Hepsiburada Announces Third Quarter 2021 Financial Results
D-MARKET Electronic Services & Trading, operating as Hepsiburada (NASDAQ: HEPS), reported its Q3 2021 financial results, showcasing a 49.8% increase in Gross Merchandise Value (GMV), reaching TRY 6.5 billion. Despite the remarkable GMV growth, revenue slightly decreased by 0.8% year-over-year to TRY 1,658.3 million. The company faced significant net losses of TRY 778.4 million, attributed to higher customer discounts and intensified competition. Active customers rose 26.1% to 10.7 million, reflecting continued engagement. Management remains optimistic, projecting around TRY 24 billion GMV for 2021.
- GMV increased by 49.8% year-over-year to TRY 6.5 billion.
- Number of orders surged 71.5% to an all-time high of 13.8 million.
- Active customers rose by 26.1% to 10.7 million.
- Marketplace GMV reached 70% of total GMV, up from 57% in Q3 2020.
- Revenue decreased by 0.8% year-over-year to TRY 1,658.3 million.
- Net loss expanded to TRY 778.4 million, up from TRY 79.6 million in Q3 2020.
- EBITDA was negative at TRY 659.4 million, down from positive TRY 8.9 million.
ISTANBUL, Nov 23, 2021 /PRNewswire/ -- D-MARKET Electronic Services & Trading (d/b/a "Hepsiburada") (NASDAQ: HEPS), a leading Turkish e-commerce platform (referred to herein as "Hepsiburada" or the "Company"), today announces its unaudited financial results for the third quarter ended September 30, 2021.
Third-Quarter 2021 Financial and Operational Highlights
- Gross merchandise value (GMV) grew by
49.8% compared to Q3 2020, reaching TRY 6.5 billion. This growth was achieved against a strong baseline from the Covid-19 pandemic last year, and was driven by strong order growth supported by our progress in our growth drivers as well as robust NPS performance. In the first nine months of 2021, GMV growth was54.9% compared to the same period in 2020. - Number of orders increased
71.5% to 13.8 million, an all-time quarterly high, compared to 8.0 million orders delivered in Q3 2020. In the first nine months of this year, the number of orders increased53.6% compared to the same period in 2020. - Active Customers reached 10.7 million from 8.5 million in Q3 2020 on
26% increase. Frequency grew to 4.4 in Q3 2021 from 3.7 in Q3 2020 on21% increase. - Active Merchant base increased to 67 thousand from 36 thousand in Q3 2020 while number of SKUs reached 77 million as at September 30, 2021 compared to 37 million at September 31, 2020.
- Share of Marketplace GMV reached
70% , compared to57% in Q3 2020, reflecting our commitment to a hybrid business model. The GMV shift to Marketplace is expected to result in long-term strategic advantages, enabling a wider selection of products with improved availability across long-tail products and services. - Revenue slightly decreased by
0.8% compared to Q3 2020, reaching TRY 1,658.3 million. Despite the49.8% GMV growth, the revenue outcome is mainly a reflection of the shift in GMV mix in favor of Marketplace and an increase in customer discounts in response to slowdown in market growth rate and intensified competition. - EBITDA was negative TRY 659.4 million in Q3 2021 compared to positive TRY 8.9 million in Q3 2020. The decline is mainly due to lower gross contribution driven primarily by higher customer discounts offered to stimulate customer demand. These discounts were also supported by an increase in advertising. Compared to Q3 2020, we experienced higher unit cost of advertising. As a result, net loss for the period was TRY 778.4 million compared to a net loss of TRY 79.6 million for Q3 2020.
- Free cash flow was negative TRY 639.0 million, compared to negative TRY 76.5 million in Q3 2020, driven by the increase in cash flow from operating activities to negative TRY 582.4 million which is mainly due to the TRY 698.8 million increase in our net loss for the period.
Commenting on the results, Mr. Emirdag, CEO of Hepsiburada said: "In the third quarter, we observed challenging market conditions with competition intensifying and online consumer activity slowing as Turkey began to emerge from the COVID 19 restrictions. We responded to this new environment by increasing total customer discounts and expanding advertising and marketing spend. However, we also continued to invest in our growth drivers, brand, customer and merchant experience, and our infrastructure across operations, logistics and technology. As a result, we saw strong momentum in growth drivers of our business including active customers, order frequency, active merchants, and selection. Our NPS performance is a strong sign of the value of our differentiated customer experience, including frictionless return. Furthermore, considering the encouraging progress in our strategic assets, particularly HepsiPay, HepsiExpress and HepsiJet, we believe we are well positioned for long-term value creation.
Based on the current trends, we expect to achieve around TRY 24 billion GMV in 2021. As the Turkish e-commerce market is expected to double its penetration within total retail by 2025, we are committed to delivering on our drivers of sustainable growth, key differentiators and strategic assets with a disciplined cash management."
Summary: Key Operational and Financial Metrics
The following table sets forth a summary of the key operating and financial data for the three months and nine months ended September 30, 2021, and September 30, 2020. The following table contains selected quarterly operational and financial information derived from our unaudited quarterly and nine months consolidated interim financial information, which are reported under IFRS applicable to interim financial reporting. The interim consolidated financial information included herein have not been audited.
