QIWI Announces First Quarter 2023 Financial Results

NICOSIA, Cyprus, May 26, 2023 (GLOBE NEWSWIRE) -- QIWI plc (NASDAQ and MOEX: QIWI) (“QIWI” or the “Company”), a leading provider of cutting-edge payment and financial services in Russia and the CIS, today announced its financial results for the first quarter ended March 31, 2023.

1Q 2023 key operating and financial highlights^{1 2}

Key events after the reported period

• QIWI received delisting notification from Nasdaq³ and appealed at the oral hearing on April 27, 2023⁴. The Company is waiting for the decision of the Hearing Panel.
• QIWI published its 2022 Annual Report on Form 20-F with the U.S. Securities and Exchange Commission⁵.
• QIWI 2023 Annual General Meeting of shareholders was scheduled on June 5, 2023⁶.
  
  

1Q 2023 results

Net Revenue breakdown by segments

Total Net Revenue increased by 35.6% YoY to RUB 8,552 million ($110.9 million) driven by strong performance of Payment Services (PS) and Corporate and Other (CO) segments, as well as consolidated results of RealWeb business acquired by the Company in December 2022⁷ and accounted for in Digital Marketing (DM) segment.

Payment Services

PS Net Revenue increased by 22.9% YoY to RUB 6,944 million ($90.1 million).

PS Payment Net Revenue was 23.5% higher YoY and amounted to RUB 5,085 million ($66.0 million) as a result of PS Payment Volume increase by 31.6% YoY and slightly decreased PS Payment Net Revenue Yield by 7 bps YoY.

PS Payment Volume was RUB 469.2 billion mainly resulting from (i) the growth of operations via our Contact Money remittances payment system; (ii) onboarding of new merchants and aggregators; (iii) an increase of payment volume via QIWI Wallet used for numerous types of services; and (iv) growing payment volume from our product offering for self-employed and peer-to-peer operations.

PS Payment Net Revenue Yield slightly decreased from 1.16% to 1.08% as a result of adverse mix effect being a higher share of operations with lower yields.

PS Other Net Revenue primarily comprises revenue from fees for inactive accounts and unclaimed payments, interest revenue, cash and settlement services and related conversion income, fees for intercompany and third-party funding, and advertising fees. In 1Q 2023 PS Other Net Revenue increased by 21.5% YoY to RUB 1,859 million ($24.1 million) mainly due to higher net revenue derived from cash and settlement services.

Digital Marketing (DM)

In December 2022, the Company acquired a controlling stake in a leading digital marketing group of companies, RealWeb. The transaction allows QIWI to attain leading positions in the growing digital marketing market based on RealWeb’s expertise and to further diversify Company’s product portfolio.

With additional focus on this growing market, in 2023 QIWI started to single out the Digital Marketing (DM) operating segment in its reporting. DM segment includes revenue generated from context and media advertising management services, including platform services under subscription, social network presence, programmatic, CPA and mobile marketing type of services. The segment includes results of the full-cycle digital marketing service provider RealWeb and Flocktory services in marketing automation and advertising technologies.

DM Net Revenue increased by 372.5% YoY to RUB 741 million ($9.6 million) driven by the RealWeb acquisition and the overall increase of the number of Flocktory clients and traffic-providers.

DM market has unique features which differ significantly from payment services. In comparison to the PS segment, DM's Net Revenue Yield is lower and operating expenses (predominantly represented by personnel expenses) as a percentage of Net revenue are higher. Therefore, an increase in the share of DM segment in Group results has a margin-dilutive effect.

Corporate and Other (CO)

CO Net Revenue increased by 73.7% YoY to RUB 867 million ($11.2 million) driven by:

• ROWI Net Revenue growth by 61.1% YoY to RUB 595 million ($7.7 million) on further expansion of bank guarantees and factoring portfolios:
  • As of March 31, 2023, the bank guarantees portfolio reached RUB 68.6 billion - an increase of 51.1% YoY.
  • As of March 31, 2023, the factoring portfolio was RUB 10.8 billion or 13.5% higher YoY.
  • As of March 31, 2023, the portfolio of online loans for government contracts execution was RUB 2.7 billion.
  • In 1Q 2023, the share of ROWI Net Revenue in Total Net Revenue was 7.0% growing 1.1 ppts YoY.
• Tochka project was closed after the disposal of our stake in the JSC Tochka associate. We continue our collaboration with Tochka on an arms-length basis and provide a bundle of cash settlement services accounted for within PS Other Net Revenue.
• Corporate and Other projects Net Revenue in 1Q 2023 amounted to RUB 272 million ($3.5 million) compared to RUB 24 million in 1Q 2022 driven by interest income from (i) investments into debt securities (high-quality corporate and government bonds) and (ii) loans provided.
  
