Earnings Call: Q2 2021

Aug 26, 2021

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your Chorus Call operator. Welcome and thank you for joining the SB Bureata Conference Call and Live Webcast to present and discuss the Q2 2021 Financial Results. At this time, I would like to turn the conference over to Ms. Helin Selig Bilek, Investor Relations Director. Ms. Eric Leck, you may now proceed. Thanks, operator. Thank you for joining us today for Hesi Borrada's 2nd quarter 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 In our prospectus filed with the SEC on July 1, 2021, and other SEC filings for information about factors which 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 Relations page of Hetsubrada's 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 Hepci Brada. Hepsi Bruda 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, HFC Brada, 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 distillation 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 life easier. We operate in an attractive market That has a large, young, urbanized and tax saving 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 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' new ways to differentiate our customer experience with value to services such as frictionless return pickup, expedited delivery services, Card splitting, instant customer loan and our loyalty club offering. Also, we continue to expand into new strategic assets, Including HEPSA Express, our on demand grocery delivery service HEPSA Pay, our digital wallet companion solution Hep Cipli, our airline ticket sales platform and Hep C Global, our inbound and cross border business. With our growth oriented business model, we recorded a GMV growth at 64% CAGR between 2015 end 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 as a homegrown company to emerge In the Q2, our GMV grew by 38% compared to the same period of last year to 5,900,000,000 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 13,100,000, which is the highest 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 Q2 of last year. Hesi Jet, our in house last mile delivery service, Achieved present in every city in Turkey by the end of June 2021. Tail to our superab ecosystem value proposition, we continue to invest and scale our strategic assets, Particularly, Hepsta Express and HepciPay, which are well positioned for strong growth. Within that context, We launched our digital wallet, HepsePay Judenum embedded in hepsebroda in June 2021. Hepsta Express, our on demand grocery delivery service, has expanded its partner network to over 40 brands across over 1800 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 Powered by our proprietary technology, we believe that our nationwide logistics network is key to our success. We operate 6 fulfillment centers covering more than 120,000 square meters strategically located across Turkey. In the Q2, Hep C Jet achieved presence in every city in Turkey, reaching 137 crosstalk Where is heptumab, our nationwide pickup and drop off network expanded to more than 1500 branded pickup and drop off points across lockers, partner local stores, gate stations and retailers. As a result of its expansion, Hestijet conducted more of retail deliveries and more of marketplace deliveries in Q2 2021 compared to the same period of last year. With FTjet, we are able to offer a variety of valuable services, including same day, next day delivery options, Delivery by appointment, including weekend and frictionless return, which is FCJet picking up your return In line with our efforts to enrich valued services, We believe that our robust logistics network gives us a significant competitive edge At Hepsta Express, we aim to become a mainstream grocery shopping destination. Embedded in Hepsta Brothers Super App, HEPSA Express offers both instant and scheduled delivery options addressing grocery needs for on demand and planned grocery shopping. By the end of Q2 of 2021, HEPSA Express has become one of the strong players in this market with around 1,600 outsourced picking and delivery agents and has expanded its ecosystem to over 40 brands and roughly 1800 stores with presence across more than 50 cities in Turkey. We believe, Hepsta Express will be a key enabler to attract new customers, to engage our existing audience and to unlock further synergies across services in Hep C broader. Let's take a look at Hep C Pay. In a flexible way across online and offline channels. Having acquired its license in 2016, HepstyPay marked an important milestone by launching HepstyPay Judenum, which I will refer to as HepstyPay Wallet As an embedded digital wallet product on our platform on the 10th June, its daily penetration among eligible audience Has been faster than our expectations. Hefty Pay Wallet enabled instant returns, cancellation and cashback. Along with HepciPay Wallet, HepciPay also introduced Hepci Papel, a cashback points program that allows customers to earn and redeem points during purchases with the wallet on the HepziPrada platform. The HepziPapeli program has been instrumental in the rapid growth of FCPay Wallet. FCPay will enable peer to peer money transfers and will constantly explore new use cases I will now leave the floor to Korhan, our CFO, to run you through the financial performance in Q2. Thank you, Murat, and hello. What inspires us in our mission of being reliable, Innovative and sincere companion in people's daily lives. In our view, this broad mission boils down to focusing on key three aspects of online shopping, selection, price and delivery. On selection with our compelling value proposition, We doubled our active merchant base as of June 30 compared to the same day 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 $13,100,000 in the second quarter. A combination of these factors has resulted in 38% GMV growth in the 2nd quarter. This performance was achieved against an already strong Q2 of 2020 due to Baseline effect of COVID-nineteen. To normalize this effect on growth figures, we have shown here 2 year compounded growth rate. So for the 1st and second quarter of 2021 compared to the same period last year, compounded 2 year growth rates were 68% 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 End Marketplace. Having launched our marketplace 6 years ago, we have gradually increased its contribution to GMV, Bringing it to 69% in the Q2 of 2021. Hence, the G and D Shinto 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 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 such service actions. We also offer them advertising services through HepciAd, so that they can effectively advertise inside and outside hep Ceburada to drive their sales. We give them access to our last mile delivery service, HepciJet, as well as our fulfillment service, Hepci Logistics, 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 1,300,000,000 in volume with an 11.4 times growth in merchant and supplier financing from 2018 to 2020. All these value added services have contributed to Hepsehuburada, shaping into one of the most attractive digital platforms We will continue to work towards growing our merchant base through our 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 2nd 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 