Q3 2019 Earnings Call
Ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience once again, ladies and gentlemen, today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
Good day, everyone and welcome to offer starts for 2019 earnings call.
At this time all participants are in the listen only mode. I finished speaker presentation. There will be a question answer session asked a question. During this session. You want me to press Star one on your telephone if you require any further assistance. Please press star zero.
I would now I'll hand, it over to Mr., Gary Numan I first head of Investor Relations open the call.
Thank you and welcome to operate third quarter 2019 earnings call with me today I have our CFO for Jochumsen.
And our CEO song one we're really excited to be hosting our call today from Lagoas, Nigeria, which has the largest country in Africa, we have a strong presence here and significant growth opportunities, including browser Hopper news advertising classified and micro lending as well as our investment in Okay, Hey company. We thank you.
Better which has had an impressive growth trajectory already becoming Nigeria is leading mobile payment and motorbike ride hailing service before I hand over that called it Proto I refer you to the Safe Harbor statement in the company's earnings release.
We're also implied the conference call today.
Management will make forward looking statements.
Our commentary today will also include non I Srs financial measures. We believed that the use of these non IRS financial measures, providing additional tool for investors Hughes.
Hi, waiting operating results and trends these measures should not be considered in isolation worried they substitute for financial information prepared in accordance with IRS reconciliations between IRS and non IRS metrics for our reported results can be found in our press release that was issued earlier today a copy.
Which can be found on our Investor relations website with that let me now turned over the call to for us.
Thanks, Eric and good morning afternoon and evening everyone.
We are very pleased with our strong third quarter results.
Our gross domestic celebrating that's we continue to execute on our strategy.
Leveraging our strong brand and large user base of more than 350 million monthly active users to grow new opportunities beyond the browser, including news in constant Fintech classified and a few initiatives that we haven't yet unannounced.
These efforts, including the investments we've made in our business led to a year over year revenue growth of 119% in Q3 compared to 55% last quarter and exceeding the top end of our guidance range.
This is positioned us with a strong momentum going into Q4 and as we enter 2020.
Before going over the other highlights of the quarter I want to give some color on our leading position as a global consumer Internet company.
While Oprah is not a well known brands in certain markets like did you there.
You have a massive user base in Africa, Europe , and South Asia.
And a corresponding hi brand awareness in these regions.
This enables us to launch and scale new offerings without the significant user acquisition and brand building costs.
Many other companies would fade in turn improving our chances of success.
Further we have a strong track record that.
Okay execution.
Yes to quickly determine if our initiatives are working where we should focus our resources elsewhere.
Now, let's review the highlights our third quarter results beyond our revenue growth.
Our user base continues to expand with PC users.
<unk> percent year over year end smartphone users up 18% year over year.
Our new initiatives, including couldn't pick a news now represent the majority of overall revenue while at the same time, our browser revenue continues to grow.
Adjusted EBITDA margins expanded meaningfully from the prior quarter.
While we aggressively invested in product development, new initiatives and marketing to drive future growth.
Net income was 28.1 million also benefiting from old face increased valuation and their latest from the ground.
And finally, these strong results and the accelerated momentum in our business.
Enabling us to once again raised our full year revenue right.
With that I will turn the call over to song to cover operational highlights and then I'll come back and talk in more detail about the border and our updated guidance.
Sounds hurdle I everyone.
I'm going to happen, we'll be reporting earnings from Nigeria, our biggest locking in a appetite.
Nigeria has a large and growing population well do you all lenses isn't the justice hobby and represents a huge opportunity plus.
Well documented all your multiple categories already including Brasil, Niels and that is out of the horizon lines.
Blades are classified and does seem to be initiatives in the oldest they just don't ramping.
More importantly, all results soggy material highlights I'll then it gets you a utilize all strong brands.
Lots and so those atlas currency in local markets to launch on a scale Neal products very quickly.
So now that's I'm getting to the detail.
I will stop Ms all pronounced.
As a standalone <unk> Nils ABS continues to scale and has.
Well to admit I'm often asked me because those.
