measure the numbers of our kiosks and terminals on a daily basis, with only those kiosks and terminals being taken into calculation through which at least one payment has been processed during the day, which we refer to as active kiosks and terminals. The period end numbers of our kiosks and terminals are calculated as an average of the number of active kiosks and terminals for the last 30 days of the respective reporting period.
(2) Active QIWI wallet accounts calculated on a yearly basis, i.e. an active account is an account that had at least one transaction within the last 12 months from the reporting date.
The number of active kiosks and terminals was 96,370, including Contact and Rapida physical points of service, a decrease of 17.7% compared to the previous year. The number of kiosks and terminals is generally decreasing as market evolves towards a higher share of digital payments. Nevertheless, our physical distribution network remains an important part of our omni-channel infrastructure allowing consumers to use physical currency for online payments and offering merchants access to a large pool of customers that use cash.
The number of active QIWI wallet accounts was 14.9 million as of the end of 3Q 2021, a decrease of 4.8 million YoY. The decrease primarily resulted from the introduction of limitations on the anonymous wallets and enhancement of certain KYC, identification and compliance procedures. The number of active QIWI wallets was also affected by the CBR restrictions imposed in December 2020 resulting in outflow of clients that customarily used our services specifically for payments to merchants that have become subject to the restrictions. We also note 1.3 million of QIWI wallet accounts previously created solely for the purposes of making bets via QIWI TSUPIS using other than QIWI wallet payment method. These QIWI wallets are at risk as QIWI stopped providing TSUPIS services in October 2021. We are focused on diversification of our product proposition and increase of payment volumes per QIWI wallet account. In 3Q 2021 payment volume per active QIWI wallet account8 was 92% higher YoY.
Corporate and Other (CO) Net Revenue breakdown
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million | ||||||||||
CO Net Revenue | 449 | 564 | 25.6 | % | 1,295 | 1,334 | 3.0 | % | 7.8 | |||||||
Tochka | 126 | 126 | 0.4 | % | 457 | 282 | (38.3 | %) | 1.7 | |||||||
ROWI | 182 | 295 | 61.8 | % | 488 | 670 | 37.4 | % | 4.1 | |||||||
Flocktory | 135 | 152 | 13.2 | % | 341 | 412 | 20.8 | % | 2.1 | |||||||
Corporate and Other projects | 6 | (10 | ) | (262.3 | %) | 10 | (30 | ) | (409.8 | %) | (0.1 | ) | ||||
CO Net Revenue in 3Q 2021 increased by 25.6% YoY to RUB 564 million ($7.8 million) driven by ROWI, Flocktory and Other projects Net Revenue growth:
- Tochka Net Revenue remained generally flat YoY and stood at RUB 126 million ($1.7 million). In the 3Q 2021 QIWI completed the sale of its 40% stake (45% economic interest) in the capital of Tochka associate to Otkritie Bank. The Company continues to work with Tochka and Otkritie Bank on joint B2B2C projects providing a bundle of services for taxi, courier delivery, transportation companies, self-employed individuals and other users.
- In 3Q 2021 QIWI Factoring business was rebranded into ROWI. ROWI Net Revenue increased by 61.8% YoY to RUB 295 million ($4.1 million) on further expansion of bank guarantees and factoring portfolios as well as launch of new products:
- Bank Guarantees portfolio increased by 86% YoY to RUB 31.2 billion with average check growth by 66% to RUB 1.1 million.
- Factoring portfolio increased by 83% YoY and reached RUB 7.0 billion with number of active clients going up by 48% YoY to 592.
- In 3Q ROWI launched two new finance products – online loans for government contracts execution and loans for marketplaces suppliers based on sales analytics. Net Revenue of new products in 3Q 2021 reached RUB 28 million.
- Flocktory Net Revenue increased by 13.2% YoY and reached RUB 152 million ($2.1 million) driven by growing number of clients and traffic-providers using Flocktory’s platform and marketing services underpinned by growth of average check.
- Corporate and Other projects Net Revenue include result of operations of different projects in the start-up stage and in 3Q 2021 it amounted to RUB 10 million ($0.1 million) of loss.
