Jumia Technologies AG

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's results conference call for the first quarter of 2020. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Safa Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for our First Quarter 2020 Earnings Code. With us today are Sacha Poignanec and Jolyne Nodara, co-founders and co-serials of Julien, as well as Ophryne Dehenneté, CFO. This code is also being webcast on the IR section of our corporate website. We will start by covering the State Harbor. We would like to remind you that our discussions today will include forward-looking statements. Actual results may differ materially from those indicated in the forward-looking statement. Moreover, these forward-looking statements may speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For the discussion of some of the risk factors that could cause actual results to differ from the forward-looking statements expressed today, please see the risk factors section of our recent 20-year filing. In addition, on this call, we will refer to certain financial measures not reported in accordance with IFRS. You can find the contributions of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our investigations website. With that, I hand over to Sacha.

Thank you and welcome, everyone. Thanks for joining the call. Before diving into Q1, of course, I would like to give some context on how COVID-19 is affecting our business so far and the actions that we have taken in response to that. The COVID-19 is bringing a complex combination of health, economic, and operational changes. First, I want to start by acknowledging the hard work of our teams working on the front lines, carrying out essential duties, and in particular, those in our warehouses and delivery hubs. Our mission of facilitating consumers' access to goods and services, helping sellers reach those consumers in a seamless way while making a positive impact on the African continent has never been more relevant. And in these difficult times, we think that we have a crucial role to play, helping the consumers and communities we serve stay safe and as much as possible functioning through the crisis. We are also hopeful that it will accelerate and help accelerate the long-term shifts towards e-commerce. Let me walk you through how we have adapted to the situation as well as the business impact that we have observed so far. I'm now on page three. Our number one priority has been and remains the health and safety of our teams, consumers, and communities. We took rapid action to adjust all our operations. We implemented work from home across all our offices. We took actions to operate our logistics infrastructure in accordance with high standards of safety and hygiene. Measures we put in place include setting up separate team shifts checking employees temperature sanitizing facilities several times a day we required the use of masks and gloves as well as sanitizers for the handling and delivery of the orders and all members of our warehouse staff and our delivery partners were trained on all the best practices of personal hygiene and social distancing we have also facilitated social distancing, of course, by implementing contactless safe delivery, which has been enabled partly by JuniorPay, which allows consumers to prepay their orders online and have them delivered without the need for cash exchange or physical contact with the delivery agents. Again, making those changes has been a huge task, and we are incredibly grateful to our colleagues and delivery partners working on the front lines. Moving on to page four, we launched a broad effort to have our consumers and communities celebrate and thank what we call the Jumia Heroes through the social media campaign. After a week after launching it, the hashtag Jumia Heroes was already trending on social media. We also established the Solidarity Fund for our Jumia Heroes, which is funded completely voluntarily by the Jumia employees and confidentially by staff contributions. And more broadly, in these difficult times, we think that we have a responsibility to support our communities leveraging our assets. Thanks to our team and cross-border platform in China, we were able to donate half a million masks to health ministries across Africa for use by health workers. You can see on the right side of the page a few pictures of the delivery meetings. And we've done that across multiple countries. We also supported local governments. in nine countries with three educational campaigns on our platform to help consumers access reliable health and safety information. And the campaign was set up within 48 hours and generated over 5 million impressions to date. This is also what we are about, making people's lives easier and contributing to the community, not only during good times, of course, but during also challenging times. Now, in terms of business impact, If you turn to page five, we have seen a combination of short-term supply and logistic challenges and positive impacts slash unique opportunities for the long term. Most of these trends, of course, emerged in the final half of March 2020, and they're not yet fully reflected in the Q1 results that we are publishing right after that. but we expect those impacts to continue playing out in the couple coming quarters. So on the one hand, we see certain challenges on supply and logistics in some parts of the business. On supply, the cross-border operations were disrupted from manufacturing shutdown in China. This supply chain disruption in China also impacted some of our local sellers, especially those who source their goods from China in consumer electronics, phones, fashion categories. And we also face cross-border logistics