Ladies and gentlemen, good morning and good afternoon wherever you are, and welcome to Teknosa's first quarter earnings call and webcast. My name is Sibel Turhan, and I'm the Investor Relations Manager of Teknosa.

Before we start, please take a moment to review our disclaimer notes. I'd like to inform you that this presentation on the 2026 first quarter financial results includes the company's audited financial information prepared in accordance with IAS 29 inflation account provisions as per the Capital Markets Board's decision dated 28 December 2023.

Our presenter today is Teknosa's CFO, Mr. Ümit Kocagil.

Please note that all participants will be in listen-only mode during the presentation. Following the first part of this call, there will be a Q&A session, and you will be able to submit your questions through the Q&A box on your panel.

If you have any questions, we kindly ask you to submit your questions in writing before the Q&A session begins, which will let us review and address them efficiently. As a reminder, this conference call is being recorded, and the link will be made available online following the call.

Now, I'd like to hand the floor over to our CFO. Ümit Bey?

Thank you, Sibel. Hello, everyone, and welcome to our meeting on the first quarter financial results for 2026.

Today, I will begin with a brief overview of Teknosa's first quarter results, highlight several KPI realizations. I will then walk you through our market assessment, financial performance, and the key opportunities and cost initiatives we are focusing on to navigate current challenging macro environment.

These actions are becoming gradually visible currently. We expect more meaningful impacts, particularly from the second half of 2026 onward.

Since we have already published our financial results, I will be happy to address any questions during the Q&A sessions. Let me start with the key highlights from 2026 year-to-date.

The macroeconomic environment remained challenging throughout the period. Ongoing uncertainties arising from global and regional geopolitical developments continued to increase both volatility and the level of uncertainty.

High financing costs and delayed normalization of policy rates continued to weigh on all company results. In parallel, households remained cautious, particularly in non-essential spendings.

This cautious behavior was further reinforced by the inflationary pressures and ongoing geopolitical risk, which continued to weigh on overall consumer sentiment. Despite these headwinds, we observed selective consumer demand directed to new models and replacement in segments such as laptops, smartphones, and TVs, especially under the chip crisis.

In addition, financing solutions continued to play a critical role supporting purchasing decisions and improving affordability for consumers. Against this backdrop, we delivered growth above both the panel and the tech online markets.

This outperformance was primarily driven by strong execution on our e-commerce channel through marketplace expansion. We continued to benefit from initiatives aimed at increasing digital traffic, improving conversion rates, and expanding customer reach, all of which supported sustained online momentum.

Operationally, EBITDA margin showed an improvement compared to the previous period. This was driven by disciplined cost management and cost mitigation actions.

This improvement was achieved despite pressures on gross margins, mainly due to seasonal effects and heightened competitive intensity in the market. At the net profit level, results remained under pressure in the first quarter.

While we continued to secure funding through favorably priced bond issuances, higher borrowing requirements driven by seasonality effect led to increased financial expenses, which weighed on profitability. Finally, our long-term strategic priorities remained fully on track.

We continued to advance our efficiency and profitability initiatives as planned while maintaining a more disciplined approach to net working capital in light of ongoing uncertainties. Our AI-driven localized assortment and stock optimization tools are expected to drive inventory efficiency by aligning store-level product mix with local demand patterns and identifying slow-moving stock through advanced analytics, enabling more effective inventory actions and healthier turnover as they are rolled out this year.

We expect the full impact of these initiatives to become more visible starting from the second half of 2026 onward, supporting sustainable value creation over the medium term. Before moving to the operational KPIs on the right side of this slide, let me briefly remind you that all figures presented are prepared in line with IAS 29 standards.

This means that prior period figures have been restated to reflect March 2026 purchasing power. As we have previously shared with you, we have accelerated several strategic initiatives over the last year.

During this period, we closed a significant number of smaller scale stores that did not meet our performance expectations and customer experience we requested. Our market expansion strategy remains focused on opening larger, experience-driven digital stores in strategically selected high-traffic locations.

As part of our intensified store network optimization efforts, the total number of stores declined from 175 as the beginning of the last year to 138 by the end of March 2026. At the same time, we continued to expand our presence by opening larger format stores in new locations within well-established shopping malls during the first quarter.

As a result of this optimization, our average net sales area per store increased significantly, reaching 681 square meters. We see this as an important enabler of the customer experience we aim to deliver in our physical stores.

We also continued to expand our SKU portfolio to better address evolving consumer demand. Since the launch of our marketplace, the number of SKUs, stock keeping units, has increased 67-fold, exceeding 336,000.

