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Edited Transcript of QIWI earnings conference call or presentation 16-May-19 12:30pm GMT

Q1 2019 Qiwi PLC Earnings Call

NICOSIA Jun 1, 2019 (Thomson StreetEvents) -- Edited Transcript of Qiwi PLC earnings conference call or presentation Thursday, May 16, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexander Karavaev

Qiwi plc - Former CFO

* Sergey A. Solonin

Qiwi plc - CEO & Director

* Varvara Kiseleva

Qiwi plc - Interim CFO & Head of IR

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Conference Call Participants

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* Andrey Mikhailov

Sova Capital Limited, Research Division - Research Analyst

* Maria Sukhanova

BCS Financial Group, Research Division - Research Analyst

* Svetlana Sukhanova

Sberbank CIB Investment Research - Senior Analyst

* Ulyana Lenvalskaya

UBS Investment Bank, Research Division - Director and Analyst of Media & Technology

* Vladimir Bespalov

VTB Capital, Research Division - Analyst of Industrials, Transportation, Infrastructure, Chemicals & Equities and Internet Analyst

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Presentation

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Operator [1]

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Good day, everyone, and welcome to the QIWI First Quarter 2019 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the call over to Mrs. Varvara Kiseleva, interim acting CFO of QIWI. Please go ahead.

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Varvara Kiseleva, Qiwi plc - Interim CFO & Head of IR [2]

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Thank you, operator, and good morning, everyone. Welcome to the QIWI's First Quarter 2019 Earnings Call. I am Varvara Kiseleva, Interim CFO. And with me today are Sergey Solonin, our Chief Executive Officer; and Alexander Karavaev, our Chief Financial Officer.

A replay of this call will be available until Thursday, May 30, 2019. Access information for the replay is listed in today's earnings press release, which is available on our Investor Relations website at investor.qiwi.com. For those listening to the replay, this call was held and recorded on May 16, 2019.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risks and uncertainties. QIWI cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect events that occur after this call. Please refer to the company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

During today's call, management will provide certain information that will consist of non-IFRS financial measures such as adjusted net revenue, adjusted EBITDA, adjusted net profit and adjusted net profit per share. Reconciliations to IFRS measures and certain additional information are also included in today's earnings press release.

With that, we will begin by turning the call over to Sergey Solonin, our Chief Executive Officer.

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Sergey A. Solonin, Qiwi plc - CEO & Director [3]

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Thank you, Varvara, and good morning, everyone. Thanks for joining us today. I'm glad to share our first quarter results with you today. This quarter, we demonstrated continued solid performance of our Payment Services business, delivered 32% segment net revenue and 35% segment net profit growth, setting up a strong start of the year. Our growth was driven by robust performance of our key areas: Payment Services for betting-related merchants; digital money remittances and projects we developed for self-employed and B2B2C customers as well as by a general expansion of our payment ecosystem.

With technologies that continued strong performance of our Payment Services business provides stable foundation for future growth, we'll continue to enhance our key products and use cases and develop new projects in order to offer clients in our key markets larger (inaudible) more convenient solutions and services.

This quarter, we continued to invest in the development of our ecosystem, mostly our retail-focused Financial Services projects, SOVEST, Rocketbank while Tochka project was transferred to the new entity, JCS Tochka, as we have announced earlier. I will walk you through some latest developments in this segment in just a moment.

We believe that our performance provides a solid foundation for the expansion of our (inaudible) business. Significant cash flows that are generated by our core payments business support our strategy and allow us to carry with investing in new projects in order to further build up our ecosystem, diversify our operations and ultimately, secure long-term growth prospects of our company.

Now onto some operating highlights. For the first quarter of 2019, our Payment Services segment volume increased by 31% to reach RUB 326 billion, driven by the significant growth in E-commerce and Money Remittance verticals, which grew 79% and 26%, respectively. The growth was largely driven by the secular trends and development of our focused merchant and customer categories, reinforced by the expansion of our product offering.

Our total Consumer Financial Services segment payment volume reached RUB 5 billion for the first quarter of 2019, more than doubling as compared to the same period of the prior year.