(in TRY million unless indicated otherwise) | Three months ended | Nine months ended | |||||
2021 | 2020 | y/y % | 2021 | 2020 | y/y % | ||
GMV (TRY in billions) | 6.5 | 4.3 | 16.8 | 10.9 | |||
Marketplace GMV (TRY in billions) | 4.5 | 2.4 | 11.7 | 6.3 | |||
Share of Marketplace GMV (%) | 13pp | 11pp | |||||
Number of orders (millions) | 13.8 | 8.0 | 36.1 | 23.5 | |||
Active Customer (millions) | 10.7 | 8.5 | 10.7 | 8.5 | |||
Revenue | 1,658.3 | 1,671.7 | ( | 4,798.9 | 4,176.0 | ||
Gross contribution | 280.0 | 380.6 | ( | 1,187.3 | 1,065.8 | ||
Gross contribution margin (%) | (4.5pp) | (2.7pp) | |||||
Net loss for the period | (778.4) | (79.6) | (1,339.8) | (151.7) | |||
EBITDA | (659.4) | 8.9 | n.m | (951.6) | 94.9 | n.m | |
EBITDA as a percentage of GMV (%) | ( | (10.4pp) | ( | (6.6pp) | |||
Net cash provided by operating activities | (582.4) | (47.8) | n.m | 44.6 | 182.9 | n.m | |
Free Cash Flow | (639.0) | (76.5) | n.m | (92.3) | 120.1 | n.m | |
Note that EBITDA and free cash flow are non-IFRS financial measures. See "Presentation of Financial and Other Information" section of this press release for a definition of such non-IFRS measures, a discussion of the limitations on their use, and reconciliations of the non-IFRS measures to the most directly comparable IFRS measures. See the definitions of metrics such as GMV, Marketplace GMV, share of Marketplace GMV, gross contribution, gross contribution margin, EBITDA as a percentage of GMV and number of orders and Active Customer in the "Certain Definitions" section of this press release.
Financial Outlook
The below forward-looking statements reflect Hepsiburada's expectations as of November 23, 2021, considering trends year to date and could be subject to change, and involve inherent risks which we are not able to control. The financial outlook is based on management's current views and estimates with respect to market conditions, customer demand, the uncertainty of the continuing impact of the COVID-19 pandemic, and the broader competitive environment. Please refer to the Forward Looking Statements section below. Management's views and estimates are subject to change without notice.
Based on the recent performance and current outlook, as we reported on November 12, 2021, our guidance of full year 2021 GMV is at around TRY 24 billion.
We remain committed to our long term value proposition and to delivering on our drivers of sustainable growth, key differentiators, strategic assets and value-added services for customers and merchants with a disciplined cash management, which we believe will result in long-term value for our company and shareholders. We believe in the significant long-term market opportunity in the digitalization of the Turkish market. As we address these growth opportunities, we have no plans to go to capital markets to raise any funds in the next 18 months.
Key Business Developments
GMV and Order Growth
Our Q3 2021 GMV grew by
Total number of orders in the third quarter was 13.8 million, a
The GMV growth was achieved via a larger Active Customer base and rising frequency since our Active Customer base increased to 10.7 million in Q3 2021 from 8.5 million in Q3 2020 while our frequency grew to 4.4 in Q3 2021 from 3.7 in Q3 2020. Our last twelve month GMV per Active Customer grew by
Marketplace
In the third quarter, Marketplace's share of overall GMV rose 13 percentage points to
In line with our strategy, we continued to provide a set of value-added-services to our merchants on our platform. As such, during the third quarter, our last mile delivery service, HepsiJet delivered around
We continued to make it easy for our merchants to maximize their success on our platform by providing them with a comprehensive set of advanced tools and services. Our merchant portal and proprietary merchant store management tools contribute to efficiency both from the merchant and the platform perspective and help to boost their sales. We continuously invest in enhancing the toolkits on our merchant portal and, in the third quarter, introduced new capabilities regarding campaign management as well as financial performance analytics. Furthermore, we developed a new merchant app, namely HepsiPartner, which became available in app stores in November. We believe HepsiPartner app will bring along further convenience and efficiency for our merchants.
As the total number of SKUs on our platform reached 77 million at the end of the third quarter, we successfully onboarded one of the leading local department stores in Turkey (Boyner) and one of the leading mother and baby product retailers (ebebek) among others. During the past 12 months, over 50 thousand brands were introduced on our platform, expanding our selection largely in fashion & lifestyle, books & hobbies and home & garden domains. In the third quarter, HepsiGlobal Inbound also continued to increase its selection nearly by five times compared to the previous quarter by onboarding nearly 300 additional merchants.
Customer Experience
Based on the results of the market research by Future Bright (a local research company) conducted for Hepsiburada, our NPS performance marked the highest at
As a household brand name in Turkey with
Being instrumental to our strong performance in customer experience, HepsiJet is highly focused on increasing its delivery speed through its operations in 81 cities with 153 cross-docks and around 1,800 carriers as of the end of the third quarter. In the third quarter, HepsiJet delivered
With regards to delivery speed, in the third quarter, we introduced an option to filter "Next-day Delivery" products across our platform, facilitating further convenience. Our aim is to widen the range of such products across the platform as we partner with more merchants committing to this operational speed.
By the end of October 2021, our logistics footprint reached over 190 thousand sqm, following the rental of a new warehouse in Tuzla (Istanbul) along with the rise in number of transfer hubs from 9 to 14.
Thanks to our robust logistics capabilities, we offer "frictionless return" where we pick up returns from customers' doors at their preferred schedule across the country at no additional fee (subject to certain exceptions). To our knowledge, we are the only e-commerce player that offers this service in Turkey. With this service, we were awarded with the Golden Stevie at the International Business Awards in the "Best User Experience" category in October.
