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 Second Quarter 2022 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 Ms. Helin Celikbilek, Investor Relations Director. Ms. Celikbilek, you may now proceed.

Thanks, Operator. Thank you for joining us today for Hepsiburada’s second quarter 2022 earnings call. I’m pleased to be joined on the call today by our CEO, Murat Emirdağ; and our CFO, Korhan Öz. The following discussion, including responses to your questions reflect management’s views as of today’s date only. We do not undertake any 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 deck, today’s press release, the 6-K, our Form 20-F filed with the SEC on May 2, 2022, and other SEC filings for information about factors which could cause our actual 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, as well as the relevant IFRS to non-IFRS reconciliations. To enhance this call, we have posted our supplemental slide deck on the Financials page of our company’s Investor Relations website. As a reminder, a replay of this call will also be available on our Investor Relations website. With that, I will hand it over to our CEO, Murat. Murat Emirdağ: Thank you, Helin. Welcome, everyone, and thank you for joining us today. Before diving into dynamics and numbers of the second quarter, let me briefly remind you of our unique ecosystem that is well beyond an e-commerce platform. We have built an ecosystem that includes a well-established logistics network, fast-growing financial services, cross-border operations and key strategic assets that…

Thank you. [Operator Instructions] The first question is from the line of Tiron Cesar with Bank of America. Please go ahead.

Hi. Good afternoon or good morning, everyone. Thanks for the call and the opportunity to ask questions. I have two questions, if that’s okay. The first one relates to the free cash flow that you’re showing and obviously improving on a sequential basis. But if we compare it to this is a business which has obviously high seasonality in working capital, so if we compare the free cash flow to Q2 2021, actually there was quite a significant decrease. Can you please talk about it? And also, I think in the past, you used to mention in some of your releases that you don’t intend to or don’t need to raise capital in the next 18 months, does this statement still stand? Thank you so much. Murat Emirdağ: Sure. Thank you, Cesar, for the question. Please note that in Turkish online retail, we have a strong seasonality with higher than those, such as Legend of November in the last quarter. Accordingly, this seasonality affects our Q4 historically and it triggers negative operating cash flow in Q1 for the reasons as I explained during my presentation, we buy during Q4 and some part of those payments fall in Q1 and we generated a negative operating cash. Also, we have 1P-3P Hybrid business model. There 1P gives us a unique competitive advantage with operational flexibility in the market. And on the other hand, our inventory management is an integral part of our 1P operations and has a direct impact on our cash performance depending on the amount of inventory purchased, the inventory turnover days, the speed of inventory turnover days and the payment terms to suppliers, whether those are increasing or decreasing. In light of these factors, we continue to seek ways to improve our cash flow performance so that we eventually turn into a positive operational cash generating model for the full year. For this 18 months question, let me first clarify that our plan not to raise capital remains valid. We believe that we have the liquidity to fund our operations. We had previously provided 18 months window on our liquidity position to provide visibility under a very volatile environment, including foreign exchange fluctuations, rising inflation, as well as challenges in the regulatory framework. But now we have further understanding of this environment, those volatility factors and we are ready to provide a deeper visibility on our path to profitability by introducing our EBITDA guidance. So we expect to improve our EBITDA performance from negative 6.5% last year to a range of negative 2.5% to 3% this year on an unadjusted basis. I hope this is okay on your side, Cesar?

Yes. Thank you so much. That was very helpful. Thank you.

The next question comes from the line of Holbrook Luke with Morgan Stanley.

