Ozon Holdings PLC (NASDAQ and MOEX: “OZON”, thereafter referred to as “OZON” or the “Company”), a leading Russian e-commerce platform, announces its financial results for the fourth quarter and the full-year ended December 31, 2020.
Fourth Quarter 2020 Financial Results Highlights
- Number of orders increased to 29.6 million growing by 137% year-on-year, compared to 12.5 million orders delivered in Q4 2019.
- GMV incl. services increased to RUB 75.8 billion, with growth accelerating to 147% year-on-year, compared to RUB 30.7 billion in Q4 2019.
- Share of Marketplace reached 52.3% as percentage of GMV incl. services, doubling compared to 25.5% in Q4 2019.
- Adjusted EBITDA was negative RUB 3.6 billion compared to negative RUB 5.3 billion in Q4 2019, with Adjusted EBITDA as percentage of GMV incl. services improving to negative 4.7% from negative 17.1% in Q4 2019.
- Cash flow from operating activities increased to RUB 10.6 billion, compared to negative RUB 2.7 billion in Q4 2019.
- Free cash flow increased to RUB 7.8 billion compared to negative RUB 4.7 billion in Q4 2019.
Full-Year 2020 Financial Results Highlights
- Number of orders increased to 73.9 million growing by 132% year-on-year, compared to 31.8 million orders delivered in the Full-Year 2019.
- GMV incl. services increased to RUB 197.4 billion with growth accelerating to 144% year-on-year, compared to RUB 80.8 billion in Full-Year 2019.
- Share of Marketplace reached 47.8% as percentage of GMV incl. services, compared to 17.4% in Full-Year 2019.
- Adjusted EBITDA of negative RUB 11.7 billion, compared to negative RUB 15.8 billion in Full-Year 2019, was broadly in line with management expectations, with Adjusted EBITDA as percentage of GMV incl. services at negative 5.9% improving from negative 19.6% in Full-Year 2019.
- Cash flow from operating activities increased to RUB 6.6 billion, compared to negative RUB 14.3 billion in Full-Year 2019.
- Free cash flow was negative RUB 2.6 billion, compared to negative RUB 19.9 billion in Full-Year 2019.
- Ozon had cash and cash equivalents of RUB 103.7 billion as of December 31, 2020.
Ozon announces appointment of Daniil Fedorov, its Chief Financial Officer, as the Chief Operating Officer of Ozon and Igor Gerasimov, its corporate finance director, as the Chief Financial Officer. Daniil Fedorov will be working with Igor Gerasimov during Q2 2021 to ensure smooth and effective transition of his duties and responsibilities.
Alexander Shulgin commented: “I am very proud of the transformation that took place at Ozon over the past three years. Our focus on building scale and improving quality of service to our buyers and sellers has been the bedrock of our success. In Q4 2020 we delivered 95% of parcels on time, even during the peak season when Ozon was shipping 650,000 parcels per day, whilst Ozon’s quarterly GMV incl. services grew by 147% year-on-year. None of this would be possible without exceptional drive and dedication of our team. I am grateful to Igor and Daniil for their contribution to Ozon's success so far. I look forward to working with Igor and Daniil to build a company that we and our shareholders can be proud of".
Summary: Key Operating and Financial Metrics
The following table sets forth a summary of key operating and financial data for the quarter and fiscal year ended December 31, 2020. The quarterly information for the three months ended December 31, 2020 and 2019 has not been audited or reviewed by the Company’s auditors and should be read in conjunction with our consolidated financial statements for the year ended December 31, 2020 and related notes thereto appearing elsewhere in the Company’s Annual Report (Form 20-F).
