ISTANBUL, Sept. 11, 2024 (GLOBE NEWSWIRE) -- D-MARKET Electronic Services & Trading (d/b/a "Hepsiburada") (NASDAQ:HEPS), a leading Turkish e-commerce platform (referred to herein as "Hepsiburada" or the "Company"), today announces its unaudited financial results for the second quarter and the six months ended June 30, 2024.
Restatement of financial information: Pursuant to the International Accounting Standard 29, Financial Reporting in Hyperinflationary Economies ("IAS 29"), the financial statements of entities whose functional currency is that of a hyperinflationary economy must be adjusted for the effects of changes in a general price index. Turkish companies reporting under International Financial Reporting Standards ("IFRS"), including the Company, have been required to apply IAS 29 to their financial statements for periods ended on and after June 30, 2022.
The Company's consolidated financial statements as of and for the three and six months ended June 30, 2024, including figures corresponding to the same periods of the prior year, reflect a restatement pursuant to IAS 29. Under IAS 29, the Company's financial statements are presented in terms of the measuring unit current as of June 30, 2024. All the amounts included in the financial statements which are not stated in terms of the measuring unit current as of the date of the reporting period, are restated applying the general price index. Adjustment for inflation has been calculated considering the price indices published by the Turkish Statistical Institute (TurkStat). Such indices used to restate the financial statements as at June 30, 2024 are as follows:
Date
Index
Conversion Factor
30 June 2024
2,319.3
1.00
31 December 2023
1,859.4
1.25
30 June 2023
1,351.6
1.72
Figures unadjusted for inflation in accordance with IAS 29, denoted as "IAS 29-unadjusted", "unadjusted for IAS 29", "unadjusted", "unadjusted for inflation", or "without adjusting for inflation", are also included in the summary tables of the consolidated financial statements and under the "Highlights" section and explanatory notes as relevant. The press release also includes tables that show the IAS 29 adjustment impact on the consolidated financial statements for the periods under discussion. Figures unadjusted for IAS 29 constitute non-IFRS financial measures. We believe that their inclusion facilitates the understanding of the restated financial statements in accordance with IAS 29 and our year-on-year growth and profitability guidance. Please see the "Presentation of Financial and Other Information" section of this press release for a definition of such non-IFRS measures, a discussion of the limitations on their use, and reconciliations of the non-IFRS measures to the most directly comparable IFRS measures.
Second Quarter 2024 Financial and Operational Highlights
(All financial figures are restated pursuant to IAS 29 unless otherwise indicated)
Gross merchandise value (GMV) increased by 3.9% to TRY 33.8 billion compared to TRY 32.5 billion in Q2 2023.
IAS 29-Unadjusted GMV increased by 79.2% to TRY 33.1 billion compared to Q2 2023.
Revenue was nearly flat at TRY 10,112.9 million compared to TRY 10,113.3 million in Q2 2023.
Number of orders increased by 33.3% to 36.7 million compared to 27.5 million orders in Q2 2023.
Active Customers increased by 0.5% to 12.1 million compared to 12.0 million as of June 30, 2023.
(Order) Frequency increased by 23.2% to 10.6 compared to 8.61 as of June 30, 2023.
Active Merchant base decreased by 0.3% to 100.9 thousand compared to 101.3 thousand as of June 30, 2023.
Number of SKUs increased by 35.6% to 264.0 million compared to 194.7 million as of June 30, 2023.
Share of Marketplace GMV was 71.1% compared to 67.1% in Q2 2023.
EBITDA increased by 45.7% to TRY 386.6 million compared to TRY 265.3 million in Q2 2023. Accordingly, EBITDA as a percentage of GMV was at 1.1%, a 0.3 percentage point improvement compared to 0.8% in Q2 2023.
IAS 29-Unadjusted EBITDA increased by 110.5% to TRY 787.4 million compared to TRY 374.0 million in Q2 2023. IAS 29-Unadjusted EBITDA as a percentage of GMV in Q2 2024 improved by 0.4 percentage points to 2.4% compared to 2.0% in Q2 2023.
Loss for the period was TRY 384.5 million compared to income of TRY 1,511.9 million for Q2 2023.
Free cash flow was negative TRY 644.5 million compared to negative TRY 1,041.8 million in Q2 2023.
First Half 2024 Financial and Operational Highlights
(All financial figures are restated pursuant to IAS 29 unless otherwise indicated)
Gross merchandise value (GMV) increased by 21.6% to TRY 73.1 billion compared to TRY 60.1 billion in H1 2023.
IAS 29-Unadjusted GMV increased by 105.3% to TRY 68.3 billion compared to H1 2023.
Revenue increased by 20.5% to TRY 22,373.1 million compared to TRY 18,569.3 million in H1 2023.
Number of orders increased by 27.9% to 66.0 million compared to 51.6 million orders in H1 2023.
Active Customers increased by 0.5% to 12.1 million compared to 12.0 million as of June 30, 2023.
(Order) Frequency increased by 23.2% to 10.6 compared to 8.61 as of June 30, 2023.
Active Merchant base decreased by 0.3% to 100.9 thousand compared to 101.3 thousand as of June 30, 2023.
Number of SKUs increased by 35.6% to 264.0 million compared to 194.7 million as of June 30, 2023.
Share of Marketplace GMV was 69.6% compared to 67.7% in H1 2023.
