Naspers Accelerates Growth and Profitability, With 18X Improvement in Ecommerce Adjusted EBIT

Naspers Limited reported a strong financial performance, with its ecommerce revenue growing 21% to US$7.0 billion and the ecommerce portfolio's adjusted EBIT surging 18 times to US$430 million, driven by significant profitability improvements across key segments like iFood, OLX, and eMAG. This robust performance, coupled with a US$263 million improvement in free cash flow (excluding Tencent), highlights the company's strategic transformation into an AI-powered operating technology firm focused on lifestyle ecommerce, supported by US$7.8 billion in strategic investments. Naspers also underscored its commitment to shareholder returns, having executed over US$50 billion in buybacks and proposing a 100% increase in the Prosus dividend.

Analysis

Naspers has demonstrated a significant operational turnaround, marked by a pivotal shift to profitability in its core Ecommerce portfolio, which recorded an adjusted EBIT of US$430 million, a stark reversal from a US$24 million profit in the prior year. This was underpinned by strong top-line growth, with consolidated revenues up 20% and Ecommerce revenues rising 21% to US$7.0 billion. The performance was broad-based, with standout results from iFood, where aEBIT grew 178%, and OLX, with a 61% aEBIT increase and a 10-percentage-point margin expansion to 35%. This financial improvement is directly tied to the company's strategic transformation into an AI-driven operating company, supported by US$7.8 billion in investments and key acquisitions like Despegar and the proposed Just Eat Takeaway.com deal. The company's strengthened financial position is further evidenced by a US$263 million improvement in free cash flow (excluding Tencent) and a robust capital return program, which includes over US$50 billion in historical buybacks and a proposed 100% dividend increase for Prosus. Management's forward guidance, anticipating at least the same level of incremental aEBIT in FY26, signals strong confidence in sustained momentum.

Key Decisions for Investors

• The sharp inflection to significant profitability in the core Ecommerce portfolio validates the long-term investment thesis, warranting a re-evaluation of valuation models to reflect accelerating earnings and the positive forward guidance for FY26.
• Investors should factor in the enhanced capital return profile, driven by a 100% proposed dividend increase for Prosus and a history of substantial buybacks, which has already delivered 15% NAV per share accretion.
• While the outlook is strong, it is crucial to monitor the execution and integration of the large-scale Just Eat Takeaway.com acquisition, as well as competitive pressures in the Indian Fintech segment, which remains a drag on overall profitability despite revenue growth.