OZON - Earnings call transcript Q3 2021

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Operator

Welcome to Ozon’s Third Quarter 2021 Results Call. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Maryia Berasneva-McNamara, Head of Investor Relations. Please go ahead.

Maryia Berasneva-McNamara

welcome Third and Call. XXXX everyone, afternoon, to Quarter Ozon Results Good Gerasimov. presenters Officer, and Daniil Igor Executive Ozon’s Chief Shulgin; Officer, Today’s Chief Officer, Alexander are Chief Operating Financial Fedorov;

company’s During you’re ask key and the welcome financial the followed to will for questions. quarter. performance will session by call, share a discuss strategic and Q&A operating we business highlights This be third the in which

IR our of You can website. release presentation on a also earnings Ozon and copy find

our may management, that Private to would statements I like information you floor Before Reform pass the advise I some you to the Act. under Litigation Securities will include the of hear today forward-looking

uncertainties, based are to maybe in release beyond many currently on are results the assumptions beliefs, our available control. statements And press and subject and differ you and our and known statements encourage actual materially. We information cautionary contained company’s and SEC today filings. of Forward-looking to may refer which management’s risks the to issued unknown

today’s you I During metrics, to of with today. pleasure, will definition now certain the to pass of the and reconciliation and referring which financial And be measures Alexander find press non-IFRS Shulgin, release other in great company’s published the floor CEO Ozon. will can call, company

Alexander Shulgin

Thank XXXX to welcome earnings Good you, quarter Maryia. afternoon, our call. third everyone, and

discuss Let me will our then dynamics marketplace outline detail. Igor key highlights and and of in the And third quarter Daniil performance. financials more

unit GMV verticals. percentage EBITDA resulting a quarter a Compared and to and we best seller orders, report a with really happy which our important in buyers We on is as improvement of achieved our us. across an XXXX, QX core strong for like-for-like numbers in highest very basis, history, in also the and economics are to active performance our business GMV

growth momentum a step-up of including sellers with of buyers XX,XXX, active QX outstanding with up you X.X number in expansion year-on-year. highlights. growth. to XXX% and the platform. record number in year-on-year times supported the GMV of we e-commerce by core business, services, orders, stellar provide increased Within big saw number base me million, compared an buyers sellers reached operational exceeded XX few and our GMV, showing in both a strong and XXXX, growth, supported let Now, by engagement The

inflection an start and since Following investments we COVID-XX made up infrastructure demand for huge expansion. in progress in online the services ramped of pandemic,

on-time next is Our for infrastructure consumer, best-in-class expansion our greater year-on-year, shifting times increased X.X strategy of provide of is and delivered delivery same orders model or fruit high-frequency infrastructure and to XX% a and stronger share network and us our bearing nearly reflected service The proximity to last-mile greater cohorts. buyers with our to doubled. sellers in With allows day.

year-on-year until precursors gives compounded be significant transformation GDP adjacent expected to is as tremendous market XX% worth as strong where and XXXX XXXX. boosted e-commerce The in entering a new deploying The the growth total and stellar nearly e-commerce become mobile retail XXX% a Kazakhstan. strong us to as driving model, penetration, aim order be in exceed extremely big on total growth in is expanding interim million In scalability key within By for which similar -- we our growth it was to growth growth Furthermore, has During market by to their Ozon of of currently the grows the Ozon uptick as progress addressable we US$XXX The annual we Ozon made creating we the believe half testimony with well rate XXX% progress, destination represents for our is market penetration. by e-commerce and And penetration up potential shift. high-frequency strategy online are reaching accelerated GMV should per and order market improvement is quarter, third frequency terms back territory, force customer high see We internet huge base, our Belarus e-commerce. an of opportunity and go-to Russian of XX markets to market. of the retail in other is model. penetration a XX% capita, of triple-digit on than it by to a billion returned in for XX% value fundamentals in which XX% by in where right a as to the basis off-line QX, verticals by confidence win a year-over-year. buyers. record year-on-year. Group. are focusing high-frequency on geographies frequency growth towards in the already such more

highlight experience with Our performance into suite the and and platform. services translates has our the buyers which quick on of turn, that our the lending in we share of payments transact market we you wide development. months. XX various product, with this this next on like to it under cards Last comes have the customers issued. year, a transaction sellers reliable would shopping business Card improve working Ozon online are for assortment BXB with leverage ensures Express delivery, cash commerce array step-up with we convenient and acquisition deliver-anything-fast plan frequencies. our license, to lot into with and on we fintech achieve After build the payment and started very Ozon and holders to This a We vertical profile I More enables financial scale when frequency. enjoyed is landing offering to gained over solid XX% brand. pipeline plan flexible the platform. sellers of popular incredibly updates to allows and a and product BXC service digital resonates in piloting laid Card, buyers. us their business of Europe. BXB flagship tap in markets banking grocery shopping a multi-category more we our higher which, off in consumer comprehensive Ozon this our Financial product, verticals to our XXXX, started which with provide frictionless Within frequently to our Bank to vertical, well management, scale along capital us than stream, one on After accelerates Ozon traction mile After payments of product year, enhance this our last year. X,XXX Services overall products showed faster. community. and And sell X.X with or Express, their foundation Ozon currently under Ozon continue tremendous a million purchase to largest

encouraged are results more months, mature more for We better as than the XX much by the operating dark show unit economics. which stores

expanded example, the business to regions of Krasnodar Rostov-on-Don. in we in Moscow months, in few last in outside and the Central metropolitan St. Tver Pete. and Russia, stores the dark this areas south, new for We Over opened in