EBITDA increased by 151.4% to TRY 700.3 million compared to TRY 278.6 million in H1 2023. Accordingly, EBITDA as a percentage of GMV was at 1.0%, a 0.5 percentage point improvement compared to 0.5% in H1 2023.
IAS 29-Unadjusted EBITDA increased by 195.1% to TRY 1,622.7 million compared to TRY 549.8 million in H1 2023. IAS 29-Unadjusted EBITDA as a percentage of GMV in H1 2024 improved by 0.7 percentage points to 2.4% compared to 1.7% in H1 2023.
Loss for the period was TRY 526.3 million compared to income of TRY 1,159.7 million for H1 2023.
Free cash flow was positive TRY 471.6 million compared to negative TRY 1,322.9 million in H1 2023.
Commenting on the results, Nilhan Onal Gökçetekin, CEO of Hepsiburada said:
"Our second quarter performance confirms our continued relevance for consumers as their trusted household brand. We remain in a challenging macroeconomic conjecture, where consumer purchasing power is under pressure. Ever customer-centric, with our meticulous execution of strategic priorities and compelling value proposition, we have delivered another solid set of results in Q2 2024, exceeding our guidance. Overall, in the first half of the year, our GMV doubled compared to the first half of the previous year and our EBITDA reached 2.4% of GMV, in each case unadjusted for inflation.
With our exceptional customer experience, top-notch logistics services and diverse affordability solutions, our NPS metrics yet again confirmed that we are Türkiye's most recommended e-commerce brand. Our loyalty program, Hepsiburada Premium, had reached a new milestone of 3 million members by mid-August, right after its second anniversary. With the upcoming conversion from local to global streaming content under Warner Bros. Discovery, the exclusive experience enjoyed by these members scales a new height.
Meanwhile, our logistics excellence led to increased preference among our merchants and other retailers. In the second quarter of 2024, HepsiJet delivered 73% of total parcels on our platform, up by a remarkable 6.8 percentage points year-on-year. Its off-platform expansion also accelerated, doubling its volume from external customers in the second quarter of 2024. HepsiJet, being a new generation logistics company committed to sustainable practices, added 21 electric vans to its fleet in a pilot project in the second quarter of 2024.
On the fintech front, Hepsipay's comprehensive suite of affordability solutions and lending services gained further traction in an ongoing tight liquidity environment. Including loans from partner banks, our affordability solutions penetration rose to 8.1% of GMV. Meanwhile, the total lending volume through our platform, including those issued through partner banks, reached TRY 11.2 billion over the last twelve months by the end of the second quarter of 2024, up from TRY 8.1 billion in the first quarter of 2024. On the payments front, Hepsipay further enhanced customer experience with the recently launched auto top-up feature in the wallet. With 16.7 million wallet customers, Hepsipay's one-click checkout solution, Pay with Hepsipay, was already integrated at the checkout of 50 leading retailers as of the end of August 2024, almost tripling its total payment volume during the second quarter of 2024 compared to the first quarter of 2024.
As we enter the second half of the year, we remain cautiously optimistic about market conditions and we are confident in our ability to execute on our strategic initiatives for the period ahead. Accordingly, in the third quarter, we expect continued GMV growth within the range of 70% - 75% year-on-year compared to the same quarter of last year, unadjusted for inflation. We also expect to achieve an EBITDA around 2.2% of GMV, unadjusted for inflation in the third quarter. We remain committed to delivering sustainable and profitable growth underpinned by our customer centricity, while preserving prudent capital management. We thank our shareholders, our loyal customers, our partners, and our dedicated team for their continued support."
Summary: Key Operational and Financial Metrics
The following table sets forth a summary of the key unaudited operating and unaudited financial data as of and for the three months ended June 30, 2024 and June 30, 2023, and the six months ended June 30, 2024 and June 30, 2023 prepared in accordance with IFRS. Unless indicated otherwise, all financial figures in the tables provided are inflation-adjusted (in accordance with IAS 29).
(in TRY million unless otherwise indicated)
Three months ended June 30,
Six months ended June 30,
unaudited
unaudited
2024
2023
y/y %
2024
2023
y/y %
GMV (TRY in billion)
33.8
32.5
3.9%
73.1
60.1
21.6%
Marketplace GMV (TRY in billion)
24.0
21.8
10.0%
50.9
40.7
25.2%
Share of Marketplace GMV (%)
71.1%
67.1%
4.0pp
69.6%
67.7%
1.9pp
Number of orders (million)
36.7
27.5
33.3%
66.0
51.6
27.9%
Active Customer (million)
12.1
12.0
0.5%
12.1
12.0
0.5%
Revenue
10,112.9
10,113.3
(0.0%)
22,373.1
18,569.3
20.5%
Gross contribution
4,048.9
3,036.0
33.4%
8,172.6
5,609.9
45.7%
Gross contribution margin (%)
12.0%
9.3%
2.6pp
11.2%
9.3%
1.8pp
Income/(loss) for the period
(384.5)
1,511.9
(125.4%)
(526.3)
1,159.7
(145.4%)
EBITDA
386.6
265.3
45.7%
700.3
278.6
151.4%
EBITDA as a percentage of GMV (%)
1.1%
0.8%
0.3pp
1.0%
0.5%
0.5pp
Net cash (used in)/provided by operating activities
(237.6)
(740.6)
(67.9%)
1,340.5
(630.7)
n.m.
