Q1 2021 Ozon Holdings PLC Earnings Call
[music].
Ladies and gentlemen, welcome to ovens first quarter 2020 financial results call.
Before I pass the floor to awesome management I would like to advise you that some of the information you will hear today may include forward looking statements under the private Securities Litigation Reform Act forward looking statements are based on management's beliefs assumptions and information currently available and all.
Subject to known and unknown risks and until day.
Many of which might be beyond our control and actual results may decide not to but we encourage you to refer to that cushion. Those statements contain income punished press release issued two day and S. E C. Five.
During today's call the company will give us having to sell non I Srs financial measures and other metrics reconciliations and definitions of which you will find in company's press release published a day pause.
The presentation today will be followed by a Q&A session and if you wish to ask questions. Please press star and one on your telephone.
Now I will pass the floor to Alexandre shocking.
Oh Awesome. Please go ahead Sir.
Thank you.
All right.
Good morning, everyone.
Thank you for joining us today and welcome to our first quarter earnings call.
Together with our CFO, who will make some comments on our business, although our quarterly results.
We will update you on the outlook for the full year 'twenty or 'twenty one.
We will try to give as much time as supposed to before the Q&A.
With the strong performance and momentum in our business is when you think about an hour.
At this time when your dog commitments omission.
And so did you go up does for them and certainly the experience for the Russian consumers by offering better.
The service is doing well.
Whilst simultaneously empowering ourselves to grow and develop their businesses on our platform.
And do you want in Virginia rate of <unk> 74.
Which is actually comparable in absolute terms to Q4 of last year.
We're pleased with this result is typically Q4 is it much stronger quarter for consumer businesses.
I'll, let Jamie growth reached 155% year over year, making it the sixth quarter in a row with a triple digit growth for all blood flow.
Oh offering resonates with Russian consumers.
Higher base reached 16 million growing by nearly 80% year over year, whilst our seller base also increases dramatically.
Our core growth engine or the marketplace, but further gain scale.
And we expect to see so there isn't a flywheel effects in our business.
Our assortment breadth increased 2.5 times year over year to 19 million skus coupled with.
Although our delivery service and the rollout of adjacent services. This means go than has been the customer proposition.
On the opposite sides of the equation our business partners all our sellers with near tools that were developed for sellers and the new and more efficient Commission structure. We see further growth in number of I'm going to tell us all seller base nearly quadrupled compared to Q1 of 2020.
For our platform performed.
Patience of our buyers and sellers.
Well calibrated logistics and fulfillment infrastructure.
As part of our strategy, we aim to become close a door of buyers to provide fast and reliable logistics and fulfillment services to our sellers both in metropolitan areas.
In the regions of Russia.
In order to do that we continue to expand our fulfillment and logistics infrastructure.
Our fulfillment footprint reached 250000 square meters and.
Number of offline pick up locations reached 12 horizontal growth, Russia, and you want to anything to add.
We were able to deliver 98% of barco sometime which the third day improvement from 95% during the high season of Q4 2020.
Which enhances customer experience.
Now a few words about COVID-19 and its impact.
Last year, the Russian governments implement jurisdictions, such as social distancing as lockdown measures starting from March 2020 to combat the effects of the pandemic the.
The lockdown impacted Q2, the most but the restrictions started to ease from around mid June onwards.
Although it is very difficult to isolate the impact of COVID-19 in our business with great degree of cost certainty.
Acknowleged ZIP code to help to bring forward the OLED production.
Our business was in the first expansion mode.
When COVID-19 hit which accelerated salaries migration to the business. This online partnership with ozone and buyers to adoption of the new ways of shut in by ordering online.
Nonetheless.
We continue to see strong growth in all cohorts with all the frequency horizon materially up by about short approximately.
And if you look at our G&A growth, we reported triple digit growth for the last three quarters.
While the logo down already was east.
Despite the lack of restrictions we continue to ensure safety for both our colleagues and customers.
With all of the necessity of precaution measures.
Example, contact less delivery is one of such initiatives.
Yes.
Now, let me provide a bit more color on the Q1 performance.
Our focus on improving product quality and better services.
It's paying off.
