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QIWI Announces Second Quarter 2021 Financial Results

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QIWI plc (NASDAQ: QIWI) (MOEX: QIWI) (“QIWI” or the “Company”), a leading provider of next generation payment and financial services in Russia and the CIS, today announced its financial results for the second quarter ended June 30, 2021.

2Q 2021 Financial Highlights
Group results

  • Total Net Revenue from continued operations increased by 3% YoY to RUB 6,049 million ($83.6 million). Including discontinued operations Total Net Revenue decreased by 12% YoY.
  • Adjusted EBITDA decreased by 1% YoY and stood at RUB 3,850 million ($53.2 million). Adjusted EBITDA margin improved by 6.6ppt and reached 63.7%
  • Adjusted Net Profit decreased by 2% YoY to RUB 2,704 million ($37.4 million), or RUB 43.30 per diluted share. Adjusted Net Profit margin went up by 4.4ppt to 44.7%

Payment Services (PS) segment results

  • Total PS volume increased by 32% YoY to RUB 457.6 billion ($6.3 billion)
  • PS Net Revenue increased by 5% YoY to RUB 5,678.1 million ($78.5 million)
  • PS Net Profit decreased by 6% YoY to RUB 3,042 million ($42.0 million). PS Net Profit margin decreased by 6.5ppt to 53.6%

Key events in 2Q 2021 and after the reported period

  • The Board of Directors comprised of seven members, including three independent non-executive directors, was elected at the Company’s AGM. Sergey Solonin was elected Chairman of the Board of Directors
  • Andrey Protopopov was appointed as CEO of the Company and became a member of the Board of Directors
  • The Board of Directors approved an interim dividend for 2Q 2021 in the amount of 30 cents per share
  • QIWI entered into a definitive agreement to sell its 40% stake (45% economic interest) in Tochka for RUB 4.95 billion, subject to performance adjustments depending on Tochka’s FY 2021 audited results1. The Closing is subject to the approval of the Federal Antimonopoly Service of the Russian Federation (“FAS Approval”) and is expected to take place in 3Q 2021.

Andrey Protopopov, QIWI’s CEO commented:
“Despite overall challenging environment we managed to deliver another quarter of strong results coming above our initial expectations. Our focus on the key niches, high standards of service and operational efficiency pays off with growing volumes and sustainable margins.

I’m pleased with the developments in our core Payment Services segment, which shows sound volume growth of 32% and net revenue growth of 7% YoY despite negative effect from temporary block of cross-border payments. Our Money Remittance vertical volume reached record highs and E-commerce vertical demonstrated growth year over year. We were well prepared for the Euro 2020 football championship and observed solid volumes across our key strategic directions on the back of our continuous efforts to improve customer value proposition. The team is progressing well on launch of new products, signing new partnerships and onboarding of new merchants. I also look forward, with enthusiasm, to the developments in B2B segment via our Factoring PLUS project where we continued to expand our portfolios and launched credit products for contracts execution and for market places. We are constantly enhancing our product portfolio mix and look for new opportunities that emerge on the market.

Despite the headwinds we face, we are committed to achieving our goals. I believe, together with our professional team, we are able to deliver sustainable and profitable long-term growth to our shareholders.”

2Q Results

Net Revenue breakdown by segments

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB million RUB million RUB million % USD(1)
Total Net Revenue 6,839 6,049 (790 ) (11.6 %) 83.6
Payment Services (PS) 5,397 5,678 282 5.2 % 78.5
PS Payment Net Revenue 4,609 4,933 324 7.0 % 68.2
PS Other Net Revenue 788 745 (42 ) (5.4 %) 10.3
Consumer Financial Services (СFS) 437 (437 ) (100.0 %)
Rocketbank 509 (509 ) (100.0 %)
Corporate and Other 496 371 (124 ) (25.1 %) 5.1

(1)   Throughout this release dollar translation calculated using a ruble to U.S. dollar exchange rate of RUB 72.3723 to U.S. $1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of June 30, 2021.

Total Net Revenue from continued operations increased by 2.6% YoY to RUB 6,049 million ($83.6 million) driven by PS segment Net Revenue growth. Including discontinued operations of Sovest (reflected in CFS) and Rocketbank Total Net Revenue decreased by 11.6% YoY.

PS Net Revenue in 2Q 2021 was RUB 5,678 million ($78.5 million) – 5.2% higher compared to last year driven by PS Payment Net Revenue increase.