Free Cash Flow
(644.5)
(1,041.8)
(38.1%)
471.6
(1,322.9)
n.m.
Note: The abbreviation "n.m." stands for not meaningful throughout the press release.
Note that Gross Contribution, EBITDA and Free Cash Flow are non-IFRS financial measures. See the "Presentation of Financial and Other Information" section of this press release for a definition of such non-IFRS measures, a discussion of the limitations on their use, and reconciliations of non-IFRS measures to the most directly comparable IFRS measures. See the definitions of metrics such as GMV, Marketplace GMV, share of Marketplace GMV, Gross Contribution margin, EBITDA as a percentage of GMV, number of orders and Active Customer in the "Certain Definitions" section of this press release.
Q3 2024 Outlook
The below forward-looking statements reflect Hepsiburada's expectations as of September 11, 2024, considering year-to-date trends that could be subject to change, and involve inherent risks which we are unable to control or foresee. The financial outlook is based on management's current views and estimates with respect to existing market conditions. However, there are several factors which may impact the current outlook, including the inflationary environment both in Türkiye and globally, local currency volatility, further tightening in monetary policy, low consumer confidence, pressure on purchasing power, regional geopolitical headwinds, the regulatory environment for our activities in Türkiye and the evolving competitive landscape. Management's views and estimates are subject to change without notice. See also the "Forward Looking Statements" section at the end of this press release.
For the third quarter of 2024, we expect to deliver IAS 29-Unadjusted GMV growth within the range of 70% to 75% compared to the third quarter of 2023 and IAS 29-Unadjusted EBITDA as a percentage of GMV around 2.2%.
In 2024, we remain committed to delivering sustainable and profitable growth underpinned by our customer centricity, while preserving prudent capital management.
Business and Strategy Highlights
As of June 30, 2024, the annual inflation rate published by TurkStat was 71.6%, up from 38.2% as of June 30, 2023, and 68.5% as of March 31, 2024. The monthly inflation rates during the second quarter of 2024 were 3.2%, 3.4% and 1.6% in April, May and June, respectively. The Consumer Confidence Index fell by nearly 6.8 points on a yearly basis to 78.3 as of June 30, 2024.
In Q2 2024, IAS 29-Unadjusted GMV increased by 79.2% to TRY 33.1 billion compared to TRY 18.5 billion in Q2 2023, exceeding our guidance of approximately 75% by nearly 4.2 percentage points. Adjusted for inflation, GMV increased by 3.9% to TRY 33.8 billion in Q2 2024 compared to TRY 32.5 billion in Q2 2023. GMV growth was attributable mainly to the 6.0% order growth (excluding that of digital products). Higher VAT rates following the increase introduced in July 2023 also contributed to this growth. These factors were partially offset by the 2.0% decline in average order value.
We experienced order growth of 33.3% compared to Q2 2023, resulting from the continued rise in order frequency during the second quarter of 2024. Our order frequency (LTM) grew by 23.2% to 10.6, up from 8.62 as of June 30, 2023. A strong customer demand for our digital products (which mainly include sweepstakes and gamified lotteries as well as the first monthly payment of Hepsiburada Premium membership subscription) contributed to the rise in order frequency. Excluding the orders of digital products, order frequency would have been 6.7 as of June 30, 2024 compared to 5.9 as of June 30, 2023, corresponding to 14.0% growth. Accordingly, order growth excluding that of digital products was 6.0% in Q2 2024 compared to Q2 2023. While these digital products only generated around 0.5% of our GMV in Q2 2024, we value the repeat interaction they enable with the participating customer segments.
Overall, our performance was also supported by the appeal of our Hepsiburada Premium loyalty program, attractive affordability solutions and data-driven marketing campaigns. Our Net Promoter Score ("NPS") of 75 in Q2 2024 compared to 73 in Q1 2024 (according to the results of market research conducted by FutureBright on behalf of Hepsiburada) positioned us, once again, as the number one most recommended e-commerce platform in Türkiye.
We remain committed to executing our strategic priorities that include: a) nurturing loyalty, b) capitalizing on our clear differentiation of superior delivery services, c) capitalizing on our clear differentiation through affordability and lending solutions and d) offering our payment, lending and last-mile services to third parties.
The discussion below elaborates on our progress in Q2 2024 within each of our strategic priorities:
a) Nurturing loyalty
Central to our strategy is prioritizing customer loyalty and retention. Our loyalty program, Hepsiburada Premium, continues to play a key role in achieving this. Meanwhile, focusing on retention has helped us to reduce and optimize our marketing and advertising spend.
Hepsiburada Premium members more than doubled, reaching 2.6 million by the end of Q2 2024 compared to 1.2 million by the end of Q2 2023. The number of Hepsiburada Premium members reached a milestone of 3 million by August 12, 2024.
Hepsiburada Premium members continue to generate higher order frequency than non-members. In Q2 2024, the monthly order frequency for members was 36% higher than before joining the program, mirroring the Q1 2024 level in percentage terms.
The NPS for Hepsiburada Premium members was 84 in Q2 2024, according to the results of market research conducted by the research company FutureBright on behalf of Hepsiburada, up from 81 in Q1 2024. This score remains higher than the Company's overall NPS, which we believe signifies a strong satisfaction level among members.