Jamie growth reached 110, 35% year over year supported by strong order growth.
In Q1, we delivered 34 million orders for customers across Russia.
Growth accelerated to 161% year over year in Q1.
From 157% year over year in Q4 'twenty. Thank you.
In Q1 with further improve delivery terms for buyers.
On some of the benefits of scale onto them.
As we push into the regions, where allowed more pickup locations, which make our cirrhosis accessible to more customers across Russia.
Our core growth engine or the marketplace showed tremendous performance in Q1.
Sure.
As presented at <unk> reached 58, 4% almost doubling from 32, 6% in Q1 <unk>.
As a result of Verizon or the frequency is rapid growth in number of active customers, which reached $16 million.
In addition, the growth was the comment that merchant base quadrupling year over year driving significant net certain expansion, which is a very important total customers.
Overall, the seller's pitch to our platform as the level of quality of service offer to them, which includes countrywide fulfillment and logistics business analytics those simple performance of their businesses.
Help us to grow with and large customer base.
In February 2021, we made an adjustment of emission rates, which further.
Was to sell our engagement with the platform.
There was a number of changes that we introduced the commission structure with the aim to stimulate trading on the platform and incentivize sellers to utilize all fulfillment infrastructure and institutions.
On the balance it means that our take rates will likely be lower which should be offset by higher trading volumes on the platform.
We also would like to note that the adjustment to the commission structure and the permanent in the breadth and quality of services offered zone puts merchant base led to higher number of sellers on boarded onto it was non marketplace.
In Q1 also sensitive marketplace by physician partnership and Unburden dig brands.
Reliable retailers.
The launch of fulfillment and certain facilities in the regions like it is closer to the original seller base.
Greater traction with regional sellers.
Finally, I would like to note debt after beta testing last year in Q1, we launched storefront model, which enable sellers to facilitate deliveries deliveries to customers independently while it use.
Although our marketplace as a digital storefront.
While at this point in time, it's not a big driver of our growth demonstrates that ozone continues to develop products for the sellers.
Our cohort performance is something that we are moving to very closely in particular and post lockdown period.
As you can see the cohort performance remains very solid with over 30% increase in order frequency.
Yes.
Amongst cohort in Q1.
The company believes the strong cohort patristics were driven by significant improvement in speed and reliability of delivery with 98% share of on time deliveries and greater choice due to much wider assortment up two points over year to $19 million of Skus.
Yes.
Improved customer proposition is contributing to growth in buyers and greater attention as bus overall greater order frequencies.
Non of active buyers on the zone marketplace increased by 77% year over year to $60 million. So much took reversed into 'twenty, one compared to $90 million as of March.
Thank you.
Annual or the frequency of his unbiased increased by 33% to five nine in Q1 'twenty.
In Q1 compared to a $4 five in Q1 'twenty adventure.
Now, let me update you on our new verticals.
We continue to roll out and scale, our complementary services around our core E Commerce platform such as always on Fintech was on express.
And we see significant potential in these services.
In simple domain, we continue to build out.
See payments and lending business items.
Our flagship <unk> product was on part.
The usage shows great traction with digital formats expediting adoption.
Therefore.
708000 activated cards as of March 2021.
Net of 117000.
Much to anticipate yes.
The card holders tend to spend more on the platform quadrant, one six more often than those that use other payment methods.
Although it can be front I would like to highlight the launch of flexible payment plan.
This is a unique product structure together with our partners.
Enable us marketplace sell out of store range of payments scheduled debt.
That business needs.
Whilst it boosts their loyalty to the platform.
It's helped to drive higher volumes and should not have significant impact on our working capital.
This quarter, we continue to develop ozone Express service in March 'twenty.
21, this past March the average daily order volume more than doubled compared to December I want to thank you. Our goal. This year is to expand the format in the regions.
Finally, we continue to develop solutions for the sellers, allowing sellers to stand.
A standout from $19 million Skus.
Which is a natural source of monetization for example at home.
Yes.
Although we see huge potential in Russia entering new markets, we're looking at additional growth for our zone.
CIS region is very similar and customer behavior and preferences to Russia, we plan to launch our new fulfillment facilities and logistics operations in Belarus. This year.
