Q3 2024 D-Market Elektronik Hizmetler ve Ticaret AS Earnings Call
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The presentation will be followed by a question and answer session should anyone need assistance. During the conference call you may see where an operator by pressing star zero on your telephone at this time I would like to turn the conference over to MS. Nielsen on Al Cook genetic gain CEO.
Speaker Change: Mr such schemes <unk>, CFO and MS. Helen song <unk> Investor Relations Director Mr. Bilek, you May now proceed.
Speaker Change: Thanks, Gary and thank you for joining us today for his support US third quarter 2024 earnings call I'm pleased to be joined on the call today by our CEO need hung on August <unk>, and our CFO search can cause so that the following discussion including responses to your questions reflects management's views as of todays date only beyond there.
Speaker Change: Takes no obligation 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 materially from these forward looking statements. Please refer to today's earnings release as well as the risk factors described in the Safe Harbor slide of today's supplemental slides.
Speaker Change: Today's press release, the 6K, our form 20-F filed with the ACC on April 32024, and other SEC filings for information on factors that could cause our actual results to differ materially from these forward looking statements also we will reference certain non <unk> measures during today's call. Please refer to the apparel.
Six of our supplemental slide deck as well as today's press release for a presentation of the most directly comparable <unk> measure and relevant first and then I had friends recon creation as a reminder, a replay of this call will be available on our Investor relations website with that I'd like to hand, the call over to our CEO Neil <unk>.
Neil: Last one maybe I'm wrong and thank you for joining us I'm delighted to be with you today to present, our first quarter results.
Neil: First we are very proud to share the significant milestone in our journey. This quarter marks the first time the achieved quarterly positive operating income since our IPO in our financials.
This accomplishment reflects the strength of our strategy disciplined execution and the dedication of our team now let's dive into the details behind this trough for my kids.
Neil: We have successfully concluded another challenging quarter facing the continued macroeconomic pressures and Kurt purchasing public most of late we delivered double G. A knee growth in EBITDA as a percentage of <unk> guidance in the third quarter.
Neil: Did you just take the fusion during the back to school shopping period and celebrate for the campaign for the second anniversary of Gulf Power's loyalty program contributed to overall euro neogaea knee growth during Q3 on a 10.3% in the third quarter <unk> delivered 17.
Neil: For first time G. Our knee growth in the first nine months compared to the same period last year adjusted for inflation.
Neil: On the profitability side, our gross contribution margin rose to 11, 3% in the first nine months, but the bottom 0.9 percentage point improvement compared to the same period last year.
Neil: Well EBITDA if person to Jong Cheon Lee continued its strong reaching bonkers sand in the first nine months of the year adjusted for inflation. Overall, we are very pleased to have demonstrated continued sustainable growth and improved profitability in the third quarter, maybe you know go into our pipe.
Neil: Four months during the clock today is that let's look at the fuel forward operational metrics our active.
Neil: Active customers grew by 233000 customers booked last point 3 million. Meanwhile, we are pleased to see growing interest in our phenomena loyalty program, which has scaled to nearly $3 7 million members like November that it's Turkey's most recommended E Commerce brand.
Neil: The boss again scored an NPS of 75 customers to identify our speed of.
Neil: Range of affordable again landing solution and their trust in <unk> brother, but as its key factors in their preference for the popcorn corn.
Neil: Corn kindleberger IPO in July of Salon support being launched or do you have your move up at your doorstep product in eight tomorrow equal to get there.
Neil: This marks Turkey's first ever nationwide Dubai renewable program ex yard Palm Doc if convenience was reflected in a vibrant customer satisfaction score.
Neil: I'm happy to note that this initiative is perfectly intact with our sustainability commitment.
Neil: We think so the turf clusters K P. R V recorded Turkey, 2 million orders only 19% year on year growth our order frequency over the past about mass reach some 0.8 up by 16%.
Speaker Change: They must give merchant faisal.
Speaker Change: Almost 100000, B quantity takes time to work it makes them by 33% to 208 2 million at scale to the Onboarding of additional brands, particularly in pitching and lifestyle categories.