|
(RUB in millions, unless indicated otherwise) |
For the three months ended December 31, |
For the year ended December 31, |
||||||
|
2020 |
2019 |
YoY change, % |
2020 |
2019 |
YoY change, % |
|||
|
GMV incl. services |
75,848 |
30,684 |
147% |
197,414 |
80,815 |
144% |
||
|
Number of orders, million |
29.6 |
12.5 |
137% |
73.9 |
31.8 |
132% |
||
|
Number of active buyers, million |
13.8 |
7.9 |
75% |
13.8 |
7.9 |
75% |
||
|
Share of Marketplace GMV, % |
52.3 |
25.5 |
26.8pp |
47.8 |
17.4 |
31.4pp |
||
|
Gross profit |
11,618 |
3,984 |
192% |
31,491 |
11,259 |
180% |
||
|
Gross profit as % of GMV |
15.3 |
13.0 |
2.3pp |
16.0 |
13.9 |
2.1pp |
||
|
Adjusted EBITDA |
(3,576) |
(5,262) |
32% |
(11,716) |
(15,832) |
26% |
||
|
Adjusted EBITDA as a percentage of GMV incl. services, % |
(4.7) |
(17.1) |
12.4pp |
(5.9) |
(19.6) |
13.7pp |
||
|
Cash from Operating Activities |
10,644 |
(2,722) |
n/a |
6,570 |
(14,312) |
n/a |
||
|
Free Cash Flow |
7,787 |
(4,740) |
n/a |
(2,566) |
(19,947) |
87% |
||
Key Business Developments
Ozon Marketplace
Ozon Marketplace platform is the core pillar of the Ozon’s business providing its customers with a reliable delivery service and a wide assortment of high-quality goods, and its sellers with best-in-class country-wide fulfillment and logistics infrastructure, including last mile capabilities, as well as value-add additional business services such as Financial Products, Advertising Platform for sellers.
In 2020 Ozon benefited from the positive network effects arising from the rapidly growing number of sellers and its customer base more than doubling.
InQ4 2020 share of Marketplace as percentage of GMV reached 52.3%, compared to 25.5% in Q4 2019. The much greater contribution from Ozon Marketplace is attributable to significant growth in the seller base owing to Ozon’s attractive comprehensive offering for the merchants on its platform, including nationwide fulfillment and logistics infrastructure, access to a large and fast-growing customer base, as well as trading tools, analytical and advertising business solutions for the sellers.
- Buyers
- Number of active buyers on Ozon’s platform increased 75% year-on-year to 13.8 million as of December 31, 2020, compared to 7.9 million as of December 31, 2019.
- We see further improvements in cohort performance with annual order frequency of Ozon’s buyers increasing by 33% to 5.4 in 2020, compared to 4.0 in 2019.
- Sellers
- Number of sellers on Ozon platform quadrupled in Q4 2020 compared to Q4 2019.
- Ozon’s fast growing seller base resulted in rapid expansion in assortment, almost doubling year-on-year. Greater variety of goods available on Ozon’s platform is translating into greater customer engagement and higher order frequency, leading to higher sales for the sellers and accelerating Ozon’s GMV growth.
- A variety of fulfillment and logistics services provide as a reliable support to Ozon Marketplace platform. A combination of Fulfilled-by-Ozon (“FBO”), Fulfilled-by-Seller (“FBS”) and Extended FBS models allows sellers to have greater ability to optimize the fulfillment and delivery operations for their businesses, thereby retaining existing and attracting new sellers to the platform.
- Ozon launched new B2B fintech offering for its sellers during 2020 aimed at assisting sellers with growing their business, and representing a new revenue opportunity for Ozon.
Ozon Fulfillment & Logistics
Ozon focuses on assortment expansion and faster and more reliable delivery which leads to more attractive buyers’ cohort characteristics with higher order frequencies and retention. Ozon is aiming to achieve this through investing in technology and scaling up and increasing efficiency of its logistics infrastructure.
- By the end of 2020 Ozon operated one of the largest logistics networks in Russia. Ozon's footprint included over 220,000 square meters of fulfillment center space in Moscow and Moscow region, Tver, Saint-Petersburg, Kazan, Rostov-on-Don, Yekaterinburg and Novosibirsk.
- To provide maximum convenience to its customers, Ozon operates a variety of last mile delivery channels, including pick-up points, couriers and parcel lockers. During 2020 Ozon continued to actively expand its last-mile network. As of December 31, 2020 Ozon operated over 10,000 offline pick-up locations, including Ozon branded pick-up points and automated parcel lockers.
- Over 80% of Ozon’s branded pick-up points are franchised, allowing faster, asset-light roll-out.
- Ozon estimates that over 85 million people in Russia have access to courier delivery or a pick-up point within walking distance as of the end of 2020.
Ozon delivers parcels from both its own fulfillment facilities and from its sellers’ warehouses to customers across Russia.
Ozon New Initiatives
Ozon Fintech
During 2020 Ozon expanded its fintech initiatives both for buyers and sellers. Ozon’s fintech services are aimed at providing quick and seamless access to lending and payment assistance solutions to both its multi-million buyer base (B2C) and a fast-growing number of merchants on its platform (B2B).