All of the retail market estimated to be in the mid single digits as a percentage of retail sales turnover. So there is a lot of scope for growth given the very low e-commerce penetration.
Now I would like to hand over to Igor Gerasimov, who will discuss our financial performance.
Thank you Alexander good afternoon, everyone as Alexander already highlighted where the strong supply and performance in Q1 will have JV growth, reaching 135% year over year.
Now I would like to take you through how debt rating expenses simple and the drivers for this.
Overall in the first quarter, we expanded fulfillment and soybean census in the regions, which requires not only EBIT muscle solids. So additional operating expenses related to additional personnel to deal with.
T bills and rents and in addition, I'd like to share of operating cost growth is.
Associated with them first of strengthening our it infrastructure.
And central office team in order to facilitate Latam growth and product development.
Scale, our business when you had highly qualified software developers another idea, especially.
Our investments into Ikea balance is reflected in current year over year increase in the technology and content expense line.
If we take it line by line and go flow the remaining key expense items, which.
Fulfillment.
In delivery and <unk>.
General and administrative expense increased the most by 130% year over year growing almost in line with the JV.
The weighted received this increase as an investment and acquisition of talent in place, which we require.
To accelerate the development of our platform.
Fulfillment and delivery costs was up by 83% year over year.
Primarily by higher number of orders processed through Amazon fulfillment and logistics infrastructure across Russia, and also new openings of additional infrastructure objects.
We won this year, we'll deliver.
$4 1 million orders compared to $13 1 million of orders in Q1 last year as a result of minus itself scale and despite the ramp up effect, which puts additional pressure on the cost line.
As a percentage of dreamy of fulfillment and delivery costs were down 140 basis points year over year to 15, 8% of the JV.
84% year over year increase in sales and marketing was driven by the increase in digital and offline advertising, mostly aimed at attracting new customers to OSM platform, but also increasingly the attention.
It also has reduced year over year as a percentage of JV, reflecting better frequency and cohort performance.
To sum up although our.
<unk> expense together with cost of the goods sold increased by 6% year over year in Q1 as a result of the fast expansion of our zone operations.
Durations, they actually decreased significantly as a percentage of <unk> in Q.
Q1 operating expense together with Fox accounted for 55% of our JV non.
I'm from 81% in Q1 2020.
This significant reduction is driven by the growing scale, our focus and daily work on efficiency and cost optimization.
Our price stability in Q1 was in line with our expectations, while business size more than doubled and active investments in logistics and it took place EBIT.
<unk> remained practically at the level of the previous year in ruble terms adjust.
Adjusted EBITDA loss of ruble.
<unk> 9 billion was quite comparable to the negative $4 5 billion in Q1 2020, while JV has more than doubled over the same time period.
Adjusted EBITDA as a percentage of JV encouraging services improved significantly to negative minus six 5% in Q1 2020 from negative 14. So Q1 last year, you had some economies of scale efficiency gains in fulfillment and logistics as well as greater operating leverage.
The rapid growth in JV for the six quarters <unk> seen that all demonstrate that our strategy of focusing on building scale is playing out we plan to continue scaling our business and gaining market share.
Cash flow from operating activities was negative 12 billion rubles compared to a negative $2 4 billion rubles in Q1 2020.
Let me provide some context around the seasonality effect, which is quite typical for operations Q1 cash flow is typically significantly impacted by the dynamics of the previous year.
And by the fact that Q4 is seasonally the strongest in our business and then general across the whole <unk> industry.
As a result of that famous for the inventory results index season during the fourth quarter appeared in Q1.
It's an insignificant cash outflows will look forward to a gradual improvement on cash flow in the course of 2021 and expect operating cash flow for the year to be around breakeven and thus we're reiterating our guidance of operating cash flow to be near breakeven for the full year.
<unk> started to ramp up in Q1, but we expected so ramp up even faster in the following quarters given expected more than tripling of Capex. This year.
So to sum up.
Strong performance continuous interest in 'twenty. One this gives us confidence to increase our guidance for JV, so 100% year over year from previously communicated 90% or more.
