Revenue grew due to an increase in service fees

[tanjimajuha20]

Ozon, the operator of one of the largest marketplaces in Russia, reported an increase in total goods turnover (GMV) by 118% y/y to RUB 372.6 billion in 2Q23, revenue - by 61% y/y to RUB 94.2 billion. The company increased its forecast for GMV growth in 2023 to 80-90% (previously: +70%), and the management also expects positive corr. EBITDA for the year.

(marketplace commissions, advertising, honduras whatsapp resource delivery, financial services) by 88% y/y to RUB 56.9 billion. Own sales grew by 32% y/y to RUB 37.2 billion, thus the share of own sales in total revenue decreased to 40% compared to 48% in 2Q22 and 43% in 1Q23. It should be noted that the expansion of own sales returned to double-digit rates after three quarters of inexpressive dynamics. At the same time, on a call with investors, Ozon CFO Igor Gerasimov noted that the share of own sales will continue to decline.

Adjusted EBITDA decreased by 67% y/y to RUB 62 million, EBITDA margin – to 0.1% compared to 0.3% in 2Q22 and 8.5% in 1Q23. Starting from 2Q22, Ozon demonstrated positive adjusted operating profit and consistent expansion of profitability, while the growth rate of GMV and revenue slowed. In the reporting quarter, the marketplace decided to accelerate turnover growth on the platform through various promotions. As a result, gross profit grew slower than revenue, by 13% y/y. During the call, the CFO noted that Ozon is in no hurry "to show significantly positive EBITDA" and believes that investing in market share growth is a strategically correct decision.

The report is mixed, the company's receipts are down 4.4%. Ozon demonstrated an increase in the main indicators of the marketplace (number of orders +131% y/y, buyers +29% y/y, the frequency of orders per year increased to 17 purchases per year compared to 11 in 2Q22) due to the expansion of logistics assets and the development of the e-commerce market in Russia, as well as due to promotions, which affected profitability.

Ozon remains one of the growth stories in the Russian market, demonstrating impressive growth rates, but investors should not count on dividends in the near future, as the company will continue to actively invest in development and consolidation of its share, which will affect its profitability. We plan to revise the target price of Ozon shares taking into account the increase in management forecasts and the released report.