QIWI plc
Q4 2019 Earnings Call Transcript

Published: 24 Mar 2020

[Operator:]

Good day, everyone, and welcome to the Qiwi Fourth Quarter and Full-Year 2019 Earnings Conference Call. Today's call is being recorded.At this time, I would like to turn the call over to Ms. Varvara Kiseleva, Interim Chief Financial Officer of Qiwi. Please go ahead.

[Varvara Kiseleva:]

Thank you, operator, and good morning, everyone. Welcome to the Qiwi's fourth quarter and full-year earnings call. I am Varvara Kiseleva, Interim Chief Financial Officer, and with me today are Boris Kim, our Chief Executive Officer; and Andrey Protopopov, Chief Executive Officer of the Payment Services segment.A replay of this call will be available until Tuesday, April 7, 2020. Access information for the replay is listed in today's earnings press release, which is available on our Investor Relations website at investor.qiwi.com. For those listening to the replay, this call was held and recorded on March 24, 2020.Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements about our expectations for future performance are subject to known and unknown risks and uncertainties.Qiwi cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statements to reflect the events that occur after this call.Please refer to the Company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.During today's call, management will provide certain information that will consider non-IFRS financial measures, such as adjusted net revenue, adjusted EBITDA, adjusted net profit and adjusted net profit per share. Reconciliations to IFRS measures and certain additional information are also included in today's earnings press release.With this, we will begin by turning the call over to Boris Kim, our Chief Executive Officer.

[Boris Kim:]