Speaker Change: As I do every classic I would like to get a status update on our four strategic priorities. So I like all of our key achievements.
Speaker Change: First of all let's consider our loyalty driver hipster, where other premium broke up building on this momentum we have reached nearly $3 7 million members by November that's driving higher engagement premium members Mazda order frequency rose by 31% after joining the program.
Speaker Change: Members highest frequency.
Speaker Change: Typically contributes to our overall order growth.
Speaker Change: So mark the second anniversary of the programs, we have catch their breath a premium based in mid July offering exclusive campaigns to other premium now by the time the event. It takes us from the two 2 million visits to the platform and 4 million products the order to us.
Speaker Change: Our customer satisfaction is cleared from the program robot.
Speaker Change: What are the net promoter score of eight to four point, which is nine points above or below our overall M. P. At the value of this program for being a strong driver of frequency and catalyst for customer loyalty.
Speaker Change: Next slide please.
That's closer to another strategic priority, namely our differentiating logistic capabilities achieved through hedged as a bolt on peanuts for an off peak iPhone customers hipster.
Speaker Change: Hip suggest continued penetration within our merchant base, because 6.8 firsthand and you're right hipster J D, 174% of total possible, especially during this quarter is confirming its integrity at all in our digital ecosystem.
Speaker Change: It's what it makes passion and oversized parcel deliveries has also been super impressive in Q3 Hipsters ethics Slash stated about six to nine core signs of other oversight costs are up by about four percentage points year on year hits.
Speaker Change: It suggests strong M. P. S underscores its value added service excellence and confirms our commitment to collectible encomiums data where the auction.
Another key strategic pillar hips. Just also continues its off platform expansion and doubling its volume year on year.
Speaker Change: The main point 8 million parcels delivered its fourth pillar for volume corresponded to nearly 35% of total volume in Q2.
Speaker Change: Yeah.
Speaker Change: Let's move on to other strategic priority capitalizing on another clear differentiation through landing solution.
Speaker Change: Our solutions include Inhofe buy now pay later solution in house consumer finance loan shopping laws from partner banks in general purpose non sport shopping go another platform. This proposition is unmatched in the Turkish E Commerce sector and has increased our relevance in this.
Speaker Change: Challenging economic climate there.
Speaker Change: What's really shed off these solutions being G. M is most of the eight 8% up from eight points bumper Santa Claus. So they go its superior user experience is enjoyed by our platform to also buy journey hits the word that its turkeys largest nonbank beyond kiosk solution provider already.
Speaker Change: Beyond Ti volume more than tripled year on year during Q3.
Speaker Change: Moreover, in house consumer finance loans have the highest conversion rate compared to all other partner banks, providing shopping launched another platform. Other Bianca cost of risk was down 2.6 per ton in Q3, it's about two four in line with our projections and pricing assumptions.
Speaker Change: The aim to grow this business in line with profitable Clay is tied the world's shade of Turkey is $40 billion consumer loan market. In this kept us to take we will continue to leverage our solution and also public partner banks to grow above or equal isn't it.
Speaker Change: All the payments pronged hips debate continues to increase its penetration hips are paid tons out in the market with its 10 110.6 million members customers starting to get onto them for 1 million cars by the end of November we are determined to scale of chromium Banca <unk>.
Speaker Change: Kick off promotion pay the types of PE among other retailer also beyond double P. I've thought this solution is older. They didn't like baseball Congress to that just say one key retailer doubling its total payment volume in Q3 compared to Q2, it's the pes remains committed to becoming Turkey go to digital.
Speaker Change: In both physical and online retail.
Speaker Change: Let me take a moment to talk about other November campaign pack formats before I dive into our Q4 guidance. Our preliminary results indicate that this year, we delivered yet another strong performance in November despite all the macroeconomic challenges we recorded the.
Speaker Change: I would say the traffic in our heat study on singles day endeavor platform received 500 million visits during the month the grades of outcome Turkish cosmetics baby and appreciation for our superior service and solution in all of our campaigns in the Pisa Mouthful smell damper and now our guidance for.
Speaker Change: Q4, and its implications for the full yet.
