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QIWI Plc (NASDAQ:QIWI)
Q1 2020 Earnings Call
May 20, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone, and welcome to QIWI's First Quarter 2020 Earnings Conference Call. [Operator Instructions]

At this time, I would like to turn the call over to Varvara Kiseleva, Interim Chief Financial Officer of QIWI. Please go ahead.

Varvara Kiseleva -- Interim Chief Financial Officer

Thank you, operator, and good morning everyone. Welcome to the QIWI's first quarter earnings call. I am Varvara Kiseleva, Interim Chief Financial Officer. And with me today are Boris Kim, our Chief Executive Officer, and Andrey Protopopov, Chief Executive Officer of the Payment Services segment.

A replay of this call will be available until Wednesday, June 3, 2020. 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 20, 2020.

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 to date, 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 constitute 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'll begin by turning the call over to Boris Kim, our Chief Executive Officer.

Boris Kim -- Chief Executive Officer of QIWI Group

Thank you, Varvara, and good morning everyone. Thanks for joining us today. Today, I would like to share our first quarter 2020 financial results with you.

This quarter, we demonstrated robust performance, given at the end of March, we have already started to see the negative impact of the COVID-19 and global lockdown on some of our segments and categories. It is fair to say that many of our key niches are impacted by the current crisis. For example, our Payment Services for betting merchants are affected by the suspension of the major sports events. Our SOVEST project is under pressure from the general downturn in Russia, while Tochka is affected by the correspondent significant decline in the SME activity. Many categories like Payment Services for online games and projects like Factoring and Flocktory [Indecipherable] in these turbulent times and demonstrate steady growth trends.

Despite the global challenges all of us are facing now, we believe that our performance proves the value and relevance of the payment ecosystem and digital solutions we have developed so far and aim to develop further. As an omni-channel provider of digital payments and financial services, we were able to continue offering our services to our customers, merchants and partners in full and without any interruption. Moreover, we believe that some of our key categories and niches, though negatively affected by the ongoing crisis, may be well positioned to show fast and steady recovery as soon as the situation normalizes.

At the same time, we continue to focus on optimizing our operations and implementing stricter cost controls across the Group. We have prioritized the health and well-being of our employees, while also supporting our clients and partners within our ecosystem during these challenging times. With the absolute majority of our employees working remotely since mid-March, I'm glad to know that our business has continued to co-operate remotely across all projects including the planned wind-down of Rocketbank operations.

Even though, we already begun to see the first signs of recovery, including the restart of some major national soccer leagues, we remain cautious that the next couple of quarters will be challenging. However, we believe that we have proved many times before that we have created a resilient ecosystem that is highly adaptive and consumer-oriented. We'll continue to develop it further by targeting our core niches and areas of expertise and creating new use cases well-fitted to serve our users, merchants and partners.

Now to some operational highlights. First quarter 2020 total net revenue increased by 17% to reach RUB6.3 billion compared to [Phonetic] RUB5.4 billion in the first quarter of 2019. The increase was mainly driven by Payment Services and Consumer Financial Services segments' net revenue growth. This growth was slightly offset by the technical decrease in Tochka project net revenue. Andrey will discuss the performance of Payment Services segment in a minute, while I will walk you through the results of our other segments.

Consumer Financial Services segment's payment volume reached RUB8.8 billion for the first quarter of 2020, increasing by 76% as compared to the same period of the prior year. Segment net revenue was RUB566 million as compared to RUB218 million in the first quarter of the previous year. Our loan portfolio reached over RUB8.5 billion as of March, 31st 2020. SOVEST project has demonstrated strong financial results in the first quarter of 2020 to move tenants to increasing the credit portfolio and improving consumer monetization. However, we already see the current crisis is having a substantial effect on both consumer activity and purchase and follow-up.