In penetration. addressable segment. billion branded square a this own and addition We SKUs, stores with less X% We launched our private opportunity The footprint the selection this and e-commerce very ready-to-eat meters to see XX,XXX offering. and more of meals dark total in huge the by end than segment of Ozon of $XXX enormous level for market attractive we is our nearly believe than exceeded QX. XX,XXX expanded quarter-on-quarter with doubled

we X market. start during billion the strong the and scratched a GMV progressing had So and believe during in barely tremendous to far, November hours. of high minutes and the to months this XXX% a day X,XXX penetrate generated to XXX% nine sum had GMV platform up, GMV orders growth And in our surface. we in the peak in quarter achieved ability is growth season first execute a in incredible QX. QX. To the with We the with single on accelerating have record we of Trading late XX well an

our raising performance to XXXX our year-to-date, growth year. XXX% GMV in Given last compared strong guidance to we are

Now, I performance the who over Daniil Fedorov, dynamics our in marketplace. and it elaborate will will operational pass on to

Daniil Fedorov

growth XXX% Thank orders of of is growth on you and I light result, provide phenomenal tough in QX operational in scaled everyone. few QX updates. comps XXXX. in with will the you, comments a growth company Hello, and GMV even Alexander. XXX% company’s a results base

all execution flywheel enables us very and are and logistics of assortment, and partners. customer platform and best-in-class engagement, best Largest experience expand on our sellers sellers augmenting our fulfillment and users buyers, base excellence buyers platform, high for We to focused to logistics delivering user effect. proximity infrastructure drive

landscape. over decisions Our and contributed to XX,XXX proprietary The appreciate in GMV. merchant rising base, access to business understand XX business million share the the XX% base Ozon plans fulfillment to last informed in about increased options. merchant of by variety X.X to analytic and make of reaching delivery the and better base of marketplace, market market tools outstanding Sellers year. help their sellers customer more times growth

advertising Our services in assist sellers and financial instruments faster. their scaling business

is gaining on also traction. businesses Our cross-border global

As have join doing choice. selling of that more it and platform making [ph] variety QX to encourage X,XXX on to a In platform, also in business adding we now, attractive on assortment, platform launched initiatives our goods entrepreneurs we their proprietary on business XXXX, focuses should international over Such sales sole more to buyers. our with start us.

More XXXX to multiple with offers In convenience, currently times choice and coupled platform. the shoulders XXXX. categories, buy fact, more across more assortment customers availability, and more increased head this QX QX competitors. assortment core between five Ozon brings and And and above

a of QX, attracted users matter approximately As month. fact, Ozon one active million during per new

which surpassed we engagement ago. in We than million a frequency buyers the observed buyers, result, categories. is milestone increasing across XX active and year more of our a As XX%

which by in per X.X offering translates shoppers, resonates year-on-year, purchase increased orders Our year. reaching with frequency XX%

progress long-term is And the that’s our [indiscernible] number. targets. this average great still but way behind quarter-on-quarter, showed ambitious So

what of illustration. I’ll as However, indication you can some an we achieve, progress give

audience, week, places nearly versus in customers year at least Our this increased XXX,XXX which year two around most October ago. to orders once a million loyal a

verticals later of assortment long average drivers as and by increasing assumes availability, in a Formation Card. basket with strong Key fintech customers greater network our loan marginal solutions delivery but sustainable model pay bolstered lower coupled models, order high express is services such adjacent proximity value through Ozon high-frequency as and contraction to pickup frequently, as such lifetime size. value. performance growth more of now of of points believe term frequency subscription and more buy premium order it expansion and such of customer as a this that the and We with growth, cohorts into

in as build be new the Ozon one-stop proximity expansion, high-quality UX to continues shop also and demand greater to services to performance. to enhance consumers customers for through cohort Being develop We improve emerged service. network better the and since and projects the consumers. consumer share insights and is convenience and dramatically for feedback, Russian recognizable destination go strength, beginning e-commerce based strength top-of-mind continue XXXX And Today, to go-to brand our of on most online from to for peers. among Ozon share our shopping Russian outpacing marketplaces. products increased

a more marketplaces. consumers other Ozon result, on seeing choosing As more we and order are

composition shows Order orders, contribute that keeps doubled and frequency. Our existing We those a which year-on-year, proposition has of give in experience gives over peers third-party mobile is on rate focusing more that based the the substantial our right repurchase user for recent been exhibiting customer confidence to order chart us both amazing new and buyers’ commerce highest greater high long app growth characteristics Improving part cohort retention show is of data. us improving. new amongst as the audience amongst than cohorts The performance term. confidence obsession strategy rates, high-frequency contributing that our customer cohorts growth as cohort on cohorts. believe pace well a

to All e-commerce of Ozon rising Ozon’s of as volumes as rapidly the impossible as of handle is huge be it business having a without total and solid backbone. faster warehouse XXX% by assortment over year-on-year. delivery. Fulfillment logistics this Ozon bedrock would well expanded offer capacity its enables orders, logistics

quarter [ph] increase XXX,XXX Last marked footprint the largest exceeded base in our warehouse total in Our meters. history. square

positioning reach our parcels with in Our to per of us applications With during almost million strategy I’m years. of for to last And opening time. doubling steadily on prepares of our great peak two high-frequency fruit order to XX% the say us model shifting shipped Last, increasing for infrastructure XXXX we QX proximity bearing one than demand XXXX. and but off-line in planned the since enabled the us secured strong XX% a more delivered least, season, for milestone during of greater the growth pleased space over a infrastructure guidance year-end. frequency which doubled growth high not the is consumer, on have also that Furthermore, are XXXX. strong our to delivering expansion new day, in for

into better translate should cohort frequencies the All years to performance order of for this and boost come.

