QIWI Plc (QIWI) Q1 2019 Earnings Call Transcript

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QIWI Plc (NASDAQ: QIWI)
Q1 2019 Earnings Call
May 16, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to Qiwi First Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the call over to Ms. Varvara Kiseleva, Interim acting CFO of QIWI. Please go ahead.

Varvara KiselevaInterim Chief Financial Officer

Thank you, operator. And good morning, everyone. Welcome to the QIWI first quarter 2019 earnings call. I am Varvara Kiseleva, Interim CFO. And with me today are Sergey Solonin, our Chief Executive Officer; and Alexander Karavaev, our Chief Financial Officer.

A replay of this call will be available until Thursday, April 4, 2019. 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 May 16, 2019.

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, reflects 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 consist of 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 that, we will begin by turning the call over to Sergey Solonin, our Chief Executive Officer.

Sergey SoloninChief Executive Officer

Thank you, Varvara, and good morning, everyone. Thanks for joining us today. I’m glad to share our first quarter results with you today. This quarter, we demonstrated continued solid performance of our operating service business, delivered 32% segment net revenue and 35% segment net profit growth, setting up a strong start of the year. Our growth was driven by robust performance of our key areas in services for betting-related merchants, digital money remittances and projects we developed for self-employed and B2B B2C customers as well as by a general expansion of our payment ecosystem. Glad to acknowledge that the continued strong performance of payment service business provides stable foundation for future growth. We’ll continue to enhance our key products and use case and develop new projects in order to offer clients in our key markets larger suit of more convenient solutions and services. This quarter, we’ll continue to invest in the development of our ecosystem, mostly our retail focused financial services projects, SOVEST Rocketbank, while which Tochka project was transferred to the new entity JCS Tochka, as we have announced earlier. I will walk you through some latest developments in this segments in just a moment. We believe that our performance provides a solid foundation for the expansion of our ecosystem and our business, significant cash flows that are generated by our core payment business, supports our strategy and allow us to carry with investing in new projects in order to further build up our ecosystem, diversify our operations and ultimately secure long term growth prospects of our Company.

Now onto to some operating highlights. For the first quarter of 2019, our payment services segment volume increased by 31% to reach RUB326 billion, driven by the significant growth in e-commerce and money remittance verticals, which grew 79% and 36% respectively. The growth was largely driven by the secular trends in development of our focused merchants and customers categories, reinforced by the expansion of our product offering. Our total consumer financial services segment payment volume reached RUB5 billion, for the first quarter of 2019, more than doubling as compared to the same period of the prior year.

During the last several quarters, we are significantly advanced in development our service projects, enhanced the product offering by introducing consumer bid value at options and other technological features and improved in several key operating dimensions. We optimize the distribution network and improved our cost of risk. All these factors, help us to reach positive consumer unit economics. We see an ample room for the development of SOVEST project going forward. We continue testing our multi-bank model together with AK Bars Bank and may contemplate new potential partnerships to support and reinforce the scaling of the project.

Our SME segment, which we developed through Tochka multi-bank platform together with Otkritie bank, continued to demonstrate robust operating and financial performance in the first quarter of 2019. While we were finally able to transfer this project to JCS Tochka as previously agreed. The same time, we continue to develop a new Rocketbank strategy and product offering, assessing the market and testing policies, regarding consumer behavior and preferences. We aim to provide the update on Rocketbank mid-term strategy by the end of the year.

Strong growth in our key market verticals converted into robust payment services segment net revenue growth. And together with SME and the CSS segments, contributed to the overall robust performance of our business. Alexander, will walk you through the first quarter numbers and more details in just a moment. While I would like to walk you through some recent developments.

I’m glad to announce that this quarter, we are returning to paying our dividend and our Board of Directors approved the all times high payout in terms of cents per share per quarter. We believe that distributing excess cash to the shareholders is good practice, needed to provide maximum transparency and consistency in this respect going forward.

Last but not the least, I’m happy to announce that our Board of Directors has appointed Varvara Kiseleva as our Interim Chief Financial Officer. Varvara has served our our Head of Investor Relations for more than five years, while she also has overseen certain other financial functions such as corporate finance, fundraising and annual and quarterly report. I fully believe that Varvara’s dedication, leadership and deep knowledge of the Company makes her the best positioned for her new role. And we continue to search for other Alexander’s replacements having in mind both internal and external candidates and we’ll update you in due course about any progress.