We have taken all methods of action to optimize our credit exposure as well as the overall operations of the project. We believe that our efforts are currently sufficient to mitigate key risks and uncertainties. We are actively monitoring the behavior of our clients. As of now, we are managing the portfolio and credit limits very tightly. We have taken a conservative approach toward our lending business and results do not see any critical changes in portfolio quality or consumer behavior as of now. We will continue to closely monitor the situation.

At the same time, we continue to explore partnership opportunities to support the scaling of the projects. We are also developing different strategies aimed at refocusing the project on offering customized products and services to clients in the niches core to our Payment Services segment.

Corporate and Other Category segment net revenue, which includes primarily Qiwi Bank net revenue of the Tochka project JV, net revenue from account receivable financing and digital bank guarantees products of Factoring PLUS project and net revenue of Flocktory, SaaS platform awards, RUB350 million as compared to RUB476 million in the first quarter of the prior year. The decline was driven by the technical decrease of the Tochka project net revenue, offset by contribution of other projects.

Further, I would like to give you a brief update on the latest developments in the relation of the Rocketbank wind-down process. In March, 2020, the Board decided to wind down Rocket operations. We have commenced this process and are currently proceeding following the initial wind-down plan. As part of the measure, we have terminated marketing activities, including the calculation of the Rocketbank loyalty program, significantly increased tariffs, and are currently reducing the headcount of the project. We have already seen a significant decline in the number of Rocketbank customers as well as corresponding account balances. We believe that the winding down of the current Rocketbank B2C service offering will be finalized in the next three to six months. At the same time, we continue to review the most efficient way to reduce or dispose of Rocketbank assets. We are currently piloting certain projects, earlier developed in Rocketbank in our Payment Services segment, particularly as part of our B2B2C product pipeline.

Finally, yet importantly, I'm glad to announce that following the determination of the first quarter 2020 financial results and taking into consideration the current level of the uncertainty of our operating environment, our Board of Directors has approved a dividend of $0.14 per share. We remain committed to the target dividend payout ratio of at least 50% of the adjusted net profit for 2020, approved by the Board in March 2020. The Board of Directors reserves the right to distribute the dividends quarterly as it deems necessary, so that the total annual payout is in accordance with the target provided. However, the payout ratios for each of it may vary and be above or below provided target. Even in these challenging times, we see many opportunities both in the payment space and the adjacent markets, and I believe we are very well-positioned to continue strengthening our ecosystem with the ultimate goal of securing our long-term growth prospects.

With this, I will turn the call over to Andrey for an update of the Payment Services business. Andrey?

Andrey Protopopov -- Chief Executive Officer of Payment Services

Thank you, Boris, and good morning everyone. It's my pleasure to be here with you today.

Now, on to the results of our Payment Services segment. For the first quarter 2020, our Payment Service segment volume increased by 14% to reach RUB370 billion, driven by significant growth in Money Remittance and E-commerce category, which grew 24% and 18% respectively. The growth in E-commerce and Money Remittance verticals were largely driven by the development of our key streams, including digital entertainment, self-employed and sharing economy partners.

As Boris mentioned earlier, in the second half of March, we started to see the impact of the coronavirus crisis on our key payment categories including primarily services for betting merchants. Other categories such as travel and ticketing, services we provide to taxi companies and drivers were affected by lockdown and other restrictions as well. On the other hand, certain categories such as for example online gains and physical commerce are demonstrating strong growth rates during the lockdown. Generally, we believe that most of our categories such as digital entertainment, and to a larger extent, services for the self-employed though negatively affected by the crisis, may be well-positioned to show good recovery rates as soon as the restrictions are lifted. At the same time, certain categories such as, for example, Money Remittance, remain sensitive to the general level of economic activity and may be pressured by the decrease offset [Phonetic] such for a longer period.

To put in short, we currently see and will likely continue to see mixed trends across our key streams. Overall, taking into account challenges we all are facing due to the lockdown and social distancing, we expect that the importance of digital solution and payments will continue to increase in the near future. We have taken this chance to review interests [Phonetic] on our product pipeline and suite of services we offer, and believe that we will be able to find new initiatives as a result of this crisis.