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8 Payment volume per active QIWI wallet account for the period is calculated as total amount of outgoing payments for the period including peer-to-peer transactions divided by number of active QIWI wallet accounts involved in transactions within the period.
Operating expenses and other non-operating income and expenses
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million | ||||||||||
Operating expenses | (3,026 | ) | (2,874 | ) | (5.0 | %) | (10,764 | ) | (8,005 | ) | (25.6 | %) | (39.5 | ) | ||
% of Net Revenue | (45.6%) | (44.8%) | 0.8% | (54.5%) | (45.4%) | 9.1% | ||||||||||
Selling, general and administrative expenses | (711) | (986) | 38.7% | (2,634) | (2,147) | (18.5%) | (13.6) | |||||||||
% of Net Revenue | (10.7%) | (15.4%) | (4.6%) | (13.3%) | (12.2%) | 1.2% | ||||||||||
Personnel expenses | (1,983) | (1,496) | (24.6%) | (6,204) | (4,726) | (23.8%) | (20.6) | |||||||||
% of Net Revenue | (29.9%) | (23.3%) | 6.6% | (31.4%) | (26.8%) | 4.6% | ||||||||||
Depreciation, amortization & impairment | (317) | (289) | (8.8%) | (1,101) | (872) | (20.8%) | (4.0) | |||||||||
% of Net Revenue | (4.8%) | (4.5%) | 0.3% | (5.6%) | (4.9%) | 0.6% | ||||||||||
Credit loss (expense) | (15) | (103) | 586.7% | (825) | (260) | (68.5%) | (1.4) | |||||||||
% of Net Revenue | (0.2%) | (1.6%) | (1.4%) | (4.2%) | (1.5%) | 2.7% | ||||||||||
Other non-operating income and expenses excluding gain on disposal of an associate | 321 | 36 | (88.8%) | (441) | 200 | (145.4%) | 0.5 | |||||||||
% of Net Revenue | 4.8% | 0.6% | (4.3%) | (2.2%) | 1.1% | 3.4% | ||||||||||
Share of gain of an associate and a joint venture | 256 | – | (100.0%) | 495 | 306 | (38.2%) | – | |||||||||
% of Net Revenue | 3.9% | 0.0% | (3.9%) | 2.5% | 1.7% | (0.8%) | ||||||||||
Foreign exchange loss, net | 125 | 3 | (97.6%) | (130) | (39) | (70.0%) | 0.0 | |||||||||
% of Net Revenue | 1.9% | 0.0% | (1.8%) | (0.7%) | (0.2%) | 0.4% | ||||||||||
Interest income and expenses, net | (23) | 2 | 108.7% | (88) | (25) | 71.6% | 0.0 | |||||||||
% of Net Revenue | (0.3%) | 0.0% | 0.4% | (0.4%) | (0.1%) | 0.3% | ||||||||||
Other income and expenses, net | (37) | 31 | 183.8% | (718) | (42) | 94.2% | 0.4 | |||||||||
% of Net Revenue | (0.6%) | 0.5% | 1.0% | (3.6%) | (0.2%) | 3.4% | ||||||||||
Gain on disposal of an associate | – | 6,213 | – | 6,213 | 85.4 | |||||||||||
% of Net Revenue | 96.8% | 35.2% | ||||||||||||||
Operating expenses went down by 5.0% YoY to RUB 2,874 million ($39.5 million) and improved by 82bps to 44.8% as percent of Total Net Revenue driven by divestiture of Rocketbank project that offset Total Net Revenue decline due to temporary restrictions imposed on cross-border payments.
Selling, general and administrative expenses increased by 38.7% to RUB 986 million ($13.6 million). SG&A expenses as percent of Total Net Revenue increased by 4.6ppt YoY to 15.4% primarily due to (i) advisory services for market research while reviewing Company’s strategy and (ii) higher tax expenses as a result of increased share of operations with financial companies which are non-deductible for VAT purposes.
Personnel expenses decreased by 24.6% YoY to RUB 1,496 million ($20.6 million) and improved by 6.6ppt to 23.3% as percent of Total Net Revenue primarily driven by divestiture of Rocketbank project.
