Prosus accelerates profitability target and delivers on objectives

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Prosus is successfully delivering on its commitments. The fundamentals of its operating  businesses are improving, driving proftable growth. The ongoing open-ended buyback  continues to compound value over time and the removal of the cross-holding agreement  has greatly simplified the Group’s structure. Lastly, with its strong balance sheet and  through active portfolio management, the Group is well positioned to generate improved  returns through smart and disciplined capital allocation, benefitting all its stakeholders.


Headlines

  • Sustained topline growth of 16%, more than double the rate of peers, with Ecommerce  consolidated revenue of US$2.6bn.
  • Meaningful improvement in profitability, enabling the Group to bring forward its Ecommerce profitability target by six months to 2H 2024.
    • Consolidated Ecommerce trading loss of only US$36m, representing a 10% margin  improvement year-on-year.
    • iFood is now profitable overall, not just in its core.
  • Core headline earnings more than doubled, increasing 118%, on improved Ecommerce  and Tencent profitability
  • Free cash inflow increased to US$725m, a 6x improvement year-on-year.
  • US$25bn of value created by the ongoing buyback programme since launch, delivering 7% NAV per share accretion.
  • Strong balance sheet with central cash of US$15.1bn.
  • Removal of cross-holding agreement between Prosus and Naspers completed in  September 2023, to simplify the Group’s structure.

Ervin Tu, Interim Group CEO, Prosus and Naspers, commented: “We are making  substantial progress against our commitment to drive profitable growth. Through active  management of our portfolio, we have delivered improved results as our Ecommerce  portfolio is now close to breakeven and growing at scale. We’ve simplified our Group  structure, and the open-ended buyback programme is driving daily NAV per share  growth – magnifying returns over the long term. With deep institutional knowledge  across a number of technology domains, including AI, we are well positioned to support  exceptional technology companies around the world. We remain ambitious in our plans  and disciplined in our approach to drive real returns for all of our stakeholders.“

Group performance

Basil Sgourdos, Group CFO, Prosus and Naspers, commented: The Group has delivered a strong financial performance, beating industry levels of growth, while  significantly accelerating profitability. Driven by continued strong execution across our  Ecommerce portfolio, I expect this trajectory to continue at pace. Our Classifieds and  Food Delivery segments are both profitable, and PayU is making strong progress towards  profitability. Core headline earnings have doubled and the impact of the strong improvements in Ecommerce and Tencent are also evident in our free cashflow, which has increased six times. Our strong and flexible balance sheet, active portfolio  management and disciplined capital allocation will underpin our success.”

Industry-leading growth and accelerating profitability across core Ecommerce  portfolio

  • Food Delivery: Sustained revenue growth with significant profitability improvement
  • iFood’s core restaurant business more than doubled trading profit to US$114m,  with a 19% trading margin. 
  • iFood grew Gross Merchandise Value (GMV) by 15% and revenue by 17%, resulting  in a trading profit of US$23m, up 149%.
  • Strong performance by key investments:
    • Delivery Hero grew group GMV by 8% in Q2 2023, with H1 revenue up by  27%, boosting profitability to an adjusted EBITDA of €9m. 
    • Swiggy grew GMV by 28%, as operating metrics improved, and trading  losses reduced to US$208m.

Classifieds – OLX Group: Strong performance, with peer-leading growth and expanding margins

  • Classifieds consolidated revenue grew 32%, driven by a strong performance in European auto verticals and OLX horizontal platforms.
  • Trading profit more than doubled to US$94m, with trading profit margin increasing 12 percentage points, to 27%.
  • Exited OLX Autos businesses (excluding the US), with expected proceeds of US$181m.

Payments & Fintech – PayU: Strong overall performance, with core Payments Service Provider (PSP) business profitable and sustained growth in Indian businesses

  • Consolidated revenue increased 32% to US$497m, as core PSP business grew Total Payment Volume (TPV) by 20% and delivered a trading profit margin of 2%.
  • Indian credit business grew its loan book by 66% with revenue up 31%.
  • Consolidated trading loss narrowed to US$22m, with a 15 percentage point improvement in trading profit margin.
  • Agreed sale of GPO business, excluding PayU Turkey and Red Dot Payment, to Rapyd for US$610m.
  • Strong performance at Remitly in Q3 2023, with revenue increasing 43%. At 30 September 2023, value of Remitly stake approximately 5x initial investment.

Edtech: Continued growth in majority-owned platforms, with investment to leverage the  significant opportunity of generative AI

  • Consolidated revenue grew 11% to US$71m with trading losses flat at US$66m, despite the macroeconomic downturn and continued investment in new  technologies. 
  • Stack Overflow revenues grew 7% and successfully launched Overflow AI, a  roadmap for the integration of generative AI. 
  • GoodHabitz grew revenue by 22%.

South African businesses [Naspers release only]

  • Takealot Group grew GMV by 15% and revenue by 9%, while reducing trading  losses by 85%, despite challenging trading conditions.  
  • Mr D grew GMV by 15% and revenue by 11%.

For full details of the Group’s results, please visit www.prosus.com.

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