We believe that despite tough comps this year, even in <unk>. So our business can deliver triple digit growth fueled by flywheel effect ongoing product and service improvements tactical investments to accelerate market share growth and benefits from secular trend of online services adoption in Russia.
We reiterate our guidance for Capex in 2021 way aimed to deploy between 20 to 25 billion rubles in order to expand and enhance our logistics infrastructure follower E Commerce core business and growth of the new verticals as well as a few.
Higher growth form for longer in our platform.
In Q1, 2021, as only ship congrats simple bumps with aggregate principal amount of $750 million USD.
This bumps ideal.
So 2026, the coupon is one point.
175%. So it has to be paid semi annually starting from August 2021.
This transaction that helps us to strengthen our balance sheet position.
As of the end of March 'twenty or 'twenty, one, we'll have cash and cash equivalents of 140 billion.
Our recent exciting development for US is the acquisition of <unk> Bank. This transaction allows us to obtain a banking license, which is required in order flow.
Developing our impact operations and gradually migrates the first budget, thus delivering better products for our customers on both sides of the marketplace.
Sure.
This acquisition.
Should allow us to provide faster payment services with low of emissions.
What are you seeing central bank approval for the transaction on April 29.
Sure.
14th we closed the transaction and therefore, we expect the title to the bank will be passed to us before the end of day month.
Total cash consideration for the transaction amounted robo since $115 million.
In February 2021, we also registered our new micro finance entity with the goal to create financial products for our merchant base.
Another exciting development for US is the MSCI index inclusion announced last week as long as expected to be included in the May share, Russia index with the approximate weight of <unk>, 8% as of close of business on May 27th 2021.
Finally, I would like to note that first quarter, we will launch first <unk> logistics services.
As a part of the New service also on the aims to become a reliable partner for many businesses across Russia, helping them to improve their presence online.
Also see a big demand for cost effective and reliable alternative delivery service in the regions with suboptimal logistics service provision.
These initiatives create a new revenue stream for us, but more importantly, it allows us to increase capacity utilization during the low season, and so to improve the returns on capital and shorten the payback period.
<unk> already had been able to force great business partnerships for example, with the international Homegoods and furniture chain GAAP now AK products are available for delivery via although in Moscow and the Moscow region.
We plan to make this service available throughout the country.
Thank you for your attention.
And let us move to Q&A.
Ladies and gentlemen, well now begin the question and answer session, if you'd like to ask a question. Please.
Star and one on your telephone and wait for your name to be on that.
EBIT dollar.
And one for a net.
I'll comment.
And your first question is from the line of Slava, Sorry go ahead.
From Goldman Sachs. Please go ahead.
Yes. Thank you very much for the call couple of questions.
Can you comment on the progression of the GNP growth performance throughout the month.
How profitable is that deceleration in April may and maybe the performance by month throughout Q1, what was the strongest month during the first quarter.
And secondly on the cost side.
So basically all cost items improved as a percentage of <unk> on a year over year basis in Q1, except for the G&A costs.
Would you expect the same trajectory to continue throughout the year. Thank you.
<unk>. Thank you for the questions. So.
Now.
As you probably remember Russia all over those measures were introduced in late March and therefore, and they were lifted by the end of June 2021, largely across most of <unk>.
Most of the rational agents.
Therefore, this time period definitely creates.
It's the toughest comps throughout the year and therefore.
Given that the growth was almost.
Was nearing 100% year over year on the year over year basis, it's natural to expect some sort of deceleration.
However, if were looking on the three year CAGR in terms of the journey of growth. When we see that visitation is largely stable and performance is in line with our expectations. Therefore, while on a year over year times, the performance might fireeye because of the base effect.
They come into account.
Right.
It should be largely in line with.
The trends, which we have observed previously in 2021.
Speaking about the cost performance as a percentage of JV.
Going forward for some cost lines, we still will be experienced in negative pressure from the opening of the new infrastructure objects as well as additional higher income for some that will however, we aim to maintain.
I mean, the robust cost relative to JV and definitely on year over year basis, especially speaking about the full year.
And then improvements should.
Variable cost lines. However, I mean definitely will not provide any guidance on EBITDA.
But we remain focused on the cost discipline.
Okay. Thank you very much.
Thank you.