Thank you, Varvara, and good morning, everyone. Thanks for joining us today. And first of all, I would like to say that I am really excited to be here with you today, hosting my first earnings call, and it’s a great honor and a big responsibility for me.Having said that, I am pleased to share our fourth quarter and full-year 2019 results year-to-date. This year, we demonstrated outstanding performance, especially in our Payment Services business, which delivered 27% segment net revenue and segment net profit growth year-over-year.Our growth was driven by the solid performance in our key streams, Payment Services for digital entertainment merchants, digital money remittances and projects we developed for self-employed and sharing economy partners.Our growth was enforced by overall expansion of our payment ecosystem, driven by the scaling of our operations and enhancement of the product proposition we offer to our users, merchants and partners.Throughout 2019, we have also benefited from strong secular trends in our key verticals. Even though in the end of the fourth quarter, we have noticed the slowdown in secular growth in some of our key initiatives. We continue to develop our ecosystem by targeting core and creating new niches and areas of expertise.This quarter, we also continued to invest in the development of our Financial Services projects, primarily SOVEST, while Tochka project has booked some positive net profits this year. I am happy to say that as we continue to optimize our operations, we see that the majority of the projects that we have been investing in demonstrate improving operating and financial performance.I believe that our results in this year clearly demonstrate the value of our ecosystem for our customers and serve as a solid foundation for the future stability of the company. At the same time, we see many challenges ahead, primarily resulting from the recent pandemic coronavirus outbreak and affects some of our key categories and a steep decline in oil prices and ruble devaluation. The full effect of these factors and the magnitude are still to be evaluated.Nevertheless, we believe and have proved many times before that we have created a resilient ecosystem that is highly adaptive and consumer oriented and will continue to develop it further. We will also continue to optimize our operations and implement stricter cost controls.Now on to some operating highlights. Fourth quarter 2019 total adjusted net revenue increased by 7% to reach RUB 6.3 billion, up from RUB 5.8 billion in the fourth quarter of 2018. The increase was mainly driven by Payment Services and Consumer Financial Services segments net revenue growth. This growth was slightly offset by technical decrease in the SME segments net revenue and negative net revenue contribution of the Rocketbank segment.For the full-year 2019, total adjusted net revenue increased by 18% to reach RUB 23.2 billion, up from RUB 19.7 billion in the prior year driven by the same factors as our quarterly numbers.Andrey will discuss the performance of our Payment Services segment in a minute, while I will walk you through the results of our other segments. Consumer Financial Services segment payment volume reached RUB 27.8 billion for 2019, increased by 74% as compared to the prior year. Our loan portfolio reached RUB 8 billion as of December 31, 2019.Segment net revenue was RUB 469 million as compared to RUB 199 million in the fourth quarter of the prior year, demonstrating the development and improved monetization of the SOVEST project.Throughout 2019, we have significantly enhanced the product offering and improved the monetization of the project. At the same time, we continue to explore opportunities to support and reinforce the scaling of the project. Since 2018, we have been testing various multi-bank platform models, primarily aimed at sharing the funding and credit risk with department banks.However, none of the arrangements have yet proven to be economically efficient and mutually beneficial for us and for our partners. Having reached the substantial scale and positive business unit economics of the products, we are currently evaluating different strategy for further development of SOVEST project.The strategies we consider primarily targets the shift of our key focus to offering customized products and services to customers in specific niches that we primarily target in our Payment Business segment. As part of our Consumer Financial Services segment, we also aim to develop more targeted products and services offering for specific groups of customers, such as, for example, self-employed.Moving to the SME segment. Tochka platform, we developed together with the Otkritie Bank continued to demonstrate robust operating and financial performance in the fourth quarter 2019 throughout the year. At the same time, our SME segment net revenue decreased to RUB 193 million for the fourth quarter of 2019 as a result of the transfer of Tochka operations to JSC Tochka and happened in February 1, 2019.Further, I would like to give you an update of our latest developments in relations to the Rocketbank project. Following our decision of our Board of Directors in August, we investigated potential partial or complete sale of Rocketbank. We were not able to find a suitable buyer for Rocketbank. As a result, the Board of Directors has determined to wind-down the Rocket operations.We have commenced this process and we are currently reviewing the most efficient way to reuse or dispose of the Rocketbank assets, including piloting certain projects earlier developed in Rocketbank in our Payment Services segment particularly in our B2B2C product pipeline.As part of the measures we are taking to wind-down Rocket project, we intend to terminate marketing activities, including cancellation of the Rocketbank loyalty program, reduce headcount and increase tariffs, which we believe will result in an overall significant decline in the number of the Rocketbank customers and termination of the current Rocketbank service offering in the short-term. We anticipate the wind-down will be completed by the end of 2020. Total net loss of the Rocketbank segment for 2020 shall not exceed RUB 1.5 billion.Last but not least, I am glad to announce that following determination of the fourth quarter 2019 financial results, our Board of Directors has approved a dividend of RUB 0.22 per share. In accordance with the decision of the Board, we will be distributing 65% of our adjusted net profit for 2019.Further, considering our expectations about the performance of the group as well as our anticipated level of investments in 2020, the Board of Directors approved a target dividend payout ratio of at least 50% of group adjusted net profit for 2020.The Board of Directors reserves the right to distribute the dividends on a quarterly basis, as it deems necessary so that the total annual payout is in accordance with the target provided, though the payout ratios for each of the quarters may vary and be above or below provided target.Even in these challenging times, we see many opportunities both in the payment space and in the adjacent markets and I believe we are well positioned to continue strengthening our ecosystem with the ultimate goal of securing our long-term growth prospects.Taking this into account, we remain committed to distributing excess cash to our shareholders and currently have no plans to postpone or refrain from paying dividends.With this, I will turn the call over to Andrey for an update on Payment Services business. Andrey?

[Andrey Protopopov:]

Thank you, Boris, and good morning, everyone. It's my pleasure to be here with you today.Now on to the results of our Payment Services segment. This year we have processed close to RUB 1.5 trillion in cash and electronic payments, increasing our turnover by almost one third. I believe this is an impressive achievement and would like to thank our entire team for their contribution. Our results clearly emphasize the value and relevance of the payment ecosystem we have developed so far and aim to develop further.For the fourth quarter 2019, our Payment Services segment volume increased by 22% to reach RUB 400.5 billion, driven by significant growth in Money Remittance, E-commerce and Financial Services vertical, which grew 31%, 29% and 13%, respectively.The growth in the E-commerce and Money Remittance vertical is largely driven by the development of our key streams, mainly the digital entertainment, self-employed and sharing economy partners, where we were focused on extending our partner and merchant network, building up our relations with our existing partners and expanding our product offering. This growth was reinforced by secular market trend towards the digitalization of payment in our key regions.The growth in the Financial Service category was driven primarily by the new distribution contracts. Payment Service segment net revenue increased 16% in the fourth quarter 2019 to reach RUB 5.5 billion compared to RUB 4.7 billion in the prior year. Payment Services payment adjusted net revenue increased 18% to RUB 4.8 billion, up from RUB 4.1 billion in the prior year, primarily as a result of the net revenue growth in our Money Remittance, Financial Services, and E-commerce verticals, which grew 29%, 18% and 13%, respectively.Our financial results in these segments were predominantly driven by the increase in volumes. Our payment average adjusted net revenue yield was down by 4 basis points year-over-year to 1.21%, driven by the yield decline in our E-commerce and Money Remittance market verticals. Such decline was driven mainly by our focus on increasing the scale of the business through offering our merchants and partners the new services, such as online acquiring, which may have lower commissions than our Qiwi Wallet solutions.The growth of these new product streams may dilute our payment average adjusted net revenue yield, primarily in the E-commerce category, while the commissions we charge in our core solutions remain stable.Payment Service other adjusted net revenue increased 4% to RUB 647 million as compared to RUB 622 million in the prior year as a result of growth of interest revenues that is in line with our overall growth and scaling of our ecosystem.As Boris mentioned earlier, our growth was driven by the robust performance we have achieved in our key strategic streams and through the expansion and enhancement of the product proposition we offer to our users, merchants and partners. Nonetheless in December 2019, we started to experience a certain slowdown in the growth rate of our Payment Services segment that resulted from a number of factors.These factors include, secular situation and growth slowdown in the banking market, implementation of additional new clients and anti-money laundering measures and the closure of our largest Kazakh merchant that significantly affected our business in that region.Some of these trends can be further amplified by the events that we have currently unfolding, including the negative effect on the betting industry caused by performance and termination of the major sports event due to the outbreak of the coronavirus and the global pandemic.Nevertheless, we believe that we have created a resilient ecosystem that is highly adaptive and consumer oriented and will continue to develop it further by targeting our core niches and areas of expertise and creating new use cases well fitted to serve our users, merchants and partners, as well as develop new strategic initiative to support our long-term growth.With this, I will pass over to Varvara for more details on the financial performance of the group. Varvara?

[Varvara Kiseleva:]

Thank you, Andrey. Moving on to expenses. Strong operating performance of our Payment Services business that continues to generate substantial cash flows, supported our investments in the development of the new projects. Our net revenue growth outpaced the growth of the expenses supported by the improving operating leverage of the group. This being said, adjusted EBITDA for the fourth quarter 2019 increased 9% to RUB 1.6 billion from RUB 1.5 billion for the same period in the prior year.Adjusted EBITDA margin was 26% compared with 25% for the same period in the prior year. For the full-year 2019, adjusted EBITDA increased by 63% to RUB 9.1 billion from RUB 5.9 billion for the same period in the prior year. Adjusted EBITDA margin was 39% compared to 30% in the prior year.Adjusted EBITDA margin expansion primarily resulted from the adjusted net revenue growth, underpinned by the decline in advertising client acquisition and related expenses, decline in rent of premises and related utility expenses resulting from the adoption of IFRS 16 that was partially offset by the new class of expenses related to Tochka platform services arising after the transfer of the Tochka’s operations to an associate starting from February 2019, increase of the compensation to employees and related taxes, resulting from the personal expense growth primarily in Payment Services segment and Corporate and other category, and an increase in the credit loss expenses predominantly related to the SOVEST project.Group adjusted net profit increased 15% for the fourth quarter 2019 to RUB 1.2 billion from RUB 1 billion in the fourth quarter of the prior year. While for the full-year 2019, group adjusted net profit increased by 61% to RUB 6.7 billion from RUB 4.1 billion in the prior year.Adjusted net profit was largely affected by the same factors as adjusted EBITDA as well as by decrease in a net foreign exchange loss as compared to the same period in the prior year.Payment Services segment net profit increased 3% to RUB 2.7 billion compared with RUB 2.6 billion in the prior year, driven primarily by the Payment Services segment net revenue growth slightly offset by the growth of compensation to employees and related taxes, as well as one-off increase in marketing and advertising expense.Consumer Financial Services segment net loss was RUB 590 million in the fourth quarter 2019 as compared to net loss of RUB 538 million in the same period of the prior year, resulting from the growth and loss from initial recognition on loans at market rate due to the expansion of the SOVEST project, and the increase in marketing and advertising expenses mostly related to the consumer acquisition offset by the increase in SOVEST net revenues.SME segment net profit was RUB 187 million as compared to net loss of RUB 281 million in the fourth quarter of 2018. Net profit growth in the SME segment resulted primarily from the growth and development of the Tochka business.Rocketbank segment net loss was RUB 684 million for the fourth quarter 2019 as compared to the net loss of RUB 584 million for the same period in 2018. The substantial increase in net loss was primarily driven by the increase of marketing and advertising expenses as well as compensation to employees and related taxes.Now on to our guidance. Firstly, I would like to remind everyone that at the moment, we are not able to accurately estimate the potential impact of the outbreak of the COVID-19 strain of coronavirus on our business, including the negative impact on the betting industry in general and our revenue generated from products and services we provide to our betting merchants caused by postponement and termination of the major sports events.In addition, it is currently unclear how much consumer demand will be negatively affected from the outbreak of COVID-19 and what effect this outbreak will have on the macroeconomic environment, as a whole.The full impact remains uncertain and will depend on the length and severity of the effect of the coronavirus on economic activity in our markets. The full scope of the negative impact that the abrupt decline in oil prices and resulting devaluation of the ruble may have on the Russian economy also remains unclear, but has the potential to be very significant.Our outlook reflects our current expectations and views only and is based on the trends we see as of the date of this earnings call. If such trends were to deteriorate further the impact on our business and operations could be more severe than currently expected. We continue to monitor the situation closely. Having said that, we expect group adjusted net revenue to increase by 3% to 13% over 2019.Payment Services segment net revenue to change by minus 3% to plus 8% over 2019, while adjusted net profit of the group is expected to increase by 10% to 30% over 2019. At that time, we reserve the right to revise the guidance in the course of the year or when additional information regarding the effect of the ongoing events becomes available.With that, operator, please open up the call for questions.

[Operator:]

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Cris Kennedy with William Blair. Please proceed with your question.

[Cristopher Kennedy:]

Hey guys. Thanks for taking the questions. I have two. I just wanted to get a better – can you give an update on recent trends in the business, and I understand there is lot of uncertainty, but can you kind of talk about what's happened over the last couple of quarters or even weeks if possible?

[Andrey Protopopov:]

Hi, Cris, it's Andrey. Thank you for your question. So we are closely monitoring the trends. In the couple of, I would say, in the last week, we started to see real decline in the sports betting business as we described. So it's not yet clear how, I would say, deep it will go. At the same time, we see some positive dynamics in other categories like, online games for example and some others.So I would say it's too early to say that the trends are already started in the new environment. Clearly, that we will see some decline in betting business though we think it's a temporary one. As soon as the sports events will be back, we will see the volumes back as well.To give you a little bit more color on this one, we see that betting company is not, I would say, sitting so they're changing their proposition to clients. There are some new sports where they're introducing, including the cyber sports, so that it's not, I would say, zero. It's still – still volumes are there and clients are there.

[Cristopher Kennedy:]

Okay. That's helpful. Thank you. And then one update on SOVEST. It sounds like you're kind of changing your strategy, and can you talk about the expected losses from SOVEST in 2020 or the pathway to breakeven, if possible?

[Boris Kim:]

So as I mentioned here, we are still thinking on the strategy of SOVEST. One moment, already mentioned was connected to multi-banking model. And I must say that multi-banking model didn't work as we expected. So now we can see there are some other perspectives and strategic choices for SOVEST, including online loans and value proposition for self-employed segment to be more connected to Payment segment and our proposition for that sort of things. We still think and we believe that in any scenario, SOVEST will break even later this year.

[Cristopher Kennedy:]

Okay. Thanks a lot for the update.

[Operator:]

Thank you. Our next question comes from the line of Vladimir Bespalov with VTB Capital. Please proceed with your question.

[Vladimir Bespalov:]

Hello. Thank you for the presentation and thank you for taking my question. My first question will be on Rocketbank. Could you maybe provide more color on why do you expect such big loss of RUB 1.5 billion from Rocketbank this year, given that it's more not than last year, but than the year before that, given that you are unwinding this asset, where this money will go?And the second question is, maybe you could also provide some color since you're going to transfer some operations of Rocketbank to Payment Services. What kind of operations are going to be transferred and how these are going to impact, let's say the business and the profitability of the Payment Services segment? Thank you.

[Varvara Kiseleva:]

Hello. Hi, it's Varvara. Thank you for your questions. So as for the costs, basically, our current estimate over the maximum costs we may incur this year for the operations of Rocketbank has taken place in the first quarter. I remind you that, we are currently launching the winding down process. We have not launched it before, and we will incur the kind of run rate and the burn rate of Rocketbank in the first quarter.So apart from the burn rate as we had in the first quarter 2020, I will also incur certain costs for working with – for the period while the clients are – while the number of clients is decreasing, we’ll be running – we'll have the team running the business, et cetera, et cetera. So there are certain winding down costs that are included in this guidance, and we believe that including certain redundancies, et cetera. And we believe that the total amount of costs that we incurred this year will not exceed this number. So that's quite a rough estimate.

[Andrey Protopopov:]

So I will comment on the second question. It's Andrey. So the business we are currently looking at is, we call it B2B2C. It's basically the payout solutions that Rocketbank is now providing to some of the partners with the payout of the self-employed of the salary to the Rocketbank accounts, and the sales branch how we see, it can be synergestic to what we are doing in Payment Services with the payout for the self-employed with the wallets and payouts to cards.We are currently assessing how synergistic it can be, what extra revenue and partners that it can bring into Payment Services. So it will take several months for us to assess and then we will make the final decision. Regarding the cost, I would believe it will not be material for the Payment Service segment this year.

[Vladimir Bespalov:]

Okay. Thank you very much. And maybe one more question as follow-up on SOVEST. Could you provide your estimate of the potential loss that SOVEST can generate this year?

[Varvara Kiseleva:]

So although, it's embedded in our guidance, there was a – can generate this year and it definitely depends to some extent on how the macroeconomic situation will develop and how the credit risk portfolio and the clients will behave. However, we believe that at the current moment, we believe that the total loss for SOVEST will not exceed RUB 1 billion.

[Vladimir Bespalov:]

Okay. Thank you very much. Very helpful.

[Operator:]

Thank you. Our next question comes from the line of Maria Sukhanova with BCS Global Markets. Please proceed with your question.

[Maria Sukhanova:]

Hi, guys. Hello, thank you for the call. I have two questions. So first one is on your guidance. If you could provide us any color what exactly are you including in your guidance? Like, for instance, do you expect this issue from the betting like the current situation that it will stay for one quarter or do you assume that it will stay for several quarters? So just for us to understand like whether downside or upside can be. So that's the first one.And second one on Rocketbank, just a follow-up. So out of this maximum RUB 1.5 billion costs, like if you look at the long-term run rate for this business and in your costs, what do you think, like, for instance, what was kind of loss we could see in 2021? What kind of sustainable loss will there remain after you wind-down the operations? That's it from my side. Thank you.

[Varvara Kiseleva:]

So as per the guidance question, we currently estimate that the betting market can be down for up to six months and that we – four to five that was embedded in our current guidance, if it lasts for a longer period of time and if all the sports events that have been postponed or canceled will be only running in 2021.We can definitely see some additional eddies to the current forecast, but we believe, overall the betting companies, as Andrey said, will be able to find some substitution for the major sports events and develop their activities, because again, they are also willing to make business and make money and no one is kind of willing to stay – everyone's faced with basically. So that's for the guidance.And for Rocketbank, we expect that in 2021 there will be no running for Rocketbank. The projects that we will pilot in Payment Services will either become the parts of Payment Services and we'll be working as part of this business line or they will be both, with that – on top of that, we believe that overall the potential costs of these pilots are insignificant for both of course between services and...

