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NASDAQ:HEPS

Earnings Call Analysis

Hepsiburada Exceeds Q3 Expectations Amid Inflation

In the third quarter of 2023, despite challenging macroeconomics with inflation reaching 61.5%, Hepsiburada boosted its Gross Merchandise Volume (GMV) by 126%, marking a solid 45% increase after adjusting for inflation. Order volume soared by 55%, and the company achieved a 2.7% EBITDA margin, adjusted at 2.2% excluding one-off income, surpassing their guidance. The success was fueled by strategic loyalty programs like Hepsiburada Premium, which grew to 4 million members and enhanced customer engagement and retention. A significant VAT hike in July spurred e-commerce demand, benefiting the company. With a product range hitting nearly 211 million SKUs, initiatives like Hepsipay and HepsiJet addressed payment and delivery differentiators, contributing to the quarter's profitability and positioning the company favorably for the full year.

Significant Growth Amidst Economic Challenges

Hepsiburada showcased resilient financial performance in the third quarter of 2023, defying a tough macroeconomic climate with inflation scaling to 61.5%. The company's Gross Merchandise Volume (GMV) soared by an impressive 126% compared to the same period last year, evidencing a robust year-on-year growth. Even after adjusting for inflation, the GMV growth stood strong at 45%. This remarkable growth is a testament to the operational agility of Hepsiburada's strategy, which led to a performance that not only met but exceeded expectations.

Exceeding Performance Targets

The company's growth in GMV outpaced its own guidance by 16 percentage points, indicating the efficacy of its strategic approach to foster platform loyalty. Interestingly, a Value Added Tax (VAT) hike across all goods and services in July sparked a surge in e-commerce demand, subsequently contributing to the company's growth. Prudent cost management yielded an EBITDA as a percentage of GMV at 2.2% when adjusted for one-off income, double the upper end of their EBITDA guidance. These results validate Hepsiburada's commitment to sustainable growth and signal a well-poised trajectory for achieving a positive full-year '23 EBITDA on an unadjusted basis.

Enhancing Consumer Engagement and Loyalty

The Hepsiburadapromise initiative, a customer-centric marketing campaign, has played a crucial role in bolstering consumer benefits through promises such as next-day delivery and easy returns. Leveraging the influence of a significant Turkish celebrity, the campaign has addressed primary concerns of e-commerce consumers in Turkey. The effectiveness of these engagement strategies is evident through a 59% growth in order frequency and a 55% increase in orders, further substantiating the company's thriving consumer engagement and loyalty.

Merchant Ecosystem Expansion and Optimized Operations

Continuing its growth narrative, Hepsiburada expanded its active merchant base to over 101,000, with the total SKU count reaching nearly 211 million. Notably, the quarter saw an introduction of more effective advertising solutions and the enabling of merchants to create their promotions, both of which have been catalysts in driving higher sales conversions. These initiatives underline Hepsiburada's commitment to fostering deep merchant relationships and highlight the company's focus on execution excellence, which has contributed to the continued progress in profitability, shown by the 2.2% EBITDA as a percentage of GMV, excluding one-off items.

Loyalty Programs and Consumer Finance Innovations

The Hepsiburada Premium program continues to be a significant driver of loyalty, as evidenced by its growth to over 4 million members by the end of November. This membership not only expands but also significantly influences consumer behavior, subsequently increasing monthly order frequency. Alongside this, Hepsipay, Hepsiburada's in-house fintech solution, issued 708,000 prepaid cards in just six months, showcasing strong demand. The Buy Now, Pay Later (BNPL) option solidifies the company's position as a first mover in Turkish e-commerce, now used by over 245,000 customers. These offerings are pivotal in enhancing the affordability and accessibility of e-commerce for Turkish consumers.

Robust Delivery Infrastructure with HepsiJet

Another strategic pillar for Hepsiburada is HepsiJet, their logistics arm, delivering 82% of bump orders with next-day service in the third quarter. With a strong Net Promoter Score (NPS) of 86.2, HepsiJet's commitment to operational excellence is quite clear. The service's geographical coverage now extends to over 600 municipalities, further cementing Hepsiburada's comprehensive and swift delivery capabilities.

Earnings Call Transcript 2023-Q3

[Operator]

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 third quarter 2023 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mrs. Nilhan Gokcetekin, CEO; Mr. Seckin Koseoglu, Vice President of Strategic Finance; and Mrs. Helin Celikbilek, Investor Relations Director.

Mrs. Celikbilek, you may now proceed.

