Third-Quarter 2024 Operating and Financial Highlights
Group
· Total revenue increased by 41% YoY to RUB 153.7 billion, mostly driven by strong growth in service revenue and a fourfold increase in interest revenue.
· Gross profit increased fivefold YoY to RUB 27.1 billion in Q3 2024, due to improved unit-economics in E-commerce and growth in Fintech services.
· Adjusted EBITDA increased to positive RUB 13.0 billion in Q3 2024, compared with negative RUB 3.9 billion in Q3 2023, driven by significantly higher gross profit. The Company achieved positive adjusted EBITDA in its E-commerce and Fintech segments in Q3 2024, which demonstrates strong execution and our commitment to improving profitability whilst maintaining robust growth.
· Loss for the period decreased by RUB 21.3 billion YoY to RUB 0.7 billion. This was due to a higher gross profit, a one-off insurance payment related to the fire incident at the Novaya Riga fulfilment in the amount of RUB 6.4 billion1, and lower net finance expense due to positive revaluation of derivative financial instruments.
· Net cash generated from operating activities increased threefold YoY to RUB 75.3 billion, mostly driven by favorable working capital movements.
E-commerce
· E-commerce revenue increased by 31% YoY to RUB 135.8 billion, driven by strong growth in advertising revenue.
· Despite the continued strategic growth in investments and labor cost inflation, E-commerce adjusted EBITDA increased to positive RUB 4.4 billion in Q3 2024, compared with negative RUB 7.2 billion in Q3 2023, driven by the strong performance of our advertising services.
· GMV incl. services increased by 59% YoY to RUB 718.3 billion in Q3 2024, despite an exceptionally high base of 140% YoY growth in Q3 2023. The growth in GMV incl. services in Q3 2024 was augmented by 48% YoY growth in the number of orders and a more modest increase in the average order value.
· The number of active buyers2 increased by 11 million YoY to 54 million as of September 30, 2024, and order frequency grew by 30% YoY to 25 orders per year, driven by our continued focus on making delivery more convenient, and enhancing the user experience.
Fintech
· Fintech revenue increased by 197% YoY to RUB 24.4 billion, as we continue to develop our B2B and B2C credit and transaction product suite.
· Fintech adjusted EBITDA and profit before income tax increased by 161% YoY to RUB 8.6 billion and by 163% YoY to RUB 7.4 billion, respectively, driven by strong growth in Fintech revenue.
· Loans to customers3 amounted to RUB 69.7 billion as of September 30, 2024, and increased by 20% as compared with June 30, 2024 and by 109% compared with September 30, 2023, driven by the expansion of our credit business.
· Current accounts and term deposits from customers amounted to RUB 149.8 billion as of September 30, 2024, and increased by 59% as compared with June 30, 2024 and grew more than fivefold as compared with September 30, 2023, bolstered by the fast-growing number of Fintech users.
· In Q3 2024, the number of Fintech active users4 increased by 68% YoY to 27 million. Ozon Card remained the leading payment method on Ozon Marketplace. Our Fintech operations continued to expand beyond our marketplace. The non-marketplace operations exceeded 30% of the total value of transactions made using Ozon Card.
· Credit loss allowance coverage ratio of non-performing loans overdue past 90 days was 1.5x as of September 30, 2024.
The following table sets forth a summary of the key operating and financial information for the three and nine months ended September 30, 2024, September 30, 2023, as well as of September 30, 2024 and June 30, 2024. The information for the three and nine months ended September 30, 2024, September 30, 2023, as well as of September 30, 2024 and June 30, 2024 has not been audited by the Company’s auditors. Since January 1, 2024, following the expansion of our Fintech segment, we have presented interest revenue separately from other types of revenue in the Interim Condensed Consolidated Statements of profit or loss and other comprehensive income. Furthermore, we also presented expected credit losses on Fintech financial assets separately from cost of revenue. We have also introduced other changes to the presentation of the statements of profit or loss and other comprehensive income, the statement of financial position, and statement of cash flows. The corresponding amounts for the three and nine months ended September 30, 2023 and as of December 31, 2023 were reclassified accordingly. Please refer to “Presentation of Financial and Other Information – Changes in Presentation and Reclassifications” for details.
By October 2023, we completed the transition to an agency model for the majority of third-party services rendered to sellers. As a result, our revenues from such services were recognized net of the costs of third-party service providers, which resulted in a decrease in our reported net revenue with a corresponding decrease in cost of revenue with no impact on gross profit.
Third-Quarter 2024 Consolidated Financial Highlights
Total revenue increased by 41% YoY to RUB 153.7 billion in Q3 2024, driven by strong growth in service and interest revenue. Total revenue in Q3 2024 grew faster YoY compared with 30% YoY growth in Q2 2024, as a result of accelerated growth in marketplace commissions. Our take rate also improved by 170 basis points QoQ in Q3 2024.
Service revenue increased by 47% YoY in Q3 2024, driven by an increase of 82% YoY in advertising revenue, as a result of development of our advertising products and growing number of sellers on our Marketplace. Interest revenue increased almost fourfold YoY, due to an expansion of Ozon Fintech credit operations.
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 costs of third-party service providers. This resulted in a decrease in our reported marketplace commissions and net revenue with a corresponding decrease in cost of revenue and no change to gross profit.
Gross profit grew fivefold YoY to RUB 27.1 billion in Q3 2024 and increased by 2.6 p.p. as a percentage of GMV incl. services to 3.8% in Q3 2024. This was driven by fast-growing Fintech services and improved unit-economics in E-commerce partly due to optimization of first-mile and fulfilment services, as a result of higher utilization.