In parallel, the number of active merchants on our marketplace has grown to 1,437. Customer satisfaction remains strong throughout the period.

Our Net Promoter Score, NPS, a key indicator of the consumer satisfaction, increased to 73 in Q1 from 70 at the year-end, in line with leading global benchmarks. This score reflects performance across stores, online channels, services, and our call center.

Finally, our TeknoClub program, launched in 2021, reached nearly four 5.4 bil- million registered customers. This continued growth supports stronger engagement and further reinforces brand loyalty.

Now, let's look at the market performance before going into the details of our financial results. For those who haven't attended our previous calls, GfK, the independent research company, follows two consumer electronic markets in Türkiye.

The first one is the panel market, which represents the total sales of consumer electronic products in Türkiye, and the second one is tech online market, which constitutes a subset of the panel market and includes only the online sales across all channels in panel market. Despite ongoing economic headwinds, the market demonstrated resilience.

Rising prices driven by chip shortages supported growth in IT, while PCs gained momentum driven by both price and replacement demand. In real terms, the panel market grew by 1% in first two months versus same period last year in 2026, compared to a 10% decline in 2025.

Within this environment, the tech online channel remained more resilient, growing around 11% year-to-date in 2026 versus a 7% decline seen in 2025, and continued to significantly outperform the overall market. The fundamentals of the tech online remain strong, supported by increasing digital adoption and evolving consumer behavior.

These realizations showed our strategy is well defined, timely as we continue investing in our online capabilities, and as demand gradually normalizes. By category, the panel market recorded strong growth in IT, followed by SDA, small domestic appliances, and telecom, while consumer electronics and white goods were more significantly impacted by softer demand.

In tech online, the picture was more positive, with real growth across all categories. IT, consumer electronics, and telecom delivered strong performance, while small domestic appliances and white goods also grew above inflation, reflecting solid underlying online demand.

Despite intense competition and store closures, our revenues grew by 3% in real terms, outperforming the market growth, supported by strong e-commerce momentum. On a quarterly basis, revenues reached 22.2 billion TL.

Meanwhile, in the first quarter, like-for-like sales increased by 9.6% year-over-year, indicating an even stronger underlying performance independent of store closures. We continued to accelerate our focus on high-margin complementary products and services, while continuing to enhance the profitability of our marketplace model.

Regarding profitability, gross margin was under pressure in the first quarter, mainly due to seasonality, increased competition, and changes in retail mix. As a result, gross margin declined 1.2 percentage point year-on-year to 11.5%.

In response, we continue to implement our strategic initiatives, including disciplined pricing, a stronger focus on high-margin categories, and margin enhancement across all categories alongside effective inventory management and improved sales turnover, which will further supported by the rollout of our key projects. Let me briefly walk you through how we view the online channel as a structural growth opportunity supporting overall top-line performance.

Growth in the online channel across both first-party and marketplace model continues to be a key strategic priority for us in within foreseen long-term shift in consumer behavior toward digital channels. Our presence on leading pure play marketplaces, including Trendyol, Hepsiburada, Amazon, Pazarama, and N11, continues to expand and plays an important role in supporting and accelerating our e-commerce momentum.

This multi-platform strategy strengthens our reach, enhances customer access, and contributes positively to overall online performance. As you can see on the right-hand side of this slide, our marketplace ecosystem continues to scale rapidly, expanding across multiple categories with a growing merchant base and a significantly broader product assortment, underlining our strong year-on-year momentum.

This in turn allows us to offer customers a wider product selection and more choice wherever they prefer. Finally, the value and the impact: our e-commerce GMV has reached 3.6 billion TL for the first quarter, accounting for 16% of retail GMV and 10% of total company revenues.

This clearly demonstrates that e-commerce is no longer a supporting channel, it's a meaningful contributor to growth, scale, and long-term value creation. As we mentioned in detail during our previous calls, we rolled out strict operational efficiency measures last year with a strong focus on cost mitigation.

We also noted that the financial impact of this action is expected to materialize progressively over time. We optimized our store network to eliminate inefficiencies and identified saving opportunities across personnel, rent, logistic, and general administrative expenses.

In parallel, we optimized our marketing and communication spendings with an increased focus on retail media. In addition, we worked closely with our suppliers on investment-related revenues to help reduce rent costs and further improve our store setup.

We also implemented process improvements and operational enhancements in our warehouses. As shown on the right-hand side of this slide, these initiatives have already began to deliver tangible result.

