Half Year 2022 D Market Elektronik Hizmetler ve Ticaret AS Earnings Call
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Ladies and gentlemen, thank you for standing by. I am Mina, your call score operator. Welcome and thank you for joining the HabsiBurda conference call and live webcast to present and discuss the second quarter 2022 financial results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing the button.
including responses to your questions, reflect management's views as of today's date only. We do not undertake any obligations to update or revise this information except as required by law. Certain statements made on today's call are forward-looking statements, and actual results may differ in materials from these forward-looking statements. Please refer to today's earnings release as well as risk factors described in the case harvest slide of today's supplemental date. Today's press release, the 6K, are form 20, while we take...
To enhance this call, we have posted our supplemental slide deck on the financial page of our company's investment relations website. As a reminder, a replay of this call will also be available on our investment relations website. With that, I will hand it over to our CEO , Murat. Thank you, Elin. Welcome everyone and thank you for joining us today. Before diving into the dynamics and numbers of the second quarter, let me briefly remind you of your unique ecosystem that is well beyond an e-commerce platform.
To provide a better understanding of the macro picture, let's take a look at some of the key indicators during the second quarter. Consumer confidence index was at an all-time low level with 63 in June . Although it is still early to say, there are some signs of potential recovery with the consumer index rising to 72 in August .
The annual inflation rate reached 79% by the end of June . We experienced 7%, 3% and 5% levels in April , May and June respectively. And yet, the growth rate of inflation slowed down in the second quarter compared to the first quarter.
Please note that the community inflation during the past three years being two tiers surpassed 100% by the end of February and it has triggered the inflation accounting requirement as per August .
So, we will discuss our financial performance as per the relevant standards of IFRS called IAS 29 in the upcoming slides. Next slide please.
It is important to understand the impact of inflation on consumer behavior as well as the basket patterns. One of the key changes in the consumer behavior is that customers tend to switch to lower segment brands in their purchase decisions. They also favor budget-friendly choices with reliable customer experience.
Another important change in terms of the basket pattern is that the basket size in value does not grow at the rate of inflation.
We believe that there are several reasons for this.
First, the pressure on consumer spending triggers changes in shopping decisions, such as substitution for more affordable products or partial holdback in purchase decisions for certain categories. Second, we observe that the factors including but not limited to inventory carryover and competitive market dynamics affect the decision of sellers on and on the platform on to what extent the inflation impact will be reflected.
Last but not least, generally speaking, the pass-through effect of inflation is usually more imminent in categories such as grocery, food and FMTG.
which are actually limited in our GND.
Within this operating environment, our capabilities ranging from 1P, 3P hybrid speed models, the affordability solutions and more have played a significant role in meeting the changing dynamics as we continued our order growth. Now have a brief look at our H1 performance.
Next slide please.
We had reported on an unadjusted for inflation basis as previously, we would have reported 69% GNV growth and 72% revenue growth resulting in a 8.3% gross contribution margin in the first half of the year.
When adjusted for inflation, RGMV and revenue growth in H1 2022 were 3% and 5% respectively. In the same period, gross contribution margin was 4.3%.
29 million orders which correspond to 31% growth, filled by the continuous momentum in the active customers and order frequency, was instrumental in our H1 performance. Now, let's have a look at the second quadrant performance in more detail.
In the second quarter, on an unadjusted for inflation basis, we had 57% GMV growth and 63% revenue growth. When adjusted for inflation, our GMV and revenue declined by 10% and 6% respectively compared to the second quarter of last year.
While we continue to deliver solid order growth at 8% year-on-year basis in Q2, the revenue decline in 1p and 3p operations during this period was mainly due to the limited pass-through effect of inflation to our average order value.
Gross Contribution Margin was 5% in Q2 with a 2.8% decline compared to the same quarter of last year but with a 1.7% improvement compared to the first quarter of 2022.
We believe this quarter-on-quarter improvement underpins the progress in our TASD profitability efforts. Our CFO Korhan will touch upon the underlying reasons in more detail soon.
Another key highlight in Q2 2022 is the fact that we had positive pre-cash flow with 185 million Turkish lira.
