Prosus and Naspers celebrate strong year: Triumphs and challenges ahead

Prosus and Naspers celebrate strong year: The highlights and challenges

Prosus CEO Fabricio Bloisi's recent shareholder letter and voluntary update for the fiscal year has suggested a period of success for the Naspers spinoff.

Financial achievements across the portfolio

Prosus exceeded its earnings target with $435 million in adjusted earnings, beating the $400 million goal set last year. This performance reinforces the Naspers' decision to create Prosus as a separate entity for its international assets. The OLX classifieds group demonstrated impressive growth with revenue increasing by nearly 20%, while earnings jumped over 50% to reach $270 million. Meanwhile, iFood has become a powerhouse in food delivery, doubling its earnings to over $200 million while processing more than 120 million monthly orders.

Strategic moves strengthen both companies

The Prosus leadership made bold investments, putting $8.6 billion into India, including a stake in the rapidly expanding ride-hailing company Rapido. This continues the tradition of successful emerging market investments pioneered by parent company Naspers. Prosus strengthened its market position through strategic acquisitions of profitable companies Despegar and Just Eat Takeaway. Shareholders of both Naspers and Prosus benefited directly from the company's massive buyback program, which has returned over $35 billion and reduced Naspers shares by 25% and Prosus shares by 27%.

Challenges for the Naspers-Prosus ecosystem

The CEO has set ambitious goals, aiming to maintain the same impressive growth rate next year, which presents a significant challenge for both Naspers and Prosus given the already strong performance. The company must justify its large investments in India at a time of increasing global economic uncertainty. Successfully integrating recently acquired companies during potentially challenging market conditions will require the same careful management that has characterized Naspers' approach to investments.

The food delivery and classifieds markets continue to face intensifying competition and potential margin pressure from rivals, challenging the Naspers-Prosus portfolio companies. Prosus has invested in AI startups like Corti and Zapia, but these ventures require patience and face stiff competition from established tech giants. The expansion of iFood beyond its core delivery business into credit and payments adds new layers of complexity to the business model that both Naspers and Prosus must navigate.

In summary:

Prosus shows impressive growth and ambitious plans, while Naspers continues to benefit from its majority stake in the company.

However, maintaining this momentum while integrating acquisitions and justifying heavy investments will test management's skills across both companies in the coming year.

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