Speaker Change: We executed on our strategic priorities throughout the year, we stayed very focused on achieving sustainable growth and in fact, the other profitability. Accordingly, we expect to deliver that all 75 first time G M liquid alts in the full year. This is roughly 13% growth at justice.
Speaker Change: 40 inflation contest with Atlantic City.
Speaker Change: Such growth will be the end result of a guy who's the 50 to $55 that jammy growth for the fourth quarter on the margin side, our fourth quarter guidance for EBITDA as first time G M B E.
Speaker Change: 1.8 to 12 per cent consequently, our full year EBITDA at Pearsons adult Jammies, they expect us to be at all two point to and two points of I'm sorry, what.
Speaker Change: For Q4 and fiscal year signals continued margin expansion. These figures are adjusted for inflation.
Speaker Change: Before I hand over to say Chicken makes me say a few words on hips, the bread is forthcoming ownership and consolidation.
Speaker Change: Now Coffey has signed on as baby toddler ponder.
Speaker Change: The members of Dom families to purchase a controlling 65.4% they can hit that that approval from the Turkish competition authority, but granted on November 19, the transaction have any sorts of in aggregate for the approval and involved parties expected to be closed in early July.
Five we are extremely excited about the synergies that will arise from this deal.
Speaker Change: S coffee as the preeminent and payments marketplace and Fintech auger system in cause I could stop our shared customers Panther system and service quality orientation.
Speaker Change: For the strong cultural fit Mississippi power stocks that they believed cockpits expertise in feed take technological capabilities and experience will be significant tax spend that a test for that and we are not in a stronger position to remain a preferred companion in the people like they did.
Speaker Change: I think as so much for listening that's indeed, the Florida pitch gets our CFO to provide further insights into all of our strong financial performance.
Speaker Change: Thank you for your time and welcome everyone I'm delighted to be with you today to present, our third quarter results.
Speaker Change: Despite the ongoing macroeconomic challenges I'm pleased to report that we maintained a strong upward trend across all key metrics and our third quarter and nine months results.
Speaker Change: We stand point cheaper sent Jim knee growth in the third quarters are Jim Me Rose 17, 4% in the first nine months compared to the same period of last year.
Speaker Change: On the profitability side, the gross contribution margin rose to 11, 3% during the first nine months with a one nine percentage point improvement compared to the same period of last year.
Speaker Change: Our EBITDA as a percentage of G. M. <unk> continued its right, reaching one two per cent is required to treat and one person in the first nine months of the year.
Speaker Change: Let's go over the details of this performance.
Speaker Change: In the third quarter, Jeremy growth came mainly through solid order growth and hired a O P. When digital products are excluded.
Speaker Change: Fashion and lifestyle appliances, and mobile phones are the top three categories of costs.
Speaker Change: We achieved a gross contribution margin of 11, 5% in quarter two 2024, while our third party logistics business what are the key drivers.
Speaker Change: This expansion was also supported by an easing inflationary impact on our cost of inventory sold in retail operations compared to the same period of last year.
Speaker Change: And of course, they're cheap we reached a milestone with positive operating income EBIT of 32 million TL in their first since our IPO.
Speaker Change: Our EBITDA as a percentage of G. M E continued its right to reach one 2%.
Speaker Change: Is that 1.3 percentage points right year on year when excluding the one off contribution from took commerce towards the settlement of class action lawsuits in quarter three 2022.
Speaker Change: Let's move on to the next slide to see our G. M E breakdown.
Speaker Change: Imports of cheap around 10% of real G. M. D growth came through 32 million orders and the higher average order value.
Speaker Change: This performance results from our value proposition and investments in both our selection and user experience supported by our loyalty program and affordable solutions.
Speaker Change: Our digital products contribute to the order frequency of participating customer statements.
Speaker Change: Excluding these our order growth was at around 5%.
Speaker Change: During quarter, two we saw with four nine percentage point shift towards our marketplace operations compared to quarter three last year.
Speaker Change: In our GPO oppressions corresponded to around 70% of our business.
Speaker Change: This shift came as a result of a two six percentage point shift towards none electronics, which is in line with our broader strategy.
Speaker Change: Let's have a look at our revenue and gross contribution dynamics.
