News Column

QIWI Announces First-Quarter 2014 Results

May 21, 2014

Total Adjusted Net Revenue Increases 46% to RUB 1,877 Million

Adjusted Net Profit Increases 72% to RUB 785 Million or RUB 14.78 Per Share

QIWI Raises 2014 Guidance

Board of Directors Approves Dividend of 29 Cents Per Share

MOSCOW, May 21, 2014 (GLOBE NEWSWIRE) -- QIWI plc, (Nasdaq:QIWI) ("QIWI" or the "Company") today announced results for the first-quarter ended March 31, 2014.

First-Quarter 2014 Operating and Financial Highlights

• Total Adjusted Net Revenue increased 46% to RUB 1,877 million ($52.6 million)• Adjusted EBITDA increased 75% to RUB 1,068 million ($29.9 million)• Adjusted Net Profit increased 72% to RUB 785 million ($22.0 million), or RUB 14.78 per diluted share• Total payment volume increased 20% to RUB 149.6 billion ($4.2 billion)

"I am pleased with the strong start to the year," said Sergey Solonin, QIWI's chief executive officer. "Our strong financial performance demonstrates that we continue to execute and gain share in the fast-growing payments markets we serve. Looking forward, we will continue to focus on our core strategies of expanding the number of participants in our network, increasing the utilization of our services, and driving the adoption of Visa QIWI Wallet."

First-Quarter 2014 Results

Revenues: Total Adjusted Net Revenue for the quarter ended March 31, 2014 was RUB 1,877 million ($52.6 million), an increase of 46% compared with RUB 1,284 million in the prior year.

Payment Adjusted Net Revenue was RUB 1,362 million ($38.2 million), an increase of 51% compared with RUB 900 million in the prior year. Payment Adjusted Net Revenue growth was predominantly driven by an increase in payment volume and net revenue yield in the E-commerce, Financial Services and Money Remittances market segments.

Other Adjusted Net Revenue, which is principally composed of revenue from inactivity fees, interest on deposits and on overdrafts provided to agents, cash and settlement services, and advertising, was RUB 515 million ($14.4 million), an increase of 34% compared with RUB 383 million in the prior year. Inactivity fees for the first quarter were RUB 127 million ($3.6 million) compared with RUB 55 million in the prior year. Other Adjusted Net Revenue excluding revenue from fees for inactive accounts increased 18% compared with the same period in the prior year.

Total Adjusted Net Revenue excluding revenue from fees for inactive accounts increased 42% compared with the same period in the prior year.

Adjusted EBITDA: For the quarter ended March 31, 2014, Adjusted EBITDA was RUB 1,068 million ($29.9 million), an increase of 75% compared with RUB 611 million in the prior year. Adjusted EBITDA growth was mainly driven by revenue growth and continued operating leverage in the business. Adjusted EBITDA margin (Adjusted EBITDA as a percentage of Total Adjusted Net Revenue) was 56.9% compared with 47.6% in the prior year. Adjusted EBITDA excluding inactivity fees was RUB 941 million ($26.4 million), an increase of 69% compared with RUB 556 million in the prior year. Adjusted EBITDA margin excluding inactivity fees was 53.8% compared with 45.2% in the prior year.

Adjusted Net Profit: For the quarter ended March 31, 2014, Adjusted Net Profit was RUB 785 million ($22.0 million), an increase of 72% compared with RUB 455 million in the prior year. The increase in Adjusted Net Profit was primarily driven by the same factors impacting Adjusted EBITDA. Adjusted Net Profit excluding inactivity fees (net of tax) increased 66% compared with the prior year.

Other Operating Data: For the quarter ended March 31, 2014, total payment volume was RUB 149.6 billion ($4.2 billion), an increase of 20% compared with RUB 124.5 billion in the prior year. Average payment net revenue yield was 0.91%, an increase of 19 bps compared with 0.72% in the prior year. The increase in payment volume and average net revenue yield in the first quarter was mainly driven by strong growth in the E-commerce, Financial Services and Money Remittances market segments.