Let's move on to the next slide to look into our operational metrics.
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four growth drivers continued their healthy rise on a yearly basis. Our active customer base grew by 18% up to 11.7 million, while frequency grew by 23% up to 5.2 on a year-on-year basis.
This has been achieved with lower marketing spending and higher marketing efficiency.
Our active merchant base increased to nearly 89,000 this quarter. Our comprehensive merchant value proposition and our progress in enhancing merchant experience contributed to this solid increase.
This has contributed to strengthening our product offering where the number of SKUs more than doubled to 130 million as of June 30, 2022.
Last but not least, we maintained our leadership in MPS in the sector, thanks to our excellent customer experience on the back of our technology, logistics capabilities and our wide range of affordability solutions.
While we are pleased to see our leadership in MPS, we continue to innovate for customers with breakthrough technology solutions and services. Let me now share two recent examples on the next slide.
For the second quarter, we achieved two important milestones in Y-Meter customer centric approach. In July , we marked a first in the market by introducing 2GS first new generation smart physical store, Hepsy Borada Smart Store, certifying our top leadership in retail innovation.
In Heftaboda Smart Store, all shopping related transactions are carried out using artificial intelligence, image processing and digital wafer sensor technologies for an easy and convenient shopping experience.
Second, we launched our paid subscription service, Hep C Broda Premium, replacing our early and loyalty graph.
Eximata Premium subscribers have access to a range of benefits. We are glad to see the promising customer interest in this program as the number of members has exceeded 200,000 by mid-September.
Now, I would like to switch gears and give an update on our nationwide logistics network, which is an essential enabler for our customer and merchant value proposition.
Our last mile W service have suggest served through a nationwide logistics footprint and delivered 57% of our orders from the marketplace operations.
Regarding the next day delivery performance, have suggested delivery 83% of the orders on the next day in the second quarter.
With heftyjet Xlarge, heftyjet delivery of oversized items continue its fast penetration.
I suggest Xlarge carried around 75% of oversight items in our 1P operations.
We are proud to have registered a new patent for FCJet's Multi-Vehicle Route Optimization Technology, unlocking further deficiencies in our operation.
On the Fulfillment as a Service, Pepsi Logistics continues to scale its operations by adding 183 clients to its portfolio during the quarter, providing fulfillment services to 513 clients in total.
On the next slide, let's take a deeper dive on our progress with respect to other strategic assets serving our customers as well as our merchants.
Our adtech solutions under Hefty Ads were used by more than 10,000 merchants in Q2 2022. Hefty Ads has been expanding its portfolio of services to include sponsored ads as of most recently.
While the inbound arm of Hepsi Global continues to expand our selection to some 4.4 million, our cross-border outbound operations in Azerbaijan have gone live since the first quarter. Our primary focus in Azerbaijan has remained on advancing user experience and expanding our assortment during the second quarter.
Our online grocery business, Hepha Express, which has been rebranded as Hepha Dibroda Market, continues to expand its ecosystem throughout the quarter to reach 105 retailers.
Pepsi Brata Market, perfect order ratio performed with about 79% in the second quarter, up by 5 percentage point compared to the first quarter of 2022.
Our flight ticket service, Hep C Brata Tehat, enables sales of roughly 37,000 tickets in Q2 from 27,000 a quarter ago. In short, we will continue to diligently operate our strategic asset to help fuel further monetization and incremental growth for the overall ecosystem while consistently improving cost-effective middle models.
On the next slide, I would like to give an update on our financial services.
Within our long-term strategy of becoming a leading fintech player across online and offline channels in Twitje, we are determined to continue to expand our payments and affordability solutions.
Marking its first year of launch, Hefsepay Wallet reached 8 million users as of the end of June .
Around 39% of GMVs pass through the wallet.
Launched in early Q1 2022, our Buy Now Pay Later solution is embedded within FC Pay payment gateway and is currently available for purchases from our direct sales operations.
Using MinarPay later, approximately 500,000 customers were issued a shopping limit and over 100,000 of those customers used their limit as of the end of August 2022.