Speaker Change: First some color on the babies.
Speaker Change: Our revenue grew by one 7% in quarter T, bringing our revenue growth in the first nine months to 13, 5% compared to the same periods of last year.
Speaker Change: Quarter, three revenue growth was mainly due to a 6% rise in G. P revenue.
Speaker Change: 47% increase in delivery service revenue and 82% increase in other revenue.
Speaker Change: These were partially offset by the 9% decrease in our a bumpy ride with you compared to quarter two 2023.
Speaker Change: The decline in <unk> revenue was mainly due to a four nine percentage point shift in G. M D mix towards TP.
Speaker Change: The gross contribution margin improved by two points, one percentage points to 11, 5% in court to cheap compared to car T 2022.
Speaker Change: This margin improvement was mainly attributable to our strategic priority to expand our logistics and Fintech services to third parties.
Speaker Change: One P margin expansion, primarily due to the impact of higher discounts on cost of inventory sold due to purchases on credit.
Speaker Change: And scaling our advertising services and our loyalty program.
Speaker Change: Let's move on to our ABC sarcomas over the next slides.
Speaker Change: We recorded $1 two first time to J P E as a percentage of G. M medium courses cheap with a one two percentage points yearly improvement.
Speaker Change: Excluding the one off item from quarter three of last year.
Speaker Change: It's two 1% rise in gross contribution margin partially offset by.
Speaker Change: 0.4.
Speaker Change: First time at this point drives and payroll and also stuff expensive 0.3 percentage points rise in shipping and packaging expenses and the 0.1 percentage right and advertising expenses.
Speaker Change: The rise in payroll in outsource stuff expenses came from the rise of <unk>.
Speaker Change: E a number in line with our tenant onboarding for our subsidiary.
Speaker Change: The increase in shipping and packaging expenses as a percentage of G. M. D was mainly driven by higher parts of the balloon and the rising delivery fees per unit due to the fuel price and annual minimum wage rises outpacing average inflation in course of cheap compared to loss of PS.
Speaker Change: Next let's take a look at our cash flow dynamics.
Speaker Change: In quarter, two 2024 cash provided by operations decreased by $1 2 billion compared to a year ago.
Speaker Change: This decrease was mainly due to a $1 4 billion decrease in monetary gains on operating activities.
Speaker Change: Mainly on trade payables due to lower inflation.
917, yoga and T. A decrease in realized FX gains.
Speaker Change: Against at $682 million increase in the change in networking capital and the 376 million TL increase in EBITDA.
Speaker Change: With 359 million TL in Capex.
Speaker Change: Our free cash flow was around one 6 billion tee up in quarter two 2024.
Speaker Change: Considering the first nine months, we delivered nearly $2 1 billion TRP test rule on our continued cash discipline.
Speaker Change: Next slide please.
Yeah.
Speaker Change: We'll leave you with the following.
Speaker Change: [noise] away from today's presentation in quarter, three 2024, we recorded real double digit Jim equal.
Speaker Change: Building on our strategic priorities, we marked a milestone with positive operating income in our financials for the first time since our IPO.
Speaker Change: Supported by the two point bump percentage points rise in gross contribution did ryzen EBITDA continued to nearly 500 million T. S corresponding to one 2% of G M B in courts it cheap.
Speaker Change: Having posted solid results in the turf quarters, you remain committed to growing sustainably and profitably going forward.
Speaker Change: With the expected forthcoming ownership transition to coffee.
Speaker Change: We are entering a new period in hips, the ROE that's history.
Speaker Change: Thank you for listening we can now open the line for questions.
Speaker Change: Ladies and gentlemen at this time, we will begin the question and answer session anyone who wishes to ask a question press star followed by one on their telephone if you wish to remove yourself from the question queue. Then you May press star two.
Speaker Change: Those participating participating via the webcast you may type your question via the live feed back books throughout the presentation for those participating in the audio questions and answer session.
Speaker Change: Have someone asking a question for better quality anyone who has a question press star one at this time one moment for the first question. Please.
Speaker Change: Yeah.
Speaker Change: Once again to register for and audio question. Please press star and one on your telephone.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: As a reminder, if you would like to ask a question. Please press star and one on your telephone.