  

Operating expenses and other non-operating income and expenses

Operating expenses increased by 51.4% YoY to RUB 4,382 million ($56.8 million) following increase in Total Net Revenue and acquisition of RealWeb in December 2022. Despite positive operating leverage effect in PS segment, operating expenses as a percentage of Total Net Revenue deteriorated by 5.3 ppts to 51.2% mainly due to (i) higher personnel expenses of PS segment as well as consolidation of the new RealWeb business, and (ii) allowance for expected credit loss (ECL) accrued for growing ROWI loan portfolio and financial assets accounted for at fair value through other comprehensive income.

Selling, general and administrative expenses increased by 24.4% to RUB 959 million ($12.4 million) while as percentage of Total Net Revenue it went down by 1.0 ppt YoY to 11.2% mainly driven by the positive operating leverage effect.

Personnel expenses surged by 64.4% YoY to RUB 2,751 million ($35.7 million) driven by hiring of new staff for development of new products and strong financial performance resulting in higher bonuses to employees in PS segment as well as consolidation of new RealWeb business. As a result, personnel expenses as a percentage of Total Net Revenue increased by 5.6 ppts to 32.2%.

Depreciation, amortization and impairment stood at RUB 309 million ($4.0 million) or 3.6% as percent of Total Net Revenue – 0.8 ppt lower YoY due to positive operating leverage effect.

Credit loss increased to 4.2% as a percentage of Total Net Revenue or RUB 363 million ($4.7 million) due to allowance for ECL accrued for (i) ROWI loan portfolio as a result of its further growth, and (ii) financial assets accounted for at fair value through other comprehensive income.

Other non-operating income increased to RUB 1,220 million ($10.3 million) compared to RUB 352 million of loss last year primarily due to (i) gain recognized upon liquidation of one of our subsidiaries in 1Q 2023 in the amount of RUB 424 million, and (ii) foreign exchange gain resulting from the depreciation of the Russian ruble vs. USD, AED and Euro in 1Q 2023.

Income tax expense

Income tax expense increased by 11.2% YoY to RUB 891 million ($11.6 million) driven by Total Net Revenue dynamics and partially offset with (i) non-taxable gain recognized upon liquidation of our subsidiary, (ii) foreign exchange gain for 1Q 2023 which is tax neutral within the Group perimeter, and (iii) no tax accruals on dividends in 1Q 2023. The effective tax rate was therefore 9.7 ppts lower YoY and stood at 16.5% driven by the factors described above.

Profitability results 

Adjusted EBITDA increased by 21.5% YoY to RUB 4,479 million ($58.1 million) mainly due to the Total Net Revenue growth by 35.6%. Despite the positive operating leverage effect in PS segment, Adjusted EBITDA margin decreased by 6.1 ppts YoY to 52.4% mainly due to consolidation of the new RealWeb business, increased personnel expenses in PS segment and allowance for ECL (described earlier).

Adjusted Net Profit increased by 79.7% YoY to RUB 4,180 million ($54.1 million). Adjusted Net Profit margin increased by 12.0 ppts YoY to 48.9% primarily driven by the foreign exchange gain partially offset by the consolidation of the RealWeb business operating with a lower margin than the PS segment.

Payment Services Adjusted Net Profit increased by 16.7% YoY to RUB 3,536 million ($45.9 million) as a result of PS Net Revenue growth by 22.9% YoY. PS Adjusted Net Profit margin slightly deteriorated by 2.7 ppts to 50.9% due to a combination of (i) increased personnel expenses (described earlier), (ii) allowance for ECL (described earlier), (iii) higher expenses related to multi-bank platform services due to increased payment volumes via Tochka branch in QIWI Bank, partially offset by (iv) positive operating leverage effect and (v) foreign exchange gain.

Digital Marketing (DM) Adjusted Net Profit for 1Q 2023 increased to RUB 116 million ($1.5 million) due to consolidation of new RealWeb business and Flocktory Net Revenue growth. DM Adjusted Net Profit margin stood at 15.7%.

CO Adjusted Net Profit increased to RUB 528 million ($6.8 million) compared to CO Net loss of RUB 733 million driven by:

• CO Net Profit of RUB 344 million ($4.5 million) resulting primarily from the СO Net Revenue change described above and the foreign exchange gain.

• ROWI Net Profit growth to RUB 184 million ($2.4 million) as a result of its Net Revenue growth by 61.1% YoY.

