1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
OZON
Event Date
2020-11-24
Sector
Consumer
Subsector
Broadline Retail
Offer Range
$30.00-$30.00
Shares Offered
33M
177.13M
$5.9B
18.6%
Implied Upside vs Midpoint
Description
We are a leading e-commerce platform in the large, fragmented, underpenetrated and growing Russian e-commerce market. Over the years, we have become the most trusted and respected online retailer in the country, according to INFOLine, and our brand has become synonymous with online shopping for our approximately 11.4 million active buyers in Russia in the twelve months ended September 30, 2020. Our mission is to transform the Russian consumer economy by offering the widest selection of products, best value and maximum online shopping convenience among Russian e-commerce companies, while empowering sellers to achieve greater commercial success. We attribute our success to our focus on enhancing the buyer and seller experience, our nationwide logistics infrastructure, which is one of the largest among Russian e-commerce companies, according to INFOLine, and our cutting-edge technology and strong culture of innovation. We connect and facilitate transactions between buyers and sellers on our Marketplace (our “third-party” business), which represented 45% of our gross merchandise value including services (“GMV incl. services”) and 15% of our total revenue in the nine months ended September 30, 2020. We also sell products directly to our buyers (our “Direct Sales or “first-party” business), which represented 51% of our GMV incl. services and 79% of our revenue in the nine months ended September 30, 2020. We believe that this globally proven business model of an online marketplace for third-party sellers, complemented by a first-party business, allows us to offer Russian consumers the largest multi-category assortment of products, according to INFOLine, with approximately 9 million stock keeping units (“SKUs”), as of September 30, 2020, in categories ranging from electronics, home and decor and children’s goods to fast moving consumer goods (“FMCG”), fresh food and car parts, at competitive prices and with a wide range of delivery options. This business model also enables us to better manage our inventory and enhance the online shopping experience of our buyers for certain product categories and geographical regions through our Direct Sales business. In the nine months ended September 30, 2020, 8% of our SKUs were offered through our Direct Sales business, while 92% of our SKUs were offered by our sellers through our Marketplace. Our growing base of approximately 18,100 active sellers, as of September 30, 2020, plays a key role in the expansion of our platform’s product catalog. We attract sellers to our platform with a strong value proposition that combines access to millions of our active buyers with a comprehensive set of tools and services for our sellers, such as sales management solutions with access to data analytics and advertising services, financial products and fulfillment and delivery services through our nationwide logistics infrastructure through our Fulfilled-by-OZON (“FBO”) and Fulfilled-by-Seller (“FBS”) logistics models. These seller-facing tools and services equip our sellers to attract more buyers, grow their sales and provide a seamless transaction and buyer experience. We believe that we are one of the pioneers of e-commerce and the most recognized e-commerce brand in Russia, with a top-of-mind brand awareness of 32%, compared to 18% for our nearest competitor in June 2020, according to INFOLine and BrandScience. In the twelve months ended September 30, 2020, our platform served approximately 11.4 million active buyers who placed an average of 5.0 orders during that period, an increase from approximately 6.6 million active buyers who placed an average of 3.8 orders in the twelve months ended September 30, 2019. The selected periods of 2020 include the period from April 2020 until June 2020, during which we experienced increased demand for our products and services as a result of the COVID-19 pandemic and the related government-imposed social-distancing measures. The combination of our wide assortment of products (the largest selection in the Russian e-commerce market, according to INFOLine), competitive prices and seamless shopping experience, coupled with our brand reputation, enable us to attract more buyers to our platform, which, in turn, draws more sellers to our Marketplace, resulting in the expansion of our product catalog, and bolsters the retention and order frequency of our buyers. We believe that this powerful network effect has allowed us to achieve faster growth than the Russian e-commerce market, which grew by 41% in the nine months ended September 30, 2020 as compared to the same period in 2019, and compared to 29% in the year ended December 31, 2019 and 22% in the year ended December 31, 2018. Our GMV incl. services grew by 142% in the nine months ended September 30, 2020, as compared to in the same period in 2019, supported, to some extent, by the government imposed social-distancing measures related to the COVID-19 pandemic, compared to 93% in the year ended December 31, 2019 and 74% in the same period in 2018. Our GMV incl. services grew by 46% and 20% in the years ended December 31, 2017 and 2016, respectively. We reported a loss of P12,857 million in the nine months ended September 30, 2020, compared to a loss of P13,033 million in the nine months ended September 30, 2019. Due to significant investments in our growth, we