Ladies and gentlemen, thank you for standing by. I’m Constantinos, your Chorus Call Operator. Welcome and thank you for joining me the Hepsiburada Conference Call and Live Webcast to present and discuss the Second Quarter 2021 Financial Results. All participants will be in listen-only mode and the conference is being recorded.

The presentation will be followed by a question-and-answer session. 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 second quarter 2021 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 reflects 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. 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 presentation, today’s press release, the 6-K and our Prospectus filed with the SEC on July 1, 2021, and other SEC filings for information about factors, which could caused 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 earnings press release for a presentation of the most directly comparable IFRS measure as well as the relevant IFRS to non-IFRS reconciliation.

As a reminder, a replay of this call will be available on the Investor Relations page of Hepsiburada website. With that, I will hand it over to our CEO, Murat..

Thanks, Helin. We are so excited to have our first earnings call ever as the only NASDAQ listed Turkish company. Before we dive into the second quarter results, I would like to take a moment to give an overview of our Super App ecosystem and focus on some of the key fundamentals that contribute to the success of Hepsiburada.

Hepsiburada is a homegrown company that has played a fundamental role in the development of e-commerce in Turkey over the last 20 years. Our name Hepsiburada literally means everything is here and is synonymous with a seamless online shopping experience and benefits from very strong brand awareness. Our vision is to lead digitalization of commerce.

To that end, we have evolved from an e-commerce platform into an integrated ecosystem of products and services centered on making people’s daily lives easier. We operate in attractive market that has a large, young, urbanized, and tech savvy population.

The Turkish market is at an inflection point with a growing e-commerce penetration expected to exceed 20% within total retail by 2025. That said, roughly 90% of total retail is still offline, offering a large opportunity for growth.

Our Super App is at the center of our value proposition and acts as a one-stop-shop for customers by offering a broad range of products and services and by creating differentiated user experience. Today, we are a one-stop-shop for customers’ everyday needs from products and services to groceries and payments.

We constantly seek new ways to differentiate our customer experience with value-added services such as frictionless return pick-up, expedited delivery services, card splitting, instant customer loan and our loyalty club offering.

Also, we continue to expand into new strategic assets, including HepsiExpress, our on-demand grocery delivery service; HepsiPay, our digital wallet companion solution; HepsiFly our airline ticket sales platform; and HepsiGlobal, our inbound and cross-border business.

With our growth-oriented business model, we recorded a GMV growth at 64% CAGR between 2015 and 2020, as we disclosed in our IPO prospectus.

Our solid operational execution, capital efficiency, robust logistics network, deep technology capabilities, household brand name, hybrid business model and integrated ecosystem have positioned us with a homegrown company to emerge as the first-ever NASDAQ listed Turkish company. Let me stop here and now turn to our second quarter results.

Next slide, please. In the second quarter, our GMV grew by 38% compared to the same period of last year to TRY 5.9 billion, in line with our plan. This performance brings the first half GMV growth to 58% on a yearly basis. Total number of orders in the second quarter were 13.1 million, which is the highest we have recorded to-date in a single quarter.

It is important to highlight that these results heading against a strong baseline effect of COVID-19 pandemic last year and are driven by a greater active customer base, order frequency, active merchant base and total number of SKUs compared to the second quarter of last year.

HepsiJet, our in-house last-mile delivery service achieved presence in every city in Turkey by the end of June 2021. Parallel to our Super App ecosystem value proposition, we continue to invest and scale our strategic assets, particularly HepsiExpress and HepsiPay, which are well-positioned for strong growth.

Within that context, we launched our digital wallet, HepsiPay Cuzdanim embedded in Hepsiburada in June 2021. HepsiExpress our on-demand grocery delivery service has expanded its partner network to over 40 brands across over 1,800 stores. Overall, these results indicate our ability to deliver strong growth across the ecosystem.

Let’s have a detailed look into key assets. We operate a large, fast and scalable in-house logistics network with last-mile delivery, fulfillment and operations capabilities powered by our proprietary technology. We believe that our nationwide logistics network is key to our success.

We operate six fulfillment centers, covering more than 120,000 square meters strategically located across Turkey.