During the last several quarters, we have significantly advanced in developing our SOVEST project, enhanced the product offering by introducing consumer paid value-added options and other technological features and improved in several key operating dimensions. We optimized the distribution network and improved our cost of risk. All these factors helped us to reach positive consumer unit economics. We see an ample room for the development of service project going forward. We continue testing our multibank model together with AK Bars Bank and may contemplate new potential partnerships to support and reinforce the steering of the project.

Our SME segment, which we developed through Tochka multibanking platform together with Otkritie Bank continued to demonstrate robust operating and financial performance in the first quarter 2019 while we were finally able to transfer this project to JCS Tochka as previously agreed.

At the same time, we continued to develop a new Rocketbank strategy and product offering, assessing the market and testing our policies regarding consumer behavior and preferences. We aim to provide the update on the Rocketbank midterm strategy by the end of the year.

Strong growth in our key market verticals converted into robust Payment Services segment net revenue growth. And together with our SME and CFS segments contributed to the overall robust performance of our business. Varvara will walk you through the first quarter numbers in more details in just a moment while I would like to walk you through some recent developments.

I'm glad to announce that this quarter, we are returning to paying out dividend and our Board of Directors approved the all-time high payout in terms of cents per share per quarter. We believe that distributing excess cash to the shareholders is good practice and aim to provide maximum transparency and consistency in this respect going forward.

Last but not the least, I'm happy to announce that our Board of Directors has appointed Varvara Kiseleva as our Interim Chief Financial Officer. Varvara has served as our Head of Investor Relations for more than 5 years, while she also has overseen certain other financial functions such as corporate finance, fundraising and annual and quarterly reporting.

I truly believe that Varvara's dedication, leadership and deep knowledge of the company makes her the best positioned for her new role. We continue to search for Alexander's replacement having in mind both internal and external candidates, and we'll update you in due course about any progress.

And before turning the call to Alexander, I would like to thank him again for his enormous contribution to the success of our business. Alexander?

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Alexander Karavaev, Qiwi plc - Former CFO [4]

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Thank you, Sergey, and good morning, everyone. Now onto our numbers. First quarter 2019 total adjusted net revenue increased by 31% to reach RUB 5.4 billion, up from RUB 4.1 billion in the first quarter of 2018. The increase was mainly driven by Payment Services and Consumer Financial Services segments net revenue growth, slightly offset by negative net revenue contribution of Rocketbank segment.

Payment Services segment net revenue increased 32% to reach RUB 4.8 billion compared to RUB 3.7 billion in the prior year.

Payment Services payment adjusted net revenue increased 30% to RUB 4.2 billion, up from RUB 3.2 billion in the prior year as a result of the net revenue growth in our E-commerce and Money Remittance verticals, which grew 40% and 33%, respectively, partially offset by a slight decline in net revenue in other verticals.

Our financial results in this segment were predominantly driven by an increase in volumes (inaudible). Our Payment other adjusted net revenue yield was down by 1 basis point year-over-year, driven by the decline across all categories, offset by the shift in product mix as we focused on increasing the scale of our business and offering our clients a broad range of payment solutions that may have different marginality for us.

Payment Services other adjustment net revenue increased 48% to RUB 661 million as compared to RUB 445 million in the prior year, as a result of growth of revenue from fees for inactive accounts and unclaimed payments and interest revenue.

Consumer Financial Services segment net revenue was RUB 218 million for the first quarter 2019 as compared to RUB 3 million in the first quarter of the prior year, showing the growth on the SOVEST project underpinned by the introduction of new consumer paid value added options.

Net revenue of the SME segment decreased by 2% to RUB 412 million for the first quarter 2019 as compared with RUB 420 million in the prior year. This result was mostly driven by 2 current effects: increase in the number of clients and corresponding expansion of the operations of Tochka multibank project; and the transfer of Tochka operations to JSC Tochka that happened on February 1, 2019. As a result of this transfer, we stopped recognizing a certain portion of Tochka project's revenue associated with information and technology service agreements with Otkritie Bank.

