D-Market Electronic Services & Trading

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your chorus call operator. Welcome and thank you for joining the HepsiBurada conference call and live webcast to present and discuss the first quarter 2024 financial results. All participants will be listening only more than the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Ms. Nilhan Onal-Kokcetekind, CEO, Mr. Sechkin Kyoseoglu, CFO, and Ms. Helene Tselikbilek, Investor Relations Director. Ms. Tselikbilek, you may now proceed.

Thanks, Operators. Thank you for joining us today for Hepstibora's first quarter 2024 earnings call. I'm pleased to be joined on the call today by our CEO, Nilhan Onal Gökçetekin, and our CFO, Seçkin Köseoğlu. The following discussion, including responses to your questions, reflects management's views as of today's date only, and we undertake no obligation to update or revise this information, except as required by law. Certain statements made on today's call are forward-looking statements, and 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 supplemental slide deck. Today's press release, the 6K, are Form 20, filed with the SEC on April 30, 2024, and other SEC filings for information on factors that 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 press release for a presentation of the most directly comparable IFRS measure and the relevant IFRS, non-IFRS reconciliations. As a reminder, a replay of this call will be available on our investor relations website. And with that, I will hand it over to our CEO, Nitin.

Thank you, Helen. Welcome, everyone, and thank you for joining us. I'm delighted to be with you today to present our first quarter results. It has been a strong start to the year as reflected on all our results. Notably, we beat our GMV and EVTA guidance for the quarter. Good execution, accelerated by the favorable base effect of last year due to a tragic earthquake, drove 138% year-on-year GMV growth. Adjusted for inflation, our GMV growth was a solid 43%. Our gross contribution margin improved by 150 basis points to 12%, marking the highest since our IPO. Our EBITDA continued its uptrend, rising 120 basis points year-on-year to 2.4% of GMV on an unadjusted basis. Adjusted for inflation, our EBITDA as a percentage of GMV improved by 70 basis points year-on-year to 0.8%. These results are a clear sign of our winning strategy. Now let's have a look at few of our operational metrics. Being Turkey's most recommended e-commerce brand once again with an MPS of 73 is a great source of pride. We are committed to advancing this performance to the next level. Our active customer base was 12.1 million on an additional 171,000 customers. We are glad to see growing interest in our appealing loyalty program, which has scaled to 2.6 million members by the end of May. We recorded 29.3 million orders with 22% growth during the quarter. Our order frequency over the last 12 months reached 9.8. This is up 30%. year over year. With an active merchant base of almost 102,000, we expanded our selection by 38% to nearly 248 million SKUs. Now let me provide a snapshot of our quarterly progress on top four strategic priorities. First is our loyalty program, Hepziburada Premium. The program's growing customer base signals customer satisfaction with our proposition. This is also evidenced by program's strong MPS. Also, premium members' higher frequency significantly contributes to our overall growth. Moving on to second priority, which is differentiation with superior delivery services. Our superior delivery services is realized with our in-house company, Hepstijet. Merchant preference for Hep C Jet services has risen significantly this quarter. Jet delivered 68% of total parcels on our platform. This is up by 5.1 percentage point year on year. Its 82% next day delivery ratio among retail orders also confirms its integral role in our ecosystem. HepsiJet brings wider satisfaction to the HepsiBrother customer. Its fast, reliable, and high-quality service reflects in our strong customer satisfaction score of 87. Our third differentiator is HepsiPay. It's scaling its offering with additions to its already comprehensive suite of payment and landing services. Fourth is offering our strongest muscles to off-platform customers. Let me start with HepCJ, which has more than doubled its volume year-on-year in Q1. Accordingly, with 3.2 million parcels delivered, its off-platform volume corresponded to nearly 33% of its total Q1. On the next slide, I'll elaborate on HEPCP, including its off-platform performance. Let me dive into how we are providing these cutting-edge solutions with HEPCP. In the current economic climate of high interest rates, being able to offer a suite of alternatives is a huge advantage. In January, we took the further step of including our consumer finance loans to this debt. Meanwhile, our BNPL solution is the largest non-bank BNPL solution in the market. Overall, our BNPL and shopping loans were utilized in over 1.1 million orders over the last 12 months. On a broader scale, over last 12 months, total lending volume through our platform tripled compared to the same period of last year, and it reached 8.1 billion lira. That's roughly equivalent to 290 million U.S. dollars. HepsiPay aims to grow this business, line in a profitable manner, and take a sizable share in Turkey's $34 billion consumer loan market. In this capacity, we will continue to leverage HepsiPay solutions as well as those of our partner banks to grow our e-commerce business. Aside from the affordability aspect, our financial services also encompasses the payments business. In offline retail, FTP leads the market with its 15.7 million wallet space covering 18 million store cards. Our one-click checkout solution, Pay with FTP, is also live at 28 key retailers just within less than a year of its launch. HepsiPay aims to capture a substantial share both in key accounts as well as in Turkey's sizable online SME market. And now, I'll end my part with our guidance. As we live through the second quarter, we observe the continuation of challenging macroeconomic conjecture, cooling of consumer demand to a certain extent. And yet, our platform preserves our relevance for consumer purchases as their trusted household brand. Accordingly, we expect to deliver growth around 75% year-on-year in Q2 2024. With that, GMV growth in the first half is expected to double year-on-year. With continued prudent cost management in place, we foresee an EBITDA within the range of 1.8% to 2% of GMV. As a reminder, our GMB in Q2 last year was 1.5%, so we expect to deliver a year-on-year improvement in our profitability in Q2, and these figures I've referred to are adjusted for inflation. With this, I thank you very much for listening and leave the floor to Seçkin, our dear CFO, to provide further insights to our financial performance.