In the second quarter, HepsiJet achieved presence in every city in Turkey, reaching 137 cross-docks with HepsiMat, our nationwide pick-up and drop-off network, expanding to more than 1,500 branded pick-up and drop-off points across lockers, partner local stores, gas stations and retailers.

As a result of its expansion, HepsiJet conducted more of retail deliveries and more of marketplace deliveries in Q2 2021 compared to the same period of last year.

With HepsiJet, we are able to offer a variety of value-added services, including same-day, next-day delivery option, delivery by appointment, including weekend and frictionless return, which is HepsiJet picking up your return from your door at your preferred schedule.

In line with our efforts to enrich value-added services, HepsiJet also began rolling out two-man cargo handling service in Q2, addressing the need for high-quality and reliable service in relevant categories. We believe that our robust logistics network gives us a significant competitive edge in offering strong customer experience.

Let’s take a look at another strategic asset, HepsiExpress. At HepsiExpress, we aim to become a mainstream grocery shopping destination. Embedded in Hepsiburada’s Super App, HepsiExpress offers both, instant and scheduled delivery options, addressing grocery needs for on-demand and planned grocery shopping.

By the end of second quarter of 2021, HepsiExpress has become one of the strong players in this market with around 2,600 outsourced picking and delivery agents, and have expanded its ecosystem to over 40 brands and roughly 1,800 stores with presence across more than 50 cities in Turkey.

We believe HepsiExpress will be a key enabler to attract new customers to engage our existing audience and to unlock further synergies across services in Hepsiburada. Let’s take a look at HepsiPay. HepsiPay is designed to be a companion wallet to spend, save and mobilize money in a flexible way across online and offline channels.

Having acquired its license in 2016, HepsiPay marks an important milestone by launching HepsiPay Cuzdanim, which I will refer to as HepsiPay Wallet, as an embedded digital wallet product on our platform on the 10th of June. Its daily penetration amongst eligible audience has been faster than our expectation.

HepsiPay Wallet enables instant returns, cancellation and cashback. Along with HepsiPay Wallet, HepsiPay also introduced Hepsipapel, a cashback points program that allows customers to earn and redeem points during purchases with the wallet on the Hepsiburada platform. The Hepsipapel program has been instrumental in the rapid growth of HepsiPay Wallet.

HepsiPay will enable peer-to-peer money transfers and will constantly explore new use cases across online and offline. I will now leave the floor to Korhan, our CFO, to run you through the financial performance in Q2..

selection, price, and delivery. On selection, with our compelling value proposition, we doubled our active merchant base as of June 30th, compared to the same base a year ago. This is reflected in our offering to customers as almost doubling our SKUs on our platform during the same period.

On pricing, we seek to provide the best value for our customers by offering competitive prices, which we have continued to uphold in Q2. On delivery, our large, fast and scalable in-house logistics network stands out as one of the key strengths, which we have done by increasing our overall footprint across Turkey.

These key strengths have been instrumental in driving continued customer growth on our platform, as well as higher order frequency on a yearly basis. As such, our total number of orders grew by 38%, reaching a record 13.1 million in the second quarter. A combination of these factors has resulted in 38% GMV growth in the second quarter.

This performance was achieved against an already strong second quarter of 2020 due to baseline effect of COVID-19. To normalize this effect on growth figures, we have shown here two-year compounded growth rate.

So, for the first and second quarter of 2021 compared to the same period last year, compounded two-year growth rate was 68% and 86%, respectively, indicating a continued quarter-over-quarter momentum. It is worth mentioning that we will continue to see the baseline effect of last year on the growth figures for the upcoming two quarters as well.

Let me now walk you through our hybrid business model. Our hybrid business model offers a healthy combination of retail and marketplace. Having launched our marketplace six years ago, we have gradually increased its contribution to GMV, bringing it to 69% in the second quarter of 2021.

Hence, the GMV shift to 3P is expected to have strategic advantages on our business in the long-term, facilitating a wider selection, availability and its competitive pricing. Since our launch of the marketplace, we have always regarded our merchants as our long-term business partners.

With this mindset we have focused on creating value-added services for our merchants. We empower them with our comprehensive end-to-end solutions to thrive digitally. Our set of advanced tools and services include the merchant portal with merchant store management tools and advanced data analytics.

In Q2, we upgraded our merchant portal by introducing new modules that further contributed to overall efficiency by increasing self-service actions. We also offer them advertising services through HepsiAd, so that they can effectively advertise inside and outside Hepsiburada to drive their sales.