During the quarter, HepsiJet also expanded the coverage of cities where it provides the two-man cargo handling service, called HepsiJet XL, and began offering scheduled return pick-up for such oversized products. Addressing the need for high quality and reliable service in that particular segment, HepsiJet's two-man cargo handling service is highly appreciated by customers, recording nearly
New Strategic Assets: HepsiPay and HepsiExpress
With its license to operate as an open wallet, HepsiPay aspires to evolve into best-in-class payment companion enabling frictionless platform experience across payments, money transfers, and incremental fintech capabilities across online and offline.
Since its debut in June 2021, HepsiPay has continued its rapid penetration, recording 2.7 million HepsiPay Wallet customers and TRY2.4 billion GMV passing through its wallet as of the end of October.
HepsiPay is focused on developing new use cases linked with the Hepsipay Wallet and payments landscape including seamless integration with other Hepsiburada assets.
HepsiPay is also expanding its partner ecosystem. Accordingly, in November, HepsiPay has agreed with Paycell, a fintech subsidiary of Turkey's leading telecom operator Turkcell, to enable direct carrier billing capability at HepsiPay Wallet. By doing so, Turkcell subscribers will be able to shop at Hepsiburada without a credit or debit card.
HepsiExpress, our on-demand grocery delivery service with instant and slotted delivery options, had expanded its ecosystem to include over 50 brands and roughly 1,950 stores at the end of the third quarter.
Aiming to offer the widest selection for grocery shopping, HepsiExpress continues its progress in its partnership ecosystem. Migros, a leading national retailer, also agreed to join our HepsiExpress partner ecosystem in November.
By the end of the third quarter, HepsiExpress delivery resources (i.e. pickers, vehicles and motorbikes) exceeded 3,400. With its scaled operational resources and optimization efforts, HepsiExpress has increased its daily order capacity.
The introduction of cross-service search capability provided easy product discoverability as well as frictionless price and product portfolio comparison among different stores. By expanding into adjacent offerings such as Water and Flower, HepsiExpress began providing a greater spectrum of services in a hyper-localized way. Moreover, HepsiExpress enlarged its addressable audience by accepting payments via debit card.
Social Consciousness, Diversity and Inclusion
Our "Technology Empowerment for Women Entrepreneurs" program providing numerous benefits to women entrepreneurs on our platform covered approximately 24,000 entrepreneurs from across Turkey as at the end of the third quarter. Since August, through our collaboration with one of the mid-tier banks in Turkey, women entrepreneurs in our program have easier access to funding alternatives. We remain committed to continuing this inspirational program which was awarded with The Stevies For Women in Business in November.
In July, together with TOBB (Union of Chambers and Commodity Exchanges of Turkey), we initiated the "HepsiTurkiye'den" program ("Everything from across Turkey") which gathers over three thousand long-tail products from local manufacturers and entrepreneurs with local practices including specialty food products, traditional handcrafts, organic farming and such with a geographical indication. By doing so, we aim to provide wider reach to local selection from local manufacturers and entrepreneurs.
Hepsiburada Financial Review
(in TRY million unless indicated otherwise) | Three months ended | Nine months ended | |||||||||
2021 | 2020 | y/y % | 2021 | 2020 | y/y % | ||||||
GMV (TRY billion) | 6.5 | 4.3 | 16.8 | 10.9 | |||||||
Marketplace GMV (TRY billion) | 4.5 | 2.4 | 11.7 | 6.3 | |||||||
Share of Marketplace GMV (%) | 13pp | 11pp | |||||||||
Revenue | 1,658.3 | 1,671.7 | ( | 4,798.9 | 4,176.0 | ||||||
Gross contribution | 280.0 | 380.6 | ( | 1,187.3 | 1,065.8 | ||||||
Gross contribution margin (%) | (4.5pp) | (2.7pp) | |||||||||
Net loss for the period | (778.4) | (79.6) | (1,339.8) | (151.7) | |||||||
EBITDA | (659.4) | 8.9 | n.m | (951.6) | 94.9 | n.m | |||||
EBITDA as a percentage of GMV (%) | ( | (10.4pp) | ( | (6.6pp) | |||||||
Net cash provided by operating activities | (582.4) | (47.8) | n.m | 44.6 | 182.9 | n.m | |||||
Free Cash Flow | (639.0) | (76.5) | n.m | (92.3) | 120.1 | n.m | |||||
Revenue
(in TRY million unless indicated otherwise) | Three months ended September 30, | ||||
2021 | % of Revenues | 2020 | % of Revenues | y/y% | |
Sale of goods1 (1P) | 1,432.5 | 1,420.8 | |||
Marketplace revenue2 (3P) | 30.0 | 151.1 | ( | ||
Delivery service revenue | 173.3 | 94.9 | |||
Other | 22.5 | 4.9 | |||
Revenue | 1,658.3 | 1,671.7 | ( | ||
1: In 1P model, we act as a principal and initially recognize revenue from the sales of goods on a gross basis at the time of delivery of the goods to our customers.
2: In 3P model, revenues are recorded on a net basis, mainly consisting of marketplace commission, transaction fees and other contractual charges to the merchants.
Revenue slightly declined by
In contrast to the
The
The increase in other revenue is mainly driven by the increase in HepsiAd (our advertising platform) and HepsiLojistik (our fulfillment services provider) revenue streams. As one of our promising strategic assets, HepsiAd successfully penetrated to our merchant base with its enhanced advertisement offering.