Moving on to expenses. Strong operating performance of our Payment Services business that continued to generate substantial cash flows supported our investment in the development of our new projects, though our net revenue growth significantly outpaced the expense growth underpinning improving operating leverage this quarter. This being said, adjusted EBITDA increased 61% to RUB 2.3 billion from RUB 1.5 billion in the prior year. Adjusted EBITDA margin was 44% compared to 35% in the prior year. The adjusted EBITDA margin expansion primarily resulted from adjusted net revenue growth offset by several factors including the increase in personnel expenses and related taxes, excluding effect of share-based payments, higher SG&A compensation to employees and related taxes as well as slight increase in [credit book] expenses incurred due to scaling up of the SOVEST project.

Group adjusted net profit increased 53% to RUB 1.7 billion from RUB 1.1 billion in first quarter of the prior year. Adjusted net profit was largely affected by the same factors as adjusted EBITDA.

Payment Services segment net profit increased 35% to RUB 3 billion compared with RUB 2.2 billion in the prior year, driven primarily by Payment Services segment net revenue growth and certain expenses savings that will be caught up during the year.

Consumer Financial Services segment net loss was RUB 532 million in the first quarter 2019 as compared to a net loss of RUB 679 million in the same period of the prior year, resulting from the expansion of the operations of the SOVEST project and improvement of the user economics that Sergey previously mentioned.

SME segment net loss was RUB 5 million as compared to RUB 153 million in the first quarter of 2019. Substantial reduction of SME segment net loss resulted primarily from the growth and development of the Tochka business.

Rocketbank segment net loss was RUB 490 million for the first quarter 2019 as compared to a net loss of RUB 73 million for the same period in 2018. The substantial increase in net loss was primarily driven by expenses incurred in connection with transfer and commencement of Rocketbank operations in QIWI, including primarily personnel expenses as well as client acquisition and marketing costs.

Finally, as you saw in our earnings release, following the determination of the first quarter 2019 financial results, our Board of Directors approved a dividend of $0.28 per share. In accordance with the decision of the Board, the company aims to distribute between 65% to 85% of its adjusted net profit for 2019, starting from the first quarter 2019. The Board of Directors reserves the right to decrease the dividend on a quarterly basis as it deems necessary so that the total annual payout is in accordance with the target range provided, although the payout ratios for each of the quarter may vary and be well outside of this range. It remains a long-term intention of the company to distribute all excess cash to shareholders.

Now onto our guidance. Firstly, I would like to answer the certain accounting changes and assumptions that are embedded in our 2019 guidance. We have stopped, starting from February 1, 2019, to recognize part of the Tochka revenues appreciated with information and technology service agreements with Otkritie Bank for providing services to Tochka clients that have their accounts with Otkritie Bank as Tochka business was transferred to (inaudible), JSC Tochka. Such revenues were recognized in full for the full year 2018. However, they are only being recognized for 1 month in 2019. For the avoidance of doubt, only the revenues related to Tochka clients that have their accounts with Qiwi Bank are recognized as QIWI group revenues starting from February 1, 2019. We correspondingly account JCS Tochka as equity accounted associate.

Further, we believe that the financial results of Rocketbank as well as underlying business trends and targets of this segment will not change materially throughout the year and (inaudible) Corresponding (inaudible) corresponding estimates into our full year guidance. However, we have the right to adjust the Rocketbank strategy and corresponding financial forecasts for the segment throughout the year based on the results of our review of the Rocketbank strategy.

Given all the above, we upgrade our 2019 guidance to reflect strong performance of our Payment Services business and underlying trends that we currently observe. We expect group adjusted net revenue to increase by 9% to 15% over 2018; Payment Services segment net revenue to increase by 19% (sic) [20%] to 25% over the last year; group adjusted net profit to increase by 40% to 50% over 2018; while Payment Services segment net profit is expected to increase by 19% (sic) 20% to 25% over -- from '18, in line with the net revenue growth.

Although we show our first quarter results as a solid foundation for future growth, certain other factors remain beyond our control, and hence, we will provide the revised guidance in the course of the year.

And lastly, on a personal note, I would like to thank Sergey, our team and our Board of Directors for their invaluable support all these years. Also, my sincere congratulations to Varvara in respect of her new role. I truly enjoyed being a part of QIWI for all these years and wish QIWI every success in the future. I also wish Varvara every success in her new role.