Dividends

Due to the lingering stock market infrastructure issues resulting from the introduction of European sanctions against the Russian National Settlement Depositary, the Company does not see the opportunity to arrange the distribution of dividends or repurchase shares with the equal treatment of all existing shareholders. Therefore, the Board decided to keep the distribution of dividends under review until changes of the sanction regime in respect of the Russian National Settlement Depositary or other developments that may enable the Company to distribute dividends to all of its shareholders.

Earnings Conference Call and Audio Webcast

Given the persisting level of uncertainty and market volatility, there will be no conference call or webcast to discuss the results. We welcome all our stakeholders to send any questions related to our business using the contact details available on our investor’s website. We remain available for individual incoming call requests.

About QIWI plc.

QIWI is a leading provider of cutting-edge payment and financial services in Russia and the CIS. We stand at the forefront of fintech innovations to facilitate and secure the digitalization of payments. Our mission is to connect our clients providing unique financial and technological solutions to make the impossible accessible and simple. We offer a wide range of products under several directions: QIWI payment and financial services ecosystem for merchants and B2C clients across digital use-cases, ROWI digital structured financial products for SME, digital marketing, and several other projects.

For the FY 2022 QIWI had revenue of RUB 51.5 billion and an Adjusted EBITDA of RUB 19.8 billion. QIWI's American depositary shares are listed on the NASDAQ and Moscow Exchange (ticker: QIWI).

For more information, visit .

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding expected total net revenue, adjusted net profit and net revenue yield, dividend payments, payment volume growth, growth of physical and virtual distribution channels, trends in each of our market verticals and statements regarding the development of our ROWI, RealWeb, Flocktory and other projects, the impact of recent sanctions targeting Russia, the impact of such sanctions on our results of operations, potential further changes in the regulatory regime, and others. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of QIWI to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to, the macroeconomic conditions of the Russian Federation and in each of the international markets in which we operate, growth in each of our markets, competition, the introduction of new products and services and their acceptance by consumers, QIWI’s ability to estimate the market risk and capital risk associated with new projects, a decline in net revenue yield, regulation, QIWI’s ability to grow physical and virtual distribution channels, cyberattacks and security vulnerabilities in QIWI’s products and services, QIWI’s ability to expand geographically, the risk that new projects will not perform in accordance with its expectations and other risks identified under the Caption “Risk Factors” in QIWI’s Annual Report on Form 20-F and in other reports QIWI files with the U.S. Securities and Exchange Commission. QIWI undertakes no obligation to revise any forward-looking statements or to report future events that may affect such forward-looking statements unless QIWI is required to do so by law.

QIWI plc.

Consolidated Statement of Financial Position

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QIWI plc.

Consolidated Statement of Comprehensive Income

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QIWI plc.

Consolidated Statement of Cash Flows

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Non-IFRS Financial Measures and Supplemental Financial Information

This release presents Total Net Revenue, Payment Services (PS) Net Revenue, PS Payment Net Revenue, PS Other Net Revenue, Digital Marketing (DM) Net Revenue, Corporate and Other (CO) Net Revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Profit, PS Adjusted Net Profit, DM Adjusted Net Profit, CO Adjusted Net Profit, and Adjusted Net Profit per share, which are non-IFRS financial measures. You should not consider these non-IFRS financial measures as substitutes for or superior to revenue, in the case of Total Net Revenue, PS Net Revenue, PS Payment Net Revenue, PS Other Net Revenue, DM Net Revenue, CO Net Revenue; Net Profit, in the case of Adjusted EBITDA, Adjusted Net Profit, PS Adjusted Net Profit, DM Adjusted Net Profit, CO Adjusted Net Profit, and earnings per share, in the case of Adjusted Net Profit per share, each prepared in accordance with IFRS.

Furthermore, because these non-IFRS financial measures are not determined in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. QIWI encourages investors and others to review our financial information in its entirety and not rely on a single financial measure. For more information regarding Total Net Revenue, PS Net Revenue, PS Payment Net Revenue, PS Other Net Revenue, DM Net Revenue, CO Net Revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Profit and Adjusted Net Profit per share, including a quantitative reconciliation of Total Net Revenue and its breakdown by segments, Adjusted EBITDA and Adjusted Net Profit to the most directly comparable IFRS financial performance measures, which is revenue in the case of Total Net Revenue, PS Payment Net Revenue and PS Other Net Revenue, and Net Profit in the case of Adjusted EBITDA and Adjusted Net Profit, see Reconciliation of IFRS to Non-IFRS Operating Results in this earnings release.

