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Ozon (OZON)

Participants
Alexander Shulgin CEO
Daniil Fedorov Chief Operating Officer
Igor Gerasimov CFO
Miriam Adisa Morgan Stanley
Vyacheslav Degtyarev Goldman Sachs
Kirill Panarin Renaissance Capital
Ivan Kim Xtellus Capital
Anna Kurbatova Alfa Bank
Dmitry Vlasov WOOD & Company
Elena Jouronova JPMorgan
Call transcript
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Operator

Ladies and gentlemen, welcome to Ozon's Second Quarter 2021 Earnings call.

Before I pass the floor to Ozon management, I would like to advise you that some of the information you will hear today may include forward-looking statements under the Private Securities Litigation Reform Act.

Forward-looking statements are based on management's beliefs, assumptions, and information currently available, and are subject to known and unknown risks and uncertainties, many of which may be beyond our control and actual results may differ materially. We encourage you to refer to the cautionary statements contained in the Company's press release issued today and SEC filings.

During today's call, the company will be referring to certain non-IFRS financial measures and other metrics, reconciliations and definitions of which you can find in company's press release published today.

the CEO pass Shulgin. Ozon, will I floor of to Alexander Now, please ahead. Shulgin, go

Alexander Shulgin

Hello to Thank XXXX and everyone you. welcome results our call. quarter second

remind onset Before that challenges XXXX, in go into QX extraordinary let we business. our we faced with COVID-XX of me the the from March results, you

to to safe deliver manner. challenge goods Russia to we manage the across a While millions in step up and of customers

our grew GMV that the And again. as from in for nearly normalize growth compounded annual for and of doubled As are And year if we GMV of QX. the the in in a the an yet look even result, see rate, tough growth quarter high side removed the XX% means gradually we to we interest last base continue the signs is of a business In to quarter impressive extremely XXX% try XXXX. the services more unprecedented This to year. our our demand the we achieved year-on-year. out it and for the X-year by XXXX the in cycling comps. QX size tough of our [indiscernible] from GMV onwards, restrictions actually from from of example, Despite QX second either. We this consumers this effect XXX% light of growth XXX% extremely accelerated comp COVID strong second no merchant year,

customers This sellers reached the we for is by our for the base SKUs. platform. customer and exceeded compared The Speaking is using double which constantly seventh million. drives great the proposition a national every about than to of active assortment tripled our become year the footprint logistics has more more our This Russian to of active customers start quarter base, improving XX merchants. risen by our large base, and RUBXX Growing will the wide use XX% the of more attracted more and of number user last million regional the than year. platform, number now merchants. attractive our And means second compared merchant

words few footprint infrastructure. square XX space. our operate last in We months. meters logistics fulfillment significantly XXX,XXX the and over of a Now expanded about fulfillment We

and key to infrastructure achieve one Our Improving we delivery the to steadily fulfillment nearly outsource our the a consumers, convenient platform to their is milestone of which day us double footprint. are consumers needs. QX, parcels processes meet X of to year, this, shipped enables our aim faster time them great daily enable This customers goods more delivered fulfillment deliver will million Greater to more on us closer use faster. and during of and store logistics to time. footprint XX% our our and per priorities. we becomes Within goods ship

is same Ozon market. X%, we're fulfilled launched delivery But have the interim around penetration. XX% other Russia in underpenetrated the XX% compared top account market with highly e-commerce in the than XX% to three for similar with The and penetration markets market less players billion US$XXX at retail exceeds remains of cities to The market Russian next or still Russian surface. of Ozon centers, XX in by cities In orders delivered quite day day. scratching XX% are has same fragmented. only We are fulfillment e-commerce about Russia. where

of position to infrastructure, and of in building in enable cement help they'll investments We the particular This faster scale one share. as So stepped we so, leaders take in and market Russia. fulfillment to us acquisition the delivery and is the in should in acquisition. have focus on opportunity talent IT tremendous. up e-commerce To do us our customer

