QIWI Plc (NASDAQ: QIWI) Q4 2019 Earnings Call Transcript

QIWI Plc  (NASDAQ: QIWI) Q4 2019 Earnings Conference Call
Mar. 24, 2020

Corporate Participants:

Varvara Kiseleva — Interim Chief Financial Officer

Boris Kim — Chief Executive Officer of QIWI Group

Andrey Protopopov — Chief Executive Officer of Payment Services

Analysts:

Chris Kennedy — William Blair — Analyst

Vladimir Bespalov — VTB Capital — Analyst

Maria Sukhanova — BCS — Analyst

Ildar Davletshin — Wood & Co — Analyst

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Presentation:

Operator

Good day everyone and welcome to the QIWI Fourth Quarter and Full Year 2019 Earnings Conference Call. Today’s call is being recorded. At this time, I would like to turn the call over to Ms. Varvara Kiseleva, Interim Chief Financial Officer of QIWI. Please go ahead.

Varvara Kiseleva — Interim Chief Financial Officer

Thank you, operator and good morning everyone. Welcome to the QIWI fourth quarter and full year earnings call. I am Varvara Kiseleva, Interim Chief Financial Officer, and with me today are Boris Kim, our Chief Executive Officer and Andrey Protopopov, Chief Executive Officer of the Payment Services segment.

A replay of this call will be available until Tuesday April 7, 2020. 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 who is listening to the replay, this call was held and recorded on March 24, 2020.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they’re 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 updating these statements 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 constitute 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 this, we’ll begin by turning the call over to Boris KIm, our Chief Executive Officer.

Boris Kim — Chief Executive Officer of QIWI Group

Thank you, Varvara and good morning everyone. Thanks for joining us today. First of all, I would like to say that I’m really excited to be here with you today. Of course, this is my first call and it’s a great honor and a big responsibility for me. Having said that, I am pleased to share our fourth quarter and full year 2019 results with year-to-date.

This year, we demonstrated outstanding performance especially in our Payment Services business, which delivered 27% segment net revenue and segments net profit growth year-over-year. Our growth was driven by the solid performance in our key streams, Payment Services for digital entertainment merchants, digital Money Remittances and projects we developed for self-employed and sharing economy partners. Our growth was enforced by our overall expansion of our Payment ecosystem, driven by the scaling of our operations and enhancement of the product proposition we offer to our users, merchants and partners.

Throughout 2019, we have also benefited from strong secular trends in our key verticals, even though in the end of the fourth quarter, we have noticed a slowdown in secular growth in some of our key initiatives. We continue to develop our ecosystem by targeting core and creating new initiatives and areas of expertise. This quarter, we also continued to invest in the development of our Financial Services projects primarily SOVEST. While Tochka project has booked some positive net profits this year, I’m happy to say that as we continue to optimize our operations, we see that the majority of the projects that we have been investing in demonstrate improving operating and financial performance. I believe that our results in this year clearly demonstrates the value of our ecosystem to our customers and serve as a solid foundation for the future stability of the company.

At the same time, we see many challenges ahead primarily resulting from the recent pandemic coronavirus outbreak that affects some of our key categories and a steep decline in oil prices and ruble devaluation. The full effect of these factors and the magnitude are still to be evaluated. Nevertheless, we believe and have proved many times before that we have created a resilient ecosystem that is highly adaptive and consumer-oriented and will continue to develop it further. We will also continue to optimize our operations and implement stricter cost controls.

Now onto some operating results. Fourth quarter 2019 total adjusted net revenue increased by 7% to reach RUB6.3 billion up from RUB5.8 billion in the fourth quarter of 2018. The increase was mainly driven by Payment Services and Consumer Financial Services segment’s net revenue growth. This growth was slightly offset by technical decrease in the SME segment’s net revenue and negative net revenue contribution of the Rocketbank segment. For the full year 2019, total adjusted net revenue increased by 18% to reach RUB23.2 billion, up from RUB19.7 billion in the prior year driven by the same factors as our quarterly numbers. Andrey will discuss the performance of our Payment Services segment in a minute while I will walk you through the results of our other segments.

