Ozon Holdings PLC (MOEX, AIX: “OZON,” hereafter referred to as “we,” “us,” “our,” “Ozon,” the “Company,” the “Group”) today announces its unaudited financial results for the three months ended March 31, 2024, based on management accounts.
First-Quarter 2024 Operating and Financial Highlights
Group
- Total revenue increased by 32% YoY to RUB 122.9 billion in Q1 2024, bolstered by a 39% increase in service revenue mainly due to the strong performance of advertising services, as well as by the growth in Fintech’s interest revenue.
- Adjusted EBITDA increased by 16% YoY to RUB 9.3 billion, as a result of higher gross profit, despite rising labor cost inflation, which was partly offset by growth in operating expenses due to investments in sales, marketing and technology.
- Loss for the period was RUB 13.2 billion in Q1 2024, compared with a profit of RUB 10.7 billion in Q1 2023, mostly as a result of the recognition of a one-off gain related to the restructuring of convertible bonds in Q1 2023 and the increase in finance expense in Q1 2024.
- Net cash used in operating activities was RUB 1.0 billion in Q1 2024 compared with RUB 1.8 billion in Q1 2023, due to a greater positive contribution from working capital.
- E-commerce revenue increased by 24% YoY to RUB 112.6 billion driven by growth in advertising revenue and other service revenue.
- E-commerce Adjusted EBITDA declined 40% YoY to RUB 3.3 billion due to strategic growth investments and the impact of cost inflation in logistics.
- GMV incl. services grew by 88% YoY in Q1 2024, compared with 71% YoY growth in Q1 2023, with Marketplace GMV doubling YoY as a result of strategic growth investments.
- The number of orders in Q1 2024 grew by 70% YoY to 305 million, driven by 32% growth in our customer base, which reached 49 million active buyers, increasing by approximately 1 million users per month in the last 12 months. Order frequency per active buyer increased by 50% YoY and reached 22 orders per year.
- In Q1 2024, the Company reached a new milestone as its seller base exceeded 500,000 merchants. More than 80% of our sellers are regional businesses.
- Fintech revenue increased more than threefold YoY to RUB 14.6 billion as a result of a significant increase in our customer base and new B2B and B2C product offerings. The active user base increased by 70% YoY to 20 million.
- Fintech adjusted EBITDA (substantially corresponds to operating income before depreciation and amortization) increased by 147% YoY to RUB 5.9 billion, driven by interest and commission revenues. On the same basis, Fintech’s Adjusted EBITDA for the FY 2023 amounted to RUB 13.4 billion.
- Loans to customers increased to RUB 50.8 billion as of March 31, 2024, compared with RUB 12.3 billion as of March 31, 2023, as we expanded our credit operations in the B2B and B2C segments.
- Customer deposits1 and other financial liabilities increased ninefold YoY to RUB 75.2 billion as of March 31, 2024, mainly as a result of the growing popularity of our Fintech products, such as our savings and term deposits accounts, Ozon Card and cash and settlement services.
The above table sets forth a summary of the key operating and financial information for the three months ended March 31, 2024, and March 31, 2023. The information for the three months ended March 31, 2024, is derived from the IFRS-based management accounts and has not been audited or reviewed by the Company’s auditors. The financial information for the three months ended March 31, 2023 and the Fintech segment financial information for the year ended December 31, 2023 has not been audited by the Company’s auditors. From January 1, 2024, following the expansion of our Fintech segment, we presented interest revenue separately from other types of revenue in the interim condensed consolidated statement of profit or loss and other comprehensive income. Furthermore, we also presented expected credit losses on Fintech financial assets separately from cost of revenue. The corresponding amounts for the three months ended March 31, 2023, were reclassified accordingly.
See also the “Presentation of Financial and Other Information – Use of Non-IFRS Financial Measures” section of this press release for a definition of the non-IFRS measures and a discussion of the limitations of their use, and for reconciliations of the non-IFRS measures to the applicable IFRS measures. See the definitions of metrics such as GMV incl. services, number of orders, number of active buyers, share of Marketplace GMV and number of active users of Fintech in the “Key Operating Measures” section of this press release.
First-Quarter 2024 Consolidated Financial Highlights
Total revenue grew by 32% YoY to RUB 122.9 billion in Q1 2024. Fintech’s interest revenue increased fourfold YoY. Service revenue was fueled by a 120% YoY increase in advertising revenue. The deceleration of growth in marketplace commissions in Q1 2024 was primarily driven by strategic price investments and the transition to an agency model for sellers. As a result of the transition to an agency model in Q4 2023, our revenues from the majority of third-party services rendered to sellers were recognized net of the costs of third-party service providers. This resulted in a decrease in our reported net revenue with a corresponding decrease in cost of revenue and no change to gross profit.
Gross profit grew by 43% YoY in Q1 2024 and decreased as a percentage of GMV by 1.3 p.p. to 3.9% in Q1 2024 due to strategic price investments and rising labor costs and transportation tariffs in logistics.
Operating expenses grew by 52% YoY in Q1 2024 but decreased as a percentage of GMV incl. services by 1.0 p.p. YoY to 4.2% in Q1 2024, as a result of operating leverage. Sales and marketing costs grew by 77% YoY and technology and content by 53% YoY in Q1 2024 respectively, driven by growth of E-commerce platform and Fintech, while G&A expenses decreased significantly as a percentage of GMV to 0.8% in Q1 2024 from 1.4% in Q1 2023.