[Helin Celikbilek, executive]

Thanks, operator. Thank you for joining us today for Hepsiburada Third Quarter 2023 Earnings Call. I'm pleased to be joined on the call today by our CEO, Nilhan Gokcetekin and our Vice President of Strategic Finance, Seckin Koseoglu. The following discussion, including responses to a question, reflects management's views as of today's date only. We undertake no 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 slide date. Today's press release, the 6-K are Form 20-F filed with the SEC on May 1, 2023, and other SEC filings for information factors that could cause our 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 top marked slide deck as well as today's press release for a presentation of the most IT comparable IFRS measure and relevant IFRS to non-IFRS reconciliation. As a reminder, a replay of this call will be available on our Investor Relations website.

And with that, I will hand it over to our CEO, Nilhan.

[Nilhan Gokcetekin, executive]

Thank you, Helin. Welcome, everyone, and thank you for joining us. I'm pleased to be with you today and to present our quarterly progress. In Q3, aim is continued challenging macroeconomic environment by using inflation scale to 61.5%, we did with a robust financial performance. Our GMV more than doubled by 126% growth year-on-year. Adjusted for inflation our GMV growth remained solid at 45% year-on-year.

The operational agility afforded by our strategy led to an outstanding performance that exceeded expectations. Our orders numbered 27 million. It was up 55% year-on-year, confirming a continuous demand for our differentiated services. With an 11.6% gross contribution margin, improved [indiscernible] OpEx management, our EBITDA as percentage of GMV rose by 690 basis points year-on-year to 2.7%. Adjusting for onetime other income, our quarterly EBITDA guidance was still 2.2%. Our to Hepsiburada Premium program is over 4 million members as of November end align seamlessly with our expectation. The program continues to play a pivotal role in elevating our order frequency and improving our customer retention.

Overall, I'm very pleased to demonstrate sustainable growth and improved profitability.

Let me now take you through our delivery versus Q3 guidance. Through diligent execution, we serviced our guidance for both GMV and EBITDA. Our GMV growth exceeded guidance by 16 percentage points. This performance was a result of our solid strategy that boosted loyalty to our platform. On top, in July, the announcement of the VAT increase across all goods and services triggered a higher demand for e-commerce.

Furthermore, through prudent cost management, our EBITDA as percentage of GMV reached 2.2% adjusted for one-off income. This doubling of the upper end of our EBITDA guidance clearly highlights our operational efficiency. The quarterly performance validates our commitment to sustainable growth and positions us favorably to achieve a positive full year '23 EBITDA on an unadjusted basis.

Hepsiburada is the key thrust plan for e-commerce. In line with our pledge to customer centristic, we announced Hepsiburadapromise initiative as a marketing campaign. As part of this initiative, we promoted key consumer benefits that encompasses next-day delivery guarantee, convenience return to cost services from consumer doorstep and then assurance of authenticated product. To drive higher engagement, we partnered with 1 of Turkey's most confident inspiring celebrity for this initiative. We believe this initiative has just is the primary concern of Turkish e-commerce consumers while underscoring our commitment to meet their expectations. This commitment is clearly reflected in our KPIs. 59% growth in order frequency, 55% order growth proved that our consumer engagement and loyalty strategy is clearly working.

In the third quarter, with over 101,000 active merchant base, our total SKU count climbed to nearly 211 million. Our merchants can now proactively create coupons, which are a proven ejection point for customers. SaaS management of campaigns, coupons and all advertising facilities drive higher conversion to sales for our merchants. On top, the advanced level of additions with automated inclusion of products in the next day delivery coverage. This benefited customers while freeing our merchants of a manual process. In our commitment to elevating the visibility and reach of our merchants, we reintroduced our advertising solutions in a more effective format this quarter. These initiatives underscore our commitment to a deeper merchant relationship as we have them grow their volume on Hepsiburada. As always, we remain focused on execution excellence and our recent results affirm the effectiveness of our 4-pillar strategy.

Just to recap briefly, our strategic counters around loyalty, cultivating our sustainable differentiator, streamlining our costs and expanding our B2B revenue in fintech and logistics. In the next few slides, I'll provide a snapshot of our progress, highlighting our key achievements.

First, our Hepsiburada Premium program. It's a key loyalty driver and continues to gain momentum and exceeded 2 million numbers by end of November. The program success goes beyond mere expansion is significantly influences customer behavior. Premium numbers, monthly order frequency rose from 1.8 to 2.6 after they joined the program. This emphasizes the program's potential to position Hepsiburada's customers go to e-commerce platform. The programs quarterly Net Promoter Score remained at about 81 points, which is 10 points above our overall NPS. We remain dedicated to keep this program as a compelling proposition for our members.