with international on Before operations. its few a Ozon discussion words to Belarus company present The to and our we now over scale in expansion. is Kazakhstan. continues turn performance Igor, financial

times Gerasimov, its to XX performance. financial popularity times grown hand sorting are Belarus gained in will Igor And on the sales which During of of collect last sellers this, branded approximately seen you There franchising of QX has further in unbranded a pickup XXXX. March the like sales where in in could beginning launched model Russia. year. With would Belarus. applications X,XXX center Belarus, since XXXX, Ozon peak has just launched more our Ozon the off-line Ozon fasten week, since have can the from The our than replicate by over orders. increased five discuss points of believe of we I Belarus success who to in we

Igor Gerasimov

will I insights some you, financials. QX into Thank Daniil. our share

which driven of a billion. underlying we drivers and XXXX. the the and QX, QX expense progress. in during in This you GMV, with X.X like-for-like increase improvement US$X.X an improvements, QX generated and gross was on profit improvement on also as August Quarter-on-quarter, the platform a managed great investments to QX, a to of but marketing XP deliver XXXX. by gross price shared or times in Our profit accelerated you basis. billion This GMV up optimize to compared including to of to ramped impressive our give we margin Not To within GMV. primarily visible made only RUBXXX XX% XXX% in I started means year-over-year marketing as compared more EBITDA we business, percentage services,

compared on the QX methodology. As effort, QX a achieved to result we of gross in this like-for-like XXXX better margins

having customer QX seven As encouraging, We were the the view. for expansion. offset XX% rate also up in without X% customer is QX, our XXXX spend. to aim impact on the discussed rising of infrastructure Yes, from record cost approximately acquisitions. efficiency sales to GMV result XX% on in to pressure versus in in August, of our grew increase we’re the marketing run decreased Marketing somewhat achievements focused faster and The year-over-year optimization expense my compared base QX. These our average by last negative quarters.

high of it basis season a by versus QX underlying corresponds in as XXXX. represents EBITDA for increased an and and have times capacity warehouse To QX. We our basis the X.X next leg to Q-on-Q up, on like-for-like of preparation in of points one-off, a X.X% growth XX the GMV sum in This excluding calculated percentage in QX. improvement

highlight few of expense strategic also to this on X.X higher investments shows Next growth as year-over-year growth and increase slide and is well level. Higher dynamic as operating aggregate at expenses like The into by verticals operating cost other as elevated in a JV times new the infrastructure model. well as slide. the reflects in transformation our frequency A products. I through would points

efforts sales expense remind this that would with which efficiency, which all includes greater line. expense customer compared paid you associated cost GMV increased QX really X% a marketing to of I around achieved marketing processing, Despite like marketing Our to to QX marketing costs X.X% and percentage in acquisition, we expense due XXXX. this, off year-over-year. of our in as declining where inflates to XXXX card concentrated

R&D, doesn’t increase The as technology. I EBITDA. to Q-on-Q expenditure largely components, mentioned to over as Turning attributed which can a one-off ESOP impact on be well have which

substantially components, Q-on-Q grants like new and noncash price would and appreciation. of that because share ESOP was G&A year-over-year note to impacted which increased I both Finally, by the

transition model. part is to of our by This strategy. transition driven a our contracted AOV high-frequency Our

buyer. This is higher rising per across the and repurchase our on loyalty and less order And with GMV sustainable basis, Higher tremendous buying mix temporary we increasing number all between mention of order I pressure and know But in XX economics This year. in you, engaging growth last this acquisition that our your cost our QX can This seeing last achieved comment would with diluting QX on XX per next highlighted of revenue off our and on and nearly bottom growth categories. customers, such which already rates but future. attention user would increases QX to we it like cost the paying say result already makes to are which once and compared again this the will however, is therefore, to line. confidence quadrupled, on this in in more customer reaching category I of business year. orders We orders year and to draw dependent and produces, million costs. per returns I slide. orders million the

have cost able and per order further improvements were user went order from continuing marketing means to better Sales dilution XXXX room per in What nearly economics. unit costs order RUBXXX down one went We sellers key metrics basis order. per cost growth of on and X.X is order RUBXXX from to is this QX. space buyers the of QX is RUBXXX the capacity. in and XXXX in XXXX. from reduce frequency, QX QX RUBXXX marketing per despite commitment the the to our went orders platform. order per delivered of one growth and delivery to This orders in per in strongest of our ultimate incredible per times which impacting of down showing there whilst XXXX further to down industry, volume XX in is in in in warehousing cost It dynamics cost that doubling growth order RUBXXX fulfillment order the With per active order base. in Namely, RUBXXX and increase for positively we months QX

billion. operating cash outflow dynamics. Cash flow from RUBX.X was minus a Lastly, our activities words few on

favorable. working dynamics remains Our capital

with as progress infrastructure for move Q&A RUBX.X expenditure launches. to you we capital session. your and attention, billion let us amounted Our Thank planned now to

