Full-Year 2023 Guidance
Based on the current trends and outlook, Ozon has raised its guidance for the full year 2023. The Company expects GMV incl. services to increase by 90%–100% year-on-year and adjusted EBITDA to be positive for the full year 2023.1
Third-Quarter 2023 Operating and Financial Highlights
- GMV incl. services was RUB 450.8 billion, with growth accelerating to 140% year-on-year, driven by an increase in the number of orders and a higher average order value. The number of orders increased by 134% year-on-year to 251.1 million.
- The number of active buyers continued to grow at a steady rate of approximately 30% year-on-year for the third consecutive quarter, reaching 42.4 million. Our customers showed greater engagement, as the order frequency per active buyer increased by 64% year-on-year to 19.2 orders per annum.
- Total revenue increased by 77% year-on-year mainly due to strong service revenue performance, in particular in marketplace commissions and advertising revenue.
- Adjusted EBITDA incl. services was negative RUB 3.9 billion, compared with positive RUB 1.6 billion in Q3 2022, as we have increased strategic investments in customer engagement and our logistics infrastructure to accelerate GMV growth and strengthen our position in the Russian retail market. Greater scale should lead to higher, sustainable profitability and stronger cash generation in the long term.
- Loss for the period was RUB 22.1 billion in Q3 2023 mainly due to the lower adjusted EBITDA and an increase in finance costs driven by the revaluation of financial instruments and growth in interest-bearing liabilities.
- Net cash generated from operating activities increased by RUB 17.0 billion year-on-year to RUB 24.9 billion, driven primarily by a greater contribution from working capital.
Total revenue increased by 77% year-on-year to RUB 109 billion in Q3 2023. Marketplace commissions remained our key revenue driver, accounting for approximately 40% of total revenues. Growth in marketplace commissions accelerated slightly in Q3 2023 to 62%, compared with 58% in Q2 2023 and was driven largely by continued Marketplace expansion. Advertising revenue nearly tripled year-on-year. Over 70% of our sellers use our advertising tools to promote their goods on our Marketplace. Revenue from financial services increased 14-fold year-on-year in Q3 2023 due to growth and greater engagement of our B2C and B2B user base. Sales of goods grew by 50% year-on-year; as a result, the contribution of 1P operations to the Company’s GMV incl. services continued to decline.
From January 1, 2023, as further described in the section “Presentation of Financial and Other Information – Changes in Presentation and Reclassifications”, “fulfillment and delivery expenses” and “cost of sales” have been presented as “cost of revenue”. Accordingly, we changed the definition of gross profit from total revenue less cost of sales in a given period to total revenue less cost of revenue in a given period.
Gross profit decreased by 39% year-on-year to RUB 5.8 billion in Q3 2023. Gross profit as a percentage of GVM incl. services declined by 3.7 p.p. mainly due to strategic investments in platform growth and an increase in fulfillment and delivery costs, including labor cost, as a result of the rapid expansion of our infrastructure to facilitate the growth of our platform. Our total warehouse footprint expanded by 70% year-on-year to more than 2 million square meters as of September 30, 2023, and the number of pick-up locations doubled over the last year.
Operating expenses decreased by 26% year-on-year in Q3 2023. Operating expenses in Q3 2022 were negatively impacted by losses of RUB 10.8 billion related to a fire incident at a fulfillment center in the Moscow region. Excluding one-off expenses related to the aforementioned incident in Q3 2022, operating expenses increased by 24% year-on-year in Q3 2023. Operating expenses, excluding fire-related one-off losses, were down 400 basis points to 4.2% as a percentage of GMV incl. services and decreased to RUB 76 per order from RUB 143 in Q3 2022.
Loss for the period was RUB 22.1 billion in Q3 2023, compared with a loss of RUB 20.7 billion in Q3 2022, due to lower operating profit and higher finance costs. Finance costs increased by 258% year-on-year, driven by the revaluation of financial instruments and growth in interest-bearing liabilities.
Net cash generated from operating activities was RUB 24.9 billion in Q3 2023. The increase of RUB 17.0 billion from RUB 7.8 billion in Q3 2022 resulted from an improvement in working capital due to the expansion of our fintech vertical and an increase in accounts payable, driven mainly by the growth of our marketplace business and an improvement in purchasing terms for our 1P operations.
Net cash used in investing activities was RUB 7.8 billion in Q3 2023, compared with RUB 4.4 billion in Q3 2022, driven by the launch of new fulfillment and sorting centers as well as investments in our IT infrastructure.
Net cash used in financing activities was RUB 1.0 billion in Q3 2023, compared with net cash generated from financing activities of RUB 2.5 billion in Q3 2022, due to decreased borrowings in Q3 2023.
Cash, cash equivalents and short-term bank deposits amounted to RUB 92.7 billion as of September 30, 2023, compared with RUB 74.6 billion as of June 30, 2023.
