Core Insights - Joint Stock Company Kaspi.kz (NASDAQ:KSPI) is recognized as a promising technology stock by hedge funds, with its fiscal Q2 2025 results showing a revenue increase of 41.41% to $1.79 billion, exceeding analyst expectations by $337.07 million, although EPS of $2.50 fell short of consensus by $0.11 [1][2] Financial Performance - Revenue for Q2 2025 reached $1.79 billion, marking a 41.41% year-over-year growth, surpassing analyst expectations by $337.07 million [1] - Payment total processing volume (TPV) and transactions increased by 21% and 14% year-over-year, respectively [2] - Payment revenue and net income rose by 16% and 19% year-over-year, respectively [2] - The company reaffirmed its full-year guidance, anticipating approximately 15% growth in net income [2] Analyst Ratings - J.P. Morgan maintained a Hold rating on KSPI following the earnings release, setting a price target of $96 [3] - The company is identified as a Kazakhstan-based financial technology firm providing online payments, e-commerce, and digital banking services [3]

Company Overview - Joint Stock Company Kaspi.kz is a leading financial technology company based in Kazakhstan, offering services such as payments, marketplace, and fintech solutions, and is recognized for its innovative integration of these services [1] Financial Performance - Kaspi.kz has a Return on Invested Capital (ROIC) of 41.90%, significantly higher than its Weighted Average Cost of Capital (WACC) of 4.59%, resulting in a ROIC to WACC ratio of 9.14, indicating high efficiency in generating returns from invested capital [2][6] - In comparison, Corpay, Inc. has a ROIC of 10.23% and a WACC of 7.12%, leading to a ROIC to WACC ratio of 1.44, showing less efficiency than Kaspi.kz [3] - Klaviyo, Inc. has a negative ROIC of -8.82% against a WACC of 10.11%, resulting in a negative ROIC to WACC ratio of -0.87, indicating inefficiency in capital utilization [3] - JSC Halyk Bank has a ROIC of 19.90% and a WACC of 22.38%, with a ROIC to WACC ratio of 0.89, showing returns below its cost of capital [4] - Evolution AB achieves a ROIC of 30.35% and a WACC of 8.35%, resulting in a ROIC to WACC ratio of 3.64, which is efficient but still lower than Kaspi.kz's performance [4] - Cellebrite DI Ltd. has a ROIC of 13.30% and a WACC of 17.95%, resulting in a ROIC to WACC ratio of 0.74, indicating insufficient returns relative to its cost of capital [5] Competitive Position - Overall, Kaspi.kz stands out among its peers with the highest ROIC to WACC ratio, showcasing its superior ability to utilize capital effectively and generate substantial returns [5][6]

Core Insights - The article expresses a positive outlook on Joint Stock Company Kaspi.kz (KSPI), highlighting its ability to generate income in Kazakhstan [1]. Company Analysis - The author has a long-standing interest in KSPI, indicating a favorable view based on the company's performance and potential [1]. - The investment philosophy focuses on identifying underappreciated companies that can return value to investors, suggesting that KSPI may fit this profile [1]. Investment Perspective - The author has a beneficial long position in KSPI shares, indicating confidence in the company's future performance [2]. - The analysis is based on extensive experience in investment research, particularly in value investing, which may provide a solid foundation for the insights shared [1].