Operator

Thank Slava you. your line Sachs]. Instructions] The [Goldman [Operator Please Degtyarev the ask question. comes from first question of

Slava Degtyarev

you of thank A questions Yes, the very presentation. couple much from my for side.

on in frequency elaborate that So fulfillment created this competitors? comment and the from a regions? your secured at material between And you if difference see in of do versus competitive you year you currently mentioned the market Thank moats fulfillment the secondly, next capital looking side the you you you high cities outpace the growth the would is year? directionally, And space? you have for also firstly, can on roughly to maybe the available are Can And what expect the frequency target GMV growth compared you. XX% for addition of space is you what year. the to capacity the next the fulfillment

Igor Gerasimov

for you Thank Slava. your questions,

going relative growth will available be expansion say growth is other like from very best our of many with Let me is one orders towards and categories based frequency, well. probably electronics. that item order mention that to values, basis, average Dan growth on probably move in remains and see is the behind have is in can metrics, which the GMV what of as drivers of our growth begin questions, e-commerce key information they of the the on us. And once competitors I'd believe Russia. standpoint in forward, one non-electronics. inflated that the means probably on we per strong the up. which that the Meaning On relatively a proceed have it diluted And one of to I strongest follow still we Also, some I'd whole market that

double growth in a infrastructure On for year-over-year to this almost we bar year, first taking the because fulfillment aim capacity months XXXX a order to the would higher basis. us we be part shared, as as support orders fulfillment to are effectively. the And capacity, expansion we of have well of previously on attributable overall so

we we However, produce I or time with updated guidance targets XXXX release exact share results. will QX guidance. any cannot guess on you by our we the

Daniil Fedorov

Yes.

if I a all, best-in-class basic I and add focus the have would think first we what Let and really me But we it's on, coverage we highlight can performances, Look, – on difficult so stuff, think network. frequency. and of excel we Well, I I have very – super most the with advertise and last-mile our actually to important. is a brand. the first which good basically of customers,

network last-mile a That's that's customers. to proximity So one.

not of pay have Second, on – also manage we actually drastically. also and of subscription. of cards issued, like who just their and And product, is on see – is we goods, the localization that, attention means that and And frequency top proximity a million proximity those a network. of good premium goods that subscription. and a we which we use with progress And our we have fastest-growing on lot course, the time that there, They not different of guys is the we Fintech, narrow. of last-mile we that, other actually delivery on premium how means course, we But in stock of Express X.X availability of Fintech, market. of least, of delivery, in that last think are It's have lot doing. which which over one be top the a it's e-groceries today but will the focus it's improving

see also and frequency from and is the huge dramatically. Express a We pace and delivery – gaining customers, improves quite engagement

as if at in customers you your the look particular Looking you two looking of orders But all I Express. buyers layers day same the or lot by actually delivery. cities. high-frequency is of actually think actually high because time, supply in you at doing Moscow, of share asked, so a to near frequency, regions, can in versus a of fulfillment is different the have weekly customers next Key have that

Slava Degtyarev

you much. very thank Okay,

Operator

Thank you.

next your Your Morgan Adisa Please the Stanley. comes of of question. from Miriam ask question line

Miriam Adisa

Great. Thanks everyone to Ozon ask Firstly And on as just opportunity the Express. questions. the

still Moscow, this stores you fact out your given cities. dark next and expansion new you've that of also share over a gone the the plans driver how frequency in about for represents the And into limited could much the GMV how in of is size something And of cities? you you you are the saw? this if and your year, of And as would then something your order store Is cities? seller be step-up of gone SKUs some color you've base. more plans now could you this that the Any store that your talk If working just Or of the of think then as expansion on of well also per you perhaps was see great. to now? share relative well? And bigger do just number that about most on there finally, sort thinking

this merchant So growth base. you've seen in your big

sellers more color wondering you're any shift would great. FBO Just Any if seeing choosing versus be FBS, if there? you. as there's that Thank well been on

Alexander Shulgin

Sure, Alexander Miriam. this is Hi, Miriam speaking.

this new fairly piloted year. Express, us infrastructure discussed. developing dark on for So we is actively business and store this XXXX the are as in We

share cities driven St. Express total increase. the business. its driven than at our contributes it terms the increase recently GMV available of for overall, quality Obviously, frequency performance better and proposition Frequency frequency wouldn't that's frequency But in of say and I where and in speed our service is substantially Rostov. the on the to less is key platform, the delivery. Moscow, the increase operates reason a sellers Pete by is of of XX%, and Krasnodar So number in in the primarily the by of core SKUs launched

Daniil Fedorov

and FBS On add FBO me Yes. split, let here.

see. we highlight two – I I trends can would think that I

actually and First, going we they do not see differentiate can – differentiate because actually model sellers into and is goods. actually different claim two figures this models sellers, and more more that I

FBR. one it's we see mixing a are see stock. FBR for the This sellers, actually slight attention impossible sellers models. we improvement to to of I we would too, And And what lot regions. localize that a pay simply attribute to that of fact So

regions works Actually, increases, commission in actually commission misleading our some a So I – And very I commentaries, similar some bit share our that commissions at is way, to our competitors. the because see by and of higher. becomes commentaries. a of if our commissions, look

of some competitors commission times three And year. this our increased

very long-term through we've last built par. and our are partnership what because been we – this we and sustainable we on, So we're I focusing are talking with the And clearly on focused over sellers. on commissions a year, think

Miriam Adisa

just if of cities the the then terms Great. of format the was about also your for in plans you're you of of SKUs can terms of first And and you. it Thank question, in dark and stores. talk on how up on the sort number following new the just thinking stores size about expansion

Igor Gerasimov

Sure, Miriam.

stores So in Express in dark the of operate St. already Pete. expansion, terms

they're and exclusively we're experimenting Moscow, expansion. in So regional not with present

However, at stage, this it's pilot. mostly a

see. of we'll we're order to a compared narrower will about delivery experimenting early stage it an to SKU even And initiative. of But make So is with Therefore, value be proposition. SKUs, delivery previous count out also mix number various the to versus relatively we the in formats speedier of the number trying roll time. better a

Miriam Adisa

Great, thank you.