And before turning the call to Alexander, I would like to thank him again for his anonymous contribution to the success of our business. Alexander?

Alexander KaravaevChief Financial Officer

Thank you, Sergey. And good morning everyone. Now on to our numbers. First quarter 2019 total adjusted net revenue increased by 31% to reach RUB 5.4 billion, up from RUB 4.1 billion in the first quarter of 2008. This increase was mainly driven by payment services and consumer financial services segment net revenue growth, slightly offset by negative net revenue contribution of Rocketbank segment.

Payment services segment net revenue increased 32% to reach four RUB4.8 billion, compared to RUB3.7 bllion in the prior year. Payments services payment adjusted net revenue increased 30% to RUB4.2 billion up from RUB3.2 billion in the prior year, a result of the net sharing growth in our e-commerce and money remittance verticals, which grew 40%, and 33% respectively, partially offset by a slight decline in net revenue and other verticals. Our financial results in this segment, were predominantly driven by an increase in the volume as Sergey just described.

Our Payment Average Adjusted Net Revenue Yield was down 1 basis point year- over-year, driven by the yield decline across all categories, offset by the shift in product mix that we focus on increasing the scale for our business and offerings, offering our clients a broad range of payment solutions that may have different marginality for us. Payment services other adjusted net revenue increased 48% to RUB661 million as compared to RUB445 million in the prior year. As a result of growth of revenue from fiscal and active accounts and employed payments and interest revenue.

Consumer financial services segment net revenue was RUB218 million for the first quarter of ’19 as compared to RUB3 million in the first quarter of the prior year, showing the growth of the solid projects underpinned by the introduction of new consumer paid value adoption. Net revenue your of the SME segment, decreased by 2% to RUB412 million for the first quarter for of 2019 as compared this RUB420 million in the prior year. This result was mostly driven by two-count, increase in the number of clients and corresponding expansion of the operations of Tochka multi-bank project and the transfer of Tochka operations to JSC Tochka that happened on February 1st of ’19. As a result of this transfer, we stopped to recognize a certain portion of Tochka project saving associated with information and technology service agreements in the Otkritie Bank.

Moving on to expensive, strong operating performance of our payment services business would continue to generate substantial cash flow, supported our investments in the development of our new projects. Although, our net revenue grow significantly, out priced the expand growth underpinning improving operating leverage this quarter. This being said, adjusted EBITDA increased 61% to RUB2.3 billion, from RUB1.5 billion in the prior year. adjusted EBITDA margin was 44% compared to 35% in the prior year. Adjusted EBITDA margin expansion primarily resulted from adjusted net revenue growth offset by several factors including the increase in personnel expenses and related taxes, excluding effect of share-based payment, higher SG&A compensations to employees and related taxes as well as slight increase in expenses in scaling up of the SOVEST project.

Group adjusted net profit increased 53% to RUB1.7 billion from RUB1.1 billion in the first quarter in the prior year. Adjusted net profit was largely affected by the same factors that adjusted EBITDA. Payments services segment, net profit increased 35% to RUB3 billion compared with RUB2.2 billion in the prior year, driven primarily by payment services segment net revenue growth and certain expensive savings that will be caught up during the year. Consumer financial services segment net loss was RUB532 million in the first quarter 2019 as compared to a net loss of RUB679 million in the same period of the prior year, resulting from the expansion of the operations of the SOVEST project and improvements of the user that Sergey previously mentioned. SME segment net loss was RUB5 million, as compares to RUB153 million in the first quarter of 2019. Substantial reduction of SME segment net loss resulted primarily from the growth and development of the Tochka business. Rocketbank segment net loss were RUB419 for the first quarter 2019, as compared to a net loss of RUB73 million for the same period in 2018. The substantial increase in net loss was primarily driven by expenses in certain connection with transfer and commencement of Rocketbank operations including primarily personnel expenses as well as client acquisitions and marketing costs.

Finally, as you saw in our earnings release, following the determination of the first quarter 2019 financial results, our Board of Directors approved a dividend of RUB0.28 per share. In accordance with the decision of the Board, the Company aims to distribute between 65% to 85% of it’s adjusted net profit for 2019, starting from the first quarter 2019. 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 range provided, although the payout ratios for each of the quarters may vary and be outside of this range. It remains the long-term intention of the company to distribute all excess cash to the shareholders.