Depreciation, amortization and impairment decreased by 27bps YoY to 4.5% as percent of Total Net Revenue driven by divestiture of Rocketbank project.
Credit loss increased by 1.4ppt YoY to 1.6% as percent of Total Net Revenue driven by provisions accrued in 3Q 2021 resulting from ROWI business portfolio growth and other factors.
Other non-operating income and expenses excluding gain on disposal of an associate in 3Q decreased by 88.8% YoY to RUB 36 million ($0.5 million) mainly driven by (i) no contribution from Tochka equity pick up due to sales of stake in the project, and (ii) lower forex exchange gain driven by currency rates fluctuations. Other insignificant changes are driven by divestiture of Rocketbank project.
Gain on disposal of an associate in the 3Q 2021 resulted from sale of stake in Tochka and stood at RUB 6.2 billion including: (i) base deal amount of RUB 4.95 billion, (ii) accrued expected performance adjustment gain contingent on Tochka’s earnings for the year 2021 in the amount of RUB 2.7 billion, (iii) dividends received in 3Q in the amount of RUB 0.5 billion, and (iv) less carrying amount of disposed investment in the amount of RUB 1.95 billion. Contingent amount is expected to be received in 2Q 2022.
Income tax expense
Income tax expense increased by 7.8% YoY to RUB 958 million mainly resulting from divesture of SOVEST and Rocketbank projects. Effective tax rate in 3Q 2021 was 12.8ppt lower YoY and stood at 9.8% as a result of recognition of non-taxable gain on disposal of Tochka.
Profitability results
3Q 2020 | 3Q 2021 | YoY | 9M 2020 | 9M 2021 | YoY | 3Q 2021 | ||||||||||
RUB million | RUB million | % | RUB million | RUB million | % | USD million | ||||||||||
Adjusted EBITDA | 4,020 | 3,834 | (4.6%) | 10,223 | 10,504 | 2.7% | 52.7 | |||||||||
Adjusted EBITDA margin, % | 60.6% | 59.7% | (0.8%) | 51.8% | 59.6% | 7.8% | 59.7% | |||||||||
Adjusted Net Profit | 3,275 | 2,705 | (17.4%) | 7,785 | 7,470 | (4.0%) | 37.2 | |||||||||
Adjusted Net Profit margin, % | 49.3% | 42.1% | (7.2%) | 39.4% | 42.4% | 2.9% | 42.1% | |||||||||
Payment Services | 3,633 | 3,231 | (11.1%) | 9,927 | 8,753 | (11.8%) | 44.4 | |||||||||
PS Net Profit margin, % | 59.5% | 55.2% | (4.3%) | 59.0% | 53.7% | (5.3%) | 55.2% | |||||||||
Consumer Financial Services | (137) | – | (100.0%) | (793) | – | (100.0%) | – | |||||||||
Rocketbank | (165) | – | (100.0%) | (781) | – | (100.0%) | – | |||||||||
Corporate and Other (CO) | (56) | (526) | (848.2%) | (568) | (1,283) | (125.8%) | (7.2) | |||||||||
Tochka | 281 | 5 | (98.3%) | 590 | 328 | (44.4%) | 0.1 | |||||||||
ROWI | 72 | 122 | 69.7% | 164 | 156 | (4.6%) | 1.7 | |||||||||
Flocktory | 44 | (6) | (114.3%) | 57 | (109) | (291.7%) | (0.1) | |||||||||
Corporate and Other projects | (453) | (647) | (42.7%) | (1,378) | (1,658) | (20.3%) | (8.8) | |||||||||
Adjusted EBITDA decreased by 4.6% YoY to RUB 3,834 million ($52.7 million) driven by Total Net Revenue decline and modest Adjusted EBITDA margin decline by 84bps to 59.7%. Adjusted EBITDA margin decreased mainly due to PS Payment Net Revenue decline partially offset by optimization measures resulting from divesture of Rocketbank project.
