November 11, 2015 at 10:11Qiwi's EBITDA posted a record drop due to reduction in the number of company terminals and business restructuring
Qiwi's financial performance in the third quarter was mixed. For the first time in the company's history, EBITDA (profit before interest, taxes and depreciation) decreased by 12% year-on-year and amounted to 1.34 billion rubles. Its profitability also decreased (to 0.68%) in terms of turnover (net revenue yield) by 39 pp compared to the same period of 2014. At the same time, the turnover itself grew by 64.5% to 270.5 billion rubles.
Qiwi adjusted revenue grew 6% year-on-year to 2.53 billion rubles, while in the second quarter of 2015, growth was 20%. At the same time, the company confirmed its forecast for revenue and net profit growth in 2015 by 18-22%, given by Qiwi in September.
Nevertheless, investors responded positively to the reporting - yesterday at NASDAQ, ADS Qiwi quotes rose by 9.82% to $ 17.56 per share by 19.25 Moscow time. However, outside experts find both positive and negative sides in this.
The company's results are related to the general macroeconomic recession in Russia, as well as to the tightening of the rules for the work of Qiwi agents - owners of payment terminals, the Qiwi press service quotes the words of CEO Sergey Solonin.
In 2015, there are fewer loans in Russia than in the past, and accordingly, the number of payments on loans, commissions for which Qiwi receives, is reduced, a company representative explains.
In Q3 2015, Qiwi for the first time fully consolidated the results of Contact and Rapida money transfer systems, Bought out by a group of "Discovery" . This explains both a sharp increase in turnover and a decrease in profitability for it: commissions at Contact and Rapida are significantly lower than the average for Qiwi, says a Qiwi spokesman.
Tighter regulation of the activities of terminal owners also affected the company's financial results. At the end of October 2015, Qiwi announced a reduction in the number of terminals in its network in Russia. For three months their number decreased by about 15%.
Moreover, the problem of terminals is compounded by increased payments to surviving agents. According to experts, because of all this, QIWI in 2015 may well lose almost 1 billion rubles, and in the next loss will reach 3.8 billion. According to agents of payment systems that sell small batches of terminals, they note the loss of a significant part of the profit due to the need to transfer money to special accounts and the prohibition of setting a zero commission.
The Central Bank of Russia, which is struggling with illegal cashing of funds, pushed the company towards this decision. The Central Bank has discovered large-scale violations of the rules for working with cash from the owners of payment terminals. According to the rules of the Central Bank, money from the terminal should be credited to special accounts in order to control the cash turnover, but in reality only 8% of the funds were credited to them. Since June 2015, the Central Bank began to fight this phenomenon, the regulator gathered the largest players and set the task by September to bring this share to 98%, which was done, Vedomosti writes .
Qiwi’s turnover and revenues will be disproportionately reduced, said a person close to the company in October. The fact is that the number of terminals was excessive: for example, several terminals could be located close to each other, he explains. Therefore, a decrease in their number was partially offset by an increase in turnover at the terminal. Qiwi has taken the actions necessary to support the agents, and does not expect further significant deterioration of the agent network, the press service of the company quoted Solonin as saying.
The fact that Qiwi has maintained its forecast for revenue and profits is positive news for investors, said Gazprombank analyst Sergey Vasin. As the company’s results showed, the reduction in the number of terminals did not significantly affect its turnover, he notes. But the low profitability in terms of turnover can remain for a long time - during the crisis, payers and partners of Qiwi seek to minimize commissions, Vasin explains. In this situation, it would be logical for Qiwi to look for ways to increase turnover, as well as expand the range of client services at the expense of highly profitable segments such as electronic commerce, he said.
QIWI has attempted to diversify its business. The network of terminals was reduced by 15%, but the company learned how to better earn on electronic payments.