Yeah. Thanks for giving me the opportunity to ask a couple of questions. Just my first, sorry, if we’re rehashing what you said on the call, but on slide 22, you’ve got the minus 6.2% EBITDA as a percent of GMV adjusted and then you’ve got it 2.7% unadjusted. Can you just kind of go through a bridge a little bit and the delta between the two and what would your kind of EBITDA guidance be on an adjusted basis for the full year? Thanks. Korhan Öz: Well, unfortunately, we were -- we are not in a position to give an adjusted basis EBITDA guidance for the year end, because there are various factors affecting our inflation accounting. Even today, we don’t know what the inflation is going to be by the year end and there are so many factors that we have to take into concentration while calculating the inflation adjusted figures. And if you consider about the 6.2% versus 2.7%, this is a kind of technical calculation on our side. Once we buy the inventories, we multiply those inventories with an index until the date of sales. This increases the cost of goods sold significantly in line with the inflation versus the sales realized in the respective month. So on an adjusted basis, we are -- as Murat mentioned, we were not able to increase our average order values in line with the inflation. So the sales prices were not increased in line with the cost of goods sold increases. That resulted in a decrease in the cost of goods sold and consequently the gross contribution margin. One of the main effects of this is the age of the inventory, if you buy and sell the inventories within the same calendar month, there is no impact. However, if you buy a certain amount of inventories and sell in the following months, then the inflation accounting reduces your gross contribution margin. That is the main reason of this difference.

Okay. That’s clear. And just a second question is on your GMV guidance for the full year. I guess it would imply real terms kind of 10% decline year-on-year at the 60% on mark and I think you’ve seen order growth slow to up 8% in the last quarter. So just trying to get a handle on that, is this competitive dynamics, is this the macro situation, what are you seeing from your side? Murat Emirdağ: Let me take this question. Luke, it’s Murat speaking. Hi. So I guess the first thing to remember, maybe we are operating in an inflationary environment and we are remaining focused on our execution according to our plans by applying a disciplined constant cash management within our path to profitability. So it is important to remind everyone. And within that context, when you now refer this, let me start with the orders first. When you look at the order growth, which is resilient, has been resilient against all these challenges in the market actually has a couple of drivers behind it. Let me remind you of some of those which I think if you have understand our current order growth platform. One actually is to mention, first, an external factor, which is, of course, the macroeconomic environment. So there is definitely a continued pressure on consumer spending in the current environment and this affects the consumer behaviors. So consumers, in terms of their behavior we observe, they tend to shift towards more affordable products and also we observed they are applying potential holdback on certain categories. That is actually one a major consumer behavior aspect of it. If you look at our internal drivers, maybe I want to mentioned -- worth mentioning is the fact that within our disciplined cost and cash management, we…

Yeah. Perfect. Thank you very much. That was all.

The next question comes from the line of Ms. Kilickiran Hanzade with JPMorgan. Please go ahead.

Thank you very much. I have three questions. The first question is about the free delivery. So what was the share of free delivery in total orders, I mean, so far year-to-date and compared to 2021, how has this changed? And you are quite excited about the Hepsiburada Premium and I wonder how much are you charging for the loyalty fee here? And the second question is about the GMV guidance. What is the average inflation have you considered on GMV guidance and can you provide a bit more detail on the guidance for quarter for the third quarter and the fourth quarter? And the final question is about the delivery cost and pass on the cost inflation in last-mile on the 3P. So how quickly are you able to pass the cost inflation in last-mile? And I couldn’t really understand this decline in shipping expenses, which was around 35% in real terms, very substantial, but you didn’t lose any orders according to your key KPIs. So can you please elaborate a little bit more. Thank you. Murat Emirdağ: Thank you, Hanzade. Actually, maybe it’s -- because it’s very related to the previous question of Luke, let me start with the question on more detail on guidance or few forward-looking expectations for Q3 and Q4 and I hand over to actually to Korhan. Okay, now at this point, let me just briefly -- I guess, I briefly covered what is the current trading momentum at this point. And again, our initial impression looks like our execution and our focus and experience and our disciplined diligent execution seems to have resonated well with our customers and merchants. But of course, this is still our early observation with respect to our current trading period. But on top, I guess, maybe it’s also…