The total average Net Revenue Yield was 1.26%, an increase of 23 bps as compared with 1.03% in the prior year. The total average Net Revenue Yield excluding the effect of inactivity fees was 1.17%, an increase of 18 bps as compared with the same period in the prior year.

The number of active kiosks and terminals was 167,713, an increase of 1% compared with the prior year, primarily driven by an increase in self-service kiosks partially offset by a decrease in other terminals. The number of active Visa Qiwi Wallet accounts was 15.6 million in the first quarter 2014, an increase of 2.6 million, or 20%, as compared with 13.0 million in the first quarter 2013.

Recent Developments

Dividend:QIWI announces that following the determination of first-quarter 2014 financial results its Board of Directors recommended a dividend of USD 29 cents per share. The dividend record date is June 1, 2014, and the Company intends to pay the dividend on June 3, 2014. The holders of ADSs will receive the dividend shortly thereafter.

Changes in Company Reporting: Beginning January 1, 2014, QIWI revised its financial reporting structure such that it has one financial reporting segment. The Company decided to consolidate the Company's previous financial reporting segments, Visa QIWI Wallet and QIWI Distribution, in order to better reflect QIWI's underlying business in light of the growing interconnectedness and interrelation between Visa QIWI Wallet and QIWI Distribution. In addition, in order to provide additional transparency into its core payments-related businesses, QIWI began reporting two components of Total Adjusted Net Revenue, Payment Adjusted Net Revenue and Other Adjusted Net Revenue, in order to highlight different revenue streams of QIWI's business. Payment Adjusted Net Revenue is also reported according to five market segments or market verticals: i) E-commerce, ii) Financial Services, iii) Money Remittances, iv) Telecom, and v) Other. QIWI concluded that presenting its financial information and other operating data in this way would be more appropriate for securities analysts, investors and other interested parties to develop an understanding and evaluate the performance of QIWI's underlying business. For a reconciliation of Total Adjusted Net Revenue, Payment Adjusted Net Revenue and Other Adjusted Net Revenue to gross revenue as included in this earnings release, please see "Non-IFRS Financial Measures and Supplemental Financial Information."

2014 Guidance

QIWI is upgrading its 2014 outlook as compared to its previously announced outlook:

• Total Adjusted Net Revenue is expected to increase by 24% to 26% over 2013• Adjusted Net Profit is expected to increase by 27% to 29% over 2013

This guidance reflects QIWI's current and preliminary view, which is subject to change.

Earnings Conference Call and Audio Webcast

QIWI will host a conference call to discuss first quarter 2014 financial results today at 8:30 a.m. ET. Hosting the call will be Sergey Solonin, chief executive officer, and Alexander Karavaev, chief financial officer. The conference call can be accessed live over the phone by dialing +1 (877) 407-3982 or +1 (201) 493-6780 for international callers. A replay will be available today at 11:30 a.m. ET and can be accessed by dialing +1 (877) 870-5176 or +1 (858) 384-5517 for international callers; the pin number is 13579946. The replay will be available until Wednesday May 28. The call will be webcast live from QIWI's website at https://www.qiwi.ru under the Investor Relations section or directly at http://investor.qiwi.com/.

About QIWI plc.

QIWI is a leading provider of next generation payment services in Russia and the CIS. It has an integrated proprietary network that enables payment services across physical, online and mobile channels. It has deployed over 15.5 million virtual wallets, over 167,000 kiosks and terminals, and enabled merchants to accept over RUB 49 billion cash and electronic payments monthly from over 70 million consumers using its network at least once a month. QIWI's consumers can use cash, stored value and other electronic payment methods to order and pay for goods and services across physical or online environments interchangeably.



Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of, and subject to the protection of, the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding expected total adjusted net revenue, adjusted net profits and net revenue yield, dividend payments, the growth of Visa QIWI Wallet, payment volume growth, and growth in QIWI's distribution network. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance or achievements of QIWI plc. to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Various factors that could cause actual future results and other future events to differ materially from those estimated by management include, but are not limited to, competition, a decline in average net revenue yield, fees levied on QIWI's consumers, regulation, QIWI's ability to grow Visa QIWI Wallet, QIWI's ability to expand geographically and other risks identified under the Caption "Risk Factors" in QIWI's Annual Report on Form 20-F and in other reports QIWI files with the U.S. Securities and Exchange Commission. QIWI undertakes no obligation to revise any forward-looking statements or to report future events that may affect such forward-looking statements unless QIWI is required to do so by law.