Revenue and Income - Revenue for the six months ended June 30, 2025, increased to KZT 1,789,352 million, a growth of 55.3% compared to KZT 1,152,051 million in the same period of 2024[3] - Net income for the six months ended June 30, 2025, rose to KZT 512,678 million, reflecting a 10.0% increase from KZT 466,057 million in the prior year[3] - Basic earnings per share for the six months ended June 30, 2025, increased to KZT 2,675, up 10.7% from KZT 2,416 in the same period of 2024[3] - Total comprehensive income for the six months ended June 30, 2025, was KZT 434,308 million, a decrease from KZT 447,002 million in the same period of 2024[4] - The company reported a net fee revenue of KZT 741,205 million for the six months ended June 30, 2025, which is a 28.2% increase from KZT 578,065 million in the prior year[3] - Interest revenue for the six months ended June 30, 2025, increased to KZT 709,033 million, up 44.7% from KZT 490,137 million in the same period of 2024[3] - Marketplace revenue for the six months ended June 30, 2025, was KZT 808,433 million, a significant increase of 153.5% compared to KZT 319,056 million in 2024[34] - Retail revenue for the six months ended June 30, 2025, was KZT 335,322 million, a substantial increase from KZT 75,674 million in 2024, representing a growth of 343.5%[27] Assets and Liabilities - Total assets as of June 30, 2025, reached KZT 10,048,025 million, a significant increase from KZT 8,377,101 million at the end of 2024[5] - The company’s total liabilities as of June 30, 2025, amounted to KZT 8,018,363 million, an increase from KZT 6,804,240 million at the end of 2024[5] - Loans to customers grew to KZT 6,392,266 million as of June 30, 2025, compared to KZT 5,746,600 million at the end of 2024, marking an increase of 11.2%[5] - Cash and cash equivalents increased to KZT 1,077,948 million as of June 30, 2025, up from KZT 619,470 million at the end of 2024, representing a growth of 74.1%[5] - The total allowance for impairment losses on loans to customers was KZT 334,634 million as of June 30, 2025, compared to KZT 295,843 million as of 31 December 2024, indicating an increase of 13.1%[63] Cash Flow and Financing Activities - Net cash inflow from operating activities increased significantly from KZT 99,793 million in H1 2024 to KZT 324,983 million in H1 2025, representing a growth of 225%[7] - Net cash inflow from financing activities shifted from an outflow of KZT 378,209 million in H1 2024 to an inflow of KZT 276,457 million in H1 2025[8] - Interest received from loans to customers rose from KZT 368,736 million in H1 2024 to KZT 638,422 million in H1 2025, an increase of 73%[7] Expenses and Costs - Costs and operating expenses for the six months ended June 30, 2025, totaled KZT 1,159,944 million, a 97.6% increase from KZT 586,667 million in 2024[39] - Employee benefits for the six months ended 30 June 2025 were KZT 36,073 million, up from KZT 13,869 million in the prior year[47] - Technology and product development expenses increased to KZT 39,130 million for the six months ended 30 June 2025, compared to KZT 26,446 million for the same period in 2024[47] Acquisitions and Investments - The company acquired a 65.41% share in "D-MARKET Electronic Services & Trading" for approximately USD 1,127 million on January 29, 2025[13] - Kaspi.kz signed a share purchase agreement for Rabobank's Turkish subsidiary, which is subject to regulatory approval[14] - The Group acquired a 65.41% share in Hepsiburada on 29 January 2025, aiming to enhance growth and financial performance[104] - Goodwill recognized from the acquisition of Hepsiburada amounted to KZT 552,041 million, primarily related to expected sales growth and synergies[107] Financial Ratios and Performance Metrics - The Bank's Tier 1 capital ratio improved from 17.6% as of 31 December 2024 to 18.6% as of 30 June 2025, exceeding the minimum regulatory requirement of 6.5%[102] - The weighted average number of common shares for diluted earnings per share increased slightly to 191,226,496 as of 30 June 2025 from 191,101,618 in the prior year[52] Shareholder Information - Dividends declared for the six months ended 30 June 2024 amounted to KZT 323,028 million, while no dividends were declared for the same period in 2025[77] - The total number of GDRs acquired through buyback programs reached 4,036,932, with a total amount paid of KZT 127,227 million[74]