over merchants. also we're traction growth sellers After enable license, for still associated gain see important of our we digital is of card, while is Ozon better the Ozon Ozon serve e-commerce of -- business, new platform an thrilled Ozon needs card In This product our quarter. great frequency with Ozon with about verticals. buyers Ozon see cards three has in the second sellers as with Ozon than year-end. lever, our purchases on for one the of a payment customers gained exhibit X more payments lot scope the and we comprehensive of of consumers our banking our to our we of increasingly vertical, While fintech top for methods core suite is high as acquisition aim on services cardholders compared and fintech fintech platform. activated of a flagship became on platform. the double partners. consumer to as In QX, possible financial and buyers of team the our and with focused traction our creating to end XXXX many million XX% financial for becoming

what the SKUs launched course After service Ozon our platform the quick food. to this service of to We of Express currently with over the we year, better their This The faster. our loyalty scaling are just a for which in traction from we sellers. my Express months of services our in service launch XXXX sellers operations service is and allow financial scale invest manage free plan Essentially, XXXX in view. adopted to started our Moscow BXB the is QX gaining launched sellers last -- capital business X the has their Ozon sellers. this Over QX, payment over already format will platform of Our in XX% sellers increased Saint-Petersburg. products solution. after business this of within launch. quick working XX,XXX flexible year. the In to them offers

worth of accounted As retail I retail within half mentioned, the category around single the consumer and total the largest retail, grocery billion is market Russian for over the sales. US$XXX is

the on huge opportunity Within grocery, a standalone basis. represents a

the and order and additional Grocery [indiscernible] us, for categories traffic and customer it platform However, the benefit. generate loyalty. frequency an to is increased also

top to a assistant Ozon aids acquisition. become the with online brand it Secondly, customer

coming As of we into quarters, XX,XXX end frequency QX, square scale operated continue Express In higher push model. the to the aggressively space. will over we of of quite the Darkstores meters as we OZON fulfillment

will Daniil to it marketplace. dynamics in talk over our and Fedorov, I performance our will who pass about operational Now

Daniil Fedorov

Good Thank will everyone. for We year-on-year, stellar afternoon, comments marketplace of the of with boosting of which you, provide this driver is part growth at our core biggest you of Alexander. stage. marketplace, demonstrated GMV XXX% overall. the I performance is our a the Group business. growth Ozon few the on

doing are increase doubled that been growth of Moscow. last as financial from fulfillment of large should of higher. in that and Moscow than the regions the to As year-on-year. we infrastructure as would access we exceeded which have of sellers as with frequency. customers climb The sellers our gaining seller that, an attracted regions XP XX -- can faster of sales regional commission Moscow infrastructure year more continues on point a to active introduced user And Most our new of greater XP the high of to three-fold over platform merchants was up year. customers, this reached augmented utilize services share which lead since in XX% importantly, provide improved. see we with growth of generate region, by in merchant delivery logistics, was our engage more incentivize had active sellers analytics This base. to out more. to The base marketplace from like has The we and on very means substantial side XP is structure time that outside February offer. sellers XX,XXX, and well the on our the delivery by The expansion drives with the merchants I for beginning the our sorting XX%, and of engagement our acceleration million contribution that the can demonstrates over platform. platform from platform this result, year, the XX% traction our approximately outside the and and facilities which number

of to of through businesses. services sellers of sellers are for a of wide best needs use series cater our wide through sellers individual to -- we for the aiming our our position sorry, the services Although --

and as mobile. For storefront SBO MBS well example, [ph] as for rollout

constantly as for run aid as well and to big addition, seminars new we're sellers events tools launching development. analytical advertising them In in business

from million selection the is The on to marketplace us by XX effects powerful which delivery Our customer growing with by a network faster large This XX% market user expanding customers. month, being experience very now merchant is and million X in coupled active SKUs. growth in great supporting and a with a performance latter the resulted our is offer widest able base, driven nearly constantly base.

propelling being the and further is attracts I of. we're is order in very the growth. larger base effect. mentioned, that significant interesting for customer room complacent by that more frequency an growth a merchants we XX% But slide. As This The are upside is not and there something flywheel proud acknowledge annual

cohorts new As more improvements new increased in the in launched [indiscernible] the you fulfillment over and one-third those tremendous even regions. that higher center frequency combined interesting account which the on rate the What slide, in fulfillment that -- order cohort growth and can increase year-on-year. in the orders. massively is from with order footprint frequency is for the see cohorts Ozon data is show contribute We resulted overall the XXX% XX% to order new in the