Let's now look into 1 of our key differentiators, Hepsipay. In today's economic landscape, affordability tech center stage and our in-house fintech expertise [indiscernible]. Leveraging our unique e-money payment services liscence, we offer a comprehensive suite of payment and affordability solution. These include our prepaid card Buy Now Pay Later solution top up to wallet and point of sales shopping lot.

In North Turkey [indiscernible] Hepsipay prepaid card in collaboration with Visa. We are encouraged by the demand for this card with 708,000 cards issued in just 6 months. Hepsipay card users can earn 3% cash back in order online and in-store payments if they are a premium program member. [indiscernible] that customers use to top up their prepaid card is a general purpose loan from our partner banks, which can be reached with 1 unique solution from our apps. This quarter, we integrated 4 major banks. Hepsipay gives customers the freedom to spend these amounts everywhere, both physical stores and online, combined with the ease of QR payments. With our customer centristic, our commitment to deliver its strongest tailored payment and affordable solutions remains firm.

Next, let's consider our affordability solutions, highlighting some performance indicators. The quarterly share of total noncard affordability solutions in our GMV was 5.6% up from 5% a quarter ago. This increased penetration is a result of our improving incorporation of non-card affordability solutions throughout our buy journey. Over the last 12 months, 762,000 orders came through this affordability solution. Aiming to our BNPL solution, Hepsiburada remains the first provider of Turkish e-commerce. Since it's inception over 245,000 customers have utilized their BNPL limits. In September, during iPhone 15 launch, we were the only platform to offer a BNPL solution for this high-value item.

I would like to move to now our next differentiator HepsiJet. HepsiJet's strong NPS of 86.2 in Q3 underscores its acknowledge terms excellence. HepsiJet continue to invest in expanding its geographical coverage by additional municipalities, total municipalities covers exceeded 600 by the end of the quarter. In Q3, HepsiJet continued its strong next day delivery performance with 82% ratio among our bumpy orders. Out of the total parcel of volume on our platform, HepsiJet delivered 67%, confirming its integral role in our delivery ecosystem. Notably, HepsiJet XLarge delivered 57% of our oversight ARPU. This is confirming greater merchant preference for our 2 months handling capability.

In Q3, as a result of all of our actions, we saw continued progress in profitability posting a 2.2% EBITDA as a percentage of GMV, excluding the one-off item. The positive run clearly demonstrates the effectiveness of our strategy confirming our core strength and our diligent cost management.

Now let me take you through the fourth pillar of our strategy, which is generating B2B revenue from fintech and logistics. First, let's start with HepsiJet. We continue to expand our external customer base adding other retailers and doubling our customer cost and doubling our volume year-on-year. This is confirming our ability to generate B2B revenues of Pillar 4 and clearly showcase the HepsiJet firm momentum as an appealing logistic partner.

Now let's turn over right to Hepsipay's Off-Platform expansion, enabling the service payment experience. Hepsipay offers a one-click checkout solution, pay with Hepsipay to other retailers. This solution became available at the online check out of 5 major Turkish retailers in Q3 has been on the slot. A leading furniture [indiscernible], leading Turkish fashion brand, [indiscernible], leading label-branded [indiscernible] is just few of the examples. Moreover, we also offer our landing capabilities as part of Hepsipay's marketing check-out solution. This take-up in line with our vision of providing sets, reliable, versatile payments and lending experience beyond Hepsiburada platform.

Hepsipay features expand beyond one-click checkout. The seamless use of pay, prepaid cards, both online and in-store payments clearly diversify our payment options for consumers. The top up to wallet with loans offer enables users to top up their wallet with general purpose loans from multiple customer banks. These funds are then available to stand anywhere that accepts QR payment in addition to platforms which have to pay at their checkout. An upcoming feature is the integration of shopping walls within the pace in Hepsipay network.

Before I dive into Q4 outlook, let me take a moment to talk about our November campaign performance. Our business is characterized by strong Q4 seasonality like all other e-commerce players. We delivered a higher sales volume during the fourth quarter of the year. Our preliminary results indicate that this year, we delivered yet another very strong performance in November. We doubled the GMV compared to the same period last year. The number of orders was 2x that of the monthly average of the prior month in '23. Our platform attracted almost 500 million visits and we sold over 30 million pieces.