Your next question is from the line of.
Alan.
Giovanna from J P. Morgan. Please go ahead.
Yes, hi, good growth congratulations.
I'll have a few questions first and foremost on delivery and fulfillment costs.
Do you think they should perform could you.
And why.
I guess as a percentage thank you Lena and figured I guess as a percentage of shoulder injury.
It should be reached.
This year and going forward.
The infrastructure ramps up.
We observed a gradual improvements.
Understood.
How does the.
How does the rising foreign tax rate change your outlook for perfect per barrel.
The increase in motor frequencies definitely beneficial for us and therefore, while optically.
Sure.
Maybe reducing debt.
Vikas.
Purchases are becoming more frequent.
Number of items.
Lower power into the economy, it's neutral thus far cohort performance and retention, it's way better therefore in the long run it should be beneficial for the company.
So basically even though the pressure on your growth vertical I mean, there's more quick one for a number of calls but.
Much of debt.
No no it doesn't really it suppression on delivery cost in this progression of this completely in line with our expectations and therefore, the guidance, which we have communicated to you already hospitals. This thing.
Therefore from our standpoint. This is just a natural reflection of the fact that people are becoming more frequent shoppers on all of them and.
So therefore, there shouldn't be any negative implications from the unit economic standpoint.
And can you share with us how quick one.
Customers shop per view on average that in a number of.
Orders per year or per.
Per quarter.
Tom.
Tier one is roughly a five client orders on them.
On the annualized basis, therefore is an increase from the fourth quarter of last year.
This is also a reflection of the fact, so that people are using more our own our pick up points and fossil office, which we actually wanted them to use more because we're opening those objects quite rapidly right now.
As seen in our press release, and therefore, it's all solid so fast infrastructure ramp up.
And for people, who have just a natural way of consumption. Therefore, it's also beneficial for our cohorts. So you could have seen in our presentation.
Uh huh.
Just a small follow up so you are saying about $5 nine orders per can.
Customer on an annual basis.
Thank you.
Like in parts of our growth.
Yes.
Yes, Hi, Harlan.
Hum.
In theory.
This is the long term targets would be definitely in mid to high teens and our longer term that's for sure.
That's something which is already a reality in most of punches and debt.
And that's what we'd like to achieve.
But what you should also.
Understand this debt.
<unk> is average adults also includes the new.
New customers right, which just joined the platform.
For those who are with us for more than one year. This number would do all relative.
No about one five times higher.
So thats.
We are quite happy with our cohort performance I think it's on the slide.
Six so thats.
You can see that every every new cohort is better.
And the previous one and it actually continues developing rapidly. So we're quite happy. So this five nine is actually already.
As always just about price, it's just metals.
The metals time for <unk>.
For new cohorts to mature.
Even if the older cohorts do not improve.
Mhm, Okay understood I think on the.
Those of you on more frequent shoppers shop, 36 365 day.
And the one from me.
Great.
Let's see a frequency.
Maybe you can provide an estimate.
365.
Here.
Yes.
Every day and sometimes twice a day, so I'm on like that.
You can tell that this is the potential.
So the final one from me would be on take rate dynamics.
How should we think about this for the rest of 2021 remaining quarters should we expect the take rate go down further as much.
Adjusted <unk>.
<unk> Commission.
Structure or maybe competitive pressures out there.
So again as you know we have done some changes since February. So in this result is actually a factor in some of the changes and you can see the interest looking versus Q4.
We do not want to give any guidance any promises here, but we just we just made this changes.
In February we.
We still digesting them together with sellers, what we clearly see is that.
We see some.
Some response from sellers. So we saw a solid base is increasing rapidly we see in particular by good response in terms of.
<unk> ask us so.
So our goal is to increase the assortment.
We see as it goes in either direction.
And we're also starting to seeing much better interest in our regional infrastructure, because we you can now actually to optimize some of the.
Some of your cost if you can bring debt equity to the local fulfillment center.
No.
So having said that so technically you might see some some reduction there, but it will be.
A clear reduction of cost as well right. So for example.
Today, if you sell from multiple to you guys haven't you will sell low will pay for.
For transportation activities, so in our reported it would be.