Further enriching the program's customer benefits, in July 2024, we partnered with Warner Bros. Discovery to extend the offering of a BluTV subscription, a Türkiye-based subscription video-on-demand service, as a privilege for Hepsiburada Premium members. BluTV, which was fully acquired by Warner Bros. Discovery in December 2023, features an ever-expanding collection of Turkish content and a broad range of the best international series and shows from Warner Bros. Discovery.
b) Capitalizing on our clear differentiation of superior delivery services
In Q2 2024, HepsiJet continued offering competitive services, including our oversized delivery services that differentiate us in the market. We believe that swift delivery is a core customer expectation and, in Q2 2024, HepsiJet delivered 82% of the orders placed through our retail arm (1P) within the next day (compared to 83% in Q2 2023).
HepsiJet is also a key component of our value proposition for our merchants. In Q2 2024, HepsiJet delivered approximately 73% of our total parcels (compared to 66% in Q2 2023).
The NPS for HepsiJet was 89 in Q2 2024, according to our internal survey results, underscoring its service excellence. Through HepsiJet, our customers enjoy flexible delivery options and value added services including return from doorstep for all purchases on our platform.
Our oversized package delivery service (HepsiJet XL) delivered 68% of oversized parcels ordered through our platform in Q2 2024, up from 59% in Q2 2023.
c) Capitalizing on our clear differentiation through affordability and lending solutions
Leveraging our e-money and payment services licenses, we offer a comprehensive suite of payment and affordability solutions on the Hepsiburada platform, as well as externally to other partner retailers.
Our total financed transaction volume (including BNPL, shopping loans, general purpose loans and consumer finance loans) had reached TRY 11.2 billion over the last twelve months by the end of Q2 2024. 48% of this amount was issued through partner banks in the form of shopping loans and general purpose loans, while 52% was issued by Hepsiburada group companies (up from 36% in Q2 2023) in the form of our BNPL solution and consumer finance loans.
As of June 30, 2024, our BNPL solution had been used by over 404 thousand customers.
Approximately 1.3 million orders were processed through our non-card affordability solutions (including BNPL and shopping loans) over the past 12 months.
In Q2 2024, orders made through our BNPL solution, shopping loans and consumer finance loans accounted for 6.1% of total GMV for the period, up from 4.9% in Q1 2024.
The consumer tendency to use general purpose loans for shopping on our platform has also increased. As such, including the impact of general purpose loans spent on the platform, GMV penetration of all affordability solutions rose to 8.1% in Q2 2024 from 5.8% in Q1 2024.
By August 31, 2024, our wholly-owned subsidiary, Hepsifinans, had provided over TRY 813 million in consumer finance loans since its launch in January 2024.
We diligently manage credit risk in our BNPL, with a CoR3 of around 2.6% as of August 31, 2024, while remaining focused on growth optimization.
Shopping related credit receivables create limited balance sheet load with average durations of around 3.7 and 4.2 months for BNPL and consumer finance loans solutions, respectively.
As of June 30, 2024, our wallet and payment gateway solution, Hepsipay, registered approximately 16.1 million Hepsipay wallet customers (representing users who have opened their wallet account by giving the required consent to Hepsipay), up from 12.5 million as of June 30, 2023. As of the end of August, the number of Hepsipay wallet customers had reached 16.7 million. Additionally, 19.5 million cards are stored in the wallets of Hepsipay customers.
As of June 30, 2024, 1.6 million Hepsipay prepaid cards had been issued through the Hepsiburada mobile app. The Hepsipay prepaid card can be used online at any e-commerce site and is linked to the QR payment feature which allows customers to use it at any off-line retailer that accepts QR payments. As of the end of August, the number of Hepsipay cards issued exceeded 1.7 million. The option for Hepsipay prepaid card holders to top up their e-wallets by way of general purpose loans is now available at nine leading banks in Türkiye. In April 2024, the automatic top-up feature went live in the digital wallet. This convenient feature enables customers to automatically top up their wallet with any saved card when their wallets lack sufficient credit and pay at off-line retailers by scanning QR.
d) Offering payment, lending and last-mile delivery services to third parties
We believe that our strategy to extend our services and solutions beyond our platform by offering them to other retailers, benefits both retail partners and customers. We see great potential for both Hepsipay and HepsiJet to leverage their own assets and increase their revenue contribution to our Company.
HepsiJet today serves approximately 2,300 external customers, including household-name retailers. We believe HepsiJet is best positioned to build on this momentum and grow its share in the logistics market.
The share of external customer volume in HepsiJet's operations increased to 35.9% in Q2 2024, up from 24.8% in Q2 2023. The total parcel volume of third parties delivered in Q2 2024 doubled compared to Q2 2023.
As of June 30, 2024, Hepsipay's one-click check-out ("Pay with Hepsipay") offering was successfully integrated into the online checkout of 40 retailers, reaching 50 retailers by the end of August. Total payment volume through "Pay with Hepsipay" almost tripled compared to Q1 2024. By enabling payment with cards stored on the Hepsipay wallet, Hepsipay has gained a share of these retailers' online sales.
ESG Actions
In Q2 2024, Hepsiburada continued its support in social, commercial and economic areas.