QIWI plc.
Consolidated Statement of Financial Position
(in thousands, except per share data)
       
 As of December 31, As of March 31, As of March 31, 
 2013 (audited)2014 (unaudited)2014
 RUBRUBUSD(1)
Assets      
Non-current assets      
Property and equipment 307,500 326,230 9,141
Goodwill and other intangible assets 2,405,645 2,375,818 66,574
Long-term debt instruments  1,376,862 1,652,483 46,305
Long-term loans  10,637 24,177 677
Deferred tax assets 183,333 214,301 6,005
Other non-current assets 38,394 38,614 1,082
Total non-current assets4,322,371 4,631,623 129,785
Current assets      
Trade and other receivables 2,772,297 2,165,402 60,678
Short-term loans  65,430 60,188 1,687
Short-term debt instruments  1,635,291 825,472 23,131
Prepaid income tax 60,537 60,406 1,693
VAT and other taxes receivable 12,478 38,715 1,085
Cash and cash equivalents 11,636,913 8,127,674 227,749
Other current assets 159,264 189,244 5,303
Total current assets16,342,210 11,467,101 321,324
Total assets20,664,581 16,098,724 451,109
Equity and liabilities      
Equity attributable to equity holders of the parent      
Share capital 907 909 25
Additional paid-in capital 1,909,172 1,876,104 52,571
Other reserve 304,186 421,355 11,807
Retained earnings 573,604 1,277,939 35,810
Translation reserve 10,757 16,545 464
Total equity attributable to equity holders of the parent2,798,626 3,592,852 100,677
Non-controlling interest (94,766) (121,894) (3,416)
Total equity2,703,860 3,470,958 97,261
Non-current liabilities      
Long-term borrowings 109,351 142,560 3,995
Long-term deferred revenue 31,629 27,943 783
Deferred tax liabilities 58,630 47,298 1,325
Long-term accounts payable 7,625  --   -- 
Total non-current liabilities207,235 217,801 6,103
Current liabilities      
Short-term borrowings 635 315,805 8,849
Trade and other payables 16,768,973 11,122,414 311,666
Amounts due to customers and amounts due to banks 831,226 758,758 21,261
Income tax payable 10,823 82,098 2,301
VAT and other taxes payable 95,403 97,674 2,737
Deferred revenue 46,233 31,007 869
Other current liabilities 193 2,209 62
Total current liabilities17,753,486 12,409,965 347,745
Total equity and liabilities20,664,581 16,098,724 451,109
       
(1) Calculated using a ruble to U.S. dollar exchange rate of RUB 35.687 to U.S.$1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.
       
QIWI plc.
Consolidated Statement of Comprehensive Income
(in thousands, except per share data)
       
 Three months ended (unaudited)
 March 31, 2013March 31, 2014March 31, 2014
 RUBRUBUSD(1)
       
Revenue  2,532,696  3,259,462  91,335
Operating costs and expenses:      
Cost of revenue (exclusive of depreciation and amortization)  1,476,430  1,688,133  47,304
Selling general and administrative expenses  542,906  582,188  16,314
Depreciation and amortization  26,154  84,294  2,362
Profit from operations 487,206  904,847  25,355
       
Impairment of investment in associates  --   (2,903)  (81)
Other income  11,056 375  11
Other expenses  (1,098)  (5,006)  (140)
Foreign exchange gain / (loss) net  2,603  (2,053)  (58)
Share of loss of associates  (7,691)  (7,311)  (205)
Interest income  4,147  712  20
Interest expense  (6,253)  (10,572)  (296)
Profit before tax 489,970  878,089  24,605
Income tax expense  (136,308)  (189,912)  (5,322)
Net profit 353,662  688,177  19,284
       
