HEPS — D-Market Elektronik Hizmetler ve Ticaret A.S.

Hepsiburada (HEPS) Q4 2024 Earnings Call Summary

1. Key Financial Results and Metrics

• Gross Merchandise Volume (GMV): Grew by 12.1% in 2024, with a notable 74% growth on an unadjusted inflation basis.
• Revenue: Increased by 11.1% for the full year, with Q4 revenue growth at 6.4%.
• EBITDA: Reached 1.1% of GMV for the year, a 0.7 percentage point improvement year-on-year.
• Gross Contribution Margin: Improved to 11.3%, up by 2.1 percentage points from the previous year.
• Active Customers: Increased by 235,000 to 12.2 million, with order frequency rising by 14% to 10.8.
• Free Cash Flow: Decreased by TRY 1.9 billion, attributed to a decline in net cash from operating activities and increased capital expenditures.

2. Strategic Updates and Business Highlights

• Customer Loyalty: The Hepsiburada Premium program expanded to 3.7 million members, enhancing customer engagement through partnerships, including with Warner Bros. Discovery.
• Logistics Services: HepsiJet delivered 72% of total parcels, confirming its role in the delivery ecosystem.
• FinTech Solutions: Total lending volume reached 16.2 billion lira, a 2.6 times increase from 2023, with significant adoption of buy now pay later (BNPL) and consumer finance loans.
• Marketplace Operations: Shift towards 3P operations, which now account for approximately 70% of business, reflecting a strategic focus on non-electronics categories.

3. Forward Guidance and Outlook

• The start of 2025 is expected to be challenging due to ongoing macroeconomic pressures and consumer boycotts. However, the recent acquisition of a 65.4% controlling stake by Kaspi is anticipated to create value and growth opportunities moving forward.

4. Bad News, Challenges, or Points of Concern

• Macroeconomic Headwinds: Continued pressure on consumer purchasing power and political sensitivities affecting marketing activities.
• Cash Flow Decline: Significant decrease in free cash flow raises concerns about operational efficiency and capital management.
• Increased Operating Expenses: Rising payroll, shipping, and other operating expenses could impact future profitability.

5. Notable Q&A Insights

• There was no Q&A session during this earnings call, but management expressed eagerness to engage with investors through their investor relations team for any inquiries.

Overall, Hepsiburada demonstrated solid growth in 2024, particularly in GMV and EBITDA margins, but faces significant challenges in the early part of 2025 due to economic conditions and operational pressures. The strategic acquisition by Kaspi presents a potential positive shift for the company.