Well I just saw they said listen this is a year ago.
Well also a including <unk> Nielsen yourself from all Brussels.
Our total can you think there's all this is a $1.69 minutes.
It's a major animal.
We remain focused on clean product called it due to drive a boat to do the wells and increased engagement.
This concludes.
Your vesting enable hyper local content.
Such as to the tip of because we're just now.
Calc open your call.
Opened you'll talk allows local critical.
I've spoken to all capital.
And then shell <unk> monetization all got confidence you know very easy way.
Well actually the Paul who launched such a model you know zero.
And it was not an all time Kern River unassigned overall five onto appeal condemn beetles.
This is a good example, overall because I've been at that well be localized.
And with example, well continue to strengthen usually engagement.
You could all you know people cost original Africa.
I would also talk a bit the bulk all monetization Apple which also progressing.
That's all perhaps.
Our direct advertising platform has they'll grow revenue last month. This is the second the cool.
And more importantly, we have expanded the platforms I took a bit at this.
We have launched a new Adnan.
Who do not cool and the ads that they've been could directly.
Coco Cola necessity.
Which I really no matter cold that can be pal from animal local allowing direct and as I can give them and which is a very vocal originates like Africa.
This is really reflecting hallway differentiating ourselves from some rather global lungs.
Which is really appreciated by the business the local out of puzzles.
Second well also lost and it's hard to know product called oldies.
That's really enable us to help the whole commit to small and medium enterprises in Nigeria, which would otherwise have no me who make the websites.
So I wouldn't read it provides pretty basic websites with Wunderlich.
No, which will help them out of us and we came on the bus by offering cost the police advertising products.
It's called me very popular.
And waiting because this is yet another alternative to drive up all the most efficient although growing because I've been.
We have also highlighted last quarter.
That would have lunch all classified offering only Nigeria.
Even though it's only three most obvious launch.
Well, but at least right we all the momentum as the at least as more than doubled global one minimum probably about three months ago.
We plan to come to know who will lead to add to drive comes from a wellness using both our Brasil and no doubt.
Well I really believe is a potential in this area both in pounds all the advertising, but also from a pension pot <unk> the underlying transaction who oppose the model.
Oh for instance that general really tight lots of alone represents couldn't $2 billion lots with another which however is the boasts ecosystem and stuff like that.
And we'll conclude I played a key part bill.
Although there will still as we all this they just just a little softer lumps, but.
But we are really very selective about spending all rolling into sabal trails.
No I will also come back would be because of Ralph.
So you don't was no Brussels similar to last quarter, we all try Vincent Liberals.
Usually I mean do not very much kilowatts.
Having increased <unk> [laughter] meta and smartphone, but also and they used to have increased London not to wonder them.
Well quite a CLIA waived Gulf coast Phil.
And again, all broker folks really come to know to focus on providing differentiated brought up.
For instance, well loves to Ocaliva Boucher Qualcomm Enbrel.
Which allows you got it seemed to file they do well I'll come from.
Results using lots of them on over there. It's all you might be holds back a bio snow network.
Richard has been very vocal just a few weeks off the problems.
On the other and well work alongside all partner.
Oh, Belfield Taylor, who came off.
Which is also performing I'll handle these patients.
It's very strong religion getting them.
This girl thought is a very good example, and the highlights we all dependent people ask let's address specifically and also financially attractive segments over the market, whereas the very differentiated solutions.
Just to wrap up.
Well what can hop.
And I believe what exactly well.
We all know there's composition was an adult exciting growth opportunities.
We have a [laughter] fully long cover the only because it doesn't have skills quickly and liberty luxury because they simply roll out new offering class.
Super all significant rich hi.
Perhaps the most importantly apologetically.
Well very vocal in all key reason.
And well will position could have to all potential.
Who we offer Balco and no.
Well as include both coasts catch up into classified and the related vocal and offering online advertising.
Overall, we think this was done at the beginning.
And that really is a tremendous opportunity ahead.
So with that let me how did that poor though.
Thanks.
Let me now talk.