PS Payment segment breakdown by verticals

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB RUB RUB % USD
PS Payment Volume (billion)(1) 346.8 457.6 110.8 32.0 % 6.3
E-commerce 100.2 104.3 4.1 4.1 % 1.4
Financial services 53.7 67.8 14.1 26.2 % 0.9
Money remittances 142.2 243.7 101.5 71.4 % 3.4
Telecom 42.6 28.9 (13.7 ) (32.1 %) 0.4
Other 8.1 12.9 4.8 59.5 % 0.2
PS Payment Net Revenue (million)(2) 4,608.4 4,932.8 324.4 7.0 % 68.2
E-commerce 2,687.7 2,292.6 (395.1 ) (14.7 %) 31.7
Financial services 313.6 161.5 (152.1 ) (48.5 %) 2.2
Money remittances 1,317.5 2,337.0 1,019.5 77.4 % 32.3
Telecom 238.7 124.4 (114.3 ) (47.9 %) 1.7
Other 51.0 17.2 (33.8 ) (66.2 %) 0.2
PS Payment Net Revenue Yield(3) 1.33 % 1.08 % n/a (0.25 %) 1.08 %
E-commerce 2.68 % 2.20 % n/a (0.48 %) 2.20 %
Financial services 0.58 % 0.24 % n/a (0.35 %) 0.24 %
Money remittances 0.93 % 0.96 % n/a 0.03 % 0.96 %
Telecom 0.56 % 0.43 % n/a (0.13 %) 0.43 %
Other 0.63 % 0.13 % n/a (0.50 %) 0.13 %

(1)     PS Payment Volume by market verticals and consolidated payment volume consist of the amounts paid by our customers to merchants or other customers included in each of those market verticals less intra-group eliminations. The methodology of payment volumes allocation between different market verticals in Contact and Rapida may differ from the methodology used by QIWI. We therefore retain the right to restate the presented volumes, net revenues and net revenue yields data in case the methodology of Contact and Rapida will be brought in conformity with the methodology used by QIWI.
(2)     PS Payment Net Revenue is calculated as the difference between PS Payment Revenue and PS Cost of Payment Revenue (excluding D&A). PS Payment Revenue primarily consists of merchant and consumer fees. Cost of PS Payment Revenue primarily consists of commission to agents.
(3)     PS Payment Net Revenue Yield is defined as PS Payment net revenue divided by Payment Services payment segment volume.
In 2Q 2021 PS Payment Net Revenue increased by 7.0% YoY and amounted to RUB 4,933 million ($68.2 million) as a result of an increase of the PS Payment volume by 32.0% which was partially offset by a decrease of PS Payment Net Revenue Yield by 25bps YoY.

PS Payment Volume increased by 32.0% to RUB 458 billion primarily due to the Money remittance and Financial services verticals. Money Remittances vertical went up by 71.4% YoY reaching a historical high level of RUB 244 billion represented by increased volumes across all key streamlines, namely card-to-card money transfers to Master Card, Visa and MIR from Qiwi Wallet accountholders (up 109% YoY), repayment of customers’ betting winnings on the QIWI Wallet (up 59% YoY), B2B2C transactions (up 135% YoY) resulting largely from the development of our product offering for self-employed and increase in peer-to-peer operations, and money remittances via Contact (up 29% YoY). Volume growth in the Financial services vertical by 26.2% YoY was driven by increased bank and micro loans repayments. E-commerce vertical Volume went up by 4.1% YoY on increased TSUPIS operations and recovery of tourism partially offset by the decrease in payment volumes to foreign merchants due to temporary restrictions imposed by the CBR2 in December 2020 and expired in June 2021. Telecom volume decreased by 32.1% YoY to RUB 29 billion on lower volumes coming through MNOs3 and adverse impact of the downsizing kiosk network. Other category comprising a broad range of merchants in utilities and other government payments as well as charity organizations to which we offer payment processing services increased by 59.5% YoY to RUB 13 billion.

We note significant growth within the B2B and B2B2C streamlines as we continuously enhance our customer value proposition. These transactions mostly represent use-cases connected to peer-to-peer transactions, light banking, collection of proceeds services we provide to self-employed customers, etc. We believe that significant growth in revenue from peer-to-peer transaction may not be representative of revenue from such transactions in future periods.

A decline in PS Payment Net Revenue Yield by 25bps to 1.08% was mainly driven by a combination of (1) decreased E-commerce Net Revenue Yield by 48bps to 2.20% and (2) lower share of E-commerce vertical in total PS volume by 6.1ppt to 22.8%, both resulting from the temporary restrictions imposed on higher-yielding cross-border payments.

Any changes in the regulatory regime or in the interpretation of current regulations that affect the continuation of one or more types of transactions currently facilitated by our system may materially adversely affect our results of operations.

PS Other Net Revenue breakdown

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB million RUB million RUB million % USD million
PS Other Net Revenue 788 745 (42 ) (5.4 %) 10.3
Fees for inactive accounts and unclaimed payments 501 413 (88 ) (17.6 %) 5.7
Other Net Revenue 287 332 46 16.0 % 4.6

PS Other Net Revenue decreased by 5.4% YoY and stood at RUB 745 million ($10.3 million).

Fees for inactive accounts and unclaimed payments were RUB 413 million ($5.7 million) or 17.6% lower compared to 2Q 2020 due to extension of inactivity terms from 6 to 12 months as well as decreased number of QIWI Wallet accounts.

Other Net Revenue largely composed of interest revenue, revenue from overdrafts provided to agents, and advertising increased by 16.0% YoY up to RUB 332 million ($4.6 million) driven by cost optimization measures resulting into lower expenses for call center, SMS and Voicemail.