Consumer Financial Services segment payment volume reached RUB27.8 billion for 2019 increased by 74% as compared to the prior year. Our loan portfolio reached RUB8 billion as of December 31, 2019. Segment net revenue was RUB469 million as compared to RUB199 million in the fourth quarter of the prior year, demonstrating the development and improving monetization of the SOVEST project. Throughout 2019, we have significantly enhanced the product offering and improved the monetization of the project. At the same time, we continue to explore opportunities to support and reinforce the scaling of the project.

Since 2018, we have been testing various multi-bank platform models primarily aimed at sharing the funding and credit risk with the partner brands. However, none of the arrangements have yet proven to be economically efficient and mutually beneficial for us and for our partners. Having reached a substantial scale and positive business unit economics of the products, we are currently evaluating different strategies for further development of SOVEST project. The strategies we consider primarily targets the shift of our key focus to offering customized products and services to customers in specific niches that we primarily target in our Payment business segment. As a part of our Consumer Financial Services segment, we also aim to develop more targeted product and services offering for specific groups of customers such as, for example, self-employed.

Moving to the SME segment, Tochka platform we developed together with Otkritie Bank continued to demonstrate robust operating and financial performance in the fourth quarter of 2019 throughout the year. At the same time, our SME segment net revenue decreased to RUB193 million for the fourth quarter of 2019 as a result of the transfer of Tochka operation to JSC Tochka and happened in February 1, 2019.

Further, I would like to give you an update of our latest developments in relation to Rocketbank project. Following our decision of our Board of Directors in August, we investigated potential partial or complete sale of Rocketbank. We were not able to find a suitable buyer for Rocketbank. As a result, the Board of Directors has determined to wind-down the Rocket operations. We have commenced this process and we are currently reviewing the most efficient way to reuse or dispose of the Rocketbank assets, including piloting certain projects earlier developed in Rocketbank in our Payment Services segment, particularly in our B2B2C product pipeline. As part of the measures we are taking to wind-down Rocketbank projects, we intend to terminate marketing activities including cancellation of the Rocketbank loyalty program, reduce headcount and increase tariffs, which we believe will result in overall significant decline in the number of Rocketbank customers and termination of the current Rocketbank service offering in the short term. We anticipate the wind-down will be completed by the end of 2020. Total net loss of the Rocketbank segment for 2020 shall not exceed RUB1.5 billion.

Last, but not the least, I’m glad to announce that following the determination of the fourth quarter 2019 financial results, our Board of Directors has approved a dividend of $0.22 per share. In accordance with the decision of the Board, we will be distributing 65% of our adjusted net profit for 2019. Further considering our expectations about the performance of the Group, as well as our anticipated level of investments in 2020, Board of Directors approved a target dividend payout ratio of at least 50% of Group adjusted net profit for 2020. The Board of Directors reserves the right to distribute the dividends on quarterly basis as it deems necessary so that the total annual payout is in accordance with the target provided though the payout ratios for each of the quarters may vary and be above or below provided target.

Even in these challenging times, we see many opportunities for us in the payment space and the adjacent markets and I believe we are well-positioned to continue strengthening our ecosystem with the ultimate goal of securing our long term goals prospects. Taking this into account, we remain committed to distributing excess of cash to our shareholders and currently have no plans to postpone or refrain from paying dividends. With this, I will turn the call over to Andrey for an update on Payment Services business. Andrey?

Andrey Protopopov — Chief Executive Officer of Payment Services

Thank you, Boris and good morning everyone. It’s my pleasure to be here with you today. Now, on to the results of our Payment Services segment. This year, we have processed close to RUB1.5 trillion in cash and the recurrent payments increasing our turnover by almost [Indecipherable]. I believe this is an impressive achievement and would like to thank our entire team for their contribution. Our results clearly emphasize the value and relevance of the payment ecosystem we have developed so far and aim to develop further.

For the fourth quarter 2019, our Payment Services segment volume increased by 22% to reach RUB400.5 billion driven by significant growth in Money Remittance, E-commerce and Financial Services vertical, which grew 31%, 29% and 13% respectively. The growth in E-commerce and Money Remittance verticals were largely driven by the development of our key streams mainly digital entertainment, self-employed and sharing economy partners where we are focused on expanding our partner and merge network, building up our relations with our existing partners and expanding our product offering. This growth was reinforced by secular market trends toward the digitalization of payment in our keys.