Our affordability solutions and loyalty programs are particularly reflection points. 46% of GMV generated through sales with credit cards came through installment sales. The most significant service in orders compared to the same period of last year with among clothing, appliance, home garden and FMCG. We greatly welcome the consumer appreciation of our superior services, promotions and campaigns in the busy month of November. The Hepsiburada clearly puts its name to the word legendary, which was created by us 7 years ago.

And now I want to close my presentation with our guidance. So with another robust legendary November behind us, we expect to deliver a solid and profitable growth, also in fourth quarter. Accordingly, we expect to deliver a GMV growth within the range of 93% to 95% compared to the same period last year and EBITDA is the percentage of GMV within a range of 0.5% to 1%. These figures are unadjusted for inflation. Consequently, for the full year '23, we expect to double over GMV year-on-year on a non-adjusted basis and deliver EBITDA as a percent of GMV at 1.5%. These figures are also unadjusted for inflation.

With this, I thank you for listening, leave the floor to Seckin, our forthcoming CFO, for more color on our Q3 financial performance, and I'll do my closing remarks.

[Seckin Koseoglu, executive]

Thank you, Nilhan, and welcome, everyone. It's a pleasure to meet with all of you today for the first time. As I embarked on my new role as CFO, I look forward to many more such occasions. Despite the prevailing macroeconomic challenges, I am pleased to say that we continued our uptrend across all metrics during the third quarter.

Unadjusted for inflation, our GMV rose 126% in quarter 3 on a yearly basis to TRY 24.3 billion. Similarly, our IAS 29 unadjusted revenue growth was at 137% million on a yearly basis. When adjusted for inflation, GMV and revenue growth were at 45% and 52%, respectively. Strong order growth, coupled with faster than inflation rise in the average order value and a strong e-commerce market growth in July on the back of a VAT right resulted in a 126% GMV growth. The growth contribution margin came in at 11.6% on a 1.8 percentage point improvement on the same quarter of last year. Adjusted for inflation, this metric rose to 9.4% on a 1 percentage point improvement.

Quarter 3 was the third consecutive quarter of positive EBITDA and adjusted for inflation. Accordingly, our EBITDA as a percentage of GMV reached 2.7% on a 6.9 percentage point rise year-over-year. Excluding the impact of one-off income item, our EBITDA as a percentage of GMV was at 2.2%. Also, when adjusted for inflation, this metric was at 0.3% on a 6.2 percentage point improvement year-over-year.

On the next slide, let's elaborate on our GMV growth performance. 45% of GMV growth came through 27 million orders in quarter 3. This performance results from our value proposition, supported by the Hepsiburada Premium loyalty program and our affordability solutions. Our digital products contribute to the order frequency of participating customer segments. Yet, excluding these orders, our order growth was still strong at around 18%.

During the third quarter, we saw a 2.7 percentage point shift in GMV mix towards 1P. While we continue our growth in nonelectronics, during this quarter, we also leveraged our strong 1P model to meet the demand in the electronics market.

On the next slide, I will discuss our revenue and gross contribution performance. First, I would like to give some color on revenues. Revenue growth of around 52% was achieved mainly by a 50% rise in retail revenue and 61% growth in Marketplace revenue. Our retail and marketplace operations comprised 87% of our revenues. Our delivery service revenue comprising 10% of total revenue rose 43% compared to quarter 3 2022. Meanwhile, other revenue, which mainly consists of our advertising services, fulfillment services and loyalty program subscription fees grew by 116% compared to quarter 3 2022. Our quarter 3 gross contribution margin was at 9.4% on a 1 percentage point improvement on the same quarter last year. This was mainly attributable to a higher rediscount impact on cost of inventory sold due to purchases on credit, a change in the GP GMV category mix towards higher-margin products and the higher other revenue stream. Other inventory turnover partially compensated for the margin deteriorating impact of significantly higher quarterly inflation that we have business in quarter 3.

Let's move on to the EBITDA performance on the next slide. Together with strong top line growth, our focus on costs and marketing spend optimization enabled us to deliver positive EBITDA for yet another quarter. The 6.2 percentage point year-over-year improvement in EBITDA as a percentage of GMV, but mainly due to a 1 percentage point price in gross contribution margin, 1.1 percentage point decline in advertising expenses, 0.1 percentage point decline in shipping and packaging expenses, a 0.6% decline in payroll and outsourced staff expenses, and 3.3 percentage improvement in other OpEx items, which includes the settlement contribution from e-commerce in the quarter 3 this year and the provision expense related to the same litigation in quarter 3 of last year.

