Global internet and entertainment group Naspers’s ballooning e-commerce portfolio continued to shine in fiscal 2022.
Naspers reported its financial performance for the year today, saying the e-commerce segment’s revenue grew 56% (49%) to $10.7 billion and was the key contributor to group revenue growth of 24% (24%) to $36.7 billion. (Percentages in brackets represent growth in local currency, excluding mergers and acquisitions.)
The blowout performance of Naspers’s e-commerce follows global growth trends, as the number of people making purchases via the internet reached 2.14 billion in 2021, according to statistics released by Statista.
In the year, the internet company headquartered in Cape Town says its e-commerce businesses were resilient, growing revenue in the second half of the year, in many cases significantly outperforming global peers.
Bob van Dijk, group CEO of Prosus and Naspers, comments: “Within our e-commerce portfolio, all segments made good progress against their financial and strategic objectives. Classifieds demonstrated healthy growth at its core, well ahead of global peers.
“OLX Autos experienced strong triple-digit growth this year, as it creates a differentiated customer experience. Our classifieds business has been deeply impacted by Russia's invasion of Ukraine.
“We are appalled by the war in Ukraine and we continue to do all we can for our Ukrainian employees and the people of Ukraine. Consequently, in March 2022, we announced the separation of the Russian classifieds business Avito from our OLX Group.”
Naspers has since started the search for an appropriate buyer for its shares in Avito.
Also on the menu
Turning to food delivery, the company says this segment of the business remained strong in the year, “as it addresses a major consumer need that is being fundamentally transformed by technology”.
“We are leveraging our logistics network and capabilities, as well as our strong customer relationships, to pursue this opportunity with a real competitive advantage. The online food and convenience industry is still in its early stages of development, and we are excited by its long-term prospects, and we believe it will ultimately yield a good return on investment,” explains Van Dijk.
As for its payments and fintech unit, Naspers says its growth momentum continued globally.
“We increased our scale in India, one of the fastest-growing consumer internet markets, and the closing of the acquisition of BillDesk will create further opportunity to expand into credit and digital banking. Outside of India, the business continued to grow strongly,” says Van Dijk.
The company sealed a takeover of Indian digital payments provider BillDesk for $4.7 billion in August last year.
At the time, it said the acquisition will bolster PayU, the Naspers and Prosus fintech business that operates in more than 20 high-growth markets, as it seeks to become one of the leading online payment providers globally by total payment volume.
PayU focuses on payments for domestic and cross-border transactions, credit solutions for consumers and small businesses, as well as strategic investments in innovative fintech companies.
Furthermore, in the period under review, the edtech unit’s performance remained strong and Naspers says it made substantial progress in expanding the portfolio with acquisitions of market leaders in its areas of focus.
Van Dijk explains: “During the year, we took a substantial stake in Skillsoft, which is now public, while acquiring Stack Overflow and GoodHabitz. This positions us well within the key enterprise education market. Our edtech investments currently reach over 500 million users and cover the full span of the sector, from kindergarten through to grade 12 (K-12) and beyond, into third- and enterprise-level education.”
In terms of key financial metrics in the year, core headline earnings were $2.1 billion – down 40% (16%), impacted by the sale of 2% interest in Tencent and Tencent's reduced contribution to core as a result of increased losses from its associates.
Headline earnings decreased by $2.5 billion to $1.6 billion, and on a consolidated basis, total revenue increased by $2 billion, or 34% (37%), from $5.9 billion in the prior year to $7.9 billion.
Long-term shareholder value
Meanwhile, Naspers and Prosus today announced a long-term share repurchase programme, designed to increase net asset value per share, taking advantage of both Prosus's and Naspers's trading discounts to their underlying net asset value.
The initiative is open-ended and will run as long as elevated levels of the trading discount to the group’s underlying net asset value persist.
The firms say it will be funded by an orderly, on-market sale of Tencent shares held by the group. Tencent is supportive of the withdrawal by Prosus of its voluntary restriction on the sale of its Tencent shares.
“Today, we are announcing an open-ended share repurchase programme that is designed to unlock significant value for our shareholders over time,” Van Dijk says.
“We expect the programme to significantly increase the net asset values per share for Prosus and Naspers. It will also rebalance our asset base towards our fast-growing non-Tencent assets, whose value we expect to increase over time, while retaining exposure to Tencent’s significant value creation potential.
“We will continue to execute our long-term strategy to build valuable consumer internet businesses to deliver sustainable returns over the long-term.”
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