D-MARKET Electronic Services & Trading Q4 2024 Earnings Report

D-MARKET Electronic Services & Trading EPS Results

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

D-MARKET Electronic Services & Trading Revenue Results

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

D-MARKET Electronic Services & Trading 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. 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 Electronic Services & Trading Q4 2024 Earnings Call Transcript

Key Takeaways

• Hepseburda delivered 12.1% real GMV growth in 2024 with a 2.1 percentage point rise in gross contribution margin to 11.3% and EBITDA as a percentage of GMV expanding by 0.7 points to 1.1%.
• Active customer base grew by 235,000 to 12.2 million, while orders increased 16% to 131.4 million and order frequency rose 14%, highlighting stronger customer engagement.
• Total lending volume surged 2.6 times year-on-year to ₺16.2 billion, driven by in-house BNPL and consumer finance loans used in over 3.3 million orders.
• Q1 2025 performance was challenged by macroeconomic headwinds and consumer boycotts that pressured purchasing power and limited marketing activities due to political sensitivities.
• On January 29, Kaspi completed the acquisition of a 65.4% controlling stake in Hepseburda, creating potential synergies between the companies’ fintech and e-commerce ecosystems.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. I'm Vasileios, your Chorus Call operator. Welcome and thank you for joining the Hepsiburada conference call and live webcast to present to discuss the fourth quarter and full year 2024 financial results. All participants will be in a listen only mode and the conference is being recorded. Should anyone need assistance during the conference call, you may signal an operator by pressing 0 on your telephone. At this time I would like to turn the conference over to Ms. Nilhan Onal Gökçetekin, CEO, Mr. Seçkin Köseoğlu, CFO, Ms. Ceren Tuzcu, Investor Relations Director. Ms. Tuzcu, you may now proceed.

[Ceren Tuzcu, Investor Relations Director at Hepsiburada]

Thanks Operator. Thank you very much for joining us.

[Ceren Tuzcu, Investor Relations Director at Hepsiburada]

Today for Hepsiburada's fourth quarter and full year 2024 earnings call. I am pleased to be joined on the call today by our CEO Nilhan Onal Gökçetekin and our CFO Seçkin Köseoğlu. The following discussion reflects management's views as of today's date only. 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. 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 6-K, our Form 20-F filed with the SEC on April 30, 2025 and other SEC filings for information 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.

[Ceren Tuzcu, Investor Relations Director at Hepsiburada]

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 relevant IFRS to non-IFRS reconciliation. As a reminder, a replay of this call will be available on our Investor Relations website. With that I hand over to our CEO Nilhan.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

Thank you Ceren. 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 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 0.7 percentage point rise year-on-year. On an unadjusted inflation basis, our GMV grew 74% year-on-year and EBITDA as 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, CEO at Hepsiburada]

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 12.2 million. Our orders have shown 16 percentage points year-on-year growth, resulting in 131.4 million orders, and our order frequency over the last 12 months reached 10.8, up by 14%. On the merchant side, we enhanced our logistics, two-man handling, fintech, and advertising solutions with an active merchant base of over 100,000. We continue to onboard additional brands, particularly in the lifestyle categories. Let me now elaborate on our achievements in 2024. In line with our profitable growth strategy, we remain focused on three priorities: customer loyalty, cultivating the sustainable differentiators HepsiJet and Hepsipay, and finally expanding our B2B services to our platform as a turnkey e-commerce solution partner for merchants.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

In early 2024, we set clear targets for each of these strategic priorities and now I am pleased to share the progress we made throughout the year. First, our loyalty program Hepsiburada Premium. The program continues to register increased customer loyalty, reaching to 3.7 million 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 HepsiJet's widened penetration within our merchant base whereby it delivered 72% of total parcels dispatched during the year. HepsiJet 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.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

