Full-year 2023 Guidance
Based on the current trends and outlook, Ozon raises its guidance for the full-year 2023. The Company expects GMV incl. services to increase by 80% to 90% year-on-year and adjusted EBITDA to be positive for the full-year 20231
Second Quarter 2023 Operating and Financial Highlights
- GMV incl. services increased by 118% year-on-year in Q2 2023. Strong GMV growth was augmented by accelerated order growth. Number of orders increased by 131% year-on-year and reached 209 million as a result of an expanded customer base and greater customer loyalty. Number of active buyers increased by 29% year-on-year to 39.5 million in Q2 2023. Order frequency per active user increased to 17 orders per annum in Q2 2023 from 11 in Q2 2022.
- Total revenue increased by 61% year-on-year primarily driven by 88% growth in service revenue supported by a significant improvement in 1P sales.
- Adjusted EBITDA remained positive and amounted to RUB 0.1 billion in Q2 2023, compared to RUB 0.2 billion in Q2 2022. In Q2 2023 the Company made strategic investments aimed at accelerating GMV growth and gaining market share, and continued to invest in Q3 2023 based on encouraging results in customer cohort and operating performance. These investments should enable the Company to secure a leading position in a fast-growing online retail market with sustainable long-term profitability.
- Loss for the period was RUB 13.1 billion in Q2 2023 compared to RUB 7.2 billion in Q2 2022 mainly as a result of foreign currency exchange effects and an increase in finance costs.
- Net Cash Generated from Operating Activities was RUB 10.8 billion in Q2 2023, a significant improvement compared to net cash used in operating activities of RUB 5.4 billion in Q2 2022 as a result of positive contribution from working capital.
Total revenue increased by 61% year-on-year mainly driven by growth in revenue from marketplace commissions and advertising revenue which tripled year-on-year to RUB 14.9 billion. Growth in marketplace revenues was fueled by the continued expansion of our 3P business, while the take rate was lower as a result of strategic investments. Our 1P sales rebounded and increased by 32% year-on-year in Q2 2023.
From January 1, 2023, as further described in the “Presentation of Financial and Other Information – Changes in presentation and reclassifications”, “fulfilment 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 increased by 13% year-on-year to RUB 10.1 billion. Gross profit as a percentage of GMV incl. services contracted by 2.5 p.p. year-on-year to 2.7% in Q2 2023 due to targeted investments aimed at accelerating GMV growth. Other cost of revenue decreased as a percentage of GMV incl. services by 0.7 p.p. year-on-year to 13.7% in Q2 2023.
Operating expenses significantly decreased as a percentage of GMV incl. services to 5.0% in Q2 2023 compared to 9.9% in Q2 2022 as a result of operating leverage effect and cost optimization. Sales and Marketing, Technology and Content and General and Administrative expenses per order declined to RUB 90 in Q2 2023 from RUB 188 in Q2 2022.
Loss for the period was RUB 13.1 billion in Q2 2023 compared to a loss of RUB 7.2 billion in Q2 2022, primarily due to a less favorable effect from the foreign currency exchange and higher financing costs.
Net Cash Generated from Operating Activities was RUB 10.8 billion in Q2 2023 compared to net cash used in operating activities of RUB 5.4 billion in Q2 2022 as a result of positive contribution from working capital stemming from changes in accounts payable.
Net Cash Used in Investing activities was RUB 7.0 billion in Q2 2023 compared to RUB 6.6 in Q2 2022 and primarily consisted of capital expenditures relating to the acquisition of property and equipment.
Net Cash Used in Financing activities increased to RUB 13.4 billion in Q2 2023 compared to RUB 3.0 billion in Q2 2022, primarily due to the payments related to the convertible bond restructuring which were partly offset by the proceeds from borrowings.
Cash, cash equivalents and short-term bank deposits amounted to RUB 74.6 billion (an equivalent of 0.9 billion in USD terms3) as of June 30, 2023, compared to RUB 82.4 billion (an equivalent of 1.1 billion in USD terms4) as of March 31, 2023.
Other Business Developments
Ozon Global, our cross-border business that mainly operates in China and Turkey and enables international sellers to offer their goods on our marketplace, continued to focus on enhancing customer services and streamlining logistics to reduce delivery time.
Ozon CIS continued to expand its operations in the CIS countries by developing its own logistics and delivery channels. In Q2 2023, Ozon launched a second fulfillment center in Kazakhstan which makes the Russian market more accessible to local sellers. In July 2023, Ozon opened an office and established a sorting center in Armenia.
Ozon Fintech offers B2B and B2C transaction and lending services, including Ozon Card (Ozon-branded debit card) and Ozon Installment (our customer lending service) for buyers, as well as “Flexible Payment Plan” and “Cash Prior to Sales” solutions, and Cash Settlement services for sellers. In Q2 2023, Ozon expanded its suite of B2C financial services and launched a savings account service for individuals. Ozon Card remained the top payment method on our platform in Q2 2023 with more than 25 million users.
Ozon’s total warehouse footprint expanded by 57% to more than 1.7 million square meters as of June 30, 2023.
Risks and Uncertainties Related to Current Environment
As the potential global and economic impacts of the geopolitical crisis surrounding Ukraine continue to rapidly evolve, in a manner that is unpredictable and beyond the Company’s control, it is difficult to accurately predict 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. Its fulfillment infrastructure and delivery network enable Ozon to provide its customers with fast and convenient delivery via couriers, pick-up points or parcel lockers. Its extensive logistics footprint and fast-developing marketplace platform allow entrepreneurs to sell their products across 11 time zones and offer customers wide selections of goods across multiple product categories. Ozon actively seeks to expand 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 within the meaning of the Private Securities Litigation Reform Act of 1995 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 titled measures used by other companies, which may be defined and calculated differently. See “Presentation of Financial and Other Information” 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 six months ended June 30, 2023 and 2022. The financial information for the three and six months ended June 30, 2023 and 2022 has not been 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.
2 Other cost of revenue mainly includes fulfillment and delivery costs, fees for cash collection and cost of financial services’ revenue.
3 The USD equivalent was calculated as RUB amounts of cash, cash equivalents and short-term deposits converted from RUB using the exchange rate as of June 30, 2023: RUB 87.0341 per 1 USD (source: the Central Bank of the Russian Federation).
4 The USD equivalent was calculated as RUB amounts of cash, cash equivalents and short-term deposits converted from RUB using the exchange rate as of March 31, 2023: RUB 77.0863 per 1 USD (source: the Central Bank of the Russian Federation).