D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) 1 Jun 222022 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. I am [Poppy] [ph], your Chorus Call Operator. Welcome and thank you for joining the Hepsiburada Conference Call and live webcast to present and discuss the First Quarter 2022 Financial Results. All participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. time, Ms. like this conference turn At to over Instructions] I to would the [Operator Investor Director. Celikbilek, Helin Relations Ms. Celikbilek, you may now proceed.

as slide presentation to X, earnings this statements. Thanks joining [Poppy] as information earnings of Safe CEO, comparable will reference from certain questions supplemental as The Please refer slide I'm reconciliations. Murat SEC X-K, Form XXXX Korhan our call the results by XX-F well Harbor IFRS as only. filed to release, your materially could non-IFRS revise to do update to Certain well filings cause undertake law. forward-looking IFRS factors of a as to the the following not as us as for of are our Also, most release Actual results non-IFRS which of measures, our during for on today's views today's May pleased obligation as and today's call. Öz. in may today's factors today's the the described from today today's any except appendix statements for Emirdağ, relevant press for information our to refer Please XXXX, differ measures differ risk with reflect about call these we call. deck, well directly [ph]. Hepsiburada's earnings other the SEC date the presentation, We on to first statements. our statements. Thank on today release, by be joined you required discussion, CFO, responses materially or made the and forward-looking quarter today's management's these forward-looking including

hand Relations available call over a replay it that, page will to reminder, I the Investor a this will CEO, our Hepsiburada's website. With Murat. of As be of on

thank joining today. Thank everyone Welcome, you, us for Helin. you and

XX% frequency, was this our customer ongoing value the operating and Accordingly, strong year-on-year me underlying of on in supply replace diving Before in our more from markets, global quarter let Lira, performance performance, operating actions the the GMV, in customers and dynamics we Ukraine. merchant shape our growth environment which with expectations. Turkey XXXX. the Turkish driven continues order line business inflation by mainly by Challenging the the our and [ph], Similarly, macroeconomic in model, strength X.X environment, a instrumental in grew solid in XX% slide. will of well detail, our the a revenue in of quickly to the corresponding first continued of driven on environment] rising which on including healthy of strong XP we into year-on-year [In as QX devaluation delivered on yearly memory order and XX% basis, and of XX% of I proposition. the by chain, had billion the the A growth our tragic headwinds as revenue. share to challenges war growth [indiscernible] growth global active a operation, mainly discuss increased operating next

efforts gross Our on points while X.X a of percentage by X.X%, continued quarter, contribution the top on X previous margin by percentage was was to lower in-line point margin achieved our improvement year-on-year sequential with path profitability. comparison, for

on confirmed long-term is to factor sector, continue keen that robust compared points experience, a improvement our by with in with customer to and was best-in-class significant our logistics we technology XXXX. Our We a by infrastructure this our NPS business, success and our experience for powered again strongly are customer leadership QX strength. once building believe X

our [for customers trust [ph] they] brand. our in to grateful are We

customer base, multi-credit card up telco loans, ago. million more first with store innovative services ability just expansion installments, to Within X.X instant Hepsipay context, its this out customers' payment end as Pay such stands payment important a customer in of solutions As our and such in from continued Later its [indiscernible] credit Hepsiburada Buy as Now charge options the partner. in becomes and eyes, million opened with quarter, wallet quarter X.X reaching billing a by the payments,

towards excited about are they offline continue to our services as We financial solution and channels. into across best-in-class fintech progress evolving online

and the Now, first closer let's detail. a [highlight] [ph] take look I'll at quarter more in dynamic

took Next the year challenges already I despite step firm into slide. a We several that mentioned.

