Qiwi Q4 results top Street view on solid payments growth; stock gains

Reflecting the rapid adoption of digital payment services, Qiwi plc (NASDAQ: QIWI) (MOEX: QIWI) reported strong earnings and revenue growth for the fourth quarter, which also exceeded analysts’ forecast. Shares of the Russian payment services provider climbed about 7% Thursday after the positive results and the management’s bullish dividend program triggered a stock rally.

The company reported adjusted earnings of RUB 16.40 per share ($0.24 per share), up from RUB 10.48 per share reported in the fourth quarter of 2017. Analysts had forecast a slower increase. Reported profit advanced to RUB 14.26 per share ($0.21 per share) in the December quarter from RUB 7.26 per share in the year-ago period.

Driving the income growth, revenues moved up 46% annually to RUB 9.28 billion ($134 million). At RUB 5.82 billion ($83.7 million), adjusted revenues were up 42% year-over-year and came in above the estimates.

The top-line benefitted from a 35% growth in Payment Services revenue, aided by higher volumes. The overall performance of the segment improved significantly from the levels seen in the preceding years. 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.

The top-line benefitted from a 35% growth in Payment Services revenue, aided by higher volumes

“This year we have built a strong foundation for future growth, we are well positioned to continue building up our ecosystem, diversifying our operations, increasing the life cycle of our clients with an ultimate goal of securing the long-term growth prospects of our Company,” said CEO Sergey Solonin.

Recent Developments

Revenues of Tochka, the digital banking service acquired by the company a year earlier along with Rocketbank, were fully recognized in Qiwi in fiscal 2018. Last year, the company also completed the transfer of Rocketbank’s customers and processes to Qiwi Bank, thereby making the former as a separate reporting segment.

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

Outlook

Looking ahead, the management expects adjusted net revenue to be flat to up 8% in fiscal 2019, while adjusted net profit is forecast to grow between 15% and 25% year-over-year. The payment services segment is expected to register double-digit growth for both revenues and earnings.

Earlier this year, payments giant PayPal (PYPL) reported double-digit growth in fourth-quarter earnings and revenues amid a sharp increase in customer accounts and transaction volume.

Qiwi shares gained about 7% on Nasdaq early Thursday following the earnings report, after closing the previous session lower. The stock has gained about 3% so far this year but continues to trade below its long-term average.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions