Ozon Holdings PLC (NASDAQ and MOEX: “OZON”, thereafter referred to as “we”, “us”, “our”, “Ozon” or the “Company”), an operator of the leading Russian e-commerce platform, announces its unaudited financial results for the fourth quarter and audited financial results for the full-year ended December 31, 2022.
Fourth Quarter and Full-Year 2022 Operating and Financial Highlights
· GMV incl. services increased by 67% year-on-year to RUB 296.0 billion in Q4 2022 boosted by the near doubling of Ozon Marketplace (3P) GMV. In the full-year 2022, GMV incl. services increased 86% year-on-year to RUB 832.2 billion.
· Total revenue increased by 41% and 55% year-on-year in Q4 2022 and in the full-year 2022, respectively, augmented by growth in our service revenues of 123% year-on-year in Q4 2022 and of 147% in the full-year 2022.
· Adjusted EBITDA was positive for the third consecutive quarter and reached RUB 3.9 billion in Q4 2022 mainly due to the increase in revenue, in particular service revenue, the optimization of fulfillment and delivery expenses and a reduction in sales and marketing costs. Adjusted EBITDA improved by 10.3 p.p. to 1.3% as a percentage of GMV incl. services in Q4 2022 and improved sequentially by 0.4 p.p. compared to Q3 2022.
· Loss for the period decreased significantly year-on-year to RUB 11.2 billion in Q4 2022 and remained broadly flat at RUB 58.2 billion for the full-year 2022, despite a one-off operating expense of RUB 10.2 billion resulting from a fire incident at our fulfillment center in the Moscow region in August 2022.
Fourth Quarter and Full-Year 2022 Operating and Financial Highlights
· GMV incl. services increased by 67% year-on-year to RUB 296.0 billion in Q4 2022 boosted by the near doubling of Ozon Marketplace (3P) GMV. In the full-year 2022, GMV incl. services increased 86% year-on-year to RUB 832.2 billion.
· Total revenue increased by 41% and 55% year-on-year in Q4 2022 and in the full-year 2022, respectively, augmented by growth in our service revenues of 123% year-on-year in Q4 2022 and of 147% in the full-year 2022.
· Adjusted EBITDA was positive for the third consecutive quarter and reached RUB 3.9 billion in Q4 2022 mainly due to the increase in revenue, in particular service revenue, the optimization of fulfillment and delivery expenses and a reduction in sales and marketing costs. Adjusted EBITDA improved by 10.3 p.p. to 1.3% as a percentage of GMV incl. services in Q4 2022 and improved sequentially by 0.4 p.p. compared to Q3 2022.
· Loss for the period decreased significantly year-on-year to RUB 11.2 billion in Q4 2022 and remained broadly flat at RUB 58.2 billion for the full-year 2022, despite a one-off operating expense of RUB 10.2 billion resulting from a fire incident at our fulfillment center in the Moscow region in August 2022.
The above table sets forth a summary of the key operating and financial information for the quarter and fiscal year ended December 31, 2022. The quarterly information for the three months ended December 31, 2022 and 2021 has not been audited or reviewed by the Company’s auditors and should be read in conjunction with our consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 and related notes thereto appearing elsewhere in the Company’s Annual Report (Form 20-F) filed with the United States Securities and Exchange Commission (“SEC”) on April 25, 2023. See the “Presentation of Financial and Other Information” section of this press release for a definition of non-IFRS measures, such as Adjusted EBITDA, and a discussion of the limitations on their use, and reconciliations of the non-IFRS measures to the applicable IFRS measures. See the definitions of metrics such as GMV incl. services, number of orders, number of active buyers, number of active sellers and share of Marketplace GMV in the “Other Key Operating Measures” section of this press release.
Total revenue increase of 41% year-on-year in Q4 2022 was driven by growth in service revenues, which was partly offset by the softer performance of our 1P business due to supply chain disruptions. Service revenues demonstrated strong progression, increasing by 123% year-on-year in Q4 2022, boosted by adjustments to the marketplace commission and rising advertising revenues. Notably, advertising revenue reached 3.8% as a percentage of GMV in Q4 2022 compared to 2.3% in Q4 2021, primarily driven by rapid growth in the seller base as well as quality and efficiency enhancements made to our suite of advertising products for sellers.
Total revenue increase of 41% year-on-year in Q4 2022 was driven by growth in service revenues, which was partly offset by the softer performance of our 1P business due to supply chain disruptions. Service revenues demonstrated strong progression, increasing by 123% year-on-year in Q4 2022, boosted by adjustments to the marketplace commission and rising advertising revenues. Notably, advertising revenue reached 3.8% as a percentage of GMV in Q4 2022 compared to 2.3% in Q4 2021, primarily driven by rapid growth in the seller base as well as quality and efficiency enhancements made to our suite of advertising products for sellers.
Operating expenses declined by 17.2 p.p. year-on-year in Q4 2022 as a percentage of GMV incl services as our cost of sales and marketing and sales expenses decreased significantly year-on-year and fulfillment and delivery cost base growth decelerated to 35% in Q4 2022 from 187.2% year-on-year in Q4 2021. The growing scale of our business, as well as the optimization of logistics routes and processes at fulfillment centers, led to a decrease in fulfillment and delivery costs of 3.5 p.p. year-on-year as a percentage of GMV incl. services in Q4 2022. Growth in expenses tied to technology and content slowed in Q4 2022, and cost per order declined to 35 RUB in Q4 2022 from 49 RUB in Q4 2021, mainly as a result of the positive operating leverage effect. General and administrative expenses grew by 3% year-on-year in Q4 2022, declining by 1.1 p.p. to 1.6% as a percentage of GMV incl. services due to labor cost reduction and economies of scale.
Non-operating expenses amounted to RUB 7.5 billion in Q4 2022 compared to non-operating income of RUB 1.4 billion in Q4 2021, driven by rising interest rates and foreign currency exchange loss.
Loss for the period amounted to RUB 11.2 billion in Q4 2022 compared to RUB 20.8 billion in Q4 2021 due to solid GMV growth and improved profitability as a result of operating leverage and increasing platform monetization.
Net Cash Generated from Operating Activities was positive and reached RUB 8.5 billion in Q4 2022. The reduction compared to RUB 15.3 billion generated in Q4 2021 was largely attributed to a lower contribution from accounts payable and a greater cash outflow in respect of inventories.
Net Cash Used in Investing activities was RUB 8.7 billion in Q4 2022 versus RUB 22.6 billion in Q4 2021. The decrease of cash used in investing activities was primarily related to the placement of RUB 14.2 billion in bank deposits in Q4 2021.
Capital Expenditures in Q4 2022 remained broadly flat year-on-year and amounted to RUB 8.4 billion and was primarily related to expansion of fulfillment centers and launch of new warehouses to support growth of our platform.
Net Cash Generated from Financing activities was RUB 19.7 billion in Q4 2022 compared to RUB 2.2 billion used in Q4 2021 mainly due to proceeds from borrowings.
Cash, cash equivalents and short-term bank deposits amounted to RUB 90.5 billion (an equivalent of 1.3 billion in USD terms [1]) as of December 31, 2022.
Key Business Developments
Number of orders more than doubled to 465 million orders in the full-year 2022, bolstered by greater customer base and rising order frequency. Number of active buyers increased by 9.6 million to 35.2 million in 2022 as wider assortment and competitive pricing attracted new customers to the platform. Order frequency is one of the key indicators of our customer cohorts’ performance. As of December 31, 2022, the order frequency reached 13.2 orders per active customer per annum, increasing by more than 50% from 8.7 orders per annum as of December 31, 2021.
Number of active sellers reached approximately 232 thousand, increasing by 2.5 times year-on-year. With a rapid increase in the number of active sellers, share of Marketplace GMV continued to edge up reaching 78% in Q4 2022 compared with 68% in Q4 2021.
Ozon Global is our cross-border business which enables international sellers to offer goods to our customers. As of December 31, 2022, about 16 thousand international sellers from over 40 countries operated on our platform. In 2022 we continued to expand our global operations and launched Ozon Partner Delivery for goods from Turkey and China, and our Marketplace introduced direct sales of various goods by merchants through the Ozon Global platform. In October 2022, we established a sales office in Turkey and in November in China to attract more local sellers, further expand our product assortment and improve delivery time.