- Number of Ozon card holders increased significantly throughout 2020. In December 2020 number of OZON cards users exceeded 450,000, compared to 57,000 as of December 31, 2019.
- In Q4 2020 Ozon launched a virtual Ozon card which allows for faster and wider adoption of the Ozon card.
- Ozon card holders exhibit greater customer loyalty and demonstrated 1.6x higher order frequency on average in 2020, compared to the customers using other payment methods.
- In Q4 2020, in partnership with a number of Russian banks and fintech companies, Ozon launched B2B lending solution for its sellers.
Ozon Express
- In 2020 Ozon Express grew a network of dark stores in Moscow, with full coverage of Moscow and partially Moscow area with one hour delivery.
- Ozon’s unique dark store concept is based on assortment mix catering to demand in any given micro polygon, with over 22,000 SKUs across 20 food and non-food product categories.
- In December 2020 the number of orders at Ozon Express increased by 8.3 times, compared to December 2019.
- Faster delivery allows for higher conversion rates and increasing order frequency.
- In 2021 Ozon plans to expand its dark stores network in other Russian regions, outside of Moscow.
COVID-19 Developments and Potential Impact
- The COVID-19 pandemic has led to significant global disruptions, which affected Ozon’s business. The Russian Government implemented the restrictions such as social distancing, self-isolation and other quarantine measures, from the end of March 2020 until June 2020. The lockdown in most regions of Russia has been eased since June 2020.
- COVID-19 related restrictions accelerated e-commerce adoption by Russian consumers. As a result of the COVID-19 pandemic, online platforms such as Ozon experienced a significant increase in the number of new active buyers, higher demand for products on their platforms and an inflow of third-party merchants. We believe that COVID-19 contributed to the increased order frequency and average check of buyers on Ozon’s platform during the lockdown in Russia.
- Ozon believes that COVID-19 related restrictions drove more businesses to increase their online presence, and potentially boosted the third-party sales at Ozon’s Marketplace as well as first party sales at Ozon.
- Although the acceleration of Ozon’s GMV growth in the twelve months ended December 31, 2020, compared to the same period in 2019, may have been partly attributed to a greater demand for e-commerce services in Russia, Ozon believes that the acceleration in its GMV growth was underpinned by the changes in Ozon’s corporate development strategy implemented since 2018 such as focus on third party marketplace model, assortment expansion, significant investment into fulfillment and logistics footprint expansion, and focus on operational excellence and efficiency.
- Despite easing of the COVID-19 related restrictions, Ozon reported acceleration in its GMV growth to 147% year-on-year in Q4 2020.
Financial Outlook
The below following forward-looking statements reflect Ozon’s expectations as of March 30, 2021, taking into account trends year to date and could be subject to change, and involve inherent risks which we are not able to control, for example the overall impact of the coronavirus pandemic and any ongoing or new potential disruptions caused by COVID-19. The below forecasts assume no further escalation of the pandemic.
- Ozon expects growth in Company’s GMV incl. services of 90% or potentially greater for Full-Year 2021, compared to Full-Year 2020.
- Ozon expects capital expenditure to be between RUB 20 billion to RUB 25 billion for the Full-Year 2021.
Other Key Operating Measures
Certain parts of this press release contain our key operating measures, including, among others, gross merchandise value including revenue from services (“GMV incl. services”), Gross profit, share of our online marketplace (our “Marketplace”) GMV (“Share of Marketplace GMV”), number of orders and number of active buyers. We define:
- GMV incl. services as the total value of orders processed through our platform, as well as revenue from services to our buyers and sellers, such as delivery, advertising and other services rendered by our Ozon.ru operating segment. GMV incl. services is inclusive of value added taxes, net of discounts, returns and cancellations. GMV incl. services does not represent revenue earned by us. GMV incl. services does not include travel ticketing commissions, other service revenues or value of orders processed through our Ozon.travel operating segment.
- Gross profit represents revenue less cost of sales in a given period.
- Share of Marketplace GMV as the total value of orders processed through our Marketplace, inclusive of value added taxes, net of discounts, returns and cancellations, divided by GMV incl. services in a given period. Share of Marketplace GMV includes only the value of goods processed through our platform and does not include services revenue.
- Number of orders as the total number of orders delivered in a given period, net of returns and cancellations.
- Number of active buyers as the number of unique buyers who placed an order on our platform within the 12 month period preceding the relevant date, net of returns and cancellations.
