Naspers Limited Class N · JSE:NPN
Naspers Limited Class N — H1 FY2018 Earnings Presentation
38 slides from Naspers Limited Class N's earnings presentation, November 2017
Slide 1: Financial results presentation
Financial results presentation For the six months ended 30 September 2017
Slide 2: Important information
Important information This presentation contains forward-looking statements as defined in the United States Private Securities Litigation Reform Act of 1995. Words such as “believe”, “anticipate”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour” and similar expressions are intended to i
Slide 3: Agenda
1. Operations 2. Financials Agenda 3. Outlook 4. Appendix
Slide 4: Operations
OPERATIONS
Slide 5: 1H FY18 operational highlights
1H FY18 operational highlights 1 Classifieds: strong traction across portfolio 2 B2C: local market-leadership positions, improving unit economics 3 Payments: continue to scale organically and through M&A 4 Food delivery: strengthened presence in fast-growing segment 5 VE: solid performance by SA, st
Slide 6: Classifieds: strong traction across portfolio
Classifieds: strong traction across portfolio MULs (m)* App MAU (m)* 30% 21% 85.4 19.1 15.8 65.7 1H FY17 1H FY18 1H FY17 1H FY18 * Data reflects full year averages at 100% of controlled entities and a proportionate share of equity-accounted investments. 6
Slide 7: Classifieds: increased revenue/user & margin expansion
Classifieds: increased revenue/user & margin expansion OLX: revenue/internet user - monetisation countries EBITDA margins: expanding, but room to be best in class (OLX monetisation countries only)* 34% 66% 64% 1.45 1.08 0.72 60% 54% FY16 FY17 FY18E 52% # of Countries 10 12 14 Margin % 40% 45% 45% 54
Slide 8: Classifieds: Avito shows consistent growth
Classifieds: Avito shows consistent growth Key growth metrics – Avg. 1H17 vs. 1H18 Buyers and sellers in apps (Apr 14 = 100) 62x 57x # of Paying Listers +16% App MAUs +32% Apr-14 Apr-15 Apr-16 Apr-17 Dec-14 Dec-15 Dec-16 Aug-17 Aug-14 Aug-15 Aug-16 MULs +42% Revenue (RUBbn)* Adjusted EBITDA (RUBbn)*
Slide 9: Classifieds: Poland exceeding expectations
Classifieds: Poland exceeding expectations Key growth metrics – Avg. 1H17 vs. 1H18 Revenue split (PLNm) – (indexed) MULs +24% 50% App MAUs +38% # of Paying Listers +133% FY16 FY17 1H FY17 1H FY18 YoY growth in revenue (indexed) Revenue split (PLN) Real Estate +31% Advertising C2C Goods Vehicles +47%
Slide 10: Classifieds: early monetisation in Brazil, plenty of runway
Classifieds: early monetisation in Brazil, plenty of runway Key Market Insights OLX Brazil revenue (BRLm) 4th Largest Internet Base Globally 88% 140m users Top 10 Private Consumption Globally 1H FY17 1H FY18 OLX Brazil trading loss (BRLm) 66% >US$1bn per annum 1H FY17 1H FY18 Young, Mobile First Dem
Slide 11: Classifieds: letgo USA overtook Offerup in mobile minutes
Classifieds: letgo USA… USA now also overtook Offerup in mobile minutes Monthly Minutes Spent (Mobile App) Mobile monthly active users (Mobile MAUs) 120% 19% 106% 81% Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Close5 5Miles Close5 5Miles Letgo a
Slide 12: B2C etail: strong GMV growth and improving unit economics
B2C etail: strong GMV growth and improving unit economics B2C etail* segment GMV (US$m) YoY growth in GMV (US$m) 40% eMAG 35% 1 047 Flipkart 43% Takealot 72% 746 554 B2C etail segment EBITDA as % of GMV 1H FY16 1H FY17 1H FY18 -9% -11% 1H FY16 1H FY17 1H FY18 -19% *GMV presented on an economic inter
Slide 13: Payments: continuing to scale organically and through M&A
Payments: continuing to scale organically and through M&A Scaling rapidly Strong growth Select investments Average daily transactions (m) 86% (63%) 1.8 • ~US$120m investment 1.0 • Provides AI-based credit Sep 16 Sep 17 Revenue growth (US$m) 52% (36%) • Operations across 17 markets • >300,000 merchan