incurred losses of P19,363 million and P5,661 million in the years ended December 31, 2019 and 2018, respectively. --- Our nationwide logistics infrastructure facilitates the fulfillment of products and delivery of parcels sold through both our Marketplace and our Direct Sales businesses in an efficient and reliable way. We have developed one of the largest and most sophisticated logistics infrastructures in the Russian e-commerce market, according to INFOLine, with nine fulfillment centers, including one of the largest fulfillment centers in Russia among e-commerce businesses, and our delivery infrastructure, consisting of approximately 43 sorting hubs, 7,500 parcel lockers, 4,600 pick-up points and 2,700 couriers, allowing us to provide what we believe to be one of the best online shopping experiences for our buyers in terms of cost, speed and convenience. We offer same-day delivery services in Moscow and in parts of the Moscow region and Saint Petersburg and next-day delivery coverage for over 40% of the Russian population as of September 30, 2020. We are a technology-driven company with a strong culture of innovation. Our secure and scalable technology infrastructure, developed by our in-house research and development team, provides the foundation for seamless buyer and seller experiences on our platform, as well as for our supply chain operations, business intelligence, traffic and search optimization, customer relations managements (“CRM”) operations and payments. We collect and analyze data to optimize our operations, personalize the shopping experience of our buyers and enable us, our buyers, our sellers and our logistics partners to make informed real-time decisions on our platform. We believe our mobile-first approach makes shopping more convenient for our buyers, increases buyer retention, improves the efficiency and conversion rate of our marketing programs and accelerates the growth of our business. According to INFOLine, our mobile app for buyers (our “Shopping App”) is one of the leading shopping apps in Russia by number of average monthly users, with approximately 10 million monthly average users (“MAU”) (which we define as unique visitors within a particular period) on our Shopping App in the six months ended June 30, 2020, according to AppAnnie. The orders made through our Shopping App accounted for 70% of orders on our platform in the nine months ended September 30, 2020, an increase from 51% of orders in the nine months ended September 30, 2019. In the year ended December 31, 2019, 56% of orders on our platform were made through our Shopping App, an increase from 35% of orders in the year ended December 31, 2018 and 15% of orders in the year ended December 31, 2017. We believe that developing complementary products and services will help us to grow our core business and our market share. We have developed and successfully launched financial products and services for buyers and sellers, advertising and logistics services for sellers and an online travel booking service through our OZON.Travel business. We will continue to develop and enhance our existing products and services as well as expand our range of service offerings to our buyers and sellers, which will help us achieve our mission to contribute to the transformation of the Russian consumer economy. For example, one of our buyer-facing financial products, OZON.Card, our branded debit card, offers benefits to our buyers when it is used to make purchases. OZON.Card holders made an average of approximately three orders per month in the nine months ended September 30, 2020, which is approximately 1.6 times more than the average monthly order frequency of our buyers who placed at least one order each month in the same period in 2020. As of September 30, 2020, approximately 260,000 OZON.Cards were activated, compared to approximately 57,000 OZON.Cards as of December 31, 2019 and fewer than 10,000 OZON.Cards as of September 30, 2019. --- We were incorporated in Cyprus on August 26, 1999 under the Cyprus Companies Law, Cap. 113 as Jolistone Enterprises Limited (registration number HE 104496) and changed our name to Ozon Holdings Limited on November 8, 2007. On October 22, 2020, Ozon Holdings Limited was converted from a private limited liability company incorporated in Cyprus into a public limited company incorporated in Cyprus, and our name changed pursuant to a special resolution at a general meeting of our shareholders to Ozon Holdings PLC. Our registered office is located at Arch. Makariou III, 2-4, Capital Center, 9th floor, 1065, Nicosia, Cyprus. The principal executive office of our key operating subsidiary, Internet Solutions LLC, is located at 10 Presnenskaya Embankment, “Naberezhnaya Tower,” Tower C, 123112, Moscow, Russia. The telephone number at this address is +7 495 232 1000. Our website address is www.ozon.ru.
Ozon Holdings PLC annual income statement and balance sheet, FY 2019 to FY 2022, as reported in SEC filings.
| Metric | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
|---|---|---|---|---|
| Revenue | $60.1B | $104B | $178B | $277B |
| Gross profit | $11.3B | $31.5B | $65.7B | $156B |
| Operating income | ($18.6B) | ($17.3B) | ($58.9B) | ($44.1B) |
| Net income | ($19.4B) | ($22.3B) | ($56.8B) | ($58.2B) |
| Metric | FY 2019 | FY 2020 | FY 2021 | FY 2022 |
|---|---|---|---|---|
| Total assets | — | $155B | $241B | $285B |
| Total liabilities | — | $75.4B | $211B | $301B |
| Total equity | $817M | $79.3B | $30.6B | ($16.6B) |
| Cash & equivalents | $3.0B | $104B | $108B | $90.5B |