Other Business and Corporate Developments
Ozon Fintech continues to develop an array of financial services in both our B2C and B2B segments. “Flexible payment plan” remains the top B2B fintech product, which was used by more than 36 thousand Ozon sellers in Q3 2023. During the last quarter our B2B segment focused on promoting its cash and settlement services for sole traders and small and medium-sized enterprises. Our primary B2C product, the Ozon card, was the most popular payment method on our platform in Q3 2023, with more than 29 million opened accounts as of September 30, 2023.
Ozon Global continued to focus on enhancements of customer and seller experience. The number of active sellers operating as part of Ozon Global increased approximately fivefold year-on-year to more than 59,000 as of September 30, 2023. In Q3 2023, Ozon Global launched its first fulfillment center in China, enabling us to reduce order delivery time to 8–12 days.
Ozon CIS continues to expand its operations in local markets and to improve its logistics efficiency. In Q3 2023, we broadened our network of pickup points in Kazakhstan and Belarus, which enabled us to enhance our customers’ experience as well as bolster the efficiency of our operations. We plan to construct local fulfillment centers across the CIS countries in 2024.
In October, we voluntarily delisted our American Depositary Shares from Nasdaq, following our unsuccessful appeal of the determination of the Listing Staff of Nasdaq to pursue such delisting. In November, we filed a Form 15F with the U.S. Securities and Exchange Commission. Upon such filing, our reporting obligations under the U.S. Securities Exchange Act were automatically suspended and we expect such obligations to terminate effective February 7, 2024. We will continue to provide financial and other information, in English, on our website. Trading of our ADSs on the Moscow Exchange and the Astana International Exchange are expected to be unaffected.
Risks and Uncertainties Related to the Current Environment
As the global and economic impacts of the geopolitical crisis surrounding Ukraine continue to evolve in a manner that is unpredictable and beyond the Company’s control, it is difficult to accurately assess the full impact of this crisis on the Company’s business and the results of its operations.
The United States, the European Union, the United Kingdom and other countries imposed severe sanctions targeting Russian financial institutions, oil, defense and other state-owned companies and other Russian companies and businesspersons, as well as export and import restrictions. In response, Russia identified a number of states, including the United States, all European Union member states and the United Kingdom, as hostile and introduced a number of economic measures in connection with their actions, as well as economic measures aimed at ensuring financial stability in Russia. These sanctions, along with regulatory counter-measures taken by the Russian authorities, have had a significant, and in many cases unprecedented, impact on companies operating in Russia.
Over the last two decades, the Russian economy has experienced or continues to experience at various times significant volatility in its GDP, high levels of inflation, increases in, or high, interest rates, sudden price declines in oil and other natural resources and instability in the local currency market.
Please refer to our Annual Report on Form 20-F for the year ended December 31, 2022, for detailed information on our risk exposure and possible adverse impacts on our business and operations.
Consolidated Financial Statements are available here.
Ozon is a multi-category e-commerce platform operating in Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia, China and Turkey. The Company’s fulfillment infrastructure and delivery network enable it to provide its customers with fast and convenient delivery via couriers, pickup points or parcel lockers. Its extensive logistics footprint and fast-developing marketplace platform enable entrepreneurs to sell their products across 11 time zones and offer customers wide selections of goods across multiple product categories. Ozon is committed to expanding its value-added services such as fintech and other new verticals such as Ozon fresh online grocery delivery. For more information, please visit https://corp.ozon.com.
This press release contains forward-looking statements that reflect the current views of Ozon Holdings PLC (“we”, “our” or “us”, or the “Company”) about future events and financial performance. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.
These forward-looking statements are based on management’s current expectations. However, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors and circumstances that may cause Ozon’s actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including conditions in the relevant capital markets, negative global economic conditions, the geopolitical crisis surrounding Ukraine and sanctions and governmental measures imposed in response, other negative developments in Ozon’s business or unfavorable legislative or regulatory developments. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2022, and other filings with the SEC concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.
These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While Ozon may elect to update such forward-looking statements at some point in the future, Ozon disclaims any obligation to do so, even if subsequent events cause its views to change. These forward-looking statements should not be relied upon as representing Ozon’s views as of any date subsequent to the date of this press release.
This press release includes “Adjusted EBITDA”, a financial measure not presented in accordance with IFRS. This financial measure is not a measure of financial performance or liquidity in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, this measure should not be considered in isolation or as an alternative to loss for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that the Company’s presentation of this measure may not be comparable to similarly named measures used by other companies, which may be defined and calculated differently. See “Presentation of Financial and Other Information – Use of Non-IFRS Financial Measures” in this press release for a reconciliation of this non-IFRS measure to the most directly comparable IFRS measure.
This press release includes interim financial information for the three and nine months ended September 30, 2023, and September 30, 2022. The financial information for the three and nine months ended September 30, 2023, and September 30, 2022, was not audited by the Company’s auditors.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company.
1The above forward-looking statements reflect Ozon’s expectations as of November 16, 2023. They could be subject to change and involve inherent risks that we are not able to control, such as any global supply chain issues or developments in political and economic conditions in Russia.
2Other cost of revenue mainly includes fulfillment and delivery costs, fees for cash collection and cost of financial services’ revenue