The growth in the Financial Service category was driven primarily by the new distribution contracts. Payment Service segment’s net revenue increased 16% in the fourth quarter 2019 to reach RUB5.5 billion compared to RUB4.7 billion in the prior year. Payment Services payment adjusted net revenue increased 18% to RUB4.8 billion, up from RUB4.1 billion in the prior year, primarily as a result of the net revenue growth in our Money Remittance, Financial Services and E-commerce verticals, which grew 29%,18% and 13% respectively. Our financial results in this segment were predominantly driven by increase in volumes. Our Payment average adjusted net revenue yield was down by 4 basis points year-over-year to 1.21% driven by the yield decline in our E-commerce and Money Remittance markets vertical. Such decline was driven mainly by our focus on increasing the scale of the business through offering our merchants and partners, new services, such as online [Indecipherable] which made favorable conditions of our Qiwi Wallet solution. The growth of this new product streams may dilute our Payment average adjusted net revenue yield, primarily in the E-commerce category while the commissions we charge in our core solutions remained stable.

Payment Service other adjusted net revenue increased 4% to RUB647 million as compared to RUB622 million in the prior year as a result of growth of interest revenues that is in line with the overall growth and scaling of our [Indecipherable]. As Boris mentioned earlier, our growth was driven by the robust performance we have achieved in our key strategic streams and through the expansion and the enhancements of the product proposition we offer to our users, merchants and partners. Nonetheless, in December 2019, we started to experience a certain slowdown in the growth rate of our Payment Service segment that resulted from a number of factors. These factors include secular situations and growth slowed down in the betting market, implementation of additional know-your-client and anti-money laundering measures and the closure of our largest Kazakh merchant that significantly affected our business in that region. Some of this trend can be felt amplified by the events that were currently unfolding including the negative effect on the betting industry caused by performance and termination of the major sports events due to the outbreak of the coronavirus and the global pandemic.

Nevertheless, we believe that we have created a resilient ecosystem that is highly adaptive and consumer-oriented and we will continue to develop as it shows up by targeting our core mission and areas of expertise and creating new use cases well-suited to serve our users, merchants and partners, as well as develop new strategic niches to support our longer-term growth. With this, I will pass over to Varvara for more details on the financial performance of the Group. Varvara?

Varvara Kiseleva — Interim Chief Financial Officer

Thank you, Andrey. Moving on to expenses. Strong operating performance of our Payment Services business has continued to generate substantial cash flows, supported our investments in the development of the new project. Our net revenue growth outpaced the growth of the expenses, supported by the improving operating leverage of the Group. This being said, adjusted EBITDA for the fourth quarter 2019 increased 9% to RUB1.6 billion from RUB1.5 billion for the same period in the prior year. Adjusted EBITDA margin was 26% compared with the 25% for the same period in the prior year.

For the full year 2019, Adjusted EBITDA increased by 53% to RUB9.1 billion from RUB5.9 billion for the same period in the prior year. Adjusted EBITDA margin was 39% compared with 30% in the prior year. Adjusted EBITDA margin expansion primarily resulted from the adjusted net revenue growth underpinned by the decline in advertising client acquisition and related expenses, decline in rental premises and relates to utility expenses resulting from the adoption of IFRS 16 that was partially offset by the new class of expenses related to Tochka platform services arising after the transfer of the Tochka operations and associates starting from February 2019, increase of the compensation to employees and related taxes resulting from the personnel expense growth primarily in Payment Service segment in corporate and other category, and an increase in the credit loss expenses, predominantly related to the SOVEST project.

Group adjusted net profit increased 15% for the fourth quarter 2019 to RUB1.2 billion from RUB1 billion in the fourth quarter of the prior year, while, for the full year 2019, group adjusted net profit increased by 61% to RUB6.7 billion from RUB4.1 billion in the prior year. Adjusted net profit was largely affected by the same factors as adjusted EBITDA, as well as by decrease in the net foreign exchange loss as compared to the same period in the prior year.

Payment Services segment net profit increased 3% to RUB2.7 billion compared with RUB2.6 billion in the prior year, driven primarily by Payment Services segment net revenue growth, slightly offset by the growth of compensation to employees and related taxes, as well as one-off increase in marketing and advertising expense.