Regarding solutions like Mine App Elator, we continue to diligently manage Cred
Before I leave the floor to Korhan, let me say a few words on our guidance for the full year.
Please note that, at time of transition to inflation accounting, to provide more context on comparability, we refer to our guidance for GMV growth and EBITDA as a percentage of GMV on an unadjusted for inflation basis.
First, based on my half year performance, we are raising our GMV growth guidance from around 50% to around 60% for the full year 2022 compared to 2021.
Second, while we continue to have the liquidity to fund our operations to help provide additional visibility on this year's performance, we will begin providing guidance for our full year ABCA in 2022.
Accordingly, we expect to deliver NABCA as a percentage of GMV within the range of negative 2.5% to negative 3% which was around negative 6.5% last year.
With this, I now hand over to RCFO Kuran to give more color on our financial performance. Thank you all for listening.
Thank you Murat and welcome everyone. As already mentioned, inflation accounting, in other words, the implementation of IAS 29 standards, has become mandatory for all IFRS reporting companies in Turkey starting from this quarter onwards.
Murat has mentioned the key financial highlights for both the inflation adjusted figures as well as the unadjusted month to ease the understanding of restated financials.
On this slide, I would like to give an overview of what inflation accounting requires and how its implementation impacts our financials.
In IAS 29 required, our comparative financial statements are presented in terms of the measuring unit current as at June 30, 2022. For these statements, the monthly price indexes published by the Turkish Statistical Institute are used which are disclosed in our press release.
Monetary items are not restated while non-monetary items are restated from the date of acquisition.
In addition, we index all our reported non-IFRS measures such as GND and EBT-A.
As shown on this slide, the gross contribution margin from the sale of an administrative item could turn from a positive 3% down to a negative 1.5% when restated as per IAS 29.
Only if a good is purchased and sold within the same calendar month, then this transaction has no impact on gross contribution margins under the implementation of IAS 29.
I will elaborate more on this one in the upcoming slides.
In Q2, on an unadjusted for inflation basis, we generated 9.2 billion TLGND, corresponding to 57% year-on-year growth.
Adjusted for inflation, the GNV became 9.6 billion TL with a 10% decline compared to Q2 of last year.
Let me briefly address why there is some left-lock decline on a year-on-year basis this quarter.
GMB is a function of the growth in number of orders and average order value. We recorded continued order growth during the second quarter at 8% compared to a year ago. This order growth came through the growth in number of customers and the continued rise in the order frequency.
Meanwhile, the growth in average order value was lower than the level of inflation in the second quarter. Actually, in our business model, for the reasons Murat has already mentioned, average order value and inflation rate are not fully correlated due to limited path-through impact of the inflation.
On the next slide I would like to discuss our revenue performance.
On an unadjusted for inflation basis, our revenue grew by 63% in Q2 2022 compared to Q2 of last year.
The 6% revenue decline on an adjusted foreign inflation basis was mainly due to decline in revenue from 1p and 3p with similar underlying reasons discussed in GND growth dynamics.
Additionally, the decline in delivery service revenue was mainly due to decrease in the number of parcels delivered as well as the limited actuary effect of inflation on unit delivery service charges.
Meanwhile, other revenue, which mainly consists of HPSE-S and HPSE-LORISTIC revenue streams, grew by approximately 54%.
Now I would like to discuss our gross contribution performance in the next slide.
Our inflation adjusted gross contribution margin was 5% in the second quarter of 2022 and 8.3% unadjusted for inflation. This difference was mainly driven by higher inflation adjustments on the cost of goods sold.
Securing inventory became critical in order to ensure product availability, particularly in electronic goods in the inflationary environment. As a result, we secured a high level of inventory and had higher inventory turnover rate in Q2, where the average order value growth was realized below the inflation rate per the reasons explained previously. Resulting in 3.3% point decline in inflation adjusted growth contri...
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On the other hand, compared to the first quarter of 2022, our gross contribution margin improved by 1.3 percentage points in the second quarter within the context of slowdown in the monthly inflation rate and with our increased focus on better inventory management. This performance is an indication of our focus on petto profitability.
Next slide, please.