Qiwi's revenue in the e-commerce segment grew by 2% compared to the same period in 2014, to 677 million rubles. In the field of e-commerce, Qiwi earns on a commission, which the company charges from customers and partners who buy and sell goods in online stores, social networks, online games and so on. In the e-commerce segment, Qiwi received about 27% of adjusted revenue in the third quarter. A year earlier, e-commerce revenue accounted for 22%, RBC reports .
Qiwi adjusted revenue grew 6% year-on-year to 2.53 billion rubles, while in the second quarter of 2015, growth was 20%. At the same time, the company confirmed its forecast for revenue and net profit growth in 2015 by 18-22%, given by Qiwi in September.
Nevertheless, investors responded positively to the reporting - yesterday at NASDAQ, ADS Qiwi quotes rose by 9.82% to $ 17.56 per share by 19.25 Moscow time. However, outside experts find both positive and negative sides in this.
The company's results are related to the general macroeconomic recession in Russia, as well as to the tightening of the rules for the work of Qiwi agents - owners of payment terminals, the Qiwi press service quotes the words of CEO Sergey Solonin.
In 2015, there are fewer loans in Russia than in the past, and accordingly, the number of payments on loans, commissions for which Qiwi receives, is reduced, a company representative explains.
In Q3 2015, Qiwi for the first time fully consolidated the results of Contact and Rapida money transfer systems, Bought out by a group of "Discovery" . This explains both a sharp increase in turnover and a decrease in profitability for it: commissions at Contact and Rapida are significantly lower than the average for Qiwi, says a Qiwi spokesman.
Tighter regulation of the activities of terminal owners also affected the company's financial results. At the end of October 2015, Qiwi announced a reduction in the number of terminals in its network in Russia. For three months their number decreased by about 15%.
Moreover, the problem of terminals is compounded by increased payments to surviving agents. According to experts, because of all this, QIWI in 2015 may well lose almost 1 billion rubles, and in the next loss will reach 3.8 billion. According to agents of payment systems that sell small batches of terminals, they note the loss of a significant part of the profit due to the need to transfer money to special accounts and the prohibition of setting a zero commission.
The Central Bank of Russia, which is struggling with illegal cashing of funds, pushed the company towards this decision. The Central Bank has discovered large-scale violations of the rules for working with cash from the owners of payment terminals. According to the rules of the Central Bank, money from the terminal should be credited to special accounts in order to control the cash turnover, but in reality only 8% of the funds were credited to them. Since June 2015, the Central Bank began to fight this phenomenon, the regulator gathered the largest players and set the task by September to bring this share to 98%, which was done, Vedomosti writes .
Qiwi’s turnover and revenues will be disproportionately reduced, said a person close to the company in October. The fact is that the number of terminals was excessive: for example, several terminals could be located close to each other, he explains. Therefore, a decrease in their number was partially offset by an increase in turnover at the terminal. Qiwi has taken the actions necessary to support the agents, and does not expect further significant deterioration of the agent network, the press service of the company quoted Solonin as saying.
The fact that Qiwi has maintained its forecast for revenue and profits is positive news for investors, said Gazprombank analyst Sergey Vasin. As the company’s results showed, the reduction in the number of terminals did not significantly affect its turnover, he notes. But the low profitability in terms of turnover can remain for a long time - during the crisis, payers and partners of Qiwi seek to minimize commissions, Vasin explains. In this situation, it would be logical for Qiwi to look for ways to increase turnover, as well as expand the range of client services at the expense of highly profitable segments such as electronic commerce, he said.
QIWI has attempted to diversify its business. The network of terminals was reduced by 15%, but the company learned how to better earn on electronic payments.
Qiwi's revenue in the e-commerce segment grew by 2% compared to the same period in 2014, to 677 million rubles. In the field of e-commerce, Qiwi earns on a commission, which the company charges from customers and partners who buy and sell goods in online stores, social networks, online games and so on. In the e-commerce segment, Qiwi received about 27% of adjusted revenue in the third quarter. A year earlier, e-commerce revenue accounted for 22%, RBC reports .