One more operational area micro lending and then I'll get into details about the third quarter and provide updated guidance before we open the call for questions.
Overall, we ran the Mike from any business faster than we had anticipated and it has now become a sizable part of our overall revenue.
During the third quarter, you really pushed growth in India to establish our offering there at scale.
Going forward, we continue to expect strong growth rate.
At a more normalized trajectory versus what we've seen in the past quarters.
We believe there is meaningful upside in India in Kenya, while Nigeria is just getting off the ground.
In addition over the next six to 12 month, we see opportunities to launch new markets and also other non lending fintech products as we continue to diversify this revenue stream.
Given our focus on gaining scale, our credit losses moved slightly higher relative to revenue from the prior quarter.
Now as we continue to gain experience and the credit scoring technology continues to improve we have seen a positive trend in credit losses relative to revenue in October following a decrease in nonperforming loans.
Getting into some of the metrics, we underwrote approximately 5 million loans this quarter.
Most tripling from the second quarter.
Our average loan size went though to just above $50, adding up to more than 250 million in total loan valley.
Then moving on to the financial details of the quarter.
Pension OPEB delivered record third quarter revenue of 93.7 million up 119% versus a year ago quarter.
Again, this compares to 855% year over year revenue growth rate in Q2.
Search revenue represented 23% of coking revenue or 21.5 million.
This was up 13% year over year ahead of our expectations and a really strong results for this revenue stream.
Advertising revenue represented 20%, but total revenue or 18.3 million up 17% year over here.
The growth was driven by direct sales such as appropriate and our increase user base and we continue to see meaningful potential here, including up for news and our classified offer.
Fintech revenue represented 43% of Cobra revenue or 39.9 million.
This increase meaningfully from the second quarter, primarily driven by our recent launch in India.
As mentioned going forward, we continue to expect strong growth rates, but at more normalized levels than what we have reported today.
Retail revenue represented 6% of the total or 6 million down slightly versus last quarter, but overall quite stable.
The technology licensing and other revenue category represented 8% of the total or 7.9 million largely driven by temporary support to our embassy okay.
That's okay has now established it teams in house, we expect this revenue category to decline towards substantially lower levels going forward.
Total operating expenses were 87 million in the third quarter and I'll go through the main components.
Compensation expense was 19.5 million oh versus the prior quarter.
This included roughly 4 million and nonrecurring compensation cost relating to the OPAY revenues, we just referenced.
Some opportunistic Seth increases relating to our growth initiatives.
Marketing and distribution expenses was 20 million slightly down compared to the second quarter.
Cost of revenue was 15 million.
Within the total 6 million related to retail revenue and 8.8 million related to micro lending.
Cost of revenue for micro lending includes transection and communication platform expenses as well as third party credit, scoring data and risk control costs in total amounting to 22% micro lending revenue in the third quarter.
Credit loss expense was 19.6 million, mainly related to Microlending, where it represented 50% of revenue.
As discussed this was slightly up as percentage of Fintech revenue actually massively scale. This business during the third quarter, but it's trending lower purchase revenues, thus far in the fourth quarter.
To sum up all other operating expenses, including depreciation and amortization was 12.8 million, representing a slight increase versus the second quarter.
I'd say, we're so we saw an operating profit of 6.7 million.
Our net income was 28.1 million. This included a noncash gain from opaque, which recently raised capital at an increased valuation.
Adjusted EBITDA was 12.6 million, representing a 13% margin.
Margins increased meaningfully from last quarter as we're beginning to see benefits from our revenue scaling. Despite the continued aggressive investments and our long term growth.
Finally on the balance sheets, we ended the quarter with 216 million in cash and marketable securities 69 million from 147 million at the end of second quarter.
Two items worth highlighting their first we received 71.8 million in net proceeds from our technical grade in late September .
This excludes the additional 10.8 million from the underwriters exercise of the over allotment option, which we've received in October .
Second our increase in loans to customers driven by the successful growth of our micro lending business resulted in a loan book of 56 million at the end of Q3, an increase of 33 million versus the second quarter.