the Today it the goods high of our year have network network there point. growth results by points about the of we made compare as frequencies. and XX,XXX region in open to aggressively four-fold. this The increase pickup year. consumers breaded slide a progress now. of are located in we franchise closer in XX last we tremendous in exhibit or which had the in second pickup of by able operation versus stand end We our faster are XX% enabled million building same The and fulfillment well. estimate If out, we consumer, higher scaling ago, the walking In goods that presentation can at accelerates which quarter, correlation We it to our XX,XXX, conversion Since speaks our distance the was order end a delivered the between get by points is And actually a better rate. with rates center the to to year. footprint model. sorting the and we expanded next logistics deliver, in

floor Gerasimov, in discuss will Now who more detail. results our I will financial hand the Igor to

Igor Gerasimov

afternoon, performance. Daniil. financial everyone. will you, the Good comment Thank on I

Let me quarter. billion second GMV recap. The Group in generated in RUBXX the

mentioned, Daniil strong XX% orders XXX% the delivered growth a Alexander As growth. GMV of we on and back year-over-year

becoming and has cohorts more to destination marks The Both traction stock improved, transition driven go the of frequently. our more frequency have order high been the average frequency shopping growth demonstrate decreased, number entire Although model for by our customers the order platform high our beginning platform. for shoppers value is a this on ordering which customers the online. in means order and strategy that working. and of increase to rates The

which by growth, result GMV. XX% Our marketplace of the as now increase seller commission accounts marketplace for revenue a XXX% of

Our to promote and increasing growth leverage usage advertising our revenue strong and Sellers strong XXX%. as a grow and platform sales. their brands awareness of advertising marketplace show of brand

platform now see platform that advertising of and increase for offers we revenue. and our the every in tools potential advertising significant should seller going allow over That us tools. Our promotion to uses XX monetization forward

on moving operating to expenses. Now

of frequency costs of by and delivery Infrastructure depressed marketing GMV funds. up expansion base launch largely and of a percentage Although Sales COVID-XX facilities, increased ramp increased by forward. utilization support instrumental marketing provided growth in XXX% remain of high they fulfillment GMV tailwind customer year-over-year, costs. and expenses is in existing mainly back QX fulfillment of offset terms logistics a to acquisition a when effect XXXX expense due early of Q-on-Q to going our reflect on the and as a

new important talent accelerated On per In that, this and is investments note order in my XX% logistics a in with and addition, to advertising essential would the process to to IT and of negative us as to compared GMV Xx together as to quarter especially also we new a order accelerated as orders second footprint more in technology EBITDA Xx to X.X% that order of in IT. deliver that targeted instruments percentage our cost -- to and XXXX and teams and marketing second building We're more fintech support XXXX. scale of Adjusted basis, This order quarter continue backbone costs the in and verticals, year-over-year. was I acquisition, compared QX first Express. increase our such second in quarter conditions the XXXX, The key declined and platform scale were, X.X% G&A, XXXX. on which like our year, XXXX of the after of allows quarter second growth energy in slightly sale buyer full in quarter contributed digital negative in What XXXX. with quarter grow all, adjustments February Those infrastructure. base. drivers a first X.X% compared we introduced to negative the the have marketplace

share growing driver from of profit second more prominent marketplace gross levels. become quarter forward, recovery a Going the of will XXXX the

seek those efficient. be of them Secondly, We a have frequency analyzed in over efficiency the the high been optimizing to our the business. strategies and quarters for of support we of and the orders. the second in quarter, of course investments are and investments which pricing growth we increase number targeted the business XP most the will our frequency of selected of made, several drive XP testing we categories various In

expect of we improvement the profit the couple to our Over of in profile see XP some business. next quarters, gross

part EBITDA drives on. which First, development frequency investments Express it value, scaling of We because it is customer more to will accelerated attributable higher long the our into and Express sustainable is of model one loss high run. we're from priorities prioritizing now our up, strategic in and model of remain

As time scale into that acquisition core and as at should verticals, and accelerate believe of we over new support our to marketing future we talent growth we across be it investments platform. valued grow

working by in expect territory, healthy further in cash quarter, Working a result We with On mainly and half second for billion capital XP ahead year-end. to Cash our to commerce well. the EBITDA in working up and fare performance season, capital CapEx marketplace profile RUBX.X we currently offset I'll capital Ozon flow generation expect year. investments slightly better performance. flow of intact of dynamics. of moving loss flow widening Now but division share guidance. high Multiple continues a some cash our Group with in as the metrics negative performance was of positive increase. we capital stock in invested second finish higher expenditures the the stays

confidence higher well QX performance QX, gives platform performance in and trading our and increased us that so model market far deliver ability core growth Express Our share. growth our as to

to raise our order expect therefore for of the GMV grow growth XXX% year. the remain for We to And our strong full we remainder the guidance year.

guidance XXXX. RUBXX and capital for presentation This operator move We of concludes expenditure also we to I reiterate will our Q&A our RUBXX suggest billion billion to now.