With that, operator, please open up the call for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Ulyana Lenvalskaya with UBS.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [2]

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This is Ulyana from UBS. My first question will be on the number of e-wallets. This quarter, you managed to add quite a lot, almost 1 million of new e-wallets. Could you please tell us about the key drivers or the categories where these customers are kind of appearing?

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Alexander Karavaev, Qiwi plc - Former CFO [3]

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Ulyana, it's Alexander. So it is primarily coming from actually same growth points, primarily from E-commerce and Money Remittances. So basically, this is a result of development of the B2B2C ecosystem and general increase of the volumes of the company.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [4]

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Okay. So I remember a few quarters ago, we were discussing sort of the total number of customers reaching certain situations. So now with this development of E-commerce and -- so self-employed and B2B2C, would it be fair to say that you see new opportunities, so?

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Alexander Karavaev, Qiwi plc - Former CFO [5]

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Well, we certainly see new opportunities, primarily, I mean, around the growth of the average spend per wallet so to say because we see the increasing engagement of the user. So although in terms of number of new consumers as well. But again, we are tipping to a kind of new market and some of those markets we are just creating like self-employed. So it is very difficult to estimate the total size of those markets yet. So -- but we generally see a lot of opportunities, at least in terms of the substantial increase of volumes.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [6]

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Okay. And the second question will be on SOVEST's net revenue yield. It's now almost 4.5%. Where do you see the normalized level? How should we estimate this going forward?

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Alexander Karavaev, Qiwi plc - Former CFO [7]

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I think we still have a certain room for improvement there. So we have already achieved quite substantial levels. It obviously will depend on our promo campaign for some of those made in the future. But we, as you remember, a couple of years ago when we announced SOVEST, we were guiding somewhat towards north of 5%. So this is something that we are going to be achieving within the next several months I'd say.

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Operator [8]

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Our next question comes from the line of Vladimir Bespalov of VTB Capital.

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Vladimir Bespalov, VTB Capital, Research Division - Analyst of Industrials, Transportation, Infrastructure, Chemicals & Equities and Internet Analyst [9]

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Congratulations on very strong numbers. My first question will be on your EBITDA margin for the quarter. It was very strong, but it looks like the trend, like it outpaces significantly both the revenue growth and the net profit growth. Should we expect this to stay like this? Was there something one-off maybe behind this strong performance of EBITDA margin? So maybe you could provide some color on that.

And the -- also a question on your revenue guidance for the full year. It implies a pretty significant slowdown compared to the first quarter of 2019. So what is behind that? Are you trying to be cautious? Or you see some maybe headwinds for the top line growth?

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Sergey A. Solonin, Qiwi plc - CEO & Director [10]

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Thank you for your question. First of all, on the EBITDA margin, we believe it should stay like this. So we really see quite a substantial kind of improvement. So we had, to a certain extent, a one-off kind of effect in Q1 because we are now reestablishing our long-term incentive program for the wide variety of employees. And part of those kind of cost savings will be caught up in Q2 and afterwards. But in general, the margins that we achieved, especially in Payment Services, they are more or less (inaudible) given the scale effect.

On the revenue then, look, first of all, it's not -- I mean, we are generally conservative given that we really have new markets that we're exploring. And the base -- I mean, we already achieved quite a high base last year, generally speaking, because we had substantial improvement across all the key categories in Q3 and Q4. But it still implies 20-plus percent growth for all the key categories for the remaining quarters, so we believe it's quite challenging. But we are pretty sure we will be there.

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Vladimir Bespalov, VTB Capital, Research Division - Analyst of Industrials, Transportation, Infrastructure, Chemicals & Equities and Internet Analyst [11]

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Okay. But just to clarify. Your guidance for the full year is between 9% and 15% for adjusted net revenue, right? But you grew 31%. If you grow like 20%, it should be higher, no? Did I misunderstand something?

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Alexander Karavaev, Qiwi plc - Former CFO [12]

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Yes. I mean that's exactly right. It's actually the nature of (inaudible). First of all, I think we tried to make that sort of clear in the press release. So we have deconsolidated Tochka business. So basically, completed the transaction that we announced a month ago with (inaudible) we're changing the accounting for revenue. While the Tochka business is continuing to perform very well, but we're only going to be reflecting the part of gross revenues. And then we have a substantial kind of negative net revenue yet for Rocketbank. So all these effects together is quite substantial growth in Payment Services business give that guidance. So it's really a mixture of effects. But generally speaking, we believe this is a very solid growth throughout the year.