Gross Contribution
(in TRY million unless indicated otherwise) | Three months ended September 30, | ||||||||||
2021 | % of Revenues | 2020 | % of Revenues | y/y% | |||||||
Revenue | 1,658.3 | 1,671.7 | ( | ||||||||
Cost of inventory sold | (1,378.3) | ( | (1,291.1) | ( | |||||||
Gross Contribution | 280.0 | 380.6 | ( | ||||||||
Gross contribution margin (% of GMV) | (4.5pp) | ||||||||||
Our gross contribution in Q3 2021 compared to the same period of last year declined
Our Marketplace gross contribution reflects our Marketplace commission net-off customer discounts. Calculated on a weighted average method, our average Marketplace commission rates, that we charge our merchants on the Marketplace, remained at around the same levels in the third quarter compared to the same period last year. Marketplace commission rate that we are able to charge to our merchants is in the high single digits on average.
Operating Expenses:
Below are our operating expenses for the three months ended September 30, 2021 and 2020 in absolute terms and as a percentage of GMV:
(in TRY million unless indicated otherwise) | Three months ended September 30, | ||||||||
2021 | 2020 | y/y% | |||||||
Cost of inventory sold | (1,378.3) | (1,291.1) | |||||||
% of GMV | ( | ( | 8.6pp | ||||||
Shipping and packaging expenses | (239.3) | (130.7) | 83.1 | ||||||
% of GMV | ( | ( | (0.7pp) | ||||||
Payroll and outsourced staff expenses | (196.3) | (76.7) | |||||||
% of GMV | ( | ( | (1.2pp) | ||||||
Advertising expenses | (461.3) | (139.3) | |||||||
% of GMV | ( | ( | (3.9pp) | ||||||
Technology expenses | (13.2) | (8.2) | |||||||
% of GMV | ( | ( | 0.0pp | ||||||
Depreciation and amortization | (37.3) | (23.4) | |||||||
% of GMV | ( | ( | (0.1pp) | ||||||
Other operating expenses, net | (29.3) | (16.8) | |||||||
% of GMV | ( | ( | (0.1pp) | ||||||
Operating expenses, net | (2,355.0) | (1,686.1) | |||||||
Operating expenses as a % of GMV | ( | ( | 2.6pp | ||||||
Our net operating expenses increased by
While we achieved strong growth in customer, frequency, merchant, and selection metrics, the GMV growth became more costly under the intensified competitive environment as both the need for advertising and the unit cost of advertising continued to increase.
The rise in net operating expenses was also driven by the increase in shipping and packaging expenses, driven by the
Net operating expenses as a percentage of GMV decreased to
Share Based Payment
The Company adopted a share-based payment plan for its key management personnel the details of which are outlined in our registration statement on Form F-1 filed in connection with our initial public offering ("IPO"), under the heading of "Incentive Plan". This plan includes both cash and equity settlement clauses. As disclosed in the registration statement, the portion related to the cash settlement payments were based on the occurrence of a successful IPO process. With the closing of the IPO in July of this year, the necessary conditions were met and the Company paid the cash settled part of the plan in Q4 2021 in the amount TRY 121.1 million.
The equity settled payments are triggered upon meeting certain "vesting" and "performance target" conditions. Payments related to the vesting condition will be made partially on a pro rata basis the next three specified terms in accordance with the service period of the key management personnel considered within this program. As at 30 September 2021, the Company accounted TRY 69.6 million of these share-based payment plans on a pro-rata basis under the equity.
As of September 30, 2021, no share-based payment provision has been recognized for the performance target-based payments since the relevant criteria have not yet been set.
Financial Income
Our financial income, which consists of foreign currency exchange gains, interest income and other financial income, increased by
Financial Expenses
Our financial expenses, which consist of foreign currency exchange losses, interest expenses, credit card commission expenses and other financial expenses, increased by
Net Loss for the Period
Net loss for the period increased by TRY 698.8 million, to TRY 778.4 million in Q3 2021 as a result of the factors mentioned above.
EBITDA
EBITDA was negative TRY 659.4 million, compared to positive TRY 8.9 million in Q3 2020. This corresponds to a 10.4pp decline in EBITDA as a percentage of GMV in Q3 2021 compared to the same period last year. This was driven by 4.5pp decrease in gross contribution margin, 3.9pp rise in advertising expenses, 1.2pp rise in payroll & outsource staff expenses and 0.8pp rise in other opex items excluding the cost of inventory sold and depreciation and amortization.
Capital Expenditures
Capex was TRY 57.0 million for the three-month period ended September 30, 2021 compared to TRY 28.7 million in the prior year period. Our investments were mainly for product developments across app, website and mobile platforms as a result of our growing operations as well as purchase of property and equipment.
Cash Flow From Operating Activities
Our net cash used in operating activities comprises of net loss for the three-month period ending September 30, 2021 amounted to TRY 778.4 million (Q3 2020: net loss of TRY 79.6 million), change in net working capital amounted to TRY 23.4 million (Q3 2020: negative TRY 54.3 million) and change in other (comprising of non-cash items such as provisions and depreciation expenses) amounted to TRY 172.7 million (Q3 2020: TRY 86.1 million).
Net cash used in operating activities increased by TRY 534.5 million, reaching negative TRY 582.4 million in Q3 2021 as compared to Q3 2020. Although we improved the change in net working capital to TRY 23.4 million in Q3 2021 from negative TRY 54.3 million in the same period of last year, the decrease in our net cash used in operating activities is mainly a result of increased net loss for the period reaching to TRY 778.4 million.