Going back to the first quarter results, Payment Services segment net revenue increased 10% to reach RUB5.3 billion compared to RUB4.8 billion the prior year. Payment Services adjusted net revenue increased 10% to RUB4.6 billion, up from RUB4.2 billion in the prior year, primarily as a result of net revenue growth in our Money Remittance and E-commerce verticals, which grew 11% and 10% respectively. Our financial results were predominantly driven by the volume growth in Money Remittance and E-commerce categories. Our Payment average adjusted revenue yield was down by 4 basis points year-over-year to 1.24%, driven by the yield decline in E-commerce and Money Remittance market verticals. The yield decline resulted primarily from scaling of our business that came largely through offering our merchants and partners new services such as online inquiry. Such services had lower operations with our Qiwi Wallet solutions.

The growth of this new product stream value that our Payment average adjusted net revenue yield, primarily the E-commerce getting it, while the commissions we charge in our core solutions remain stable. Payment Services Other adjusted net revenue increased 7% to RUB727 million as compared to RUB661 million in the prior year as a result of growth of revenue from fees from inactive accounts and unclaimed payments that were in line with the overall growth of follow-up activity. and interest revenue. As Boris mentioned earlier, our growth was driven by the robust performance we have achieved in our key strategic streams, and through the expansion and enhancement of the product proposition yield.

Truly, at the moment, we see many challenges imposed primarily by the coronavirus crisis and corresponding lockdown worldwide ahead of us. Even though, we are starting to see some restriction being lifted, we remain cautioned. We believe that we are well-positioned to continue to grow our business and reach our suite of services, develop niches and create new use cases for our users, merchants and partners. We are doing our best to improve and optimize our operations in order to lay a ground work for the loan requirement roles.

With this, I will pass over to Varvara of for more details on the financial performance of the Group. Varvara?

Varvara Kiseleva -- Interim Chief Financial Officer

Thank you, Andrey.

Moving on the expenses. This quarter, our Payment Services business continued to demonstrate strong operating performance and generated substantial cash flow. At the same time, in the end of the first quarter, we have launched certain costs and growth optimization initiatives, including the wind-down of Rocketbank operations with the aim to improve the operating efficiency across our key operating segments. This being said, adjusted EBITDA for the first quarter 2020 decreased 2% to RUB2.20 billion. Adjusted EBITDA margin was 37%, compared with 44% in the prior year. Adjusted EBITDA margin contraction primarily resulted from an increase of personnel expenses in Payment Services segment and Corporate and Other Category, as well as growth of credit loss expenses mainly related to the SOVEST project. This was partially offset by the total adjusted net revenue growth as well as by a decline in rent of premises and related utility expenses and a decline of advertising, client acquisition and related expenses.

Group adjusted net profit increased 6% to RUB1.8 billion from RUB1.7 billion in the first quarter of the prior year. The growth in adjusted net profit was primarily driven by the same factors impacting adjusted EBITDA. Net profit was also affected by the following factors. Share of gain of an associate and a joint venture as opposed to share of loss of associate and a joint venture for the same period in the prior year, mostly related to Tochka JV; and net foreign exchange gain as compared to a net foreign exchange loss for the same period in the prior year, offset by higher income tax expense and other income and expenses, net loss as compared to other income and expense, net gain for the same period in the prior year.

Payment Services segment net profit increased 2% to RUB3.1 billion compared to RUB3 billion in the prior year, driven primarily by Payment Services segment net revenue growth, offset by the increase of payroll and related taxes. Payment Services segment net profit increased 2% to RUB3.1 billion compared with RUB3 billion In the prior year, driven primarily by Payment Services segment net revenue growth, offset by the increase of payroll and related taxes, excluding effect of share-based payments and foreign exchange loss.

