D-Market Elektronik Hizmetler ve Ticaret A.S. Q4 2024 Earnings Report

D-Market Elektronik Hizmetler ve Ticaret A.S. EPS Results

• Actual EPS: -$0.06
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

D-Market Elektronik Hizmetler ve Ticaret A.S. Revenue Results

• Actual Revenue: $591.47 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

D-Market Elektronik Hizmetler ve Ticaret A.S. Announcement Details

• Quarter: Q4 2024
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 9:00AM ET

D-Market Elektronik Hizmetler ve Ticaret A.S. (NASDAQ:HEPS) operates e-commerce platforms in Turkey. The company operates www.hepsiburada.com, a retail website that provides its retail customers a range of merchandise, including electronics and non-electronics products, such as books, sports, toys, kids and baby products, cosmetics, furniture, etc. It also offers Hepsiburada Market, an app-in-app initiative and on-demand delivery service that delivers groceries and water; HepsiJet that provides last-mile delivery services; HepsiLojistik, which offers storage and fulfillment services; HepsiMat, an offline network of pick-up and drop-off point; HepsiAd that provides advertising service; HepsiGlobal for discovering and purchasing products from international merchants online; Hepsipay, which offers an e-money and payment services; and Hepsiburada Seyahat for buying airline tickets online. The company was incorporated in 2000 and is headquartered in Istanbul, Turkey.

D-Market Elektronik Hizmetler ve Ticaret A.S. Q4 2024 Earnings Call Transcript

Key Takeaways

• Hepsiburada delivered a 12.1% real GMV growth in 2024, improved gross contribution margin to 11.3% (+2.1 pp) and expanded EBITDA to 1.1% of GMV (+0.7 pp).
• Active customers rose by 235,000 to 12.2 million, orders grew 16% to 131.4 million and order frequency climbed 14% to 10.8 over the past twelve months.
• The loyalty program “Hepsiburada Premium” now has 3.7 million members, a Warner Bros Discovery content partnership, while Hepsijet handled 72% of parcels with off-platform volume up 89%.
• Lending solutions saw total volumes of ₺16.2 billion (2.6× 2023) with over 3.3 million orders using in-house buy-now-pay-later, consumer finance and partner bank loans.
• Q1 2025 faced macro headwinds, boycotts and restricted marketing, but the January 29 deal selling 65.4% to Kaspi opens new fintech and marketplace growth opportunities.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. I'm Vasilios, your Chorus Call operator. Welcome and thank you for joining the Hep C Burada Conference Call and the live webcast to present and discuss the Fourth Quarter and Full Year twenty twenty four Financial Results. All participants will be in a listen only mode and the conference is being recorded. At this time, I would like to turn the conference over to Ms.

[Operator]

Nilhan Olaan, Gyutskasekin, CEO Mr. Sachin Kuseoglu, CFO Ms. Terence Tuzhou, Investor Relations Director. Ms. Tuzhou, you may now proceed.

[Ceren Tuzcu Seyhunlu, Corporate Strategy & IR Group Director at D-Market Elektronik Hizmetler ve Ticaret]

Thanks, operator. Thank you very much for joining us today for Hepse Broda's fourth quarter and full year twenty twenty four earnings call. I am pleased to be joined on the call today by our CEO, Nihann Olgaugcetekin and our CFO, Sechkin Kosovo. The following discussions reflect management's views as of today's date only. We undertake no obligation to update or revise this information, except as required by law.

[Ceren Tuzcu Seyhunlu, Corporate Strategy & IR Group Director at D-Market Elektronik Hizmetler ve Ticaret]

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 supplemental slide deck, today's press release, the six ks, our Form 20 F filed with the SEC on 04/30/2025, 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 to non IFRS reconciliations.