OpEx as a percentage of GMV was 9.1 percentage in this quarter that is 5.1 points lower compared to 14.2 percentage in the third quarter of last year. Our continued efficiency in marketing spend was achieved through our focus on customer retention and loyalty strategy, data-driven marketing and co-marketing partnerships.

Next, a few words on our cash flow dynamics. Compared to quarter 3 2022, our cash flow from operating activities increased by almost TRY 1.4 billion to TRY 2.2 billion in quarter 3 '23. This increase in cash flow from operating activities mainly resulted from TRY 1.1 billion improvement in EBITDA, TRY 1.2 billion decrease in change in net working capital, mainly due to increase in BNPL receivables and an increase in inventory in anticipation of high demand in quarter 4. TRY 0.7 billion increase in operating monetary gains due to inflation accounting and other items. And finally, TRY 0.8 billion increase due to realized FX gain. CapEx was around TRY 234 million and 0.9 percentage points of GMV. Overall, our free cash flow was a positive TRY 2 billion in quarter 3 2023.

Before we end our call, I would like to leave the word back to Nilhan to highlight the key takeaways from today's presentation.

[Nilhan Gokcetekin, executive]

Thank you, Seckin. In Q3, we delivered a strong top line growth and EBITDA through diligent cost management exceeding our guidance. Our IAS 29 unadjusted GMV growth marked the highest quarterly growth since our IPO. On the margin side, we improved our gross contribution margin by 1.8 percentage points and EBITDA as a percent of GMV by 6.9 percentage points. We generated a substantial improvement in free cash flow on a yearly basis, thanks to our improvement in operating profitability. We are committed to creating long-term value for all of our stakeholders, and we work diligently to deliver our best possible results with our quality.

And finally, I take this opportunity to wish everyone seasonal greetings. Thank you for listening. We can now open the line for questions.

[Operator]

[Operator Instructions] The first -- I am so sorry, there was a question but it was withdrawn. [Operator Instructions] Ladies and gentlemen, there are no ideal questions at this time. We will now proceed with the webcast questions from our participants. The first webcast question is from Maksim Nekrasov with Citi. And I quote, "what drives growth deceleration in Q4 2023 compared to third quarter 2023?"

[Nilhan Gokcetekin, executive]

This is Nilhan speaking. We have a couple of factors. One of them is our base in Q4 '22 was extremely strong. That's number 1 driver. Number 2 driver is in Q3, Maksim, we had a VAT change, as I explained in July. We've accelerated our growth at e-comm platforms, which won't be repeated from our expectations in Q4. And lastly, with the rising interest rates, we are expecting also some minor intake to the demand in Turkish market, hence with the 3, our expectation is the GMV growth we share.

[Operator]

[Operator Instructions] The next webcast question is from Ulle Adamson with Troweprice. And I quote, "any thoughts on possible local listings to improve the liquidity of shares?"

[Nilhan Gokcetekin, executive]

Local possible listing in Istanbul Stock Exchanges, 1 other idea that we are always evaluating like other option. There are pros and cons we are investigating Ulle. As we crystalize our thinking, if there is something to share, we will obviously come back, but this is 1 of the things we are obviously looking into as on the feedback we receive today.

[Operator]

[Operator Instructions] The next webcast question is from Tim Razak with Frontera Capital, and I quote, "could you please -- excuse me, could you provide me color on September sales and how the [indiscernible] member event was relative to your expectations?"

[Nilhan Gokcetekin, executive]

It was almost spot on versus our expectations in November. We have done a couple of assumptions for November growth, [indiscernible] increase uptake from our premium consumers. Both of our premium membership increase and the frequency increase from premium consumers has been in line with our expectations. Nonelectronic, new categories that we have been driving has been strong. That has also been in line with our expectation. And in terms of our marketing plan, the number of sessions we plan for Legendary November also was in line with our expectations. So I would say the invented Legendary November 7 years ago. And since then, we have been getting stronger and stronger in our execution and in line with our plans we delivered a strong November campaign.

[Operator]

Our next webcast question is from Christian Andrews with Frontera Capital, and I quote, "digital orders represented a significant portion of order growth. Could you expand on what these orders relate to? And would their contribution to revenue growth be similar?"

[Nilhan Gokcetekin, executive]

The digital orders, yes, they represent a significant portion of order growth, but in terms of GMV, it is [indiscernible] less than 0.7% of our GMV. So we can't talk about any related contribution to our GMV growth. It's strategic, it drives frequency, it drives consumers to come back create loyalty retention, so we'll continue driving that.