Slide 14: Online food delivery: highly attractive opportunity
Online food delivery: highly attractive opportunity Online food delivery footprint* iFood – investing in further growth (US$m) 53 49 20 16 5 2 (2) (7) FY16 FY17 1H FY17 1H FY18 Revenue Trading profit *Includes Naspers subsidiaries and online food delivery associates Delivery Hero – strong growth in
Slide 15: Video entertainment: solid subscriber growth
Video entertainment: solid subscriber growth Video-entertainment subscriber homes (‘000) Subscriber mix (‘000) 11% 1 890 Total 7,259 8,402 10,234 11,002 12,232 2 005 3 290 3 266 2 981 2 553 +17% 7 052 2 428 5 730 873 2 615 541 2 401 +9% 1H FY17 1H FY18 2 243 2 355 2 019 18% 15% 27% 30% +10% 6,636 5,
Slide 16: Video entertainment: positioning for the future
Video entertainment: positioning for the future South-Africa Sub-Sahara SVOD/online opportunity + • Mass market growth continuing • Subscriber growth recovering • Combined Showmax with DStvNow • ARPU relatively stable at ZAR347 • ARPU now US$24 due to fx, sub mix • Strong, early market position in S
Slide 17: Financials
FINANCIALS
Slide 18: 1H FY18 financial highlights
1H FY18 financial highlights 1 Strong growth in revenue and core earnings 2 Development spend trending down 3 Ecommerce: topline growth accelerated, reduced losses 4 Classifieds: turned profitable (excluding letgo) 5 Healthy boost from Tencent 6 Balance sheet strong, current business plan fully fund
Slide 19: Synopsis of financials
Synopsis of financials Revenue* (US$m) Development spend* (US$m) 33% (39%) -5% (-6%) 9 021 496 470 6 788 1H FY17 1H FY18 1H FY17 1H FY18 Trading profit* (US$m) Core HEPS (USc) 65% 40% (52%) 2 067 350 1 473 212 1H FY17 1H FY18 1H FY17 1H FY18 *Results reported on an economic-interest basis, i.e. equi
Slide 20: Ecommerce and Tencent fuel robust revenue growth
Ecommerce and Tencent fuel robust revenue growth Revenue* by segment (US$m) Incremental revenue* by segment, YoY (US$m) YoY change (%) 38% 56% 7% 5% 4% 0% 33% (39%) 120 14 28 1,943 (277) 405 9,021 6,788 Ecommerce (18%) SNS (59%) 1H FY17 Ecommerce SNS Video Media M&A and Forex 1H FY18 Video entertain
Slide 21: Ecommerce growth accelerating
Ecommerce growth accelerating Constant currency revenue growth by type* 186% 180% 90% 135% 76% 75% 60% 30% 38% 38% 37% 36% 29% 24% 24% 16% 0% Ecommerce Classifieds eTail Payments Food delivery Travel 1H FY17 1H FY18 *Results reported on an economic-interest basis, i.e. equity-accounted investments a
Slide 22: Development spend lower in absolute terms
Development spend lower in absolute terms Development spend YoY (US$m)* 1 084 953 961 -5% (-6%) 496 470 188 200 308 270 FY15 FY16 FY17 1H FY17 1H FY18 Older investments New investments * Development spend consists of trading losses incurred by developing businesses that have yet to reach scale. Resu
Slide 23: Trading profit boosted by Tencent and reduced ecommerce losses
Trading profit boosted by Tencent and reduced ecommerce losses Incremental trading profit by segment, YoY (US$m)* 38% 6% 43% 3% 0% 7% 2% 40% (52%) 7 (103) (29) 661 (41) 49 9 2 067 1 473 1H FY17 Ecommerce New bets** SNS Video Media M&A & other Forex 1H FY18 entertainment * Results reported on an econ
Slide 24: Classifieds and payments drive profitability in ecommerce
Classifieds and payments drive profitability in ecommerce Financial progress of profitable entities* (US$m) 1 015 774 698 698 50% (36%) 443 443 465 391 288 311 55% (52%) 229 122 170 317 110 331 166 162 FY16 FY17 1H FY17 1H FY18 Revenue Trading profit Contribution from disposed entities * Information
Slide 25: Classifieds now profitable (excluding letgo)