We have funded the increased loan book by a combination of local bank debt and our own cash.
We expect that the strong and profitable growth in our micro lending business will continue to utilize cash in the short term, though the business will be increasingly self funded.
With that let me turn to our Q4 guidance and increased full year 2019 outlook.
Starting with the fourth quarter, we expect revenues in the range of 95 to 105 million, representing a year over year growth rate between 89% to 109%.
Our strong revenue guidance reflects continued to fintech growth.
Well as continued positive momentum around our advertising efforts well take licensing revenue is expected to meaningfully fall in the fourth quarter.
Consequently for the full year 2019, we are raising our revenue expectations again.
Our increased range is now 302 310 million representing year over year growth of 74% to 80%.
This compares to our prior range of 207 Pizza 290 million.
We expect fourth quarter adjusted EBITDA to be in the range of 15 to 19 million, which represents a continued margin increase versus the third quarter.
This means that we are increasing the lower end of our full year 2019, adjusted EBITDA guidance by 6 million, resulting in a revised range of 41 to 45 million for the year.
This is inclusive of our product and marketing investments in long term growth.
To summarize we are very pleased with our strong results are consistent execution and our increased full year guidance.
We have demonstrated an ability to launch and scale new products and revenue streams rapidly.
And our results today demonstrate that our strategic investments are driving growth and positioning us well to capitalize some hard large market opportunity.
Our business will exit 29 team with an annualized revenue run rate of approximately 400 million.
This is staggering compared to the 2018 exit rate of 200 million.
While it's premature to provide 2020 guidance. We think we are well positioned to maintain strong revenue growth rates and drive margin expansion.
We look forward to providing more details next quarter on how 2020 will benefit from the growth of our existing products expansion, two additional markets and new product launches.
With that I will turn it back to the operator for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press the pound cake. Please stand by while we compile the Q and a roster.
I first question comes from Lee Crown with B. Riley affair.
Great. Thanks for taking my questions guys.
Just wanted to dive in on Okay.
First.
Specifically the credit loss expense. Another you have to geography is could you maybe.
Even just at a high level break down [laughter], just you know from a current credit loss expense perspective is Kenya kinda operating below your quarterly target in India higher I'm trying to get offensive you know kind of as these markets grow you know the optimization that you guys are able to employ too.
Control kind of a risk around new.
Finally, a this is proto here thanks for the question.
I'd say overall in terms of credit losses, or what we did this quarter was to really focus on scaling that fit and having it become a really meaningful segment in our Mick.
The as we scaled up and India being a new relatively new country to us we just started that they do too.
That was that was the biggest part of our growth in Q3, I think entering a new country, having sort of higher mix of Earth fund lenders versus the second time lender et cetera.
Will it impact that in in the short term.
And we have seen that that's something that we did with sort of eyes wide open during the quarter.
What we see now is that.
We have scale or that you have also gotten more more data or systems, our credit for it.
We're seeing and in the months or in the period, that's followed the third quarter that our credit losses relative to revenue has grown.
Substantially.
Gordon and maybe even below the level that we saw in Q2.
At a significantly bigger scale.
Got it and then just on the new product initiative, Oh lift to know leads.
You know two parts to the question first are you targeting other geography is currently for those products and then second.
Just based on how you guys kind of put some marketing.
Resources against the scaling of owners do you guys anticipate kind of a similar cadence as you try to build scale in these newer products.
Yes. So this is only no I think I'll try.
Yes, we have two different products like.
The namely the Biloxi monopoly method, you can make a distinction but anyway, so only itself.
Did you do it's really about being able to localism used to be able to you.
Hey lies the old is done you know.
Well not an easy the ability web properties web sites, so that they can lately I don't have the pump so.
I would say only ease a bit more I think all these itself.
Okay.
Hi, rich because essentially everyone now that this to you offered knows how that this platform and you know can easily.
So I think to that's a bit more by the audience.
Oh.
Yes, so on the other and Oh.
Itself is the clock about offering which we have launched.
About three months ago, So I would say that is a bit more.