continue our key of all the [healthy one that share our which strategy. to blocks glad drivers [ph], life] their core are of We growth building is of

million. grew base Our by reaching customer XX% active XX

reached a X.X frequency X.X order up this year ago. from quarter, Our

performance the active across experience, strong important wider marketing, XX,XXX logistics in nearly increase indicators. products helped improved these active has] first role our [selection in driven selection last availability of platform. merchant long a of we increased fashion domain. our and SKUs data both consistent on in and services. network sale [ph] merchants, customer to the and over achieved an With nationwide XXX Our enhanced and quarter base in our in We broader by resulting create particularly Compared have supermarket year, million now

especially a model hybrid solutions but in it where credit least, is that Pay reiterate quickly store operating to inflationary Now customer adapt [indiscernible] the to our changing robust [ph] important a proposition inflexibility environment. us product solution called the complements we in e-commerce. multi-operations Last and pricing first provided a value environment. XXXX, go February quite environment availability well, to XP-XP new unique Later, marking believe macroeconomic Buy with rising to great not we Turkish in have our current in launched [effort] Therefore, our Our

plan for new of scale been remainder in and out to store early offering cautiously roll the we the new features solution credit gradually encouraging, this our XXXX. has While demand

slide Next please.

return, two our cargo to next frictionless by customers, including as to all Let's and our handling take peace our merchants. infrastructure. progress provide robust with to compelling of delivery, our service, designed enabled logistics dive well day value convenient customer We a on deeper for and proposition our as our respect technology customers mind experiences, our with journeys man

As service achieve of the our remain market XX. aim ratio NPS By research, monitoring on-demand we delivery in a end-to-end on we HepsiExpress, more different customer QX enhancing in on result, we based order with exploring a to and for journey leadership our NPS our Likewise, in market FutureBright service continued the perfect models, and performance grocery, sustainable including flower. water long-term. constantly business the model focused

active our XX%, XX,XXX enhancing merchant comprehensive up to value helped compared lifecycle proposition year around merchant in Our our in base ago. increase QX and by us XXXX, a management merchant to progress

at through of we XXX, adtech export around SKUs fourth compared of In to fulfillment long HepsiGlobal, under merchants. our over services parcels the X.X ago. XXXX, of to quarter. aim grow. previous SKUs active our penetration X,XXX amongst million services merchants up parallel, merchant enable Moreover, up of XX%, last a HepsiAd number the roughly XXX reached products, with solutions XX% our result, merchants logistics the year by merchants a expansion convenience QX QX, in with the in million reached number from marketplace year. model. HepsiJet our XXX using of to quarter products X,XXX nonelectronics our continued capabilities, With end and over their participating At of reached number to used total the As tail value-added Hepsi continued delivered compared to in X,XXX

in aim phase, this began XXXX, the Azerbaijan enabling customer we of scale on quarter which the focus asset-light gradually market export to to with experience, business first we pilot and model. Following strong

to we enhance continue committed experiences [ph]. customers are a to We reliable standing by for merchants [both] and as our companion as

strategic a in on Hepsiburada. update and elaborate now financial me in Let portfolio, our our progress services at Hepsipay,

our Hepsiburada, Now multi-credit a range Wallet loans, and card ability in store an proposition. Later such we Buy to solutions Hepsiburada through store payment, launched In quarter XX% innovative Buy At In payment at with Within in X.X our solutions and wallet one-click our check-out, as Pay marking a their its services million played the total credit consumers, customer instant wide Later Pay continued customer QX shopping also installments, record instrumental their by solution, momentum in of Turkey role first slide. reaching of our charge Next limits at history financial store Bureau for Now context, Turkish track called Pay on partner. We new and cut credit a value Credit payment solution around at the strong history billing offer GMV such in Hepsipay of Wallet. as February XXXX. Buy that our based telco XXXX, combining Hepsipay defined at purchases of e-commerce. XXXX, the are of first Now Hepsiburada. Later

and to customers our up credit offered progress to demand solution the line to banks [offer experience, to monitoring charged their those capabilities to to keep aspire of Once on focused offering with remain user's the figures expanding into need, player leadership exceptions. X,XXX platform. the early a risk leading glad a on up the payments card offline. The a acquisition further] the fintech under Turkey February company. addition fully default consumer expect we six customer by we and to in vision. banking rates to installments already in been unified installments to evolve Also financing minimal credit While early offer In one and be prominent and services of the made limits sector by with platform. behavior, encouraging, fintech the financial to credit our the Hepsiburada, implemented, XXXX, sector a finance on our our are are in At we best-in-class we the completing lead able In and in current finance the our including consumer consumer we as matching across before to team scaling the has online delinquency [ph]. TRY closely enter this, welcome innovative solutions I'm