Consumer Financial Services segment's net loss was RUB522 million in the first quarter of 2020 as compared to a net loss of RUB532 million in the same period of the prior year, resulting primarily from segment net revenue growth offset by an increase in credit loss expenses. And increase in credit loss expenses was primarily driven by RUB186 million increase in expected credit loss allowance that was due to the adjustments made to our provisioning models in light of the expected operating environment and credit quality deterioration resulting from the global distress caused by COVID-19, falling oil prices and ruble devaluation, as well as by the expansion of our credit portfolio.

Rocketbank segment's net loss was RUB660 million, an increase of 35% compared to the net loss of RUB490 million in the prior year, resulting primarily from an increase in payroll, including RUB142 million serverance payment provisions related to the wind-down process started at the end of the first quarter.

Now, on to our guidance. Firstly, I would like to remind everyone that at the moment we have limited visibility regarding the potential impact of the outbreak of the COVID-19 strain of coronavirus on our business, including the negative effect on the betting industry in general and our revenue generated from products and services we provide to our betting merchants, caused by postponement and termination of the major sports events as well as the negative effect on the consumer lending market in Russia and corresponding impact on our SOVEST project.

In addition, it is currently unclear how much consumer demand will be negatively affected from the outbreak of COVID-19 and what effect that outbreak will have on the macroeconomic environment as a whole. The full impact remains uncertain and will depend on the length and severity of the effect of the coronavirus on economic activity in our markets. The full scope of negative impact that the abrupt decline in oil prices and resulting devaluation of the ruble may have on the Russian economy also remains unclear, but has the potential to be very significant. Our outlook reflects our current views and expectations only and is based on the trends we see as of the day of this earnings call. If such trends were to deteriorate further, the impact on our business and operations could be more severe than currently expected. We continue to monitor the situation closely.

Having said that, we reiterate our guidance in respect of the 2020 outlook. We expect Group total net revenue to increase by 3% to 13% over 2019. Payment Services segment net revenue to change by minus 3% to plus 5% over 2019, while adjusted net profit is expected to increase by 10% to 30% over 2019. Although, we see our first quarter results for the solid foundation for the year, certain other factors remain beyond our control, and we, therefore, right to revise guidance in the course of the year.

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

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is from Ulyana Lenvalskaya with UBS. Please proceed.

Ulyana Lenvalskaya -- UBS -- Analyst

Hi everyone, it's Ulyana from UBS. Firstly, is it possible for you to comment on the current trends i.e., April and May so far. If possible, with numbers? And if not, can you maybe just describe the trajectory for payments or for the business altogether?

Andrey Protopopov -- Chief Executive Officer of Payment Services

Our overall volumes and revenues, mainly behind baiting merchants as well as to a certain extent, the self-employed categories like taxi drivers and some others, due to the cancellation of the sport event and lock down. The main dynamics are more or less the same as April.

Boris Kim -- Chief Executive Officer of QIWI Group

Hi, Ulyana. It's Boris here. Yes, I just want you to make some comments regarding other segments of the business, you know, that we are winding down Rocket, so it's -- the process is going well and according to the initial plan. That's nothing new about that. Regarding SOVEST they performed well -- quite well in the first quarter now, we see some deterioration in the quality of portfolio and also change in transactional behavior of the customer, but we are closely monitoring situation in SOVEST. As for other business units like factory and factoring, they really performed very well in April. Unfortunately, I'm afraid that I can't give you exact figures, but they've performed well.

Ulyana Lenvalskaya -- UBS -- Analyst

Okay, thank you. And secondly, there was a sequential decline in the number of active e-wallets for the first time ever. Can you please comment on that, what are the reasons?

Andrey Protopopov -- Chief Executive Officer of Payment Services

We see, it's not a decline, it's more like situation number with -- we said in the past that, our key effort is not on the number of key -- the wallet per se, but on the key niches and things that we have developed in digital entertainment and self-employed. I'm talking about those wallets, there is no decline and actually the growth we demonstrate in the third quarter and the revenues and volumes in our key categories behind those issues. I would say that overall we are fine with the number of wallets.

Ulyana Lenvalskaya -- UBS -- Analyst

Okay. And if I may another question. What was the net cash position at the end of the quarter?