Speaker Change: There are no audio questions at this time I will now pass the floor to MS. I'd say look my leg to a REIT I've written questions. Thank you.
Speaker Change: Thank you Kelly one question is on our expectations for 2025, how do you think about macro landscape on your humanity to potentially shrinking demand into care.
Speaker Change: So first of all pending at this should remind that Turkey is a bit of high potential concept for equal nurse large population with eight 2 million household things down there to vantiv for your salt high mobility and with large incidents equaled nuts.
Speaker Change: So do you believe in long term potential of the market next six to nine months that will be shrinking in the math for the collection of that product are in.
Speaker Change: Following the much more Orthodox funding from the government. We think this is beneficial.
Speaker Change: For long term in Turkey, not in short term, we have significant building blocks to really run it through these periods in there has to be blunt hits, the Buda raw prices offered at a great value for customers during macroeconomic challenges.
Speaker Change: We have divided the options for landing services at beach means that consumer in the time, they need affordability they'll get more and more of the third of our premium offer premium loyalty program all perfect great.
Speaker Change: Service demo forecast for myself not shack, yes next six to nine months is going to demand certain.
Speaker Change: Immunity from the detailed list players I picked the Buda because the vantiv five years experience in Turkey in tough times and better times N V I relate it to drive it through the state.
Speaker Change: Thank you need huh.
Speaker Change: Another question is about our loyalty program. The question asks about our long term targets with regards to the program and its growth potential.
Speaker Change: Perfect So hey.
Speaker Change: So what are the premium program is very critical for future don't pick it up without that.
Speaker Change: Once the consumer interest this program takes the amazing value proposition pretty cargo for easy to learn from your door, 3% Cashback and with Warner Bros. Package included and this offers great service.
Speaker Change: Consumer Sunday insert this broke down the frequency is increasing by 30% and we have been in for Ya just three exceeded our two year Mark the older Red Dead is three points. Several Emilia Mommy look into video developed E Commerce market places like a <expletive> NASCAR dog D. C. That's all.
Speaker Change: Most powerful stayed active customers is now part of their loyalty program off because they just can't huh.
Speaker Change: These should designate the espy, though as fast forget that is powerful for our customers said that this would be our long term objective, but the key thing is how staining in amazing value for our customer retaining they just strong game P. S. Keeping premium is a growth of ideas for hips, the breath of group.
Speaker Change: Yeah.
Speaker Change: Alright, Thank you for that Oh, we have another question coming up.
Speaker Change: Will you be reading the question. Please yeah of course, so we have from our webcast participant around that God, Yeah I.
Can you share data on volume or transactions on Hep C wallet and take rate on the same.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Do you want me to read the rest of them as well.
Speaker Change: No well I will answer this one okay. Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: The current transaction volume going over the wall that is basically a predominantly our e-commerce volume.
Speaker Change: So based.
Speaker Change: Based on our 30 plus million orders over two quarters.
Speaker Change: Yeah.
Around 85% of this volume is going towards through the books.
Speaker Change: Thank you.
Speaker Change: The next question is from the line of Jamie, let's laugh, whether it be our capital could you. Please clarify the 1.2% EBITDA in Q3 actual compared to 2.2% guided in September.
Speaker Change: The difference is basically the adjusted and unadjusted numbers. If you are giving guidance on unadjusted EBITDA growth.
Speaker Change: So.
Speaker Change: In terms of Unadjusted EBITDA. A result is in line with the guidance that you have provided.
Speaker Change: And at one point.
It's always in line with the adjusted numbers in our financials.
Speaker Change: Thank you.
Speaker Change: And the next question is from our webcast per participant Mcadam, who said that with K C. A why is there no increase in active merchants for the past eight quarters in a row.
Speaker Change: I can answer this question so with other active merchant and he actually we are covering.
Speaker Change: Most of the high potential heat on merchants in Turkey.
Speaker Change: Our cockpits with this merchant is quite element in our connection resolved, which is increasing gave this quarter. So we are looking for quality of the merchants over quantity.