Consumer Financial Services segment’s net loss was RUB590 million in the fourth quarter 2019 as compared to a net loss of RUB538 million in the same period of the prior year resulting from the growth in loss from initial recognition on loans at market rate due to the extension of the SOVEST project and the increase in marketing and advertising expenses, mostly related to the consumer acquisition, offset by the increase in SOVEST net revenue.

SME segment’s net profit was RUB187 million as compared to a net loss of RUB281 million in the fourth quarter of 2018. Net profit growth in the SME segment resulted primarily from the growth and development of the Tochka business.

Rocketbank segment’s net loss was RUB684 million for the fourth quarter of 2019 as compared to the net loss of RUB584 million for the same periods in 2018. The substantial increase in net loss was primarily driven by the increase of marketing and advertising expenses, as well as compensation to employees and related effects.

Now on to our guidance, firstly, I would like to remind everyone that at the moment, we are not able to accurately estimate the potential impact of the outbreak of the COVID-19 strain of coronavirus on our business, including the negative impact on the betting industry in general and our revenue generated from products and services we provide to our betting merchants both by performance and termination of the major sports event. In addition, it is currently unclear how much consumer demand will be negatively affected from the outbreak of COVID-19 and what effect this outbreak will have on the macroeconomic environment as a whole. The full impact remains uncertain and will depend on the length and severity of the effect of the coronavirus on economic activity in our markets. The full scope of the negative impact that the abrupt decline in oil prices and resulting devaluation of ruble may have on the Russian economy also remains unclear, but has the potential to be very significant. Our outlook reflects our current expectations and use only and is based on the trends we see as of the date of this earnings call. If such trends were to deteriorate further, the impact on our business and operation could be more severe than currently expected. We continue to monitor the situation closely.

Having said that, we expect Group adjusted net revenue to increase by 3% to 13% over 2019. Payment Services segment’s net revenue to change by minus 3% to plus 8% over 2019, while adjusted net profit of the Group is expected to increase by 10% to 30% over 2019. At that time, we reserve the right to revise the guidance in the course of the year or when additional information regarding the effects of the ongoing events becomes available. With that, operator, please open up the call for questions.

Questions and Answers:

Operator

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Chris Kennedy with William Blair. Please proceed with your question.

Chris Kennedy — William Blair — Analyst

Hey guys, thanks for taking my questions. I have two. I just wanted to get a better — can you give an update on recent trends in the business and I understand there is lot of uncertainty, but can you kind of talk about what’s happened over the last couple of quarters or even weeks if possible.

Andrey Protopopov — Chief Executive Officer of Payment Services

Hi, Chris. It’s Andrey. Thank you for your question. So we are closely monitoring the trends. In the couple of, I would say, in the last week, we started to see real decline in the sports betting business as we described. So it’s not yet clear how, I would say, deep it will go. At the same time, we see some positive dynamics in other categories like online games for example and some others. So I would say it’s too early to say that the trends are already started in the new environment. Clearly, that we will see some decline in betting business though we think it’s a temporary one. As soon as the sports events will be back, we will be — we will see the volumes back as well.

To give you a little bit more color on this one, we see that betting company is not, I would say, sitting so they’re changing their proposition to clients. There are some new sports where they’re introducing including the cyber sports so that it’s not, I would say, zero. It’s still — still volumes are there and clients for them.

Chris Kennedy — William Blair — Analyst

Okay, that’s helpful. Thank you. And then one update on SOVEST. It sounds like you’re kind of changing your strategy and can you talk about the expected losses from SOVEST in 2020 or the pathway to breakeven if possible?

Boris Kim — Chief Executive Officer of QIWI Group

So as I mentioned here, we are still thinking on the strategy of SOVEST. One moment, already mentioned was connected to multi-banking model. And I must say that multi-banking model didn’t work as we expected. So now we can see there are some other perspectives and strategic choices for our service including online loans and value proposition for self-employed segment to be more connected to Payment segment and our proposition for that sort of things. We still think and we believe that in any scenario, service will breakeven later this year.

Chris Kennedy — William Blair — Analyst

Okay, thanks a lot for the update.

Operator

Thank you. Our next question comes from the line of Vladimir Bespalov with VTB Capital. Please proceed with your question.