Operator

line your go Miriam And Morgan Please Instructions] Miriam. [Operator of first question comes from the comes ahead. Stanley. from

Your line open. is now

Miriam Adisa

for questions. Great. Thanks my taking

margin First one the just on gross contraction.

So commentary -- then. of the you and just there's made some

on then what just between break drivers about as perhaps over down XXX the you So how And sort the that the again, marketing of that the that drivers? we you of different half? secondly, sort contraction if like And could bps think second contraction? the in ones? for well. the could sort And What of biggest were should cost looks go

as you about I think XXX there increase saw well. sequential bps So

was by customer And pretty advertising just pressures? was took if that comment billion August, the is -- then, solid. you in cash some thirdly, what of the driven you acquisition extent the could costs? seen clearly competitive extent I loan on for this balance to mentioned increase because you that Express? think what any to Have out you in RUBXX Or a this of So result

just useful. you to going could if So explain that is you. Thank be what

Alexander Shulgin

Miriam. Sure,

margins you granularity. some on to So gross profit more give

not any commission therefore, second commission the our structure. you operate stable expect is when introduced full forward. remember, see February we going We weakening or of quarter structure. to do probably the we a all we have therefore of quarter deterioration new first structure. XXXX, And remain commission And on it in new As X, XXXX relatively

how were they we the have share quarter analyzing see of Another of investments Hi orders making which year-over-year The because profit in our well second quarter the strong, the our of we gross thing contributor higher account structure. targeted fees over gross of to in of here and course should GMV, an operations forward second were note frequency to especially into growth Q-on-Q simply taking is of margins and that which the margins growing uptick and decline see which at efficiency high XXXX. on of paying growth GMV of investment XP off pricing our terms, as strategies we're and been the that and We both our the profit of with XXXX is were -- especially year-on-year looks base marketplace the we business. biggest going

monthly versus performance platform safe first is our make, optimized to bulk On gross XXXX. of is cohort Going a forward, of with our our to the significantly this cohort comers XP versus investments on And better to spending be of relatively the XXXX. investment with and we see And marketing. question evidently -- have updates, making of we saw the be expect therefore quarter a of drive profile quarter second because this growing frequency however, been it attract our business XXXX. of about such therefore second we've new improving we acquisition. profit share And more will half retention, as that performance will is improving standpoint, investments of a from We the rating our GMV and is your order the marketing to managed basis. in will Nevertheless, in paying percentage customer as be trading off. from

to an decent a On loan very the ruble loan, so at we're leverage basically rate. get just opportunity

capital it use in So it's we which with the will order be decided and the working Bank. sufficient rate capital liquidity to Central points level. flexibility to provides And it facility, the used above manage of key to our improve on percentage structure. us just therefore, mainly the degree It's companies just mostly free. it's our a Russian operational of covenant X-year to finance And

Miriam Adisa

Great. Thank you.

the follow-up first the were making give Just Could on any you color those one. to that you on pricing investments categories in?

Alexander Shulgin

and generate of for the we categories Sure. of shopping. stimulate most great of is FMCG. of Electronics naturally us, create an FMCG investments and adoption important and is long customers. and targeting run run frequency vertical category which the growth long driving and electronics two traffic most a which of been importance important those traffic, were the is to e-commerce attract Those mainly have the categories And are strategic

Miriam Adisa

so Thanks. lot you That's great. Thank much. a --

Operator

your of And comes at go you. from Thank ahead. question Sachs. next Please Degtyarev the line Vyacheslav Goldman

Your line is open.