We give them access to our last-mile delivery service, HepsiJet, as well as our fulfillment service, HepsiLojistik where we can take care of storage, handling and packing of the merchandise on their behalf. We also help them get better with e-commerce by providing comprehensive training sessions through our training portal.

Last but not least, we provide them with financing options to help them in their effective working capital management. In 2020, our financing program exceeded TRY 1.3 billion in volume with an 11.4 times growth in merchants and suppliers financing from 2018 to 2020.

All these value-added services have contributed to Hepsiburada, shaping into one of the most attractive digital platforms for merchants to access 33 million members on our platform as of last year-end. We will continue to work towards growing our merchant base through these capabilities.

Now, let me elaborate on our GMV and revenue growth in the second quarter. As we have stated already, our GMV growth was 38.2% whereas our revenue grew by 5.2% in the second quarter compared to the same period 2020.

Our GMV refers to the total value of orders/products sold through our platform over a given period of time, including value-added tax, without deducting returns and cancellations, including cargo income and excluding other service revenues and transaction fees charged to our merchants. Our revenue consists of sale of goods, which is our retail model.

And we refer to it as 1P, plus marketplace revenue, which is our marketplace model, and we refer to it as 3P, plus delivery service revenue and other revenues. In direct sale of goods, which is retail, we act as a principal and initially recognize revenue on a gross basis at the time of delivery of the goods to our customers.

In the marketplace, revenues are recorded on a net basis, mainly consisting of marketplace commission, transaction fees and other contractual charges to our merchants. Our revenue grew by 5.2% in Q2 2021, compared to the second quarter of last year.

This was mainly driven by a 67.2% increase in our delivery services and other revenue, and a 2.3% growth in our marketplace revenue, whereas the revenue generated from sale of goods, which is retail, remained as flat, also detailed in the next slide.

On the upper part of this slide, we show the dynamics and factors that have had an impact on our revenue growth in the second quarter. While our GMV grew by 38.4% in Q2 ‘21, our revenue growth was 5.2%, reflecting the 11 percentage points rise in the share of marketplace GMV. Please note that marketplace revenues are recognized on a net basis, i.e.

representing commission and other fees, whereas the direct sale of goods that is retail is recognized on a gross basis. The contribution of the electronics domain to overall GMV was around the same level as the same period last year.

However, we sold more electronics, including appliances mobile and technology through marketplace in Q2 ‘21 than the same period of last year.

We continued to widen our selection with expanding merchant base and competitive prices in the market by our strategic margin investments, as well as discounts given to our customers for temporary marketing campaigns.

Accordingly, we invested in certain non-electronic categories, such as supermarket to drive order frequency and also invested in electronic categories to fortify our market position.

Additionally, we observed higher customer demand for lower margin products across different categories, such as digital products, gadgets and appliances, including accessories, Bluetooth devices and robot vacuum cleaners.

The 60% increase in delivery service revenue compared to the second quarter of last year was primarily attributable to 37% rise in the number of orders as well as higher delivery service revenue generated from third-party operations during the same period.

At the bottom part of this slide, we disclose the EBITDA as a percentage of GMV bridge between Q2 2020 and Q2 2021. EBITDA was negative TRY 189 million compared to positive TRY 71 million in Q2 2020.

This corresponds to a total 4.9 percentage-point decline in Q2 2021 compared to the same period in EBITDA as a percentage of GMV, which is driven by 2.4 percentage-point decrease in gross contribution margin, 1.5 percentage-point rise in advertising expenses and approximately 1 percentage-point rise in other OpEx items, including the cost of inventory sold and depreciation and amortization.

The 2.4 percentage-point decline in gross contribution margin is driven by strategic margin investments with shift in electronics GMV to 3P and the discounts given to our customers for temporary marketing campaigns offset by other revenue streams.

Negative 1.5 percentage-point margin impact through advertising expenses was to accelerate key growth drivers in core business and also to scale new strategic assets. We consider this expense as an investment in our long-term growth while strengthening our market position.

Negative 0.7 percentage-point margin impacts through shipping and packing expenses was mainly driven by changing some of our delivery partner mix to improve customer experience and around 23% rise in unit costs.

