Ladies and gentlemen, thank you for standing by. I am Gail, your Chorus Call Operator. Welcome and thank you for joining the Hepsiburada Conference Call and live webcast to present and discuss the Fourth Quarter and Full Year 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. Helin Celikbilek, you may now proceed.

Thanks operator. Thank you for joining us today for Hepsiburada's fourth quarter and full year 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 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. 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, our prospectus filed with the SEC on July 1, 2021, and other SEC filings for information about factors which could cause our actual results to differ materially from these forward-looking statements. The earnings release has been filed with the SEC on a Form 6-K and is currently available on the SEC website and on our Investor Relations website. 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, our prospectus filed with the SEC on July 1, 2021, 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 presentation as well as today's earnings release for a presentation of the most directly comparable IFRS measures, as well as the relevant IFRS to non-IFRS reconciliations. As a reminder, a replay of this call will be available on the Investor Relations page of Hepsiburada's website. With that, I will hand it over to our…

The first question is from the line of Josiah Miriam with Morgan Stanley. Please go ahead.

Hey, good afternoon, everyone. Thanks for taking my questions. And firstly just going back on full year results, obviously your guidance was set in November so I just wanted to get a bit more color on what has changed in the last couple of months for you to be so significantly, obviously, higher inflation has been an issue, but I just wanted to also get a bit of a sense as what you've been seeing in the last couple of weeks given your statement you made around Q1 growth to be higher than the rest of the year. So have you already started to see some weakness in the consumer sentiment and trading in the last few weeks? Any more color on that would be great. Then secondly, if you could just give more detail on what you're seeing at the moment in terms of inventory on the 1P business? How difficult is it to get stock at the moment? How much of price increases are you passing through? And then finally, if you could just give a bit more color on EBITDA and your expectations for this year and perhaps any color on the trajectory of that as we move through the year. Thanks. Mehmet Murat Emirdağ: Hi, Miriam. Thank you so much for the question. To my understanding, you'd like to understand the consumer sentiment and how much is actually behind the recent trend in Q1 period trading, if I'm not mistaken, right? That's the first question. Let me take that one and maybe Korhan, you can address the others. In terms of like -- despite the inflationary environment and the macro challenges in the market, actually our Q1 started off very strongly, which is very encouraging for us. But with that said, also, let me maybe clarify…

Yes. Just two follow-ups, just on the first one. So, on the guidance for Q1 to be higher, so are you basically saying that it is not as if you started to see any weakness in the last couple of weeks really, as to why you're guiding for Q1 to be higher than the rest of the year? Mehmet Murat Emirdağ: I see. Actually, yes, as you said, I think the year-to-date momentum is pretty promising and encouraging for us. However, based on the current uncertainties in the macro environment and our commitment to disciplined cost and cash management on our path to profitability, we believe around 50% is the prudent guidance at this point? So that is the reason why.

Got it, thanks. And then just secondly, in terms of the 1P/3P mix for this year, should we take the 4Q mix is sort of a broad indication for what you'd expect or do you think 1P will be even higher? Halil Korhan Öz: Well, we are taking that 3P questions from time to time. If we foresee any sourcing issues then we just actively start buying on the 1P side, but not under normal circumstances. We just keep it as is. So there's a healthy balance between 65% to 75% depending on the sourcing, we can always act accordingly.

Thank you.

Next question is from the line of Kilickiran Hanzade with JPMorgan. Please go ahead.

Thank you very much. I have three questions. The first one is related to your working capital and the impact on the margin. You also ended 2021 with a very strong inventory buildup as far as I can see on the balance sheet. So could this mean that there is also another positive quarter is ahead in terms of margins because inflation is still keep going up in Turkey? So do you see some sort of extra room in first Q margins? And the second one is, again, inflation related. On your 50% GMV growth guidance, what is the inflation assumptions you have? And the third question is about the competitive environment. Have you been observing a better, I mean competition, competitive environment, particularly after surging inflation because I presume this could accelerate the cash burn in periods or periods of focus has been shifted to others platforms, I'm not really sure about it and I really appreciate if you can comment about the competitive environment? Thank you. Halil Korhan Öz: Thank you, Hanzade. Let me take the first one, Murat. On the working capital side, our negative net working capital keeps on increasing. One of the major reason is that our trade payables and service payables are increasing due to inventory procurement. As I mentioned, we started procuring inventory starting from October onwards, and especially in the last two months to get ready for the first quarter and to eliminate the impact of inflation and currency volatility. Yes, we have a lot of inventory available as of the year-end, and we are utilizing the benefit of it during Q1. So you can expect our margin improvements will slightly continue during this period. Also on the inventory assumption, on the cost side, our inventory assumption is something around 40% to 50% depending on the nature of the costs. And also third question, Murat?

Sorry, Korhan, is it -- I mean, do you base your 50% GMV guidance on 40% to 50% average inflation expectation? Mehmet Murat Emirdağ: I will take the competition question, but an -- did we address your first two questions, Hanzade, before I take the competition one, issue?