Ozon’s total warehouse footprint expanded by 36% year-on-year and reached approximately 1.4 million square meters as of December 31, 2022. In 2022 the Company also launched fulfillment centers in Kazakhstan and Belarus.
Ozon Fintech provides B2B and B2C financial services to our sellers and buyers and enhances customer retention and platform monetization and boosts our profitability. Ozon’s B2B fintech products include Flexible Payment Plan, lending solutions, settlement and cash services. Our B2C Fintech services consist of Ozon Card with more than 16 million users and BNPL solution and boost customer engagement, order frequency and boost profitability of the platform due to acquiring costs saving. Ozon Card allows customers to transact on and off-platform, to receive cashback and to buy goods on our platform at a discount, and results in higher order frequency per user compared to customers that do not use our fintech products.
Convertible Bonds and Debt Financing
As a result of a “Delisting Event” in March 2022, the holders of our USD 750 million 1.875% senior unsecured convertible bonds due 2026 (the “Bonds”) were entitled to require the Company to redeem the Bonds at the principal amount together with accrued interest on the redemption date, which was May 31, 2022.
In September 2022, the Company and an ad hoc committee of holders of the Bonds reached an agreement with respect to the terms of early redemption of the Bonds (the “Restructuring”). The terms of the Restructuring can be found in the consent solicitation memorandum dated September 23, 2022. In October 2022, holders of over 90% in principal amount of the Bonds outstanding voted in favor of the Restructuring. By December 31, 2022, the Company obtained U.S. and Cyprus sanctions licenses regarding the Restructuring, and in March 2023 the UK sanctions authority published a general license the scope of which covers the Restructuring and its implementation.
As of the date of this press release, the Company redeemed approximately 94% in principal amount of the Bonds. For further disclosure related to the Restructuring, please refer to the Company’s website https://ir.ozon.com/restructuring.
Risk and Uncertainties Related to Current Environment
The Company’s primary market of operations is Russia. The Company’s business and the results of its operations are therefore dependent on the economic conditions in Russia. Over the last two decades, the Russian economy has experienced or continues to experience at various times significant volatility in its GDP, high levels of inflation, increases in, or high, interest rates, sudden price declines in oil and other natural resources and instability in the local currency market.
The sanctions imposed on Russia and Russian persons by a number of countries in connection with the geopolitical crisis surrounding Ukraine, along with regulatory counter-measures taken by the Russian Government, have had a significant, and in many cases unprecedented, impact on companies operating in Russia. The United States, the European Union, the United Kingdom and other countries imposed severe sanctions targeting Russian financial institutions, oil, defense and other state-owned companies and other Russian companies and businesspersons, as well as export and import restrictions. In response, Russia identified a number of states, including the United States, all European Union member states and the United Kingdom, as “hostile” and introduced a number of economic measures in connection with their actions, as well as economic measures aimed at ensuring financial stability in Russia. In connection with such counter-measures, the Company is currently restricted from upstreaming cash from its Russian subsidiaries.
As the potential global and economic impacts of the geopolitical crisis surrounding Ukraine continue to rapidly evolve, in a manner that is unpredictable and beyond the Company’s control, it is difficult to accurately predict the full impact of the sanctions that have been introduced, as well as that of any measures taken by the Russian Government in response to these sanctions.
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[1] The USD equivalent was calculated as RUB amounts of cash, cash equivalents and short-term deposits converted from RUB using the exchange rate as of December 31, 2022: RUB 70.3375 per 1 USD (source: the Central Bank of the Russian Federation).
Loss for the period amounted to RUB 11.2 billion in Q4 2022 compared to RUB 20.8 billion in Q4 2021 due to solid GMV growth and improved profitability as a result of operating leverage and increasing platform monetization.
Net Cash Generated from Operating Activities was positive and reached RUB 8.5 billion in Q4 2022. The reduction compared to RUB 15.3 billion generated in Q4 2021 was largely attributed to a lower contribution from accounts payable and a greater cash outflow in respect of inventories.