[Operator]

We also have a question from Mr. Hassan [indiscernible], and I quote, "how do you invest in the U.S. cash you have? What is the return on that?"

[Seckin Koseoglu, executive]

We typically use time deposits in banks. And I think the yield is a big question. We are close to 5% on our yield for USD deposits.

[Operator]

The next question is from Mr. Maksim Nekrasov with Citi and I quote, "what are your expectation regarding consumer demand in 2024 considering recent interest hikes?"

[Nilhan Gokcetekin, executive]

Our progress and results clearly proved that our strategy works in '23. And as we look forward to the coming year, although the interest rate increases, could diminish consumer demand consumption can also impact Turkish economic growth. We have several key initiatives reinforcing our position. I maintain our commitment to strategic priorities, affordable shopping options, benefit from premium programs and also e-com is in best place, a very sweet [indiscernible] serving consumers in this type of environment.

[Operator]

Our next webcast question is a follow-up from Mr. Ulle Adamson with Troweprice, and I quote, "what is the outlook for EBITDA margin in 2024? Also, where would you like to see the margin over the longer term?"

[Nilhan Gokcetekin, executive]

For 2024, we are going to talk about our guidance, our expectations as part of our Q4 earnings results. But what I can say we are extremely committed to sustainable profitable growth. We have built a very strong initiative pipeline for '24 and also upcoming years. In line with the presentation we have done, that is including Hepsi advertising platform. It's including nonelectronics in our mix, that is including incremental margin from our services in B2B revenues that will continue to enhance our margin situation. For granular details and expectations, we will come back in Q4.

[Operator]

Our next webcast question is from Christian Andrews with Frontera Capital and I quote, "Hepsi Premium reached 2 million members. Could you please speak a bit about any targets for the program? Is there a target number of members? Is this program breakeven yet on a consolidated basis?"

[Nilhan Gokcetekin, executive]

In terms of Hepsiburada Premium program, obviously, we are quite bullish about creating a great amazing program that will be sticky for our consumers. We are not chasing a statistics number. We are looking into sustainable profitability of the company, sustainable profitable growth, using loyalty retention initiatives in a mix, that also includes premium. Hence, I'm not going to share a specific number that we are chasing for next year, but we will continue to enhance both the benefits of the program and also members in the program. In terms of premium profitability, we don't share the details for a specific consumer segment. In future, we could look into giving different cuts in our profitability. But so far, we are only sharing a consolidated view.

[Operator]

Our next question is an audio question from the line of Kilickiran, Hanzade with JPMorgan.

[Hanzade Kilickiran, analyst]

Apologies, I have a technical issue. I couldn't ask ask my question initially. I would like to follow up on the gross contribution margin. You had a very strong -- I mean, a robust improvement here. Would it be reasonable to say that some -- I mean, large part of this expansion in the gross margin contribution comes from the inventory gains because there was a very high inflation in the third quarter. And I just try to understand whether this expansion is one-off or not? And -- or otherwise, have you also had some structural changes in your business like a higher share of clothing category or better tech rates that may continue to support the margins going forward?

And the second question is, is it possible to provide some sort of update on the recent competition authority investigation, what it is about? And do you expect some negative results from this investigation?

[Seckin Koseoglu, executive]

As I mentioned in my presentation, the rediscount impact on cost of inventory sold due to purchases on credit has an impact on the improvement in gross contribution. But key structural improvements that we are making are related with the 3P GMV category mix towards higher-margin products, and this is going to continue in the future as well. And definitely, other revenue stream is something that we are continuing to expand, especially [indiscernible], our premium fees are hefty as which is very important for our future profitability and the expansion of our delivery services. So these are structural key interventions that we will be continuing to have in the coming quarters as well.

[Nilhan Gokcetekin, executive]

Let me come back on the second question, which is the contact to authority investigation. There has been an investigation in Turkey for price recommendation for merchants from e-commerce platform. We have been 1 of the companies, the competition authority wanted to better understand, the logic. We have been sharing all the data we have. This is a recent capability we developed in order to enhance merchants, competitiveness in order to enhance competitive prices with right ambition, with right material. So we are very comfortable in terms of the potential outcome. There could be a situation, Hanzade, in the worst case scenario, the competition authorities could say, we would like platforms to hold this implications, but nothing beyond that. So even the worst case scenario, obviously, we are ready for that, but we wouldn't recommend that.

[Operator]

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