D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals mixed signals: strong GMV and EBITDA growth guidance, but weak Q3 financials and macroeconomic pressures. The ownership transition poses regulatory risks, and there's no announced shareholder return plan. The Q&A highlights concerns about demand and unclear responses on fintech plans. While the company shows resilience with loyalty programs and fintech growth, the lack of clear positive catalysts and ongoing economic challenges suggest a neutral stock price movement over the next two weeks.
Key Financial Performance
GMV Growth (Q3 2024) 10.3% growth in Q3 2024; 17.4% growth in the first nine months compared to the same period last year, adjusted for inflation.
Gross Contribution Margin (Q3 2024) 11.5% in Q3 2024, a 2.1 percentage point improvement compared to Q3 2023.
EBITDA as a Percentage of GMV (Q3 2024) 1.2% in Q3 2024, a 1.3 percentage point rise year-on-year, excluding one-off contributions from Q3 2023.
Operating Income (Q3 2024) Positive operating income (EBIT) of TRY 32 million, the first since the IPO.
Revenue Growth (Q3 2024) 1.7% growth in Q3 2024; 13.5% growth in the first nine months compared to the same periods last year.
3P Revenue Growth (Q3 2024) 6% rise in 3P revenue in Q3 2024.
Delivery Service Revenue Growth (Q3 2024) 47% increase in delivery service revenue in Q3 2024.
Other Revenue Growth (Q3 2024) 82% increase in other revenue in Q3 2024.
1P Revenue Decline (Q3 2024) 9% decrease in 1P revenue compared to Q3 2023, attributed to a shift in GMV mix towards 3P.
Cash Provided by Operations (Q3 2024) Decreased by TRY 1.2 billion compared to a year ago.
Free Cash Flow (Q3 2024) Around TRY 1.6 billion in Q3 2024.
CapEx (Q3 2024) TRY 359 million in CapEx.
BNPL Volume Growth (Q3 2024) More than tripled year-on-year during Q3 2024.
Active Customers (Q3 2024) Grew by 233,000 customers to 12.3 million.
Order Frequency (Q3 2024) Reached 10.8, up by 16%.
Orders (Q3 2024) Recorded 32 million orders, a 19% year-on-year growth.
Active Merchant Base (Q3 2024) Almost 100,000 active merchants.
Hepsipay Wallet Customers (Q3 2024) 17.6 million wallet customers by the end of November.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New Product Launch: In July ‘24, Hepsiburada launched its 'renew your mobile at your doorstep' product in 81 cities across Turkey, marking the first nationwide device renewal program at home.
Loyalty Program Growth: The Hepsiburada Premium program reached nearly 3.7 million members by November, with premium members showing a 31% increase in monthly order frequency.
Payment Solutions Expansion: Hepsipay has grown to 17.6 million wallet customers, with a significant increase in transaction volume.
Market Positioning: Hepsiburada is positioned as Turkey's most recommended e-commerce brand, achieving an NPS of 75.
Market Expansion: The company is expanding its logistics capabilities through HepsiJet, which delivered 74% of total parcels in Q3.
Operational Efficiency: Hepsiburada recorded 32 million orders in Q3, a 19% year-on-year growth, with an active merchant base of almost 100,000.
Profitability Improvement: The company achieved positive operating income for the first time since its IPO, with EBITDA as a percentage of GMV reaching 1.2% in Q3.
Strategic Shift: Hepsiburada is undergoing an ownership transition to Kaspi, which is expected to enhance its fintech and marketplace capabilities.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Macroeconomic Pressures: The company is facing ongoing macroeconomic challenges, including reduced purchasing power and a potential shrinking demand for discretionary products in Turkey over the next six to nine months.
Regulatory Approvals: The ownership transition to Kaspi is pending certain regulatory approvals, which could pose a risk to the timeline and execution of the acquisition.
Supply Chain and Logistics Costs: Increased shipping and packaging expenses due to higher parcel volumes and rising delivery fees, driven by fuel price increases and minimum wage rises, are impacting profitability.
Active Merchant Base: The active merchant base has not increased for eight consecutive quarters, attributed to a focus on quality over quantity and new regulatory requirements for merchant verification.
Credit Card Costs: The cash outflow from early collection of credit card receivables is currently higher than EBITDA, with expectations for improvement as interest rates decrease.
Competitive Pressures: The company must navigate competitive pressures in the e-commerce sector, particularly as it seeks to expand its loyalty program and fintech solutions.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Quarterly Positive Operating Income: Achieved quarterly positive operating income for the first time since IPO, reflecting strong strategy and execution.
Hepsiburada Premium Program: Grew to nearly 3.7 million members, with premium members showing a 31% increase in monthly order frequency.
HepsiJet Logistics: Delivered 74% of total parcels, with significant growth in off-platform services, confirming its role in the delivery ecosystem.
Buy Now Pay Later Solutions: BNPL volume tripled year-on-year, with a 2.6% cost of risk, aiming to capture a share of Turkey's $40 billion consumer loan market.