Net Cash Used in Investing activities was RUB 8.7 billion in Q4 2022 versus RUB 22.6 billion in Q4 2021. The decrease of cash used in investing activities was primarily related to the placement of RUB 14.2 billion in bank deposits in Q4 2021.
Capital Expenditures in Q4 2022 remained broadly flat year-on-year and amounted to RUB 8.4 billion and was primarily related to expansion of fulfillment centers and launch of new warehouses to support growth of our platform.
Net Cash Generated from Financing activities was RUB 19.7 billion in Q4 2022 compared to RUB 2.2 billion used in Q4 2021 mainly due to proceeds from borrowings.
Cash, cash equivalents and short-term bank deposits amounted to RUB 90.5 billion (an equivalent of 1.3 billion in USD terms [1]) as of December 31, 2022.
Key Business Developments
Number of orders more than doubled to 465 million orders in the full-year 2022, bolstered by greater customer base and rising order frequency. Number of active buyers increased by 9.6 million to 35.2 million in 2022 as wider assortment and competitive pricing attracted new customers to the platform. Order frequency is one of the key indicators of our customer cohorts’ performance. As of December 31, 2022, the order frequency reached 13.2 orders per active customer per annum, increasing by more than 50% from 8.7 orders per annum as of December 31, 2021.
Number of active sellers reached approximately 232 thousand, increasing by 2.5 times year-on-year. With a rapid increase in the number of active sellers, share of Marketplace GMV continued to edge up reaching 78% in Q4 2022 compared with 68% in Q4 2021.
Ozon Global is our cross-border business which enables international sellers to offer goods to our customers. As of December 31, 2022, about 16 thousand international sellers from over 40 countries operated on our platform. In 2022 we continued to expand our global operations and launched Ozon Partner Delivery for goods from Turkey and China, and our Marketplace introduced direct sales of various goods by merchants through the Ozon Global platform. In October 2022, we established a sales office in Turkey and in November in China to attract more local sellers, further expand our product assortment and improve delivery time.
Ozon’s total warehouse footprint expanded by 36% year-on-year and reached approximately 1.4 million square meters as of December 31, 2022. In 2022 the Company also launched fulfillment centers in Kazakhstan and Belarus.
Ozon Fintech provides B2B and B2C financial services to our sellers and buyers and enhances customer retention and platform monetization and boosts our profitability. Ozon’s B2B fintech products include Flexible Payment Plan, lending solutions, settlement and cash services. Our B2C Fintech services consist of Ozon Card with more than 16 million users and BNPL solution and boost customer engagement, order frequency and boost profitability of the platform due to acquiring costs saving. Ozon Card allows customers to transact on and off-platform, to receive cashback and to buy goods on our platform at a discount, and results in higher order frequency per user compared to customers that do not use our fintech products.
Convertible Bonds and Debt Financing
As a result of a “Delisting Event” in March 2022, the holders of our USD 750 million 1.875% senior unsecured convertible bonds due 2026 (the “Bonds”) were entitled to require the Company to redeem the Bonds at the principal amount together with accrued interest on the redemption date, which was May 31, 2022.
In September 2022, the Company and an ad hoc committee of holders of the Bonds reached an agreement with respect to the terms of early redemption of the Bonds (the “Restructuring”). The terms of the Restructuring can be found in the consent solicitation memorandum dated September 23, 2022. In October 2022, holders of over 90% in principal amount of the Bonds outstanding voted in favor of the Restructuring. By December 31, 2022, the Company obtained U.S. and Cyprus sanctions licenses regarding the Restructuring, and in March 2023 the UK sanctions authority published a general license the scope of which covers the Restructuring and its implementation.
As of the date of this press release, the Company redeemed approximately 94% in principal amount of the Bonds. For further disclosure related to the Restructuring, please refer to the Company’s website https://ir.ozon.com/restructuring.
Risk and Uncertainties Related to Current Environment
The Company’s primary market of operations is Russia. The Company’s business and the results of its operations are therefore dependent on the economic conditions in Russia. Over the last two decades, the Russian economy has experienced or continues to experience at various times significant volatility in its GDP, high levels of inflation, increases in, or high, interest rates, sudden price declines in oil and other natural resources and instability in the local currency market.
