In a recent earnings call, Hepsiburada (HEPS) unveiled their financial results for the third quarter of 2023, showcasing a remarkable year-on-year growth despite a challenging macroeconomic landscape. The Turkish e-commerce giant reported a more than twofold increase in gross merchandise value (GMV), with a 126% rise from the previous year, or 45% when adjusted for inflation. Orders surged by 55% to reach 27 million, and the company's EBITDA as a percentage of GMV climbed by 690 basis points to 2.7%. The Hepsiburada Premium program has now surpassed 2 million members. The company's strategic focus remains on enhancing customer loyalty, rigorous cost management, and expanding its B2B revenue streams across fintech and logistics sectors. Looking forward, Hepsiburada anticipates doubling its GMV year-on-year and targeting an EBITDA margin of 1.5% for the full year 2023.
Key Takeaways
- Hepsiburada's GMV soared by 126% year-on-year, with an adjusted growth rate of 45% considering inflation.
- The number of orders reached 27 million, marking a 55% increase from the previous year.
- Gross contribution margin stood at 11.6%, and EBITDA as a percentage of GMV rose by 690 basis points to 2.7%.
- The Hepsiburada Premium program now boasts over 2 million members.
- The company is focusing on loyalty programs, cost efficiency, and B2B revenue growth in fintech and logistics.
- For the full year 2023, Hepsiburada aims to double its GMV and achieve an EBITDA margin of 1.5%.
Company Outlook
Hepsiburada's outlook for the fourth quarter remains optimistic with an expected GMV growth of 93% to 95% compared to the previous year and an EBITDA margin forecast of between 0.5% and 1%. The company's full-year projections are equally ambitious, aiming to double the GMV and secure an EBITDA margin of 1.5%. Positive free cash flow and significant increases in cash flow from operating activities were reported, indicating a healthy financial position. Furthermore, the possibility of a local listing was mentioned as a means to enhance the liquidity of Hepsiburada's shares.
Bearish Highlights
The company is currently under scrutiny by the competition authority in Turkey regarding price recommendations for merchants, a situation they are actively cooperating with and believe will not have a significant impact. Additionally, the anticipated consumer demand in 2024 may face headwinds due to potential interest rate hikes, which the company is preparing to navigate with strategic initiatives.
Bullish Highlights
Hepsiburada's payment platform, Hepsipay, has shown impressive growth and is set to expand further by integrating shopping malls into its network. The company's November campaign delivered strong results, doubling the GMV from the same period last year. The company also highlighted the success of its affordability solutions and loyalty program, which are instrumental in driving customer retention and growth.
Misses
While the company experienced significant order growth, digital orders had an immaterial impact on GMV. The report did not provide a specific target number for the Hepsiburada Premium program members for the upcoming year, which leaves some uncertainty around the program's future expansion goals.
QA Highlights
In the question and answer session, Nilhan Onal Gökçetekin addressed the company's performance, noting that the November sales were aligned with expectations and saw a substantial uptake from premium consumers. The company's cash management strategy involves time deposits with a yield close to 5% on USD deposits. The company's representative also reassured that despite the potential challenges posed by interest rate hikes in 2024, the company is confident in its strategic positioning and initiatives.
In summary, Hepsiburada's third-quarter earnings call painted a picture of a company that is successfully navigating a complex economic environment, focusing on strategic growth areas, and positioning itself for continued profitability and expansion.
InvestingPro Insights
As Hepsiburada (HEPS) continues to navigate through a complex economic landscape with a strategic focus on growth, real-time data from InvestingPro offers additional insights into the company's financial health and market position. With a market capitalization of 528.12M USD and a significant revenue growth of 171.73% in the last twelve months as of Q3 2023, Hepsiburada is demonstrating its capacity to scale rapidly in a competitive e-commerce market. The company's gross profit margin stands at a healthy 22.16%, indicating effective cost management and a strong value proposition to its customers.
