Qiwi earnings preview: What to expect in Q1?

Russian payments giant Qiwi plc (QIWI) is scheduled to report its earnings results for the first quarter of 2019 on Thursday before the market opens. The results will be benefited by the rapid adoption of digital payment services based on key areas such as betting related merchants, digital money remittances and projects.

The results will be driven by significant growth in e-commerce and money remittance vertical, backed by secular trends and development of core categories. The company has significantly enhanced its service product offering by introducing a number of consumer paid value added options.

The company expects an ample room for development going forward and has an impressive product pipeline for 2019. After the finalization of the transfer of Rocketbank clients and processes to Qiwi Bank, the company is currently developing the strategy of Rocketbank, assessed the market and certain hypotheses regarding consumer behavior and preferences.

The company could be benefited by the growths in payment services, consumer financial services, and small & medium enterprises. However, Qiwi could be hurt by an increase in personnel expenses and related taxes, higher selling, general & administrative compensations, as well as higher client acquisition and advertising expenses related to Tochka project and the acquisition of Rocketbank.

Also read: PayPal Q1 earnings report

Analysts expect the company’s earnings to be in line with last year at $0.27 per share and revenue will rise by 2.60% to $63.67 million for the first quarter. The company has surprised investors by beating analysts’ expectations in the three of the past four quarters. It is expected that Qiwi will post upbeat results for the first quarter. Majority of the analysts recommended a “hold” rating while expecting the stock to reach $24.07 per share in the next 52 weeks.

For the fourth quarter, Qiwi posted a 96% surge in earnings helped by a 46% jump in revenues. The top-line benefitted from a 35% growth in Payment Services revenue, aided by higher volumes. Among the other segments, Consumer Financial Services and Small & Medium Enterprises recorded double-digit growth, which was partially offset by a decline in the revenues of Rocketbank.

During the fourth quarter, the board of directors approved a target dividend payout ratio, setting the stage for the distribution of 65% to 85% of the adjusted net profit among shareholders in the current fiscal year, starting the first quarter.

For fiscal 2019, the company expects adjusted net revenues in the range of flat to up 8% and adjusted net profit in the range of 15% to 25% year-over-year. The payment services segment is predicted to register double-digit growth for both revenues and earnings.

Shares of Qiwi opened higher on Tuesday and is trading in the green territory on the Nasdaq. The stock has fallen over 27% in the past year and over 12% in the past three months.

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