We define non-IFRS financial measures as follows:

• “Total Net Revenue” is calculated by subtracting cost of revenue from revenue.
• “Adjusted EBITDA” as Net profit plus/(less): (1) depreciation and amortization, (2) other expenses/(income), (3) foreign exchange loss/(gain), (4) share of loss/(gain) of associates and joint ventures, (5) interest expenses/ (income), (6) income tax expenses, (7) share-based payment expenses, (8) impairment of non-current assets, (9) loss/(gain) on disposal of subsidiary.
• “Adjusted Net profit” as Net profit plus/(less): (1) fair value adjustments recorded on business combinations and their amortization, (2) impairment of non-current assets, (3) share-based payment expenses, (4) loss/(gain) on disposal of subsidiary, (5) effect of taxation of the above items.
• “Adjusted EBITDA Margin” as Adjusted EBITDA divided by Total Net Revenue.
• “Adjusted Net profit Margin” as Adjusted Net profit divided by Total Net Revenue.
  
  

Total Net Revenue is a key measure used by management to observe our operational profitability since it reflects our portion of the revenue net of fees that we pass through, primarily to our agents and other reload channels providers. In addition, under IFRS, most types of fees are presented on a gross basis whereas certain types of fees are presented on a net basis. Therefore, in order to analyze our two sources of payment processing fees on a comparative basis, management reviews Total Net Revenue.

We provide a breakdown of Total Net Revenue by segments - PS Net Revenue, including PS Payment Net Revenue and PS Other Net Revenue, DM Net Revenue, CO Net Revenue. We define the above measures as follows:

• PS Payment Net Revenue is the Net Revenue comprising the merchant and consumer fees collected for the payment transactions.
• PS Other Net Revenue primarily comprises revenue from fees for inactive accounts and unclaimed payments, interest revenue, cash and settlement services and related conversion income, fees for intercompany and third-party funding, and advertising fees.
• DM Net Revenue includes revenue generated with services provided for context and media advertising management services, including platform services under subscription, social network presence, programmatic, CPA and mobile marketing type of services. The segment includes results of full-cycle digital marketing service provider RealWeb and Flocktory services in marketing automation and advertising technologies.
• CO Net Revenue comprises from results of ROWI business, Tochka project (before 2Q2022) and Corporate and Other projects, including interest income.

Adjusted EBITDA is a key measure used by management as a supplemental performance measure that facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structures (affecting interest expenses, net), changes in foreign exchange rates that impact financial assets and liabilities denominated in currencies other than our functional currency (affecting foreign exchange (loss)/gain, net), tax positions (such as the impact on periods or companies of changes in effective tax rates), the age and book depreciation of fixed assets (affecting relative depreciation expense), non-cash charges (affecting share-based payments expenses and impairment of non-current assets), and certain one-time income and expenses (affecting other income, offering and related expenses, etc.). Adjusted EBITDA also excludes other expenses, share in losses of associates and impairment of investment in associates because we believe it is helpful to view the performance of our business excluding the impact of entities that we do not control, and because our share of the net income (loss) of associates and other expenses includes items that have been excluded from Adjusted EBITDA (such as finance expenses, net, income tax, and depreciation and amortization). Because Adjusted EBITDA facilitates internal comparisons of operating performance on a more consistent basis, we also use Adjusted EBITDA in measuring our performance relative to that of our competitors.

Adjusted Net Profit is a key measure used by management to observe the operational profitability of the company. We believe Adjusted Net Profit is useful to an investor in evaluating our operating performance because it measures a company’s operating performance without the effect of non-recurring items or items that are not core to our operations. For example, loss on disposals of subsidiaries and the effects of deferred taxation on excluded items do not represent the core operations of the business, and fair value adjustments recorded on business combinations and their amortization, impairment of non-current assets and share-based payments expenses do not have a substantial cash effect. Nevertheless, such gains and losses can affect our financial performance.

In order to reflect the operational profitability of each segment, we provide a following breakdown of Adjusted Net Profit: Payment Services Adjusted Net Profit, Digital Marketing Adjusted Net Profit, Corporate and Other Adjusted Net Profit.

Payment Services segment payment volume provides a measure of the overall size and growth of the business, and increasing our payment volumes is essential to growing our profitability.

Payment Services segment net revenue yield. We calculate Payment Services segment net revenue yield by dividing Payment Services segment net revenue by Payment Services segment payment volume. Payment Services segment net revenue yield provides a measure of our ability to generate net revenue per unit of volume we process.

¹ Total Net Revenue, adjusted EBITDA, adjusted EBITDA margin, adjusted Net profit, and adjusted Net profit margin 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 a reconciliation to IFRS reported numbers at the end of this release.

² Throughout this release calculations of totals, subtotals and/or percentage change may have small variations due to rounding of decimals.

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QIWI plc.

Reconciliation of IFRS to Non-IFRS Operating Results

(in millions, except per share data)