Operating loss increased to RUB 1.6 billion in Q1 2024 compared with RUB 0.1 billion in Q1 2023 as an improvement in gross profit was offset by rising operating expenses.
Loss for the period was RUB 13.2 billion in Q1 2024, compared with profit of RUB 10.7 billion in Q1 2023, mainly as a result of the one-off gain of RUB 18.4 billion related to the restructuring of convertible bonds in Q1 2023 and rising finance expense in Q1 2024 due to an increase in our interest-bearing liabilities and the impact of interest rate increases on our debt linked to the Bank of Russia key rate7.
Operating loss increased to RUB 1.6 billion in Q1 2024 compared with RUB 0.1 billion in Q1 2023 as an improvement in gross profit was offset by rising operating expenses.
Loss for the period was RUB 13.2 billion in Q1 2024, compared with profit of RUB 10.7 billion in Q1 2023, mainly as a result of the one-off gain of RUB 18.4 billion related to the restructuring of convertible bonds in Q1 2023 and rising finance expense in Q1 2024 due to an increase in our interest-bearing liabilities and the impact of interest rate increases on our debt linked to the Bank of Russia key rate7.
Net cash used in operating activities was RUB 1.0 billion in Q1 2024 compared with RUB 1.8 billion in Q1 2023, as an improvement in working capital dynamics was mostly offset by higher interest paid due to greater interest-bearing liabilities and rising interest expense.
Net cash used in investing activities increased to RUB 9.0 billion in Q1 2024 compared with RUB 4.5 billion in Q1 2023, primarily driven by an expansion of our fulfillment and sorting centers to support the rapid order growth. Our total warehouse footprint increased by 75% YoY and exceeded 2.6 million square meters as of March 31, 2024.
Net cash generated from financing activities was RUB 5.0 billion in Q1 2024, compared with net cash used in financing activities of RUB 4.9 billion in Q1 2023, as a result of additional borrowings in Q1 2024.
Cash and cash equivalents amounted to RUB 165.7 billion as of March 31, 2024, including RUB 81.4 billion in cash and cash equivalents pertaining to Fintech legal entities.
Interim Condensed Consolidated Financial Statements are available here.
Risks and Uncertainties Related to the Current Environment
As the global and economic impacts of the current geopolitical crisis 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 jurisdictions imposed severe sanctions targeting companies and businesspersons related to Russia, 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 unfriendly 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 countermeasures 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, and other public disclosures concerning factors that could impact the Company’s business and the results of operations.
About Ozon
Ozon is a multi-category e-commerce platform operating in Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia, Uzbekistan, China and Turkey. Our fulfillment and delivery infrastructure enables us to provide our customers with fast and convenient delivery via couriers, pickup points or parcel lockers. Our extensive logistics footprint and fast-developing marketplace platform help entrepreneurs to sell their products across 11 time zones and offer our customers a wide selection of goods across multiple product categories. Ozon is committed to expanding its value-added services, including fintech and other verticals such as Ozon Fresh online grocery delivery. For more information, please visit https://corp.ozon.com.
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Disclaimer
This press release contains forward-looking statements that reflect the current views of Ozon Holdings PLC (“we,” “our,” “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 and are applicable only as of the date on which they are made.
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 ongoing geopolitical crisis, sanctions and governmental measures imposed in various jurisdictions in which we operate and 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 public disclosures of the Company 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 information for the three months ended March 31, 2024, and March 31, 2023. The information for the three months ended March 31, 2024, is derived from the IFRS-based management accounts and has not been audited or reviewed by the Company’s auditors. The financial information for the three months ended March 31, 2023, and the Fintech segment financial information for the year ended December 31, 2023, has not been audited by the Company’s auditors. The information disclosed in this press release is based on the currently available information.
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.
1 Customer deposits amounted to RUB 67.5 billion as of March 31, 2024.
2 Adjusted EBITDA is a non-IFRS financial measure that is defined in the “Presentation of Financial and Other Information – Key Operating Measures” section of this press release.
3 Total Fintech revenue includes interest and commission revenues on credit products for B2B and B2C customers, flexible payment schedule and factoring services for sellers, revenues from payment processing services, premium subscription, cash and settlement and bank cards services.
4 As of end of period.
5 Interest revenue includes revenues from interest and interest-like commissions on Fintech’s financial assets, which are accounted for at amortized costs using the effective interest method.
6 Cost of services and other revenue mainly includes fulfillment and delivery costs, fees for cash collection and cost of financial services revenue.
7 The key rate increased from 7.5% as of March 31, 2023, to 16.0% as of March 31, 2024.
2 Adjusted EBITDA is a non-IFRS financial measure that is defined in the “Presentation of Financial and Other Information – Key Operating Measures” section of this press release.
3 Total Fintech revenue includes interest and commission revenues on credit products for B2B and B2C customers, flexible payment schedule and factoring services for sellers, revenues from payment processing services, premium subscription, cash and settlement and bank cards services.
4 As of end of period.
5 Interest revenue includes revenues from interest and interest-like commissions on Fintech’s financial assets, which are accounted for at amortized costs using the effective interest method.
6 Cost of services and other revenue mainly includes fulfillment and delivery costs, fees for cash collection and cost of financial services revenue.
7 The key rate increased from 7.5% as of March 31, 2023, to 16.0% as of March 31, 2024.