The first question has been addressed but the second question, because your GMV, you are guiding GMV growth of around 50%, which is lower than the expected inflation in Turkey and you are still acquiring customers and more merchants there. So this sounds like a little bit, I mean, conservative to me. So I really wonder what your macro assumptions under this GMV guidance? Mehmet Murat Emirdağ: Korhan, could you take the assumption on the behind our value…? Halil Korhan Öz: Hanzade, our 50% growth is mainly based on our frequency increase and customer increases. It's not directly correlated to the inventories. The inventory impact is not directly affecting our GMV growth. Those are not So frequency and number of customers, is increasing significantly on our side. In our inventory assumptions, there is inflation assumption varies between 40% to 50% depending on nature, but recently, Turkish Central Bank made a survey, and according to this survey, the result is around 42% for 2022. So we based our budget on this assumption. Mehmet Murat Emirdağ: Maybe also -- maybe just to add more color on it. Like Korhan said, the survey, the Central Bank participation survey cited 42% inflation roughly I guess. But also in our model, Hanzade, it's also good to remind you all and maybe also to clarify the fact that the growth in GMV or average sales price or average order value is not an apples-to-apples comparison with the inflation rate. Maybe let me give you some examples why and the underlying factors behind it. The first one actually could be, for instance, the mix factor. The inflation usually hits the food and grocery categories more than it does the others in the early phase, especially. And then another factor could be the pressure on purchasing power because…

Yes, thank you very much. Mehmet Murat Emirdağ: Thank you.

The next question is a follow-up question from Kilickiran Hanzade with JPMorgan. Please go ahead.

Sorry, I forgot to ask one more question. You actually briefly highlighted about your plans, I mean, your strategic expansion. And can you please elaborate your capital allocation strategy a bit detail? So for 2022, how should we think about you allocating the capital? Are you going to put more capital in the HepsiExpress or is it HepsiPay, which is going to be under focused and Buy Now Pay Later may take more capital, so how should we think about this? Mehmet Murat Emirdağ: Yes please, Korhan, take the first. Halil Korhan Öz: Yes, maybe you can add afterwards. On the investments, especially on the CapEx side, Hanzade, we have budgeted for a substantially higher CapEx in 2022 compared to last year and for several reasons. However, I will not be able to disclose the number, but I will try to explain the relevant data points. First, roughly half of our CapEx is for website development costs, which is mainly cost of the engineers that work for this purpose in the research and development department. This year, we will onboard many merchants on these R&D centers and our spending for this purpose will increase significantly. On the other side, the remaining 50% purchase is mainly in hardware and for our strategic assets going forward. Maybe you would like to add some color for the strategic assets, Murat. Mehmet Murat Emirdağ: Actually, maybe it's good to mention the fact that in terms of the gating of strategic assets, Hanzade, actually, as we mentioned on HepsiExpress, we are definitely gradually optimizing our search model, so we can actually lessen the dependence on our delivery resources. So you will see us continuously optimizing for sustainable model in that actually are focused there. In terms of HepsiPay though, you will also see even we speak about to Buy Now Pay Later as well. In terms of Buy Now Pay Later, we are very focused on precision, accuracy in our scoring, making sure that journey is frictionless and experience is actually smooth. So our focus will be definitely first on the experience side, and we are also going to be very smart about our cash and cost and allocation on that. So you will see us keeping true to our principles in terms of disciplined cost and cash management, even if you refer to the surge effect. It will take the test gradually in a measured way. There is no inventory actually the advertise. It's much more about that calculated and disciplined expansion plan. And in terms of also HepsiJet, you already know HepsiJet XL already reached in every single city in Turkey, 81 out of 81, which is also making another big difference in terms of customer experience with oversized delivery items. Halil Korhan Öz: One addition, Murat. Our hardware, software CapEx and our financial leasings are 30% foreign currency denominated. So this is another reason for the substantial increase in our next year's CapEx expenses.

Thank you very much. I mean, Murat you mentioned about that you are trying to optimize the HepsiExpress model as being less dependent on the delivery. What do you mean exactly? I mean, are you -- I mean, are you, I mean, is there a change in the delivery process of HepsiExpress? Mehmet Murat Emirdağ: So to our modular model, as you remember, actually, we have a model that can allow our partners and deliver or we can deliver or vice versa. So that's actually a modular system allows us now to optimize that value chain. So our focus is right now by keeping our customers actually still high, how can we minimize the friction in this new economy and actually maximize for longer-term sustainability. That's why you'll see us continuously and gradually optimized and working with our partners and which will eventually maybe also lessen our dependency on our delivery resources and cost items. That's actually an area on our path to profitability also going to look deeply and making sure diligently we deliver optimization there as well.

Okay, understand. Thank you very much. Mehmet Murat Emirdağ: Thank you.

Ladies and gentlemen, there are no further questions at this time. The conference has now concluded, and you may disconnect your telephones. Thank you for calling, and have a pleasant afternoon.