[Ceren Tuzcu Seyhunlu, Corporate Strategy & IR Group Director at D-Market Elektronik Hizmetler ve Ticaret]

As a reminder, a replay of this call will be available on our Investor Relations website. With that, I hand over to our CEO, Nithan.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Thank you, Geraint. Welcome, everyone, and thank you for joining us. I'm delighted to be with you today to present our fourth quarter and full year results. We concluded 2024 with growth and margin expansion through diligent execution of our fundamentals. Notably, we delivered a real GMV growth of 12.1% in 2024.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

And we also achieved gross contribution margin at 11.3% with a 2.1 percentage point improvement on a yearly basis in 2024. Our EBITDA as percentage of GMV continued its expansion, reaching 1.1% with a 0.7 percentage point rise year on year. On an unadjusted inflation basis, our GMV grew 74% year on year and EBITDA as a percentage of GMV reached 2.1%. Now I'd like to go into the performance of our operational metrics during the year. Our customers and merchants are always at the core of our ecosystem, and we work hard to improve our value proposition for them.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

In line with our customer centric approach, we improved our reliability, speed and convenience of our logistics services as well as payment convenience with our diverse lending solution. Our active customers grew by 235,000 to 12,200,000. Our orders have shown 16 percentage points year on year growth, resulting in 131,400,000 orders. And our order frequency over last twelve months reached 10.8%, up by 14%. On merchant side, we enhanced our logistics, two man handling, fintech and advertising solutions.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

With an active merchant base of over 100,000, we continue to onboard additional brands, particularly in the life cycle category. Let me now elaborate on our achievements in Cevantipar. In line with our profitable growth strategy, we remain focused on three priorities: customer loyalty cultivating the sustainable differentiators, Hefziget and Hefzipe and finally, expanding our B2B services to Ofpi platform as a turnkey e comm solution partner for merchants. In early twenty twenty four, we set clear targets for each of these strategic priorities, and now I'm pleased to share the progress we made throughout the year. First, our loyalty program, Hexo Product Premium.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

The program continued to register increased customer loyalty, reaching to 3,700,000 member base. Enhancing the program offerings, we signed a partnership with Warner Bros. Discovery in 2024, and content provided as part of premium program benefits has widely expanded. Our next strategic priority has been our delivery services. Central to achieving this is HeptiJet's widened penetration within our merchant base, whereby it delivered 72% of total parcels dispatched during the year.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Hexige confirms its commitment to differentiation through service excellence, confirming its integral role in our delivery ecosystem. Next slide, please. Now let's move on to our next strategic priority, which is capitalizing on our differentiation through lending solutions. Our lending solutions include in house buy now pay later, in house consumer finance loans, shopping loans from partner banks and general purpose loans from our partner banks. Over the last twelve months, our total lending volume reached 16,200,000,000.0, which is 2.6 times of the total volume in 2023.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Overall, our BMPI consumer finance loans and shopping loans were utilized in over 3,300,000 orders since their launch. Next slide, please. Our fourth key priority is offering strong capabilities to our merchants. Let me start with Heptejet. With over 40,000,000 parcels delivered in 2024, HeftyJet increased its off platform volume by 89% year on year.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Accordingly, 2024, its off platform share rose by 9.7 percentage points year on year to nearly 34.6% of its total volume. Next, I would like to talk about HeftyPay's one click checkout solution, Pay with HeftyPay. We continue to expand its convenience solution to other retailers and all our merchants. HeftyPay is now integrated with 140 key accounts by end of twenty twenty four. For all our strategic priorities, solid progress in our KPIs throughout the year reflects the dedicated performance of and strong execution by entire Eftaburada Group team.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Let me say a few words on early twenty twenty five. Start of '20 '5 was very challenging due to ongoing macroeconomic headwinds, pressuring purchasing power of our consumers as well as boycotts against shopping starting March. Our marketing activities were also limited in all performance channels due to political sensitivity and the level of boycotts in the first quarter of the year. However, as you know, we also had a very positive milestone for HEPTIBURDA after twenty five years. On January 29, the closing of the transaction between CASB and our founder, the members of the AAM family, to purchase a 65.4% controlling stake in Efseborazawa Dena.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

We are extremely excited about the potential value creation opportunities that arise from this deal as Kaspi is the preeminent payment marketplace and fintech ecosystem in Kazakhstan. With this, I thank you for listening and leave the floor to Tetchkin, our CFO, to provide further insights into our financial performance.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

Thank you, Nihon, and welcome, everyone. I'm delighted to be with you today to present our fourth quarter and full year results. On an unadjusted for inflation basis, our GMV grew by 49.4%, close to our guidance of 50% to 55%. And our EBITDA as a percentage of GMV reached 1.8% in line with our guidance of 1.8% to 2% in the fourth quarter. Adjusted for inflation, our GMV rose by 12.1% in 2024 compared to full year 2023.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