Adjusted Net Profit in 3Q 2021 decreased by 17.4% YoY to RUB 2,705 million ($37.2 million). Adjusted Net Profit margin declined by 7.2ppt and stood at 42.1% driven by (i) Adjusted EBITDA dynamics, (ii) no share gain from Tochka associate, and (iii) lower forex exchange gain.
Payment Services Net Profit decreased by 11.1% YoY to RUB 3,231 million ($44.4 million) as a result of a combination of PS Net Revenue decline by 4.1% YoY mainly due to temporary restrictions imposed on higher-yielding cross-border payments and PS Net Profit margin contraction by 4.3ppt to 55.2% primarily driven by higher tax expenses due to changing base for VAT and adverse forex exchange impact.
CO Net Loss in 3Q 2021 increased to RUB 526 million ($7.2 million) driven primarily by the following factors:
- Corporate and Other projects Net Loss in 3Q 2021 increased by 42.7% YoY to RUB 647 million mainly due to advisory services for market research while reviewing Company’s strategy, increased costs for insurance of Directors and Officers and higher income tax expenses.
- Tochka Net Profit decreased to RUB 5 million followed by sale of QIWI stake in the project.
- ROWI Net Profit increased by 69.7% YoY to RUB 122 million as a result of project scale up reflected in portfolio growth.
- Flocktory Net Loss in 3Q 2021 stood at RUB 6 million primarily driven by (i) increased personnel expenses mainly due to selective review of salaries and new hires, and (ii) negative forex exchange impact.
Consolidated cash flow statement
9M 2020 | 9M 2021 | YoY | 9M 2021 | |||||||
RUB million | RUB million | % | USD million | |||||||
Net cash generated from operating activities before changes in working capital | 8,724 | 8,762 | 0.4 | % | 120.4 | |||||
Change in working capital | (6,012 | ) | (13,672 | ) | 127.4 | % | (187.9 | ) | ||
Net interest and income tax paid | 735 | (16 | ) | (102.2 | %) | (0.2 | ) | |||
Net cash flow used in operating activities | 3,447 | (4,926 | ) | (242.9 | %) | (67.7 | ) | |||
Net cash received from investing activities | 684 | (33 | ) | (104.8 | %) | (0.5 | ) | |||
Net cash used in from financing activities | (3,438 | ) | (4,805 | ) | 39.8 | % | (66.0 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | 1,411 | (140 | ) | (109.9 | %) | (1.9 | ) | |||
Net decrease in cash and cash equivalents | 2,104 | (9,904 | ) | (570.7 | %) | (136.1 | ) | |||
Cash and cash equivalents at the beginning of the period | 42,101 | 47,382 | 12.5 | % | 651.2 | |||||
Cash and cash equivalents at the end of the period | 44,205 | 37,478 | (15.2 | %) | 515.1 | |||||
Net cash generated from operating activities before changes in working capital for 9M 2021 slightly increased by 0.4% YoY to RUB 8,762 million ($120.4 million) as decrease in Net Revenue by 10.7% YoY due to temporary suspension of cross-border operations was compensated by improved profitability on divesture of loss making SOVEST and Rocketbank projects. Net cash flow used in operating activities for 9M 2021 stood at RUB 4,926 million ($67.7 million) driven by significant changes in working capital and increased income tax paid. Change in working capital for 9M 2021 resulted in cash outflow of RUB 13,672 million primarily due to (i) lower accounts payable and accruals of RUB 10,444 million resulted from discontinuation of payments to foreign merchants on the back of the temporary CBR prescriptions related to cross-border operations; (ii) decrease in customer accounts and amounts due to banks in the amount of RUB 4,163 million driven predominantly due to the wind-down of Rocketbank and seasonality; (iii) increase in loans issued from banking operations of RUB 2,418 million mainly related to ROWI business development, and (iv) decrease in trade and other receivables by RUB 2,125 million mainly due to seasonal factor. Net interest and income tax paid increased by RUB 751 million mainly resulting from divesture of loss making SOVEST and Rocketbank projects.