Payment Services other operating data

2Q 2020 2Q 2021 YoY change
Active kiosks and terminals (units)(1) 118,455 100,324 (18,131 ) (15.3 %)
Active Qiwi Wallet accounts (million)(2) 20.9 15.5 (5.4 ) (25.7 %)
PS Payment volume per active QIWI Wallet account (RUB thousand) 16.6 29.5 12.9 77.6 %

(1)     We measure the numbers of our kiosks and terminals on a daily basis, with only those kiosks and terminals being taken into calculation through which at least one payment has been processed during the day, which we refer to as active kiosks and terminals. The period end numbers of our kiosks and terminals are calculated as an average of the number of active kiosks and terminals for the last 30 days of the respective reporting period.
(2)     Active QIWI Wallet accounts calculated on a yearly basis, i.e. an active account is an account that had at least one transaction within the last 12 months from the reporting date.

The number of active kiosks and terminals was 100,324, including Contact and Rapida physical points of service, a decrease of 15.3% compared to the previous year. The number of kiosks and terminals is generally decreasing as market evolves towards a higher share of digital payments. Our physical distribution network was also negatively affected by the spread of the COVID-19 pandemic, corresponding lockdown measures, and other restrictions that limited our consumers’ access to certain retail locations as well as changed customer behavior. Nevertheless, our physical distribution network remains an important part of our omni-channel infrastructure.

The number of active QIWI Wallet accounts was 15.5 million as of end of 2Q 2021, a decrease of 5.4 million, or 25.7%, compared to 20.9 million last year. The decrease primarily resulted from the introduction of limitations on the anonymous wallets, and enhancement of certain KYC, identification and compliance procedures. The number of active QIWI Wallets was also affected by the CBR restrictions imposed in December 2020 resulting in outflow of clients that customarily used our services specifically for payments to merchants that have become subject to the restrictions. We are focused on diversification of our product proposition and increase of payment volumes per QIWI Wallet account. In 2Q 2021 PS Payment Volume per active QIWI Wallet account was RUB 29 thousand which is 78% higher YoY.

Corporate and Other (CO) Net Revenue breakdown

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB million RUB million RUB million % USD million
CO Net Revenue 496 371 (124 ) (25.1 %) 5.1
Tochka 166 74 (92 ) (55.6 %) 1.0
Factoring 204 181 (24 ) (11.6 %) 2.5
Flocktory 117 127 10 9.0 % 1.8
Corporate and Other projects 8 (10 ) (19 ) (223.5 %) (0.1 )

CO Net Revenue in 2Q 2021 decreased by 25.1% YoY to RUB 371 million ($5.1 million) driven by Tochka and Other projects Net Revenue decline partially offset by successful roll out of Factoring and Flocktory projects:

  • Tochka Net Revenue decreased by 55.6% YoY to RUB 74 million ($1.0 million) due to switch of some SME customers from QIWI to Tochka bank. The technical change of cash and settlement service bank provider resulted into Net Revenue decline partially offset with Net Profit growth through the equity pick up. In the beginning of 3Q 2021 QIWI entered into agreement to sell its stake in the project. Thus, in the next quarters impact on operating results from Tochka is expected to cease.
  • Factoring Net Revenue decreased by 11.6% YoY to RUB 181 million ($2.5 million) due to a one-off adjustment in 2Q 2020 in the amount of RUB 50 million. Excluding the one-off effect, Factoring Net Revenue would have shown growth of 17.1% YoY on further expansion of bank guarantees and factoring portfolios:
    • Bank Guarantees portfolio increased by 87% YoY to RUB 24.8 billion with average check growth by 3% to RUB 1.1 million.
    • Factoring portfolio increased by 59% YoY and reached RUB 5.3 billion with number of active clients going up by 39% YoY to 492.
  • Flocktory Net Revenue increased by 9.0% YoY and reached RUB 127 million ($1.8 million) driven by growing number of clients and traffic-providers (7% YoY) using Flocktory’s platform and marketing services underpinned by growth of average check.
  • Corporate and Other projects Net Revenue include result of operations of different projects in the start-up stage and in 2Q 2021 it amounted to RUB 10.5 million ($0.1 million) of loss.

Operating expenses and other non-operating income and expenses

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB million % of Net Revenue RUB million % of Net Revenue RUB million % ppt USD million
Operating expenses (3,369 ) (49.3 %) (2,486 ) (41.1 %) 883 (26.2 %) 8.2 % (34.4 )
Selling, general and administrative expenses (696 ) (10.2 %) (612 ) (10.1 %) 84 (12.1 %) 0.1 % (8.5 )
Personnel expenses (1,938 ) (28.3 %) (1,525 ) (25.2 %) 413 (21.3 %) 3.1 % (21.1 )
Depreciation, amortization & impairment (445 ) (6.5 %) (285 ) (4.7 %) 160 (36.0 %) 1.8 % (3.9 )
Credit loss (expense) (290 ) (4.2 %) (64 ) (1.1 %) 226 (77.9 %) 3.2 % (0.9 )
Other non-operating income and expenses (883 ) (12.9 %) 11 0.2 % 894 (101.2 %) 13.1 % 0.2
Share of gain of an associate and a joint venture 107 1.6 % 141 2.3 % 34 31.8 % 0.8 % 1.9
Foreign exchange loss, net (292 ) (4.3 %) (50 ) (0.8 %) 242 (82.9 %) 3.4 % (0.7 )
Interest income and expenses, net (33 ) (0.5 %) (15 ) (0.2 %) 18 (54.5 %) 0.2 % (0.2 )
Other income and expenses, net (665 ) (9.7 %) (65 ) (1.1 %) 600 (90.2 %) 8.6 % (0.9 )

Operating expenses went down by 26.2% YoY to RUB 2,486 million ($34.4 million) and improved by 8.2ppt to 41.1% as percent of Total Net Revenue driven by divestiture of SOVEST and Rocketbank projects that offset the negative operating leverage effect resulting from Total Net Revenue decline on temporary restrictions imposed on cross-border payments.

