D-MARKET Elektronik Hizmetler ve Ticaret AS · NASDAQ:HEPS
D-MARKET Elektronik Hizmetler ve Ticaret AS — D-Market Electronic Services & Trading (Hepsiburada) — Q2 2022 Earnings Presentation
35 slides from D-MARKET Elektronik Hizmetler ve Ticaret AS's earnings presentation, Sep 28, 2022
Slide 1: Q2 2022 Results Presentation
Q2 2022 Results Presentation September 28, 2022 1
Slide 2: Disclaimer
Disclaimer 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
Slide 3: Forward Looking Statements
Forward Looking Statements This presentation, the conference call webcast, press release and related communications include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended and the S
Slide 4: Business Update
Business Update
Slide 5: Hepsiburada Ecosystem: Leading the Digitalization of Commerce
Hepsiburada Ecosystem: Leading the Digitalization of Commerce Financial Services Logistics Network Fintech with wallet and lending capabilities Last-mile delivery and 2-man cargo Affordability solutions Fulfillment-as-a-service Vision for beyond Hepsiburada (online and offline) Nationwide footprint
Slide 6: Slow Down in Inflation Growth Rate in Q2 2022
Slow Down in Inflation Growth Rate in Q2 2022 Consumer Inflation Consumer Inflation (Annual; 2003=100)(1) Last 3-yr (Monthly; 2003=100) (1) cumulative inflation surpassed 100% Q3 14% Q1 Q2 Q3 79% 80% 11% 61% 7% 5% 36% 5% 5% 4% 3% 2% 2% 2% 2% 20% Inflation change in 2% 2% 1% 16% 18% 1% 1% 1% 1% H1’22
Slide 7: Addressing the Changing Market Dynamics
Addressing the Changing Market Dynamics Key Observations Key Capabilities 1 • Hybrid 1P-3P business model • Change in customer trends • Pressure on consumer spending • Affordability solution set • Shift towards affordable services and products • Need for reliable and budget-friendly experiences • Pa
Slide 8: Solid H1 2022 Performance in a Challenging Environment
Solid H1 2022 Performance in a Challenging Environment Unadjusted for Inflation Adjusted for Inflation(1) GMV(2) TRY 17.5Bn 69% YoY TRY 19.7Bn 3% YoY Revenue TRY 5.4Bn 72% YoY TRY 6.1Bn 5% YoY As a % of GMV As a % of GMV Gross TRY 1.5Bn 8.3% TRY 853Mn 4.3% Contribution(2) -0.5pp YoY -4.0pp YoY 29.1M
Slide 9: Positive Free Cash Flow in Q2 2022
Positive Free Cash Flow in Q2 2022 Unadjusted for Inflation Adjusted for Inflation(1) GMV(2) TRY 9.2Bn 57% YoY TRY 9.6Bn -10% YoY Revenue TRY 2.9Bn 63% YoY TRY 3.0Bn -6% YoY As a % of GMV As a % of GMV Gross 8.3% 5.0% TRY 765Mn TRY 475Mn Contribution(2) flat YoY -2.8pp YoY from -1.4Bn from -1.8Bn Fr
Slide 10: Continued Focus on Operational Excellence in Fundamentals
Continued Focus on Operational Excellence in Fundamentals Growth Drivers Customer Experience Active Customers(1) Frequency(2) Customer NPS Performance(5) (Millions) 18% 23% +4 points 11.7 5.2 9.9 4.2 76 72 68 65 Leadership in NPS Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Active Mer
Slide 11: Post Q2: Continued Momentum in Innovation
Post Q2: Continued Momentum in Innovation Hepsiburada Smart Store Hepsiburada Premium (Mimex) (Subscription Service(1)) • Türkiye’s first smart, • First home-grown subscription- cashier-less “pick & go” based loyalty program concept launched on July 1st • AI and IoT technology • Free delivery, free
Slide 12: Nationwide Powerhouse in Logistics
Nationwide Powerhouse in Logistics Last-Mile 2-Man-Handling Fulfillment Services Operations Footprint(8) (HepsiJet) (HepsiJet XL) (HepsiLojistik) (ca. 202K sqm) • Delivered 83% of 1P • Recorded ca. 99% • Onboarded 513 firms • 7 distribution centers orders within next day(1) satisfaction score(3) int
Slide 13: Strategic Assets for Further Monetization and Growth