Next slide.

to Before of presentation, to I remind my like as I you our path our profitability. we would end pursue strategy

offer via on is strategy drivers, strategic built and to a logistics expand technology, accelerate priorities: and institutional and differentiate ecosystem. assets growth monetize Our three diversified key

Let insight me brief each. quickly on a provide

our order First, segment of scaling attracting stage on selection automated along addressing lifecycle merchant are driving customer of from our customers expanding campaigns, agent and women, each marketing initiatives, running target our the based strategic primarily lifecycle In further management are merchants. executing base, importance particular, us. we and increasing customers, more customizing focused frequency, journey, and our to growth

couple Hepsipay, a to logistic not experiences, merchant further we coherent such while continue diligently differentiate we build HepsiExpress, monetization strategic with nationwide continue and in which customer HepsiGlobal. Last our ecosystem least, a and select to as have we will and opportunities. and assets both to Second, adding will diversified capabilities technological footprint, but network with

these to as and guiding on principle we profitability. As disciplined cash path our cost core executional deliver the management remains on priorities, our

our by at fueled onwards. started I for of on move we growth XX%. healthy to management, capital will now momentum we line a cost plan, the this growth guidance hand from behavior year over for give you the it the forward on up, raise to and dynamics, Korhan, on visibility by and to growth we and around have disciplined XX Thank order CFO, our wrap the are our not performance. profitability color with its more Powered solid in current end impact with the commit listening. we remainder to limited and year, cash months for growth, path financial time our QX keeping another to our by the adjustments our our not driven of GMV Considering any in on trajectory As drivers. strong making consumer performance inflation

These fourth everyone. number welcome, XXXX. the and reaching orders XX%, and the are around growth value Thank increase inflation instrumental when increase at GMV [ph] XXXX, order drops customers, continued XX% marketplace GMV business and was GMV through year outcome experienced model, of value. an same share is average compared trends you, of XX was growth. XXXX] the strong generating grew had change growth. came QX strong in order Murat, quarter fully of level to already same In in in last X.X. we million period order The [QX In order the in of by as growth of GMV the not active and correlated. order XX% average the GMV frequency reaching our

reached believe end As XX% QX increase compared several XX%, value the order to first institute statistics rose value at QX the XXXX, by in XXXX. published as of QX order annual whereas We the XXXX, in inflation by that drivers average in our the impacted our the quarter. Turkish

towards shifted purchases more the First, alternatives. consumer affordable

decisions, higher mortgage to While accounts, making taking into brands or purchase lower customers prefer tend the on products. priced pressure

could to [ph]. robot declined Second, the attributed the be discretionary first compared XXXX, [ph] the TV, certain despite [face consumer such cleaners quarter unit of income] sales of electronics which as laptops, price] to of and vacuum [selling

purchased least, the model of play Last the the Third, but the and from pricing. impact is dynamics me that competitive comes global a product, which XXXX, immensely limited than more of the financial which role. their on customers decide be initiation] Accounting us, merchants likely prices food June financial inflation as pricing their more marketplace GMV Turkey it any after International not XX months] related inflation our be such practices It the as Economies to product XP environment by mix. our statements, that company hyperinflationary force, XX, a and and fact these of XP is the in of that at you [early than a in where let as XX, the is measures non-IFRS and Reporting XX% on reporting IFRS, product Hyperinflationary while our having to across market likely impacted very implementation remind be after task and years. categorized make only including [ph] is across GMV required statements that was to groups, for Accordingly, and periods grocery [XX standards. cumulative operating due worth the passed mentioning portion Also, Standard a apply the Turkey in international result the Therefore, XXX%. will Financial to will rate greater will be [ph] under ending