Speaker Change: We want to work with high potential merchant that we'll be opportunistic real July southern cone films, and we believe that overtime overactive merchants basically little say increase but for now we have been working on monetizing its merchant base.
Speaker Change: This high retention, serving dominates the whole logistics services, bringing them to our successful bond connect execution is that last quarter I want to give some like 12 or active merchant numbers right. They did something today, So Turkish government created a new tool.
Speaker Change: The authentication and verification mechanism developed it they've seen a different number but with this new higher bar, which was quite sad for hires take to resolve the transaction.
Speaker Change: Have you seen that and halting dock.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: And Ah. Another question is from icon defeat with could you tell us.
Speaker Change: Do you think that collaborations with Bluetooth will be affected by caspase acquisition.
Speaker Change: So we don't see the collaboration is a very strategic and important one as you know recently Blue T. V's they acquired by broadening our Bronx N V made a five year deal with them exclusive deal with Thomas Cook, yet, we don't expect any negative impact the saturation and extra labor.
Speaker Change: TV just announced today on station to make.
Speaker Change: This amazing content next year and they also highlight that their partnership in this press release and they are do you like the types of or the premium flows out probably had.
Speaker Change: For acquiring new customers through their life program as math. So we are quite excited about the makes the non seizure N V think b, a b well content side the strong collaboration in the coming five years as well.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: And the next question is from the line of afraid at the from our webcast participant Fredrik, Quebec with S. G. C. M. What are your plans to in source your Fintech segment with the help of Cafe.
Speaker Change: Stop security I think or outsourcing to bags.
Speaker Change: Sorry, I will not create a five bucks.
Speaker Change: Enforced means.
Speaker Change: Let's move to the next question, while the Crazy Thursday.
Speaker Change: Yes.
Speaker Change: Okay. Thank you and our next question is from Cat M. Go so far with P. C. A.
Speaker Change: Cash outflow from early collection of credit card receivables is higher than EBITDA. When do you expect EBITDA a C C Commission to turn positive.
Speaker Change: Thanks, a lot for this question actually if he gets he he's got improving our EBITDA quarter over quarter.
Speaker Change: And in the.
The interest rates have increased versus last year significantly and the credit card costs have gone up as well.
Speaker Change: But going forward it is.
Speaker Change: Is the overall interest rates in the country.
Speaker Change: We are going to be decreasing gradually in line with inflation.
We will continue to increase our profitability. So this desktop.
Speaker Change: <unk> build a close and we will definitely be having a positive.
Speaker Change: EBITDA minus a credit card.
Speaker Change: Costs are in the next two years.
Speaker Change: Thank you.
Speaker Change: And from an AR or not Gadhia from Don Ross what is the take rate of underlying interest rate on B M. P. L loans.
Speaker Change: The bianco loans have a different annualized interest rates, depending on the number of installments.
Speaker Change: So it ranges from eight to 200 person, but on average every time coach it at all.
Speaker Change: Thanks to 5% including tax.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: I think I got the dish stopped equates to MAU from Treasury as well so first of all of her beyond yeah, and hips, the rudder finance loans Solutia.
Speaker Change: It is done through our own P&L. This is half of our outstanding loans and the other half.
Speaker Change: She is constituted by shopping loss N G. P S.
Speaker Change: It's coming from banks.
Speaker Change: Our current strategy is quantity of offering our customers as to why the spectrum of services that is email content with general purpose loan mystery they'll be lifetime, it's multiple banks if the marketplace getting the best thing is my kids to be continual freaks.
Speaker Change: Are they just strong beyond Piet and hips, they finance loan proposition. So far this is a strategy. We don't go in and they change and obviously, if we would have new news to share with you we would share it in the following call.
Speaker Change: Thank you.
Speaker Change: As a final reminder, if two to register for a question. Please press star and one on your telephone.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: 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.
Speaker Change: Viva la thanks, so much for listening and trusting catch the world that'd be an exhausted them all of our future and in case, we don't talk before we would like to wish you all made it because most and happy new year. Thank you.
Speaker Change: Ladies and gentlemen, the conference has now concluded and you may disconnect. Your telephone. Thank you for calling and have a good afternoon.
Speaker Change: Okay.
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