Selling, general and administrative expenses decreased by 12.1% to RUB 612 million ($8.5 million). SG&A expenses as percent of Total Net Revenue remained almost flat decreasing by 0.1ppt YoY to 10.1% primarily on lower advertising, client acquisition and related expenses of SOVEST and Rocketbank projects partially offset by higher taxes expenses and expenses related to the Tochka platform.

Discontinuation of SOVEST and Rocketbank projects also resulted in optimization of personnel expenses by 21.3% YoY to RUB 1,525 million ($21.1 million) or 25.2% as percent of Total Net Revenue – 3.1ppt improvement compared to last year.

Depreciation, amortization and impairment as well as Credit loss expenses combined decreased by 5.0ppt YoY to 5.8% as percent of Total Net Revenue driven by divestiture of SOVEST and Rocketbank projects.

Share of gain of an associate and a joint venture represented by Tochka equity pick up increased by 31.8% YoY to RUB 141 million ($1.9 million) on strong performance of Tochka in 2Q 2021 compared to last year.

Foreign exchange loss (net) decreased by 82.9% YoY to RUB 50 million ($0.7 million) driven by currency rates fluctuations.

Interest expenses (net) primarily related to interest on non-banking loans issued and interest expense accrued on lease liabilities held by the Company, decreased by 54.5% YoY to RUB 15 million ($0.2 million) driven by divestiture of SOVEST and Rocketbank projects.

Other expenses (net) decreased by 90.2% YoY to RUB 65 million ($0.9 million) driven by divestiture of SOVEST project.

Income tax expense

Income tax expense increased by 25.6% YoY to RUB 941 million mainly resulting from divesture of SOVEST and Rocketbank projects. Effective tax rate in 2Q 2021 was 2.6ppt lower YoY and stood at 26.3%.

Profitability results

2Q 2020 2Q 2021 YoY change 2Q 2021
RUB million RUB million RUB million % USD million
Adjusted EBITDA 3,905 3,850 (55 ) (1.4 %) 53.2
Adjusted EBITDA margin, % 57.1 % 63.7 % n/a 6.6 % 63.7 %
Adjusted Net Profit 2,756 2,704 (52 ) (1.9 %) 37.4
Adjusted Net Profit margin, % 40.3 % 44.7 % n/a 4.4 % 44.7 %
Payment Services 3,243 3,042 (201 ) (6.2 %) 42.0
PS Net Profit margin, % 60.1 % 53.6 % n/a (6.5 %) 53.6 %
Consumer Financial Services (134 ) 134 (100.0 %)
Rocketbank 44 (44 ) (100.0 %)
Corporate and Other (397 ) (338 ) 59 (14.8 %) (4.7 )
Tochka 165 132 (33 ) (20.3 %) 1.8
Factoring 94 54 (40 ) (42.6 %) 0.7
Flocktory (23 ) 17 40 172.3 % 0.2
Corporate (543 ) (512 ) 31 (5.7 %) (7.1 )
Other projects (90 ) (28 ) 62 (68.4 %) (0.4 )

Adjusted EBITDA decreased by 1.4% YoY to RUB 3,850 million ($53.2 million) driven by Total Net Revenue decline and partially offset by Adjusted EBITDA margin improvement by 6.6ppt to 63.7%. Adjusted EBITDA margin went up despite negative operating leverage effect offset by optimization measures resulting from divesture of SOVEST and Rocketbank projects.

Adjusted Net Profit in 2Q 2021 decreased by 1.9% YoY to RUB 2,704 million ($37.4 million). Adjusted Net Profit margin improved by 4.4ppt and stood at 44.7% primarily driven by the same factors affecting Adjusted EBITDA.

Payment Services Net Profit decreased by 6.2% YoY to RUB 3,042 million ($42.0 million) mainly driven by margin decrease by 6.5ppt to 53.6% due to temporary restrictions imposed on higher-yielding cross-border payments, increase in personnel expenses and higher income tax partially offset by foreign exchange gain for the reported period and PS Net Revenue growth of 5.2%.

