D-Market Electronic Services & Trading

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your course call operator. Welcome and thank you for joining the Hespiburada conference call and live webcast to present and discuss the second quarter 2021 financial results. At this time, I would like to turn the conference over to Ms. Helene Selik-Bilek, Investor Relations Director. Ms. Selik-Bilek, you may now proceed.

Thanks, operator. Thank you for joining us today for Hespiburada's second quarter 2021 earnings call. I'm pleased to be joined on the call today by our CEO, Murat Emirda, and our CFO, Korhan Öz. The following discussion, including responses to your questions, reflect management's views as of today's date only. We do not undertake any obligation to update or revise this information, except as required by law. Certain statements made on today's call are forward-looking statements. Actual results may differ materially from these forward-looking statements. Please refer to today's earnings release as well as the risk factors described in the Safe Harbor slide of today's presentation. Today's press release, the 6K, in our prospect is filed with the SEC on July 1st, 2021 and other SEC filings for information about factors which could cause our actual results to differ materially from these forward-looking statements. Also, we will reference certain non-IFRS measures during today's call. Please refer to the appendix of our supplemental slide deck, as well as today's earnings press release, for a presentation of the most directly comparable IFRS measure, as well as the relevant IFRS to non-IFRS reconciliations. As a reminder, a replay of this call will be available on the Investor Relations page of HIPPSI Brada's website. With that, I will hand it over to our CEO, Murat.

Thanks, Helene. We are so excited to have our first earnings call ever as the only Nelzak listed Turkish company. Before we dive into the second quarter results, I would like to take a moment to give an overview of our SuperApp ecosystem and focus on some of the key fundamentals that contribute to the success of HepsiBrada. HepsiBrada is a homegrown company that has played a fundamental role in the development of e-commerce in Turkey over the last 20 years. Our name Hepsi Burada literally means everything is here and is synonymous with a seamless online shopping experience and benefits from very strong brand awareness. Our vision is to lead digitalization of commerce. To that end, we have evolved from an e-commerce platform into an integrated ecosystem of products and services centered on making people's daily life easier. We operate in an attractive market that has a large, young, urbanized, and tax-savvy population. The Turkish market is at an inflection point, with a growing e-commerce penetration expected to exceed 20% within total retail by 2025. That said, roughly 90% of total retail is still offline, offering a large opportunity for growth. Our super app is at the center of our value proposition and acts as a one-stop shop for customers by offering a broad range of products and services and by creating differentiated user experience. Today, we are a one-stop shop for customers' everyday needs, from products and services to groceries and payments. We constantly seek new ways to differentiate our customer experience with valued services such as frictional return pickup, expedited delivery services, card splitting, instant customer loan, and our loyalty club offering. Also, we continue to expand into new strategic assets, including Hepsi Express, our on-demand grocery delivery service, Hepsi Pay, our digital wallet companion solution, Hepsi Fly, our A-line ticket sales platform, and Hepsi Global, our inbound and cross-border business. With our growth-oriented business model, we recorded a GMV growth at 64% CAGR between 2015 and 2020, as we disclosed in our IPO prospectus. Our solid operational execution, capital efficiency, robust logistics network, deep technology capabilities Household brand name, hybrid business model, and integrated ecosystem have positioned us as a homegrown company to emerge as the first ever NASDAQ listed Turkish company. Let me stop here and now turn to our second quarter results. Next slide, please. In the second quarter, our GMV grew by 38% compared to the same period of last year to 5.9 billion TL in line with our plan. This performance brings the first half GMV growth to 58% on a yearly basis. Total number of orders in the second quarter were 13.1 million, which is the highest we have recorded to date in a single quarter. It is important to highlight that these results have been against a strong baseline effect of COVID-19 pandemic last year and are driven by a greater active customer base, order frequency, active merchant base, and total number of SKUs compared to the second quarter of last year. HepcJet, our in-house last-mile delivery service, achieved presence in every city in Turkey by the end of June 2021. Parallel to our super app ecosystem value proposition, we continue to invest and scale our strategic assets, particularly Hepsi Express and Hepsi Pay, which are well positioned for strong growth. Within that context, we launched our digital wallet, Hepsi Pay Cüzdanım, embedded in Hepsi Brada in June 2021. Hepsi Express, our on-demand grocery delivery service, has expanded its partner network to over 40 brands across over 1,800 stores. Overall, these results indicate our ability to deliver strong growth across the ecosystem. Let's have a detailed look into key assets. We operate a large, fast, and scalable in-house logistics network with last mile delivery, fulfillment, and operations capabilities powered by our proprietary technology. We believe that our nationwide logistics network is key to our success. We operate six fulfillment centers covering more than 120,000 square meters strategically located across Turkey. In the second quarter, HepsiJet achieved presence in every city in Turkey, reaching 137 crosstalks, whereas HepsiMAT, our nationwide pick-up and drop-off network, expanded to more than 1,500 branded pick-up and drop-off points across lockers, partner local stores, gate stations, and retailers. As a result of its expansion, HeftyJet conducted more of retail deliveries and more of marketplace deliveries in Q2 2021 compared to the same period of last year. With HeftyJet, we are able to offer a variety of valued services including same-day, next-day delivery options, delivery by appointment, including weekends, and frictionless return, which is HEPCJET picking up your return from your door at your preferred schedule. In line with our efforts to enrich valued services, HEPCJET also began rolling out two-man cargo handling service in Q2. addressing the need for high quality and reliable service in relevant categories. We believe that our robust logistics network gives us a significant competitive edge in offering strong customer experience. Let's take a look at another strategic asset, HepsiExpress. At HepsiExpress, we aim to become a mainstream grocery shopping destination. Embedded in HepsiBrothers Super App, HepsaExpress offers both instant and scheduled delivery options addressing grocery needs for on-demand and planned grocery shopping. By the end of second quarter of 2021, HepsaExpress has become one of the strong players in this market with around 2,600 outsourced picking and delivery agents and has expanded its ecosystem to over 40 brands and roughly 1,800 stores with presence across more than 50 cities in Turkey. We believe HepsiExpress will be a key enabler to attract new customers, to engage our existing audience, and to unlock further synergies across services in Hepsi products. Let's take a look at HepsiPay. HepsiPay is designed to be a companion wallet to spend save and mobilize money in a flexible way across online and offline channels. Having acquired its license in 2016, HepsiPay marked an important milestone by launching HepsiPay Juzanım, which I will refer to as HepsiPay Wallet, as an embedded digital wallet product on our platform on the 10th of June. Its daily penetration amongst eligible audience has been faster than our expectations. HepsiPay Wallet enables instant returns, cancellations, and cashback. Along with HepsiPay Wallet, HepsiPay also introduced HepsiPapel, a cashback points program that allows customers to earn and redeem points during purchases with the wallet on the HepsiBroada platform. The HepsiPapel program has been instrumental in the rapid growth of HepsiPay Wallet. Hapsipay will enable peer-to-peer money transfers and will constantly explore new use cases across online and offline. I will now leave the floor to Korhan, our CFO, to run you through the financial performance in Q2.