OPEX in nominal terms was lower than both Q1 and Q4 of the previous year. Accordingly, our operational margin improved year-on-year, supported by a 1.2 percentage point reduction in OPEX.

Turning to EBITDA, we delivered an improved performance with EBITDA increasing by 12% year-on-year to 643 million compared to 577 million TL last year. Accordingly, our EBITDA margin improved from 2.7% to 2.9% for the quarter.

Despite continued gross margin pressures, the improvement was mainly driven by disciplined OPEX management, clearly reflecting our continued focus on cost discipline and operational efficiency. Below EBITDA, credit card commission costs remained the main driver of financial expenses, particularly in the current high-interest-rate environment.

We strengthened tight control over credit card by increasing the share of alternative revenue collection methods. As we have highlighted in previous calls, credit card costs remained unchanged since November 2023.

Our efforts to increase the share of non-credit-card payments have enabled a significant reduction in this expense. This improvement was supported by several disciplined actions, including tightening our collection mix in field, installment discipline, continues to renegotiating commission terms with banks in line with declining interest rates, and expanding alternative payment solutions such as consumer loans with more favorable rates and supplier cost participation.

We couldn't get rid of this cost that we can control by our actions, but we have significantly curbed the usage of credit card as revenue collection method, switching from credit card collection to consumer loans and cash collection. As a result, the share of credit card collection decreased by approximately 9 percentage point year-on-year basis.

Collectively, these initiatives are helping us reduce financing cost and improve cash flow efficiency going forward. In the first quarter, working capital requirement increased due to seasonal effects, which put pressure on financial expenses.

The increase was primarily driven by higher purchasing activity in Q4, which also marked the period of peak season sales along with seasonal effects. As is typically the case, the related payments were realized in Q1.

Additionally, the higher share of short-term procurement items such as smartphones had an upward impact on this dynamic, increasing payment levels. Despite securing financing through new bond issuances at favorable below-market rates and attractive average borrowing cost, the net financial expenses to revenue ratio, excluding IFRS 16 adjustments, increased from 5.2% to 6% in Q1, driven by higher overall borrowing needs.

Our focus continues to strengthen this discipline in working capital management, including optimizing inventory turnover, maintaining improved supplier payment terms, and fine-tuning payment cycles to help mitigate financing cost for the rest of the year. Let's look at our net income bridge for the first quarter compared to same period last year, where we achieved a 65 million year-over-year improvement in net income.

We delivered a positive contribution of 67 million TL from EBITDA, mainly driven by our disciplined control of operating expenses, as discussed earlier. Below EBITDA, a 155 million TL decrease in our other operating expenses also supported the bottom line.

These positive effects were partially offset by a higher negative impact of 219 million TL in net financial expenses, including credit card cost and higher interest expenses driven by increasing borrowing requirements due to seasonality effect, as explained before. In addition, a higher monetary gain contributed a positive 179 million TL impact.

However, this was partly offset by an increase in tax differences, amounting 270 million TL. This figure includes an additional negative impact of approximately 76 million TL arising from the discontinuation of tax procedure code inflation accounting principles.

Overall, our net loss in the first quarter of 2026 amounted to 477 million TL compared to 542 million TL in the prior year. Looking ahead, as we increase efficiencies and optimize all costs that we can control, once interest rates begin to normalize, we expect this loss position to gradually improve, supporting a recovery in net income level.

Before concluding my presentation and opening the floor for questions, as a summary: uncertainties driven by global and regional political developments continue to pose a risk of heightened volatility. Teknosa continues to operate in a challenging macroeconomic and demand environment, while maintaining a clear focus on its well-defined strategy priorities.

Now, I'd like to reiterate our main focus areas for 2026. Firstly, we focus on revenue growth through complementary products, higher-margin categories, and online and offline channel expansion, while optimizing our retail mix alongside selective expansion of big format stores.

We maintain strict cost discipline and efficiency improvements aligned with the economic environment. We support demand by expanding alternative payment options beyond credit cards and strengthening cash flow through effective inventory management to reduce financing cost.

Last but not least, AI-driven digital initiatives deployed recently started to improve stock management and efficiencies. We will work on to enhance the effects of these initiatives.

At the same time, we continue to maintain our focus on sustainable value creation. This is the end of my presentation.

Now, if it is okay for you, we may proceed with your questions.

The first and second questions are very related, actually, I can just answer them in one answer. Accumulation of financial debt and deterioration of net working capital is related, as you know.

When you just look at the seasonality, as in the retail business, the seasonality starts with Q4, the highest sales. When you reach your highest sales, also you are just going to adjust your stock level to support this sales.

