Prospectus Summary
PROSPECTUS SUMMARY This summary highlights information contained in more detail elsewhere in this prospectus. This summary does not contain all the information that you should consider in making your investment decision. Before deciding to invest in the ADSs, we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated financial statements, including the notes thereto, included in this prospectus.Our Mission
Our mission is to improve people’s daily lives by developing innovative, highly relevant, world-class mobile services.
We operate a two-sided Super App business model which we believe is unique: the Kaspi.kz Super App for consumers and the Kaspi Pay Super App for merchants and entrepreneurs. The Kaspi.kz Super App is Kazakhstan’s most recognized consumer mobile app, according to KResearch, with 13.5 million average monthly active users (“Average MAU”) as of September 30, 2023, 65% of whom access our services daily (“Average DAU”), which is one of the highest levels of daily engagement among selected major mobile applications globally as of June 30, 2023, according to the ADL Report.
Ratio of Average DAU to Average MAU
Source: data.ai, ADL Report (as of June 30, 2023).
Increased use of our existing products by merchants and consumers, along with a growing range of new products, facilitates a greater number of transactions across more areas of household spending and merchants’ business activity. As of September 30, 2023, the number of Monthly Transactions per Active Consumer was 68.
Our offerings include payments, marketplace and fintech solutions for both consumers and merchants. We believe our business model, reinforced by our highly recognizable brand and continuing product innovation, generates powerful network effects, which have resulted in growth and strong financial performance.
For the year ended December 31, 2022, our consolidated revenue, consolidated net income and adjusted net income was ₸1,271 billion ($2,678 million), ₸589 billion ($1,241 million) and ₸617 billion ($1,301 million), respectively, which represented an increase of 44%, 35% and 36%, respectively, compared to the year ended December 31, 2021.
Our Super App Model
Being “Super App first” is at the core of everything we do and is a key factor behind our success. We call our mobile applications Super Apps because, unlike single-purpose apps, our apps integrate different and complex services that are used on a daily basis and are found in one place, in a way that is simple and seamless for users.
Our Super Apps
Note: Data as of September 30, 2023.
With the Kaspi.kz Super App, consumers can shop online with fast, and in most cases free, e-Commerce and e-Grocery delivery, use m-Commerce to find and shop at local merchants, book travel and holidays with Kaspi Travel, pay with Kaspi QR throughout Kazakhstan, shop with our buy-now-pay-later (“BNPL”) products, pay their household bills and save for the future, among other services. Consumers’ use of these services is rewarded through Kaspi Bonus, our loyalty points program, which can then be applied towards future purchases and payments on our Platforms. With integrated Government Services, consumers can also access digital documents, including passports, renew their driving licenses, and transfer car ownership.
With the Kaspi Pay Super App, merchants can sell products and services online using e-Commerce or list their businesses and offers using m-Commerce, organize nationwide delivery by connecting to Kaspi Delivery Smart Logistics Platform, run product ad campaigns with Kaspi Advertising, participate in our promotional events and access merchant financing through our Fintech Platform. Merchants can also issue and instantly settle invoices, accept payments, pay suppliers and track their turnover, among other things. Merchants also have access to Government Services, including tools to initially register their business, issue fiscal receipts for all types of payments, calculate and pay their taxes, and file tax reports. Kaspi Classifieds allows merchants to advertise their used and new goods, services and jobs to consumers.
We believe that the combination of integrated merchant and consumer Super Apps, with multiple services, creates a more powerful business model than single-purpose payments or shopping apps. Users of our Super Apps value our existing products and, as a result, they are able to quickly adopt new products as they are introduced. We believe that our integrated merchant and consumer Super Apps enable a faster user adoption of new features and products with lower marketing and operating costs than if the same service was provided through separate, differently branded apps.
Our Unique Value Proposition
We believe we have a unique combination of different consumer and merchant services as compared to other leading global super apps and other digital platforms.
Products and Services Comparison
Source: ADL Report.
Our Platforms
As we deliver various mobile services to consumers and merchants through our Super Apps, we combine specific services and products into the following highly integrated and complementary platforms.
Payments Platform
Our Payments Platform facilitates transactions between and among merchants and consumers. For consumers, our Payments Platform is a highly convenient way to pay for shopping transactions, pay regular household bills and make peer-to-peer payments. For merchants, our Payments Platform enables them to accept payments online and in-store, issue and instantly settle invoices, pay suppliers and monitor merchants’ turnover. Our Payments Platform is our main customer acquisition tool. We consider our Payments Platform to be fundamental for high levels of customer engagement. Payments Platform proprietary data facilitates informed decision-making across multiple areas of our business.