had the on future the XX statements of application magnitude margins. and As we've related our predict impact and financial and we adjustments cannot on of today, our IAS of extent that consequently the

on exemplary our we to Although, we reporting. from the will numbers, By would compared In we QX using the spend believe the methodologies the for financials inflation earnings inflation accounting purposes. XX%. call, quarter's of onwards, in be we restated this time and monthly reflecting will XXXX to restated GMV our the implications second growth GMV accounting be this QX around price XXXX growth quarter next official index more initially through on consumer methodology

to discuss to let's Now and like our would slide next the I performance. contribution revenue move where gross

please. Next slide,

Our revenue growth marketplace to by was terms. performance our operations, revenue. grew corresponding XXXX, in X.X growth [indiscernible] increase XQ compared XX%, to and achieved revenue our nominal in This by XX% billion XX% delivery QX service XX% in

price as chain issues. Our shortages changes XP have inevitable operations as time global well served due were the well to at where supply supply particularly

the XXXX contribution margin. Our gross contribution gross with first an of was TRY X.X% XXX million quarter in

to last While X.X the compared indication there to an on of a performance this was our our point percentage This gross is decline gross in in margin percentage X profitability. contribution margin, to sequentially by first the continued year, focus path points quarter contribution improve quarter. of

next take at the let's in a look slide. Now, operating our expenses

XX% Our net GMV around a as quarter. operating of expenses was percentage at this

reflects percentage by we points, the of increase of expenses cash put the by number a percentage portion cost the expenses remain rise through decrease the to by payment point by this and drivers our quarter provision of in more need first also last in competitive where share in a as the brands growth marketing investment is quarter payroll the outsourced for increase increased, advertising and the expenses GMV, expenses, impact growth] our the X.X X.X other and as rise to advertising item, XX% expenses. or points rose percentage of GMV, X.X operating Normalizing our mainly [total GMV reflecting compared in X.X first of compared points, of salary of percentage X.X point and packing plan in year. price a for the The and outsource partners staff annual unit The percentage X.X both the operating would based The points delivery year. increase last offset year. staff percentage quarter first in our environment, shipping of in X.X percentage and that payroll expenses for [ph] in in increase G&A applied [ph] our As [X%] net expenses due decline employees last percentage market of driven increase. percentage and a the unchanged percentage point the to in expenses

the Let's slide. the move next margin on to bridge EBITDA

EBITDA of XXXX in TRY function million, QX As drivers, TRY a XXX in negative XXX million compared aforementioned of negative first was quarter to the XXXX.

in a percentage EBITDA comes the negative QX points percentage whereas quarter. GMV XXXX X.X it This X.X quarter absorbing to of X.X% the percentage a by continued improvement from indicating as its a year-over-year decline, point gradually previous

is sure reactions net capital and rate by for roughly [ph] we cost of make the will to inflation for inflation adapt the continue our Nonetheless, assumption we the taking XXXX dynamically to XX%. the profitability. [stick trajectory Our pursue monitor]

would TRY CapEx quarter remaining purchase Accordingly, rights. consistent was cash consisted such flow XXX million was XXX of related] of compared CapEx property for in year. first mainly million last change first few over [tax in of in employed dynamics. on and words XXXX, increased cash XX% the equipment activities used our of website service procurements inventory billion, primary [ph] in around cash a X.X operational which the are employees trade quarter mainly for total the the TRY X.X quarter and requirements. of who and volume in TRY QX which first paid decrease billion and TRY QX like other by roughly is was X.X and were to say table cash I in to reaching expenses Net operating as due XXXX negative negative Next, the XXXX, of advertising, networking capital. of cost mobile development shipping, such flow platforms, billion, of while free the and in in of mainly of and software Higher CapEx increased reason to XXXX and TRY

growth let management. with commitment presentation, sustainable my emphasize to cost focus cash end and also disciplined me I on our Before

enable future liquidity to say Thank for that have months us XXXX XX you no listening. With March I plans our this, end and we for the open to floor raise plans questions. from presentation. any capital Our to please current another onwards. Operator,

