Classifieds pumped for Naspers in H1 of FY2016/17.

Revenue earned by classifieds as a sub-group of businesses within the e-commerce division of Naspers jumped 58 percent to $196 million U.S. in H1 of FY2016/17 from $124 million U.S. in H1 of FY2015/17. These numbers include revenue earned by classifieds at Naspers’ investments (Tencent and Mail.ru) and its JVs (part of the Schibsted peace pact).

So, strong growth for classifieds from a low base.

Naspers reports half-yearly and released the financials for the six months to end-September last Friday. (Here to the 41-page presentation.)

There was a lot of positive news for classifieds.

In H1 of FY2016/17 Naspers entered four new countries markets with classifieds, fought for the lead in six countries, was in the lead in 23 countries with its classifieds, and was in the lead and monetizing in another 11 country markets. That brought the number of countries in which Naspers operated classifieds to 44.

In H1 of FY2015/16 Naspers monetized classifieds in 10 countries. So, only one country market was added in the last 12 months. On this front, progress remained worryingly slow.

The division e-commerce generated $1.4 billion in revenue for Naspers in H1 of FY2016/17. Classifieds (eg. OLX, LetGo and the verticals) contributed 14 percent of all e-commerce revenue in the period; marketplaces (eg. Konga, Takealot) contributed 14 percent and etail (eg. Markafoni) contributed 55 percent of all e-commerce revenue. The rest came from travel, payments etc..   

The big revenue contributors (such as Tencent) continued on their victory runs in the period, which reduced classifieds’ share of total group revenue ($6.8 billion) to about 3 percent.

In the period, the mobile stuff brand LetGo was particularly hot. In the reporting period, the number for unique listers per month on LetGo in the U.S. grew 139 percent, said Naspers.

It quoted AppAnnie Pro numbers, which showed LetGo had passed OfferUp on monthly active users (MAUs) in April this year, and had 15 percent more MAUs than OfferUp in September.

More stats were quoted to show LetGo was kicking dust in OfferUp’s eyes in the U.S.: in January this year LetGo still lagged OfferUp on downloads and on the metric monthly active users (MAUs). Its downloads were only 55 percent of OfferUp’s and its MAU’s were only 53 percent of OfferUp’s.

Nine months later, in September, LetGo was ahead on both metrics. Its downloads were 25 percent higher than OfferUp’s and its MAUs were 15 percent higher.    

Of the number of unique listers on LetGo every month, 72 percent are return listers, and the rest new listers – pointing to a good measure of stickiness.

In typical Naspers style, money went where opportunities raised their beautiful heads. Of all the money spent on development in H1 of FY2016/17 (namely $387 million), 49 percent went to what Naspers called “new growth opportunities”. As examples of “new growth opportunities” were given LetGo, Showmax and Ibibo Hotels.

Naspers said in H2 of the current financial year it will continue to “reduce development spend on the existing footprint” and re-channel money to where the return opportunities are the highest. One of the biggest benefactors of this “re-channeling” of development spend, will be LetGo. Naspers said it’ll be increasing its development spend on LetGo, meaning it’ll intensify the battle for market share with competitors such as OfferUp and Schibsted’s Shpock.

So, now we have the interesting situation where Naspers and Schibsted cooperate with some classifieds brands (eg. OLX), and compete with others (LetGo and Shpock). This situation will get ever stranger, as OLX becomes more of a mobile brand.

Let’s pull back somewhat, and look at the group-wide performance in the reporting period.

Group revenue rose 16 percent to $6.8 billion from $5.9 billion in H1 of FY2015/16. The share contributed by the two investments (Tencent and Mail.ru) climbed yet again (we are now way past the point where this dependence got unhealthy) to 56 percent of total revenue from 49 percent in H1 of FY2015/16.

Another number which poured water on the fire (to keep it above belt), is net profit. The net profit dropped 15 percent to $541 million from $636 million in H1 of FY2015/16.

It would be unfair to end on a negative note. So, we’ll go back to the division e-commerce and report that the number of businesses in this division which operated profitably in the reporting period rose to 23 from 18 in H1 of FY2015/16. And, their combined trading profit rose 87 percent to $215 million from $115 million in H1 of FY2015/16.

Yes, it’s that “from a low base” thing again. But, still. Nothing wrong with the trend.  

Note: The analysts call with senior management will take place in a few hours. We’ll listen in and report new insights. 

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