Net cash flow used in investing activities for 9M 2021 stood at RUB 33 million ($0.5 million). The net cash outflow was primarily driven by purchase of debt securities in the amount of RUB 8.1 billion, which was partially offset by proceeds from sale of Tochka of RUB 4.95 billion.
Net cash flow used in financing activities for 9M 2021 increased by 39.8% YoY to RUB 4,805 million ($66.0 million). The increase in net cash outflow was primarily driven by (i) repayment of borrowings of RUB 649 million and (ii) higher dividend payments during 9M 2021 by RUB 621 million compared to the same period of last year due to an increase of distributable profit and lower payout ratio in 2020 due to the COVID-19 outbreak.
As a result of factors described above cash and cash equivalents as of September 30, 2021 were RUB 37,478 million ($515.1 million) – a decrease by 15.2% compared to September 30, 2020.
Dividends
In March 2021, the Board of Directors has approved a target dividend payout ratio for 2021. In accordance with the decision of the Board of Directors, the Company aims to distribute at least 50% of Group Adjusted Net Profit for 2021.
Following the determination of 3Q 2021 financial results and taking into consideration the current operating environment, the Board of Directors approved a dividend of USD 30 cents per share. The dividend record date is December 6, 2021, and the Company intends to pay the dividend on December 8, 2021. The holders of ADSs will receive the dividend shortly thereafter.
The Board of Directors reserves the right to distribute the dividends on a quarterly basis, as it deems necessary so that the total annual payout is in accordance with the target range provided, though the payout ratios for each of the quarters may vary and be outside of this range.
Recent Developments
Betting industry regulation
Since 2016, we have been operating an Interactive Bets Accounting Center (TSUPIS), which we established together with one of the self-regulated associations of bookmakers in order to enable us to accept electronic bets on behalf of sports betting companies and process related payments. In December 2020, a new law was adopted, establishing a Unified Gambling Regulator as a new governmental agency with broad authority to oversee the betting market, and creating the role of a single Unified Interactive Bets Accounting Center (ETSUP). QIWI made a proposal to serve as the ETSUP but it was not successful. Since October 2021, the newly-appointed ETSUP solely processes betting operations replacing both TSUPIS operators. As a result, QIWI lost the ability to generate volume and income directly related to TSUPIS business in Russia starting from 4Q 2021. It will most likely also affect our acquiring services provided to sports betting companies in a bundle with TSUPIS operations. At the same time, part of the betting revenues generated from QIWI wallet services, including commissions for betting accounts top-ups and winning payouts are expected to be retained. We note that there can be no assurance that recent changes will not have adverse impact on the overall usage of QIWI wallet.
The combined betting stream for 9M 2021 represented 26% (or RUB 351.6 billion) of PS Payment Volume and 38% (or RUB 5,225 million) of PS Payment Net Revenue. QIWI’s TSUPIS business and related acquiring services for 9M 2021 accounted 23% (or RUB 3,246 million) of PS Payment Net Revenue.
We are looking for different options to share our expertise and technologies to transform and secure our place on the new betting landscape.
Earnings Conference Call and Audio Webcast
QIWI will host a conference call to discuss 3Q 2021 financial results today at 8:30 a.m. ET. (1:30 p.m. London time; 4:30 p.m. Moscow time)
Hosting the call will be (i) Andrey Protopopov, CEO, (ii) Alexey Mashchenkov, CFO and (iii) Elena Nikonova, Deputy CFO for Corporate Finance.
To participate in the conference call, please use the following details:
Live call | Toll Free (US) Toll International Toll Free (Russia) |
+1 (877) 407-3982 +1 (201) 493-6780| 88 00 100 6268 |
Replay | Toll Free (US) Toll International |
+1 (844) 512-2921 +1 (412) 317-6671 |
available since Tuesday, November 23, 2021, 11:30 a.m. ET till Tuesday, December 7, 2021 | ||
Confirmation Code | 13724831 |
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Endorphina Press Releases
Endorphina releases its newest title – Jolly Queen!
One of the top casino game providers, Endorphina, has announced the release of its brand-new title, Jolly Queen, which will join its portfolio on April 27th. Jolly Queen is a 5-reel, 5-row fruit slot with 50 fixed paylines, introducing players to the lifestyle of the nobles.