Classifieds now profitable (excluding letgo) OLX Group revenue (US$m) OLX Group trading profit/(loss) (US$m) Split in OLX Group trading profit/(loss) (US$m) 40% 1HFY17 1HFY18 426 55 (28) 150 47% (38%) (78) 107 288 266 (192) 30% (286) 196 (95) 214 (135) FY15 FY16 FY17 1H FY17 1H FY18 FY15 FY16 FY17 1
Slide 26: Video entertainment: steady profitability
Video entertainment: steady profitability Video entertainment (VE) financials (US$m) 8% 1 645 1 777 4% 226 234 1H FY17 1H FY18 Revenue Trading profit Programming and production costs (US$m) Capital expenditure (US$m) 5% 60% 573 43 545 17 1H FY17 1H FY18 1H FY17 1H FY18 26
Slide 27: Video entertainment: solid results from SA, SSA stabilised
Video entertainment: solid results from SA, SSA stabilised ZAR* strengthened vs US$ … … which, together with sub growth, boosted results (US$m) FY16 FY17 1H FY18 10% South Africa 9% 1 478 1 341 -1% 13% -25% 368 416 1H FY17 1H FY18 Revenue Trading profit Naira* continues to weaken… ... but cost contr
Slide 28: Associates: healthy contribution from Tencent and Mail.ru
Associates: healthy contribution from Tencent and Mail.ru Tencent operating profit (RMBm)* Mail.ru EBITDA* (RUBm) 39% CAGR +3% CAGR +38% 18 086 17 914 9% 58 154 60 170 16 850 14 106 43 208 12 945 41 764 30 411 2014 2015 2016 9M FY16 9M FY17 2014 2015 2016 9M FY16 9M FY17 *Reflects 100% of Jan-Sep 20
Slide 29: FCF: increased cash from operations offset by working capital
FCF: increased cash from operations offset by change in working capital Free cash flow (FCF) breakdown (US$m) 42 (1) (96) (239) 12 57 33 1H FY17 Cash from operations Working capital* Capex Dividends received Other 1H FY18 *Working capital affected by investment in decoder inventory and pre-payments
Slide 30: M&A activity
M&A activity Acquisition spend over time (US$m) Announced after half year-end 1,495 Investments 420 US$775m 1,005 US$100m 553 US$36m 420 262 139 Total US$911m FY15 FY16 FY17 1H FY17 1H FY18 30
Slide 31: Balance sheet strong, current business plans fully funded
Balance sheet strong, current business plans fully funded Group net cash / (consolidated debt) (US$m) US$m FY17 1H FY18 Debt*: (offshore US$3.2bn) (2,898) (3,305) 1 105 Cash: (South Africa US$272m) 4,003 3,165 (140) Closing net cash / (debt) 1,105 (140) (1 213) Gearing -7% 1% (1 994) -2 500 Interest
Slide 32: Outlook
OUTLOOK
Slide 33: Outlook
Outlook 1 Continue to drive scale across all segments 2 Accelerate path to profitability for ecommerce 3 Consistently drive cost reduction and margin improvement 4 Selectively invest in emerging growth opportunities 5 Set up application of AI/ML in all our businesses 33
Slide 34: Appendix
APPENDIX
Slide 35: Summarised income statement
Summarised income statement US$m 1H FY17 1H FY18 Revenue* 6,788 9,021 Less: Equity-accounted investments (3,830) (5,914) Consolidated revenue 2,958 3,107 Trading profit 45 70 Trading margin 2% 2% Net finance costs (165) (125) Share of equity-accounted results 912 1,447 Gains on acquisitions and disp
Slide 36: Group structure
Group structure 1) OLX owns 50% of operations in Brazil and 40.5% of Indonesia 2) Our effective interest in letgo USA (B.V) is 47.1% held through Ambatana Holdings 3) MMYT listed on the Nasdaq stock exchange; fully diluted holding 40% 4) Showmax SA is held 80%, other Showmax operations are held 100%
Slide 37: Glossary of terms
Glossary of terms — AI: Artificial intelligence — GMV: Gross merchandise value — ARPU: Average revenue per user — M&A: Mergers and acquisitions — B2C: Business to consumer — MAU: Monthly active user — C2C: Consumer to consumer — ML: Machine learning — CAGR: Cumulative annual growth rate — MUL: Month
Slide 38: Thank you
THANK YOU Meloy Horn +27 11 289 3320 +27 82 7727 123 InvestorRelations@naspers.com www.naspers.com