charge 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 commissions, transaction fees and other contractual charges to our merchants. Our revenue grew by 5.2% in Q2 2021 compared to the Q2 of last year. This was mainly driven by a 67 point 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, remain 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 2nd quarters. While our GMV grew by 38.4% in Q2 2021, Our revenue growth was 5.2%, reflecting the 11 percentage point 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 the 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 2021 than the same period of last year. We continue 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 nonelectronic categories such as supermarkets 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. There is 60% increase in delivery service revenue compared to the Q2 of last year, but primarily attributable to 38% rise in number of orders as well as higher delivery service revenue generated from 3rd party operations during the same period. At the bottom part of this slide, we disclosed the EBITDA as a percentage of GMV bridge Between Q2 2020 and Q2 2021, EBITDA was negative TIA 1,000,000 compared to positive TIA 71,000,000 TIA 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 points rise in advertising expenses an approximately 1 percentage point rise in other OpEx items excluding 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, The 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 impact through shipping and packing expenses was mainly driven by change in 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 1200 employees over the past years 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 percent amounting to negative TRY189,000,000. Now let's have a look at our net working capital and free cash flow generation in the next This quarter, we generated a strong operating cash flow through effective working capital management. Accordingly, net cash provided by operating activities increased by TRY 595,000,000 Reaching TRY 749,000,000 in Q2 2021. This increase was primarily due to increase in change in working capital through change in trade receivables of TRY 355,000,000 which is mainly driven by credit card receivables Change in inventories of TRY 301,000,000 and change in trade payables and payables to merchants by negative Our net CapEx is TRY 44,000,000 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 equipments mainly consist of hardware and intangible assets Arighting from website development costs. As a result, our free cash flow increased to TRY 569,000,000 as of Q2 2021 from TRY 136,000,000 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 8 Alada in July And the lift off of lockdown measures as of July 1, 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 markets, We will continue to prioritize GMV growth in the second half of twenty twenty one. 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 catalogs, maintaining price competitiveness and scaling our new strategic assets. We are committed to invest in and delivering strong full year GMV Within TRY 28,000,000,000 to TRY 29,000,000,000 range. With this, we end our presentation. The first question is from the line of Tyrone 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 4 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 1 or 2 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 please give us some indication on the take rate and also help us probably understand it looks like it dropped a little bit. 3rd question would be on the contribution margin comments from the press release. Just wanted to understand better The mention 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 the mention from the press release that You've observed some increased demand for lower margin products. Just wanted Thank you, Thijsar, for your questions. For the first one also is whether the outlook looks tougher or not. Well, the recent trends 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 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 In terms of the take rate, our growth contribution margin declined 2.4 percentage points to 8.3% compared to the Q2 of last year, Mainly due to underlying dynamics in revenue growth. This 2.4pp 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 call this as temporary margin investment and this will be gradually reduced throughout the time. And also shifting electronics GMV into 3P, meaning marketplace. We sold more electronics from the marketplace unit and therefore This affected our gross contribution. And finally, the discounts given to our customers to widen sorry, Lower margin products, those lower margin products are mainly gadgets, appliances, Bluetooth devices and robot vacuum cleaners and also once Well, depending on the market evolution, we expect this trend may continue in the Q3 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 The next question is from the line of Haditha 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 sort of current competitive environment that you're seeing at the moment? And then finally just on the payments, I think you mentioned there that it was the development was ahead of expectations. If you could just give us a bit more color on that, that would be great. Thank you. Thank you, Miriam. For the take rate, Well, we continue 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 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 market 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 also over to Murad. Thank you, Goran. 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 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. 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 assets And of course, our solid operational execution, capital efficiency, robust logistics network, deep technology capabilities, how's our brand name, hybrid business model and integrated ecosystem value positions us 3rd question, if I'm not mistaken, is about HEPCI Pay. So, FCPay 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, HEPCI Pay marked this important milestone by launching the GiuseDonum, Pepsi Pay Wallet as an embedded digital wallet on our platform On the 10th June, as said, as we mentioned, the daily penetration amongst eligible audience has been faster than our expectations, but yet it's too early to disclose numbers. But FCPay Wallet enables instant returns, cancellations and cash back. Along with Hefty Pay Wallet, Hefty Pay also introduced PayPal program, a cashback points program that allows customers to earn, redeem points during purchases with the wallet on our platform. Hesi Pay 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 Hepci Pay, which is well positioned for strong long term growth. Got it. Great. Thank you very much. Thank you. The next question is from the line of Tuntzer Asli with Goldman Sachs. Please go ahead. Hi, thank you very much for the presentation Congratulations on the first set of results post your IPO. So I have a couple of questions. First on the active user base, are you able to Share some sort of granularity around the actual growth rates as it will be important to track. Anything sort of anecdotal would be helpful as well. I know that there were