Kaspi.kz (KSPI) and Netflix (NFLX)
Kaspi.kz (KSPI) reported Q2 results this morning that came in just a hair shy of expectations (net income of +25% missed by about 2%), though full-year guidance was reiterated. It sounds like lower interest rates on current account balances meant Payment segment net income underperformed by about 6%, even though it grew by 22% thanks to business-to-business (B2B) payments and Kaspi Pay growth. Fintech net income grew by 2% but missed by a couple percentage points. Expectations for lower interest rates imply Fintech will start to do better as we move into Q3 and Q4. Marketplace was the bright spot in the quarter with net income up 64% (a roughly 5% beat). Management still expects net income to grow by around 25% this year but noted that Q3 could be a little slower without the Juma promotional event (kind of like Amazon’s Prime Day), which occurred in June (Q2), not July (Q3) as it did last year. There should be a pickup in Q4, partially thanks to Juma in November. Management is still looking to expand internationally. This was a perfectly good quarter with nothing super good, or super bad. The stock is down a little today, but I don’t expect any significant drama. BUY HALF
Netflix’s (NFLX) Q2 results just snuck by expectations as revenue grew 16.8% to $9.56 billion and EPS grew 48% to $4.88. Most relevant is that subscriber net additions (+8 million) set a Q2 high water mark, and management raised full-year guidance for revenue (14% to 15%) and operating margin (26%). It sounds like the Ad Tier is performing well (now roughly 10% of members), but it will still be a few quarters before the revenue spigot opens (i.e., when ad revenue starts to exceed the loss of subscription revenue from subs jumping from a higher priced Basic plan to the lower-priced Ad plan). It’s possible Netflix will be increasing prices across the Ad Tier (currently at $6.99), which could drive some outperformance relative to expectations in the second half of the year. There is a lot of work being done around monetizing users in the Ad Tier, and I’m sure we’ll hear much more about this in future quarters. In the meantime, Netflix continues to focus on putting out strong content to support its position as the best in the streaming business. Continuing to watch the stock’s reaction to the report. HOLD HALF
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