Vladimir Bespalov — VTB Capital — Analyst

Hello, thank you for the presentation. And thank you for taking my question. My first question will be on Rocketbank. Could you maybe provide more color of why do you expect such a big loss of RUB1.5 billion from Rocketbank this year and given that it’s more not than last year, but than the year before that, given that you are unwinding this asset, where this money will go? And the second question is, maybe you could also provide some color, since you are going to transfer some of the operations of Rocketbank to Payment Services, what kind of operations are going to be transferred and how these are going to impact, let’s say, the business and the profitability of the Payment Services segment? Thank you.

Varvara Kiseleva — Interim Chief Financial Officer

Hi, Vladimir, thank you for your question. So as per the costs, basically our current estimate over the maximum cost remain to occur this year for the operations of Rocketbank has taken place in the first quarter. I remind you that we started — we’re currently launching the winding down process. We have not launched it before and we were encouraged to be kind of run rate and the burn rate of Rocketbank in the first quarter. So apart from the burn rate that we had in the first quarter 2020, I will also incur certain costs for working with — for the period, while the clients are — we have a number of clients that’s decreasing, we will be running — we will have the team running the business, etc, etc. So there are certain winding down costs that are included in this guidance and we believe that are including certain redundancies, etc. And we believe that the total amount of costs that we incurred this year will not exceed this number. So that’s quite a rough estimate.

Andrey Protopopov — Chief Executive Officer of Payment Services

So, I will comment on the second question. It’s Andrey. So the business we are currently looking at is, we call it B2B2C. It’s basically the payout solutions at Rocketbank is now providing to some of the partners with the payout of the self-employed, of the salary to the Rocketbank accounts and the sales branch how we see, it can be synergestic to what we are doing in Payment Services with the payout for the self-employed — with the wallets and payouts to cards. We are currently [Indecipherable] in how synergestic it can be, what extra revenue and partners that it can bring into Payment Services. So it will take several months for us to assess and then we will make the final decision. Regarding the cost, I would believe it will not be material for the Payment Service segment this year.

Vladimir Bespalov — VTB Capital — Analyst

Okay, thank you very much. And maybe one more question as follow-up on SOVEST. Could you provide your estimate of the potential loss that SOVEST can generate this year?

Varvara Kiseleva — Interim Chief Financial Officer

So, although, it’s embedded in our guidance, there was a — can generate this year and it definitely depends to some extent on how the macroeconomic situation will develop and how they created these portfolio and the clients will behave. We believe that at the current moment, we believe that the total loss for SOVEST will not exceed RUB1 billion.

Vladimir Bespalov — VTB Capital — Analyst

Okay. Thank you very much. Very helpful.

Operator

Thank you. Our next question comes from the line of Maria Sukhanova with BCS Global Markets. Please proceed with your question.

Maria Sukhanova — BCS — Analyst

Hi, guys. Hello, thank you for the call. I have two questions. So first one is on your guidance, if you could provide us any color what exactly are you including in your guidance. Like, for instance, do you expect this issue from the betting like the current situation that it will stay for one quarter or do you assume that it will stay for several quarters? So just for us to understand like whether downside or upside can be. So that’s the first one. And second one on Rocketbank, just a follow-up. So out of this maximum RUB1.5 billion costs, like if you look at the long term run rate for this business and in your costs, what do you think, like, for instance, what was kind of loss we could see in 2021? What kind of sustainable loss will there remain after you wind down the operations? That’s it from my side. Thank you.

Varvara Kiseleva — Interim Chief Financial Officer

Maria, Hi. So as per the guidance question, we currently estimate that the betting market can be down for up to six months and that we, four to five, that was embedded in our current guidance. If it lasts for a longer period of time and if all the sports events that have been postponed or canceled will be only running in 2021, we can definitely see some additional eddies to the current forecast, but we believe, overall the betting companies, as Andrey said, will be able to find some substitution for the major sports events and develop their activities, because again, they are also willing to make business and make money and no one is kind of willing to stay — everyone’s faced with basically. So that’s for the guidance.

And for Rocketbank, we expect that in 2021 there will be no running for Rocketbank, the projects that we will pilot in Payment Services will either become the parts of Payment Services and we’ll be working as part of this business line or they will be both, with that — on top of that, we believe that overall the potential costs of these pilots are insignificant for both of course between services and…

Maria Sukhanova — BCS — Analyst

Okay, thank you.

