D-MARKET Electronic Services & Trading(HEPS) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3 2022, the company reported a GMV growth of 66% on an unadjusted basis, while adjusted for inflation, GMV declined by 9% [7][31] - Revenue grew by 93% on an unadjusted basis, and 7% when adjusted for inflation, despite the decline in GMV [35] - The gross contribution margin improved to 8.4%, a 4.5 percentage point increase year-on-year [8][38] - EBITDA as a percentage of GMV improved by 4.6 percentage points year-on-year to negative 5.8% [11][42] Business Line Data and Key Metrics Changes - Active customer base grew by 11% year-on-year, reaching 11.8 million [13] - Order frequency increased to 5.4, up from 4.4 a year ago [13] - Marketplace GMV accounted for approximately 68%, down from 70% a year ago [34] - The company achieved nearly six-fold growth in marketplace revenue, while 1P revenue declined by 7% [36] Market Data and Key Metrics Changes - Inflation in Türkiye reached about 80%, impacting consumer behavior and GMV growth [7] - The share of marketplace GMV fluctuated due to macroeconomic factors and customer behavior [34] Company Strategy and Development Direction - The company is focused on optimizing customer experience, expanding the merchant base, and improving marketing effectiveness [12] - A strategic shift towards profitability has led to reduced marketing spending and discounts [35] - The company raised its GMV growth guidance for the full year from around 60% to around 70% [27][49] Management Comments on Operating Environment and Future Outlook - Management acknowledged the competitive landscape and high marketing costs, while preparing for regulatory changes expected in January 2023 [53][55] - The company remains committed to disciplined cash and cost management to support its path to profitability [49] Other Important Information - The company reached a settlement agreement for class action lawsuits in the U.S., incurring a provision expense of approximately TRY258 million [10][40] - Hepsipay wallet usage grew significantly, with around 44% of GMV passing through it [20] Q&A Session Summary Question: Impact of new e-commerce loss on profitability and competition - Management noted that the market remains competitive with high marketing costs and is preparing for regulatory changes affecting marketing spending [53][55] Question: Plans for excess cash from reduced spending - Management indicated that cash generation will depend on GMV and promotional distribution, with further details to be discussed in upcoming quarters [58]