Strategic Assets for Further Monetization and Growth Advertising Platform International On-Demand Airline Tickets (HepsiAd) (HepsiGlobal) (Hepsiburada Market) (Hepsiburada Seyahat) 10K 4.4Mn 79% 37K merchants used active SKUs(2) perfect order ratio(3) tickets sold in Q2 2022 our ad solutions(1) • Di
Slide 14: Progress in FinTech with Hepsipay
Progress in FinTech with Hepsipay Wallet Growth Volume Growth BNPL Performance(3) Hepsipay Wallet Base(1) Total Payment Volume as a % of GMV(2) • Prudent execution: 500K+ customers (Million) were issued a limit 12.8% 40% 39% • Promising customer reaction: 100K+ 8.0 37% customers used the limit 7.1 •
Slide 15: EBITDA Guidance Initiated and GMV Growth Guidance Raised
EBITDA Guidance Initiated and GMV Growth Guidance Raised GMV growth Raised GMV growth guidance to around 60% in 2022 (Unadjusted for Inflation) from previous around 50% (1) EBITDA as a % of GMV EBITDA Set to deliver EBITDA(2) at a range of -2.5% to -3.0% of (Unadjusted for Inflation) GMV for 2022 in
Slide 16: Financial Performance
Financial Performance
Slide 17: Understanding the Impact of IAS 29 Implementation
Understanding the Impact of IAS 29 Implementation IAS 29: Financial Reporting in Hepsiburada Balance Sheet Relative Weights(1) IAS 29 Impact on Our Profitability Margins Hyperinflationary Economies • Financial statements prepared in the currency of a IAS 29 had material impact on our 1P gross hyperi
Slide 18: Deep Dive on GMV Performance under IAS 29
Deep Dive on GMV Performance under IAS 29 Quarterly GMV Breakdown and Bridge GMV (TRY Billion) Adjusted for Inflation -10% YoY IAS29 adjustment +0.4Bn Unadjusted for Inflation 10.6 +57.3% 9.6 9.2 GMV Q2'21 Adj. for 1.9 Inflation 3.4 3.3 1.5 5.9 1.8 5.9 6.1 4.0 GMV Q2’21 Sales of Goods (1P) Marketpla
Slide 19: Deep Dive on Revenue Performance under IAS 29
Deep Dive on Revenue Performance under IAS 29 Quarterly Revenue Breakdown and Bridge Revenue (TRY Million) Adjusted for Inflation -6% YoY IAS29 adjustment 3,184 Unadjusted for Inflation +124Mn Revenue Q2'21 +63.1% 2,985 Adj. for 2,862 2,862 25 43 Inflation 107 34 40 235 225 291 303 941 1,755 2.862 1
Slide 20: Gross Contribution: Focused on Continued Progress
Gross Contribution: Focused on Continued Progress Quarterly Gross Contribution Performance Gross Contribution as a % of GMV Unadjusted for Inflation (%) 9.3% Adjusted for Inflation 8.3% 8.3% 8.3% 8.9% 7.8% 7.1% 5.0% IAS 29 has not yet been implemented 3.7% 4.3% to Q3'21 & Q4’21 periods (1) Q1’21 Q2’
Slide 21: Operating Expenses: Continued Discipline in Cost Management
Operating Expenses: Continued Discipline in Cost Management Operating Expenses as a % of GMV (Adjusted for Inflation) -0.5pp 12.0% 11.6% 11.1% 3.6% Shipping and 4.0% 2.9% Packaging Advertising expenses as a % of GMV is lower 1 as a result of enhanced marketing efficiency with sharpened focus on rete
Slide 22: EBITDA Performance: Committed to Path to Profitability
EBITDA Performance: Committed to Path to Profitability EBITDA as a % of GMV Bridge (Adjusted for Inflation) EBITDA as a % of GMV Unadjusted for Inflation -3.8% Adjusted for Inflation -6.2% -2.3% -2.7% -3.2% IAS29 has not yet been -3.7% -2.7% implemented to Q3'21 & Q4’21 -3.8% periods (1) -2.8% -6.2%
Slide 23: Cash Flow Performance: Positive Free Cash Flow in Q2 2022
Cash Flow Performance: Positive Free Cash Flow in Q2 2022 Free Cash Flow (1) (Adjusted for Inflation) Cash Flow From Operating Activities (Adjusted for Inflation) TRY million TRY million 1,299.8 1,376.3 184.6 396.7 -290.4 -223.9 -1,796.9 -1,676.0 Q1’21 Q2’21 Q1’22 Q2’22 Q1’21 Q2’21 Q1’22 Q2’22 CAPEX