InvestingPro Tips suggest that Hepsiburada is a prominent player in the Broadline Retail industry, holding more cash than debt on its balance sheet, which is a reassuring signal for investors concerned about financial stability. Analysts are also anticipating sales growth in the current year, aligning with the company's ambitious targets for doubling its GMV and achieving a favorable EBITDA margin.
For those looking to delve deeper into Hepsiburada's potential, InvestingPro offers additional tips, with a total of 15 tips available for subscribers. As part of a special Cyber Monday sale, InvestingPro subscriptions are now available with a discount of up to 60%. To add even more value, use coupon code sfy23 to get an additional 10% off a 2-year InvestingPro+ subscription. These insights can help investors make more informed decisions as they consider Hepsiburada's promising trajectory and strategic initiatives.
Full transcript - DMARKET ADR (HEPS) Q3 2023:
Operator: Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus Call operator. Welcome, and thank you for joining the Hepsiburada Conference Call and Live Webcast to present and discuss the Third Quarter 2023 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. [Operator Instructions] At this time, I would like to turn the conference over to Mrs. Nilhan Onal Gökçetekin, CEO; Mr. Seçkin Köseoglu, Vice President of Strategic Finance; and Mrs. Helin Celikbilek, Investor Relations Director. Mrs. Celikbilek, you may now proceed.
Helin Celikbilek: Thanks, operator. Thank you for joining us today for Hepsiburada's third quarter 2023 earnings call. I'm pleased to be joined on the call today by our CEO, Nilhan Onal Gökçetekin, and our Vice President of Strategic Finance, Seçkin Köseoglu. The following discussion, including responses to your questions, reflects management's views as of today's date only. We undertake 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 slide deck, today's press release, the 6-K, our Form 20-F filed with the SEC on May 1, 2023, and other SEC filings for information on factors that could cause our results to differ materially from these forward-looking statements. Also, we will reference certain non-IFRS measures during today's call. Please refer to the appendix of our supplemental slide deck as well as today's press release for a presentation of the most directly comparable IFRS measures and the relevant IFRS to non-IFRS reconciliation. As a reminder, a replay of this call will be available on our Investor Relations website. And with that, I will hand it over to our CEO, Nihan.
Nilhan Onal Gökçetekin: Thank you, Helin. Welcome everyone, and thank you for joining us. I'm pleased to be with you today and to present our quarterly progress. In Q3, amidst continued challenging macroeconomic environment where yearly inflation scaled to 61.5%, we delivered a robust financial performance. Our GMV more than doubled by 126% growth year-on-year. Adjusted for inflation, our GMV growth remained solid at 45% year-on-year. The operational agility, afforded by our strategy, led to an outstanding performance that exceeded expectations. Our orders numbered 27 million. It was up 55% year-on-year, confirming a continuous demand for our differentiated services. With an 11.6% gross contribution margin and through frugal OpEx management, our EBITDA as percentage of GMV rose by 690 basis points year-on-year to 2.7%. Adjusting for one-time other income, our quarterly EBITDA guidance was still 2.2%. Our Hepsiburada Premium program has over 2 million members as of November-end, aligned seamlessly with our expectation. The program continues to play a pivotal role in elevating our order frequency and improving our customer retention. Overall, I am very pleased to demonstrate sustainable growth and improved profitability. Let me now take you through our delivery versus Q3 guidance. Through diligent execution, we surpassed our guidance for both GMV and EBITDA. Our GMV growth exceeded guidance by 16 percentage points. This performance was a result of our solid strategy that boosted loyalty to our platform. On top, in July, the announcement of the VAT increase across all goods and services triggered a higher demand for e-commerce. Furthermore, through prudent cost management, our EBITDA as a percentage of GMV reached 2.2%, adjusted for one-off income. This doubling of the upper-end of our EBITDA guidance clearly highlights our operational efficiency. The quarterly performance validates our commitment to sustainable growth and positions us favorably to achieve a positive full-year '23 EBITDA