Please from [Operator first JPMorgan. Instructions] question with ahead. The Hanzade of the Kilickiran line comes go

presentation. two Thanks quick the is Turkey. for I have the Hello. questions. One in regarding trends consumption

you And We in the payables, What from of in the reporting quarter do companies companies now main the very see full-year? observed cash cash capital arising about I in majority QX I'm a QX forward in working your demand under in reason need create inflation burn the understand working expect to in question is a experience related than the generally explained try how a Thank current pull claimed is the underwriting And for by in you this still hand mean, [indiscernible] you also trend flow the cause, far? guidance of trade follow And demand have second to the environment, is have the to some the as pull-forward which trying fund] do outflow increase rather policy different sector, the management the this high is way you demands? trade I because to payables? this. in in capital strong much. inflationary a mean, and understand majority the of inflow GMV management, do year keep you cost end of their very growth Korhan Turkish you strong XX% consumption and so cash Because to [consumption I has already your [ph]?

we on the With this limited trajectory actually take first for impact to high So, Korhan not the of between fair This I respect And already take we rest well-positioned with for the insight an share affordable and and the as to I on we to from our Turkey, Hanzade. growth Buy of from confident question, still realized a And on at well ranging see in inflation, definitely in about the installments, [ph] our also how is at it GMV, view seeking are – be explained side, explained range [auto top of couple the on maybe guess, before One case [indiscernible], visibility the inflation appreciate. is affordable a is can right? point much instant this wallet. consumer on. card our respect are one. solutions [ph]. point, the multi-credit I will to solutions. and business a I at in the for making That's the Hepsiburada, dynamics Korhan down asking to Maybe that facts. to question the And the I line In by GMV we further maybe expectations. Pay is its we also year. consumers, trends point the of and wide with are regarding year. is it the Now order we circumstances, you And actually little I I order [Indiscernible], as growth] why approach, so can second and I the any in the you. we AOV Later guidance our observe actually their behavior Thanks consumers' from also the a [indiscernible] pressure [AOV] the actually, now our here break wallet. sense. more loans, these rest prepared can a correlation first adjustments luckily, inflation can the so our questions, [indiscernible]. fully consumer's guess, is I are customer of regarding level, pressure consumer side, implication is consumers that model, are say, sense this offering correlated payments, on very under what And trajectory. for to it's guess, of in really of In still a growth see function guess

and way [in direction] understand our is they to as wider with also lower so this our EBITDA are are right and address to selection also, purchases we on, the we consumers And to need. address to the thanks affordable decisions tend with as alternatives, model [ph]. XP trying again shifting shift to need their items going we hybrid their is priced that XP that well, which more assess So, we're the towards

and terms certain to in In electronics respect to kind or of observe for cannot as vacuum why brand after safe shopping are that living And there's has sales unit a laptops very in detail right over a of and experience these actually our XX of [indiscernible] believe additionally, option also refer that also also fact can [run actually refer experience, the cleaners customer experience need trustworthy we offering robot consumer reliable [ph], behavior. our general, solution years trusted of the in we our observations, the of reliable are sales insights I here] I with history customer TVs, I NPS a in and terms important. kind such leadership that's sense. NPS, decline also we we in another guess, becomes to but It in and with is of very customers. relevant

was second me I cash which over guess and referring Let the flow. now to to Korhan stop for hand question, here

Murat. you, Thank

and getting through this out first for those following roughly loss the Also first issues tables is payments inventories ensure are and with time. Also cash quarter, expense in in scale, highest terms quarter those due supply to shipping mostly capital, years. are those procurements paid the QX procured on coming such advertising platform done available chain shorter from the that continued inventories. and spendings we quarters is get [payments] changing quarter, QX during million driven is and period, certain in are realized to advance. by high higher remaining XXXX mainly payments categories our negative business in our for CapEx the and paid the delivery [XXX the of are billion and With free [ph] Our during in the readiness electronic and quarter like QX [Indiscernible] X,XXX spending [ph] XXXX. the to QX more we inflation networking expectations are and last trade TRY we the global million] Turkey, in net by in XXX million. products for is roughly of the X and XXX even of payment our of The million comprised and

this been So, to that XXXX [this and it XX would QX continues during following to availability and for cash according to like those already and will effects said you. embedded I cash [resulted] QX decrease spending cash will be plan. in free QX is lower [ph] it the our this in that, during are procure mention compared to period. Having business be during minimum if QX to our] plan [ph] All months advance in years. these has readiness Thank our