Now, on to our guidance. Firstly, I would like to emphasize certain accounting changes and assumptions that are embedded in our 2019 guidance. We have stopped starting from February 1, 2019 to recognizing part of the Tochka revenues associated with information and technology service agreements with Otkritie Bank for providing services to Tochka clients that have their accounts with Otkritie Bank as Tochka business was transferred to JSC Tochka.

Such revenues were recognized in full for the full year 2018; however, they are only be recognized for one month in 2019. For the avoidance of doubt, only the revenues related to Tochka clients that have their accounts with QIWI bank are recognized as QIWI Group revenues starting from February 1, 2019. We correspondingly account JSC Tochka as an equity associate.

Further, we believe that the financial results of Rocketbank as well as underlying business trends and targets of this segment will not change materially for all of the year and include corresponding estimates into full year guidance. However, we reserve the right to adjust the Rocketbank strategy and corresponding financial forecasts for the segment throughout the yea,r based on the results of our review of Rocketbank strategy.

Given all the above, we have raised our 2019 guidance to reflect strong performance of our payment services business and underlying trends that (inaudible) We expect group adjusted net revenue to increase by 9% to 15% over 2018. Payment Services segment net revenue to increase by 19% to 25% over the last year. Group adjusted net profits to increase by 40% to 50% over 2018, while payment services segment and profits is expected to increase by 19% to 25% or from each in line with the net revenue growth. Although, we show our first quarter results as a solid foundation for future growth, should not affect us remain beyond our control and hence, we reserve the right to revise guidance in the course of the year.

And lastly, on a personal note, I would like to thank Sergey, our team and our Board of Directors for their invaluable support through all these years. Also, my sincere congratulation to Varvara in respect of her new role. I truly enjoyed being a part of Qiwi for all these years and wish Qiwi every success in the future, also wish Varvara every success in her new role.

With that, operator, please open up the call for questions.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Our first question comes from the line of Ulyana Lenvalskaya with UBS. Please proceed with your question.

Ulyana LenvalskayaUBS — Analyst

Hi everyone This is Ulyana from UBS. My first question will be on the number of e-wallets. This quarter you managed to add quite a lot. Almost 1 million of new e-wallets. Could you please tell us about the key drivers or the categories who were those customers are?

Alexander KaravaevChief Financial Officer

Ulyana, its Alexander. So, it is probably coming from the same growth points, primarily from e-commerce and money remittances. So basically this is the result of development of the B2C ecosystem and general increase of the volumes of the Company.

Ulyana LenvalskayaUBS — Analyst

Okay.so, I remember a few quarters ago, we were discussing sort of the total number of customers reaching certain saturation. So now with this development of e-commerce and the self-employed and B2B, B2C would it be fair to say that you see new opportunities so?

Alexander KaravaevChief Financial Officer

Well, we certainly see new opportunities primarily, I mean around the growth of the average spend double so to say because we see the increasing engagement of the users. So although in terms of number of new consumers as well. But again, we are stepping to a new markets and some of those markets were just creating like self employed. So it’s pretty difficult to estimate the total price of those markets yet. So but we generally see opportunities at least in terms of the substantial increase of volumes.

Ulyana LenvalskayaUBS — Analyst

Okay. Thank you. And the second question will be on service net revenue yield, it’s now almost a 4.5%. Where do you see the normalized level? How should we estimate this going forward?

Alexander KaravaevChief Financial Officer

I think, we still have a certain room for improvement there. So we have already achieved quite substantial levels. So it obviously, will depend on our promo campaign for some of those — their net revenue but we as you remember, a couple years ago when we announced service reward ranging somewhat toward north of 5%, so this is something that we are going to be achieve in the next several months.

Ulyana LenvalskayaUBS — Analyst

Thank you.

Operator

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

Vladimir BespalovVTB Capital — Analyst

Hello, congratulations some very strong numbers and thank you for taking my question. My first question will be on your EBITDA margin for the quarter, it was very strong, but it looks like the trend like it outpaces significantly both the revenue growth and the net profit growth. Should we expect this to stay like this? Was there something one off may be behind this strong performance of EBITDA margin? So maybe you could provide some color on that. And also question on your revenue guidance for the full year, it implies a pretty significant slowdown compared to the first quarter of 2019. So what is behind? Are you trying to be cautious or you see some maybe headwinds for for the top line growth? Thank you.