And so what is the, I mean, current charge for the Hepsi membership. So that is the one, because you still offer pre-deliver for all loyalty members, right? Murat Emirdağ: The pre-delivery -- maybe with respect to Hepsiburada Premium, let me maybe Korhan share some insights and please get on it if you see any of that program. Basically, Hepsiburada Premium have very brand new and fresh programs as you know we introduced recently. And we, of course, are very pleased by the promising demand and initial reaction by the customers. And actually, in that Hepsiburada Premium paid subscription model, yeah, that number actually we shared here on the presentation as well almost about 200,000 subscribers. So it’s still relatively in early phase for us. With that said, that is actually a program which is currently available at TRY9.9 per month. This is the current price, and of course, this is the current price we are referring to, which is also publicly visible. And also in that program, we have multiple benefits that we offer to our customers, which are actually not just related to cargo benefits, but also some other benefits as well and actually in overall, our vision for this program to become actually a key differentiation for us. I think we should also be referring to our focus on retention and engagement we believe Hepsiburada Premium will eventually play an integral role to drive further engagement and loyalty in our customer base. And actually, we can see that also looking at the global examples and best practice as well. So this is our vision from this program. Let me actually Korhan start here. I hand over back to you because I have not shared the... Korhan Öz: Yeah. Thank you. Murat Emirdağ: …that’s the only… Korhan Öz: …turn on with Murat. On our platform, if the order is above TRY100 then the cargo is free with the Premium launch, we decreased this TRY25 for the Premium customers. Murat Emirdağ: But of course… Korhan Öz: That’s the gap is very insignificant for the time being. Thank you.

Okay. Thank you very much. Can I please ask a final question, if possible? It’s about actually e-commerce... Murat Emirdağ: I am sorry please remind us if we forget to address any questions, because you have multiple...

I will… Murat Emirdağ: …if we just forget, you just remind us.

I am trying to understand the impact -- positive impact from the new e-commerce law. So when do you expect to see the trans-positive [ph] sign from declining ad spending that cost by the new model now? And is it possible for you to share a rough calculation ad spending at post in terms of GMV in 2023 as a calc? Thank you. Murat Emirdağ: I think maybe it’s fair to say first. It is way too early to assess the impact at this point as some provisions of the new regulatory framework to get effective as of next year onwards. So it’s still an early phase. But I guess our initially impression and our initial review on the law makes us anticipate that this build eventually, over time, might create a more favorable operating environment for all players. The reason behind actually is the fact that the regulators actually attributed to certain design systems, which also we believe seem to resonate to delivery some standards. And the one we actually understand from the perspective which is that they try to ensure a more transparent, healthy and same market environment for all players, which makes sense for us. Of course, obviously, the second actually is they definitely want to prevent any monopolistic practice in the market to secure the long-term benefits of all stakeholders, including customers, SMB, suppliers and suppliers in general, which makes sense for us as well. And that, of course, but not least, they also want to establish and invest to friendly market environment for both domestic and international investors with a much transparent regulatory framework with a defined rules and regulations and I think, again, that is on us makes sense. So taking those principles, actually, we believe, in general, we anticipate a much more favorable environment -- operating environment for all the players. But again, the impact is early to assess. I guess that’s what we can actually mention at this point. In terms of calculation, I mean, this is maybe early to specify a certain number, but we are actually actively working on this analysis, what those thresholds, which were introduced in the regulatory framework means to us and moving forward in the New Year. But again, let me remind you, this is actually a separate side note. We’ve been already actively operating with a very cautious improvement in marketing efficiency and spending. So we believe our unique customer experience, which is, as you know, we are the market leader in terms of MPS [ph] and also our kind of does changed marketing engine, actually will become much more handy in the new rules and we are getting already ready for it.

Okay. Thanks very much. Murat Emirdağ: Thank you.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to management for any closing comments. Thank you. Murat Emirdağ: Thank you so much for your -- for all listening and actually we are looking forward to the next quarter’s earnings call.

Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for calling and have a good afternoon.