Part of the day rate once you will see ryzen reported so some growth some gross profit and it also will be some cost there.
If they bring directly to your current book.
The order goes from the Hudson Book Hudson Board, they will not pay for transportation.
They will pay us price there so.
Shall we take rate will be low cost well below as well.
So this is something that might happen apart from that.
We currently.
We are not working too so.
There are no.
<unk>.
Thoughts about.
Change in commissions.
We need to Digest This commission.
Develop ancillary.
Ancillary revenue.
Which is advertising is services, where we're doing a lot today and also cross dock.
Services, So you can actually pay us.
And we bring goods to regional fulfillment centers. So that's also important service fossil.
So Scott this shortly I guess, we just digits in disc emissions the impact they have and.
Focusing on ancillary part.
Okay. Thank you and if I may ask one more question.
Because the working capital dynamics are very volatile and I do understand.
Why this has been a source of cash outflow.
In Q1, but in principle has there been any underlying change.
How fast you pay.
Margin.
No I mean, nothing is nothing was changed it was completely impact so.
I mean, it will be a complex answer, but I'll try to keep it on price. So in 2020, the picture was distorted a bit.
By the COVID-19.
Especially in.
In the beginning of 2020 was distorted by the lagging impacts of.
The price evolution, which we decided zone that they can 2019.
Therefore, the way it will look at it is to is to combine the performance across several quarters say if you also look at the working capital dynamics for fourth quarter two.
2019, non first quarter going into 'twenty, together and compare it with the performance for the fourth quarter 2000 per initiative of the first quarter of 2021.
Actually see.
But the dynamics is healthy.
And therefore.
Less than it used to be over the comparable time period, but this segregation with low yet so I mean avoids.
Base.
Which one.
Which one between different quarters.
Okay. Okay. Thank you very much.
Briefly I think yes is the only way you suggest would be on the first half versus first half basis.
Because effectively will remember very well it's lost among last two weeks of March was a huge surge in in <unk>.
And in <unk> as well and we just got it just like a little bit like.
Small new year within the year and you can see the second quarter of last year in terms of operating cash flow was not.
Theres nothing thats actually not good at all versus first quarter right.
So the searcher sales in March and we paid for COVID-19.
Sales in the second quarter.
Uh-huh Yep understood. Thank you.
Thank you.
Once again, ladies and gentlemen, this star and one final question.
And your next question is from the line of Stephen Kim of Telus Capito. Please go ahead.
Yes, good afternoon.
Can I just have.
Three questions. Please.
Firstly on your share of deliveries next day so.
Is that progressing.
And how it compares maybe with the fourth quarter or a year ago.
Secondly.
As you reduce the threshold order flow for.
Well the thresholds order value for free quarter delivery, what happens with the share of quarter delivering total now in the first quarter.
So.
Last year, let's say.
And then lastly shall we expect G&A expenses growth ahead of Jim for.
For the rest of the year.
Something reasonable to issue. Thank you.
Okay.
So I will begin and it might be a venue and Alexander can't pull off the shelf Snaggers day still remains at roughly one third of the low dose because bill.
10 years, some of that fast to implement and therefore.
Nothing which has materially I think which is materially different versus the fourth quarter last year.
On the thresholds for AAV. So it resulted in a small uptick until they acquire in the share of great delivery I mean, but at the same time, we've been opening quite a lot of the pickup points. Therefore, it's hard to say.
What affects ultimately was was the strongest on the blended basis.
Now the share of deliveries flow parcel lockers pickup points.
<unk> said over 80%.
But going forward.
We're yet to see how this will play out.
Just as a reminder.
Our delay.
Delivery channel are structured in a way that makes it kind of agnostic and therefore, it doesn't matter that much for us.
Customer growth for liquidity delivery or where the customer can get the goods flow products, the low cost will pick up points because the growth from there.
If commissions are.
Our flagship in a way to make it.
Largely neutral for the bottom line.
G&A expense for the year, and therefore stronger in your guidance, but I can only say that.
In 2021, we are investing in and saw LMS acquisition.
Therefore.
So we're very costly and growth will probably remain somewhat elevated but.
I mean.