Sergey SoloninChief Executive Officer

Thank you. Thank you for your question. First of all on the EBITDA margin, we believe it should stay like this, so we really keep away substantial kind of improvement. So we head to certain extent a one off kind of effect in Q1, because we are now reestablishing our long term incentive program for the wide variety of employees. And part of those kind of core cost saving will be caught up in Q2 and afterwards. But in general, the margins that we achieve especially in payments services, they’re more or less sustainable given the kiosk. On the revenue again, I mean we are generally conservative that given that we really have a new market that we’re exploring, and base — I mean we already achieved quite quite a high base but generally speaking because we had substantial improvement across all the key categories in Q3 and Q4. But it’s still imply 20% plus growth for all the key categories for the remaining quarter. So we believe that was quite challenging but we are pretty sure we will be there.

Vladimir BespalovVTB Capital — Analyst

Okay. But just to clarify, your guidance for the full year is between 9% and 15% for adjusted net revenue, right? But you grew 31%. If you grow like 20%, it should be higher, no? Did I misunderstand something?

Alexander KaravaevChief Financial Officer

Yeah I mean that’s exactly right. It’s actually the signature for taxes. First of all, I think we tried to make it absolutely clear in the press release. So we have consolidated Tochka business, so based on the transaction that we now announced a long ago with the (inaudible) changing the accounting. The Tochka business is continuing to perform very well. But we’re only going to be reflecting the part of the gross revenue. And then we have a substantial kind of negative net revenue for Rocketbank. So these effects together was quite substantial both in payments services business given that that guidance. So it’s a really mixture of effect. But generally speaking, we believe this is a very solid growth for the year.

Vladimir BespalovVTB Capital — Analyst

Okay. Thank you. If I may I ask one more question on service. You just mentioned that you are heading to reach a 5% plus net revenue yield in about next 12 months, but will this be enough to make the project break even and maybe you could provide some updates on what is the split of your net adjusted revenues for service in between the merchant commissions value added services and others? Thank you.

Sergey SoloninChief Executive Officer

Well, it’s the majority of the net revenue will now be coming from the user generated fees to value added services, while still quite substantial chunk would flow through the (inaudible) As for the break-even point, so we do not really changed our estimation, expatiation in this respect. So it should come some time 2020, and we are developing more or less according to that plan.

Vladimir BespalovVTB Capital — Analyst

Thank you very much.

Operator

Thank you our next question comes from the line of Sveta Sukhanova with Sberbank.. Please proceed with your question.

Sveta SukhanovaSberbank — Analyst

Good afternoon, everyone and congratulations with extremely strong results. My first question would be on margins in payments. If I perhaps hear that right that you do expect sustainable margins in payments? Are the net margin in payments was 62%, which was pretty high, so is it sustainable or not? Sergey, I understand your comment about the overall EBITDA but what about payments?

Sergey SoloninChief Executive Officer

We expect the EBITDA in payments business to stay more or less stable on the levels that they achieve, but again but it can be sort of fluctuation for throughout the year but generally we — and all of this guided that the inherent EBITDA in such type of business should be north of 60%. And this is what we have kind of achieved so far.

Sveta SukhanovaSberbank — Analyst

So it’s around 60%, not 62% what you had in Q1?

Sergey SoloninChief Executive Officer

I mean it can slightly go down and can slightly go up but, I mean what we would be expecting kind of mid to long term would be north of 60%.

Sveta SukhanovaSberbank — Analyst

Understand. Very clear. Thank you very much. My second question would be on betting and e-commerce. And let me ask actually two questions together. The first word would be on betting and e-commerce.Have you had the very strong growth of the e-commerce. Can you kindly guide us or tell us what kind of betting contribution was the e-commerce growth or e-commerce revenues in the first quarter? That would be my first part of the question. And my second part of the question would be about visibility. You reported results — full year results just a month and a half ago. And you were given very conservative guidance, which is significantly upgraded to-date. So what’s the visibility of your earnings and what’s the predictability of your earnings? How come that you are substantially upgrading your guidance just one and a half month after it was given?

Sergey SoloninChief Executive Officer

Yeah. Okay. So on the — I start with the second part of the question. Look, I mean each quarter, I mean we are creating more and more visibility, during our speaking and we’ve been conservative with the guidance, when we provided that with whole year. So we were not exactly sure about the seasonality in Q1. And how sustainable the trends are. So generally speaking, jumps on the consumer dynamics, consumer behavior and spending patterns, we are usually getting new data like each month, that’s what’s made us believe that the visibility. Visibility is such that we are in a position to upgrade the guidance. Again, it’s still a lot of unknowns, I mean we’re still setting to work quite new markets. Some of those are difficult to estimate and they may go to a different phase of the development. But again, just further we have fairly sure that we are going to be achieving the guidance that we just provided. On your first question for sports betting, it’s still one of the key categories. So it has continued to the major part of the segment.