Net Working Capital
Net working capital increased to TRY 2,099.8 million as of September 30, 2021 from negative TRY 1,160.3 million as of December 31, 2020. Increase in negative net working capital was mainly driven by change in trade payables and payables to merchants, change in contract liabilities and merchant advances and change in inventories.
Our trade payables and payables to merchants increased by TRY 943.6 million, compared to December 31, 2020, mainly due to higher volume of inventory procurements in Q3 2021 and increased service payables such as advertising and shipping expenses.
In line with seasonality, our inventory purchases typically accelerate in the last quarter to meet the higher demand especially for the legendary November discount period. In Q3 2021, due to expected supply chain shortages and for back-to-school readiness, we started inventory purchases earlier and this resulted in TRY 152.9 million higher inventory balance as of September 2021, compared to December 31, 2020.
Also, due to accelerated GMV levels in Q3 2021, contract liabilities and merchant advances increased, resulting in a decrease in our net working capital.
Free Cash Flow
Our free cash flow decreased to negative TRY 639.0 million in Q3 2021 from negative TRY 76.5 million in Q3 2020. This decrease was mainly driven by the decrease in our cash flow from operating activities as further detailed above.
Borrowings
Our short-term bank borrowings are utilized to facilitate supplier and merchant financing facilities as well as for our short-term liquidity source if and when required in the ordinary course of our operations. As a result of the increase in our cash and cash equivalents following the IPO proceeds, our short-term borrowings decreased to TRY 129.1 million as of September 30, 2021, from TRY 347.4 million as of December 31, 2020.
As of September 30, 2021, supplier and merchant financing loans corresponded to TRY 102.4 million of the short-term bank borrowings compared to TRY 39.1 million as of December,31 2020.
All of our bank borrowings are denominated in Turkish Lira. As of 30 September 2021, the average annual effective interest rate for bank borrowings was
Conference Call Details
The Company's management will host an analyst and investor conference call and live webcast to discuss its unaudited financial results today, Tuesday, November 23, 2021 at 16.00 Istanbul time / 13.00 London / 8.00 a.m. U.S. Eastern time.
The live webcast can be accessed via https://87399.themediaframe.eu/links/hepsiburada211123.html
Telephone Participation Dial in Details:
- Turkey: + 90 212 900 3719
- UK & International: + 44 (0) 203 059 5872
- USA: + 1 516 447 5632
Participants may choose any of the above numbers to participate should they wish to ask questions.
The Company's results presentation will be available at the Hepsiburada Investor Relations website https://investors.hepsiburada.com on November 23, 2021.
Replay
Following the call, a replay will be available on the Hepsiburada Investor Relations website https://investors.hepsiburada.com
D-MARKET Electronic Services & Trading | ||
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION | ||
(Unaudited; Expressed in Thousands of Turkish Liras) | ||
30 September 2021 (unaudited) | 31 December 2020 (audited) | |
ASSETS | ||
Current assets: | ||
Cash and cash equivalents | 4,038,289 | 592,643 |
Restricted cash | 16,665 | - |
Trade receivables | 295,301 | 157,107 |
Due from related parties | 1,343 | 3,408 |
Inventories | 923,014 | 770,141 |
Contract assets | 6,842 | 55,737 |
Other current assets | 251,695 | 110,795 |
Total current assets | 5,533,149 | 1,689,831 |
Non-current assets: | ||
Property and equipment | 76,067 | 56,950 |
Intangible assets | 153,851 | 89,387 |
Right of use assets | 169,793 | 125,983 |
Other non-current assets | 4,511 | 2,806 |
Total non-current assets | 404,222 | 275,126 |
Total assets | 5,937,371 | 1,964,957 |
LIABILITIES AND EQUITY | ||
Current liabilities: | ||
Bank borrowings | 129,107 | 347,436 |
Lease liabilities | 84,466 | 51,211 |
Wallet deposits | 16,665 | - |
Trade payables and payables to merchants | 2,968,111 | 2,024,549 |
Due to related parties | 5,827 | 3,930 |
Provisions | 4,223 | 3,734 |
Employee benefit obligations | 136,727 | 22,808 |
Contract liabilities and merchant advances | 277,073 | 150,698 |
Other current liabilities | 186,009 | 51,779 |
Total current liabilities | 3,808,208 | 2,656,145 |
Non-current liabilities: | ||
Lease liabilities | 94,640 | 92,845 |
Employee benefit obligations | 7,132 | 3,299 |
Total non-current liabilities | 101,772 | 96,144 |
Equity: | ||
Share capital | 65,200 | 56,866 |
Other capital reserves | 69,625 | - |
Share premiums | 4,269,536 | 187,465 |
Restricted reserves | 1,586 | 1,586 |
Accumulated deficit | (2,378,556) | (1,033,249) |
Total equity | 2,027,391 | (787,332) |
Total equity and liabilities | 5,937,371 | 1,964,957
|
D-MARKET Electronic Services & Trading |
CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS |
(Unaudited; Expressed in Thousands of Turkish Liras) |
Nine Months Ended | Three Months Ended | ||||
30 Sep 2021 | 30 Sep 2020 | 30 Sep 2021 | 30 Sep 2020 | ||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
Revenues | 4,798,872 | 4,176,022 | 1,658,336 | 1,671,679 | |
Operating expenses | |||||
Cost of inventory sold | (3,611,529) | (3,110,236) | (1,378,262) | (1,291,116) | |
Shipping and packaging expenses | (635,253) | (344,016) | (239,344) | (130,748) | |