Well I'm not sure yet whether it will be a coupled with Virginia growth hormone.
Steel I mean definitely is just on the investments and definitely.
Quickly ramping up therefore, this impacts going to be much simple in the first quarter of 2020, so and by the end of 2021 already.
Great. Thank you Howard low here.
So what are you going to say that one of the reasons behind the New Commission that we implemented in Q1 was to incentivize us to keep the inventory in.
The total census across regions, which will both improve speed of delivery as well as reduced cost as percentage of JV.
Obviously, it takes time to communicate.
Let's change the way how sellers makes decision.
There is some in their share.
But what's it below but I think eventually this.
<unk> emissions will.
Have positive impact both on the speed of delivery, which is very important for us and also on costs.
Great. Thank you very much for this and maybe.
Maybe the last one is on express.
So footwear sushi, there you said before.
<unk> growth in revenue.
And.
<unk> C.
Similar trends this quarter end.
Have you been opening more dark stores. Thank you.
I'll just add earnings per day message very high growth rate.
From a very low base of last year.
Plan built on substantial number of dark stores.
This year.
They are performing according to our plan.
Our growth versus last year as overall zone has decelerated a bit given.
Very unusual situations situations last year.
But overall, we're very optimistic about the business model.
Okay, great. Thank you.
Thank you.
Your next question is.
From the line of MRV to Carnival of BCS. Please go ahead.
Yes, hi, everyone Ive got two questions. The first one.
Blue creation of your financials.
The merchant base.
You do tell us how many.
Got it.
Thanks.
But maybe if you could tell us now what percentage.
Sure.
Installments.
And also if there's merchant if you could tell us what percentage of merchants using your.
Sure.
<unk> financial strength.
And final question just advertising so what is kind of interest you feel like you tightened.
Non merchandise.
Okay.
So.
The total penetration low Fintech services lending forget the payments is close to roughly 7% total engineering deal right. So it's pretty significant obviously most part of that is attributable to a payment services because theres, a segue more scalable product offering.
But linear growth curve will gradually taken up so remind you. It was just an MVP at the end of the year and over the course of first quarter.
<unk> has already been able to get.
A couple of percentage points of Jamie.
Which is very fast, which means very fast scaling from a very very small base.
Therefore going forward, we're pretty confident in.
That's our fintech initiatives critical by very bigger share as a percentage of our own Jamie.
[noise].
And you guys can please.
Advertising is increasing as a percentage of the shelf JV gradually obviously is very far from realizing its long term potential.
Which should be somewhere close to mid <unk>.
Single digits as a percentage of <unk>.
<unk>.
In.
Advertising Yogurts, then it's a mindset.
It's impacted by the marketing which largely.
I think mostly attributable to a gross profit of element you back margin in a way.
I think I am talking the wallets.
<unk>.
On which the Neal and his team are focused mostly is development. So.
Rising engine in marketplace.
The service, which our sellers will be using.
As of now.
It's still very far from its long term potential as I've mentioned.
Understood. Thank you very much.
Okay.
Once again, ladies and gentlemen, I would like to.
Ask a question. Please press star one on your telephone.
And no further questions at this time please continue.
Okay.
Yeah.
As there are no further questions, let me hand back to the presenter for closing remarks.
Okay.
We want to thank everyone for joining us on this quarterly call and for your questions today.
To sum up we're very pleased with the progress we have made to date with 155% growth in Q1 of last year recall engine of our business, although our marketplace is Friday.
All cylinders.
I see.
As of Q1, 2021 three per share reached nearly 60% and we see a lot of growth potential both in our sleep and lumpy business models.
We're seeing strong demand for our services promotional consumers.
Our customer base is growing fast.
Encouraged about our cohort performance.
We continue to focus on scaling our business and expanding our core e-commerce business as well as additional verticals, which are complementary to our core business.
We look forward to updating year low.
We're making our Q2 earnings call in August.
Thank you and have a good afternoon.
That concludes the presentation today. Thank you for participating you may.
Disconnect.
Thank you.
Okay.
[music].
Okay.
[music].
Yes.
Yeah.
Okay.
Yes.
[music].
Okay.
Okay.
[music].
[music].
[music].
[music].