For the year ended December 31, 2022, net income, adjusted net income and TPV of our Payments segment were ₸199 billion ($420 million), ₸209 billion ($440 million) and ₸19,913 billion ($42 billion), respectively, which represented an increase of 58%, 59% and 54%, respectively, compared to the year ended December 31, 2021. For the year ended December 31, 2022, our Payments segment accounted for 25% of our total segment revenue.
Key services in our Payments Platform include:
Consumer Services:
Merchant Services:
Marketplace Platform
Our Marketplace Platform is fully integrated into our Super Apps and connects both online and offline merchants with consumers, enabling merchants to increase their sales using an omnichannel strategy and consumers to purchase a broad selection of products and services. Other than in e-Grocery, our Marketplace Platform is a “3P” model, enabling third-party merchants to sell their products directly to consumers.
For the year ended December 31, 2022, net income, adjusted net income and GMV of our Marketplace segment were ₸152 billion ($321 million), ₸156 billion ($328 million) and ₸2,872 billion ($6 billion), respectively, which represented an increase of 53%, 53% and 56%, respectively, compared to the year ended December 31, 2021. For the year ended December 31, 2022, our Marketplace segment accounted for 18% of our total segment revenue.
Key services in our Marketplace Platform include:
Third-party (“3P”) Marketplace:
First-party (“1P”) Marketplace:
Delivery Services:
Advertising Services:
Fintech Platform
Our Fintech Platform provides consumers with BNPL, finance and savings products; and merchants with merchant finance services. All of our Fintech services can be accessed digitally through our Super Apps with users identified using Kaspi ID biometrics technology.
With our proprietary technology, we originate 99.9% of our lending transactions in less than six seconds, while maintaining a consistently low Cost of Risk. We lend only in local currency and we fund our financing products mainly using Kaspi Deposits.
We believe that Fintech Platform’s profitability is a function of our Super App business model’s scalability and network effects, as well as the low-risk nature of our Fintech products, our highly attractive deposit products and our ability to leverage unique proprietary transactional, behavioral and shopping data that we have from Kaspi.kz Super App usage.
For the year ended December 31, 2022, net income, adjusted net income and TFV of our Fintech segment were ₸237 billion ($500 million), ₸253 billion ($533 million) and ₸5,411 billion ($11 billion), respectively, which represented an increase of 14%, 14% and 25%, respectively, compared to the year ended December 31, 2021. The majority of our revenue is generated from our Fintech segment. For the year ended December 31, 2022, our Fintech segment accounted for 57% of our total segment revenue.
Key services in our Fintech Platform include:
Government Services
Our Government Services is our GovTech platform that provides digital access to everyday government services. Government Services offered through the Kaspi.kz Super App include Digital Documents, which enable consumers to store and access ID documents in the Kaspi.kz Super App, renew driving licenses, transfer car ownership and register business. Entrepreneurs can also register new businesses, calculate and pay taxes, and file tax reports.
Although we do not generate revenue directly from Government Services, it is synergetic with our other products and contributes to higher Super App user engagement.
Our Competitive Strengths
We have established a strong operational and financial track record and believe that the following competitive strengths have contributed and are expected to continue to contribute to our long-term growth and success.
Kazakhstan’s leading Super Apps with powerful self-reinforcing network effects
With our popular products and services available through our Super Apps, consumers and merchants can manage their day-to-day household and business needs in one place. Our products are highly integrated, which we believe improves the user experience and is difficult for competitors to replicate.
For consumers, the Kaspi.kz Super App is the most recognized mobile app in Kazakhstan. The depth and breadth of services and products available through the Kaspi.kz Super App makes it a one-stop solution where consumers can shop, pay and manage their personal finances. Our Average DAU to Average MAU ratio reached 65% in September 2023, which is one of the highest levels of daily engagement among selected major mobile applications globally as of June 30, 2023, according to the ADL Report.
For merchants, the Kaspi Pay Super App has quickly become the merchants’ digital platform of choice in Kazakhstan, with merchants attracted to its selling proposition of instant access to our large and highly engaged consumer bases.
Our Kaspi Pay Super App is a one-stop solution where merchants can accept digital payments, increase their sales, reach new customers and access our full range of value-added services, including merchant financing, Kaspi Advertising and Kaspi Delivery.