on an unadjusted basis. Hepsiburada is the key trust brand for e-commerce. In-line with our pledge to customer centricity, we announced HepsiburadaPromise initiative as a marketing campaign. As part of this initiative, we promoted key consumer benefits that encompasses next-day delivery guarantee, convenience return pick-up services from consumer doorsteps, and an assurance of authenticated products. To drive higher engagement, we partnered with one of Turkiye's most confident inspiring celebrity for this initiative. We believe this initiative addresses the primary concerns of Turkish e-commerce consumers while underscoring our commitment to meet their expectations. This commitment is clearly reflected in our KPIs. 59% growth in order frequency, 55% order growth prove that our consumer engagement and loyalty strategy is clearly working. In the third quarter, with over 101,000 active merchant base, our total SKU count climbed to nearly 211 million. Our merchants can now [indiscernible] create coupons, which are a proven attraction point for customers. Self-management of campaigns, coupons and all advertising facilities drive higher conversion to sales for our merchants. On top, we advanced our operations with automated inclusion of products in the next-day delivery coverage. This benefitted customers while freeing our merchants of a manual process. In our commitment to elevating the visibility and reach of our merchants, we reintroduced our advertising solutions in a more effective format this quarter. These initiatives underscore our commitment to a deeper merchant relationship as we help them grow their volume on Hepsiburada. As always, we remain focused on execution excellence and our recent results affirm the effectiveness of our four-pillar strategy. Just to recap briefly, our strategy centers around loyalty, cultivating our sustainable differentiator, streamlining our costs, and expanding our B2B revenue in fintech and logistics. In the next few slides, I'll provide a snapshot of our progress, highlighting our key achievements. First, our Hepsiburada Premium program is a key loyalty driver and continues to gain momentum and exceeded 2 million members by end of November. The program success goes beyond [mere] (ph) expansion. It significantly influences customer behavior. Premium members' monthly order frequency rose from 1.8 to 2.6 after they joined the program. This emphasizing the program's potential to position Hepsiburada as customers' go-to-e-commerce platform. The program's quarterly net promoter score remained at a robust 81 points, which is 10 points above our overall NPS. We remain dedicated to keep this program as a compelling proposition for our members. Let's now look into one of our key differentiator, Hepsipay. In today's economic landscape, affordability takes center stage, and our in-house fintech expertise clearly sets us apart. Leveraging our unique e-money payment services license, we offer a comprehensive suite of payments and affordability solutions. These include our prepaid card, Buy Now Pay Later solution, top-up to wallet loans, and point of sale shopping loans. A noteworthy addition is the Hepsipay prepaid cards in collaboration with Visa (NYSE:V). We are encouraged by the demand for this card with 708,000 cards issued in just six months. Hepsipay card users can earn 3% cash back in all their online and in-store payments if they are a Premium program number. A tool that customers use to top up their prepaid card is a general purpose loan from our partner banks, which can be reached with one-click solution from our app. This quarter, we integrated four major banks. Hepsipay wallet gives customers the freedom to spend these loans everywhere, both physical stores and online, combined with the ease of QR payments. With our customer centricity, our commitment to deliver stronger tailored payment and affordability solutions remains firm. Next, let's consider our affordability solutions, highlighting some performance indicators. The quarterly share of total non-card affordability solutions in our GMV was 5.6%, up from 5% a quarterly ago. This increased penetration is a result of our improved incorporation of non-card affordability solutions throughout our [buy] (ph) journey. Over the last 12 months, 762,000 orders came through this affordability solution. As to our BNPL solution, Hepsiburada remains the first provider of Turkish e-commerce. Since its inception, over 245,000 customers have utilized their BNPL limits. In September, during iPhone 15 launch, we were the only platform to offer a BNPL solution for this high-value item. I would like to move to now our next differentiator, HepsiJet. HepsiJet's strong NPS of 86.2 in Q3 underscores it acknowledged service excellence. HepsiJet continues to invest in expanding its geographical coverage by additional municipalities. Total municipalities covered exceeded 600 by the end of the quarter. In Q3, HepsiJet continued its strong next-day delivery performance with 82% ratio among our 1P orders. Out of the total parcel volume on our platform, HepsiJet delivered 67%, confirming its integral role in our delivery ecosystem. Notably, HepsiJet XLarge delivered 57% of our oversized parcels. This is confirming greater merchant preference for our 2-Man-Handling capability. In Q3, as a result of all our actions, we saw continued progress in profitability, posting a 2.2% EBITDA as percentage of GMV excluding the one-off item. The positive [indiscernible] clearly demonstrates the effectiveness of our strategy, confirming our core strength and our diligent cost management. Now, let me take you through the fourth pillar of our strategy, which is generating B2B revenue from fintech and logistics. First, let's start with HepsiJet. We continue to expand our external customer base, adding other retailers and doubling our customer count and doubling our volume year-on-year. This is confirming our ability to generate B2B revenues of platform and clearly showcases HepsiJet's strong momentum as an appealing logistic partner. Now, let's turn our eyes on Hepsipay's off-platform expansion, enabling a [swift] (ph) payment experience. Hepsipay offers a one-click check-out solution: Pay with Hepsipay to other retailers. This solution became available at the online check-out of five major Turkish retailers in Q3, as seen on the slide. A leading Turkish home appliance brand, Karaca, leading Turkish fashion brand, DeFacto, leading baby brand, Ebebek, is just few of the examples. Moreover, we also offer our lending capabilities as part of Hepsipay's one-click check-out solution. This take-up aligns with our vision of providing fast, reliable, versatile payment and lending experience beyond Hepsiburada platform. Hepsipay's features expand beyond one-click check-out. The seamless use of pay -- prepaid cards both online and in-store payments clearly diversify our payment options for consumers. The top-up to wallet with loans offer enables users to top-up their wallet with general purpose loans from multiple partner banks. These funds are then available to spend anywhere that accepts QR payment in addition to platforms with Hepsipay at their check-out. An upcoming feature is the integration of shopping malls within the Pay in Hepsipay network. Before I dive into Q4 outlook, let me take a moment to talk about our November campaign performance. Our business is characterized by strong Q4 seasonality like all other e-commerce players. We deliver a higher sales volume during the fourth quarter of the year. Our preliminary results indicates that this year we delevered yet a another very strong performance in November. We doubled the GMV compared to the same period last year. The number of orders was 2 times that of the monthly average of the prior month in '23. Our platform attracted almost 500 million visits and we sold over 30 million pieces. Our affordability solutions and loyalty program were particular attraction points. 46% of GMV generated through sales with credit cards came through installment sales. The most significant [service in] (ph) orders compared to the same period of last year were among clothing, appliance, home garden and FMCG. We greatly welcome the consumer appreciation of our superior services, solutions, and campaigns in the busy month of November, where Hepsiburada clearly puts its name to the word legendary, which was created by us seven years ago. And now, I want to close my presentation with our guidance. So, with another robust Legendary November behind us, we expect to deliver a solid and profitable growth also in fourth quarter. Accordingly, we expect to deliver a GMV growth within a range of 93% to 95% compared to the same period last year and EBITDA as a percentage of GMV within a range of 0.5% to 1%. These figures are unadjusted for inflation. Consequently, for the full-year '23, we expect to double our GMV year-on-year on an unadjusted basis and deliver EBITDA as a percent of GMV at 1.5%. These figures are also unadjusted for inflation. With this, I thank you for listening, leave the floor to Seçkin, our forthcoming CFO, for more color on our Q3 financial performance. Then, I'll do my closing remarks.
Seçkin Köseoglu: Thank you, Nilhan, and welcome, everyone. It's a pleasure to meet with all of you today for the first time. As I embark on my new role as CFO, I look forward to many more such occasions. Despite the prevailing macroeconomic challenges, I am pleased to say that we continued our uptrend across all metrics during the third quarter. Unadjusted for inflation, our GMV rose 126% in quarter three on a yearly basis to TRY24.3 billion. Similarly, our IAS 29-unadjusted revenue growth was at 137% on a yearly basis. When adjusted for inflation, GMV and revenue growth were at 45% and 52%, respectively. Strong order growth coupled with faster than inflation rise in the average order value and a strong e-commerce market growth in July on the back of a VAT rise resulted in a 126% GMV growth. The gross contribution margin came in at 11.6% on a 1.8 percentage point improvement on the same quarter of last year. Adjusted for inflation, this metric rose to 9.4% on a 1 percentage point improvement. Quarter three was the third consecutive quarter of positive EBITDA unadjusted for inflation. Accordingly, our EBITDA as a percentage of GMV reached 2.7% on a 6.9 percentage point rise year-over-year. Excluding the impact of one-off income item, our EBTIDA as a percentage of GMV was at 2.2%. Also, when adjusted for inflation, this metric was at 0.3% on a 6.2 percentage point improvement year-over-year. On the next slide, let's elaborate on our GMV growth performance. 45% of GMV growth came through 27 million orders in quarter three. This performance results from our value proposition supported by the Hepsiburada Premium loyalty program and our affordability solutions. Our digital products contributed to the order frequency of participating customer segments. Yet, excluding these orders, our order growth was still strong at around 18%. During the third quarter, we saw a 2.7 percentage point shift in GMV mix towards 1P. While we continue our growth in non-electronics, during this quarter, we also leveraged our strong 1P model to meet the demand in the electronics market. On the next slide, I will discuss our revenue and gross contribution performance. First, I would like to give some color on revenues. Revenue growth of around 52% was achieved mainly by a 50% rise in retail revenue and 61% growth in marketplace revenue. Our retail and marketplace operations comprise 87% of our revenues. Our delivery service revenue, comprising 10% of total revenue, rose 43% compared to quarter three 2022. Meanwhile, other revenue, which mainly consists of our advertising services, fulfillment services, and loyalty program subscription fees, grew by 116% compared to quarter three 2022. Our quarter three gross contribution margin was at 9.4% on a 1 percentage point improvement on the same quarter last year. This was mainly attributable to a higher re-discount impact on cost of inventory sold due to purchases on credit, a change in the 3P GMV category mix towards higher margin products, and a higher other revenue stream. Faster inventory turnover partially compensated for the margin deteriorating impact of significantly higher quarterly inflation that we have witnessed in quarter three. Let's move on to the EBITDA performance on the next slide. Together with strong top-line growth, our focus on costs and marketing spend optimization enabled us to deliver positive EBITDA for yet another quarter. The 6.2 percentage point year-over-year improvement in EBITDA as a percentage of GMV was mainly due to a 1 percentage point rise in gross contribution margin, 1.1 percentage point decline in advertising expenses, 0.1 percentage point decline in shipping and packaging expenses, 0.6% decline in payroll and outsourced stuff expenses, and 3.3% improvement in other OpEx items, which includes the settlement contribution from TurkCommerce in the quarter three this year and the provision expense related to the same litigation in quarter three of last year. OpEx as a percentage of GMV was 9.1% in this quarter, thus 5.1 percentage points lower compared to 14.2% in the third quarter of last year. Our continued efficiency in marketing spend was achieved through our focus on customer retention and loyalty strategy, data-driven marketing, and co-marketing partnerships. Next, a few words on our cash flow dynamics. Compared to quarter three 2022, our cash flow from operating activities increased by almost TRY1.4 billion to TRY2.2 billion in quarter three '23. This increase in cash flow from operating activities mainly resulted from a TRY1.1 billion improvement in EBITDA; TRY1.2 billion decrease in change in networking capital, mainly due to increase in BNPL receivables and an increase in inventory in anticipation of high demand in quarter four; TRY0.7 billion increase in operating monetary gains due to inflation accounting and other items; and finally, TRY0.8 billion increase due to realized FX gains. CapEx was around TRY234 million at 0.9 percentage point of GMV. Overall, our free cash flow was a positive TRY2 billion in quarter three 2023. Before we end our call, I would like to leave the word back to Nilhan to highlight the key takeaways from today's presentation.