Negative 0.4 percentage-point margin impact through payroll and outsourced staff expenses was mainly due to additional around 1,200 employees over the past year, along with the impact of annual salary rise in February 2021. As a result, EBITDA as a percentage of GMV resulted as negative 3.2%, amounting to negative TRY 189 million.

Now, let’s have a look at our net working capital and free cash flow generation in the next slides. This quarter, we generated a strong operating cash flow through effective working capital management. Accordingly, net cash provided by operating activities increased by TRY 595 million, reaching TRY 749 million in Q2 2021.

This increase was primarily due to the increase in change in working capital through change in trade receivables of TRY 355 million, which is mainly driven by credit card receivables, change in inventories of TRY 301 million and change in trade payables and payables to merchants by negative TRY 97 million. Our net CapEx is TRY 44 million in Q2 2021.

During this period, our investments were mainly in product development across app, website and mobile platforms, as a result of our growing operations, and purchase of property and equipment mainly consists of hardware and intangible assets, arising from website development costs.

As a result, our free cash flow increased TRY 569 million as of Q2 2021 from TRY 136 million, year-on-year. Now, I will leave the floor back to Murat to share our guidance with you. .

Now, let’s look ahead to the second half of the year. As the second half of the year began, the Turkish e-commerce market has encountered several challenges.

These included the nationwide extension of the bank holiday period during the celebration of Eid al-Adha in July, and the lift-off of lock-down measures as of July 1st, both of which adversely impacted consumer behavior in online shopping.

The tragic wildfires on the Mediterranean coast of Turkey and later, the devastating floods in the Black Sea region have altered the priorities of the public agenda, in early August. While these adverse circumstances impact the market, we will continue to prioritize GMV growth in the second half of 2021.

We believe this to be especially important given the seasonality of our market which favors the second half of the year.

As a result, our key principle remains to prioritize growth to create long-term value by attracting more customers, increasing order frequency, adding more merchants, expanding our selection of catalogue, maintaining price competitiveness, and scaling our new strategic assets.

We are committed to investing in and delivering strong full year GMV within the TRY 28 billion to TRY 29 billion range. With this, we end our presentation. We can now open the line for questions. Thank you for listening..

Ladies and gentlemen, at this time, we will begin the question-and-answer session. The first question is from the line of Tiron, Cesar with Bank of America. Please go ahead..

Yes. Hi. Good morning or good afternoon, everyone. Thanks for the call and the opportunity to take questions. I have four questions. Sorry about that. The first one is on the outlook for the market in 2H.

By reading the press release and also from your comments, do I understand correctly that the outlook for H2 seems to be a little bit tougher than what you expected, probably one or two months ago, and that you need to invest more than expected to achieve the same GMV number? I just wanted to check if I understood that right.

My second question would be on the take rate for 2Q. Can you give us some indication on the take rate? And also help us broadly understand, it looks like it dropped a little bit. Third question would be on the contribution margin comments from the press release.

I just wanted to understand better dimension of discounts that you’ve given to your customers for temporary marketing campaigns, if you can help with that? And then, the last question would be on dimension from the press release that you’ve observed some increased demand for lower margin products.

I just wanted to understand, if that has reversed into Q3 and what do you attribute this to? Thank you so much. I’m sorry for the many questions..

For the first one, outlook -- whether outlook looks tougher or not. Well, the recent trends observed -- we observed in Q2 and early Q3 are reflected on the outlook, as well as the seasonality of our market, which favors the second half of the year. And the Turkish market is at an inflection point.

And this is the right time for us to prioritize our growth. That is why we raise capital and are focused on investing in and delivering long-term value creation.

In terms of the take rate, our gross contribution margin declined 2.4 percentage points to 8.3% compared to the second quarter of last year, mainly due to underlying dynamics in revenue growth.

This 2.4 PP decline in gross contribution margin is driven by, as you said, strategic margin investments in certain categories, like electronics, to fortify our market position, and in non-electronics, to drive further frequency by our customers, and also into CRM which we called as temporary margin investments, and this will be gradually reduced throughout the time.

And also shift in electronics GMV into 3P, meaning marketplace. We sold more electronics from the marketplace units and therefore this affected our gross contribution.