Varvara Kiseleva -- Interim Chief Financial Officer

Favorite question. Thank you, Ulyana. Net cash position was around RUB30 million, RUB40 million the same basically as of the end of Q4.

Ulyana Lenvalskaya -- UBS -- Analyst

And it's denominated in dollars, right?

Varvara Kiseleva -- Interim Chief Financial Officer

The potential part is denominated in dollars, but second part is in rubles.

Ulyana Lenvalskaya -- UBS -- Analyst

Okay, thank you.

Operator

Our next question is from Ildar Davletshin with Wood & Company. Please proceed.

Ildar Davletshin -- Wood & Company -- Analyst

Yes. Hi everyone, thank you for the opportunity to ask the question. So could I ask -- what was your revenue growth in January and February of this year, particularly in the payment segment before March. So that would be my first question.

And I would also like to understand two more things, so your margins have declined quite substantially and you mentioned additional personnel costs. I'd like to understand if you could the -- maybe the numerical part, like what was the degree of this extra cost. And then more like, what's the nature? Is it like bonuses to loss related to prior year activity? And how of it is the one-off in nature, and so that would be my second question.

And then the third would be in general like, now that you've seen kind of the new reality, and you mentioned you are looking at new niches like what do you think would be the most interesting opportunities? Have you identified them already apart from betting, which was a big driver for you? So anything that -- say when the life goes back to normal, you could say that there is -- I don't know [Indecipherable] 20% like a substantial percent of your revenue coming from new services that we developed during this crisis. Thank you.

Operator

Our next question is from Chris Kennedy with William Blair.

Varvara Kiseleva -- Interim Chief Financial Officer

I'm sorry, we're answering the question still.

Boris Kim -- Chief Executive Officer of QIWI Group

Yes, we still answering. Yes in fact the [Speech Overlap] we haven't started yet. Yes, just a quick answer to your question regarding first two months of the first quarter. The Group figures as follows: plus 17% in net revenue and plus 30% in net profit, compared to first -- to the first two months of 2019. And Andrey will comment the other question.

Andrey Protopopov -- Chief Executive Officer of Payment Services

Yes. So on the Payment Services, the growth was more or less the same that in the total quarter, because in the March, we have some mix effect of the -- like I would say that kind of speed up of the growth before the lockdown started. So we have kind of mixed effects in the March. So I would say that in total, you can think more or less the same gross number for the January, February for the Payment Service segment.

Varvara Kiseleva -- Interim Chief Financial Officer

On the marginality that our comments and to sum up a lot of the answer to the previous question, I would say that we started to feel you the crisis only in the very end of March. So the growth rates that we demonstrated in the first quarter are representative for mostly of the [Indecipherable] growth level. The marginality and the personnel cost, that payments -- in payment Services that primarily relates to the growth primarily relates to the LTI program that we haven't used in August 2019. So if you're looking on the first quarter 2020 versus first quarter 2019, there this program is not included, was not present in the first quarter of 2019.

The size for the numerical value is roughly about RUB100 million that's not a one-off, that's a program that we have introduced and it will continue going forward before the end of the long-term incentive -- our longer-term incentive program for the middle management. Hope this answers your question. For the new niches about the new initiatives, I will pass on to Andrey to speak about Payment Service.

Andrey Protopopov -- Chief Executive Officer of Payment Services

Yes, I just found that exact number for January, February, it's actually several percent higher than the quarter, I would say. But like several percent higher, the growth rate. And for the new niches, I would say that we are generally keep our focus on the -- what we were talking previously. First one is digital entertainment and, we believe that overall the only category within digital entertainment that is heavily effected is for the merchants and it's the temporary effect. So, in the future, it should be back to the normal situation and we expect it to happen sooner in the quarter. Secondly, and I think we had now even more opportunities in this area is related to the self-employed business, businesses that are self employed, both the payout to the self employed by the different companies and as well the self-employed of the new economics and new niches that actually developed. So, the current situation again after the lockdown is lifted, we believe we will simulate actually more part of the economics move to the self-employed part. So more companies will be trying to attract other self-employed versus the permanent workers, at the same time with people that are currently losing their job or the income, they'll be looking for the different type of self-employment including new niches. And all this at the same time, we'll delete to the different type of digital communications businesses etc., and this is exactly the area where we are playing. So, kind of looking more midterm, I would say, we see the potential there to continue develop our business regarding the self employed.