Hepsipay Growth: Increased wallet customers to 17.6 million, with a focus on scaling one-click checkout solutions.
Q4 GMV Growth Guidance: Expecting 50% to 55% GMV growth for Q4, leading to approximately 75% growth for the full year.
EBITDA Margin Guidance: Q4 EBITDA as a percentage of GMV expected to be between 1.8% to 2%, with full year guidance around 2.1% to 2.2%.
Ownership Transition: Kaspi to acquire a controlling 65.4% stake, expected to close in early 2025, anticipated to create synergies.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Shareholder Return Plan: Hepsiburada has not explicitly mentioned a share buyback program or dividend program in the call. However, they discussed their strategic priorities and growth plans, indicating a focus on sustainable growth and profitability.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:How do you think about macro landscape and your immunity to potentially shrinking demand in Turkey?
A:Turkey is a very high potential country for e-commerce with a large population and high interest in e-commerce. We expect a shrinking demand for discretionary products in the next six to nine months due to government policies, but we believe this will benefit the long-term market. Hepsiburada offers low prices, a wide range of lending services, and a premium loyalty program to navigate this period.
Q:What are your long-term targets with regards to the loyalty program and its growth potential?
A:The Hepsiburada Premium program is critical for our future. We aim to have half of our active customers in the loyalty program, similar to other developed e-commerce marketplaces. Sustaining value for customers and maintaining a strong NPS are key.
Q:Can you share data on volume of transactions on Hepsi wallet and take rate on the same?
A:Around 85% of our transaction volume is going through the wallet, predominantly from our e-commerce volume.
Q:Could you please clarify the 1.2% EBITDA in Q3 actually compared to 2.2% guided in September?
A:The difference is due to adjusted and unadjusted numbers. Our result is in line with the guidance provided.
Q:Why is there no increase in active merchants for the past eight quarters in a row?
A:We are focusing on quality over quantity, working with high potential merchants. The lack of increase is also due to new government regulations that have raised the bar for merchant verification.
Q:Do you think the collaboration with BluTV will be affected by Kaspi's acquisition?
A:We do not expect any negative impact on our collaboration with BluTV, which is strategic for us.
Q:What are your plans to insource your fintech segment through the help of Kaspi?
A:We will continue offering a wide range of services, including BNPL and loans from banks, without any planned changes.
Q:When do you expect EBITDA CC commissions to turn positive?
A:We expect to have a positive EBITDA minus credit card costs in the next year as interest rates decrease.
Q:What is the take rate of underlying interest rate on BNPL loans?
A:The BNPL loans have different annualized interest rates, ranging from 80% to above 100%, with an average around 95%.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer to the question about plans to insource the fintech segment through Kaspi, as they did not clarify what 'insource' meant.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
BNPL loan
GMV percentage
GMV rise
HepsiJet platform
IFRS financials
IPO
Ms
Nilhan
anniversary
campaign
collaboration BluTV
country
credit card
deal
decrease
door
expansion
finance loan
fintech
history
house consumer
immunity
improvement period
inflation profitability
interest rate
margin month
milestone income
month percentage
month period
ownership transition
party
premium
product
result challenge
rise month
transaction
user experience
volume wallet
year
HEPS Transcript
D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) Q4 2024 Results Conference Call Transcript
Neutral4-30
D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) Q3 2024 Earnings Call Transcript
Unknown12-10
The earnings call reveals mixed signals: strong GMV and EBITDA growth guidance, but weak Q3 financials and macroeconomic pressures. The ownership transition poses regulatory risks, and there's no announced shareholder return plan. The Q&A highlights concerns about demand and unclear responses on fintech plans. While the company shows resilience with loyalty programs and fintech growth, the lack of clear positive catalysts and ongoing economic challenges suggest a neutral stock price movement over the next two weeks.
D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) Q2 2024 Earnings Call Transcript
Unknown9-11
The earnings call summary presents a mixed picture. Basic Financial Performance shows modest GMV growth, yet strong margins. Product Development and Business Update are positive due to strategic initiatives and loyalty programs. Market Strategy faces challenges from competitive pressures and economic factors. Expenses and Financial Health are concerning due to high costs and negative cash flow. Shareholder Return Plan is neutral with no buyback program. The Q&A reveals cautious optimism but highlights economic and competitive pressures. Overall, the sentiment is neutral, with no major catalysts for strong price movement.
D-Market Elektronik Hizmetler ve Ticaret A.S. (HEPS) Q1 2024 Earnings Call Transcript
Positive6-13
The earnings call highlights strong financial performance with GMV and revenue growth, improved margins, and increased order frequency. Despite economic uncertainties and competitive pressures, Hepsiburada shows resilience with strategic partnerships and regulatory advantages. Positive sentiment is reinforced by optimistic guidance and future profitability trajectory. However, lack of specific market share data and unclear responses on US GAAP reporting are minor concerns. Overall, the positive aspects outweigh the negatives, suggesting a likely positive stock price reaction.
HEPS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