In this sense, you are just purchasing the most of the products, let's say the highest amount of products in Q4, and the payments terms is just going to be done in Q1. It is the way for each year, actually.

In Q1, normally, the sales are lower except February, which supported by Valentine's Day. Beyond that one, in March and also in January, there are not so big stories for the retail sales.

In this sense, the revenues are lower, you can say. When you just make the payments and when you didn't just get the revenues enough to cover these payments, your net working capital is just deteriorating, as you say.

As I say, it is not this year's issue, it is the same issue for each year for all retailers, by the way. When you have the deterioration in net working capital, you are also going to need financial debt to support this payment.

This is the things that we just face in Q1. Hopefully, throughout the time with the increasing sales, in Q2 and Q3 and Q4, we are just going to get rid of this net working deterioration.

Your third question is related with equity as far as I see. Probably you are asking for the technical insolvency.

Under the current legal framework, the company doesn't face any risk of technical insolvency, I can say. As of today, there is no decision has been taken by the relevant corporate bodies regarding a capital increase in the year 2026.

I couldn't see your name, that's why I couldn't address you. Sorry.

Alper Bey.

Cemal Bey has a question as far as I see, but I couldn't see the question. Cemal Bey, hello.

Please go ahead.

Thank you for the presentation. My first question is about the operational efficiency sides.

We have perceived some the restructuring over the last several years. We have seen some improvement, but how do you see the picture now?

Do you see a further room for higher efficiency? Because it's a highly competitive sector, I guess, and the profitability is still hard.

Do you see a light at the end of the tunnel in terms of your strategy? There are several players in the market, and from time to time, Teknosa could be the target for acquisition.

Could you further elaborate the outlook from your perspective going forward, and should we expect some improvements in the operational side since most of the costs are recorded in first quarter, the personnel expense or the rental side? Just could you further elaborate these issues?

Thank you very much.

Thank you, Cemal Bey. As far as I understand, your first question is related with our operational efficiencies and whether it is possible to increase our efficiencies to eliminate the effects of OPEXes.

Also you asked for the target for acquisition?

Yes.

I can just say that as we are a retailer, normally efficiencies is not just finalized. All the time, we have to just optimize it, as we know.

Even for the store closures, as we have just improved our store network, and it will be a continuous work, by the way. We can't just say that, "Okay, this is the store network that we are just going to operate."

Each year, each time, we have to Each month, we have to just check whether the financials are good for these stores, we have to check them, we have to just make some adjustment for them, and we have to take some precautions to increase the performance. If the performance is not so well, we can make some new relocation or we can just make new negotiations with the landlord.

If everything is not worked, we can just close the store and open a new store by the nearby. For the rest of the OPEX items, each time we have some opportunities and we are just going to work on them, by the way, because it's a dynamic business, as you know.

If we say that our model is just worked perfectly and we are not going to make any adaptation, which means that we are going to be dead probably throughout the time. We are checking all our OPEXes.

As I say, we are checking our store network, each time we are we are just checking for our financial expenses, we will continue doing it, by the way. Meanwhile, under this high interest in- high interest environment, we are just also going to work for the stock optimization.

We are just going to, as I said, we already launched some two projects, let's say, for the store net- not store, for the store stocks and also for the slow-moving products with the help of the AI. We just deployed them.

We are just going to see their results throughout the time, but it's just going to affect our margins and also it's going to affect our financial expenses, as we are just going to include the products with a, let's say, favorable speed in sales. I don't know whether it's a question answer for your first part.

Thank you. Thank you.

Another follow-up: do you think the omnichannel strategy works for now? Because it's always has been a questionable, from one side, you have stores, and omnichannel is a tricky thing, and it's always a issue for the sector.

In terms of the consumer side, the Turkish lira didn't depreciate, but the interest rates are high. Do you see price increases because of interest rates increases in April, for instance, you see price increases, or do you see any specific change in the consumer behavior lately, at least for the last two months?

Thank you.

I can address your question like this: omnichannel is the winning strategy for all the retailers throughout the world, by the way. We can see that only the brick-and-mortar stores or only the online stores are not just working.

We just need to be in a coherence between the online and offline channels. The customers' behaviors all the time are changing, as you see.

Throughout the time, they were just preferring the stores. After the pandemic, they just preferred to online.

When the stores are open, they preferred to go to stores. Türkiye is a little bit different than the countries abroad, by the way.