With our two-sided Super App business model, the Kaspi.kz and Kaspi Pay Super Apps connect and facilitate transactions between and among consumers and merchants: popular payments and shopping products on our platforms attract more customers to our platforms, which in turn attracts more merchants, which in turn leads to more consumers.
Our product and service offerings are further supported by financing options for both consumers and merchants through our Fintech Platform, which contribute to higher engagement and merchant retention. These self-reinforcing network effects create additional value for users and enable us to rapidly scale additional services.
Our common brand and single Super Apps technology platform lead to high levels of operational efficiency and offer a powerful mix of scale and profitability. We aim to keep growing transaction volumes, revenue and net income by increasing engagement and by expanding the range of services available through our Super Apps.
We leverage extensive proprietary data and customer feedback to plan future product upgrades and launches. We continue to see numerous opportunities to grow our range of Super App services and aim to keep adding more transaction-based products.
We typically target large addressable markets, such as grocery and travel, where scale translates into meaningful net income and net income growth. As a result, we believe our Super App business model creates a structurally more profitable business than a stand-alone equivalent service model.
Leading and trusted brand
High-quality, innovative digital services available through our Super Apps have helped us make the “Kaspi” brand among the most recognized and popular brands in Kazakhstan. Based on the results of a survey conducted by KResearch for October 2022 – September 2023, Kaspi.kz was number one in brand awareness across our major product categories:
Extensive proprietary technology and data capabilities
We believe that our proprietary technology and data capabilities provide us with a significant competitive advantage. We prioritize building our own technology, leverage machine learning and artificial intelligence to handle large volumes of data, process high numbers of transactions, orders, payments, consumer finance and deposit applications, make real-time decisions and handle customer interactions.
Information collected from transactions, user sessions, loan applications and consumer and merchant behavior provide us with large volumes of proprietary data, which we use to power our artificial intelligence and machine learning algorithms and provide a highly personalized user experience, manage risk and improve all aspects of our business.
The roll out of Kaspi Postomats, for example, was enhanced by our payments and shopping transaction data, which we used to identify the most convenient locations for our consumers. As a result, 74% of our Marketplace Active Consumers are located within five-minute walking time (approximately 400 meters) from a Kaspi Postomat, as of September 30, 2023.
Moreover, by leveraging our data and machine learning capabilities, our Kaspi Delivery Smart Logistics Platform builds routes for every phase of the delivery chain, including first mile, sorting, transit between cities and all last mile delivery options. The system selects the closest last mile courier, resulting in a significantly improved delivery efficiency.
Our data scientists leverage our technology and proprietary data to make our credit and transaction risk management procedures more efficient. Our risk models analyze over 3,600 data points in order to assess the credit risk of a consumer and allow us to make 99.9% of consumer loan approvals within six seconds, resulting in consistently low Cost of Risk in our Fintech Platform.
We developed our AI-powered virtual assistant several years ago and now leverage this powerful tool across many of our consumer-facing functions.
With the launch of Kaspi B2B Payments, e-Grocery, Kaspi Classifieds and Kaspi Shopping Register, we expect to be able to capture even more unique transaction observations and leverage these to better meet our customers’ needs and further improve the lending decisions we make, reduce risk, make our business more efficient and increase our competitive advantage.
Integrated technology infrastructure
Over the years, we have continuously invested in our underlying technology infrastructure to achieve an integrated end-to-end user experience and control the transaction and delivery value chain, which we believe provides us with a competitive advantage.
In 2019, we launched our proprietary payments network driven by Kaspi QR technology. We provide end-to-end payments functionality between consumers using the Kaspi.kz Super App and merchants integrated with our Household Bill Payments product or using the Kaspi POS Terminal or Kaspi Mobile POS. In 2022, we processed more transactions through our proprietary payment network than were processed by Mastercard and Visa combined in Kazakhstan.
Kaspi Delivery Smart Logistics Platform is our in-house developed technology platform designed to provide a best-in class experience across the entire delivery value chain from order pick up at the merchant to delivery to the consumer’s door or Kaspi Postomat. Our platform is further reinforced by 5,223 Kaspi Postomats, which we believe is the largest last-mile delivery infrastructure in the country.
We leverage our biometrics technology to enable transactions, which prevents fraud and provides extra security to our consumers. Face recognition technology also enables transactions in our Super Apps and at our ATMs.