On top of the aristocratic ambiance, Jolly Queen provides players with Free Games, allowing them to master the reels. During the Free Games, at least one Expanding Wild Joker is guaranteed to appear on the screen.
Furthermore, Jolly Queen also features the Royal Treasures Pick Game, enabling players to get a taste of the noble lifestyle. In the Bonus Game, players can choose from three gold-filled treasure chests, containing prizes of 10x, 30x, and 50x their total bets.
The post Endorphina releases its newest title – Jolly Queen! appeared first on European Gaming Industry News.
Latest News
Kambi Group’s AI-powered trading division Tzeract enters into Bet Builder partnership with European operator kwiff
Tzeract to provide its leading Bet Builder product in the cutting-edge supplier’s first commercial partnership
Kambi Group plc, the world’s trusted sports betting partner, today announced its AI-powered trading division Tzeract has partnered with kwiff to provide its powerful Bet Builder product to the innovative sports betting operator.
The partnership represents the first commercial deal for Tzeract since it was officially launched as a standalone division earlier this year, marking a significant step forward for Kambi as it continues to expand its range of modular services.
Tzeract will initially provide kwiff with its industry-leading Bet Builder football product ahead of the highly anticipated Euro 2024 football tournament, ensuring kwiff customers enjoy an unparalleled betting experience throughout the competition. Additional sports will be added during the course of the partnership.
Unlike other third-party products, Tzeract’s Bet Builder has been designed to seamlessly integrate into an operator’s existing sportsbook and can utilise either the operator’s existing pricing or leverage Tzeract’s AI-generated odds. Working with kwiff, the super-charged betting operator, known for its proprietary platform, sportsbook and innovative modular tech stack, presented Tzeract both of these opportunities.
Having powered football pricing for the Kambi network since 2022, Tzeract is on a mission to establish a new standard in sports betting by providing an indispensable service which empowers operator innovation and makes it possible to bet on anything, at any time.
As part of the Kambi Group, Tzeract benefits from Kambi’s vast network data to inform its state-of-the-art AI-powered algorithmic trading capabilities in combination with increasingly rich sports data.
David Jacquet, Interim Managing Director at Tzeract, commented: “I am thrilled to announce Tzeract’s inaugural commercial partnership which will enable us to demonstrate the full power of Tzeract outside of the Kambi network for the first time. To work with such an innovative sportsbook like kwiff will provide the opportunities to build the world’s most exciting and intuitive betting experiences together.”
Niklas Fallsjo, Head of Sportsbook Innovation at kwiff, added: “We are delighted to partner with Tzeract and integrate their market-leading Bet Builder product into our proprietary sportsbook. This innovative solution perfectly aligns with our commitment to providing our customers with an unrivalled and entertaining betting experience. We are confident that the addition of Bet Builder will be a hit with our players.”
The post Kambi Group’s AI-powered trading division Tzeract enters into Bet Builder partnership with European operator kwiff appeared first on European Gaming Industry News.
Interviews
Exclusive Q&A w/ Steven Paton, Commercial Director at Wise Gaming
Could you describe the range of products and services that Wise Gaming offers? What makes them unique or appealing to potential clients?
Wise Gaming is the fastest-growing, Complete platform offering both White-Label & Turnkey Solutions. The Wise Gaming solutions are built from our team’s extensive experience: 15 years B2C and 10 years B2B. We know the importance of a truly modular approach, allowing our partner the ability to obtain our entire solution or individual components to enhance what they already have.
In what regions or markets does Wise Gaming primarily operate? Are there any plans for expansion into new territories?
Our focus has been on both the European & LatAm Continents. With enormous success in our B2C operations, we are relying on our extensive experience. We believe the balance between established & emerging markets brings both knowledge and the ability to learn and adapt, truly focusing on our partners needs without limitations.
2025 will be Wise Gaming’s year of expansion! 2024‘s goal is about building on our success in EU & LatAm whilst planning next years’ growth in both Africa & Asia.