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Vladimir Bespalov, VTB Capital, Research Division - Analyst of Industrials, Transportation, Infrastructure, Chemicals & Equities and Internet Analyst [13]

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Okay. Then if I may ask one more question on SOVEST. You just mentioned that you are heading to reach 5% plus net revenue yield in about next 12 months. But will this be enough to make the project break even? And maybe you could provide some update on what is the split of your net adjusted revenues for SOVEST in between the merchant commissions, value added services and other?

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Alexander Karavaev, Qiwi plc - Former CFO [14]

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Well, it's -- the majority of the net revenue will now be coming from the user-generated fees over the added services, whilst still a quite substantial chunk would go through new merchants and [probably not change]. As for the break-even points, we do not really change our kind of estimation and expectation in this respect. So it should come sometime from '20. And we are developing more or less according to that plan.

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Operator [15]

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Our next question comes from the line of Sveta Sukhanova with Sberbank.

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Svetlana Sukhanova, Sberbank CIB Investment Research - Senior Analyst [16]

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Congratulations on these extremely strong results. My first question would be on margins in payments. If I perhaps heard it right that you do expect sustainable margins in payments. The net margin in payments was 62%, which was pretty high. So is it sustainable or not? [Surely], I understand your comment about the overall debt trend, but what about payments?

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Alexander Karavaev, Qiwi plc - Former CFO [17]

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We expect the design in payments business to stay more or less stable in the levels that we achieved. Again, there can be in terms of fluctuation throughout the year but generally, we always guided that the inherent EBITDA in such type of business should be north of 60%. And this is what we kind of achieved so far.

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Svetlana Sukhanova, Sberbank CIB Investment Research - Senior Analyst [18]

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So it's around 60%, not 62%, what you had in Q1?

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Alexander Karavaev, Qiwi plc - Former CFO [19]

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I mean, it can slightly go down, it can slightly go up. But I mean what we would be expecting kind of mid- to long-term would be north of 60%.

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Svetlana Sukhanova, Sberbank CIB Investment Research - Senior Analyst [20]

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Understand. Very clear. My second question would be on betting and E-commerce. And let me ask actually 2 questions together. The first would be on betting and E-commerce. You had very strong growth of the E-commerce. Could you kindly guide us or tell us what kind of betting contribution was the E-commerce growth or E-commerce revenue in the first quarter? That would be my first part of the question.

And my second part of the question would be about visibility. You were reporting the results, full year results, just 1.5 months ago. And you were giving very conservative guidance, which you significantly upgraded today. So what's the visibility of your earnings and what's the predictability of your earnings? How confident you are substantially upgrading your guidance just 1.5 months after it was given?

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Alexander Karavaev, Qiwi plc - Former CFO [21]

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Yes. Okay. So on the -- I'll start with the second part of the question. Look, I mean, each quarter, I mean, we are having more and more with the [ability] generally speaking and we -- one, we've been conservative with the guidance when we provided that for the whole year. So we were not exactly sure about the seasonality in Q1 and how sustainable the trends are. So generally speaking, in terms of the consumer dynamics, consumer behavior and spending patterns, we are literally getting new data like each month. That's what made us believe the visibility. Visibility [is a sign] that we are in a position to upgrade the guidance or not. Again, it's still a lot of unknowns. I mean we're still testing towards quite new markets. Some of those are difficult to estimate and they may go through a different set of stages of the development. But again, just I would stress that we are firmly sure that we're going to be achieving the guidance that we just provided.

On your first question, so sports betting is still one of the key categories. So it has continued to be a major part of our E-commerce segment.

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Svetlana Sukhanova, Sberbank CIB Investment Research - Senior Analyst [22]

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But what's the major part because for the full year, I think you said that it's about 50% of your E-commerce revenue. So the major part is it like 80%, 90%? Or what kind of ratios are they kind of here?