CO Net Loss includes: (i) net profit from the Tochka JV operations; (ii) net profit of our Factoring PLUS project; (iii) net profit of the Flocktory project; (iv) corporate expenses, and (v) net loss from other projects in the start-up stage. CO Net Loss in 2Q 2021 decreased by 14.8% YoY to RUB 338 million ($4.7 million) driven primarily by the following factors:

  • Corporate Net Loss in 2Q 2021 decreased by 5.7% YoY to RUB 512 million mainly due to lower personnel expenses (excluding share-based payments) and foreign exchange gain partially offset by higher income tax expenses.
  • Tochka Net Profit decreased by 20.3% YoY to RUB 132 million driven by Net Revenue decline by 55.6% YoY due to switch of some SME customers from QIWI to Tochka bank which was partially offset with Net Profit growth through the equity pick up. In the beginning of 3Q 2021 QIWI entered into agreement to sell its stake in the project. Thus, in the next quarters the impact on operating results from Tochka is expected to cease.
  • Factoring Plus Net Profit declined by 42.6% YoY to RUB 54 million as a result of the accrual of reserves for expected credit losses due to digital bank guarantees and factoring portfolios growth, increased personnel expenses for business scale up and last year’s one-off adjustment of about RUB 40 million related to agent expenses. Excluding the one-off effect Factoring Net Profit would have stayed flat YoY.
  • Flocktory Net Profit in 2Q 2021 stood at RUB 17 million as a result of Net Revenue growth by 9.0% YoY, lower personnel expenses and forex exchange gain.
  • Loss from Other projects decreased by 68.4% YoY as a result of optimization measures and ceasing of some of the projects in the end of 2020.

Consolidated cash flow statement

1H 2020 1H 2021 YoY change 1H 2021
RUB million RUB million RUB million % USD million
Net cash generated from operating activities before changes in working capital 5,305 5,663 358 6.7 % 78.2
Change in working capital (13,844 ) (14,131 ) (287 ) 2.1 % (195.3 )
Net interest and income tax paid 848 (254 ) (1,102 ) (130.0 %) (3.5 )
Net cash flow used in operating activities (7,691 ) (8,722 ) (1,031 ) 13.4 % (120.5 )
Net cash received from investing activities 648 837 189 29.2 % 11.6
Net cash used in from financing activities (1,832 ) (3,533 ) (1,701 ) 92.8 % (48.8 )
Effect of exchange rate changes on cash and cash equivalents 403 (111 ) (514 ) (127.5 %) (1.5 )
Net decrease in cash and cash equivalents (8,472 ) (11,529 ) (3,057 ) 36.1 % (159.3 )
Cash and cash equivalents at the beginning of the period 42,101 47,382 5,281 12.5 % 654.7
Cash and cash equivalents at the end of the period 33,629 35,853 2,224 6.6 % 495.4

Net cash generated from operating activities before changes in working capital for 1H 2021 increased by 6.7% YoY to RUB 5,663 million ($78.2 million). Net cash flow used in operating activities for 1H 2021 increased by 13.4% YoY to RUB 8,722 million ($120.5 million) driven by significant changes in working capital and increased income tax paid. Change in working capital for 1H 2021 resulted in cash outflow of RUB 14,131 million primarily due to (i) lower accounts payable and accruals of RUB 12,028 million resulted from discontinuation of payments to foreign merchants on the back of the temporary CBR prescriptions related to cross-border operations; (ii) decrease in in customer accounts and amounts due to banks in the amount of RUB 4,257 million driven predominantly due to seasonal factor; (iii) increase of income tax paid to RUB 1,443 million driven by increase in net profit for the reported period by 36%.

Net cash flow received from investing activities for 1H 2021 increased by 29.2% YoY to RUB 837 million ($11.6 million). This increase in net cash outflow was primarily driven by the less treasury operations comprising purchases of publicly traded debt securities in the last year following the wind-down of Rocketbank.

Net cash flow used in financing activities for 1H 2021 increased by 92.8% YoY to RUB 3,533 million ($48.8 million). The increase in net cash outflow was primarily driven by (i) the increase in repayment of borrowings by RUB 902 million and (ii) higher dividend payments in 1H 2021 by RUB 816 million due to an increase of distributable profit and lower payout ratio in 1H 2020 due to the COVID-19 outbreak.

As a result of factors described above cash and cash equivalents as of the end of 1H 2021 was RUB 35,853 million ($495.4 million) – an increase by 6.6% compared to the end of 1H 2020.

Recent Developments

The CBR restrictions

At the beginning of 2021 the CBR permitted us to resume processing payments to certain key foreign merchants and lifted some of the other restrictions imposed in December 2020. In June 2021 the term of restrictions imposed by the CBR expired. As a result, we started to onboard foreign merchants. However, the recovery of the payment volume and revenue lost in the wake of restrictions is highly dependent on changed customer behavior and new regulatory developments and cannot be accurately estimated as well as may never be restored. Considering existing uncertainties, we remain cautious and don’t provide guidance on the recovery process. There can be no assurance that new laws and regulations that have emerged recently or may emerge in the near term will not adversely affect the recovery process. The restrictions introduced by the CBR have substantially decreased the volume mainly in our E-Commerce market vertical and therefore have adversely affected and will continue to adversely affect the results of operations of our Payment Services Segment.

Betting industry regulation

Since 2016, we have been operating an Interactive Bets Accounting Center (TSUPIS), which we established together with one of the self-regulated associations of bookmakers in order to enable us to accept electronic bets on behalf of sports betting companies and process related payments. In December 2020, a new law was adopted, establishing a Unified Gambling Regulator as a new governmental agency with broad authority to oversee the betting market, and creating the role of a single Unified Interactive Bets Accounting Center (ETSUP). By the end of September 2021, the newly-appointed ETSUP will replace the existing TSUPIS. Currently, both we and the operator of the competing TSUPIS have publicly made proposals to serve as the ETSUP pursuant to the new regulatory regime, however, there can be no assurance that our bid will be successful.