That's a difficult that's a whale calls have to go the Paul.
Give assumption difficult with nature, obviously that is all about the connecting all those you know venmo you, but somehow.
Oh, the patent the dog really pay that down costs. So nobody nature itself is that you quite quite a specific region. So I would say fall awful obese also that beats you know, it's almost be like no concentrate on key component, which is no Philadelphia.
Thank you Rob will adopt a beep user base, making sure the Milan and that will probably the same motor Drago.
African countries. So how do people I think though the all strategy and you also asked me about the marketing so I would say that will now.
Yes, natural belviq had been for them off by having welcomed also traffic and that's also why last is growing so fast successful timeframe at really well. This yeah I think the I think the moving on we will probably be more like seeing how well this one.
Equally spread to us through us no spend most often if all it doesn't make sure so Boston.
And we as we looked at 20 places there I would say with successful for US is continuing to have a usage metrics, though that's never been Nigeria.
Any other than next caller went after we'd love to tell you that we've made a lot of progress on one of the vertical.
So I'm just name.
Okay, great. Thank you for taking my question.
Thank you. My next question comes from Mark Argento with Lake Street capital.
Hi, good morning, or good afternoon, guys, just wanted to drill down a little bit on.
I kinda CPM trends I know, you're still could be building your audience. So for news was up nicely or users up nicely, but just talk about how you're.
So in that.
Inventory.
Yeah, Yeah space, if you're generating.
What kind of Cpms or how do you think about kind of ramping the monetization effort there.
Yeah. Shaun. So this is only I think I'll try to be more highly long. This so I mean, the appeal of you've made is that right. So the number one I think it way we would do see though you see the on wrapping up the whole bulky countries, but you're going to Africa, you know, it's a reflection of over there.
And then also reflection of rolling demand. So I think in general well happy about that you know that being said, maybe I'll just put it they all that.
Loan come like at high level, and what to say that.
W. initiative.
We don't want roster.
He said I think you can almost to see that Q2, you did that traffic long. It used to you know America transaction based the business that you know like we can use the traffic role say and you know cash all fintech and may not offerings and the other way too you can let the traffic and sales toggle pockets.
With.
So I'll just I think what you that some of that P. Richards welding.
Exactly.
Exactly.
More profitable block you actually go there that's itself so no hello.
Yep.
You know we'd be all you still have no now given the traffic to somebody else, they're asking for that to that.
Yep.
The traffic. So that's why we ask that go straight to the transaction itself Oh.
The pet even though that they saw no.
No. That's the based on the Dol Olin EMA plays well from other hands when do you need that no given time when were able to open that the market and more like we see that though I mean, all of that funnel and that brings the total value of ultra at probably they also up so it's not generally with the all you know they're two different stages.
Quite happy with after they could be of growth. So the key markets now about them. We also has a bit long term view over there.
And then have you been building out the Salesforce books. The focus on Sarnia space are you guys been doing mostly more programmatic sales at the sport.
Mhm, So I would say, it's a red to question nationally so I think both.
Some of the mall I'd say both developed.
After the focus more problematic because that's the easiest way of lots to scale up and we see asked if I'm doing very good defect.
Well some other place, but he's going to Africa I would just say that approach is both online and offline.
Broke that out problematic, but what we saw that general that these that they should.
Just had buddies steel not big enough that you that's the make much more sensible asked you to ask that diesel and studied the digitalize yet. So that's why you know that's the way our building up a major Salesforce for instance, in Nigeria very cost effective and you know that one, Pennsylvania, but some other possible a model and then.
Good about using there's the off line direct salesforce to actually is almost attend a whole lot ready to I'm glad that Vito.
So as part of it so yeah I think that's a respectable lots that we have also announce some of these initiatives Hello death abuse I'd like always to end to end up Jago, yes. So I think that you know from after wells will be all Nigel spreads.
Regions.
Sure.
Thank you there and then just one quick Microlending question in terms of.
Just remind us where do you went live in Nigeria, and then are you guys are.