Inflation adjusted net operating expenses as a percentage of GMB was at 11.1% in this quarter, input from 11.6% EU LEGO and 12% in the first quarter of 2022.
0.5% improvement in net operating expenses as a percentage of GNV this quarter was mainly attributable to 1.3% decline in advertising expenses and 1.1% decrease in shipping and packing expenses against 1.9% rise in GNV expenses.
The decline in advertising expenses was a result of savings achieved by enhanced marketing efficiency, including sharpened focus on retention and engagement across the customer lifecycle, as well as the enhanced return on marketing investment in relevant channels while remaining competitive.
The decrease in shipping and packing expenses was on the back of a decline in the number of parcels delivered and the limited pass-through effect of inflation on unit delivery service charges.
The rise in our DNA expenses is a result of several factors including from the annual salary raise and the incremental talent onboarding including the organizational development for strategic assets.
Let's move to the EVTA margin grid on the next slide.
And on the justice for inflation basis, EBCA has a percentage of GMD improved by 0.5 percentage point compared to the second quarter of last year and one percentage point compared to the first quarter of 2022 in line with our focus on pet profitability.
On an adjusted for inflation basis, while the EBTAs as a percentage of GMB declined 2.4 percentage points compared to the second quarter last year, we observed an encouraging quarter on quarter progress with 2.1 percentage point improvement.
The 2.1 percentage point improvement from the previous quarter was mainly attributable to the improvement in our gross contribution margin as well as operating expenses, while 2.4 percentage point decline or neuron comparison was driven by the decline in gross contribution margin and higher DNA expenses with the reasons I have already mentioned above.
Next, I would like to say a few words on our cash flow dynamics.
We generated a positive free cash flow of 185 million TL in the second quarter, around 2 billion TL up from negative 1.8 billion TL in the first quarter. Thanks to the positive cash generation from our operating activities, we have 397 million TL.
Let me briefly walk you through the results behind the free cash flow dynamics from the year on year and quarter on quarter perspective.
From the year-on-year perspective, I would like to shed some light on your creating cash flow in the first place.
The key difference between two periods was the inflationary environment that has required access to inventory for continued product availability.
Therefore, we secure the higher level of inventory and if when necessary, we use either advances or shorter payment terms.
Coupled with 212 million TL capex, we were able to achieve policy-free cash flow with 187 million TL in Q2 2022. However, the amount of cash generated was lower than last year's due to the continuous inventory purchase to secure product availability in the inflationary environment.
From the quarter on quarter perspective, I would like to remind you the reason behind the negative operating cash performance in the first quarter of 2022. Generally we purchase a high level of inventory during Q4 each year due to peak shopping season in Turkey. Usually the payment of a part of such inventory purchases as well as of other service papers fall into the first quarter of the following calendar year.
As a result, even after CAPEX included, we were able to achieve an improvement of 2 billion TL in free cash flow from previous quarters.
Next slide, please.
Our continuous progress towards our petro profitability includes both our monetization and efficiency efforts. In terms of monetization, we are focused on gross contribution margin and strengthen our selection in nonelectronics where profitability is relatively higher.
With affordability solutions becoming more relevant for consumers, we continue to expand our affordability solutions, set and further develop monetization of pin tech services.
In order to support growth of our ecosystem and monetize strategic assets, we expanded our ad services with new capabilities as well as scale fulfillment services consistently.
With our new loyalty program, we aim to gain more value from our customers.
In terms of discipline cost management and operational excellence, we set some efficiency measures on marketing spending and executing consistently with an emphasis on retention and engagement in customer lifecycle and segment-based acquisition. We also maintain discipline in GNA, ensuring efficiencies in organizations, process and systems.
Optimisation in unit economics of statistical tests and patented route in light-mile delivery also will help unlock further efficiency.
Moreover, we control our cash position with focus on better inventory management and effective capex prioritization.
As we deliver on these executional priorities and focus on our discipline cash and cost management approach, we take more tangible steps towards our path to profitability.
Next slide, please.
As I end my presentation, I would like to leave you with a few highlights on our quarter-on-quarter momentum. Overall, our second quarter results on an inflation adjusted basis showed improvement on several lines, including gross contribution margin, advertising expenses and hence EBTAs when compared to the first quarter of this year.