If we are not able to secure an active role in this new industry landscape, QIWI may lose the ability to generate volume and income directly related to TSUPIS business in Russia and acquiring services with winning payouts provided to sports betting companies in a bundle with TSUPIS operations. At the same time, part of the betting revenues generated from QIWI Wallet services, including commissions for betting accounts top-ups and winning payouts expected to be retained. This or any further significant change in betting legislation may negatively affect the payment volume, revenue, and margins of our Payment Services business, as well as overall usage of Qiwi Wallet.

The combined betting stream for 1H 2021 represented 27% (or RUB 223.3 billion) of PS Payment Volume and 37% (or RUB 3,368 million) of PS Payment Net Revenue. QIWI’s TSUPIS business and related acquiring services with winning payouts for 1H 2021 accounted 23% (or RUB 2,083 million) of PS Payment Net Revenue.

Dividends

In March 2021, the Board of Directors has approved a target dividend payout ratio for 2021. In accordance with the decision of the Board of Directors, the Company aims to distribute at least 50% of Group Adjusted Net Profit for 2021.

Following the determination of 2Q 2021 financial results and taking into consideration the current operating environment, the Board of Directors approved a dividend of USD 30 cents per share. The dividend record date is September 7, 2021, and the Company intends to pay the dividend on September 9, 2021. The holders of ADSs will receive the dividend shortly thereafter.

The Board of Directors reserves the right to distribute the dividends on a quarterly basis, as it deems necessary so that the total annual payout is in accordance with the target range provided, though the payout ratios for each of the quarters may vary and be outside of this range.

2021 Guidance4

QIWI revised its FY 2021 guidance:

  • Total Net Revenue is expected to decrease by 10% to 20% YoY;
  • Payment Services Net Revenue is expected to decrease by 10% to 20% YoY;
  • Adjusted Net Profit is expected to decrease by 15% to 30% YoY.

Our outlook reflects (1) recent changes in the betting industry landscape described in the “Recent developments” section, (2) conservative projections on recovery of cross-borders operations, and (3) sale of stake in Tochka project, previously accounted for under the equity pick-up method.

Our current views and expectations only and are based on the trends we see as of the day of this press release. If such trends were to deteriorate or improve further the impact on our business and operations could deviate from than currently expected.

The Company reserves the right to revise guidance in the course of the year or when additional information regarding the effect of the ongoing events becomes available.

Earnings Conference Call and Audio Webcast

QIWI will host a conference call to discuss 2Q 2021 financial results today at 8:30 a.m. ET. Hosting the call will be Andrey Protopopov, CEO and Elena Nikonova, interim CFO. The conference call can be accessed live over the phone by dialing +1 (877) 407-3982 or for international callers by dialing +1 (201) 493-6780. A replay will be available at 11:30 a.m. ET and can be accessed by dialing +1 (844) 512-2921 or +1 (412) 317-6671 for international callers; the pin number is 13722017. The replay will be available until Thursday, September 2, 2021. The call will be webcast live from the Company’s website at https://www.qiwi.ru under the Corporate Investor Relations section or directly at http://investor.qiwi.com/.

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Fintech

How finance brands can drive the ROI with content creators

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The FinTech industry is highly competitive. In 2017, global FinTech industry revenue was approximately $90.5 billion, and it has grown by over 100% by the end of 2023.

Finance brands are constantly seeking innovative ways to connect with their target audiences, as a result, their marketing channels have also changed. The once-traditional financial sector, often associated with formal advertising, such as billboards, TV commercials, and print advertisements, now commonly uses influencer marketing. 

Today, trust in traditional advertising methods has weakened, and consumers now are turning to sources they perceive as authentic and relatable. Influencer marketing, with its ability to build trust and credibility, has become a common strategy for finance brands aiming to enhance their ROI and their engagement with audiences. At the same time, 67% of brands are increasing their influencer marketing budgets that also proves the effectiveness of this channel. 

The rise of influencer marketing in finance

Influencers’ recommendations are highly effective, with 92% of consumers trusting influencers more than traditional advertising channels. Social media platforms have further amplified the impact of influencer marketing, allowing influencers to engage directly with their audiences and foster trust within niche finance communities. 

Influencer marketing is commonly used by such companies as Binomo, Olymp Trade, Ego, Klarna, Exness, Pay Senger, Capital.com, and many more. If you are interested to see the example of a strategy, here is how Famesters helped FxPro drive 18K+ installations and more than 18M views.

Trading services, especially those strongly connected with cryptocurrencies, get the largest influencer marketing budgets among finance brands. According to Famesters, in 2022 Binance was the top-mentioned finance brand on YouTube.