So you're going to be as aggressive in terms of that im trying to get some scale in Niger like you were in India.
What a maybe kind of what.
New credit I know you talked about you get an increase in or enhanced credit, scoring but maybe just talk about your thoughts on losses relative Oh come quickly grow Nigeria, that's it for me. Thanks.
Sure. So I mean in Nigeria when fly the during Q3, it's really quite insignificant still compared to the totality of micro lending.
We do expect as mentioned on the prior call that it will have a it will have a slower ramp and the other two countries that we went live in following sort of the adoption of mobile wallets and and the necessary infrastructure.
The businesses running but it's still relatively small.
And Mark I would expect that well.
Ramp a little more in 2020, and then I think we'll consider launching some additional markets as well so and then some extra and tech services, which we're working through as we speak.
Great. Thank you.
Thank you. Your next question comes from Hillman Chan with Citigroup.
Mr Hillman Chan Hi.
Hi, it's only in July . So then Derrick. Thank your for taking my question Congrats on a quarterly results.
My first question is because they only.
Understanding it's a bit early off pretty solid.
That Steve could you shed more color as to the key verticals that we plan to fast <unk>.
Should we think about the out the its monetization model.
In the need to be them.
The only piece.
Ah, Yes trial so.
It's only I think I'll have to try to probably down that so I've mentioned that we'd all youre right I think oh.
Interesting you know a.
Perspective that actually engaging upon so like as we also be great dimension also use up even though the scripts.
Like the people, who have not channel business with all of us young or the multiples, which contribute most of you know given country.
You know keep a GDP right you know point does your Nigeria, apparently are natural that would look at it no problems on energy most additional source no really pay the acetate and the burn after they love the important part of that he called me have babies rents so almost back to the vessel to take their channel to other GDB with Holdco.
Yeah below market value of almost a modest well that would be that follows. So it's a huge potential so blocking California. Just you know you did that pulled out these very natural philosophy. You know these that we want to be no. If that's the his death Glenn Schorr, then obviously block we loved to be take Mitchell pop that part of the ecosystem.
And and you know just upon the comedy that.
We also find all do that.
It's a huge potential it's still very rapidly.
It's still to some extent beaten your sufficient built in and out.
So so no definitely also saying that.
There will be to more high level like yourself Temple App initiative, I think it makes sense for something like us.
As you go you must be Paul too deeply into value chain to try. It you are they getting all that it to go deep sea level to be able to you you know maybe smooth as a whole lot transaction flow, who easy to use our pinpoint not just selling some central app. So I think examples of why we called it the beating all.
Your best Pedicle that.
I think all goal.
At this particular buckets all goal is perhaps not only just to be.
Hello.
But also strength lack the whole up low that really say just make sure that no as much no adamant that Germans are well be able to use you know like booking refine how certain policies or at least until about how the places. So so like again well quite quite ambitious. We also think that this is very economically sound you.
No that's a much before.
Hi, Dan down then what you forget the at the business.
Again so.
And that we hope to be able to report the I'll focus on that.
The next few months.
Got it. Thank you my other question is on hold cash just want to learn more about the the competitive landscape.
Okay, and the key markets for us could you shed more maybe onto market share and so did differentiation how hot marketing strategy.
Cool products versus competitors and that would be helpful. Thank you.
Yes sure. The this is proto I can begin answering that question. So I would say overall of course, our competitive markets a competitive product I think the reason that we are doing as well as we are.
It really goes back to some of the strength that we are taking with it into the micro lending business and that includes you know are ours brand and scale.
User base, our ability to really grow quickly.
We do very well on on they are the AI that really feeding it.
With the with the approval process being very key in terms of accessing the right lender, where we are pretty scary.
And third our ability to raise locally in these markets in over calling in from Nigeria today, Greg be heard as the by end of.
We had and the ambition that they share.
Oh, that's to say having people in the market, making it very close to the and number.
Okay, they called comp.
Okay.
And where were lender.
Due date terming out et cetera.
Those I think are key advantages that set us apart from some of the other foreign companies that are operating similar businesses and why when you look at our.