This progress was achieved in the macroeconomic environment with continued challenges.
Looking at acknowledging the challenges and uncertainties, we are confident to increase our GMB growth guidance from 50% to around 60% on an unadjusted for inflation basis.
To provide further visibility on our path to profitability, we would like to share an EBTI guidance for the full years which we expect to end at a range between negative 2.5% to negative 3% on an unadjusted for inflation basis.
We believe we are on the track with our path to profitability and continue to execute the discipline, cash and cost management. With this, I end our presentation. Thank you for listening. Operators, please open the floor for questions.
Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time.
One moment for the first question, please. The first question is from the line of Teyron Cesar with Bank of America. Please go ahead.
Hi, good afternoon or good morning everyone. Thanks for the call and the opportunity to ask questions. I have two questions if that's okay. The first one relates to the free cash flow that you're showing and obviously improving on a sequential basis. But if we compare it to this business which has obviously high seasonality in working capital, so if we compare the free cash flow to 2021, actually there was quite a significant...
high than those such as legendary November in the last quarter. Accordingly, decisionality affects our Q4 historically and it triggers negative operating cash flow in Q1 per the reasons as I explained during my presentation. We buy during Q4 and some part of those payments fall in Q1 and regenerate a negative operating cash. Also, we have 1P, 3P hybrid business model where 1P gives us a unique competitive…
of these factors we continue to seek ways to improve our cash flow performance so that we eventually turn into a post-operational cash generating model for the full years. For this 18 month question...
Let me first clarify that our plan not to raise capital remains valid. We believe that we have the liquidity to fund our operations. We have previously provided a 10-month window on our liquidity position to provide visibility under a very volatile environment, including foreign exchange fluctuations, raising inflation, as well as challenges in the regulatory framework.
But now we have further understanding of this environment, those volatility factors, and we are ready to provide a deeper visibility on our tested profitability by introducing our EBCA guidance. So we expect to improve our EBCA performance from negative 6.5% last year to a range of negative 2.5 to 3% this year on an unadjusted basis.
I hope to see you again soon.
is okay on your side to see that.
Yes, thank you so much. That was very helpful. Thank you.
The next question comes from the line of Holbrook Look with Morgan Stanley . Please go ahead.
Thanks for giving me the opportunity to ask a couple of questions. Just my first, sorry if we're rehashing what you said on the call, but on slide 22, you've got the minus 6.2% EBITDA as a percent of GMV adjusted, and then you've got it 2.7% unadjusted. Can you just go through a bridge a little bit in the delta between the two, and what would your EBITDA guidance be on an adjusted basis for the full year?
Yeah thanks for giving me the opportunity to ask a couple questions. Just my first, sorry if we're rehashing what you said on the call, but on slide 22 you've got the minus 6.2% EBITDA as a percent of GMV adjusted and then you've got it 2.7% unadjusted. Can you just kind of go through a bridge a little bit in the delta between the two and what would your kind of EBITDA guidance be on an adjusted basis for the full year? Thanks.
Well, unfortunately, we are not in a position to give an adjusted basis EBT guidance for the year-end because there are various factors affecting our inflation accounting. Even today, we don't know what the inflation is going to be by the year-end and there are so many factors that we have to take into consideration while calculating the inflation adjusted figures. Thank you.
respective months. So on an adjusted basis, we are, as Murat mentioned, we were not able to increase our average order values in line with the inflation. So the sales prices were not increased in line with the cost of goods sold increases. That resulted in a decrease in the cost of goods sold and consequently the gross contribution margin.
One of the main effects of this is the age of the inventory. If you buy and sell the inventories within the same calendar month, there is no impact. However, if you buy certain amount of inventories and sell in the following month, then the inflation accounting reduces your gross contribution margin. That is the main reason of this difference.
Okay, that's clear. And just a second question is on your GMV guidance for the full year, I guess it would imply in real terms kind of 10% decline year on year at the 60% mark. And I see you've seen order growth slow to up 8% in the last quarter. So just trying to get a handle on that. Is this competitive dynamics? Is this the macro situation? What are you seeing from your side?