Payroll and outsource staff expenses | (545,945) | (206,157) | (196,258) | (76,652) | |
Advertising expenses | (843,497) | (352,131) | (461,347) | (139,276) | |
Technology expenses | (40,568) | (22,105) | (13,220) | (8,186) | |
Depreciation and amortization | (96,079) | (62,850) | (37,263) | (23,400) | |
Other operating expenses, net | (73,694) | (46,516) | (29,313) | (16,754) | |
Operating (loss) / income | (1,047,693) | 32,011 | (696,671) | (14,453) | |
Financial income | 189,528 | 98,836 | 94,049 | 46,506 | |
Financial expenses | (481,628) | (282,517) | (175,781) | (111,675) | |
Loss before income taxes | (1,339,793) | (151,670) | (778,403) | (79,622) | |
Taxation on income | - | - | - | - | |
Loss for the period | (1,339,793) | (151,670) | (778,403) | (79,622) | |
Basic and diluted loss per share | (4.11) | (0.53) | (2.74) | (0.28) | |
Other comprehensive loss: Items that will not be reclassified to | |||||
profit or loss in subsequent period: | |||||
Actuarial losses arising on remeasurement of | |||||
post-employment benefits | (5,515) | (1,544) | (2,459) | (826) | |
Total comprehensive loss for the period | (1,345,308) | (153,214) | (780,862) | (80,448) | |
D-MARKET Electronic Services & Trading |
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS |
(Unaudited; Expressed in Thousands of Turkish Liras) |
1 January – | 1 January – | |
(unaudited) | (unaudited) | |
Loss before income taxes | (1,339,792) | (151,670) |
Adjustments to reconcile loss before | ||
income taxes to cash flows from operating activities: | 576,318 | 266,654 |
Interest and commission expenses | 406,288 | 223,383 |
Depreciation and amortization | 96,079 | 62,850 |
Interest income on time deposits | (25,640) | (14,093) |
Interest income on credit sales | (24,933) | (10,861) |
Provision for unused vacation liability | 7,530 | 3,421 |
Provision for share based payment | 190,812 | - |
Provision for legal cases | 1,044 | 2,716 |
Provision for doubtful receivables | 2,916 | 2,587 |
Provision for impairment of trade goods, net | (1,419) | 11,440 |
Provision for post-employment benefits | 1,285 | 652 |
Net foreign exchange differences | (77,644) | (15,441) |
Changes in net working capital | ||
Change in trade payables and payables to merchants | 943,561 | 786,541 |
Change in inventories | (151,454) | (248,393) |
Change in trade receivables | (144,673) | (563,584) |
Change in contract liabilities and merchant advances | 126,375 | 65,450 |
Change in contract assets | 48,894 | (14,116) |
Change in other liabilities | 155,443 | 77,160 |
Change in other assets and receivables | (159,270) | (24,155) |
Change in due from related parties | 2,065 | 484 |
Change in due to related parties | 1,897 | 1,327 |
Post-employment benefits paid | (2,967) | (1,049) |
Payments for concluded litigation | (555) | (806) |
Payments for personnel bonus | (13,464) | (10,433) |
Payments for unused vacation liabilities | (1,333) | (513) |
Collections of doubtful receivables | 3,563 | 31 |
- | - | |
Net cash provided by operating activities | 44,608 | 182,928 |
Investing activities: | ||
Purchases of property and equipment and intangible assets | (138,037) | (62,826) |
Proceeds from sale of property and equipment | 1,088 | 5 |
Net cash used in investing activities | (136,949) | (62,821) |
Financing activities: | ||
Proceeds from borrowings | 1,045,945 | 1,024,988 |
Repayment of borrowings | (1,267,644) | (817,033) |
Interest and commission paid | (385,604) | (203,376) |
Lease payments | (73,338) | (39,474) |
Interest received on time deposits | 24,200 | 14,111 |
Interest received on credit sales | 24,933 | 10,861 |
Proceed from share capital and share premiums increase | 4,090,405 | - |
Net cash provided by / (used in) financing activities | 3,458,897 | (9,923) |
Net increase in cash and cash equivalents | 3,366,556 | 110,184 |
Cash and cash equivalents at 1 January | 592,281 | 281,982 |
Effects of exchange rate changes on cash and cash equivalents | 77,651 | 14,993 |
Cash and cash equivalents at 30 September | 4,036,488 | 407,159 |
Presentation of Financial and Other Information
Use of Non-IFRS Financial Measures
Certain parts of this press release contain non-IFRS financial measures which are unaudited supplementary measures and are not required by, or presented in accordance with, IFRS or any other generally accepted accounting principles. Such measures are EBITDA, Free Cash Flow and Net Working Capital. We define:
- EBITDA as profit or loss for the period plus taxation on income less financial income plus financial expenses, plus depreciation and amortization;
- Free Cash Flow as net cash provided by operating activities less capital expenditures plus proceeds from sale of property and equipment and
- Net Working Capital as current assets (excluding cash and cash equivalents) minus current liabilities (excluding current bank borrowings and current lease liabilities).
You should not consider them as: (a) an alternative to operating profit or net profit as determined in accordance with IFRS or other generally accepted accounting principles, or as measures of operating performance; (b) an alternative to cash flows from operating, investing or financing activities, as determined in accordance with IFRS or other generally accepted accounting principles, or as a measure of our ability to meet liquidity needs; or (c) an alternative to any other measures of performance under IFRS or other generally accepted accounting principles.