Our "Trade and Technology Empowerment for the Earthquake Region" program, launched in March 2023 a month after the earthquake, reached approximately 18,100 merchants, with over 4,500 new businesses now selling their products online through Hepsiburada. Active sellers have generated a trade volume exceeding TRY 6.5 billion since its launch. Our E-Commerce Specialization Centers in Adana, Hatay and Kahramanmaraş support existing merchants and organize training courses and programs for those new to the e-commerce market, benefiting over a thousand merchants from the region.
Further, Hepsiburada distributed storybooks to thousands of children in the earthquake-affected region as part of our ongoing "A Smile is Enough" project.
The "Technology Empowerment for Women Entrepreneurs" ("TEWE") program reached an additional 2,149 women. To date, the TEWE program has supported approximately 55 thousand women entrepreneurs. Furthermore, as of June 30, 2024, the number of women's cooperatives on our platform had reached 274.
As part of the TEWE program, various NGO collaborations have been established to provide sustainable support to the earthquake zone. As of June 30, 2024, the number of women entrepreneurs and women's cooperatives in the impacted region had reached 3,579 and 42, respectively.
Hepsiburada's last-mile delivery service, HepsiJet, has launched cargo distribution in select regions of Türkiye with 21 electric vans in a pilot project. The electric vans offer high energy conversion efficiency, contributing to sustainability by reducing carbon emissions.
Subsequent Events
Hepsifinans' bond issuance approved
The Capital Markets Board approved the issuance of bonds or bills by Hepsifinans with a total aggregate principal amount of up to TRY 1,050,000,000 with its decision dated August 1, 2024. This issuance will be carried out in one or more tranches within one year, targeting domestic qualified investors through sales or private placement methods, without a public offering. Hepsifinans will use the funds raised to sustainably grow its consumer finance business. The amount and timing of the issuance have yet to be determined based on market conditions.
Hepsiburada Financial Review
Restatement of financial information: Pursuant to IAS 29, the financial statements of an entity whose functional currency is that of a hyperinflationary economy are reported in terms of the measuring unit current as of the reporting date of the financial statements. All amounts included in the financial statements which are not stated in terms of the measuring unit current as of the date of the reporting period are restated applying the general price index. In summary:
(i)
Non-monetary items are restated from the date of acquisition to the end of the reporting period.
(ii)
Monetary items that are already expressed in terms of the monetary unit current at the end of the reporting period are not restated.
(iii)
Comparative periods are stated in terms of measuring unit current at the end of the reporting period.
(iv)
All items in the statement of comprehensive income/(loss) are stated in terms of the measuring unit current as of the date of the financial statements, applying the relevant (monthly) conversion factors.
(v)
The gain or loss on the net monetary position is included in the statement of comprehensive loss and separately disclosed.
Note: All financial figures in the tables provided are expressed in terms of the purchasing power of the Turkish Lira on June 30, 2024 (in accordance with IAS 29) unless otherwise indicated.
(in TRY million unless otherwise indicated)
Three months ended June 30,
Six months ended June 30,
unaudited
unaudited
2024
2023
y/y %
2024
2023
y/y %
GMV (TRY in billion)
33.8
32.5
3.9%
73.1
60.1
21.6%
Marketplace GMV (TRY in billion)
24.0
21.8
10.0%
50.9
40.7
25.2%
Share of Marketplace GMV (%)
71.1%
67.1%
4.0pp
69.6%
67.7%
1.9pp
Revenue
10,112.9
10,113.3
(0.0%)
22,373.1
18,569.3
20.5%
Gross contribution
4,048.9
3,036.0
33.4%
8,172.6
5,609.9
45.7%
Gross contribution margin (%)
12.0%
9.3%
2.6pp
11.2%
9.3%
1.8pp
Income/(loss) for the period
(384.5)
1,511.9
(125.4%)
(526.3)
1,159.7
(145.4%)
EBITDA
386.6
265.3
45.7%
700.3
278.6
151.4%
EBITDA as a percentage of GMV (%)
1.1%
0.8%
0.3pp
1.0%
0.5%
0.5pp
Net cash provided by/(used in) operating activities
(237.6)
(740.6)
(67.9%)
1,340.5
(630.7)
n.m.
Free Cash Flow
(644.5)
(1,041.8)
(38.1%)
471.6
(1,322.9)
n.m.
Note: Unless otherwise indicated, all discussions and analysis provided in this section are based on inflation-adjusted IFRS figures and non-IFRS measures.
Revenue
(in TRY million, unaudited)
Three months ended June 30,
Six months ended June 30,
2024
2023
y/y %
2024
2023
y/y %
Sale of goods1 (1P)
6,580.8
7,530.7
(12.6%)
15,053.3
13,684.2
10.0%
Marketplace revenue2 (3P)
1,302.8
1,341.1
(2.9%)
2,896.9
2,552.2
13.5%
Delivery service revenue
1,553.1
927.2
67.5%
3,290.1
1,818.2
81.0%
Other
676.1
314.3
115.1%
1,132.8
514.7
120.1%
Revenue
10,112.9
10,113.3
(0.0%)
22,373.1
18,569.3
20.5%
1: In 1P direct sales model, we act as a principal and initially recognize revenue from the sales of goods on a gross basis at the time of delivery of the goods to our customers.2: In the 3P marketplace model, revenues are recorded on a net basis, mainly consisting of marketplace commission, transaction fees and other contractual charges to the merchants.