Financial Data and Key Metrics Changes - Total Payment Volume (TPV) increased by 21%, revenue grew by 16%, and net income rose by 19% in Q2 2025 [4] - Marketplace GMV increased by 15%, revenue grew by 25%, and net income rose by 13% [5] - Fintech volumes increased by 17%, revenue grew by 21%, and net income rose by 8% [6] - Overall, the company reported strong financial performance despite high interest rates [4][6] Business Line Data and Key Metrics Changes - E-grocery GMV grew by 57% year over year, with transactions up by 63% [6] - Payment volumes remained robust, up 14% year on year in Q2 [26] - Marketplace demand was strong, with overall growth of 35% year on year in Q2 [29] - Travel GMV growth was 16% in Q2, supported by international tours [32] Market Data and Key Metrics Changes - Smartphone sales declined by 17% year on year in Q2, impacting GMV but not overall volumes [29] - Excluding smartphones, ecommerce growth was up 31% year on year [30] - Growth in beauty and personal care and clothing categories was 63% and 54% respectively [19] Company Strategy and Development Direction - The company is focusing on expanding its grocery business across major cities in Kazakhstan [7] - A new deposit product has shown extraordinary growth, with amounts up by 207% and customer numbers up by 263% [8] - The company is leveraging its payment network to partner with other financial institutions, enhancing transaction capabilities [10] - The strategy includes entering new verticals such as restaurants and domestic tours, aiming for high growth potential [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate high interest rates and emphasized the importance of customer engagement [6][9] - The company anticipates that interest rates will eventually decline, benefiting profitability in the fintech segment [38] - Management reiterated that the third quarter has started well and is in line with full-year guidance [42] Other Important Information - The company is on track to complete the acquisition of a banking license, which is expected to enhance its competitive position in Turkey [43][87] - The company plans to balance capital returns to shareholders with ongoing investments in growth opportunities [43][82] Q&A Session Summary Question: What product improvements are being worked on at Hepsie Berada? - The focus is on ensuring existing customers are satisfied with current services while introducing new products [46][47] Question: What are the growth opportunities in Kazakhstan? - The market remains underpenetrated, with specific verticals like clothing and grocery showing high growth rates [50][51] Question: What is the outlook for funding costs and asset quality? - Funding costs are expected to stabilize, and asset quality trends remain stable despite slight increases in NPL ratios [60][64] Question: How will capital deployment be balanced between investments and returns to shareholders? - The company aims to prioritize investments while also considering dividends and share buybacks in the future [82][86]

Financial Data and Key Metrics Changes - Total Payment Volume (TPV) increased by 21%, revenue grew by 16%, and net income rose by 19% in Q2 2025 [4] - Marketplace GMV increased by 15%, revenue grew by 25%, and net income rose by 13% [5] - Fintech volumes increased by 17%, revenue grew by 21%, and net income rose by 8% despite high interest rates [6] - Overall, the company reported strong financial performance with net income growth across all segments [4][6][26] Business Line Data and Key Metrics Changes - E-grocery GMV grew by 57% year-over-year, with transactions up by 63% [6] - Payment volumes remained robust, up 14% year-on-year in Q2 [26] - Marketplace demand was strong, with overall growth of 35% year-on-year in Q2 [29] - Travel GMV growth was 16% in Q2, supported by international tours [33] Market Data and Key Metrics Changes - The smartphone category saw a decline in sales by 17% year-on-year in Q2, impacting GMV but not overall transaction volumes [29][30] - Other verticals such as beauty and personal care grew by 63% and 54% respectively, indicating strong market demand outside of smartphones [18][78] Company Strategy and Development Direction - The company is focusing on expanding its e-grocery business and enhancing its payment infrastructure [7][10] - There is a strategic emphasis on vertical-specific growth, targeting underpenetrated markets such as clothing and travel [52][54] - The introduction of new services, such as domestic tours, aims to promote local tourism and enhance customer engagement [22][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate high interest rates and anticipated future growth as rates decline [9][82] - The company is optimistic about the recovery of smartphone demand and is implementing services to facilitate transactions [76][79] - Future profitability is expected to improve as the user base grows and interest rates stabilize [82] Other Important Information - The company reported a significant increase in deposits, with a growth of 207% in amounts and 263% in customer numbers for new deposit products [8] - The company is actively working on acquiring a banking license in Turkey, which is expected to enhance its competitive position [44][91] Q&A Session Summary Question: What product improvements are being worked on at Hepsie Berada? - Management highlighted the focus on ensuring existing customers are satisfied with current services and emphasized innovation in delivery and user experience [47][50] Question: How does the company view growth opportunities in Kazakhstan? - Management noted that the market remains underpenetrated, with specific verticals like clothing and travel showing significant growth potential [52][54] Question: What is the outlook for funding costs and asset quality? - Management indicated that funding costs are expected to stabilize, and asset quality remains stable with a slight uptick in NPL ratios [63][66] Question: What is the company's approach to capital deployment in the future? - Management stated that there will be a balance between investments and returning capital to shareholders, with a focus on maintaining a profitable core business [86][90] Question: How will the banking license impact competitive positioning? - Management believes that obtaining the banking license will allow for the introduction of innovative financial services, enhancing the company's market position [91][92]