Operator

Thank you. Our next question comes from the line of Ildar Davletshin with Wood & Company. Please proceed with your question.

Ildar Davletshin — Wood & Co — Analyst

Hello, good afternoon. Thank you for the opportunity to ask the question. I just wanted to ask two if I may. So, to follow up on the previous question around your assumptions. Could you perhaps specify what sort of GDP dynamic, do you expect this year, have you considered the recession scenario and deals to see potentially downside risks to non-betting activity related to just slow economic activity of your customers? That would be my first question. And then separately, the second is on new products that you may be considering in Payment segment since betting has been the core for quite a while — one of the core growth drivers, and you mentioned that you are targeting, self-employed audience, could you perhaps specify in a bit more detail, what sort of propositions and solutions you are looking, so that we understand that you have a more long term sort of opportunity, rather than just very attractive niches that you periodically identify? Thank you.

Andrey Protopopov — Chief Executive Officer of Payment Services

Ildar, thank you for your questions. I will cover those. So for the assumptions for our guidance, we embedded some economic slowdown as well in our numbers. At the same time, historically, we will be — we always was kind of counter cycle versus crisis and currently, for example, as I mentioned already we see those effect on online games for example. I believe that if we will have the same story like with the slowdown and coronavirus, but the sports event will be still in place, we will feel much better and because people will sit at home and watch sports but overall on the Payment Services business, we are not, I would say, bet-dependent on the micro. However, we embedded overall some slowdown on this one on our numbers as well.

Regarding the second question on the new products. So we — this is exactly what we mentioned about both Rocket and SOVEST. As you know, we already for some time working closely with businesses that are working with self-employed, includes the taxi companies, scrap metal pickers and many more. And we believe that it’s — there is a certain demand and opportunity for us to enrich our product proposition to those B2B and related B2C clients with debit products with loans that can be linked to operations that we are faring on those — on those type of customers. So that’s what we’ll be doing. And I would say facing in the near time, and we have already, as I said, start with this one with the Rocketbank product proposition to our clients.

Ildar Davletshin — Wood & Co — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of Andrey Pavlov-Rusinov with Goldman Sachs. Please proceed with your question.

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Good afternoon. Thanks a lot for for the presentation. I’ve got several questions. First of all, could you please remind us what actually was your betting share in payments and revenues in the fourth quarter and also in the Money Remittances, as far as I remember, there is also or kind of a share of volumes that are related to betting payout, so also what is there, what is the share there? And essentially, also — kind of, this is my first question. I’ll ask another one later. Thank you.

Varvara Kiseleva — Interim Chief Financial Officer

Andrey, do you hear me?

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Yes.

Varvara Kiseleva — Interim Chief Financial Officer

Great, So, thank you for your questions, So, as we’ve discussed, we don’t disclose the exact share of betting revenues in our E-commerce market vertical, but I can say that for 2019, we have disclosed the share of betting in volumes. It’s roughly around 22%, information is disclosed in our 20-F report 22% of the entire group volume. So you can basically extrapolate to the share in revenues. So that’s for the betting as part of the quarters. And in terms of the — in terms of the share of Money Remittance which is connected with the payout for betting merchants, that would be around like mid-teens percentages.

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Thanks very much. That’s quite helpful. And then maybe just continuing with the Money Remittances segment, what basically — there was quite a strong growth of 30% in the fourth quarter and overall for the year. Could you maybe illustrate a little bit what were the drivers and also what is the actual share there coming from the basically wallet to card payments or some commercial payments within wallets and also of course what are — what is the breakdown at the moment and also maybe if you could give us an outlook for this segment that’s baked into your guidance, given that it’s not so much related to betting. So, in a normal or kind of a relatively muted economic circumstances, what could be the growth there?