challenges due to country lockdowns, which have impacted the cargo operations. At local level, the consignment measures restrict seller operations. So in some areas, some sellers do not even have physical access to their inventory. In some areas, the confinement measures prevent them from dropping their packages into the Jumia logistics. In some countries, many of the restaurants have simply closed until further notice. Then, on logistics, we are facing capacity limitations, which, of course, affect our ability to fulfill consumer demands. We have curfews in many countries, which are impacting the operating hours, and of course, in turn, can train the delivery capacity. In South Africa, for example, the deliveries of fashion items were just completely suspended for a few weeks. And overall, the implementation of the safety measures, which I mentioned in our warehouses, like team shifts or safety distancing, are leading to reduced order processing capacity. Those are the challenges. Then on the other hand, of course, we are seeing unique opportunities for long-term e-commerce and payment adoption. More and more sellers are embracing e-commerce and are keen to join Jumia because, of course, offline distribution channels are disrupted. We are seeing unprecedented demand from brands and sellers. And since March, we have started to announce many new partnerships, including with household care and FMCG brands like Record Bank Insert, Unilever, P&G, Nestle, Coca-Cola. On JumiaFood, we see grocery and convenience retailers very eager to join our on-demand platform, which has the logistic infrastructure to complete deliveries in less than 45 minutes. We also did some partnerships to deliver fresh foods. On the demand front, we have seen a surge in demand for all the essentials, starting, of course, the second week of March. And the grocery category has experienced a big four-time increase in terms of items sold compared with last year. And we hope, of course, that those dynamics will help accelerate the consumption shift towards online. This demand is also helping us generate sales and advertising efficiency. On the advertising front and the advertising revenue front, we've seen resilient demand as the advertisers favor direct response online channels that can deliver measurable results. And last but not least, the launch of contactless safe delivery is helping us to further promote junior pay, which provides an opportunity to drive long-term payment adoption. So now if you turn to page six, you can see on this page a few illustrations of those demand and supply trends. Here you have a weekly evolution of items sold for selected parts of the business over March and April, and the data has been rebased to 100 starting in the first week of March. So you see on the black line at group level, we ended the month of April about 3% above the first week of March, and you can see that there's some negatives and some positives. Food delivery was and continues to be affected by the fact that many restaurants are just closed, right, around across many of our geographies. We managed to launch a number of convenience grocery stores, but it remains very affected. In South Africa, we post all deliveries, and we are starting to see now some recovery, some recovery as the deliveries are resuming on certain apparel categories. In Nigeria, the confinement measures had a big impact on our sellers and their ability to bring their packages to us. a lot of our top sellers simply stopped operating for a few weeks. And you can see that since then, part of the sellers have resumed their activity, some partially, some entirely, and volumes have gradually picked up, right? And by the end of April, volumes were almost back to their early March level. On the other end of the spectrum, you have countries like Morocco or Tunisia here that we have put as examples where we are experiencing and we have experienced a surge in volumes, peaking mid-April, at more than twice the volumes of the first week of March. And throughout April, we continue to see volumes at least 40% above the levels of early March. And of course, those volumes are also somewhat constrained by the logistic capacity challenges, which I mentioned before. So again here, you see some positives and some challenges. Of course, we're going to continue to adapt to the situation as it continues to develop. And overall, we think that we are very well positioned to become even more relevant to consumers, sellers, and to the broader communities in the coming months. And if you turn to page seven, we can see here the highlights of Q1. Our strategy, as you all know, is based on four pillars. Grow the usage of Jumia. drive the penetration of junior pay, increase monetization, and to do all this while improving cost efficiency. In 2019, we have started to focus on what is proving to be crucial to navigate the current situation. The focus on everyday product categories is supporting usage and consumer adoption, while all the actions we undertook on the cost are starting to pay off. as we're making progress on our path to profitability. Annual active consumers reached 6.4 million, and holders grew 28%. And this is while sales and advertising expense decreased by 25% over the same period. Junior pay grew very strongly in volumes and transaction terms. TPV increased by 71%, and transactions by 77%. On monetization, marketplace revenue grew 22% and gross profit 21%. And on cost, gross profit after fulfillment reached a record 2.5 million. And our adjusted EBDA loss decreased by 10% compared with last year, which is the best level in absolute terms in the past six quarters. So with this, I'll pass it on to Jeremy, who will walk you through our Q1 performance in more detail.