Sveta SukhanovaSberbank — Analyst

Thank you very much. But what’s a major part? Because for the full year you, I think you It’s said that it’s about 60% of your e-commerce revenue. So is the major part is it’s like 80%, 90% or what kind of ratios that are going to come?

Sergey SoloninChief Executive Officer

Well, I’m really disclosing the kind of both the numbers but the composition of net revenue within these segments remained on a stable compared to the last quarter.

Sveta SukhanovaSberbank — Analyst

Okay. Clear enough. And when you’re talking about back to your first part of the question. When you’re talking about that you’re heading to the new market and lots of unknowns. What kind, what kind of new markets do you mean? Do you mean markets outside of payments or you mean some kind of new market?

Alexander KaravaevChief Financial Officer

No, It’s primarily those kind of self-employed area that is developing quite fast, So within that segment, we really have like tons, and hundreds of use cases, realize like gamers, dreamers and many many other kinds of use cases, where the people do use digital wallets except for normal banking. And they will takes time us to actually explore those markets to develop a proper instruments that proper products for those guys and to see what dynamics. So it’s really something that cannot be really stimulated than sake of the whole, i mean for each particular use case, we need present kind strategy and products so that’s how it works.

Sveta SukhanovaSberbank — Analyst

Very clear. Thank you very much.

Operator

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

Maria SukhanovaBCS Global Markets — Analyst

Yes. Good afternoon. I have three questions. First just coming back to EBITDA question. Was there any significant impact from switching new IFRS standards, because if I look for instance at your G&A expense, they have jumped significantly. So I wonder whether there will be — there was some reallocation from G&A to D&A that we should be aware about? Second question on this — there was a draft bill approved in the first, about varying market and about putting stricter rules into play. And as I understood like it’s beneficial for you because it’s beneficial for the legal market in general. So may be could you comment on what would kind of impact, you would expect from this bill? And third on inactivity fees. You seem to have agreed to change the terms of charging the fees somewhere later this year. So wonder first off is there any understanding on when this is going to happen. And if this is included in your guidance? Thank you.

Sergey SoloninChief Executive Officer

Okay. So, on the first one on the first question. So IFRS 16, so impact of IFRS 16 was not really kind of high from the whole Company. So it does not really impact on the payments services but it impacts — it may kind of impact because we have that kind of ramp to the building. So we do not really expect that will substantially change the financial. So we’re more susceptible to the — those kinds IFRS standards that relates to to for the accounting for interest income there or it’s impacting our reporting quite a lot last year like IFRS 9. So on the key activities in general, the effect, the secular growth. I mean we’re really hedging quite a lot of digital wallets and usually as an activity fits given that we are not really changing a lot our methodology we — so it’s not, It is growing primarily in accordance with the gross volume . So that’s what we have received in the past and this is more or less the churn. Yeah. And on the regulatory part, I mean we — I mean first of all, it’s not something that all the kind of rumors and the regulation that we’re discussing now. We’re aware of that, so we are actually working together with the regulators and are doing additional perspective that given our scale and market partition, any new regulation rules will be basically positive for us, we feel the markets in the way and we will be in a position to kind of extend our figures.

Maria SukhanovaBCS Global Markets — Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Andrey Mikhailov with Sova Capital. Please proceed with your question.

Andrey MikhailovSova Capital — Analyst

Good afternoon. Thank you very much for the call. I have questions on SOVEST and Rocketbank. I’ll start with SOVEST. My first on — SOVEST is on the loan book dynamic. As I understand the net loan book declined Q-on-Q over the first quarter. Does this imply that most of first origination during the quarter was actually booked at AK Bars Bank? And my second question also is on transaction volume, which reached RUB5 billion in Q1. Again does this figure include the transactions on cards that are booked AK Bars Bank? Thank you.