Our revenue in Q2 2024 was nearly flat amounting to TRY 10,112.9 million compared to TRY 10,113.3 million in Q2 2023. This was due to a 12.6% decrease in our (1P) revenue (comprising 65.1% of total revenue) and a 2.9% decrease in our (3P) revenue (comprising of 12.9% total revenue) compared to Q2 2023 which were partially offset by 67.5% increase in delivery service revenue (comprising 15.4% of total revenue) and a 115.1% increase in other revenue. The 12.6% decline in 1P revenue was mainly due to 4.0 percentage point (pp) shift in GMV mix towards 3P (Marketplace).
The 67.5% increase in delivery service revenue compared to Q2 2023 was mainly due to i) a significant increase in delivery service revenue from the off-platform customers of HepsiJet, ii) annual rises in unit delivery service charges surpassing inflation, and iii) an increase in the number of parcels delivered.
The rise in other revenue was mainly attributable to a 73.4% growth in our advertising services (HepsiAd) and a 3.5x growth in our Hepsiburada Premium subscription revenues and a 76.2% increase in our fulfillment service revenues.
While GMV increased by 3.9% in Q2 2024 compared to Q2 2023, total 1P and 3P revenue decreased during this period by 11.1%. The gap in these rates was mainly due to a) a 4.0pp shift in the GMV mix towards 3P (Marketplace) and b) the increase in VAT across all goods and services in early July 2023, resulting in an increase in average selling prices throughout the platform. A slight increase in returns, cancellation, as well as customer discounts in Q2 2024, in each case compared to Q2 2023, also had an impact.
Gross Contribution
(in TRY million unless indicated otherwise, unaudited)
Three months ended June 30,
Six months ended June 30,
2024
2023
y/y %
2024
2023
y/y %
Revenue
10,112.9
10,113.3
(0.0%)
22,373.1
18,569.3
20.5%
Cost of inventory sold
(6,064.0)
(7,077.2)
(14.3%)
(14,200.5)
(12,959.5)
9.6%
Gross Contribution
4,048.9
3,036.0
33.4%
8,172.6
5,609.9
45.7%
Gross contribution margin (% of GMV)
12.0%
9.3%
2.6pp
11.2%
9.3%
1.8pp
The Gross Contribution margin improved by 2.6pp to 12.0% in Q2 2024 compared to 9.3% in Q2 2023. This margin improvement was mainly attributable to a 1.7pp increase in delivery service revenue from off-platform customers, a 1.0pp improvement derived from higher other revenue and a 0.1pp increase in 1P margin primarily due to the impact of higher discounts on cost of inventory sold due to purchases on credit, partially offset by a 0.3pp decline in 3P margin.
The table below shows the monthly inflation rates in 2024 and 2023.
Consumer inflation Monthly (2003=100)
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2024
7%
5%
3%
3%
3%
2%
-
-
-
-
-
-
2023
7%
3%
2%
2%
0%
4%
9%
9%
5%
3%
3%
3%
Source: Data as announced by TurkStat
Operating Expenses
The table below shows our operating expenses for the three months and six months ended June 30, 2024 and 2023 in absolute terms and as a percentage of GMV:
(in TRY million unless indicated otherwise, unaudited)
Three months ended June 30,
Six months ended June 30,
2024
2023
y/y%
2024
2023
y/y%
Cost of inventory sold
(6,064.0)
(7,077.2)
(14.3%)
(14,200.5)
(12,959.5)
9.6%
% of GMV
(17.9%)
(21.8%)
3.8pp
(19.4%)
(21.6%)
2.1pp
Shipping and packaging expenses
(1,226.9)
(883.7)
38.8%
(2,556.9)
(1,689.6)
51.3%
% of GMV
(3.6%)
(2.7%)
(0.9pp)
(3.5%)
(2.8%)
(0.7pp)
Payroll and outsource staff expenses
(1,204.8)
(1,039.7)
15.9%
(2,502.6)
(1,933.0)
29.5%
% of GMV
(3.6%)
(3.2%)
(0.4pp)
(3.4%)
(3.2%)
(0.2pp)
Advertising expenses
(835.2)
(648.4)
28.8%
(1,610.0)
(1,165.3)
38.2%
% of GMV
(2.5%)
(2.0%)
(0.5pp)
(2.2%)
(1.9%)
(0.3pp)
Technology expenses
(152.1)
(116.7)
30.3%
(293.5)
(226.1)
29.8%
% of GMV
(0.5%)
(0.4%)
(0.1pp)
(0.4%)
(0.4%)
0.0pp
Depreciation and amortization
(418.9)
(351.7)
19.1%
(838.7)
(676.6)
24.0%
% of GMV
(1.2%)
(1.1%)
(0.2pp)
(1.1%)
(1.1%)
0.0pp
Other operating expenses, net
(243.4)
(82.2)
196.0%
(509.2)
(317.4)
60.5%
% of GMV
(0.7%)
(0.3%)
(0.4pp)
(0.7%)
(0.5%)
(0.2pp)
Net operating expenses
(10,145.2)
(10,199.6)
(0.5%)
(22,511.4)
(18,967.4)
18.7%
Net operating expenses as a % of GMV
(30.0%)
(31.4%)
1.3pp
(30.8%)
(31.5%)
0.8pp
Net operating expenses decreased by 0.5% to TRY 10,145.2 million in Q2 2024 compared to TRY 10,199.6 million in Q2 2023. As a percentage of GMV, our net operating expenses declined 1.3pp mainly due to a 3.8pp decrease in cost of inventory sold as a percentage of GMV. This was partially offset by a 0.9pp increase in shipping and packaging expenses, a 0.5pp rise in advertising expenses, a 0.4pp rise in payroll and outsource staff expenses, a 0.1pp rise in technology expenses, a 0.2pp rise in depreciation and amortization and a 0.4pp rise in other operating expenses, net, in each case as a percentage of GMV.