Operator

Please The ask Thank line you. next Capital. your Xtellus question. question comes the from of Ivan of Kim

Ivan Kim

afternoon. Yes, good

please improve far. the for was good adoption probably Secondly, a fourth the foreseeable the the in a margin. related quarter fully funded of can And question the retention whether quarter quarter you moat? ways fourth margin? talk thinking about will you on technical the the lastly, what in Firstly, can is XP on customer investments the question the comment so just increase level subscription? you premium fourth you the growth be Can fourth directionally And please quarter, the on profitability you the the about How drivers you're defining so and you improve can future, and implement? think

that like-for-like, quarter-on-quarter. said it improved – guys now You

quarter? in the the understood third mandatory to you. in trying so as well had impacted right? one-off release margin sort of by Thank it just was was I like-for-like, you in to So what So say, XP clean

Igor Gerasimov

Sure, Ivan.

me the Let first the take part question. of

season, me explain infrastructure opening the cost one given that. been we've ramp-up QX. of better. guess XP fulfillment On directionally, drivers I and of in this the that let delivery QX, should in So ahead should be of high be margin, component visible the

our is So methodology, should IFRIC, And be NRV on impacting dictates I evaluated. In has most IFRS case, is retail of reserves organizations of this committee margin IFRS immediate stock impairment how XP and new RUBXXX resulted of the already that. million. mean, calculated globally it essentially the cost in net reporting, our gross a which issued note an saying into reporting the standards. And on

effectively, fiev business billion comment we comfortably higher financial profit now. of XP should by On as our to remain gross but Therefore, your have we be plans. therefore, over respect – the future balance on we have for sheet financing RUBXXX So do question our not RUBXXX over with any on funded, million. we condition,

the add. improve and On of premium increase penetration the way Dan retention I to let to the subscription, will

Daniil Fedorov

Yes.

three it me buckets. think into split I let

First is, would I say, speed.

is what So building and regional last-mile there stores actually. would Ozon stock. increasing and more dark I'm of proximity localizing stock include increasing on talking more that fulfillment opening centers, That effectively, our of about also Express network, proximity

to be efficient very proved historically. this So

Our a million, mentioned, improve just at mind, doing And you as And ago. that's October, in to almost X weekly orders year this are cohorts already. look million almost if keep continuously. I XXX,XXX compared to X people

smart stuff. in So that you actually additional right? on to mean, maybe are your of some worked on having through pushes to services different out watch films focusing universes, pretty buy TV well. we basic and the very ability more we'll I course, talk So

So one. that's

on with buyers Second develop stream and I more is had visited And social And working to the are would already. add most more. streaming. we that, engaging we XX/XX

motivation – Ozon say that services. a we Card a financial other when year And frequent and plans number and and three to great would premium for I next So commerce. that And terms is be be social relates shopper. actually of to have big in

better actually financially that creates stickiness our So platform. to

I premium, of last about good traction. to we We Talking couple the lot buckets. months. how did changes see three to how the develop think these motivate, over of So program, a

still thinking good really how it is mentioned previously, a for and a we program. to good did XX% thing of we as presale XX/XX that which date, subscription. – found accounted the enrich One we thing I on we we're we did, was buyers buyers the means and one feature think actually GMV for our that day premium of premium for promo,

it's I same. basically So think the of more

Ivan Kim

very thank Great, much. you

Operator

Thank you.

of question. Jouronova JPMorgan. Please next line Your comes Elena from question ask of the your

Elena Jouronova

questions. Hi, good have a everyone. evening few I

one, one please. ask me Let by

number, lot a metric and the a order a your it's about noticed we QX ever you've that mentioned decline quarter. of XX%. I see basis, going fulfillment per foremost, been in Well, that delivery down we've continuously the And and since talking First and you're fact, every matter cost that XXXX. as tracking on

to wondering in how we particular today's see flesh about release. That's the in actually second just the margin unit context, deteriorated first And question. out you why during quarter? when same XQ contribution your think versus I'm economics number this decided we improvement in So that the should

Igor Gerasimov

Sure.

economics, delivered cost point it's infrastructure in future. working, be delivery it. delivery diluted the If went season because don't cost trends, is growth contribution fulfillment improved mean, expanded unit that that than we're how mean? structure even is profit, What And therefore, mean, even – despite why is is mean important year. orders you to cost of We've in economics given a significant. have is profit even any up. on frequency up. know, do given because I are so our better that ahead operations. high the expense, mean, threshold. our performance know components and minus next of basically in and will go the fully fulfillment what's the and does left current we've of cohort is of order, And I even on subject in continuously adapted mode the per focus more current So – semi-fixed tells that orders. this be so as the per per higher because because – I gross of most economically without two especially, frequency, and this we infrastructure times in improving on ahead artificial And order frequency be XXXX, I costs didn't that because And XXXX. I frequency up what XXXX. was should economics point. mean, QX in future, QX I not fulfillment Therefore, here. is in expense than was going But the The define since delivery diluting will openings the And higher the forward, you this delivered scale our not you ramped more order cost towards