[Maria Sukhanova:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ildar Davletshin with Wood & Company. Please proceed with your question.

[Ildar Davletshin:]

Hello, good afternoon. Thank you for the opportunity to ask the question. I just wanted to ask two if I may. So to follow-up on the previous question around your assumptions. Could you perhaps specify what sort of GDP dynamic, do you expect this year, have you considered the recession scenario and deals to see potentially downside risks to non-betting activity related to just slow economic activity of your customers? That would be my first question.And then separately, the second is on new products that you may be considering in Payment segment since betting has been the core for quite a while – one of the core growth drivers, and you mentioned that you are targeting, self-employed audience, could you perhaps specify in a bit more detail, what sort of propositions and solutions you are looking, so that we understand that you have a more long-term sort of opportunity, rather than just very attractive niches that you periodically identify? Thank you.

[Andrey Protopopov:]

Ildar, thank you for your questions. I will cover those. So for the assumptions for our guidance, we embedded some economic slowdown as well in our numbers. At the same time, historically, we will be – we always was kind of counter cycle versus crisis and currently, for example, as I mentioned already we see those effect on online games for example.I believe that if we will have the same story like with the slowdown and coronavirus, but the sports event will be still in place, we will feel much better and because people will sit at home and watch sports but overall on the Payment Services business, we are not, I would say, bet dependent on the micro. However, we embedded overall some slowdown on this one on our numbers as well.Regarding the second question on the new products, so this is exactly what we mentioned about both Rocket and SOVEST. As you know, we already for some time working closely with businesses that are working with self-employed, includes the taxi companies, scrap metal pickers and many more.And we believe that there is a certain demand and opportunity for us to enrich our product proposition to those B2B and related B2C clients with debit products with loans that can be linked to operations that we are faring on those – on those type of customers. So that's what we'll be doing. And I would say facing in the near time, and we have already, as I said start with this one with the Rocketbank product proposition to our clients.

[Ildar Davletshin:]

Thank you.

[Operator:]

Thank you. [Operator Instructions] Our next question comes from the line of Andrey Pavlov-Rusinov with Goldman Sachs. Please proceed with your question.

[Andrey Pavlov-Rusinov:]

Good afternoon. Thanks a lot for the presentation. I've got several questions. First of all, could you please remind us what actually was your betting share in payments and revenues in the fourth quarter and also in the Money Remittances, as far as I remember there is also or kind of a share of volumes that are related to betting payout, so also what is there, what is the share there? And essentially, also – kind of this is my first question. I'll ask another one later. Thank you.

[Varvara Kiseleva:]

Andrey, do you hear me?

[Andrey Pavlov-Rusinov:]

Yes.

[Varvara Kiseleva:]

Great. So thank you for your questions. So as we've discussed, we don't disclose the exact share of betting revenues in our e-commerce market vertical. But I can say that for 2019, we have disclosed the share of betting in volumes. It's roughly around 22%, information is disclosed in our 20-F report – 22% of the entire group volume.So you can basically extrapolate to the share in revenues. So that's for the betting as part of the quarters. And in terms share of Money Remittance, which is connected with the payout for betting merchants that would be around like mid-teens percentages.

[Andrey Pavlov-Rusinov:]

Thanks very much. That's quite helpful. And then maybe just continuing with the Money Remittances segment, what basically – there was quite a strong growth of 30% in the fourth quarter and overall for the year.Could you maybe illustrate a little bit what were the drivers and also what is the actual share there coming from the basically wallet to card payments or some commercial payments within wallets and also of course what is the breakdown at the moment and also maybe if you could give us an outlook for this segment that's baked into your guidance, so given that it's not so much related to betting. So in a normal or kind of a relatively muted economic circumstances, what could be the growth there?