For example, for the northern part, they just ordered the products from the internet, but in Türkiye and also in the Mediterranean side, people just tend to speak to a salesperson in order to get some information for the products, and afterwards they just need to make some, let's say, chat about the price or so on, then they decide to do it. Before coming to the stores, they are making the investigation from the internet, they just see the prices, but still they just need to talk to a person to just understand the specifications of the products and also the payment options.

In the presentation, I said that people are just, let's say, decreasing the non-essential part for their spendings because, as you say, interest rate is high, they prefer to just benefit from this sort of cases. Still, the prices are just going up with this chip crisis.

In even April, the prices are just going up, as you maybe followed. We can just say that for the chip crisis is just going to affect everything, by the way, even not for the consumer electronics, for the cars, by the way, because they will be just produced by a company and the supply will be limited as far as we've seen.

In this sense, the prices are just going to go up, and it started to go up. In the presentation, I mentioned IT is just increasing due to this chip crisis, and it's the effect of the crisis, by the way.

The prices is just going up a little bit, people just started to buy the ITs and they are also renewing their PCs. That's what we observed in the market, both in panel and also in tech online market.

Spendings are just going in a little bit slow, the speed of the sales just not the same as the previous years, but still it's above the inflation. Last year, it was not this case, but now it's just normalizing gradually, we can say.

This behavior is just going to continue as far as we see. In first quarter, you said that the personnel cost is high because the revenue is also low, so that's why in the profitability side, we are also just seeing some deterioration, but throughout the time with the increasing sales, within seasonality, we are just going to be normalized, we can say.

Is it a question for you, Cemal Bey?

Thank you. Thank you, and one last question about the panel markets: from your presentation, I see 1% increase.

When we look at the presentations, the consumer electronics in general, maybe it might be specific to those brands, were declining, like the significant decline in TV sales in first quarter. That was our perception.

The panel market includes not only the TVs, but also the computer side or others like phones, I guess, everything, right?

Please continue.

I see 1% in your side. Thank you.

I was hearing higher declines, so that's why I asked about that. Whether this growth 1% is in other Teknosa I see from the presentation.

Thank you.

You're welcome. Just a summary: this panel market constitutes all the consumer electronic sales, including IT, SDA, which means the small domestic appliances, telecom, consumer electronics, which is mainly TV, white goods, this MDA also, major domestic appliances, as you see from the presentation.

It's going up, actually. Last year, it was the 10% decline in two months period, but this year, as I say, the demand is just a little bit improving, let's say, 1% above the inflation, but last year it was 10% below the inflation.

These figures are all IAS 29, which are just compared under the March 2026 purchasing power, and we see that the demand is a slightly, let's say, getting better currently.

Thank you.

You're welcome.

Target for acquisition.

Yes, yes. That was whether you can be a target for acquisition or are you searching for such things like mergers with others?

Thank you.

Actually, throughout the time, there was a consolidation in the market, and currently, as I said, the GfK is just following the four channels in consumer electronic markets. One of them is technical superstores, which Teknosa is under this segment, by the way.

Our main competitors are Vatan and MediaMarkt and some part of D&R's accessory sales. When we just see that there is no consolidation opportunities as far as we see.

Maybe you didn't follow the last time, there was a question like this in the last earnings call, and the answer is still the same, by the way. There is no new development on this matter since our last communication, and we haven't received any additional information from our main shareholder regarding a potential share sale or any prospective buyer.

Should there be any such development, the necessary disclosures will be made to the public, actually. This is what I can say.

Thank you. Clear.

You're welcome.

as a retailer, our net working capital should be minus, as you say, and in the year-end it was positive, as you say. Still we are just working on this one.

When you just look at the Q4, as you referred to, Q4 is the highest season. That's why when you just look at our payables, in the year-end it was 15.

almost 2 billion TL, whereas major part of these payables were in short-period maturity times with such categories such as telephone. We have to just make the payments in the first quarter.

This is the trend, as you see. Normally, before this year, before 2025, normally year-end you would just see a negative net working capital, afterwards in Q1, we just return to positive.

That was the trend. Last year, due to the, let's say, lower demand, it just returned to a positive side.

Right now, we are just working on it, but it is not just going to be in Q1, as I said, the stocks and also the payments has been already done. In Q2, Q3, and Q4, especially in Q2 and Q4, we are just going to eliminate this positive side, and we will hope to get back to negative territory again.

That's what I can say, Alper Bey. Is it a answer for you?

He

There is no question.

Thank you all for joining and listening to our webcast. Hope to see you in the next quarter's earning.

Thank you. Bye-bye.