Elena Jouronova

costs contribution QX start it QX, that in seeing big assume And are fixed then sales? fulfillment such should expansion a in after a when is to the logical infrastructure margin Okay. associated improving and season percentage we of of high as we of the

Igor Gerasimov

margins. depends on I it mean, the defining contribution how you're

Elena Jouronova

Gross and costs. delivery profit fulfillment less

Igor Gerasimov

not we're be mean, QX I QX, the but profitability giving exact targets should of because ramp-up. for guidance on fulfillment delivery in and better costs

Elena Jouronova

better mean GMV? You a percentage as of

Igor Gerasimov

Yes.

Elena Jouronova

on in Why growth did receivables? was question we another receivables. Then see Okay.

Igor Gerasimov

a scale changed. doesn't has GMV given it but the like also I mean, significant change of look

do largely in it by mean you looks your So exactly What line. question?

Elena Jouronova

receivables that in I receivables was that last not it's can of a if seen versus doubling but And QX unusual, off-line. I mean, we was just to it's fast change in if it GMV But thought advances QX look, growth, and we've year. it turnover. fine. related important, was Well, something take

Igor Gerasimov

– not not usual. in, business a it's Does as particular to

should mean, a expect the seasonality. So capital of I improvement mean because QX, dynamics the working I in significant as you usual,

So I mean nothing unusual from viewpoint. my

Elena Jouronova

advertising the comfortable we this Can What for I think growth? Or a upside. and year? accelerate which is expectations maybe certain you the be is surprised growth? next level reached to a where would that you've think discuss going advertising QX for on Do you're with? revenue bit Okay. you're outlook

Igor Gerasimov

Continue. It’s that on – Yes.

Daniil Fedorov

Yes, like, next the year, we're – I to going market from big that mean a is starting overall. year, reasonably so advertising in next become player ambition

sellers terms fact we engagement increasing. tools We actually see sellers growing – the March it our healthy actually is tools. metrics advertising So Despite since number of should into advertising in very this of – that and a sellers growing. year, almost and of doubled continue the

using these sellers half times than more using are advertising that March. sellers than tools. two more since growing And meaning of So it's

strong of We road have quite a products. map

a And our is we're enhanced in going become in to year, the commercial top also We ambition that function. next overall five advertising Russia. online players

we're forward. going the to any should guidance. continue percentage In give metrics, terms going points growing But of not net

Elena Jouronova

had do very When growing Then of nicely. percentage Understood. GMV. question It's level? XP at a stabilize the and of I a on as share Daniil, what also, you think will it

Daniil Fedorov

XP let's It's we it's we So broadly comfortable. it be no difficult like where share where level think higher, say, a fair I is push right? say are would to level because the to at to XX%/XX% aim have say that,

a So happens, and lot sellers big we're then And sometimes of unexpectedly. peak, brands sellers things like because the sometimes become any not unexpected doing specific push. vendors so

can happen. strategically. XP anything or say vendors terms less split, brands. choose in I to say, we see comfortable to of more And stay sellers But So would then like current are levels what be will I'd or

Elena Jouronova

clear. that's Yes,

sales and was one had Another I on marketing. actually

went percentage a percentage we'll obviously. performance down Or GMV. as a more of go GMV these this Do marketing was costs future down GMV a of the and think of as so trend, one-off? the in you strong. beginning very that sales So was really is costs see of this

Igor Gerasimov

attributable advertising it's it's the of more se, And rest mean, within component you a per advertising result on as I in a drastically online of to cost spending a one-off. So mean, I versus Marketing not efforts I marketing optimize XXXX. is number quarter spending. The the of items second has and offline factors. aggregate. improved sales even separate and reported have mean, to marketing, the

is the ensure the another is sales to And cost is Ozon So of component processing necessary growth. GMV Card. component one team, of the which

Elena Jouronova

Okay.

Daniil Fedorov

look without historical true businesses it were marketing that joined we to dreaming I that. or any have and look especially add trend also of our cost, to component the the continues Ozon at this when other marketing, like I'll Like sales without Yes, you level share at remember like like I financials. if

So yes, will continue. it

Elena Jouronova

And if please. I just one a may, final

a increments announced what then here the is outlook? quantify from the projects Maybe that Belarus you've how talking also to strategic on things sense? impact picked of up more couple lending. GMV you're that be do I touched we there BXB, these expansion upon interesting on, And you positive Is fintech BXC about and Kazakhstan. your a initiatives, So can and GMV in mid-term a way GMV growth increase to seeing

Igor Gerasimov

Belarus on stage, of the guess initiatives I at Kazakhstan, both now, is mean, of below maybe are X%. early very and obviously, as countries. I Ex-Russia and the

Belarus it's sharing of and guidance XXXX. average. should growth GMV in in for growing that XXXX, company, we'll communicate Kazakhstan, assume. exceeding the one It's Ozon the for that. fair we're not pace obviously, share broader XXXX, of to And But will be the Targets targets. So for that given in on be not of full

and in acquiring I our well third Plus, are to As fact. XX%, reduction payment And Therefore, of the Ozon we penetration exceeds going parties. forward, incremental, growing. I uptick frequency mean, costs GMV for is already of mean, drive XX%, have reduction loyalty products in in economies we paying forward. we another customer quite GMV financial – extracting and are going up I Ozon fintech, be in mean, closer to the material. Therefore, should of additional penetration it because from incentive effective Card not it's

Elena Jouronova

Okay. Understood, thank you very much.