The 3.8pp decrease in cost of inventory sold as a percentage of GMV was mainly due to a 4.0pp shift in GMV mix towards Marketplace sales and the positive impact on cost of inventory sold from purchases on credit as a result of increased interest rates in Türkiye.
The 0.9pp increase in shipping and packaging expenses as a percentage of GMV was mainly driven by the 6% increase in the number of orders excluding digital products, the higher volume of HepsiJet's third-party services and a rise in delivery fees per unit (applied by our delivery partners due to increases in fuel prices and annual minimum wages), outpacing the average inflation in Q2 2024 compared to Q2 2023.
The 0.5pp increase in advertising expenses as a percentage of GMV was mainly due to continued investment in some of our profitability drivers including growing the sale of non-electronic categories and scaling our strategic business pillar Hepsiburada Premium program.
The 0.4pp increase in payroll and outsource staff expenses as a percentage of GMV was mainly due to the rise in the number of full-time and outsourced employees in line with our plans on talent onboarding for our subsidiaries.
The 0.4pp increase in other operating expenses, net was mainly due to the reversal of TRY 180.3 million provision expense recorded for the Competition Board investigation in Q2 2023 that was disclosed in greater detail in our Form 6-K furnished to the U.S. Securities and Exchange Commission on August 24, 2023. This reversal resulted in a 0.5pp improvement in net operating expenses as a percentage of GMV in Q2 2023.
Financial Income
(in TRY million, unaudited)
Three months ended June 30,
Six months ended June 30,
2024
2023
y/y %
2024
2023
y/y %
Interest income on credit sales
250.7
89.2
181.1%
558.7
158.1
253.4%
Interest income on time deposits
226.4
146.4
54.6%
384.5
229.8
67.3%
Fair value gains on financial assets measured at fair value
66.3
245.5
(73.0%)
109.0
247.2
(55.9%)
Foreign currency exchange gains
38.7
1,946.5
(98.0%)
409.4
2,064.6
(80.2%)
Other
18.2
48.9
(62.8%)
25.9
71.9
(64.0%)
Interest income on financial instruments
0.5
-
n.m.
1.2
-
n.m.
Financial income
600.8
2,476.5
(75.7%)
1,488.7
2,771.6
(46.3%)
Our financial income decreased by 75.7%, to TRY 600.8 million in Q2 2024 compared to TRY 2,476.5 million in Q2 2023. The TRY 1,875.7 million decrease in financial income was mainly driven by a TRY 1,907.8 million decrease in foreign exchange gains from our U.S. dollar denominated bank deposits and financial investments due to the lower U.S. dollar/TRY appreciation during Q2 2024 compared to Q2 2023. The TRY currency depreciation was by 1.7% in Q2 2024 compared to 34.9% in Q2 2023. The decrease in financial income was partially offset by the increase in interest income on credit sales and time deposits as a result of higher annual interest rates.
Financial Expenses
(in TRY million, unaudited)
Three months ended June 30,
Six months ended June 30,
2024
2023
y/y %
2024
2023
y/y%
Commission expenses due to early collection of credit card receivables
(810.1)
(436.9)
85.4%
(1,595.8)
(785.1)
103.3%
Interest expenses on purchases
(494.6)
(143.1)
245.6%
(890.0)
(202.2)
340.2%
Interest expenses on bank borrowings and lease liabilities
(31.6)
(50.4)
(37.3%)
(139.0)
(117.3)
18.5%
Foreign currency exchange losses
(14.4)
(590.8)
(97.6%)
(177.7)
(685.7)
(74.1%)
Other
(4.6)
(5.3)
(13.2%)
(9.2)
(6.1)
50.8%
Financial expenses
(1,355.3)
(1,226.5)
10.5%
(2,811.7)
(1,796.4)
56.5%
Our financial expenses increased by 10.5% to TRY 1,355.3 million in Q2 2024 compared to TRY 1,226.5 million in Q2 2023. This TRY 128.8 million increase was primarily attributable to a TRY 373.2 million increase in commission expenses due to early collection of credit card receivables and a TRY 351.5 million increase in interest expenses on purchases as a result of an increase in annual effective interest rates and an increase in purchased goods during Q2 2024, each compared to Q2 2023, which were partially offset by a TRY 576.4 million decrease in foreign currency exchange losses from our U.S. dollar denominated trade payables as a result of lower U.S. dollar/TRY appreciation during Q2 2024 compared to Q2 2023.
Income/(Loss) for the Period
Loss for the period was TRY 384.5 million in Q2 2024, down from an income of TRY 1,511.9 million in Q2 2023. This was mainly due to a TRY 2,004.4 million increase in net financial expenses (net of financial income) and TRY 67.2 million increase in depreciation and amortization, partially offset by TRY 121.3 million improvements in EBITDA and TRY 53.9 million in monetary gain.
