D-MARKET Electronic Services & Trading — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone Q4 filing; the supplied text does not provide a clear set of separate Q4 financial results. The company operates the Hepsiburada e-commerce platform primarily in Türkiye. Financial statements are audited and prepared under IFRS, including IAS 29 hyperinflation adjustments. Unless otherwise noted, amounts below are in TRY and comparative financial figures are restated to December 31, 2023 purchasing power.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | TRY 35.56bn | TRY 26.48bn | +34.3% |
| Gross contribution | TRY 10.77bn; 9.2% of GMV | TRY 5.75bn; 6.5% of GMV | Non-IFRS measure; margin improved 2.7 percentage points |
| Operating loss | TRY 725m | TRY 5.11bn | Loss narrowed by TRY 4.39bn |
| Net income/(loss) | TRY 75.5m | TRY (4.79)bn | Turned profitable; FY2023 net income was substantially supported by monetary gains |
| EBITDA | TRY 449m; 0.4% of GMV | TRY (4.27)bn; (4.8)% of GMV | Non-IFRS measure |
| Cash from operating activities | TRY 5.02bn | TRY 706.8m | Improved substantially |
| Free cash flow | TRY 3.87bn | TRY (685)m | Non-IFRS measure, defined as operating cash flow less capex plus asset-sale proceeds |
| Cash and cash equivalents | TRY 5.50bn | TRY 8.68bn | Down; FY2023 also held TRY 1.72bn in financial investments |
| Bank borrowings | TRY 186m | TRY 39.5m | Low relative to cash; lease liabilities were TRY 276m |
| Current assets / current liabilities | TRY 14.62bn / TRY 13.65bn | TRY 13.80bn / TRY 12.76bn | Current ratio approximately 1.07; reported net working capital was negative TRY 5.91bn |
Revenue mix in 2023: Direct Sales TRY 26.35bn (74.1%); Marketplace TRY 4.49bn (12.6%); delivery services TRY 3.62bn (10.2%); other services TRY 1.10bn (3.1%). Marketplace represented 66.9% of GMV, while Direct Sales represented 33.1%. GMV rose 31.1% to TRY 116.5bn.
Key activity measures: orders increased 40.6% to 113.0m, including digital products; excluding digital products, orders rose 13.7% to 75.1m. Average order value excluding digital products rose 15.2%. Active Customers declined 2.5% to 11.9m, while order frequency rose to 9.5 from 6.6. Management attributed customer decline partly to the February 2023 earthquakes and its focus on frequency and profitability.
Material changes versus the prior comparable period
- Revenue growth accelerated, with Marketplace revenue up 59.9%, delivery services up 47.8%, and other services up 125.0%. Premium subscriptions and advertising contributed to other-services growth.
- Cost discipline improved operating performance: advertising expense fell 16.5% and was 6.8% of revenue versus 11.0% in 2022. Operating expenses rose 14.9%, slower than revenue growth.
- FY2023 net income does not by itself indicate operating profitability: the company reported an operating loss of TRY 725m and monetary gains of TRY 1.27bn. Management said monetary gains reflected net monetary liabilities exceeding monetary assets.
- Cash from operations and free cash flow improved, but cash and cash equivalents fell by about TRY 3.18bn. Investing activities used TRY 1.68bn, financing activities used TRY 3.33bn, and inflation effects reduced reported cash in the cash flow statement.
- IAS 29 materially affects period comparisons: the three-year cumulative inflation rate was reported at 268% at year-end 2023. Turkish CPI inflation was 64.8% in 2023. Historical comparisons are expressed in year-end purchasing power and may not be directly comparable with previously published figures.
Outlook, risks, contingencies, and unusual items
- Management outlook: For 2024, management aims for a higher EBITDA margin and continued progress toward operating profitability. It expects capital expenditure in TRY terms to increase, with approximately 24% allocated to Hepsipay and 13% to HepsiJet. These are targets and expectations, not guaranteed results. Management said available cash, operating cash generation, and credit lines should cover short-term needs and that cash is expected to fund operations for at least 12 months from the financial-statement issuance date.
- Funding plans: The Capital Markets Board approved a potential asset-backed securities program of up to TRY 2bn backed by BNPL receivables. A TRY 200m issuance application was made, but amount and timing remained subject to market conditions and board approval.
- Inflation and currency: The company does not hedge its foreign-exchange exposure. At December 31, 2023, a 10% USD/TRY movement was estimated to change pretax income by about TRY 485m in the opposite direction of the movement. Inflation, lira depreciation, purchasing-power pressure, and rising payroll, delivery, and inventory costs may weigh on demand and margins.
- Cybersecurity incident after year-end: In February 2024, compromised merchant credentials were used to access approximately 673 merchant accounts; customer data was downloaded for about 7,200 customers, and suspicious orders involved about 1,200 customers. The company reported no additional material financial losses and said it notified the relevant authority and affected parties. A Turkish data-protection fine of TRY 141.9 thousand to TRY 9.5m was possible, depending on the authority’s findings.
- Competition matters: A 2023 Competition Board decision imposed a TRY 3.627m fine for alleged labor-market conduct; the company had previously provided a larger provision and reversed TRY 144.6m in 2023. A separate automatic-pricing investigation remained ongoing, with a possible fine of 0.5%–3.0% of prior-year revenue if a violation is found; the investigation was extended to October 2024. Another preliminary investigation concerning a merchant was also pending.
- Other legal exposure: A TRY 52.976m provision was recorded for a Turkish Capital Markets Board registration fee, with litigation ongoing. The IPO-related U.S. class actions were settled without admission of wrongdoing for $13.9m; TurkCommerce contributed $3.975m, and the company repurchased 4.62m shares from TurkCommerce for $5.73m, partly offset by that contribution.
- Controls and reporting: Management concluded internal control over financial reporting and disclosure controls were ineffective at December 31, 2023 due to material weaknesses in IT general controls and other control-environment components. Some prior weaknesses were remediated, but the 2022 IT weaknesses were only partially remediated. The auditor did not attest to internal-control effectiveness because the company is an emerging growth company. The filing also describes an immaterial correction to prior-year tax disclosures that did not affect the financial statements.
- Other operating changes: Hepsiburada Seyahat operations ended March 31, 2024; flower delivery through Hepsiburada Market was planned to end by June 2024. The company remains subject to Turkish regulatory, tax, competition, data-protection, and e-commerce rules, with additional payment-service licensing requirements due in 2024 and a potential e-commerce license fee beginning in 2025 if applicable thresholds are met.
Most important facts for investors to verify
- Review the audited IFRS statements and IAS 29 notes to understand the inflation-restated basis, monetary gain, and comparability with earlier reported figures.
- Assess the quality and sustainability of profitability: operating loss remained, while net income depended materially on monetary gains; compare IFRS results with the company’s defined non-IFRS EBITDA and gross contribution.
- Track cash conversion, cash balances, negative working capital, merchant and supplier payment terms, and funding for BNPL and consumer lending.
- Monitor Active Customer trends, order growth excluding digital products, customer retention, and whether higher frequency and Premium growth can persist.
- Follow remediation of material weaknesses and outcomes of the cybersecurity, Competition Authority, tax, and Capital Markets Board matters, including any fines or additional provisions.
- Check 2024 capital spending, margin progress, payment-service licensing, and any asset-backed securities issuance against management’s stated plans.