The sanctions imposed on Russia and Russian persons by a number of countries in connection with the geopolitical crisis surrounding Ukraine, along with regulatory counter-measures taken by the Russian Government, have had a significant, and in many cases unprecedented, impact on companies operating in Russia. The United States, the European Union, the United Kingdom and other countries imposed severe sanctions targeting Russian financial institutions, oil, defense and other state-owned companies and other Russian companies and businesspersons, as well as export and import restrictions. In response, Russia identified a number of states, including the United States, all European Union member states and the United Kingdom, as “hostile” and introduced a number of economic measures in connection with their actions, as well as economic measures aimed at ensuring financial stability in Russia. In connection with such counter-measures, the Company is currently restricted from upstreaming cash from its Russian subsidiaries.
As the potential global and economic impacts of the geopolitical crisis surrounding Ukraine continue to rapidly evolve, in a manner that is unpredictable and beyond the Company’s control, it is difficult to accurately predict the full impact of the sanctions that have been introduced, as well as that of any measures taken by the Russian Government in response to these sanctions.
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[1] The USD equivalent was calculated as RUB amounts of cash, cash equivalents and short-term deposits converted from RUB using the exchange rate as of December 31, 2022: RUB 70.3375 per 1 USD (source: the Central Bank of the Russian Federation).
Contacts
Investor Relations
ir@ozon.ru
Press Office
pr@ozon.ru
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Disclaimer
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Ozon Holdings PLC (“we”, “our” or “us”, or the “Company”) about future events and financial performance. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.
These forward-looking statements are based on management’s current expectations. However, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors and circumstances that may cause Ozon’s actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including conditions in the U.S. capital markets, negative global economic conditions, potential negative developments in the COVID-19 pandemic, the geopolitical crisis surrounding Ukraine and sanctions and governmental measures imposed in response, other negative developments in Ozon’s business or unfavorable legislative or regulatory developments. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2022 and other filings with the SEC concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.
These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While Ozon may elect to update such forward-looking statements at some point in the future, Ozon disclaims any obligation to do so, even if subsequent events cause its views to change. These forward-looking statements should not be relied upon as representing Ozon’s views as of any date subsequent to the date of this press release.
This press release includes certain non-IFRS financial measures not presented in accordance with IFRS, including but not limited to Adjusted EBITDA. These financial measures are not measures of financial performance or liquidity in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to loss for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that the Company’s presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. See “Presentation of Financial and Other Information” in this press release for a reconciliation of certain of these non-IFRS measures from the most directly comparable IFRS measure.
This press release includes interim financial information for the three months and the year ended December 31, 2022 and 2021. The quarterly information has not been audited by the Company’s auditors.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of Ozon Holdings PLC (“we”, “our” or “us”, or the “Company”) about future events and financial performance. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements.
These forward-looking statements are based on management’s current expectations. However, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors and circumstances that may cause Ozon’s actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including conditions in the U.S. capital markets, negative global economic conditions, potential negative developments in the COVID-19 pandemic, the geopolitical crisis surrounding Ukraine and sanctions and governmental measures imposed in response, other negative developments in Ozon’s business or unfavorable legislative or regulatory developments. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2022 and other filings with the SEC concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.
These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While Ozon may elect to update such forward-looking statements at some point in the future, Ozon disclaims any obligation to do so, even if subsequent events cause its views to change. These forward-looking statements should not be relied upon as representing Ozon’s views as of any date subsequent to the date of this press release.
This press release includes certain non-IFRS financial measures not presented in accordance with IFRS, including but not limited to Adjusted EBITDA. These financial measures are not measures of financial performance or liquidity in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to loss for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that the Company’s presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. See “Presentation of Financial and Other Information” in this press release for a reconciliation of certain of these non-IFRS measures from the most directly comparable IFRS measure.
This press release includes interim financial information for the three months and the year ended December 31, 2022 and 2021. The quarterly information has not been audited by the Company’s auditors.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company.