What technologies does Wise Gaming employ to deliver its iGaming solutions? Can you highlight any proprietary technologies or platforms that differentiate your offerings?
From our 15 years of B2C success, we felt that we understood both the pleasure points and pain points that most operators face on a daily & weekly basis. Therefore, we build our Wise Gaming solutions with a customer-centric approach, How can we support our partners to support their customers. We diligently sourced the industry’s best-in-class providers for both our Sportsbook & Casino content, utilizing Enterprise software to provide the most robust offering in the iGaming industry.
Our dedicated in-house teams visualize, build and enhance our Proprietary systems for each of our Partner’s needs, making each of our partners brands Unique.
In what ways does Wise Gaming prioritise security and data protection within its technology infrastructure?
As previously mentioned, our customer-centric approach is vitally important to Wise Gaming and our Partners! Providing the correct technology and experience to our partners is key to having a successful KYC, AML, Due Diligence and Data Protection process. We opted for Amazon AWS solutioning to provide market-leading security, Encrypted databases & data storage, penetration resilience, DDoS attack elimination, dedicated Back-Office segmentation and User-based access, protecting player data while safeguarding our partners operations.
What are the current trends or challenges you’re seeing in the iGaming market? How is Wise Gaming adapting to these changes?
The speed in which technology advances is always a challenge for any provider. The key is to know your markets, the players, the accessibility of online entertainment such a sports betting & casinos and implement the technology that meets these variables. Everyone is talking about AI & Machine learning, and rightly so! With such advancements AI & Machine Learning models, it would be irresponsible not to utilize them. Whether it’s for Player customisation, Events based recommendation or supporting operational needs such as RG, KYC & AML, AI & machine Learning should be used to ENHANCE human interaction, not replace. At Wise Gaming, we have already implemented AI & Machine Learning models to provide the unique edge to our partners.
Also localized content is important. Every market is its own unique playground with their own specific cultural identities. Knowing these identities and becoming an expert in these will not only assist in the acquisition of players, it signifies a brand’s genuineness and authenticity to that market and allows greater player retention. At Wise Gaming we have already implemented A.I & Machine Learning models
How does Wise Gaming ensure compliance with regulations in various jurisdictions? How important is regulatory adherence in your sales approach?
I will answer these 2 questions together. The market is experiencing a shift in regulation, and compliance. MGA & CGA license domination has been challenged, with more and more markets opting for tighter safety measures and implementing their own self-regulated approach. This brings safety to players and trust.
Working alongside regulators will always help, and more importantly, we can learn from each other. Adhering to regulation is ultimately for a player’s safety and that is paramount for the industry’s longevity. Wise Gaming continuously enhances its platform to conform with regulations, making it safe and reliable for our partners.
What are the key factors potential clients considering when choosing an iGaming provider, and how does Wise Gaming address these factors in its offerings?
As previously mentioned, experience and knowledge are key attributes from both an operational and technical aspect. “You can’t plant apple trees and expect to get oranges!” Wise Gaming’s experience & knowledge puts us, and our partners, at the forefront of each market, allowing substantial growth and higher ROI.
Time to market should also be a priority. Whilst most Providers offer 2-4 months implementation time, Wise Gaming can deploy your platform within 2-4 weeks, giving us the competitive edge in a highly competitive space.
How does Wise Gaming incorporate feedback from clients into product development and improvement?
Experience and knowledge are simply 1’s learning over time. Our approach at Wise Gaming is that of a learning mentality, “you are never too old to learn!” iGaming is rich in experts – We trust our Partners, and they trust us, it’s the unification that builds long-term partnerships. We have 2 ears and 1 mouth, use them in that order!
What are the future goals and plans for Wise Gaming? Any upcoming innovations or developments you can share?
Our goal is to continue providing a reliable and robust platform, listening and delivering an innovative and unique solution for each of our Partners.
Innovative Developments – If we tell everyone, they won’t be innovative 😉 However, what I can say is that we are focused on “advanced”, real-time localised AI recommended content both Casino & Sportsbook.
The post Exclusive Q&A w/ Steven Paton, Commercial Director at Wise Gaming appeared first on European Gaming Industry News.
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