These measures are used by our management to monitor the underlying performance of the business and our operations. However, not all companies calculate these measures in an identical manner and, therefore, our presentation may not be comparable with similar measures used by other companies. As a result, prospective investors should not place undue reliance on this data.
This section includes for a reconciliation of certain of these non-IFRS measures to the closest IFRS measure set forth in the consolidated financial statements.
EBITDA is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included EBITDA in this press release because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and non-operating expense/(income). Accordingly, we believe that EBITDA provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.
Management uses EBITDA:
- as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of non-cash and non-operating items;
- for planning purposes, including the preparation of our internal annual operating budget and financial projections; and
- to evaluate the performance and effectiveness of our strategic initiatives.
EBITDA has limitations as a financial measure, including that other companies may calculate EBITDA differently, which reduces its usefulness as a comparative measure and you should not consider it in isolation or as a substitute for profit/(loss) for the period as a profit measure or other analysis of our results as reported under IFRS.
The following table shows the reconciliation of EBITDA to net loss for the period for the periods presented.
(TRY in million) | Three months ended | Nine months ended | |||||
2021 | 2020 | 2021 | 2020 | ||||
Net loss for the period | (778.4) | (79.6) | (1,339.8) | (151.7) | |||
Taxation on income | 0.0 | 0.0 | 0.0 | 0.0 | |||
Financial income | 94.0 | 46.5 | 189.5 | 98.8 | |||
Financial expenses | (175.7) | (111.6) | (481.6) | (282.6) | |||
Depreciation and amortization | (37.3) | (23.4) | (96.1) | (62.8) | |||
EBITDA | (659.4) | 8.9 | (951.6) | 94.9 | |||
Free Cash Flow is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included Free Cash Flow in this press release because it is an important indicator of our liquidity as it measures the amount of cash we generate/(use) and provides additional perspective on whether we have sufficient cash after funding our operations and capital expenditures. Accordingly, we believe that Free Cash Flow provides useful information to investors in understanding and evaluating our operating results in the same manner as our management and board of directors.
Free Cash Flow has limitations as a financial measure, and you should not consider it in isolation or as substitutes for net cash used in operating activities as a measure of our liquidity or other analysis of our results as reported under IFRS. There are limitations to using non-IFRS financial measures, including that other companies may calculate Free Cash Flow differently. Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash used in operating activities, capital expenditures and our other IFRS results.
The following table shows the reconciliation of Free Cash Flow to net cash provided by operating activities for the periods presented.
(TRY in millions) | Three months ended September 30, | Nine months ended September 30, | |||||||
2021 | 2020 | 2021 | 2020 | ||||||
Net cash provided by / (used in) operating activities | (582.4) | (47.8) | 44.6 | 182.9 | |||||
Capital expenditures | (57.0) | (28.7) | (138.0) | (62.8) | |||||
Proceeds from the sale of property and equipment | 0.4 | 0.0 | 1.1 | 0.0 | |||||
Free Cash Flow | (639.0) | (76.5) | (92.3) | 120.1 | |||||
Net Working Capital is a supplemental non-IFRS financial measure that is not required by, or presented in accordance with, IFRS. We have included Net Working Capital in this press release because it is used to measure the short-term liquidity of a business, and can also be used to obtain a general impression of the ability of company management to utilize assets in an efficient manner. Net Working Capital is critical since it is used to keep our business operating smoothly and meet all our financial obligations in the short-term. Accordingly, we believe that Net Working Capital provides useful information to investors in understanding and evaluating how we manage our short-term liabilities.
The following table shows the reconciliation of Net Working Capital to current assets and current liabilities as of the dates indicated:
(TRY in millions) | As of September 30, 2021 | As of December 31, 2020 |
Current assets | 5,533.1 | 1,689.8 |
Cash and cash equivalents | (4,038.3) | (592.6) |
Current liabilities | (3,808.2) | (2,656.1) |
Bank borrowings, current | 129.1 | 347.4 |
Lease liabilities, current | 84.5 | 51.2 |
Net Working Capital | (2,099.8) | (1,160.3) |
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 press release as follows:
- GMV as gross merchandise value which refers to the total value of orders/products sold through our platform over a given period of time (including value added tax ("VAT") without deducting returns and cancellations), including cargo income (shipping fees related to the products sold through our platform) and excluding other service revenues and transaction fees charged to our merchants;
- Marketplace GMV as total value of orders/products sold through our Marketplace over a given period of time (including VAT without deducting returns and cancellations), including cargo income (shipping fees related to the products sold through our platform) and excluding other service revenues and transaction fees charged to our merchants;
- Share of Marketplace GMV as the portion of GMV sold through our Marketplace represented as a percentage of our total GMV;
- Gross Contribution as revenues less cost of inventory sold. Gross Contribution is an indicator of our operational profitability as it reflects direct costs of products sold to our buyers;
- Gross Contribution margin as Gross Contribution represented as a percentage of GMV;
- Number of orders as the number of orders we received through our platform including returns and cancellations;
- Frequency as the average number of orders per Active Customer over a 12-month period preceding the relevant date;
- Active Merchant as merchants who sold at least one item within the 12-month period preceding the relevant date, including returns and cancellations;
- Active Customer are users (both unregistered users and members) who purchased an item within the 12-month period preceding the relevant date, including returns and cancellations;
- Net Working Capital is defined as current assets (excluding cash and cash equivalents) minus current liabilities (excluding current bank borrowings and current lease liabilities)).