[Andrey Protopopov:]

Okay. So first for the fourth quarter growth on the Money Remittances income. There are two big elements here. First is growth of the self-employed because the part of the big, big portion of the self-employed volumes growth is in Money Remittance when it's payout to cost and we continue to grow in this segment in the taxi payouts and others categories.The second one was Tajikistan, classical Money Remittance to Tajikistan. There was I think, a lateral change in Tajikistan for the Money Remittance company and not all of the marketplace able to comply with them, while we do and we absorbed quite a, I would say, strong growth in the classical Money Remittances in Tajikistan for the fourth quarter.Going forward, if we will discuss the Money Remittance part, we expect, as you can imagine, a similar type of slowdown for this portion that Varvara mentioned related to the betting companies. At the same time – and probably if there is some economic slowdown, it will reflect in the classical Money Remittance slowing as well.Regarding other parts with self-employed, we expect – I would say, the slowdown for the short-term period like three months or four months when we will absorb these limitations that we see now as soon as coronavirus story will end. We believe those results – those self-employed volumes will be back and will continue on the growing trend. So I would say, it will depend how long, we will observe the current situation in terms of the coronavirus.

[Andrey Pavlov-Rusinov:]

Okay, thanks very much. And just my final question is, getting there your targeted dividend payout level, is the kind of decline in the target there anyway related to your economic outlook or it's kind of – maybe just kind of your precaution to set a bit lower payout and then if things improve, then you will be back to the previous year payout or are there any investments that you're looking for and hence lower payout?

[Varvara Kiseleva:]

Andrey, so first of all, I would like to say that we expect that even though the payout ratio was decreased and again we aim to distribute not less than 50% of adjusted net profit. We still believe that there is a good chance that the minimum payout will continue to increase.And of course we are slightly cautious in terms of how much we aim to distribute for the year because as we discussed, and as we said before, there is a lot of uncertainty this year connected to both the coronavirus and then the following economic repercussions.So in this respect, we are of course cautious. We don't plan at the moment any significant investments and all our CapEx payments et cetera, are in line with the previous year, in line with the budget, so nothing to – kind of nothing to read through from a slightly lower payout ratio.Let's see how it goes. If we will have the chance, and if we will be comfortable with paying a payout above 50%, we will definitely do that. We remain committed to distributing excess cash to the shareholders. But we believe for the stability of the overall situation and for the lack of clarity on the market, it is better to have a slightly lower payout – minimum payout ratio for this year.

[Andrey Pavlov-Rusinov:]

Thank you. That's very clear. Thanks a lot.

[Operator:]

Thank you. Our next question is a follow-up from the line of Vladimir Bespalov with VTB Capital. Please proceed with your question.

[Vladimir Bespalov:]

Thank you for taking my follow-up questions. I have actually two. First, could you update on Tochka? At some point you expected that Tochka's net profit would be around RUB 1 billion. Do you expect something like this – in this year to happen? And is Tochka going to distribute its profit of dividends to Qiwi or it will still reinvest it's earnings for some period of time?And the second question is on the change in regulation of inactivity fees. Could you estimate the impact from that change on your fourth quarter and on the – on 2020 in terms of revenues and earnings? Thank you.

[Varvara Kiseleva:]

Hello. Var, here. And so on Tochka, yes, we believe that at some point Tochka, our JSC Tochka net profit can reach RUB 1 billion, but absolutely feasible estimate. I won't be sure that it will happen in the end of 2021, but I believe that in a year or two from now depending on the macroeconomic conditions and how the situation evolve.The Tochka will reach this level of profitability. We see very good trends in the business, it has great – broke even this year and as you can see in our financial reports, we have booked pretty substantial profits this year. So if the market is doing well and if the situation in the company doesn't deteriorate, maybe even by the end of 2020 we can reach such goal. So as for the dividends, there has not yet been a decision on that, so that would be discussed further with Tochka management and Otkritie.Your second question was about inactivity fees, for sure, we don't expect really a material impact on our revenues from this change. I would kind of outline that we should treat it as the postponement of certain revenues because starting from October, there was – which became inactive they became inactive not after six months, but after 12 months. So their kind of inactivity period – activity period was prolonged.So in this respect, we are not able to book part of the revenues, but we just booked in the fourth quarter this year, but we will start booking them later. So that's just a timing difference, not a significant change in our revenue expectations for something like this.

[Vladimir Bespalov:]

Thank you, Var.

[Operator:]

Thank you. Ladies and gentlemen, that concludes our question-and-answer session and that's concludes our conference this morning. Thank you for your participation. You may now disconnect your lines and have a wonderful day.