Andrey Protopopov — Chief Executive Officer of Payment Services

Okay. So first for the fourth quarter growth on the Money Remittances income. There are two big elements here. First is growth of the self-employed because the part of the big, big portion of the self-employed volumes growth is in Money Remittance when it’s payout to cost and we continue to grow in this segment in the taxi payouts and others categories. The second one was Tajikistan, classical Money Remittance to Tajikistan. There was, I think, a lateral change in Tajikistan for the Money Remittance company and not all of the marketplace able to comply with them, while we do and we absorbed quite a, I would say, strong growth in the classical Money Remittances in Tajikistan for the fourth quarter. Going forward, if we will discuss the Money Remittance part, we see — we expect, as you can imagine, a similar type of slowdown for this portion that Varvara mentioned related to the betting companies. At the same time — and probably if there is some economic slowdown, it will reflect in the classical Money Remittance slowing as well.

Regarding other parts with self-employed, we expect, I would say, the slowdown for the short term period like three months or four months when we will absorb these limitations that we see now as soon as coronavirus story will end, we believe those results, those self-employed volumes will be back and will continue on the growing trend. So I would say, it will depend how long, we will observe the current situation in terms of the coronavirus.

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Okay, thanks very much. And just my final question is, getting there your targeted dividend payout level, is the kind of decline in the target there anyway related to your economic outlook or it’s kind of — maybe just kind of your precaution to set a bit lower payout and then if things improve, then you will be back to the previous year payout or are there any investments that you’re looking for, and hence lower payout?

Varvara Kiseleva — Interim Chief Financial Officer

Andrey, so, first of all, I would say — I would like to say that we expect that even though the payout ratio was decreased and again we aim to distribute not less than 50% of adjusted net profit. We still believe that there is a good chance that the minimum payout will continue to increase. And of course we are slightly cautious in terms of how much we aim to distribute for the year because as we discussed, and as we said before, there is a lot of uncertainty this year connected to both the coronavirus and the economic — and then the following economic repercussions.

So, in this respect, we are, of course, cautious. We don’t plan, at the moment, any significant investments and all our capex payments etc, are in line with the previous year, in line with the budget. So nothing to — kind of nothing to read through from a slightly lower payout ratio. Let’s see how it goes. If we will have the chance, and if we will be comfortable with paying a payout above 50%, we will definitely do that. We remain committed to distributing excess cash to the shareholders. But we believe for the stability of the overall situation and for the lack of clarity on the market, it is better to have a slightly lower payout — minimum payout ratio for this year.

Andrey Pavlov-Rusinov — Goldman Sachs — Analyst

Thank you. That’s very clear, thanks a lot.

Operator

Thank you. Our next question is a follow-up from the line of Vladimir Bespalov with VTB Capital. Please proceed with your question.

Vladimir Bespalov — VTB Capital — Analyst

Thank you for taking my follow-up questions. I have actually two. First, could you update on Tochka? At some point you expected that Tocka’s net profit would be around RUB1 billion. Do you expect something like this in this year to happen? And is Tochka going to distribute its profit of dividends to QIWI or it will still reinvest it’s earnings for some period of time? And the second question is on the change in regulation of inactivity fees. Could you estimate the impact from that change on your fourth quarter and on the — on 2020 in terms of revenues and earnings? Thank you.

Varvara Kiseleva — Interim Chief Financial Officer

Hello. Var, here. And so on Tochka, yes, we believe that at some point Tochka, our JSC Tochka net profit can reach RUB1 billion, but absolutely feasible estimate. I won’t be sure that it will happen in the end of 2021 but I believe that in a year or two from now depending on the macroeconomic conditions and how the situation evolve. The Tochka will reach this level of profitability. We see very good trends in the business, it has great — brokeeven this year and as you can see in our financial reports, we have booked pretty substantial profits this year. So if the market is doing well and if the situation in the company doesn’t deteriorate, maybe even by the end of 2020 we can reach such goal.

So as for the dividends, there has not yet been a decision on that, so that would be discussed further with Tochka management and Otkritie [Phonetic]. Your second question was about inactivity fees, for sure, we don’t expect really a material impact on our revenues from this change. It’s — I would kind of outline that we should treat it as the postponement of certain revenues because starting from October, there was — which became inactive they became inactive not after six months, but after 12 months. So their kind of inactivity period — activity period was prolonged. So in this respect, we are not able to book part of the revenues but we just booked in the fourth quarter this year, but we will start booking them later. So that’s just a timing difference, not a significant change in our revenue expectations for something like this.

Vladimir Bespalov — VTB Capital — Analyst

Thank you, Var.

Operator

[Operator Closing Remarks]