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 12 months, our total lending volume reached TRY 16.2 billion, which is 2.6x the total volume in 2023 overall. Our BNPL, consumer finance loans, and shopping loans were utilized in over 3.3 million orders since their launch. Next slide please. Our fourth key priority is offering strong capabilities to our merchants. Let me start with HepsiJet. With over 40 million parcels delivered in 2024, HepsiJet increased its off-platform volume by 89% year-on-year. Accordingly, in 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 Hepsipay's one-click checkout solution.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

Pay With Hepsipay we continue to expand its convenience solution to other retailers and all our merchants. Hepsipay is now integrated with 140 key accounts by end of 2024. For all our strategic priorities, solid progress in our KPIs throughout the year reflects the dedicated performance of and strong execution by entire Hepsiburada Group team. Let me say a few words on early 2025. Start of 2025 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 Hepsiburada after 25 years.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

On January 29 the closing of the transaction between Kaspi and our founder, the members of Doğan Family to purchase a 65.4% controlling stake in Hepsiburada. We are extremely excited about the potential value creation opportunities that arise from this deal as Kaspi is the preeminent payments marketplace and fintech ecosystem in Kazakhstan. With this I thank you for listening and leave the floor to Seçkin Köseoğlu, our CFO, to provide further insights into our financial performance.

[Seçkin Köseoğlu, CFO at Hepsiburada]

Thank you, Nilhan, 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%-55%, and our EBITDA as a percentage of GMV reached 1.8%, in line with our guidance of 1.8%-2% in the fourth quarter. Adjusted for inflation, our GMV rose by 12.1% in 2024 compared to full year 2023. 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, 12.1% of real GMV growth came through 131.4 million orders and a higher average order value.

[Seçkin Köseoğlu, CFO at Hepsiburada]

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. 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.

[Seçkin Köseoğlu, CFO at Hepsiburada]

Our revenue growth in quarter four was mainly due to a 15% rise in 3P revenue, 18% increase in delivery service revenue, and 127% increase in other revenue. These were partially offset by the 1.6% decrease in our 1P revenue as a result of the shift in GMV towards 3P compared to quarter four 2023. 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 Hepsiburada Premium subscription revenues. 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.

[Seçkin Köseoğlu, CFO at Hepsiburada]

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 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% rise in gross contribution margin partially offset by a 0.5% rise in payroll and outsourced staff expenses, 0.4% rise in shipping and packaging expenses, 0.2% rise in advertising expenses and 0.3% rise in other operating expenses. The rise in payroll and outsourced staff expenses came from the annual and mid-year salary rises along with the rise in employee number for our subsidiaries.

[Seçkin Köseoğlu, CFO at Hepsiburada]

The increase in shipping and packaging expenses as a 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 of provision for the license fee amounting to TRY 180 million and higher bad debt provisions in 2024. Next, let's have a look at our cash flow dynamics. For full year 2024, free cash flow decreased by TRY 1.9 billion compared to a year ago. This decrease was mainly due to a TRY 1.55 billion decrease in net cash provided by operating activities and a TRY 0.34 billion increase in CapEx. With TRY 2 billion in CapEx, our free cash flow was at TRY 3.7 billion for the full year 2024. With this I will now hand over to Nilhan for the key takeaways.

[Nilhan Onal Gökçetekin, CEO at Hepsiburada]

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 a 2.1 percentage point rise in gross contribution. Our EBITDA reached TRY 2.1 billion, corresponding to 1.1% of GMV in 2024. In 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 the positive side, an important milestone in the company's history took place on 29 January under Kaspi ownership. We are excited about the opportunities we foresee going forward with this. I would like to thank you all for listening to us today. We do not have a Q&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 is now concluded and you may disconnect your telephone. Thank you for calling and have a good afternoon.

Participants

Analysts

• Nilhan Onal Gökçetekin, CEO at Hepsiburada
• Ceren Tuzcu, Investor Relations Director at Hepsiburada
• Seçkin KöseoÄŸlu, CFO at Hepsiburada