Ildar Davletshin -- Wood & Company -- Analyst

Thank you.

Operator

Our next question is from Chris Kennedy with William Blair. You may proceed.

Chris Kennedy -- William Blair -- Analyst

Yeah. Thanks for taking my question and hope all is well. I just wanted to dig more into SOVEST. And if you can talk about kind of the pathway to becoming breakeven by year end that's still in the cards? Thank you.

Boris Kim -- Chief Executive Officer of QIWI Group

Thank you, Chris. So, we -- indeed, we plan to reach a breakeven by the end of this year in SOVEST, but the application has changed. And as I mentioned before, we see the duration of the portfolio itself and as you may have noticed and noticed that we created a special reserve in the first quarter for the portfolio, but the problem not only in portfolio itself and cost of risk. The problem is also in revenue side because the clarity of business model of service is that we get main revenues not from interest, but from a transactional behavior of our customer. And what we see now is the number of transactions and what the payment volume decreased because of two reasons. The service is mainly offline payment vehicle and due to lockdown, we lost a lot of a retail point of sales in offline. And second service operates in so called traditional segment, which is the consequence of price on which much high than in say digital entertainment segment in which Qiwi Wallet is active. So, at the moment, we don't foresee the possibility of breakeven for service this year, but we closely monitor situation for us. And then, we -- and second we look -- we are looking for different options to continue SOVEST operations including partnership with other banks.

Chris Kennedy -- William Blair -- Analyst

Okay. Thank you.

Operator

Our next question is from Andrey Pavlov-Rusinov with Goldman Sachs. Please proceed.

Andrey Pavlov-Rusinov -- Goldman Sachs -- Analyst

Good afternoon. This is Andrey Pavlov-Rusinov with Goldman Sachs. Thanks a lot for the call. I've got a couple of questions. Maybe first of all just want to start with a little bit of a follow-up on SOVEST. So, basically, I see that the net yield actually increased in the first quarter. So could you please elaborate on what's driving that? Is it basically declining volume that kind of included the share of interest or anything else? And also maybe what was actually the cost of risk on your portfolio in the first quarter? And what was the part which was forward looking versus the part that related to deterioration? And also what should we expect that in the coming quarters? I guess the second quarter should be challenging there. So, that's my first question and then I ask the following one after.

Varvara Kiseleva -- Interim Chief Financial Officer

Andrey, hello. Thank you for your question. First of all on net revenues of SOVEST, that's mainly related to, if you look at the press release, you can see that the volume showed pretty significant growth as compared to last year. And the key reason for the increase in yield is better monetization. So as you know we -- part of our service include selling value-added options for our customers, including opportunities to wide prolonged installments to shop outside of the partner network etc. So, the penetration of these options increased, and this led to better inclination [Phonetic] of the consumer base, that's for the net revenue. On fourth, so for the first quarter as we said, we don't see any significant -- in the first quarter, we didn't see any significant I'd say signs of negative dynamics. The core was in accordance with the previous year so around 10% to 12% on average. And the reserve that we -- the reserve allowances that we booked in this quarter, which are related to the restructuring programs introduced by the government. And with the overall decreasing quality of the macroeconomic and operational environment, this was roughly, if I'm not mistaken around RUB180 million. So, that are connected to the event basically happens what we call after the reporting date. So that's how we account for the deteriorating environment in April and May. As for core, we definitely expect the core will increase slightly where, as Boris said, monitoring the situation on a daily basis, both in terms of cost of risk and how the customers are repaying their current loans, their current debt. And of course, if we see any deterioration we're immediately taking actions that how fast curve potentially reach.