Attributable to:      
Equity holders of the parent  365,334  704,335  19,736
Non-controlling interests  (11,672)  (16,158)  (453)
       
Other comprehensive income to be reclassified to profit or loss in subsequent periods      
Exchange differences on translation of foreign operations  (2,107)  (3,012)  (84)
Total comprehensive income net of tax 351,555  685,165  19,199
attributable to:      
Equity holders of the parent  363,975  710,123  19,899
Non-controlling interests  (12,420)  (24,958)  (699)
       
Earnings per share:      
Basic profit attributable to ordinary equity holders of the parent 7.03 13.50 0.38
       
Diluted profit attributable to ordinary equity holders of the parent 7.02 13.27 0.37
       
(1) Calculated using a ruble to U.S. dollar exchange rate of RUB 35.687 to U.S.$1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.
       
QIWI plc.
Consolidated Cash Flow Statement 
(in thousands, except per share data)
       
 Three months ended
 March 31, 2013

(unaudited)
March 31, 2014

(unaudited)
March 31, 2014
 RUBRUBUSD(1)
       
Cash flows from operating activities      
Profit before tax 489,970  878,089  24,605
Adjustments to reconcile profit before income tax to net cash flows generated from operating activities      
Depreciation and amortization  26,154  84,294  2,362
Loss on disposal of property and equipment   2,854  1,301  36
Impairment of investment in associates  --   2,903  81
Foreign exchange loss (gain), net   (33)  2,053  58
Interest income, net  (83,897)  (63,733)  (1,786)
Bad debt expense, net  51,908  62,435  1,750
Share of loss of associates  7,691  7,311  205
Share-based payments  77,683  78,933  2,212
Other  1,255  1,023  29
Operating profit before changes in working capital 573,585  1,054,609  29,552
Decrease in trade and other receivables  1,173,576  526,911  14,765
Increase in other assets  (1,298)  (31,221)  (875)
Decrease in amounts due to customers and amounts due to banks  (251,959)  (72,468)  (2,031)
Decrease in accounts payable and accruals  (5,958,937)  (5,655,583)  (158,477)
Loans issued from banking operations  (26,024)  (4,004)  (112)
Cash used in operations (4,491,057) (4,181,756) (117,179)
Interest received  155,830  73,103  2,048
Interest paid  (3,849)  (6,575)  (184)
Income tax paid   (128,216)  (160,806)  (4,506)
Net cash flow used in operating activities (4,467,292) (4,276,034) (119,820)
Cash flows used in investing activities      
Contribution to associates without change in ownership  --   (10,214)  (286)
Payments for assignment of loans  --   (8,471)  (237)
Purchase of property and equipment  (10,972)  (66,032)  (1,850)
Purchase of intangible assets  (1,453)  (14,799)  (415)
Loans issued  (11,262)  (11,325)  (317)
Repayment of loans issued  4,321  720  20
Purchase of debt instruments  (1,499,952)  (706,846)  (19,807)
Proceeds from settlement of debt instruments  979,316  1,242,313  34,811
Net cash flow used in/generated from investing activities (540,002) 425,346  11,919
Cash flows generated from financing activities      
Exercise of options  --   5,168  145
Proceeds from borrowings  8,870  336,206  9,421
Repayment of borrowings  --   (672)  (19)
Net cash flow generated from financing activities 8,870  340,702  9,547
Effect of exchange rate changes on cash and cash equivalents  2,260  747  21
Net decrease in cash and cash equivalents (4,996,164) (3,509,239) (98,334)
Cash and cash equivalents at the beginning   9,943,160  11,636,913  326,083
Cash and cash equivalents at the end  4,946,996  8,127,674  227,749
       
(1) Calculated using a ruble to U.S. dollar exchange rate of RUB 35.687 to U.S.$1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.