Operator

Thank you.

from comes the Your Panarin Capital of Renaissance of next question line Kirill

Kirill Panarin

Three Hi please. questions, everyone.

So the particular the trend? Should of firstly, season? first strategy could further pricing reversal margin of outlook, we and you give expect some high in during your a one. QX That's pricing QX optimization XP color or on gross

Secondly, EBITDA think percentage to a That’s we on for do your you next adjusted fulfillment giving sequentially GMV talk on cost improved all so could you year, have in comments about without up QX, margin specific expect it. should then of next to fulfillment Do a one-offs. this margin XXXX? maybe about number medium-term target your year? Thank for a how plans capacity? continue And for And lastly, you improvement then and trends, sum in you. in QX as

Igor Gerasimov

Kirill. Sure,

from of mean, other margins. targets level be average the of gross the in that value. necessarily we'll we So which well I improve I the it terms entrepreneurs – and XP of marketplace, advertising contains margin, it's suppliers power, profit margins in are And not the XXXX and the our probably believe But have product what sellers mid-term purchase growing achieved from sum mean, categories, the basically gross overall, given and general, other and revenue revenue structure get for margins we to profit into profit guiding gross which in in our commission On exact some from of from our that also of guide because assume value going some XP is items. is know, average gross the because mean, on And other streams. should from yes, commission Therefore, suppliers. It's item and the we mentioned a that gross are for of in with further margins improving. also levels categories, quite case. lower because gradually the and gross profit the has it's Daniil economics gross we revenue I account company is the gross margin it's profit ambitious exact item obviously, going which reasonable given in XP one expect for will hard coupled that margin, is by the growth still the abstain that and advertising subject be you good any And to years, XP following to lower, that overall it improving. to mix. profit category taking higher, offset relatively it's about forward, Yes, profit targets. level revenue not to into stable higher margin material is the as improve,

Operator

next question. the Please your Your of of line comes & Dmitry Co. WOOD ask Vlasov from question

Dmitry Vlasov

to ask question. Yes, much for very you thank opportunity the

me, for please. two So

one and the cost fulfillment quarter. delivery on first third the is side The in

the item, me. look given XX.X% such a in that percentage fulfillment huge actually capacity, cost the line the of to shop increase GMV So doesn't terrible

question, or maybe music an now? us customer the to any to next option you. be when quarter of expand it if second new streaming fulfillment middle? you open Thank center? improve those or exactly XXXX? you Would better your the beginning increase are at would what for that's video fourth you quarter And infrastructure? Was like be it versus fulfillment did proposition it maybe not would curious verticals or the planning in of Just the And business

Igor Gerasimov

of incremental of occurred well. And percentage many you order per quarter. for addition and an would as question. of go end cost the openings mean, logically, of right. infrastructure, Thank your Without as you're exactly a GMV I the to the the down. Sure. closer Yes, Q-on-Q

So there questions assume to of be your on repeat you other QX. And cost component QX, in the to quarter is this yes. better relative – timing it's logical some Could within itself. that verticals, yes, should impact please product other

loyalty engagement. we I relatively our of which improvements that retention And guess, maybe stage other internal a mainly products, improve early target at sellers considering, stage. on the product and and are initiatives which those we already. have frequency platform. and And the additions, we and wouldn't ones, on number are mean, of But So we a have initiatives, might of in customers I base customers huge mention this any customer

the So one market. audiences in of monthly biggest the we have Russian

the cetera, very core it's important Therefore, audience. which place, still improving order follow et for that playbook, customers daily delivery shoppers become availability significant more in a and to goods on platform the facilities of first the assortments, have people cetera. stock to selling delivery means the closer have in We our we us warehousing et to channels, have bringing to and improve that terms, improve frequent speed, ensure your available those delivery improving that ensuring adding pickup points reach the the they the and of

So in relatively order have which it's customer complex ensure equation, to a manage great to we experience.

Dmitry Vlasov

Thank you much. very

Operator

question of the Kim comes And Xtellus Capital. you. from next Thank from line your Ivan

now is line open. Your

Ivan Kim

wanted on on point I I percentage follow-ups. secondly, been in the Ozon the let's quarter, Thank was of XXXX? lately? cohorts, to possible you to on in it a in ask recent about just opportunity reduction. has X XXXX customer the to do then say, you in think profitability, second the impact couple EBITDA. churn versus for And that? see improvement What quantify about And maybe would ask it impact said significant you it it be And Express

similar impact much. can you you Thank maybe the third estimate of provide very quarter. what So the on was a

Igor Gerasimov

Sure. see in as And improvements and the et cohorts, cohorts performance. client exactly in On yes, continuous corporate said you We cetera. you're in right. GMV both

please repeat every in direction. your mean, I you So And could question? other

Ivan Kim

Yes.

the in second impact in question the Ozon on Express quarter on – sort of... what was just this of The profitability

Igor Gerasimov

around mean, was quarter, terms. it the around numbers the I for third was like relative It in – same