Vyacheslav Degtyarev

Thank Yes. A couple the presentation. you much questions. very for of

a question on broader Firstly, costs.

per market that hundreds next So build most in also year, wages, thousands the competition? basically you. Can increased last driven in of But maybe absorb the to be secondly, basically in the -- factors capacity, by years? the capacity in more in were spike high the much change how fulfillment is of long-term out markets, we factor challenges in for deceleration And as average out CapEx into as invest Q-on-Q or think the compared percentage fulfillment not annum Thank the full or the was flatten much guidance the over run? like decision inflation, do the percentage as you that the the -- the will GMV by either which couple growth a of GMV. characterize of how you the the medium term, effect year. did QX cost is of for maybe in Russia obviously to rolling increase construction items to do driven But to certain XXXX. of competition, of etcetera? to demand you given built base non-controllable for like GMV you high factors deliberate And the ready of non-controllable that And, for curve the the long of see other

Alexander Shulgin

Sure. Vyacheslav, your for thank you questions.

have second attributable and and infrastructure making is of first So that there of infrastructure fact Therefore, fulfillment deliberate is centers. investments been infrastructure, the the growth XXX% fulfillments overly mile in our year, expansion mainly of a XXXX, both up. opposed last were spike as in in year-over-year the because terms component GMV half a ramp to we our the XXXX year, of naturally, the mean, of reflection growth the of significant is up it last with of quarter This mainly amid ramp utilized, to COVID. the I

or that account delivery say our verticals delivery percentage sure a year, components As And remain frequency to to we're a and speed of ambition growth, and evident items, rollout making any is costs of complicated the in as of able to I affected also Therefore, is of improve to also of accounts, GMV, that fulfillment it of relatively percentage Q-on-Q, rollout reflection of and promise. the contributing of wouldn't campaigns a the our as just our support continued of and from is GMV. have half the of competition, like not items GMV things fees. aim percentage improve of fulfillment delivery one the a our the second Express courier into infrastructure. buying infrastructure we plus that been OpEx stable delivery cost which taking by the

and You contracted fulfillment fulfillment have basically, that to rolling because in technological warehousing that to stick space and been been the difficulties we requirements never out of a going suit, our infrastructure fulfillment of have already. on facilities thought have And therefore Therefore, built expanding supply well advance. years market as the for accommodate in they asked we thing of and The also to our existing are ourselves about couple forward. we is demand for well. will our that is most our sufficient strategy market

Vyacheslav Degtyarev

Okay.

Alexander Shulgin

your answer Does question? that

Vyacheslav Degtyarev

fulfillment the you Yes, here? bottlenecks clarification. or a given envisage costs Would maybe that inflationary before thought sudden you you trends envisage certain certain spike rollout maybe versus just in on what

Alexander Shulgin

in we right the Potentially, and that to some or the market us practically, although change run. mid structure conditions might long say in that P&L there dramatically affect cost pronounced on our now. them spike any spikes, wouldn't I should not do level be see

Vyacheslav Degtyarev

Okay. Thank you.

Operator

Kirill from ahead. question at Capital. comes go next Please your Panarin And you. Thank Renaissance

open. Your line now is

Kirill Panarin

questions, Thanks. please. Hi, A few everyone.

on any trends Firstly, current GMV comment quarter-to-date.

your seem competitive in Moscow, dynamics this of some in region. on have made material progress Secondly, to peers

there gross So a on particular, in term all impact have Moscow, I trends sort to said. for you would regions just you is the in longer and gross any wonder follow-up understood color of And margin be lastly, any to here That's on versus on I sustainable if helpful. Ozon's just it. everything I Thank XP target just do margin. XP -- wanted margin? ask, growth you.

Alexander Shulgin

Okay.

the one, first So on GMV.

Daniil Fedorov

trends, at the GMV So we trends internally, see CAGR because of year, GMV stable. think X-year -- last we volatility the basis are way the look And isn't I of year the CAGR. over period X the on a quite

