D-Market Electronic Services & Trading (Hepsiburada): FY2021 Form 20-F
Reporting period: Year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter filing; the filing does not provide a complete Q4 income statement or cash-flow statement. Consolidated statements are prepared under IFRS in Turkish lira (TRY). Amounts below are TRY unless otherwise stated.
Business context
Hepsiburada operates a Turkish e-commerce platform combining first-party direct sales and a third-party marketplace, alongside delivery, fulfillment, advertising and payment services. The marketplace represented about 68% of FY2021 GMV. Nearly all revenue was generated in Turkey. The company completed its Nasdaq IPO in July 2021.
Financial and operating performance
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Revenue | TRY 7.558bn | TRY 6.376bn | +18.5% |
| GMV | TRY 26.2bn | TRY 17.0bn | +54% |
| Gross contribution | TRY 1.849bn | TRY 1.527bn | Gross contribution margin fell to 7.1% from 9.0% of GMV |
| Operating loss | TRY 1.844bn | TRY 181m | Loss widened sharply |
| Net loss | TRY 700m | TRY 475m | Loss increased 47.5%; basic and diluted loss per share was TRY 2.30 versus TRY 1.67 |
| EBITDA (non-IFRS) | Negative TRY 1.703bn | Negative TRY 88m | EBITDA margin on GMV fell to -6.5% from -0.5% |
| Operating cash flow | TRY 89m | TRY 441m | Down 77% |
| Free cash flow (non-IFRS) | Negative TRY 124m | Positive TRY 341m | Turned negative |
| Cash and cash equivalents, year-end | TRY 3.813bn | TRY 593m | Plus TRY 1.158bn in financial investments at FY2021 year-end |
Revenue mix in 2021: direct-sales goods TRY 6.134bn (81.2%); marketplace TRY 601m (8.0%); delivery services TRY 740m (9.8%); other services TRY 82m (1.1%). Marketplace revenue was nearly flat despite higher GMV, with customer discounts cited as a factor. Orders rose 53% to 53.5m, active customers increased to 11.3m from 9.0m, and order frequency rose to 4.7 from 3.9.
Costs grew faster than revenue: advertising expense rose 132% to TRY 1.498bn, payroll and outsourced staff expense rose 148% to TRY 806m, and shipping and packaging expense rose 76% to TRY 953m. Management attributed pressure to heavier competition, higher discounts and marketing investment, expansion of the business and strategic assets, and higher delivery costs. Financial income of TRY 2.160bn included substantial foreign-exchange gains; financial expenses were TRY 1.017bn, including FX losses and credit-card collection commissions.
Balance sheet, debt and liquidity
- Total assets were TRY 7.881bn and equity was TRY 2.676bn at year-end, compared with negative equity of TRY 787m a year earlier, principally reflecting IPO proceeds.
- Cash and cash equivalents were TRY 3.813bn; financial investments were TRY 1.158bn; restricted cash was TRY 40m. The company reported that most cash and all financial investments were US-dollar denominated.
- Bank borrowings were TRY 193m, all short-term; lease liabilities totaled TRY 211m. Trade payables and merchant payables were TRY 4.062bn. The company reported negative net working capital of TRY 2.585bn, versus negative TRY 1.160bn in 2020.
- Net cash from financing was TRY 3.291bn, mainly reflecting TRY 4.082bn of IPO proceeds. The company reported that it expected available cash, operating cash generation and credit lines to meet obligations for at least 18 months from December 31, 2021; this depends on operating performance and access to financing.
Changes, outlook and material risks
- Growth remained strong, but profitability and cash generation deteriorated. Management linked the slowdown in online activity after COVID-19 restrictions eased in July 2021 and increased competitive intensity to higher discounts, advertising costs and weaker margins.
- Management expected 2022 capital expenditure to increase materially, citing inflation, currency depreciation, technology hiring and investment in logistics and Hepsipay. It anticipated HepsiJet would represent about 15% of 2022 capex and Hepsipay about 12%, versus about 2% for Hepsipay in 2021.
- Management said changes to HepsiExpress grocery fulfillment models beginning in early 2022 were intended to reduce reliance on its own delivery resources and improve margins. This is an expectation, not a reported result.
- Turkey’s inflation and currency volatility are significant risks. The filing states that IAS 29 hyperinflation accounting would apply for periods ending on or after June 30, 2022; the effects on reported results and margins were not yet quantified.
- The company recorded a TRY 127.5m provision for a Turkish Competition Authority labor-market investigation. The filing describes the April 2022 rapporteurs’ report as alleging a violation; the Competition Board’s final decision was pending. The company estimated a potential penalty range of 2%–4% of statutory revenue before the assumed early-payment discount.
- Two putative U.S. securities class actions related to IPO disclosures were pending. The company said it intended to defend the cases; no provision was recognized because the outcome could not be assessed.
- Management disclosed two material weaknesses in internal controls: review of complex IFRS transactions and IT general controls. Corrected items included a TRY 54m stock-based compensation valuation adjustment and reclassification of TRY 133.6m from cash and cash equivalents to financial investments. Management was implementing remediation; disclosure controls were deemed ineffective at December 31, 2021 solely because of these weaknesses.
- Other risks include competition, supply-chain and semiconductor shortages, customer demand and purchasing power, cyber and privacy incidents, regulatory changes, and unhedged foreign-exchange exposure. The company does not anticipate dividends.
Most important facts for investors to verify
- Whether revenue and GMV growth can translate into improved gross contribution, operating margins and free cash flow without continued heavy discounting and advertising.
- Whether the reported cash and financial investments remain available to fund operations, and how working-capital needs, supplier payment terms and planned capex evolve.
- The final Competition Board decision, any resulting fine versus the TRY 127.5m provision, and the progress and financial exposure of the IPO-related lawsuits.
- Progress remediating the internal-control weaknesses and the implementation and effect of IAS 29 inflation accounting on comparability of future results.
- Performance and funding needs of HepsiExpress, Hepsipay and other strategic assets, including whether management’s expected margin and capex outcomes are achieved.
EBITDA, free cash flow and net working capital are non-IFRS measures as defined by the company; they should be considered alongside IFRS results. The filing’s annual figures do not establish standalone Q4 profitability or cash flow.