Nilhan Onal Gökçetekin: Thank you, Seçkin. In Q3, we delivered a strong top-line growth and EBITDA through diligent cost management, exceeding our guidance. Our IAS 29-unadjusted GMV growth marked the highest quarterly growth since our IPO. On the margin side, we improved our gross contribution margin by 1.8 percentage points and EBITDA as a percent of GMV by 6.9 percentage points. We generated a substantial improvement in free cash flow on a yearly basis, thanks to our improvement in operating profitability. We are committed to creating long-term value for all our stakeholders and we work diligently to deliver our best possible results with our whole team. And finally, I take this opportunity to wish everyone seasonal greetings. Thank you for listening. We can now open the line for questions.
Operator: Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions] The first question -- I am so sorry, there was a question but it was withdrawn. [Operator Instructions] Ladies and gentlemen, there are no audio questions at this time. We will now proceed with the webcast questions from our participants. The first webcast question is from Maxim (NASDAQ:MXIM) Nekrasov with Citi, and I quote, "What drives growth deceleration in Q4 2023 compared to third quarter 2023?" Thank you.
Nilhan Onal Gökçetekin: This is Nilhan speaking. We have couple of factors. One of them is our base in Q4 '22 was extremely strong. That's number one driver. Number two driver is, in Q3, Maxim, we had a VAT change, as I explained in July. This accelerated our growth as e-com platforms, which won't be repeated from our expectations in Q4. And lastly, with the rising interest rates, we are expecting also some minor impact to the demand in Turkish markets. Hence, with these three, our expectation is the GMV growth [indiscernible].
Operator: [Operator Instructions] The next webcast question is from Ulle Adamson with T. Rowe Price, and I quote, "Any thoughts on possible local listings to improve the liquidity of shares?"
Nilhan Onal Gökçetekin: A local possible listing in Istanbul Stock Exchange is one of the ideas that we are always evaluating like other options. There are pros and cons we are investigating, Ulle. As we crystallize our thinking, if there is something to share, we will obviously come back. But this is one of the things we are obviously looking into based on the feedback we received today.
Operator: [Operator Instructions] The next webcast question is from Tim Raschuk with Frontaura Capital, and I quote, "Hi. Could you please -- excuse me, could you provide me color on September sales and how the Legendary November event was relative to your expectations? Thank you."
Nilhan Onal Gökçetekin: It was almost spot on versus our expectations in November. We have done a couple of assumptions for November growth. One of them was increased uptake from our Premium consumers. Both our Premium membership increase and the frequency increase from Premium consumers has been in-line with our expectations. Non-electronic, new categories that we have been driving have been strong, that has also been in-line with our expectations. And in terms of our marketing plan, the number of sessions we planned for Legendary November also was in-line with our expectations. So, I would say we invented Legendary November seven years ago and since then we have been getting stronger and stronger in our execution. And in-line with our plans, we delivered a strong November campaign.
Operator: Our next webcast question is from Christian Andrews with Frontaura Capital, and I quote, "Digital orders represented a significant portion of order growth. Could you expand on what these orders relate to and would their contribution to revenue growth be similar?
Nilhan Onal Gökçetekin: The digital orders, yes, they represent significant portion of order growth, but in terms of GMV, it's immaterial. It's less than 0.7% of our GMV. So, we can't talk about any related contribution to our GMV growth. It's strategic. It drives frequency. It drives consumers to come back, create loyalty retention. So, we'll continue driving that.
Operator: Thank you. We also have a question from [Mr. Hassan Bayahan] (ph), and I quote, "How do you invest in the U.S. cash you have? What is the return on that?"
Seçkin Köseoglu: Hi. We typically use time deposits in banks. And I think the yield is the question, we are close to 5% on our yield for USD deposits.
Operator: Thank you. The next question is from Mr. Maxim Nekrasov with Citi, and I quote, "What are your expectations regarding consumer demand in 2024 considering recent interest hikes?"
