Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• D-MARKET Electronic Services & Trading (NASDAQ:HEPS) achieved a real GMV growth of 12.1% in 2024.
• The company improved its gross contribution margin to 11.3%, marking a 2.1%-point improvement year over year.
• EBITDA as a percentage of GMV expanded to 1.1%, with a 0.7%-point rise compared to the previous year.
• Active customer base grew by 235,000, reaching a total of 12.2 million customers.
• The company's loyalty program, Hexo Product Premium, increased its membership to 3.7 million, enhancing customer loyalty.

Negative Points

• Start of 2025 faced challenges due to macroeconomic headwinds and consumer boycotts affecting purchasing power.
• Marketing activities were limited due to political sensitivity and boycotts in the first quarter of 2025.
• Free cash flow decreased by TRY1.9 billion compared to the previous year, primarily due to decreased net cash from operating activities and increased CapEx.
• There was a 0.5% rise in payroll and outsourced staff expenses, impacting overall profitability.
• Shipping and packaging expenses increased due to higher parcel volume and rising delivery fees, affecting cost efficiency.

Q & A Highlights

• Warning! GuruFocus has detected 4 Warning Signs with HEPS.

Q: Can you provide an overview of D-MARKET's financial performance for 2024? A: Nilhan Olaan, COO, reported a real GMV growth of 12.1% and a growth contribution margin of 11.3%, with a 2.1%-point improvement year-on-year. EBITDA as a percentage of GMV expanded to 1.1%, a 0.7%-point rise from the previous year. On an unadjusted inflation basis, GMV grew 74% year-on-year, and EBITDA percentage of GMV reached 2.1%.

Q: How did D-MARKET's customer and merchant metrics perform in 2024? A: The company saw an increase of 235,000 active customers, reaching 12.2 million. Orders grew by 16% year-on-year, totaling 131.4 million, with order frequency rising by 14% to 10.8%. The active merchant base exceeded 100,000, with enhancements in logistics, fintech, and advertising solutions.

Q: What strategic priorities did D-MARKET focus on in 2024? A: The company focused on customer loyalty, differentiation through HeftyJet and HeftyPay, and expanding B2B services. The loyalty program, Hexo Product Premium, reached 3.7 million members. HeftyJet delivered 72% of total parcels, and HeftyPay expanded its checkout solution to 140 key accounts.

Q: What were the key financial highlights shared by the CFO, Sachin Kuseoglu? A: On an unadjusted basis, GMV grew by 49.4%, close to the guidance of 50% to 55%. EBITDA as a percentage of GMV was 1.8% in Q4, aligning with the guidance of 1.8% to 2%. Revenue grew by 6.4% in Q4, with a full-year growth of 11.1%. The gross contribution margin improved by 2.1% points to 11.3%.

Q: What challenges and opportunities did D-MARKET face at the start of 2025? A: The year began with macroeconomic headwinds and consumer boycotts affecting purchasing power. However, a significant milestone was achieved with the acquisition of a 65.4% controlling stake in Efseborazawa Dena, a leading payment, marketplace, and fintech ecosystem in Kazakhstan, presenting potential value creation opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.