Non-IFRS Financial Measures and Supplemental Financial Information

This release presents Total Adjusted Net Revenue, Payment Adjusted Net Revenue, Other Adjusted Net Revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Profit and Adjusted Net Profit per share, which are non-IFRS financial measures. You should not consider these non-IFRS financial measures as substitutes for or superior to revenue, in the case of Total Adjusted Net Revenue, Payment Adjusted Net Revenue and Other Adjusted Net Revenue; Net Profit, in the case of Adjusted EBITDA; and Adjusted Net Profit, or earnings per share, in the case of Adjusted Net Profit per share, each prepared in accordance with IFRS. Furthermore, because these non-IFRS financial measures are not determined in accordance with IFRS, they are susceptible to varying calculations and may not be comparable to other similarly titled measures presented by other companies. QIWI encourages investors and others to review our financial information in its entirety and not rely on a single financial measure. For more information regarding Total Adjusted Net Revenue, Payment Adjusted Net Revenue, Other Adjusted Net Revenue, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Profit, and Adjusted Net Profit per share, including a quantitative reconciliation of Total Adjusted Net Revenue, Payment Adjusted Net Revenue, Other Adjusted Net Revenue, Adjusted EBITDA and Adjusted Net Profit to the most directly comparable IFRS financial performance measure, which is revenue in the case of Total Adjusted Net Revenue, payment revenue in the case of Payment Adjusted Net Revenue, other revenue in the case of Other Adjusted Net Revenue and net profit in the case of Adjusted EBITDA and Adjusted Net Profit, see Reconciliation of IFRS to Non-IFRS Operating Results in this earnings release.

Payment Adjusted Net Revenue is the Adjusted Net Revenue consisting of the merchant and consumer fees collected for the payment transactions. E-commerce payment adjusted net revenue consists of fees charged to customers and merchants that buy and sell products and services online, including online games, social networks, online stores, game developers, software producers, coupon websites, tickets and numerous other merchants. Financial Services payment adjusted net revenue primarily consists of fees charged for payments accepted on behalf of our bank partners and microfinance companies. Money Remittances payment adjusted net revenue primarily consists of fees charged for transferring funds via money remittance companies. Telecom payment adjusted net revenue primarily consists of fees charged for payments to MNOs, internet services providers and pay television providers. Other payment adjusted net revenue consists of consumer and merchant fees charged for a variety of payments including multi-level-marketing, utility bills, government payments, education services and many others. Other Adjusted Net Revenue primarily consists of revenue from inactivity fees, interest on deposits and on overdrafts provided to agents, cash and settlement services and advertising.

QIWI plc.
Reconciliation of IFRS to Non-IFRS Operating Results
(in millions, except per share data)
       
 Three months ended
 March 31, 2013March 31, 2014

(unaudited)
March 31, 2014
 RUBRUBUSD(1)
       
Revenue 2,533  3,259  91.3
Minus: Cost of revenue (exclusive of depreciation and amortization)  1,476  1,688  47.3
Plus: Compensation to employees and related taxes  227  306  8.6
Total Adjusted Net Revenue 1,284  1,877  52.6
       
Payment Revenue(2) 2,084  2,628  73.6
Minus: Cost of payment revenue (exclusive of depreciation and amortization)(3)  1,372  1,513  42.4
Plus: Compensation to employees and related taxes allocated to payment revenue(4)  188  247  6.9
Payment Adjusted Net Revenue 900  1,362  38.2
       
Other Revenue(5) 449  631  17.7
Minus: Cost of other revenue (exclusive of depreciation and amortization)(6)  104  175  4.9
Plus: Compensation to employees and related taxes allocated to other revenue(4)  38  59  1.7
Other Adjusted Net Revenue 383  515  14.4
       
Payment Adjusted Net Revenue 900  1,362  38.2
E-commerce  249  380  10.6
Financial services  188  375  10.5
Money remittances  71  184  5.2
Telecom  314  312  8.8
Other  78  111  3.1
Other Adjusted Net Revenue 383  515  14.4
Total Adjusted Net Revenue 1,284  1,877  52.6
       
Net Profit 354  688  19.3
Plus:      
Depreciation and amortization  26  84  2.4
Other income  (11)  (0)  (0.0)
Other expenses  1  5  0.1
Foreign exchange (loss) gain, net  (3)  2  0.1
Share of loss of associates  8  7  0.2
Impairment of investment in associates  --   3  0.1
Interest income  (4)  (1)  (0.0)
Interest expenses  6  11  0.3
Income tax expenses  136  190  5.3
Offering expenses  20  --   -- 
Share-based payments expenses  78  79  2.2
Adjusted EBITDA 611  1,068  29.9
Adjusted EBITDA margin47.6%56.9%56.9%
       