Nilhan Onal Gökçetekin: Our progress and results clearly prove that our strategy works in '23. And as we look forward to the coming year, although the interest rate increases could diminish consumer demand, consumption can also impact Turkish economic growth, we have several key initiatives reinforcing our position. I maintain our commitment to strategic priorities, affordable shopping options, benefits from Premium program, and also e-com is in best place, [very suited] (ph) to serving consumers in this type of environment.
Operator: Our next webcast question is a follow-up from Mr. Ulle Adamson with T. Rowe Price, and I quote, "What is the outlook for EBITDA margin in 2024? Also, where would you like to see the margin over the longer term?"
Nilhan Onal Gökçetekin: For 2024, we are going to talk about our guidance, our expectations as part of our Q4 earnings result. But what I can say, we are extremely committed to sustainable, profitable growth. We have built a very strong initiative pipeline for '24 and also upcoming years in-line with the presentation we have done, that is including Hepsi advertising platform, that's including non-electronics in our mix, that is including incremental margin from our services and B2B revenues that will continue to enhance our margin situation. For granular details and expectations, we'll come back in Q4.
Operator: Thank you. Our next webcast question is from Christian Andrews with Frontaura Capital, and I quote, " Hepsi Premium reached 2 million members. Could you please speak a bit about any targets for the program? Is there a target number of members? Is this program breakeven yet on a consolidated basis?"
Nilhan Onal Gökçetekin: In terms of Hepsiburada Premium program, obviously, we are quite bullish about creating a great, amazing program that will be sticky for our consumers. We are not chasing a specific number. We are looking into sustainable profitability of the company, sustainable profitable growth using loyalty retention initiatives in a mix that also includes Premium. Hence, I'm not going to share a specific number that we are chasing for next year, but we will continue to enhance both the benefits of the program and also numbers in the program. In terms of premium Profitability, we don't share the details for a specific consumer segment. In future, we could look into giving different cuts in our profitability, but so far, we are only sharing a consolidated view.
Operator: Our next question is an audio question from the land of Kilickiran Hanzade with JPMorgan (NYSE:JPM). Please go ahead.
Kilickiran Hanzade: Nilhan and Seçkin, apologies, I had a technical issue. I couldn't ask my question initially. I would like to follow up on the gross contribution margin. You have a very strong, I mean, robust improvement here. Would it be reasonable to say that some -- I mean, large part of this expansion in the gross margin contribution comes from the inventory gains? Because there was a very high inflation in the third quarter and I just tried to understand whether this expansion is one-off or not. And -- or otherwise, have you observed some structural changes in your business like a higher share of clothing category or better take rates that may continue to support the margins going forward? And the second question is, is it possible to provide some sort of update on the recent competition authority investigation? What it is about? And do you expect some negative results from this investigation? Thank you.
Seçkin Köseoglu: Yes, as I mentioned in my presentation, the re-discount impact on cost of inventory sold due to purchases on credit has an impact on the improvement in gross contribution. But the key structural improvement that we are making are related with the 3P GMV category mix towards higher margin product. And this is going to continue in the future as well. And definitely other revenue stream is something that we are continuing to expand, especially a word of note, our Premium fees, our HepsiAd, which is very important for our future profitability, and the expansion of our delivery services. So, these are structural key interventions that we will be continuing to have in the coming quarters as well.
Nilhan Onal Gökçetekin: Let me come back on the second question, which is the competitive authority investigation. There has been an investigation in Turkey for price recommendations for merchants from e-commerce platforms. We have been one of the companies that competition authority wanted to better understand the logic. We have been sharing all the data we have. This is a recent capability we developed in order to enhance merchants' competitiveness, in order to enhance competitive prices with right ambition, with right material. So, we are very comfortable in terms of the potential outcome. There could be a situation, Hanzade, in the worst case scenario, the competition authorities could say, "We would like platforms to hold this application," but nothing beyond that. So, even the worst case scenario, obviously we are ready for this, but we wouldn't recommend it.
Kilickiran Hanzade: Thank you very much.
Operator: Ladies and gentlemen, there are no further questions at this time. The conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
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