DISCLAIMER: Due to rounding, numbers presented throughout this presentation may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
About Hepsiburada
Hepsiburada is a leading e-commerce technology platform in Turkey, combining a globally proven e-commerce business model with a one-stop 'Super App' to cater to our customers' everyday needs and to help make people's daily lives better. Customers can access a broad range of products and services including same-day delivery of groceries and essentials, products from international merchants, airline tickets and payment services through our embedded digital wallet, HepsiPay. As at the end of September 2021, we had seamlessly connected 39.6 million members and approximately 67 thousand Active Merchants.
Founded in Istanbul in 2000, Hepsiburada was built to lead the digitalization of commerce in Turkey. As a female-founded organization, we are committed to meaningful action to empower women. Through our 'Technology Empowerment for Women Entrepreneurs' programme, we have reached over 24,000 female entrepreneurs across Turkey to date.
Investor Contact
Helin Celikbilek, Investor Relations Director
ir@hepsiburada.com
Media Contact
Cem Tanır, Corporate Communications Director
corporatecommunications@hepsiburada.com
Brunswick Group
hepsiburada@brunswickgroup.com
Azadeh Varzi
Caroline Daniel
Nick Beswick
Forward Looking Statements
This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995 that reflect the current views of D-MARKET Electronic Services and Trading ("we", "our", "Hepsiburada" or the "Company") about future events and financial performance , including but not limited to statements regarding: (a) our expectations regarding the 2021 GMV; (b) potential disruptions to our operations and supply chain that may result from (i) epidemics or natural disasters, including the duration, scope and impact on our operations in general and the pace of recovery from the COVID-19 pandemic (ii) global supply challenges, recent port shutdowns and energy crisis in China; and/or (iii) changes in the competitive landscape in the industry in which the Company operates; (c) anticipated launch of new initiatives, businesses or any other strategic projects (d) our expectations and plans for short- and long-term strategy, including our anticipated areas of focus and investment, market expansion, product and technology focus, and projected growth and profitability; (e) our ability to respond to ever changing competitive landscape in the industry in which we operate; our liquidity, substantial indebtedness, and ability to obtain additional financing; (f) our strategic goals and plans, including our relationships with existing customers, suppliers and partners, and our ability to achieve and maintain them; and (g) expectations regarding our future performance based on our ability to attract more customers to our platform and doing so cost effectively, to increase frequency of our customers on our platform, to add more merchants to our platform, to expanding our selection of products and services, to scale our new strategic assets and leverage logistics and technology as business enablers. These forward-looking statements can be identified by terminology such as "may", "could", "will," "expects," "anticipates," "aims," "future," "intends," "plans," "believes," "estimates," "targets", "likely to" and similar statements. Among other things, quotations from management in this announcement, as well as our outlook and guidance, strategic and operational plans, contain forward-looking statements.
These forward-looking statements are based on management's current expectations. However, it is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties and other important factors and circumstances that may cause Hepsiburada's actual results, performance or achievements to be materially different from its expectations expressed or implied by the forward-looking statements, including conditions in the U.S. capital markets, negative global economic conditions, potential negative developments in the COVID-19 pandemic, other negative developments in Hepsiburada's business or unfavorable legislative or regulatory developments. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements. For a discussion of certain factors that may affect the outcome of such forward looking statements, see our Prospectus filed with the U.S. Securities and Exchange Commission ("SEC") in connection with our initial public offering, and in particular the "Risk Factors" section of our Registration Statement on Form F-1 (File No.333-256654) as filed with the SEC. Copies of these filings are available online from the SEC at www.sec.gov, or on the SEC Filings section of our Investor Relations website at https://investors.hepsiburada.com. These and other important factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management's estimates as of the date of this press release. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release. All forward-looking statements in this press release are based on information currently available to the Company, and the Company and its authorized representatives assume no obligation to update these forward-looking statements in light of new information or future events.
Non-IFRS Financial Measures
This press release includes certain non-IFRS financial measures, including but not limited to, EBITDA, Free Cash Flow and Net Working Capital. These financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to profit/loss for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that the Company's presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently. See "Presentation of Financial and Other Information" in this press release for a reconciliation of certain of these non-IFRS measures to the most directly comparable IFRS measure.
Statement Regarding Preliminary Unaudited Financial Information
This press release includes quarterly information for the three months ended September 30, 2021 and 2020 and nine months information for the year 2020 and 2021. The quarterly information has not been audited or reviewed by the Company's auditors. The unaudited interim condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All periods presented have been accounted for in conformity with International Financial Reporting Standards ("IFRS") and pursuant to the regulations of the SEC.
1 Calculated over the last 24 months period.
2 Based on the results of the market research by Future Bright (a local research company) conducted for Hepsiburada. The data is for Q3 2021.
3 Calculation is based on the online credit and debit card transaction volume statistics in Turkey announced monthly by the Interbank Card Center (BKM). Specifically, all domestic transactions with domestic and international cards in relevant categories, namely Electronics, Apparel & Accessories, Grocery, Supermarkets, Furniture & Decoration, Health & Cosmetics, Home Improvement, Stationary, Office Supplies and Education, are included. Accordingly, the aforementioned quarter-over-quarter online card spending growth rate is calculated as
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SOURCE Hepsiburada