And finally, the discounts given to our customers to widen -- sorry, to continue, widen our selection with expanding merchant base and competitive prices in the markets by our strategic margin investments as well as discounts, given to our customers for temporary marketing campaigns.

In terms of lower margin products, those lower margin products are mainly gadgets, appliances, Bluetooth devices and robot vacuum cleaners, and also 1P electronic products shift into the GMV. Mostly those products consist of appliances, mobile devices and technology devices, which has lower margin compared to non-electronics.

Well, depending on the market evolution, we expect this trend may continue in the third quarter as well, but we have always been prioritizing our growth to create long-term value by attracting more customers, increasing our order frequency and adding more merchants, expanding our selection of catalogs, maintaining price competitiveness and scaling our new strategic assets.

Thank you..

The next question is from the line of Adisa, Miriam with Morgan Stanley. Please go ahead..

Hi, everyone. Thanks for taking my questions. Firstly, just following up on the take rate. So, you mentioned that you’ve seen a shift from electronics from 1P to 3P. Just wondering what has been driving that, and do you see that specifically as a permanent shift? And then, also just on the discounts that you also mentioned as well.

How much of this was sort of driven by any competitive pressures? Were there sort of more competitive pressures than you anticipated at the start of the quarter? And if you could just comment on the current competitive environment that you’re seeing at the moment? And then, finally, just on the payments, I think, you mentioned that it was -- the development was ahead of expectations.

If you could just give a bit more color on that that’d be great. Thank you..

Thank you, Miriam. For the take rate, well, we continue to widen our collection with expanding merchant base and competitive prices in the market by our strategic margin investments, as well as discounts given to our customers for campaigns.

Accordingly, we invested in certain non-electronic categories, such as supermarkets to drive our order frequency and also invested in electronic categories to fortify our markets position. Please note that we are very strong in electronics, and in electronics, the biggest opportunity comes from offline.

On the competitive environment, let me hand over to Murat..

Let me just quickly address competition and let me take next question. I mean, let me remind you that we operate in this attractive market that has a large, young, urbanized and tech savvy population. We have been operating in this market, along with several players for many years and proven our growth trajectory.

So, the Turkish market is at an inflection point with a growing e-commerce penetration expected to exceed 20% within total retail by 2025. That said, roughly 90% of total retail is still offline. Hence, our largest opportunity is offline retail.

And we would like to capitalize on this opportunity and create long-term value by expanding our customer base, order frequency, merchant base, our selection and maintaining our price competitiveness, and scaling our new strategic asset.

And of course, our solid operational execution, capital efficiency, robust logistics network, deep technology capabilities, household brand name, hybrid business model and integrated ecosystem well position us for success. Third question, if I’m not mistaken is about HepsiPay.

HepsiPay is correct?.

Yes..

So, HepsiPay is designed to be a companion wallet to spend, save and mobilize money in a flexible way across online and offline. Having acquired its license in 2016, HepsiPay marked this important milestone by launching this Cuzdanim, HepsiPay Wallet, as an embedded digital wallet on our platform on the 10th of June.

As we mentioned, the daily penetration amongst eligible audience has been faster than our expectation, but yet, it’s too early to disclose numbers. But HepsiPay Wallet enables into returns, cancellations and cashback.

Along with HepsiPay Wallet, HepsiPay also introduced papel program, a cashback points program that allows customers to earn, redeem points during purchases with the wallet on our platform. HepsiPay will enable peer-to-peer money transfers and will constantly explore new use case scenarios across online and offline.

Actually in line with our Super App value proposition, we’ll continue to invest and scale our strategic assets to the benefit of our customers, including HepsiPay, which is well-positioned for strong long-term growth..

The next question is from the line of Tuncer, Aslı with Goldman Sachs. Please go ahead..

Hi. Thank you very much for the presentation. And congratulations on the first set of results, post your IPO. So, I’ve got a couple of questions. First, on the active user base, are you able to share some sort of granularity around the actual growth rates? It will be important that just anything sort of anecdotal would be helpful as well.

I know that there were a couple of questions on the take rate, but I couldn’t hear it clearly. My line was breaking up. So, the implied take rate for the second quarter is quite low.