Let me take this question, it's Murat speaking. So I guess the first thing to remember is maybe we are operating in an inflation environment and we are remaining focused on our execution according to our plan by applying a discipline cost and cash management within our past profitability. So that's important to remind everyone. And within that context, let me start with the orders first.
When you look at the order growth which is resilient, has been resilient against all these challenges in the market, actually has a couple of drivers behind it. Let me remind you of some of those which will actually help understand our current order growth performance. One actually is to mention first an external factor which is of course the macroeconomic environment. So there is definitely a continuous pressure on consumer spending in the current environment and this affects the consumer behaviours. Our aligned
In terms of their behavior, we observe they tend to shift towards more affordable products and also we observe they are applying potential holdback on certain categories. That is actually one major consumer behavior aspect of it. If you look at our internal drivers, maybe one to mention is the fact that within our discipline cost and cash management, we are and we have been optimizing our service model for RC Buadam Market, previously known as...
also solving the result with improved perfect order ratio. The other one from our internal drivers worth mentioning actually is the fact that we've been also optimizing constantly our marketing execution and our focus on customer lifecycle management which means you will see and you are seeing it already we've been actually emphasizing our focus on retention and engagement and also in the meantime with respect to acquisition we go very segment specific.
such as women and youth segments etc. So we really try to make sure under this environment where the cost of marketing actually is substantially high, we should be also very efficient in terms of marketing channels, which eventually of course affect those numbers which I described. Let me now switch gears to GMV because you also referred in your question to GMV growth versus inflation. Now that I clarified I guess partially on the other side, let me take the next side of the GMV.
The GMV, actually if you look at the numbers in revenue and GMV with respect to the line justice, I guess one of the key drivers, maybe the major driver, is the gap between the AOV, average order value, and the inflation rate. This is important to underline for everyone because in our business model our AOV and the inflation rate are not fully correlated. There are some reasons for it, but let me...
summarize very quickly key reasons for that. One issue is definitely, as discussed, the consumer spending, the pressure on that, and they've been changing their behavior, which triggers this shift towards affordable products as well as partial holdback on certain categories. So that is one, which is much more about consumer behavior. The other one issue is much more about an observation behavior with respect to sellers.
Stenders are also actually getting affected by this dynamic because they cannot create about how much they can reflect on their business in terms of the inflation impact. So therefore to what extent we apply that impact is actually affected by the inventory carryover as well as competitive dynamics on the standard side. So that is another factor we also observe. The final one, last but not least, also is I guess very similar to other markets as well.
maybe, a hypothesis could be, assuming the inflation growth will slow down over the years over time, the lag between selling prices and inflation might narrow down over time. But again, it's a hypothesis at this point, we get to see, observe and monitor. And maybe also I can shed some light on the current training as well. Maybe now that we are speaking about these dynamics, generate high value. As you know, there is no operating.
in the current period, and we are continue to focus on our execution, and we continue to surprise and delight our customers and merchants with our experience and innovation. And also based on the initial feedback so far, from our customers and merchants, we believe our diligent execution seems to resonate with them at this point. And also we observe this initial positive feedback, hopefully it will also be reflected on the growth drivers of our business, including active customers, frequency...
active merchants and selection expansion, as well as hopefully on the GMB side. This I think what we can at least share based on the initial impression we have as of this quarter. Let me stop here, hopefully I was able to address some of your questions. Luke, thank you.
and selection expansion, as well as hopefully on the GMB side. This I think what we can share based on the initial impression we have as of this quarter. Let me stop here. Hopefully I was able to address some of your questions. Luke, thank you. Yeah, perfect. Thank you very much. That was all.
The next question comes from the land of Miss Kilikiran Hajonde with JP Morgan. Please go ahead.
Thank you very much. I have three questions. The first question is about the pre-delivery. What was the share of pre-delivery in total orders so far a year to date? Compared to 2021, how has this changed? You are quite excited about the tax-to-growth premium. I wonder how much are you charging for the loyalty fee here? The second question is about the JMB guidance.