Sergey SoloninChief Executive Officer

I think the first question. Yes indeed that sure is the loan booked declined slightly, basically the usual seasonal effect, so we were having quite right substantial increase of volumes form loan book in Q4 or it is that people were so affecting quite a lot toward the year-end. And in Q1, it’s usually less. So from Qiwi perspective, so this is something that we expected. If the certain expense are delivered, I believe Varvara would love to test that Rocketbank more than was AK Bars. AK Bars’s loan book in itself is not yet large, like several thousand cards issued, but we really going to announce a strategy that we first need to really explore how that all works and proof all the concepts before we would be in a position to scale the project. So in the meantime, we’re not in a position to extend our loan book kind of substantial. And on our technical question, yes, obviously all the volumes also using dollars transactions on the AK Bars cards are included in our reporting results.

Andrey MikhailovSova Capital — Analyst

Thank you very much for this. And the question of Rocketbank is on the plans that were publicized, namely the plans to launch great products at Rocketbank this year, would you please elaborate on this? Especially on the — any new plans for volumes and interest rates for this and next year?

Alexander KaravaevChief Financial Officer

Well, we are testing right now some great products at Rocketbank. And I think, we will testing through the end of year. So there will no any materials potential changes in figures for Rocketbank, so just experiments and that is not scaled yet.

Andrey MikhailovSova Capital — Analyst

Okay. Understood. Thank you very much.

Operator

Our next question comes from the line of Ulyana Lenvalskaya with UBS. Please proceed with your question.

Ulyana LenvalskayaUBS — Analyst

Hi, again. I just wanted to follow-up on the Rocketbank. What is expected sort of cash burn for this year? And also very theoretically speaking, when do you expect to see a RUB0 net revenue for Rocketbank?

Sergey SoloninChief Executive Officer

Ulyana, so the cash burn actually, it didn’t changed a lot. I mean we’ve projected some of — this is RUB1.2 billion to RUB2 billion exactly the one that was embedded in the annual guidance. And the break even on net revenue, I mean look, well, we are not guiding on that but we are expecting that to happen either later this year or beginning of next year. We just — to achieve that we’re testing all the hypothesis and all types of kind of new products and consumer behavior. But I mean, we just need some more time to evaluate and when we’re going to achieve it.

Ulyana LenvalskayaUBS — Analyst

Again the second question on Tochka. When it is expected to break even. So, when do you expect to record some minor positive earnings contribution from Tochka?

Sergey SoloninChief Executive Officer

For this year already. So in Q1, this is kind of literally RUB0. I mean it’s already break even, especially Q4 was also almost positive loan. So throughout the whole 2019, Tochka will be positive in general.

Ulyana LenvalskayaUBS — Analyst

Okay. Thank you, Sergey. We will miss you at these calls.

Sergey SoloninChief Executive Officer

Thank you so much. Thank you.

Alexander KaravaevChief Financial Officer

Thank you.

Operator

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

Vladimir BespalovVTB Capital — Analyst

Thank you for taking my follow-up questions. I actually have two one is again on SOVEST. Maybe you could update us on your new partnership — potential partnership how these are proceeding? When we can see more banks added to the platform and how the situation generally develops? And one more question to Sergey, your world trip is coming to the end of this month as far as I understand maybe you could have update a little bit on the future plans? Thank you.

Sergey SoloninChief Executive Officer

Okay. Yeah. So I’m on the second one. I’m coming I think on 21st — 22nd of May. And so we’ll be mostly seeing Moscow. So but my I’m actually continued — I was continuing the trip to manage the Company and generally in all the subjects. So, one thing that we have to do which is big is to present new strategy that we will do it together with management. We’ve already started to do it but little presented more or less in August. So through the Board and maybe then into the market. So that’s the — that’s my main focus around which I will be working for three months. And on SOVEST, while we have in line with several banks that are also testing right now services product. We are discussing all the options as well as others, so we’re thinking about winning the project off with a new investor as well as the partnership — partnering with some of the banks. So it’s not yet decided, I think finally, we will finalize this also too more or less to August. So that’s my understanding of the time.

Vladimir BespalovVTB Capital — Analyst

Thank you very much.

Operator

Thank you. There are no further questions at this time. And we have reached the end of our conference. Thank you for your participation. You may disconnect your lines and have a wonderful day.

Sergey SoloninChief Executive Officer

Thank you very much.

Duration: 40 minutes

Call participants:

Varvara KiselevaInterim Chief Financial Officer

Sergey SoloninChief Executive Officer

Alexander KaravaevChief Financial Officer

Ulyana LenvalskayaUBS — Analyst

Vladimir BespalovVTB Capital — Analyst

Sveta SukhanovaSberbank — Analyst

Maria SukhanovaBCS Global Markets — Analyst

Andrey MikhailovSova Capital — Analyst

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