Total operating expenses before losses and recoveries related to the fire incident (“Total operating expenses”) increased by 50% YoY in Q3 2024, due to an increase of 75% YoY in sales and marketing, and 45% YoY in technology and content expenses. Expected credit losses on Fintech financial assets increased more than fivefold due to the fast expansion of our Fintech credit operations. Total operating expenses decreased as a percentage of GMV incl. services by 0.2 p.p. to 3.9% in Q3 2024, due to operating leverage.
Net finance expense decreased to RUB 5.9 billion in Q3 2024 compared with RUB 8.4 billion in Q3 2023. This was primarily due to the positive impact of RUB 5.7 billion of a revaluation of derivative financial instruments in Q3 2024 compared with a corresponding negative impact of RUB 3.7 billion in Q3 2023.
Net cash from operating activities increased by RUB 51.7 billion to RUB 75.3 billion in Q3 2024. This was primarily due to a greater positive contribution from working capital, driven by a change in Fintech customer deposits. Working capital contribution was partially offset by an increase of interest paid by RUB 9.9 billion, as a result of higher interest-bearing liabilities and higher borrowing costs on our debt linked to the Bank of Russia key rate.12
In September 2024, the Company also received a cash compensation of RUB 6.4 billion for the losses related to the fire incident at the Novaya Riga fulfilment under its insurance policy.
Net cash used in investing activities doubled YoY to RUB 14.5 billion, mainly driven by higher capital expenditures of RUB 14.6 billion in Q3 2024 compared with RUB 9.0 billion in Q3 2023. As of September 30, 2024, our total warehouse footprint increased by 52% YoY and exceeded 3.0 million square meters.
Net cash from financing activities increased by RUB 3.6 billion YoY to RUB 3.8 billion in Q3 2024, due to an increase of RUB 4.0 billion YoY in proceeds from borrowings.
Cash and cash equivalents amounted to RUB 230.5 billion as of September 30, 2024, and included RUB 166.3 billion held by credit institutions within the Fintech segment, compared with RUB 164.7 billion and RUB 113.3 billion, respectively, as of June 30, 2024.
Full-Year 2024 Outlook
Based on the current trends and outlook, Ozon expects its GMV incl. services to grow by 60% to 70% in FY 2024 compared with FY 2023, and adjusted EBITDA to be positive for FY 2024.13
Interim Condensed Consolidated Statements are available here.
Changes to the Board of Directors
Mr. Ivan Kolomiets, Mr. Dmitry Akopov, Mr. Aleksei Maslov and Mr. Vsevolod Rozanov joined the Board as Independent Directors (the “INEDs”) with the effect from November 6, 2024 by nomination of the Board.
All INEDs were appointed pursuant to Regulation 94A of the Articles of Association of the Company, and shall stand for re-election at the next General Shareholders Meeting.
The Board is now complete and fully staffed.
The United States, the European Union, the United Kingdom and other jurisdictions imposed severe sanctions targeting companies and businesspersons with links to Russia, as well as export and import restrictions. In response, Russia designated 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.
At various times over the last two decades (and in some cases to this day), the Russian economy has experienced significant GDP volatility, high levels of inflation, increases in, or high, interest rates, sudden price drop in oil and other natural resources, and instability in the local currency market.
Please refer to our Annual Report for the year ended December 31, 2023 and other public disclosures concerning factors that could impact the Company’s business and the results of operations.
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 the expectations expressed or implied by the forward-looking statements. Such factors include 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 developments negatively impacting Ozon’s business or unfavorable legislative or regulatory developments. We therefore caution you against relying on these forward-looking statements, and we qualify all of our forward-looking statements with these cautionary statements. Please refer to our Annual Report for the year ended December 31, 2023 as well as 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 three and nine months ended September 30, 2024, September 30, 2023, as well as of September 30, 2024 and June 30, 2024. The information for the three and nine months ended September 30, 2024, September 30, 2023, as well as of September 30, 2024 and June 30, 2024 has not been audited by the Company’s auditors. The information disclosed in this press release is based on 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.
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 sell their products across 11 time zones and offer our customers a wide selection of goods across multiple product categories. Ozon Fintech includes B2B and B2C operations and offers an extensive range of transaction and credit products services to more than 26 million users. Ozon is committed to expanding its value-added services, such as Ozon Fresh online grocery delivery. For more information, please visit https://corp.ozon.com.
Contacts
Investor Relations
ir@ozon.ru
Press Office
pr@ozon.ru
2 See the definition of active buyers in the “Presentation of Financial and Other Information – Key Operating Measures” section of this Release.
3 Loans to customers include current and non-current loans to legal entities, individual entrepreneurs and individuals, net of allowance for expected credit losses.
4 See the definition of Fintech active users in the “Presentation of Financial and Other Information – Key Operating Measures” section of this Release.
5 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.
6 As of September 30, 2024 and 2023.
7 Total Fintech revenue includes interest and service 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 services and bank cards services.
8 As of September 30, 2024 and June 30, 2024 net of allowance for expected credit losses.
9 Outstanding balances on current accounts include saving accounts and outstanding balances on current accounts.
10 Interest revenue includes revenues from interest and interest-like commissions on Fintech’s financial assets, which are accounted for primarily at amortized costs using the effective interest method.
11 Cost of services and other revenue mainly includes fulfillment and delivery costs, fees for cash collection and cost of financial services revenue.
12 The key rate increased from 13.0% as of September 30, 2023, to 19.0% as of September 30, 2024.
13 The forward-looking statements below reflect Ozon’s expectations as of November 6, 2024, and could be subject to change. In addition, they are subject to inherent risks that we are not able to control — for example, any changes to political and economic conditions, either globally or in the regions in which we operate.