a couple of questions on The take rates, but I can hear clearly my line was breaking up. So the implied take rate for the Q2 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 rates 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 And related to that, how is the profitability profile across your new business lines, especially Hep C Express? Thank you, Aspen. For the 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 at the 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 Q2 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 investments And because of CRM, which is we call as temporary margin investment. And those strategic margin investments are down to in electronics prices in the market by our strategic margin investments as well as discounts given to our customers for temporary campaigns. And accordingly, we invested 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 the biggest opportunity comes from offline. And in order to capture these offline customers, we have been making on an off basis margin investments to gain additional GMV. On the 3rd question, expectations about the profitability. On investing in and delivering long term value creation. As a result, our key principle remains to prioritize growth The next question maybe I can take the next question. It was about the profitability for new businesses, Express. Right. Let me remind you, at Hepsta Express, we aim to become a mainstream grocery shopping destination. For Hepsta Pay, It is designed to be a companion wallet to spend, save and mobilize money in a flexible way across online and off line. So with this strategic mindset, we will certainly prioritize growth for our strategic assets. In line with our super value proposition, we will continue to invest in and scale our strategic assets to the benefit of our customers. And FCPay and our FCXpress are particularly important to us because they are well positioned for strong long term growth. Okay. Thank you. So basically, from my understanding, the strategic margin investments, The temporary discounts fee could continue as long as you see the growth opportunity from these. Exactly. Exactly. If you 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. Thank you. 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 By the year end, we will be sharing our customers' base increase and the frequency numbers in detail. But on a quarterly basis, we don't disclose. We only give the overall Okay. Thank you. Thank you. The next question is from the line of Kiran Hanzadeh with JPMorgan. Please go ahead. Thank you for the presentation. Majority of my questions are asked, but I have some The first one is about competition. How are you planning to respond to accelerated Last Mile and fulfillment investments by Transjal, I think they are now much bigger than you on the fulfillment side. And how many merchants Have been already on board for fulfillment services because you have given some sort of statistics during the IPO And I just wonder the developments here. And what is the share of total orders delivered by Health Research? What is the progress here? And you also mentioned about some share incentives to management, I think, which is now included in your payroll calls in the 2nd quarter. Can you please give some details about this? And finally, about your working capital, there was a big release in the second 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 acceleration of our growth flywheel, scaling of our strategic assets, Investing and scaling our operations, logistics and technology infrastructure and, of course, driving further talent. Within that context, As we discussed briefly so far, we also definitely invested and scaled our capabilities across designs. 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, Hepze Jet achieved presence in every city in Turkey, reaching 137 cross docks, Whereas Heptunat, our nationwide pickup and drop off network expanded to more than 1500 pickup and drop off points across the country. And as a result of its expansion, Hepzijet conducts more of retail deliveries and more of marketplace deliveries in Q2 Compared to the same pace of last year. And also with FCJet, with our logistics capabilities, we are able to offer a variety of value to services, especially Friction's return, delivery by appointment, Same day and next day delivery options. And also let me remind you at TX sorry, 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. Thank you. But is it possible for you to Share some statistics there because I really want to understand the upside in HEXY. So what is the current status about I mean, on the last mile, how many and what is share of total orders delivered by Hexichet? And how many merchants have you already onboarded for the fulfillment service Yes. Thank you so much again for the question. Let me tell you, Hepci Jet 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 onboarded. On the other hand, with FCS Jet, it kept 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. Question is about management incentive plan and how much we recognize in our Kiena. Is it correct, Anzade? Yes. Okay. Yes. That's correct. Okay. In total, we have EUR 132,000,000 cash payments, which is projected to be done within year 2021. And the second part is €34,000,000 It's based on share based payments, which will be made within the next 18 plus 12 months according to our plan. So in total, we recognized SEK 132,000,000 and discounted cash payment, SEK 98,000,000 Share based payment, SEK 34,000,000 this is recognized based on vesting plan disclosed in the agreements. On the working capital side, yes, our working capital will keep on improving in the second half Due to the fact that our GMV will be will continue to grow in the second half. And with a better management, we expect to All right, I mean, in the second half of the year. So we can assume the similar type of working capital management. There is always a seasonality in the second half, especially in the Q4. Having said that, our Procurement increased significantly and we are growing significantly in the 3rd 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 HEPC Express? You mentioned about new brands To be on board in grocery delivery. So is there any national brand here that you managed to on board 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 you, Hepsta Express already actually achieved Over 40 brands and roughly 1800 stores closed more than 50 cities. And also, as you remember, we launched water service water delivery service as well. Thank you very much, Marfrig. Thank you. 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 model and integrated ecosystem have positioned us as a homegrown company to emerge as the first ever Nasdaq business Turkish company. We operate in attractive market that is a large, Again, let us remind you 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 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 catalog, Maintaining our price competitiveness and scaling our new strategic assets. With the use of funds raised in our recent IPO In our strong balance sheet, we will continue to invest in our vision. Thank you, everyone, for your time today, and we look forward to speaking with you again next quarter.