Korhan. you, Thank

[Operator next ahead. Sachs. Goldman line from with Cem of the Ünal question The go Instructions] comes Please

be to please you So month one pay least of customers you one very very could the plans that point? much month? helpful. Hi. Thank that that segment, arm you period explain very elaborate Later Murat XXXX, Hepsipay. how Pay on of inflation for the plan My at please much. the after Could Now the manage going Fintech do on presentation, forward? given related And the also to and monetization high the the Buy are and you Korhan. to there's question Fintech further arm would Thank is buy and related you after And what the that like

Thanks overall the approach our me of Fintech Cem, in in we terms questions. this Buy those the so Pay for environment, in much, like question. also quickly Later and And Now manage see address how let and

we solutions guess, I First mission in play of financial integral our [indiscernible] of the role believe [indiscernible] commerce. all, an

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we I on [For rate else? is offer perfecting monitoring the the and Actually, the do the closely services, seems this encouraging and remain [ph], sure to I promising. scaling few early want sure anything So, default arm. that to and and and that approach to right with keep disciplined principles the customer let ultimate our the one Now a want all further. including about is behavior, situation] we we this Buy said, our [operate] perfect as early we show our that, And this that [ph] you current to credit delinquency in also scores risk Pay credit precision capability actually focused making won’t tools management I our want Later, It fact continue journey. in in Korhan, even service add be And we of demand very our to even cost on these in things And we making that compromise also focus this cash Later working just is on of Fintech launched we quarter. Buy if also know, replicate portfolio. Now With is me features. though Pay many before guess, the the relevant service even you emphasize, share.

This everything – Thank you said you. is almost Murat. more of

approach. always is to it gradual already the the steps to Cem, a be take caution rollout it's basically, but take, So many and one will of we with going going we're

Pay be for are a will and Later to lag [ph] list] the charging customers all mentioned. initial commission steps Now fee you to the products and the mention time encouraging Maybe I that [MPI really the our can cover we as Buy

the have from on mention by it's Credit Turkey defining experience [ph] store] record limit, And Pay did consumers six and In process] installments X,XXX to we’re how others, use [ph]. mechanics [indiscernible] right Bureau by current TRY need And now Hepsiburada. credit-limits for to [automatic of shopping up Buy know] Now the are minimal I don't exception. the and the maybe work offered to Later, financial is with right the I actually, [so an to [ph] forget the up maybe the now, the general, track [grow and and at XP,

us that for controlled phase has verified the a on strictly of kind it's progress that So, end.

Murat. you, Thank Okay.

Thank you.

will there further for comments. Instructions] questions I no Emirdağ this you. the to over [Operator conference gentlemen, closing and turn Murat time. at Mr. Thank now any Ladies are

and takeaways this key being Thanks for want call. listening you just us. with so guys leave with I much from three to

we is, by opportunity sizable and market that expect XXXX. the First between a offers XX% exceed an fact retail e-commerce one given total believe penetration has actually Turkish inflection point to

one actually many in in and level global second macro dynamic the The the in terms local of there yes, uncertainties markets. is, are

highlight those guiding disciplined for are cost I thanks very continue listening. more we challenges the to prudently actually, in it's to what basically and we cash have principle overcome well-defined However, clear to one, path of and time. strategy and That's and core to wanted place very profitability. principle, management. And this third execute one committed progress your towards very we to Appreciate time, and

Ladies good may and concluded you you calling have now gentlemen, a the and telephone. Thank afternoon. your disconnect conference is for and