On the profitability side, our gross contribution margin rose to 11.3% with a 2.1 percentage point improvement compared to last year. Our EBITDA as a percentage of GMV rose to 1.1% for the full year. This is a 0.7 percentage point rise year on year. Let's go over the details of this performance. In 2024, '12 point '1 percent of real GMV growth came through 131,400,000 orders and a higher average order value.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

Excluding our digital products, our order growth was at around 8% in 2024 compared to the previous year. Average order value growth was around 4% due to a faster than inflation rise in the average selling prices. During 2024, we saw a 2.9 percentage point shift towards our marketplace operations compared to 2023 and our 3P operations corresponded to around 70% of our business. This shift came as a result of a 2.9 percentage point shift towards non electronics, which is in line with our broader strategy. Let's have a look at our revenue and gross contribution dynamics.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

First, some color on revenues. Our revenue grew by 6.4% in quarter four, bringing our revenue growth for the full year to 11.1% compared to the same periods of last year. Our revenue growth in quarter four was mainly due to a 15 percentage rise in 3P revenue, 18% increase in delivery service revenue and 127% increase in other revenue. These were partially offset by the 1.6 percentage decrease in our 1P revenue as a result of the shift in GMV towards 3P compared to quarter four twenty twenty three. Our revenue growth in 2024 was mainly due to the 50% increase in delivery revenue and 112% increase in other revenue, including our advertising services revenues and Hepsibrother premium subscription revenues.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

12% revenue growth in marketplace operations also contributed to our overall revenue growth in 2024. The gross contribution margin improved by 2.1 percentage points to 11.3% in 2024 compared to last year. This margin improvement was mainly attributable to increased delivery service revenue, higher other revenue including ads and premium subscription revenue, together with an increase in the 1P margin. Let's move on to our EBITDA performance on the next slide. We recorded 1.1% EBITDA as a percentage of GMV in 2024, with a 0.7 percentage point yearly improvement.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

Excluding the one off items in 2023, year on year improvement in EBITDA was at 0.9 percentage point for the full year 2024. This 0.7% improvement was driven by a 2.1 percentage rise in gross contribution margin, partially offset by 0.5 percentage rise in payroll and outsourced staff expenses, 0.4 percentage rise in shipping and packaging expenses, a 0.2 percentage rise in advertising expenses and 0.3 percentage rise in other operating expenses. The rise in payroll and outsourced staff expenses came from the annual and midyear salary rises along with the rise in employee number for our subsidiaries. The increase in shipping and packaging expenses as percentage of GMV was mainly driven by higher parcel volume and the rise in delivery fees per unit combined with annual minimum wage increases. The increase in other operating expenses was mainly due to the recognition provision for the license fee amounting to 180,000,000 and higher bad debt provisions in 2024.

[Seçkin Köseoğlu, CFO at D-Market Elektronik Hizmetler ve Ticaret]

Next, let's have a look at our cash flow dynamics. For full year 2024, free cash flow decreased by 1,900,000,000 compared to a year ago. This decrease was mainly due to a 1,550,000,000.00 decrease in net cash provided by operating activities and TRY 340,000,000.00 increase in CapEx. With TRY 2,000,000,000 in CapEx, our free cash flow was TRY 3,700,000,000.0 for the full year 2024. With this, I will now hand over to Nilhan for the key takeaways.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

We leave you with the following key takeaways from today's presentation. For the year 2024, we recorded real double digit GMV growth of 12.1, Supported by 2.1 percentage point rising growth contribution, our EBITDA reached €2,100,000,000 corresponding to 1.1% of GMV in 2024. On Q1, we had two important developments. On one side, the year started with macroeconomic headwinds, pressuring the purchasing power of consumers and boycotts started against shopping. On the other, which is positive side, an important milestone in the company's history took place on January 29.

[Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret]

Under CASTIO ownership, we are excited about the opportunities we foresee going forward. With this, I would like to thank you all for listening us. Today, we don't have a Q and A, but we are much looking forward to connecting with you and your questions. Please direct them to our Investor Relations. Thank you.

[Operator]

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

Participants

Analysts

• Ceren Tuzcu Seyhunlu, Corporate Strategy & IR Group Director at D-Market Elektronik Hizmetler ve Ticaret
• Nilhan Onal Gökçetekin, Chief Executive Officer at D-Market Elektronik Hizmetler ve Ticaret
• Seçkin KöseoÄŸlu, CFO at D-Market Elektronik Hizmetler ve Ticaret