Andrey Pavlov-Rusinov -- Goldman Sachs -- Analyst

Thanks. And if I may clarify, this revenue yield, do you think it's going to be sustainable in the coming quarters although the volume, yes, would decline in the second quarter?

Varvara Kiseleva -- Interim Chief Financial Officer

So, we see quite a strong effect from the working operating environments, again, as Boris mentioned, because people shop less and the availability of funds is basically less. So, we believe that both payment volume and likely the yield -- and the yields are likely to decline in the second quarter.

Andrey Pavlov-Rusinov -- Goldman Sachs -- Analyst

Thanks. That's clear, and just a couple of other questions. Just maybe could you elaborate on what you see in there money remittances in April and May, and basically, as Andrey mentioned, that you may expect this to recover slower given that it's kind of related to the overall economic environment. So, what's your current view there? And maybe, if you could also break it down between the closed border payments of self-employed and other sub-segment there would be very helpful? And just the final question, you mentioned about the some cost initiatives in the payment. So, should we expect basically the growth rates in payment cost to subside significantly from the second quarter? Or would that be very gradual dynamics? That's it for me.

Andrey Protopopov -- Chief Executive Officer of Payment Services

Yeah. So, thank you, Andrey, for the money remittance part. We see mix dynamics, I would say. So, the biggest decline of jobs in April and May is related to the self-employed fees where those decreased with the most rates. At the same time, both are the categories where we believe, we will see the growth as soon as limitations will be lifted and we see potential there. For the more like classical money remittance and some remittance between wallet and from the wallet to the card and bank accounts. There volumes are not affected that much, but at the same time we expect the negative dynamic will be longer because it will be more related to the overall market situation rather than with the lockdown percent. So, currently as I said, the bigger decline is in the self-employed piece of the money remittance. For the future, we will see more longer effect for the classical money remittance, and from the wallet to the bank cards accounts. For the cost part of your question, and the payment services segments, there will be gradual effect quarter-by-quarter we will see gradually. So, we already made some measures actually in the first quarter, and we continue with more roughly, I would say, in the second quarter, so we will be seeing in the next quarter.

Andrey Pavlov-Rusinov -- Goldman Sachs -- Analyst

Thanks, Andrey. Very helpful. Thanks a lot.

Operator

[Operator Instructions] Our next question is from Maria Sukhanova with BCS Global Markets. Please proceed.

Maria Sukhanova -- BCS Global Markets -- Analyst

Hi, yes. Good afternoon. I have two questions. The first one on your guidance, how comfortable are you with the way it is? So, I understand the lot of moving parts, but would you say that, so far a situation develops? And why does your worst case scenario or like you see some downside to that? And also within the guidance question, do you expect second quarter to be the weakest within the year or you think or first quarter will be weak as well? And second question with dividends. Understand the payout would vary throughout the year, but you've ever been developed as you expect? Would it be fair for us to expect the dividend absolute amount will increase in the next quarter? That's it for me.

Varvara Kiseleva -- Interim Chief Financial Officer

Maria Sukhanova, thank you for your questions. So, for the guidance, of course, we're comfortable with it. That's why we reiterated. So currently, the situation does develop in accordance with the forecasts and expectations that we had in the end of March when we were providing the guidance first. So, nothing has changed materially as of now in our expectations as to significantly alter our expectations about the performance for the full-year. After the core dynamics, we do expect that the second quarter is likely to be weakest. However, the distribution between second and third quarter, the growth rate in between second and third quarter kind of can vary based on when and to what extent the limitations are lifted. The sports events are dead and the process with a couple of other internal processes.

So, in this regard, we can expect the second quarter -- the second quarter will be weakest, but we're still quite, I would say, we will not -- we never provided this quarterly guidance and we will not prefer not to go into many details for the quarterly split as of now. On the dividends as you know, the Board of Directors have a place to payout ratio of 50% at least 60% of the adjusted net profit group, but the annual payout that we're aiming for it. And the quarterly numbers will vary in accordance with that. And as you know, we approve dividends quarterly, the Board of Directors approve dividends on a quarterly basis. So I would prefer not to comment on the dynamics as of now.