Is this a pure mix effect or is there any change in the take rates across categories, potentially due to competitive pressures? And is that something that will imply lower take rate going forward for the rest of the year and potentially beyond that? And my next question is, what are your expectations on profitability for the rest of the year? Where do you see most of the pressure coming from? And related to that, how is the profitability profile across your new business lines, especially HepsiExpress?.

Thank you, Aslı. For active user base, unfortunately, we do not share our active user base on a quarterly basis, but we will share the increase by the end of the year, as a year-end figure. However, our active user base and frequency keeps on increasing, I can give you this guidance.

On the margin investment and the take rate effect, I can say, our gross contribution margin declined by 2.4 percentage points, reaching 8.3% compared to the second quarter of last year. And this is mainly due to dynamics in revenue growth.

There is a 2.5 percentage-point decline in gross contribution margin driven by strategic margin investment and because of CRM, which is we called as temporary margin investment.

And those strategic margin investments are done in electronics to fortify our market position and in non-electronic to derive frequency for this -- to bring additional GMV for our company.

We continue to widen our selection with expanding merchant space and competitive prices in the market by our strategic margin investment as well as discounts given to our customers for temporary campaigns.

And accordingly, the investment in certain categories, non-electronic and electronic categories, such as supermarkets and some electronic categories, please note that we are very strong in electronics. And in electronics, there is biggest opportunity comes from offline.

And in order to capture these offline customers, we have been making on and off basis, margin investments to gain additional GMV. On the third question, expectations about the profitability, the Turkish market is at an inflection point, and this is the right time for us to prioritize our growth.

That is why we raise capital, and we’re focused on investing in and delivering long-term value creation. As a result, our key principles remain to prioritize growth to create long-term value by attracting more customers, increasing order frequency and adding more merchants on our platform..

The next question, maybe I can take the next question. It was about the profitability for new businesses. Right? Let me remind you, at HepsiExpress, we aim to become a mainstream grocery shopping destination. For HepsiPay, it is designed to be a companion wallet to spend, save and mobilize money in a flexible way across online and offline.

So, with this strategic mindset, we will certainly prioritize growth for our strategic assets. In line with our Super App value proposition, we will continue to invest in and scale our strategic assets to the benefit of our customers.

And HepsiPay and our HepsiExpress are particularly important to us, because they are well-positioned for strong long-term growth..

Okay. Thank you.

So, basically, from my understanding, these strategic margin investments, sort of the temporary discounts, they could continue, as long as you see the growth opportunity from these?.

Exactly. If we see the growth opportunity, we can continue those campaigns and margin investments..

The key principle always will remain that we’re going to increase our customer base, merchant base, frequency, selection, and that is our core principle..

Okay. And going forward, from what I understand -- sorry, for the follow-up. So, you will be tracking -- we will be tracking growth in GMV, obviously, but we will be seeing disclosure from you on the total orders rather than breakdown of things, like active user base and the frequency, we will see the total order numbers..

That is true. By the year-end, we will be sharing our customer base increase and the frequency numbers in detail. But on a quarterly basis, we don’t disclose. We only give the overall growth numbers..

The next question is from the line of Kılıçkıran Hanzade with JP Morgan. Please go ahead..

Thank you for the presentation. Majority of my questions are asked, but I have some more. The first one is about competition. How are you planning to respond to accelerated last-mile and fulfillment investments by Trendyol? I think, they are now much bigger than you on the fulfillment side.

And how many merchants have been already onboard for fulfillment services? Because you had given some sort of statistics during the IPO, and I just wanted the developed ones here.

And what is the share of total orders delivered by HepsiJet, what is the progress here? And you also mentioned about some share incentives to management, I think, which is not included in your payroll cost, in the second quarter.

Can you please give some details about this? And finally about your working capital, there was a big relief in the second quarter. So, how should we think about this developing in the second half from a cash flow perspective? Thank you..

Yes. Let me take the first question. Maybe let me just first remind you, our well-defined use-of-proceeds plan.

As you remember, we have a very strong, well-defined use-of-proceeds, which includes exploration of our growth flywheel, scaling up our strategic assets, investing and scaling our operations, logistics and technology, infrastructure, and of course, driving project talent.

Within that context, as we discussed briefly so far, we also definitely invested and scaled our capabilities across design. We operate a large, fast and scalable in-house logistics network with last-mile delivery, fulfillment and operations capabilities powered by our proprietary technology.

