Kaspi.kz - the Super App that No One Talks About
Kaspi (KSPI) is a Kazakh super app providing fintech, payments, and e-commerce services. With 14 million users, it captures around 70% of Kazakhstan's population. Despite recent growth deceleration, its net income rose 44% from 2022 to 2023. The company f
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This memo was initially written around January 29th, 2025
Kaspi (KSPI) is a conglomerate based in Kazakhstan that operates a super app called “Kaspi.kz,” which includes banking, payments, e-commerce, and government services. Its model is similar to WeChat and Line, minus the social media and instant messaging elements.
Kaspi’s net income is equally divided between its three main segments: fintech, payments, and marketplace.
Payments: Kaspi QR, household bills, P2P
Fintech: buy now pay later, Kaspi deposit, loans
Marketplace: e-commerce, m-commerce (offline payment via QR), Kaspi travel, e-grocery
Kaspi has seen remarkable growth since its founding 15 years ago. By 2024, the Kaspi super app boasts 14 million monthly active users, capturing ~70% of Kazakhstan's total population (20 million). Mirroring its user growth, Kaspi’s net income has surged at a CAGR of over 70%, from $26.6 million in 2016 to $2.2 billion in 2023. Although the growth rate has decelerated in recent years, Kaspi still reported a 44% increase in net income from 2022 to 2023.
Kaspi presents two major competitive moats – brand power and network effect.
Brand power: Kaspi is the most well-known financial services and e-commerce company in KZ. With a 70% penetration rate, it's no surprise that many Kazakhs rely on Kaspi for their daily needs, such as groceries, online shopping, and payments.
Network effect: For many super-apps, network effect is an essential growth driver. WeChat, for example, leveraged its instant messaging platform to achieve this. Kaspi benefits similarly through its P2P and merchant payment platform. Each new user enhances the experience for both current and future users. Moreover, with widespread adoption, the cost of acquiring customers for new services drops significantly. However, it's important to note that network effects can also create a negative feedback loop if the company fails to maintain high-quality service and users start to abandon the super-app.
The company’s management team has demonstrated good track record and is highly incentivized to produce adequate long-term shareholder returns.
Extremely high insider ownership: the two co-founders of Kaspi own about 40% of the outstanding shares, without a dual class share structure.
Stellar track record: Kaspi has consistently generated high and increasing returns on invested capital (ROIC) since 2016, ranging from 40% to 80%. In 2023, ROIC exceeded 100%. Impressively, this growth was achieved despite decreasing debt and maintaining a net cash position for the past five years.
Rational capital allocation: historically, the management team has not hesitated to return excess capital to shareholder in the form of dividends.
Here are some risk factors that can negatively impact investment results:
Growth stagnation: Kaspi may face challenges if it exhausts expansion opportunities within KZ and fails to enter other markets, despite attempts to break into Turkey. So far, Kaspi has successfully diversified within KZ, generating new income streams through e-grocery and travel services.
Economic downturn: Kazakhstan's economy can face significant disruptions due to nearby conflicts (Russia, China, or other central Asian countries) or fluctuations in raw material prices, such as petroleum and uranium, given its heavy reliance on exports.
Government intervention: Kazakhstan's weak rule of law could lead to government actions that negatively impact Kaspi. However, Kaspi currently enjoys a positive and strong relationship with the government, which has showcased Kaspi as a success story of its digitization and fintech-friendly policies.
Given Kaspi’s current market valuation (enterprise value) of $18 billion, I estimate the long-term expected ROI to be around 12% to 21% per year.
Disclaimer:
The information provided in this content is for informational and educational purposes only and should not be construed as financial or investment advice. The opinions expressed are those of the author and do not constitute a recommendation to buy or sell any securities or financial instruments. While efforts are made to ensure accuracy, the information may become outdated or incomplete over time. Investing involves risk, including the potential loss of principal. Always conduct your own research or consult with a licensed financial advisor before making any investment decisions. The author may hold positions in the securities discussed.