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Alexander Karavaev, Qiwi plc - Former CFO [23]

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We are not really just posting kind of both numbers but the composition of net revenue within this segment remains more or less stable compared to the last quarter.

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Svetlana Sukhanova, Sberbank CIB Investment Research - Senior Analyst [24]

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Okay. Clear enough. And when you're talking about -- back to your first part of the question. When you were talking about that you're heading to the new markets and lots of unknowns, what kind of new markets do you mean? Do you mean markets outside of payments? Or you mean some kind of new markets inside of the payments [category]?

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Alexander Karavaev, Qiwi plc - Former CFO [25]

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No, no, no. It's primarily those kind of self-employed areas that we develop in quite fast. So within that segment, we really have like tens and we should give like hundreds of use cases, [I do not realize], so gamers, streamers and many, many other kind of use cases where the people would use digital wallets except for normal banking. And really, it takes time for us to actually explore those markets to develop proper instruments and proper products for those guys and to see what the dynamic is. So it's really something that cannot be really estimated and tackled as a whole. I mean for each particular use case, we need to present kind of a strategy and products. So that's how it works.

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Operator [26]

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(Operator Instructions) Our next question comes from the line of Maria Sukhanova with BCS Global Markets.

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Maria Sukhanova, BCS Financial Group, Research Division - Research Analyst [27]

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I have 3 questions. First, just coming back to EBITDA question. What's the significant impact from fiscal year IFRS standards because if I look for instance at your G&A expense, they have jumped significantly. So I wonder where there'll be -- there was some reallocation from SG&A to G&A that we should be aware about?

Second question, on this -- there was a draft view approved in the first reading about betting market and about like putting stricter rules into play. And as I understood it, the [addition] would be beneficial for you because it's beneficial for the legal market in general. So maybe could you comment on what kind of impact you would expect from this deal?

And third, on -- in activities (inaudible), you seem to have agreed to change the terms of charging a fee somewhere, later this year. So I wonder, first off, is there any understanding on when this is going to happen and if this is included in your guidance?

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Alexander Karavaev, Qiwi plc - Former CFO [28]

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Okay. So on the first one, on the first question. So IFRS 16 -- so impact of IFRS 16 was not really kind of high for the whole company. So it does not really impact a lot the Payment Services. Though its impact, it may kind of impact but we have that kind of strength of building so we do not really expect that, that will substantially change the financials. So we are more susceptible to the -- those kinds of IFRS standards that relate to [some simple discounting] for interest income there that was impacting our reporting quite a lot last year like IFRS 9, so.

On the -- excuse me. So on the [activity] piece in general, the objective, just the secular growth, I mean, we led in quite a lot of digital, more than usual as an activity (inaudible), given that we are not really changing a lot our kind of methodology, we -- so it's not -- it's growing primarily in accordance with the growth volumes. So that's what we have experienced in the past and that is more or less the [chunk].

Yes, and on the regulatory part, I mean, we -- I mean, first of all, it's not something that -- so all the kind of view, kind of rumors and regulations that we're discussing now, we're aware of that, so we are actually working together with the regulators. And our general position, it's expected that given our scale and market position, any new regulations will be basically positive for us, (inaudible) the market in a way and we will be in a position to kind of extend our leadership.

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Operator [29]

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Your next question comes from the line of Andrey Mikhailov with Sova Capital.

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Andrey Mikhailov, Sova Capital Limited, Research Division - Research Analyst [30]

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I have questions on SOVEST and Rocketbank. I'll start with SOVEST. My first question on SOVEST is on the loan book dynamic. As I understand, the net loan book declined Q-on-Q over the first quarter. Does this imply that most of first origination during the quarter was actually booked at AK Bars Bank?

And my second question on SOVEST is on transaction volume, which reached RUB 5 billion in Q1. Again, does this either include transactions on cards that are booked as cards at AK Bars Bank?

