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.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.