Our four data centers ensure a 99.99% availability across our platforms and services.
User-centric approach leads to innovative and highly relevant products
We believe that the popularity of our Super Apps is the result of our leading digital product development and relentless focus on a high-quality user experience. We work hard to ensure that our customers receive a seamless service and delightful experience. We also aim to ensure that our products are secure and meet the highest quality standard.
As a technology company, when it comes to innovation, we focus on the needs of our users. Kaspi B2B Payments, for example, was born out of customer behavior on our Household Bill Payments and P2P Payments products. We are a user-centric organization and work to ensure that everyone involved in the creation and execution of our products does so with a user-centered design philosophy.
We always proactively seek consumer feedback to evaluate if we are delivering on our mission. Through our Kaspi.kz Super App, we send push notifications asking our consumers to evaluate the quality of specific services and provide us with feedback, shortly after use. On average, approximately 200,000 consumers per month give us such feedback. The data and results we derive from feedback form an integral part of our product development process. For our employees, consumer feedback forms the main KPIs by which they are held accountable.
Execution-driven corporate culture fostered by a highly motivated long-standing team
Our corporate culture is central to our success and is based on our mission of leveraging technology to improve people’s daily lives. The key members of the management team have each been with Kaspi.kz for more than ten years. The team combines both global and regional perspectives.
As a large, well-established organization, we maintain the conviction that staying agile and innovative is essential for any enterprise’s continued success. Therefore, we aim to foster an environment that inspires teamwork and continuous improvement with a goal to relentlessly deliver the best possible experience to our customers.
The expansion of our equity-settled LTIP program is another step aimed at differentiating our corporate culture in Kazakhstan and ensuring our best employees are incentivized over the long term.
Market Size and Growth Opportunity
Our total addressable market is supported by a growing economy in Kazakhstan and digitalization trends across our current core markets, including payments, services, retail, travel and consumer lending.
The largest economy in Central Asia
Kazakhstan is the largest economy by GDP in the Central Asian region with 2022 nominal GDP of $220.6 billion, according to the World Bank.
The country’s economy demonstrated strong growth between 2016 and 2019, with a real GDP CAGR of 4.2%, according to ADL. While the global recession in 2020, triggered by the COVID-19 pandemic, led to GDP decreasing by 2.5% in 2020, Kazakhstan’s economy rebounded quickly, with GDP growing by 4.3% in 2021 and 3.2% in 2022, according to Qazstat.
Going forward, Kazakhstan’s real GDP is expected to grow at a CAGR of 3.5% between 2022 and 2027, according to the ADL Report.
Young and fast-growing population that is well-disposed to digital
Kazakhstan’s population is young and growing faster than many other emerging economies such as India, Turkey, Indonesia and Mexico. As of December 31, 2022, Kazakhstan’s population was approximately 20 million. The growth rate of the country’s population has outpaced many other countries, with a 9% increase between 2017 and 2022, according to the IMF and Qazstat.
Kazakhstan’s population demographics provide a solid foundation for a growing economy, underpinned by an expanding labor force and consumer base and higher adoption of new technologies and e-commerce services, according to the ADL Report, with nearly 48% of Kazakhstan’s population under 30 years old as of 2022 and a median age in the country of 29.5 years in 2021.
Addressable markets in Kazakhstan
Currently, our primary addressable market consists of the following industry verticals (each, in Kazakhstan):
According to ADL, all of our addressable markets in Kazakhstan are projected to continue expanding with at least a double-digit CAGR between 2022 and 2027.
Addressable markets growth(1)
Source: ADL Report.
Our Growth Strategy
We aim to grow the number of transactions between consumers and merchants, by ensuring that our existing products are adopted by more users and that we launch new products which we expect to lead to the enlargement of our addressable markets and an increase in loyalty to our brand, further reinforcing the network effects inherent in our business model. Our core growth initiatives are based upon the following pillars:
Capitalizing on structural growth in digitalization
Over the next decade, we believe digitalization will remain a powerful driver of economic transformation globally, and particularly in Kazakhstan and the surrounding region, where consumers are increasingly demanding digital solutions.
Merchants and entrepreneurs in Kazakhstan are still in the early stages of experiencing the benefits that come from digitalization, and the only way to meet customers’ continually rising expectations is by adopting innovative, best-in-class technology. We believe that we are the largest and most advanced technology company in our region, as we have successfully designed and executed our Super App business model, incorporating a wide range of digital products and services across multiple verticals.