Net profit 354  688  19.3
Amortization of fair value adjustments  6  22  0.6
Offering expenses  20  --   -- 
Share-based payments expenses  78  79  2.2
Effect of taxation of the above items  (1)  (4)  (0.1)
Adjusted Net Profit 455  785  22.0
       
Adjusted Net Profit per share:      
Basic  8.76  15.04  0.42
Diluted  8.75  14.78  0.41
       
Shares used in computing Adjusted Net Profit per share      
Basic  52,000  52,177  52,177
Diluted  52,048  53,078  53,078
       
(1) Calculated using a ruble to U.S. dollar exchange rate of RUB 35.687 to U.S.$1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.
(2) Payment revenue primarily consists of the merchant and consumer fees charged for the payment transactions.
(3) Cost of payment revenue (exclusive of depreciation and amortization) primarily consists of transaction costs to acquire payments from our customers payable to agents, mobile operators, international payment systems and other parties.
(4) The Company does not record the compensation to employees and related taxes within cost of revenue separately for payment revenue and other revenue, therefore it has been allocated between payment revenue and other revenue in proportion to the relevant revenue amounts for the purposes of the reconciliation presented above.
(5) Other revenue primarily consists of revenue from inactivity fees, interest on deposits and on overdrafts provided to agents, cash and settlement services and advertising.
(6) Cost of other revenue (exclusive of depreciation and amortization) primarily consists of direct costs associated with other revenue and other costs, including but not limited to: compensation to employees and related taxes allocated to other revenue, costs of call-centers and advertising commissions.
 
QIWI plc.
Other Operating Data
       
 Three months ended
 March 31, 2013March 31, 2014March 31, 2014
 RUBRUBUSD (1)
       
Payment volume (billion)(2) 124.5  149.6  4.2
E-commerce  14.6  17.4  0.5
Financial services  31.1  47.3  1.3
Money remittances  6.0  13.1  0.4
Telecom  61.6  58.4  1.6
Other  11.3  13.2  0.4
Payment adjusted net revenue (million)(3) 900.5  1,362.3  38.2
E-commerce  248.7  379.7  10.6
Financial services  188.3  375.4  10.5
Money remittances  71.2  184.2  5.2
Telecom  314.4  312.3  8.8
Other  77.9  110.7  3.1
Payment average net revenue yield0.72%0.91%0.91%
E-commerce 1.71% 2.18% 2.18%
Financial services 0.61% 0.79% 0.79%
Money remittances 1.18% 1.40% 1.40%
Telecom 0.51% 0.53% 0.53%
Other 0.69% 0.84% 0.84%
Total average Net Revenue Yield 1.03% 1.26% 1.26%
Active kiosks and terminals (units)  166,154  167,713  167,713
Active Qiwi Wallet accounts(4)  13.0  15.6  15.6
       
(1) Calculated using a ruble to U.S. dollar exchange rate of RUB 35.687 to U.S.$1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.
(2) Payment volume by market segments and consolidated payment volume consist of the amounts paid by our customers to merchants included in each of those market segments less intra-group eliminations.
(3) Payment Adjusted Net Revenue is calculated as the difference between Payment Gross Revenue and Payment Costs. Payment Gross Revenue primarily consists of merchant and consumer fees. Payment Costs primarily consist of commission to agents.
(4) Active VISA Qiwi Wallet accounts calculated on a yearly basis, i.e. an active account is an account that had at least one transaction within the last 12 months from the reporting date.


In this release, Russian ruble (RUB) amounts have been translated into U.S. dollars at a rate of RUB 35.687 to U.S. $1.00, which was the official exchange rate quoted by the Central Bank of the Russian Federation as of March 31, 2014.

CONTACT: Yakov Barinskiy Head of Investor Relations +7.499.709.0192 ir@qiwi.com

Source: QIWI plc


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