Slide 24: Continued Progress in Path to Profitability
Continued Progress in Path to Profitability: Operational Excellence and Disciplined Cost Management Monetization Efficiency • Continued focus on gross contribution margin • Efficiency in marketing with focus on retention & engagement in customer lifecycle • Strengthening selection in non-electronics
Slide 25: Highlights on QoQ Progress
Highlights on QoQ Progress Q2 2022: Encouraging results(1) 1 2 3 4 5 Improvement in Improvement in Improvement in Improvement in Positive Gross Contr. margin(2) OPEX lines EBITDA Net Loss Free Cash Flow(3) • 5% gross contribution • Advertising exp. as a % • Negative TRY 594 mn • TRY 566 mn net loss
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix New E-Commerce Law Consolidated Financial Statements Presentation of Financial and Other Information
Slide 28: The New E-Commerce Law
The New E-Commerce Law - for more transparent, healthy and fair market Important Obligations and Rationale Effective Date Obligations Rationale(3) • Prevent e-commerce platforms from gaining asymmetric market Limits on the total amount of advertising & 2023 marketing expenses and customer discounts
Slide 29: Summary Financials
Summary Financials (Adjusted for Inflation) (unaudited) (unaudited) (unaudited) (unaudited) TRY million Q2‘22 Q2’21 Q2 YoY H1’22 H1’21 H1 YoY Revenue 2,985.2 3,183.9 (6.2%) 6,063.9 5,798.8 4.6% Gross Contribution 475.0 827.8 (42.6%) 852.8 1,584.8 (46.2%) Gross Contribution margin(1) 5.0% 7.8% (2.8pp
Slide 30: Consolidated Statements of Comprehensive Loss
Consolidated Statements of Comprehensive Loss Consolidated Statements of Comprehensive Loss (Amounts expressed in thousands of Turkish lira (TRY) in terms of the purchasing power of the TRY at 30 June 2022 unless otherwise indicated.) Six Months Ended Three Months Ended unaudited unaudited unaudited
Slide 31: Consolidated Balance Sheets
Consolidated Balance Sheets Consolidated Balance Sheets (Amounts expressed in thousands of Turkish lira (TRY) in terms of the purchasing power of the TRY at 30 June 2022 unless otherwise indicated.) unaudited unaudited(1) Assets: 30 June 2022 31 December 2021 Cash and cash equivalents 2,685,882 5,42
Slide 32: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows (Amounts expressed in thousands of Turkish lira (TRY) in terms of the purchasing power of the TRY at 30 June 2022 unless otherwise indicated.) Unaudited Unaudited 1 January - 30 June 2022 1 January - 30 June 2021 Loss before
Slide 33: Non-IFRS Metrics Reconciliation (I/II)
Non-IFRS Metrics Reconciliation (I/II) EBITDA (Adjusted for Inflation) (TRY million) Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Net loss for the period (566.3) (484.1) (1,505.9) (849.9) Taxation on income - - - - Financial income 518.1 77.2 1,058.6 176.5 Financial expe
Slide 34: Non-IFRS Metrics Reconciliation (II/II)
Non-IFRS Metrics Reconciliation (II/II) Free Cash Flow (Adjusted for Inflation) (TRY million) Three months ended June 30, Six months ended June 30, 2022 2021 2022 2021 Net cash provided by /(used in) operating activities 396.7 1,376.3 (1,279.3) 1,152.4 Capital expenditures (212.3) (77.9) (333.3) (14
Slide 35: Certain Definitions
Certain Definitions We provide a number of key operating performance indicators used by our management and often used by competitors in our industry. We define certain terms used in this presentation as follows: GMV as gross merchandise value which refers to the total value of orders/products sold
D-Market Electronic Services & Trading (Hepsiburada) — Q2 2022 Earnings Presentation on 6ix