Ivan Kim

much. very you Thank great. Okay,

Operator

your question And from you. Citi. O'Neill from Catherine of line comes next Thank the

is open. Your line now

Catherine O’Neill

do. about could just focused one we been then which on you idea has average value into on as very order some And you're should just order XXXX, you I would focused I us the think frequency. and if XQ it wondered thank had Great, into frequency? order you. question give how down about value, you're ticking if about suggested average the clearly, more

Igor Gerasimov

QX, Average we should pretty order much value one in be QX. that we mean, see saw I the it in to which close

to points. order relatively So delivery -- forward, And it's roughly delivery we have couriers. for on expect guide, minimum going for via from in deviations And we the delivery target. $XX any a complicated artificial value of any do threshold because for not pickup the material thresholds we already not the or have do a this

changing so forward. plan But the preferences. it in because of do we mix going varying far, reduce basket to be not customer might And the

ability our are what the here, to doing mean, deliver, economics our goal we the all under goal customer is midterm. the but in able to to circumstances have and So to ensure that I improve economics in we're meet still needs keeping mind

Catherine O’Neill

Great, thank you.

Operator

And Thank the JPMorgan. Philippov of from from you. line your Alexey comes question next

now is line Your open.

Alexey Philippov

you. the and some Is like in thank lower color level my materially question. growth on Moscow to the Hi, you or mature markets more group compared you please for it's share your presentation. St. That's Petersburg? broadly performance the in these Thank the similar? regions first Could

Igor Gerasimov

but we're because growing fulfillment in high pickup are also quite Moscow the But Moscow And deploying improving a given rate. bit of we quite the centers a in regions impressive, points. still capacity. the Growth mean, significant, is I growth sorting very is and obviously strong reach faster, are

Alexey Philippov

your second on And that's be any of clear. would Yes, targeting categories. question my specific

been case category you the instance, and in were months? categories? November the any experimenting during three specific you you that Is specific over quarter, lot remember particularly last the aggressive it Or any in previous [indiscernible]. have still campaign? For scaled So and in third electronics quarter the consumer we a down

Igor Gerasimov

Sure.

bit swaps So the differently. a

SKUs trying that of assortments close this, you third various would product Therefore, managed to by and pricing mean, end XX to the single strategy combine I of, are So combine you quarter. we internally, offerings. to given million of involve. Any have

value towards different propositions combine to have customers. You

we they optimized say as some the the for growth abolished wouldn't numbers, I you And have to that us overall. campaigns most this level for promo are have fact, have didn't managed in And accelerated rewarded improve pricing in by of advertising on given relative But cetera, is of the could sellers. the growth, third and in group that our the or suppliers highlights negative you of have important completely campaigns your in marketing by any important. et QX. that we guess I of the we the one impact while especially rationalize promo quarter, this and seen is investments and So the to the spend.

Daniil Fedorov

can I Yes. add also on.

you said, it's that still just I through we think If – horizontal building in think the are platform. through Igor keep as talk I categories, mind

there and year very online market growth the the sales. especially at high mention good Overall see good can the biggest I base high specifically – did the for where become category And see think market, apparel. And growth. we very board, aim to create So can last books a I we And we what growth that's apparel right? the to retail I of a getting changed. the over is to high and not What FMCG highlight want whole for is definitely proxy and that We category, all. in across and this the is job also segment even already is we through Express. are in actually

with pickup have So rooms. fitting points now we

assortment mass We have of sellers. critical and

a that see – reached lagging not it that's But it's for to going to category And like at be like apparels where be, But X necessarily think actually a historically think point are outperforming, forward. continue this that have we We over we we million so huge but growing, investments continue is to there. we which and I should sure. and that category we mean pivotal doesn't Ozon. going would

Alexey Philippov

top? very in Yes, last you highlight the be – that terms most right probably probably helpful. of aggressive and question was now promo competition. the on marketing who Can And would

Daniil Fedorov

marketing. and the terms most highlighted player the offer are terms, order invest are We this. value absolute there. our high aggressive. the best aggressive for actually into most the we We significantly frequency, We In

for more aiming We paying to also sellers are it's that actually that. collect and so brands

aggressive the you industry because developer what the the we we good despite So do effectively far, a is because we publicly. most – so – are, most which can any of aggressive numbers very and that's it by hear player

Alexey Philippov

you very much. Thank

Operator

There time. are questions no this further at Please continue.

Alexander Shulgin

Alexander This speaking. is

closing finish remarks, we'll you me Let give with and this, some call. the

our To scaling you thank sum to for core questions So We thank and our we as your our to as complementary business business. your on call joining our e-commerce for attention. up, quarterly which expanding are today. to for well business want much and focus continue additional very verticals,

implementing, We are this quarter signs progress pleased of last XXX% we to improvement XXX% compared order economics growth QX have growth we're of with in the quarter-on-quarter, GMV in and unit efficiency marketing exhibiting with basis. with made record profit fruit improvement XXXX. like-for-like to a on QX percentage GMV margin The initiatives, with as bearing a of drive helping efficiency gross which improvements and quarter-on-quarter are

we our well for strong effort to in to we demonstrated you on rising and QX high are seller platform and on Thank the we stocking, We progress thanks long-term a Looking momentum positioned and a day. frequencies, around believe as additions becoming growing growth and have we XXXX Russia. on base and call and leading great our make March. as objective of e-commerce to deliver our full earnings XXXX. good in well prepared look infrastructure concerted by company inventory updating With for the engagement in order you, ahead, the forward in user well year of are season our

Ozon (OZON) 16 Nov 212021 Q3 Earnings call transcript