EBITDA
EBITDA increased by 45.7%, or TRY 121.3 million, to TRY 386.6 million in Q2 2024 compared to TRY 265.3 million in Q2 2023, corresponding to 1.1% EBITDA as a percentage of GMV in Q2 2024. This corresponded to a 0.8pp improvement in EBITDA as a percentage of GMV in Q2 2024 compared to Q2 2023. This improvement was driven by a 2.6pp rise in Gross Contribution margin, partially offset by a 0.9pp rise in shipping and packaging expenses and a 0.5pp rise in advertising expenses, a 0.4pp rise in other operating expenses, net, a 0.4pp rise in payroll and outsource staff expenses and a 0.1pp rise in technology expenses, in each case as a percentage of GMV.
Capital Expenditures
Capital expenditures increased by 35.1%, or TRY 105.7 million, to TRY 406.9 million in Q2 2024 compared to TRY 301.2 million in Q2 2023. This increase was mainly due to increase in the costs of employees, who are employed for the development of the website and mobile platforms for both core and strategic assets, and whose costs are capitalized. The cost of these employees comprises around 75% of total capital expenditures in Q2 2024, compared to around 74% in Q2 2023. The remaining capital expenditures in each of Q2 2024 and Q2 2023 mainly comprised the purchase of property and equipment as well as software and rights.
Net Working Capital
Net working capital was negative TRY 5,676.4 million as of June 30, 2024 compared to negative TRY 7,367.5 million as of December 31, 2023. The TRY 1,691.2 million change in negative net working capital was mainly driven by a TRY 840.2 million decrease in trade payables and payables to merchants, a TRY 662.1 million increase in inventories and a TRY 255.9 million increase in loan receivables. The decrease in trade payables and payables to merchants resulted primarily from a shift in the GMV mix towards 3P with shorter payments. The increase in inventories was due to longer inventory turnover days as of June 30, 2024 compared to December 31, 2023. The increase in loan receivables was mainly due to an increase in our in-house consumer finance loan facility that was launched in January 2024.
Cash Flow from Operating Activities
Our net cash used in operating activities in Q2 2024 comprised a TRY 384.5 million loss (Q2 2023: income of TRY 1,511.9 million), a negative TRY 1,662.0 million change in net working capital (Q2 2023: negative TRY 1,555.1 million) and a TRY 1,808.9 million change in other items (comprising non-cash items such as provisions and depreciation expenses as well as certain non-operating items such as financial income & expenses, non-operating monetary gains & losses and unrealized foreign exchange differences) (Q2 2023: negative TRY 697.4 million). The change in net working capital is further disclosed in the "Net Working Capital" section above.
Net cash used in operating activities rose by TRY 503.0 million to TRY 237.6 million in Q2 2024 compared to net cash used in operating activities in Q2 2023 of TRY 740.6 million. This was mainly due to an EBITDA improvement of TRY 121.3 million, a decrease in change in net working capital of TRY 106.8 million and a decrease in realized foreign exchange losses of TRY 447.7 million.
Free Cash Flow
Our free cash flow was negative TRY 644.5 million in Q2 2024 compared to negative TRY 1,041.8 million in Q2 2023. This improvement was mainly due to the decrease in net cash used in operating activities, partially offset by a TRY 105.7 million increase in capital expenditures.
Total Cash and Financial Investments
Total cash and cash equivalents was TRY 3,680.1 million as of June 30, 2024 compared to TRY 6,860.4 million as of December 31, 2023. The TRY 3,180.3 million decrease was mainly due to slower appreciation of the USD/TRY exchange rate against the six-month inflation as well as higher cash used in financing activities and purchases of financial investments.
Total financial investments as of June 30, 2024 amounted to TRY 3,184.3 million compared to TRY 2,148.9 million as of December 31, 2023. Our financial investments consist of a financial asset measured at fair value through profit or loss and financial assets carried at amortized costs, including investment funds and Eurobonds.
We held around 53.4% of our total cash, cash equivalents and financial investments in U.S. dollars as of June 30, 2024.
Bank Borrowings
Our short-term bank borrowings are utilized to facilitate supplier and merchant financing as well as for our short-term liquidity needs in the ordinary course of our operations. Our short-term borrowings increased to TRY 473.2 million as of June 30, 2024, from TRY 228.9 million as of December 31, 2023. Our short-term borrowings also included issued asset-backed securities amounting to TRY 150.0 million. As of June 30, 2024, supplier and merchant financing loans corresponded to TRY 149.5 million of the short-term bank borrowings compared to TRY 22.1 million as of December 31, 2023.
Conference Call Details
The Company's management will host an analyst and investor conference call and live webcast to discuss its unaudited financial results today, Wednesday, September 11, 2024 at 4.00 p.m. Istanbul time / 2.00 p.m. London / 9.00 a.m. New York time.
The live webcast can be accessed via https://87399.themediaframe.eu/links/hepsiburada240911.html
Telephone Participation Dial in Details:
• Türkiye:
+ 90 212 900 3719
• UK & International:
+ 44 (0) 203 059 5872
• USA:
+ 1 516 447 5632
Participants may choose any of the above numbers to participate should they ...