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Alexander Karavaev, Qiwi plc - Former CFO [31]

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Yes, thank you for your question. Yes, indeed, that shows the loan book declined slightly, basically the usual seasonal effects. So we were having quite substantial increase to volumes in loan book in Q4 with the typical transacting quite a lot towards the year-end. And in Q1, it's usually less. So [connectivity] in this respect, so this is something that we expected. It's a certain extent, I believe, the position because really, we would love to test that multibank model with AK Bars. AK Bars loan book in itself is not yet as large, it's like several thousand cards issued. But we really can announce a strategy that we shall seek to realize for how that all works and put all the concepts before we would be in a position to scale the project. So in the meantime, we are not really in a position to extend our loan book kind of [substantially]. And on the technical question, yes, obviously, all the volumes also including those transactions on the AK Bars cards are included in our reporting as well.

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Andrey Mikhailov, Sova Capital Limited, Research Division - Research Analyst [32]

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And the question on Rocketbank is on the plans that were publicized, namely, the plans to launch great products at Rocketbank this year. Would you please elaborate on this, especially on any plans for volumes and interest rates for this and next year?

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Sergey A. Solonin, Qiwi plc - CEO & Director [33]

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Well, we are testing right now some great products for Rocketbank. And I think we will be testing until the end of year. So there will be no -- any material substantial changes in figures for Rocketbank, so just experiments and that is not scaled yet.

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Operator [34]

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Your next question comes from the line of Ulyana Lenvalskaya with UBS.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [35]

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I just wanted to follow up on the Rocketbank. What is expected sort of cash burn for this year? And also, very theoretically speaking, when do you expect to see 0 net revenue for Rocketbank?

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Alexander Karavaev, Qiwi plc - Former CFO [36]

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Ulyana, so the cash burn actually it didn't change a lot. I mean we are projecting some kind of between RUB 1.2 billion to RUB 2 billion exactly the one that was embedded in the annual guidance. And the breakeven on net revenue, I mean, look, we're not guiding on that but we're expecting that to happen either later this year or beginning of next year. We just -- just to achieve that, we're assessing all the types of hedges and all types of kind of new products and consumer behavior. But I mean we just need some more time to evaluate when we're going to achieve that.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [37]

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And second question on Tochka. When is it expected to break even or -- so when do you expect to record some minor projective earnings contribution from Tochka?

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Alexander Karavaev, Qiwi plc - Former CFO [38]

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For this year already, so the -- if you want, this already kind of literally 0, I mean, it's already breakeven. It's actually Q4 was also almost positive so throughout the whole 2019, Tochka will be positive in general.

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Ulyana Lenvalskaya, UBS Investment Bank, Research Division - Director and Analyst of Media & Technology [39]

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Okay. We will miss you at this call.

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Alexander Karavaev, Qiwi plc - Former CFO [40]

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Thank you so much. Thank you.

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Operator [41]

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Our final question comes from the line of Vladimir Bespalov of with VTB Capital.

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Vladimir Bespalov, VTB Capital, Research Division - Analyst of Industrials, Transportation, Infrastructure, Chemicals & Equities and Internet Analyst [42]

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I actually have 2. One is again on SOVEST. Maybe you could update us on your new partnership, your potential partnership, how these are proceeding? When we can see more banks added to the platform? And how the situation generally develops?

And one more question to Sergey. Your world trip is coming to the end this month as far as I understand. Maybe you could update us a little bit on your future plans.

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Sergey A. Solonin, Qiwi plc - CEO & Director [43]

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Okay. Yes. So I'm -- on the second one. I'm coming, I think, on the 21st, 22nd of May. And so I will be mostly staying in Moscow after. So -- but I'm actually continuing -- I was continuing throughout the trip to manage the company and generally in all the subjects.

So one thing that we have to do is to present new strategies. That we will do together with management. We've already started to do but we will present it more or less in August. So to the Board and maybe then to the market. So that's my main focus around which I will be working during the first 3 months.

And on SOVEST, well, we have in line several banks that are also testing right now the SOVEST's product. We are discussing all the options as well for this, so we are thinking about spinning the project off with new investors as well as partnerships -- partnering with some of the banks. So it's not yet decided. I think finally we will finalize it also to -- more or less to August. That's my understanding at this time. Thanks.

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Operator [44]

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There are no further questions at this time, and we have reached the end of our conference. Thank you for your participation. You may disconnect your lines and have a wonderful day.

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Sergey A. Solonin, Qiwi plc - CEO & Director [45]

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Thank you very much.