D-MARKET Elektronik Hizmetler ve Ticaret AS Q2 FY2023 earnings call

• Strong GMV growth: GMV grew 101% vs guidance ~95%, with 27.5 million orders.
• Hepsiburada Premium Program: 1.3 million members, members have 1.4x multi-order frequency post-join.
• Affordability solutions: Hepsipay wallet base 12.5 million, 86% of GMV from wallet users; BNPL used by over 207,000 users, up 77,000 quarter-over-quarter.
• HepsiJet: Asset-light delivery, 83% next-day delivery ratio for 1P orders, 77% external customer volume year-over-year.
• Hepsipay: Launched new services like debit card, QR payment; strategic collaboration with Visa and Craftgate.

In the second quarter of 2023, Hepsiburada saw robust financial performance. GMV doubled year-over-year, with 27.5 million orders, resulting in TRY 18.5 billion unadjusted for inflation. IAS 29 unadjusted revenue also more than doubled year-over-year. The gross contribution margin was 10.4%, a 210 basis points year-over-year improvement. EBITDA as a percentage of GMV reached 2%, which is a 470 basis points year-over-year increase. Excluding the one-off provision reversal, EBITDA as a percentage of GMV was 1.5%. Retail revenue grew 32%, marketplace revenue grew 87%, delivery service revenue grew 67%, and other revenue tripled. The gross contribution margin improvement was due to lower inflation impact on inventory costs, better inventory management, and changing GMV category mix.

• Expect continued solid GMV growth around 110% year-on-year.
• EBITDA as a percentage of GMV to be in the range of 0.5% to 1%.
• Anticipate full year positive unadjusted EBITDA in 2023.

• Macroeconomic challenges in Turkey.
• Ongoing election uncertainties.
• Competitive environment in the e-commerce market.

Q: Follow-up on third quarter guidance, non-electronics mix, competitive environment, working capital.

A: Nilhan Gökçetekin mentioned growth drivers include Hepsiburada Premium Program, affordability solutions, and B2B business; non-electronics mix not specifically a jump in Q3 but continued momentum; competitive environment is vivid with global and local competitors, but Hepsiburada's agility and strategy provide strength. Korhan Öz added on working capital that seasonality in business leads to improvement in net working capital in the second half.