Choosing the right influencers

Selecting the right influencers is key to the success of influencer marketing campaigns in any business sector, and it is especially crucial for the finance sector due to its specificity. To find the right influencers with authentic audiences, you have to spend time and resources. But if aligned with a creative strategy, such publications can pay off greatly: brands can earn around $5.78 for every dollar spent on influencer marketing. Here are some key considerations to pay attention on: 

  1. Alignment with brand values. This ensures that the influencer’s content will reflect the brand’s mission, maintaining consistency in messaging.
  2. Target audience compatibility. Effective influencer marketing hinges on reaching the right audience. Finance brands should thoroughly analyze an influencer’s follower demographics to ensure they match the intended target audience. For instance, promoting credit cards to young adults may require influencers with a predominantly youthful and financially active audience.
  3. Domain expertise. In the world of finance, domain expertise is a significant asset. Influencers who demonstrate a deep understanding of financial matters and can communicate complex topics in a clear and accurate manner are considered to be the best choice to cooperate with. 

Not all financial products are best promoted by financial influencers. For instance, if you’re marketing a banking product designed for children, it’s more effective to collaborate with influencers who are able to reach the parents of potential users. Similarly, for B2B financial products like business bank accounts, it makes more sense to partner with influencers who cater to entrepreneurs rather than those focused on personal finance or budgeting advice.

  1. Engagement and trustworthiness. High engagement rates, authentic interactions, and a track record of trust-building are indicators of an influencer’s effectiveness in conveying messages and recommendations (that are crucial for finance brands). Besides, the FinTech creators market is full of fraud and scam, this is why it is worth taking time and ensuring the quality of potential partners.

Ask for a screencast of the creator’s statistics instead of a screenshot if you have doubts; a trustworthy creator would provide it, and if the statistics are fake, the influencer will likely refuse.

  1. Content quality. FinTech brands should assess an influencer’s content quality and relevance to ensure it aligns with their campaign goals. Consistency in producing valuable, informative, and engaging content is key. 

You can analyze around 10-15 of the latest videos on the channel, review the comments, and ensure that they have not been purchased from a shady website. For example, when you come across comments such as “Yes sir,” “Great video,” “Thanks!”, “Love you man!”, “Quality content,” etc., they should raise red flags, as these are most likely bot-generated comments.

  1. Past collaborations and reputation. Examine an influencer’s past collaborations and reputation. For instance, if a FinTech company partners with an influencer known for promoting risky investment schemes in the past, or associated with controversial practices, it could harm the brand’s credibility and integrity. 

Besides choosing the right creators for your campaign it is also crucial to craft a well-thought brief – a clear communication tool that helps convey your app or platform’s value. Provide influencers with guidelines on your brand message, goals, budget, and content expectations, including tone of voice and key messages. Trust influencers to communicate naturally while ensuring essential ad points are covered. 

Influencer fraud risks and how to reduce them

Influencer fraud is actually decreasing year by year as more tools to detect it appear and improve. But still, 64% of companies name influencer fraud an issue that worries them. And yes, there are significant risks that can be divided into two major categories: distorted ROI and brand reputation risks. 

 

Distorted ROI:

 

  • Brands engage with influencers expecting benefits like enhanced brand recognition, sales boosts, or greater audience interaction. However, influencer fraud distorts these projections. 

 

  • Investments in influencers who have artificial followers or engagement don’t deliver tangible outcomes, resulting in a reduced ROI.

 

Brand reputation risks:

 

  • In the finance market where authenticity is highly valued by consumers, the discovery of deceit by an influencer connected to a brand can breed doubt, not only about the influencer but also about the brand itself. This association can damage the brand’s reputation and weaken trust with its audience.

 

Influencer fraud in the FinTech sector doesn’t just affect individual campaigns; it threatens the integrity of influencer marketing as a whole. In an industry built on trust and precision, deceptive practices have far-reaching consequences, making vigilance and informed decision-making imperative for FinTech brands.

 

To avoid fraudulent influencers and reduce risks, finance brands should prioritize vetting influencers. To do so, brands can:

 

  • Review content history, engagement rates, and alignment with brand values. 

 

  • Look for genuine audience interaction and content that resonates with your brand’s message. 

 

  • Engage directly with influencers to grasp their audience’s age, gender, and location. 

 

  • Seek personal stories of audience interactions, indicating authentic connections.

 

Here are some FinTech brands’ self-audit tips:

 

  • Engagement analysis. Check the ratio of followers to engagement; low engagement with high followers is a warning sign.

 

  • Audience location. Be wary of influencers with most followers from regions irrelevant to their supposed base.

 

  • Content evaluation. Genuine influencers mix sponsored and organic content, showing true interest in their niche.

 

  • Feedback checks. Seek testimonials from other brands or agencies.

 

  • Consistency. Authentic influencers show regular posting and engagement patterns.

 

And last but not least: for brands venturing into influencer marketing, especially in sectors like FinTech where trust and credibility are essential, the importance of formalizing collaborations through contracts cannot be overstated. Contracts serve as a foundational safeguard against influencer fraud, clearly delineating expectations, deliverables, and terms of engagement. This formal agreement helps to ensure that both parties are accountable and that the influencer’s following and engagement metrics are authentic and aligned with the brand’s objectives. Contracts also provide legal recourse in the event of misrepresentation or non-compliance, significantly reducing the risk of financial loss and reputational damage. 

 

A well-structured contract is not just a formal requirement; it is a strategic tool in mitigating the risks associated with influencer fraud, ensuring transparency, and maintaining the integrity of the brand’s marketing efforts.