Maria Sukhanova -- BCS Global Markets -- Analyst

Okay. Thank you.

Operator

Our next question is from Vladimir Bespalov with VTB Capital. Please proceed.

Vladimir Bespalov -- VTB Capital -- Analyst

Thank you for taking my questions. My first question is, could you elaborate a little bit on the over a yield that we was in money remittance vertical in the first quarter? What was behind that competitive pressure, the changes in volume? And how -- given what you see in terms of volumes in the second quarter, how this is going to develop? Then my second question would be on your bottom line guidance, given that service is going to perform much worse than probably you initially expected and Tochka will be under pressure. So, what are probably the sources of positive surprises maybe, that allowed you to leave your full-year guidance unchanged? And the third one, sorry if I missed it because there were some problems in my lines, but could you elaborate a little bit on the betting volumes in April and May? How big was the decline of betting volumes? Thank you.

Andrey Protopopov -- Chief Executive Officer of Payment Services

Thank you, Vladimir, for your question. For that I will take the first and the third one. For the money remittance, first quarter yield, the main changes in the yield are due to the difference product dynamic within the category. So, the higher growth rate in the money remittance in the third quarter versus last year in the self-employed, payout self-employed with the self-employed like the taxi companies and some other similar categories where yields are lower versus for examples wallet payments from the wallets to other bank card accounts. So overall, I would say that the mix within the category was changing behind this growth rate and lower margin by high growth categories. Overall, at the same time within the same product, there is no significant changes in the yield. For your third question regarding the betting volumes decreased in the April and May. Yes, we of course observe for the sudden decrease around 25% to 30%. But at the same time, I would say, it's stabilized in the mid-April, and we are more or less stable trend since then on this volume. We have, I would say, moderate optimism looking forward as soon as some of the sports events already started, you know, probably the Bundesliga restarted this weekend. We saw some I would say pick up, so we will continue to monitor other sport events and the volumes recovery going forward.

Varvara Kiseleva -- Interim Chief Financial Officer

And for your second question on the bottom line guidance, so, as you know, Vladimir, in 2019, the investments that we made in Rocketbank and SOVEST were pretty significant. We expect that, however, the total investments in these two projects for this year will be below those that we have seen in 2019. And our overall cost optimization both across the projects of the group and to certain extent in the payment services would contribute primarily to the positive dynamic of the group adjusted net profit.

Vladimir Bespalov -- VTB Capital -- Analyst

Thank you very much. And can I clarify with Andrey one more thing? Given you've said about the pressure on the yields in money remittance and on the trends that we see in the second quarter. I would assume that the yields could actually increase because self-employed are not performing well in the second quarter. Is this still a right way to look at the situation?

Andrey Protopopov -- Chief Executive Officer of Payment Services

I would say, it's too early to say, but the changes might happen mainly due to mix change in this period. So, yes, it may increase if the mix will be positive. But, I mean, overall, it will not be very good because it will be related to the decrease of the volume in some categories more than the others.

Vladimir Bespalov -- VTB Capital -- Analyst

Okay. Thank you very much.

Varvara Kiseleva -- Interim Chief Financial Officer

Thank you, Vladimir.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

Varvara Kiseleva -- Interim Chief Financial Officer

Boris Kim -- Chief Executive Officer of QIWI Group

Andrey Protopopov -- Chief Executive Officer of Payment Services

Ulyana Lenvalskaya -- UBS -- Analyst

Ildar Davletshin -- Wood & Company -- Analyst

Chris Kennedy -- William Blair -- Analyst

Andrey Pavlov-Rusinov -- Goldman Sachs -- Analyst

Maria Sukhanova -- BCS Global Markets -- Analyst

Vladimir Bespalov -- VTB Capital -- Analyst

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