Naspers share price ends pullback from high as results improve
Revenue from continuing operations increased by 8% year-on-year.
Key Takeaways
- Early Achievement of eCommerce Profitability. The group has achieved profitability in its consolidated eCommerce segment ahead of schedule, marking a significant milestone for the company.
- Strong Revenue Growth. Revenue from continuing operations grew by 8% year-on-year, reaching $6.4 billion. This growth was driven by strong performances in key business units like OLX and iFood.
- Improved Profitability Metrics. Operating losses decreased by $511 million to $562 million, indicating a clear path towards profitability.
- Strategic Investments and Cash Flow Management. Naspers limited external investments to $571 million, down from $6.4 billion in 2022, reflecting disciplined management. The group generated a free cash inflow of $375 million, a significant turnaround from the prior year’s outflow of $491 million.
- Leadership Change with a Strategic Vision. Fabricio Bloisi, CEO of iFood, was appointed as Naspers’ Group CEO, bringing extensive entrepreneurial experience and a successful track record in scaling technology companies.
Naspers Limited Annual Financial Performance
Naspers Limited, a prominent player in the global technology sector, reported its annual financial results for the year ending March 31, 2024. The group has achieved profitability in its consolidated eCommerce segment ahead of schedule, a significant milestone for the company. Revenue from continuing operations increased by 8% year-on-year to $6.4 billion, driven by strong performances in their core businesses, particularly OLX and iFood.
Profitability and Revenue Growth
Despite operating losses decreasing by $511 million to $562 million, the company has demonstrated a clear trajectory towards profitability with improved trading profit and reduced trading losses. The eCommerce segment saw consolidated trading profit jump by $460 million to $24 million, showing the positive impacts of growth, scale, and cost reductions. Moreover, Naspers’ headline earnings per share rose from 119 US cents to 759 US cents, indicating robust financial health compared to the previous year.
Strategic Investments and Cash Flow Management
Naspers displayed judicious management in a volatile investment landscape by limiting external investments to $571 million, a sharp decrease from the $6.4 billion peak in 2022. The group's free cash inflow stood at $375 million, a substantial improvement from the previous year's outflow of $491 million, reflecting better working capital management and increased profitability in the Food Delivery and Classifieds segments. Additionally, Naspers continued to create value for shareholders through an ongoing share-repurchase program, reducing the free-float share count by 21% since its inception.
Key Sector Performances
iFood, one of Naspers’ standout businesses, generated a significant increase in trading profit, consolidating its position as a leading global food delivery service. Meanwhile, the Classifieds business also saw marked profitability driven by revenue growth and effective cost control, particularly within OLX Europe. PayU, Naspers’ payment service provider, exhibited strong revenue growth and improved profitability, overcoming regulatory challenges in India. Conversely, the Edtech segment faced challenges due to the broad adoption of generative artificial intelligence (GenAI) tools and macroeconomic conditions, prompting significant actions to enhance trading profit and cash flow performance.
Leadership and Vision
In a strategic leadership shift, Fabricio Bloisi, CEO of iFood, has been appointed as Naspers' Group CEO, bringing a wealth of entrepreneurial expertise and a proven track record in scaling technology companies. The group remains committed to enhancing shareholder value through strategic growth, disciplined investments, and operational excellence, setting a strong benchmark for continued success in the upcoming financial year.
Naspers – technical view
The share price of Naspers is forming a bullish price reversal just above the 3540 support level. The bullish price reversal if confirmed, would suggest the end of the pullback from its recent high and possible short term resumption of the longer term uptrend.
3930 provides the initial resistance target from the reversal, while a close below the 3540 level would suggest the move to have failed.
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