What is the average inflation have you considered on GMB guidance? And can you provide a bit more detail on the guidance for Carter for the Church,' said heater Gary Carter.
handover to actually to call
Thank you.
Okay now at this point let me just briefly I guess I briefly covered what is the current trading momentum at this point and again our initial impression looks like our execution and our focus on experience and all disciplines diligent execution seems to have resonated well with our customs and merchants but of course it is still our early observation with respect to our current trading period. But on top I guess maybe it is worth mentioning for next quarter because you mentioned that for the last quarter.
And I guess like Coran said, there's always a high seasonality in the Turkish retail, online retail and Q4 is actually the peak season for all of us and that's always good to remember. And historically this is the case as it is provided there are no new changes or developments on the consumer macroeconomic environment, they can expect I guess fairly the same high seasonality will continue for the upcoming quarter. That's all we can share and I guess also on top we can...
share this much, we are looking forward to the next quarter to execute our plans accordingly because we are also actively learning from year to date learnings and key takeaways in this environment and we're going to definitely apply all those learnings and best practices and key takeaways to the upcoming quarters. Of course, maybe one final note before I hand over to Korhan. That kind of discipline we have in our execution.
for 3P and for the 3P cargo costs, those are fully covered either by the customer or by the merchants. So our market-based cargo costs are fully covered. The remaining 30 to 35% 1P cargo cost is covered partially by us and the remaining portion, if it's above a certain threshold, we cover the cost. If it's below a certain coverage, then the customer pays for it.
So what is the current charge for the head to premium membership? So that is the one because you still offer premium delivery for all. Maybe if you expect to go to premium, maybe I can share some insight and then please, if you see any ASL program. Basically...
Hepatibular Premium is a very brand new and fresh program, as you know, we introduced recently and we of course are very pleased by the promising demand and initial reaction by the customers and actually in that Hepatibular Premium paid subscription model we are a start number actually we share here on the presentation as well as almost about 200,000 subscribers so it's still relatively in early phase for us with that said, that is actually a program which is currently
for us and to ensure also the referring to our focus on retention and engagement we believe have scored a premium, will eventually play an integral role to drive further engagement and loyalty in our customer base and actually we can see that also looking at the global examples and best practices as well so this is our vision from this program. Let me actually go and stop here and hand over back to you because I now share the... Yeah I will give only two numbers Murat, on our platform, if the order is above 100...
remind us if we forgot to address any questions.
I am trying to understand the positive impact from the new e-commerce law. When do you expect to see the first positive sign from declining spending that's caused by the new law now? Is it possible for you to share a rough calculation at spending at persons of GMB in 23 as a cap? Thank you.
I guess maybe it's fair to say first, it is way too early to assess the impact at this point as some provisions of the new regulatory framework should get effective as of next year onwards. So it's still early phase, but I guess my initial impression and initial review on the law makes us anticipate that this will eventually over time might create a more favorable operating environment for all players.
The reason behind this is the fact that the regulators actually attribute to certain design principles which also seem to resonate with universal standards. The one we actually understand from the perspective is that they try to ensure a more transparent, healthy and fair marketing environment for all players which makes sense for us, of course, obviously. The second, actually, is that they definitely want to prevent any monopolistic practice in the market.
to secure the long term benefits of all stakeholders including customers, SMBs, suppliers and suppliers in general which makes sense for us as well. And that of course but not least, they also want to establish an investor friendly market environment for both domestic and international investors with a much transparent regulatory framework which got defined rules and regulations. And I think again this is on us makes sense. So taking those principles actually believe in general we anticipate a much more...
and moving forward in the new year. But again, let me remind you, this is actually a separate side note, we've been already actively operating with a very conscious improvement in marketing efficiency and spending. So we believe our unique customer experience, which is, as you know, where we are marketed in terms of MPS, and also our kind of well-trained marketing engine, actually will become much more handy in the new world and we are getting already ready for it.
Okay, thank you very much.
As a reminder, if you would like to ask a question, please press star and one on your telephone.
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Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you.
Thank you so much for all listening and actually we are looking forward to the next quarter drillingagship. uplift. reserve.
Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a good afternoon.
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