Conclusion 

You can see that the success of influencer marketing in the FinTech sector hinges on a strategic and analytical approach. Its key aspects include:

  • Selective influencer engagement. Choosing influencers with a deep understanding of financial products and alignment with brand values is crucial for effective audience engagement.

 

  • ROI and risk management. It’s vital to employ robust analytics for assessing influencer authenticity to mitigate risks to ROI and brand reputation.

 

  • Audience and content analysis. Detailed examination of the influencer’s audience demographics and content relevance is essential for ensuring alignment with the brand’s target market.

 

  • Adaptive strategies. Staying adaptive to the evolving digital marketing trends and consumer behaviors in the fast-paced FinTech industry is key.

 

Effectively navigating these elements can significantly enhance ROI and market positioning for FinTech brands in an industry that values innovation and trust.

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Fintech

Revolutionizing Play and Pay: Fintech Leader Ibanera Redefines Financial Dynamics for the Gaming Sector

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Ibanera, an online fintech institution, announces an exciting array of gaming-focused financial services- a fully optimised suite of applications designed to align with the evolving financial paradigms within the global gaming industry.

In the realm of electronic gaming, where a staggering $400 billion was amassed in 2023, poised for sustained growth, a transformative shift in revenue generation is underway. The prosperity of contemporary games is intricately linked to in-app purchases, compelling game developers and publishers to explore innovative economic models. This exploration extends into the realm of tokenized digital assets within games, tradable assets stemming from in-app transactions, and unprecedented opportunities for professional gamers to prosper through a sophisticated play-to-earn framework

Ibanera’s strategic initiative materializes through a portfolio of services, notably featuring the introduction of PORTL, a solution meticulously designed for buying and selling digital assets. Moreover, Ibanera extends white-label solutions to gaming entities, facilitating the seamless integration of embedded payment tools for web3 game developers. The compatibility with blockchain and provision of multi-currency accounts underscore Ibanera’s unwavering commitment to delivering a suite of services that transcend conventional financial norms.

This venture represents a substantial investment for Ibanera, propelled by the strategic vision of CEO Michael Carbonara. In his statement, Carbonara remarked, “We are addressing the pressing need for heightened functionality within gaming companies. The pace of evolution in the gaming industry has surpassed the capacities of traditional banking institutions.”

The company’s foray into gaming-focused financial services signifies a significant milestone at the intersection of fintech and gaming, positioning the institution as a vanguard in an industry undergoing unprecedented transformation. The suite of applications not only addresses current demands but also strategically anticipates and caters to the future financial intricacies that will define the gaming experience.

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Fintech

Fwd: Portuguese bank BPI, subsidiary of CaixaBank group, launches AGE Planet Craft Tycoon, a game developed for the Roblox platform

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Today, the bank BPI, Portuguese subsidiary of CaixaBank group, launches AGE Planet Craft Tycoon, a game developed for the Roblox platform, inspired by financial education and sustainability concepts, targeting young audiences. Roblox is one of the largest immersive gaming platforms in the world, with around 70 million daily active users. The game is available here: https://www.roblox.com/games/15042392733/AGE-Planet-Craft-Tycoon

The experience unfolds in a galaxy where players embark on a journey on a deserted planet. The aim is to make strategic investments in resources to develop the planet in a sustainable way. Players can interact, socialise and visit other players’ planets. The financial education component associated with the game features, among other concepts, a bank where players can exchange resources for their planet’s development or invest resources in applications that simulate, in a simplified manner, the behavior of financial applications.

According to Afonso Eça, executive director responsible for innovation: “Virtual worlds, whether on Roblox or other platforms, are increasingly popular, especially among younger users. With this launch, we aim to explore another channel for our customers to engage with the AGE brand.”

The game contributes to the expansion of the BPI AGE brand, aimed at young people up to the age of 25. Young AGEs have access to various financial services at no cost or bureaucracies and have a dedicated platform in the BPI App and a space in the BPI VR immersive shop.

This project was developed in partnership with Simple Magic, a videogame studio from Estonia, focused on designing and developing games on Roblox and bringing the best brands to Metaverse.

BPI strengthens metaverse/web3 holistic strategy

Over the past year, BPI has launched several innovation projects focused on metaverse/web3, addressing three dimensions: (1) immersive and augmented realities as a new way to interact with customers; (2) custody and transaction of digital property supported by blockchain technology; and (3) position the bank in virtual worlds, which are attracting more users worldwide.

According to Francisco Barbeira, BPI executive board member, “The game AGE Planet Craft Tycoon is the final component of a strategic learning path we are undertaking in the metaverse. In the three dimensions we consider relevant, we already have initiatives underway, and the learning process has been very enriching. As of today, we can say that BPI has indeed a holistic presence in what we call the metaverse.”

In 2022, the bank launched BPI VR, its immersive reality application where customers and non-customers can experience interaction with the bank through this technology. Last month, BPI launched D-VERSE, its digital collectibles platform where digital property can be transacted in Euros, with custody provided by the Bank itself. Now, the launch of AGE Planet Craft Tycoon marks the entry into virtual worlds.

 

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