When you look at the financial information included in that segment that information with you see is essentially that when you take our revenue and you deduct our credit loss provision and our cost of revenue gross profit contributed by this business for us relative to our loan book It is still resulting in the return.
On on capital.
About even above 100% annualized.
And I think that.
The assay that we have.
Well it is enabling us to be as profitable SVR in these competitive market.
Okay got it thank you at Vicki.
Quick question I think just now you mentioned potential new my catch.
Okay hashing to come in six to 12 plus.
Is it possible to share some macau the gun to deal by catch that we want to enter and how should we think capacity out of the time that way that you teach thank you very much.
Sure I don't think we'll announce anything now on on the call but.
General rule, we continue to look.
Additional markets that we can launch in went when we look at our offering as a whole.
And how we believe that will develop over time I think we will continue to diversify that.
Segment, both in terms of geographies that dimension.
And.
So from additional that are not lending product. That's on also under the two just before so we will we will sort of come out than announce it when we have gone live in a specific new market, but.
Right now and him and to add I mean, the one thing on.
Some of these additional fintech product is obviously they were.
And leverage our user base.
And leverage our strong brands to murder the other products we've launched.
Okay. Thank you very much on 40 foot comment I hope you guys, having a good timing lycos. Thank you.
Thanks, Illumina, well try and you.
Thank you again, ladies and gentlemen, if you handle question at this time. Please press Star then one key our next question comes from Tom Champion with Cowen.
Hi, guys I'm curious if you could just.
Comment on the geographic breakdown of the Microlending revenue.
And any thoughts there would be helpful and.
Curious about the profile of of the loan type that you're offering by geography does it look basically about the same it seems like the average loan balances about $50. Maybe these are short term loans of about 30 to 45 days do do they look the same by by geography, and and I guess last comment.
For a question would be looks like about a 20% contribution margin is that is that a good level to the to think about going forward.
Thank you.
Yeah, Hi, Tom I'll answer that though.
In terms of geographic breakdown of our micro lending activity, India is the biggest.
India, its overtaking Kenya as the biggest market now in the third quarter.
Hi, such loans.
I would say.
The growth from an average of about $40 to an average of $50 was more really driven by the geographic mix.
And then the lets say per loan or economic.
Within each country or loans in India tends to be a bit bigger in the 50.
Whereas in thing tend to its into 30.
So while duration of loan is about the same with an average of about two weeks since you mentioned.
When it comes to margin. So we have if we do revenue less credit losses, and the cost of revenue.
Credit losses within cost of revenue totaled about seven the.
Since the two 3% now in the most recently.
And the most recent quarter in Q3, 72%.
I mentioned before we believe credit losses will.
We'll be meaningfully lower in Q4.
Seeing that draw.
Hi.
Or maybe more points for four or five points maybe.
And cost of revenue for both when did too that going up a bit with the growth of India is a little bit different different mix there.
But.
The net of the too.
Probably in the about leaving about 30% left around.
Around that level.
For a profit contribution.
Got it really helpful. Maybe maybe just last question can you can you talk about the dynamic with a technology licensing revenue in the fourth quarter there's.
Some mention of it in and in the guidance discussion. Thank you.
Sure. So included in that revenue category is support that we do and be rent, though that support partners and that's also something that we're doing with our and indices.
Time, and so Q4 had a bit up an extraordinary bum sorry, Q3, following support to old pay a which is a which is something that it's not the.
A really recurring revenue stream.
We believe that as we look ahead.
We have said now for.
No more than a year that.
Revenue category of Tech licensing is declining it's not something we focus on it so scalable or strategic in the same way that the other revenues grades are.
And we expect to sort of see the normalized pretty quickly.
And that reduce in both Q4 than on the words to one.
Got it thanks, a lot guys.
Sure.
Thank you I'm showing no further questions in the queue. At this time I would now like to turn the call back over to Mr. offended Jacobson for any closing remarks.
All right no I just from from the three of sharing loggers, we'd like to say thank you everyone for joining this call and we wish you a good breadth of today.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.