Talking So Moscow issues we continue don't any second continued we the indicated like region, I see think say I quarter, the the quarter. there. that It's we would Moscow they into growing. third that, and trend in about no,

from the whole our business. of of service. is faster, rollout rather I infrastructure. our growing GMV the the same is lot of back for quite the them as especially we healthier, that, Our say on they biggest turn, see Express that say time, rollout GMV see for the would regional we because performance players, that GMV of And number surprising. comments a But is report overall a some the bit Moscow we'll at to for region in similar we controversial and

see. we'll So

Igor Gerasimov

while profit gross the profile completely profit because have fact. metric relative we're margins on the which of focusing lower, profit value, naturally And In the hard because by of mix. in are two mean, are very higher. much it And run, on in margins margin. And Sure. profit is the item different FMCG now affected to I high on gross the average categories long the gross it's gross margins traditionally XP question guide quite electronics

the look Just mix. hard terms. it's purchasing because But assume to obviously, significant it's offline power working at gross of margin of improvement like that our a where will bargaining it is we Therefore, sales we'll be to [ph]. safe on and subject the end expire take to a retailers up tell

Kirill Panarin

very you Thank great. that's Okay, much.

Operator

from next line question Capital. is the Thank Kim you. Please your of Ivan go And Xtellus from ahead.

is now line open. Your

Ivan Kim

Hi.

Just maybe three me, questions from please.

it was sell first onboarding second Firstly, the what for the looks expect driver first the you quarter That’s And to the that on onboarding, accelerated sell you do like quarter, versus continue? question. in that?

you average you Ozon question on GMV right second useful of Ozon Express think can within a margin purchase it as number. to on fulfillment. do Express share long maybe And Express. But as The on on will for now? just for daily Express grocery And take terms then gave order you share retailers you approach Maybe in the the stat bigger of what’s how thirdly, -- on side, business? Moscow

which the So that's my you calculations this double means second to half. XXX,XXX in fulfillment you to want I square said you. meters correct. on year, right, the quick about is additional wanted Thank just reconfirm

Daniil Fedorov

Okay.

one highlight increased first on So the will I I happened. three things. of say number the sellers, think I can something dramatic has

we had in who's basically for new already weeks one June started all events a we sellers, sellers current sellers, in Siberia where several and more about First, we did major thinking public event marketplace, embrace and much doing someone sellers, just ago. we and

So that's one.

active think So, became we more a just bit I publicly.

a improvement in significant -- say in quite is also and in onboarding that I Second, process. there product will

of [ph] that sellers actually sellers. drop joint model. the And appearing LBS the infrastructure, sellers, that's have also and that time on of actually And So during for actual fulfillments, lot the opened in just I would accelerated for especially the that a and points marketplace the second for in onboarding overall with helped development up say average third, it funnel. basically And LBS right, from regions platform of sellers, regions. were original because we quarter

time. We, to continue course, onboarding increasing So processes, accelerating number of are quite overall want our accelerate I trends of in think healthy. all sellers,

But not the on and with growing important make other is And sellers probably So platform to should sure question. that here it's this think developing should -- business. the just also sellers that continue. is I what’s develop rather to going each

So for right we latest GMV XX% now. is see the total for in Ozon of months, a group Moscow in share as the over Express, that Ozon Express

considerable. quite becoming is it So

we're every because it's to to bit saw mean, several on On growth in story. roll be half purchasing therefore, is in investments of is a trying on lock it and the then category, of this to [indiscernible] need is a by scale But forward driven varying And, impact, mean, different -- sales at which you I -- let's mean, supplier. on them to category. build sales terms I need order in and consumers will But because the part a even we items all purchasing per our fewer year-over-year of least I a we the it's yes, build bit. power, back the sufficient platform. of that a things single attract did -- questions? I function and guess single your And mix, of more in I fast basis with answer yes, SKU

Ivan Kim

Yes. very much. Thanks

Igor Gerasimov

Yes.

Fedorov but this meters means This capacity, plan -- said operational. the in finish I to only square total year yes. already XXX,XXX Igor speaking. Yes, with approximately We is So committed of mean, not fulfillment operation.

Ivan Kim

Great. much. very Thank you

Operator

Thank you. Anna And Please at from Alfa your Kurbatova next line the Bank. go ahead. question of comes

open. is now line Your

Anna Kurbatova

you with very call. and the your regards to much CapEx question have for Also, Yes. I afternoon Good thank one guidance.

RUBXX in that will almost billion one RUBX expected the second number, and billion, on billion. So spend it half like RUBXX is half between you based

tell the that us Because six in cost like would end more be question part until target of flexibility commissioning, of or third my -- maybe inflation have, of be some pace and like fulfillment year the projects less reflects terms the capacity range, difference, you it your you it reflect this in until kind year. the end year. might you the forecasting, of that So or some yes, that of the

half. the great of this for the Thank like be to you. range it would CapEx understand the mathematics and second So nature

Daniil Fedorov

try I'll explain. Sure. to

our to half second most the the indeed, And CapEx the spend Year the of remains New especially and in high guidance funds before we season, intact. before So aim holidays. of the year, also

cash of built. to detached us terms will and able this for meet internally is commitments, we bit as that deadlines infrastructure needs and so variability ensure CapEx can you growth. and that postpone that this is you order bit be crucial power you the to locked renegotiate executed So to and plus, in might thing, that commitments different variability objects actually the the our GMV on thinking to cash need have is the and a This with to which is expenditure obligations and therefore, actually will need is [indiscernible] a thing we're make the counterparts. legal to the is where cost the But infrastructure sign And a expenditure guidance, your be in And [indiscernible] those actual already payments. from. bear because from to for place sure in support comes

-- therefore, not will of us, CapEx if some of drama So big quarters mean, spent of it's I for that be a first the in XXXX.

infrastructure to for sure your the and to and that make it crucial will into time. developers crucial to legal is look it is So look the which vendors instance, on built contract be find launched

Anna Kurbatova

contractors. you contractors, Thank a about as you on more And Could very your construction much. kind this. negotiation a like with of bit follow-up speak your process

and be the cost built you year. the year, by negotiating start of end in second the volume during to new the the capacity the for half So

and should we the it your like general understanding process as -- the how So should commence already expect -- object phase the finish what Thank and the develop? like them and year? when -- you fulfillment objects you've projects are next with as in what's So does for updated you. worked next that helpful. schedule, or targets your will be CapEx your this in So how soon

Igor Gerasimov

Hi. is Igor Anna, this speaking.

process on infrastructure. the provided call CapEx year next be will guidance So our QX of in

in on lead some like to the of time available to and we large Darkstores see the plan of advance and objects on negotiate therefore sure Smaller make different season of future growth periods. XX sorting how we'll have with capacity infrastructure and advance we months, in typically centers, from high a long-term our available figures GMV So readily suppliers. are commitment depends have fulfillment facilities XX it rented the its

shorter much advance a time it's in have So period we of rent to them.

Anna Kurbatova

Yes.

Alexander Shulgin

your answer question? that Does

Anna Kurbatova

clear. very That’s Thank Thanks. Yes. you much.

Operator

of from Vlasov comes go question the WOOD & line And you. ahead. at Please Company. Dmitry next Thank your

open. line Your is

Dmitry Vlasov

All to the [indiscernible]. right. Thank you for opportunity

be would on first my adjusted So question EBITDA.

of losses full XXXX the on comment or versus you EBITDA a expect some you percentage the maybe as last what year in higher-than-expected year? quarter, second margin my question. of given So in GMV can adjusted do That's provide first clarity

contribution. GMV the Second question on CIS

can of as maybe percentage be you. expect the you total? provide you as what Thank a years? in in the to a some some follow-up maybe to of below So And percentage provide guidance GMV is where color on current GMV maybe share do total see couple of next of

Alexander Shulgin

Sure.

of therefore But we end dilute of an reasonable which margin any not because the about plus the So profit question, the gross us effect, will ramp -- the up assume account precise to things guidance to into not an which for impact target. infrastructure I the improvement communicating impact give and year of marketing. have exclusive and on it's scale previously been provide taken the by the help why will first your of EBITDA, on the

and On the it's GMV, those the of in low stage we're a very percentage of and share as of Kazakhstan Belarus still at the markets. early total single-digit development

Dmitry Vlasov

you. Thank Okay.