I mean, as you remember, we mentioned as a result of its expansion, now HepsiJet achieved presence in every city in Turkey, reaching 137 cross-docks with HepsiMat, our nationwide pick-up and drop-off network expanded to more than 1,500 pick-up and drop-off points across the country.

And as a result of its expansion, HepsiJet conducted more of retail deliveries and more of marketplace deliveries in Q2, compared to the same period of last year.

And also with HepsiJet, with our logistics capabilities, we are able to offer a variety of valued services, especially frictionless return, delivery by appointment, same-day and next-day delivery options.

And also, let me remind you at International Business Awards in 2021, we were awarded with a gold award for our frictionless return service in the Best User Experience category. So, we believe our robust logistics network gives us a significant competitive edge in offering strong customer experience and we’ll continue to do so..

Is it possible for you to share some statistics there, because I really want to understand the upside in Hepsi.

So, what is the current status about the -- I mean, on the last-mile, how many -- I mean, what is share of total orders delivered by HepsiJet? And how many merchants have you already on-boarded for the fulfillment services to understand the potential growth?.

Yes. Thank you so much again for your questions. Let me tell you. HepsiJet, actually, as you remember also I’ve shared in the prospectus, is in the early phase of its journey and it keeps scaling the number of merchants getting on-boarded.

On the other hand with HepsiJet, it’s just increasing its contribution to retail deliveries as well as marketplace deliveries compared to the same period of last year. So, it keeps growing year-over-year with respect to Q2, both in 1P and 3P contribution-wise in terms of number of deliveries..

The next question is about management incentive plan and how much we recognize in our P&L.

Is it correct, Hanzade?.

Yes. That’s correct..

Okay. In total, we have TRY 132 million recognized in our P&L as management incentive plan expense, and also this TRY 98 million is based on discounted cash payments, which is projected to be done within the year 2021.

And the second part is TRY 34 million, it’s based on share based payments which will be made within the next 18 plus 12 plus 12 months according to our plan. So, in total, we recognize TRY 132 million, and discounted cash payments 98, shared based payment, 34. This is recognized based on vesting plan disclosed in the agreement.

On the working capital side, yes, our working capital will keep on improving in the second part, due to the fact that our GMV will be -- will continue to grow in the second half. And with the better management, we expect to improve our operating cash flow in the second half..

Okay.

So, there shouldn’t be any seasonality impacting the working capital, right? I mean, the second half of the year? So, you can assume the similar type of working capital management?.

There is always seasonality in the second half, especially in the fourth quarter. Having said that, our procurement increases significantly, and we are growing significantly in the third quarter. And based on the seasonality experiences in the past, we expect a better net working capital by the end of Q4. It will improve gradually..

Thank you very much. And can I finally ask about the HepsiExpress? You said -- you mentioned about new brands to be onboard in grocery delivery.

So, is there any national brand here that you managed to onboard recently?.

Because we are referring to Q2 results, we cannot actually disclose any future or forward-looking plans at this point. But I can tell, HepsiExpress already actually achieved over 40 brands, and roughly 1,800 stores with more than 50 cities. And also, as you remember, we launched water service -- water delivery service, as well..

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..

Thanks, operator. I would like to recap what you have heard from us today. Our vision is to lead digitalization of commerce. Today, we are one-stop-shop for our customers’ everyday needs from products and services to groceries and payment solutions.

Our solid operational execution, capital efficiency, robust logistics network, deep technology capabilities, household brand name, hybrid business models and integrated ecosystem helped position us as a homegrown company to emerge as the first-ever NASDAQ listed Turkish company.

We operate in an attractive market that has a large, young urbanized and tech savvy population. Again, let us remind you, the Turkish market is at an inflection point with the global e-commerce penetration expected to exceed 20% within total retail by 2025.

That said, roughly 90% of total retail is still offline, offering a large opportunity for growth. And this is the right time for us to capitalize on these opportunities.

Our key principle remains to prioritize growth, to create long-term value by attracting more customers, increasing our order frequency, adding more merchants, expanding our selection of catalogue, maintaining our price competitiveness and scaling our new strategic assets.

With the use of funds raised in our recent IPO and our strong balance sheet, we will continue to invest in our region. Thank you for everyone for your time today. And we look forward to speaking with you again next quarter..

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening..