OREANDA-NEWS. QIWI plc, today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Operating and Financial Highlights

  • Total Adjusted Net Revenue increased 4% to RUB 2,619 million ($40.8 million)
  • Adjusted EBITDA increased 11% to RUB 1,640 million ($25.5 million)
  • Adjusted Net Profit increased 23% to RUB 1,270 million ($19.8 million), or RUB 21.02 per diluted share
  • Total payment volume decreased 0.3% to RUB 202.2 billion ($3.1 billion)

"In the second quarter we continued to feel pressure from the macroeconomic slowdown in Russia, which affected our key market verticals," said Sergey Solonin, QIWI's chief executive officer. "Notwithstanding the challenging market, we managed to increase our payment adjusted net revenue as well as adjusted net profit. However, based on H1 2016 results and our current understanding of the trends in the second half of the year, we decided to decrease 2016 Adjusted Net Revenue and Adjusted Net Profit Guidance. Although current environment pressures our core business growth, we are firmly positioned to execute our strategy, widen our scope of services and enrich current payment landscape with new innovative solutions."

Second Quarter 2016 Results

Revenues: Total Adjusted Net Revenue for the quarter ended June 30, 2016 was RUB 2,619 million ($40.8 million), an increase of 4% compared with RUB 2,525 million in the prior year.

Payment Adjusted Net Revenue was RUB 2,012 million ($31.3 million), an increase of 7% compared with RUB 1,876 million in the prior year. Payment Adjusted Net Revenue growth was predominantly driven by an increase in payment volumes in the E-commerce and Money Remittances market verticals resulting from the consolidation of the Contact and Rapida businesses partially offset by a decrease in payment volumes in the Telecom and Other market verticals and a decrease in net revenue yield in the Financial Services market vertical.

Other Adjusted Net Revenue, which is principally composed of revenue from inactivity fees, interest revenue and gain from currency swaps and overdrafts provided to agents, revenue from rent of space for kiosks, cash and settlement services and advertising, was RUB 607 million ($9.5 million), a decrease of 6% compared with RUB 649 million in the prior year. The decline in the second quarter was mainly due to decrease in cash and settlement services and interest revenue on overdrafts provided to agents, partially offset by increase in inactivity fees. Inactivity fees for the second quarter ended June 30, 2016 were RUB 380 million ($5.9 million) compared with RUB 208 million in the prior year as a result of changes to the write-off policy as well as the consolidation of the Contact and Rapida businesses for the full quarter. Other Adjusted Net Revenue excluding revenue from fees for inactive accounts decreased 49% compared with the same period in the prior year.

Total Adjusted Net Revenue excluding revenue from fees for inactive accounts decreased 3% compared with the same period in the prior year.

Adjusted EBITDA: For the quarter ended June 30, 2016, Adjusted EBITDA was RUB 1,640 million ($25.5 million), an increase of 11% compared with RUB 1,483 million in the prior year. Adjusted EBITDA increase was largely due to the increase in Adjusted Net Revenue as well as due to the net effect of bad debt recovery in the amount of RUB 1 million in the second quarter 2016 as opposed to the bad debt reserve of RUB 50 million in the second quarter of 2015 and lower advertising expenses as compared to the same period in the prior year. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of Total Adjusted Net Revenue) was 62.6% compared with 58.7% in the prior year. Adjusted EBITDA excluding inactivity fees was RUB 1,260 million ($19.6 million), a decrease of 1% compared with RUB 1,275 million in the prior year. Adjusted EBITDA margin excluding inactivity fees was 56.3% compared with 55.0% in the prior year.

Adjusted Net Profit: For the quarter ended June 30, 2016, Adjusted Net Profit was RUB 1,270 million ($19.8 million), an increase of 23% compared with RUB 1,033 million in the prior year. The increase in Adjusted Net Profit was primarily driven by the same factors impacting Adjusted EBITDA. Adjusted Net Profit excluding inactivity fees (net of tax) increased 11% compared with the same period in the prior year.

Other Operating Data: For the quarter ended June 30, 2016, total payment volume was RUB 202.2 billion ($3.1 billion), a decrease of 0.3% compared with RUB 202.8 billion in the prior year. Dynamics of payment volume was driven by mixed trends across market verticals with growth in E-commerce, Financial Services and Money Remittance offset by declining volumes in Telecom and Other market verticals. Payment average net revenue yield was 1.00%, an increase of 8 bps compared with 0.92% in the prior year primarily due to the shift of product mix towards higher yielding E-commerce volumes.

Total average Net Revenue Yield was 1.30%, an increase of 6 bps as compared with 1.24% in the prior year. Total average Net Revenue Yield excluding the effect of inactivity fees was 1.11%, a decrease of 4 bps as compared with the same period in the prior year.

The number of active kiosks and terminals was 164,709 including Contact and Rapida physical points of service, a decrease of 7% compared with the prior year, primarily resulting from enhanced controls that the Central Bank of Russia has implemented over the agents. The number of active Visa Qiwi Wallet accounts was 16.2 million as of the end of the second quarter of 2016, a decrease of 0.8 million, or 5%, as compared with 17.0 million in the second quarter of 2015. The decrease was driven mainly by the lower marketing spend at the end of 2015 and first half of 2016 as compared to the prior year, as well as the decrease in the kiosk network in Russia in the second half of 2015 and overall economic downturn affecting consumer activity.

Recent Developments

Dividend: Following the determination of second quarter 2016 financial results our Board of Directors approved a dividend of USD 22 cents per share. The dividend record date is August 17, 2016, and the Company intends to pay the dividend on August 18, 2016. The holders of ADSs will receive the dividend shortly thereafter.

Dividend distributions for the remainder of 2016 are subject to our future cash flow needs, including our cash requirements in connection with potential M&A opportunities.

Regulation by the Central Bank of Russia: Our kiosk network in Russia was affected by the enhanced controls that the Central Bank of Russia has implemented to ensure compliance by the agents with legislation that requires them to remit their proceeds to special accounts, as disclosed in our Form 6-K filed on November 2, 2015.

Although this adversely affects the availability and convenience of our services to consumers in the short-term through the reduction of the size of our network, we continue to believe that increased transparency in the kiosk market has already improved our market share and will allow us to improve our market share in the future and strengthen our competitive advantages.

QIWI is a leading provider of next generation payment services in Russia and the CIS. It has an integrated proprietary network that enables payment services across physical, online and mobile channels. It has deployed over 16.2 million virtual wallets, over 164,000 kiosks and terminals, and enabled merchants to accept over RUB 67 billion cash and electronic payments monthly from over 60 million consumers using its network at least once a month. QIWI's consumers can use cash, stored value and other electronic payment methods to order and pay for goods and services across physical or online environments interchangeably.