Operator

And at go Please line Elena ahead. next your you. the Thank question Jouronova of comes from JPMorgan.

open. Your line is

Elena Jouronova

Thank evening. very Yes, good you much.

is pricing did First actually bring trying match were the key I assortment. competitors, or work? that targeted, terms question prices you understand about in targeted categories. you But How you prices XP of you actually aim price to this below to your the competition? two strategy in

Alexander Shulgin

Sure.

was strategy So follows. basic as

in pricing ultimately and in your those in the And market. to you You whole see make how considered are number that order have you on to it best various marketing with sure and which instruments ends promise select the is up competition, play your SKUs, to paying on with the purpose. What be we can Plus, how FMCG, our and for been it off tools category. of the they is seeing in across based internally people categories levels the that SKUs strategy has those improvements that assortments, is when yielded hope traffic that will particular for instance, pricing obviously this you [indiscernible] in you with attract works sort offline familiar retail. strategy, channel, sure you're which with more stuff your other buy similar used is this the in platform some assortment as acquisition of I'm because of and stick need

Elena Jouronova

share Then can that. your Thank understood question, quarter churn in you. us the cohort? what the customer Yes, second you with 'XX was second

Igor Gerasimov

because -- -- matrix not front of [ph] offline, in not you have us. we I’m with the follow-up do can We

Elena Jouronova

Understood.

Igor Gerasimov

yes, not do that -- we told the we and by And team I'm action. my disclose

Sorry.

Elena Jouronova

[Indiscernible].

for particular, you with by average two Can understand you the GMV it the share electronics -- was categories how was but than gross what and you Another FMCG? in mentioned, us question, your much? higher we reported, please. Or just maybe

Igor Gerasimov

XP related so business, different. therefore, bit a it's it's Yes, to

a well growth [indiscernible] marketplace blended been of in about So FMCG, XXX% effect been other and categories, XXX%. has over it's the also on in it electronics, but has

Elena Jouronova

for side about not? Okay, understood. questions. do Does is Then one year. I or What Bloomberg the to I this don't EBITDA this loss consensus is full you XX EBITDA loss year. more them mix number? have billion sell but of expecting And two the again know sound according you that realistic guide, on think

Igor Gerasimov

Well, reduction infrastructure, the the a once year. you not EBITDA the different for profit will have of exact consensus in margins, a and see and in the the spending. trends, marketing following also ramp communicated, which improvement Therefore, in to gradual levels again, the the gross But need do with full I especially quarter, come factors adjust up guide guess, fourth gradual probably, gradual of I up quarters, in we target them on GMV. new you

Elena Jouronova

adding and is the don't you ramping new still infrastructure infrastructure at really but I up, the same dilutive. the infrastructure understand What is is more time you're added

the other. So wouldn't one effect offset

Igor Gerasimov

reforms. the growth, infrastructure openings. a process volumes that higher it you the themselves be works. generate because pickup to mean, is of need instance, need Plus and to GMV by our support adding will not points, ensure high total I our simple in case and It for generate aim base high frequency if depends you you of more to growth, objects for in order on

to So you when naturally Because will their see closer support the and important improvements the in to it's interactions [indiscernible] retention become with the growth. customer, you platform. also broader

Elena Jouronova

question. And final Okay.

the actually. most one, important Sorry,

So factors factors the driving what And Thank we your summarize do pricing what if third you your in strategy second be all you again? half, quarter? can rates just take in in XP the the plan as will

Igor Gerasimov

seller being the be Sure. which only do factors expect there. would being still, less because is model the instance, for might operational we changes any be any But is you changes we spend [ph] versus of shouldn't But On mix within especially second bottom it ABS than marketplace. saved things take rate, models equal, business fair because The presumes less. it that expense, not because not process bear line, be But damaging we variable dramatic all OpEx that less. quarter. for do impacting other dramatic the the expect that, business

be order we on working retention improve going an in proceed margin as has our number gross their terms customer And guess, the the been and acquisition the of to in most will But year should acquisition revenue be optimizing in in Plus, see will a retention. up because of we well. the looking a On if been invest XP, level efficient for Overall, profit the of into marketplace advertising customer to should has half be second improve we quarters. gross tools margins or effectively, we I team the the we acquisition the opportunity what blended will yes, profit our strategies. on at coming monetization.

Elena Jouronova

Thank you.

Operator

questions. no continue. There you. Please further are Thank

Alexander Shulgin

Okay. This is Alexander.

make forward some to convenience So this the our updating the your up, Thank progress lines. strides businesses questions great in call to already your remarks and making operating let realize better to opportunities you results consumers, mission and call call. that November. everyone of end providing me our give and QX sum or by day. greater joining To for before economy selection earnings a and transform We look migrating today. closing We our want to the for thank in for good we Russian conference have wider on demonstrate quarterly then we're all our for Russian our

Operator

the you Thank conclude for for conference just participating. today. That

all disconnect. may You