Financial Performance - Kaspi.kz consolidated revenue increased by 61% YoY to KZT 967501 million in 2Q'25[133] - Kaspi.kz consolidated net income increased by 7% YoY to KZT 258629 million in 2Q'25[133] - The company reiterates its FY 2025 guidance, expecting around 15% net income growth, excluding Türkiye[111] Segment Performance - Payments platform revenue increased by 16% YoY to KZT 161216 million in 2Q'25, with net income up 19% YoY to KZT 105697 million[49, 135] - Marketplace platform revenue increased by 25% YoY to KZT 459088 million in 2Q'25, but net income increased 13% YoY to KZT 70477 million[69, 135] - Fintech platform revenue increased by 21% YoY to KZT 370717 million in 2Q'25, with net income up 8% YoY to KZT 82455 million[88, 135] Key Growth Drivers - E-Grocery GMV grew by 57% YoY in 2Q'25, surpassing 1 million consumers[11, 12] - Advertising revenue on Kaspi.kz increased by 91% YoY in 1H'25[26] - Kaspi Pay TPV from other banks and Alipay increased by 128% since launch[19] Hepsiburada (Türkiye) Performance - Hepsiburada's revenue increased by 23% in 2Q'25[98] - Hepsiburada's EBITDA increased by 42% in 2Q'25[98] - Hepsiburada's net income decreased 39% YoY in 2Q'25[100]

Core Insights - Kaspi.kz reported a strong financial performance for 2Q and 1H 2025, with revenue increasing by 20% YoY and net income rising by 14% YoY for the second quarter [4][5] - The company continues to expand its services and market presence, particularly in Kazakhstan and Türkiye, with a focus on enhancing customer engagement and transaction volume [4][8] Financial Performance - 2Q 2025 revenue increased by 20% YoY, while net income rose by 14% YoY; for 1H 2025, revenue and net income were up 20% and 15% YoY respectively [4] - Monthly Transactions per Active Consumer stood at 75, indicating strong customer engagement [4] - Payments segment saw a 21% increase in Total Payment Volume (TPV) and a 14% increase in transactions YoY for 2Q 2025 [4] - Marketplace revenue grew by 25% YoY in 2Q 2025, significantly outpacing GMV growth of 15% [4] - e-Grocery within the Marketplace achieved a GMV increase of 57% YoY in 2Q 2025 [4] Strategic Developments - Kaspi Pay expanded its addressable market through integration with local banks and AliPay+ [4] - New services such as Kaspi Restaurants and enhanced advertising tools were launched to provide additional value to merchants [4][7] - The company is focused on improving Hepsiburada's operations and customer experience following its acquisition [8][9] - The acquisition of Rabobank A.Ş is expected to enhance the company's financial service offerings [9] Future Outlook - The company anticipates around 15% consolidated net income growth YoY for 2025, with potential benefits from a decrease in interest rates [4][10] - Plans for 2026 include balancing capital returns to shareholders with investments in long-term growth [10]

Core Insights - Kaspi.kz will report its financial results for the quarter and half ending June 30, 2025, on August 4, 2025, with a conference call scheduled for 8.00am EST [1] - The company operates a unique two-sided Super App model, which includes Kaspi.kz Super App for consumers and Kaspi Pay Super App for merchants [3][4] - Kaspi.kz acquired a 65.41% stake in Hepsiburada, a leading e-commerce company in Türkiye, in January 2025 [5] Company Overview - Kaspi.kz aims to improve people's lives through innovative mobile products and services [3] - The Super Apps provide access to Payments, Marketplace, and Fintech Platforms, designed to meet everyday needs of users [4] - The company has a large, engaged consumer and merchant base, which contributes to strong top-line growth and a profitable business model [5] Academic Recognition - Harvard Business School has developed two case studies on Kaspi.kz, which are used in its MBA curriculum [6] - The company has been listed on Nasdaq since January 2024 [6]

Group 1 - The article initiates coverage on Kaspi (OTC:KSPI) with a strong buy rating due to its impressive past growth and potential for sustained performance [1] - The author has extensive experience in investment analysis, focusing on deep-discount value plays and underappreciated companies [1] - The analysis emphasizes the importance of returning value to investors as a key investment philosophy [1] Group 2 - The author holds a beneficial long position in KSPI shares, indicating confidence in the company's future performance [2] - The article is written independently, reflecting the author's personal opinions without external compensation [2] - There is no business relationship with any company mentioned, ensuring an unbiased perspective [2]