Jumia Technologies AG

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumayah Results Conference Call for the third quarter of 2021. At this time, all participants are on 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 Jumayah. Please go ahead.

Good morning, everyone. Thank you for joining us today for our third quarter 2021 earnings call. With us today are Sacha Pranionek and Jeremy Odara, co-founders and co-CEOs of Jumia. This call is also being webcast on the IR section of our corporate website. We will start by covering the safe 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 statements. 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 a 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 annual report on Form 20F, as published on March 12, 2021. In addition, on this call, we would refer to certain financial measures not reported in accordance with IFRS. You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our Investor Relations website. With that, I'll hand over to Sacha.

Thank you very much. Welcome, everyone, and thanks for joining us today. Let's start on page three. And as announced in Q2, we are currently focusing on scaling our platform. By scaling our platform, we mean accelerating our usage growth, accelerating the development of JumiaPay, diversifying our monetization, and all this in order to drive progress towards profitability. I think our results in Q3 very much reflect that strategy. We are able to enter this new phase of scale with strong confidence because in the past three, four years, we have strongly enhanced our fundamentals. Chimney is a very different company today versus four years ago. We have increased marketplace relevance. We have enhanced unit economics, strengthened our balance sheets. And ultimately, we've built what we believe to be a very strong and scalable platform, including the marketplace, logistics, payment, all adapted to our markets in Africa. And given the strengths of our fundamentals, it's the right strategy now to scale the platform. If you move to page four, you can see that the acceleration is now underway. Quarterly orders reached all-time high. record number in Q3 2021, posting the fastest year-to-year growth of the past seven quarters. Consumers, we've got, we posted in terms of annual active consumers, the fastest sequential growth of the past five quarters. And we recorded in Q3 the highest ever number of quarterly active consumers. And as a result of the acceleration in consumer and holders, we are reaching an inflection in GMV which is now growing by 8% year over year. This is great news. Acceleration is underway. We see good momentum, and suddenly we are working to drive even more momentum going forward. On page five, you can see that adjusted BDA reflects the increased investments in the long-term growth of the business. There are two main areas where we are currently investing. The first is consumer adoption. We are increasing our investments in sales and advertising and in consumer incentives in order to drive increased brand awareness, increased brand consideration, conversion of new consumers, and increased loyalty. We're investing in our brands. We're investing in our consumers, both for long-term growth and we do it in a very targeted and disciplined way. The second area is technology and G&A. Here, our objective is to accelerate the development of product and features for an even more engaging and seamless user experience, as well as, of course, the development of junior pay. We are comfortable with the increased level of ABDA loss, given the strength of our unit economics that we will comment in a minute. the good signs of growth that we have just seen, and of course, our cash position of $584 million at the end of the quarter. Now, let's review on page six the unit economics, which obviously are a key enabler for these growth investments. On this page, you can see that the average order value now stands at $28, as we continue to shift our mix towards more of the everyday product categories. And in parallel, our gross profit after fulfillment expenses, excluding consumer incentives, which are deducted from revenues, stands at $1.3 per order, which represents 4.6% of the value of each order. Three years ago, same numbers were $0.5 and 1.2%. Given this, given the strength of the unit economics, we are investing more into scaling the platform, and this includes targeted investments in consumer adoption. You can see on this chart that we have increased consumer incentives to $0.9 per order, a level which is similar to the ones that we had two years ago, and our sales and advertising per order are now spending at $2.8. We believe that we have very strong unit economics and this will continue to allow us to invest into scaling the platform. With this, let me now hand over to Jeremy, who will give us more details on the performance of Q3.

Thank you, Sacha. Hello, everyone, and thanks for joining today. So we kick off with the review of the usage trends during the quarter on page 8. So on page 8, our growth acceleration strategy is currently starting to play off. The orders reached an all-time high of 8.5 million, surpassing the prior Q4 peaks and increasing by 28% year-over-year, which is the fastest growth rate of the past seven quarters. The annual active consumers reached 7.3 million, which is up 8% year-over-year, supported by a strong acceleration in new consumer ads during the quarter. We are also seeing a sequential step-up in annual active consumers at 4% quarter-over-quarter, which is the fastest sequential growth of the past five quarters. As a result of the acceleration in consumer and orders growth, we are reaching an inflection point in the GMB trajectory, which increased by 8% year-over-year, reaching $238 million. This is positive momentum, and we believe we can maintain this momentum as we continue to focus on everyday categories and as we continue to invest in growth. On page 9, you can see that we continue to shift the mix towards everyday product categories, which went from 44% of the GMV in 2019 to 64% in Q3 this year. The average order value now stands at $28. If we look now on page 10 at the trends by product category into more details, we see that the GMV grows momentum across all categories with the only exception of phone electronics, which continue to be affected by supply chain destruction. In Q3, the fastest growing category in GMV terms was Jumilaté, digital and financial services, with almost double year-over-year. FMCG was the second fastest growing category in GMV terms. It was also the fastest growing category in terms of items sold, posting its highest ever volume number and almost doubling year-over-year. We see great momentum in the grocery subcategory, which we keep improving to serve the daily needs of our consumers. Food delivery. maintained its strong momentum and was the second fastest growing category in terms of items sold, growing by almost 40% year-over-year, to deliver possibly its highest ever quarterly volume with over 2 million orders. We are pleased to see broad-based momentum across every category, and we are confident that our continued investment and disciplined execution will further fuel the acceleration. We are moving now to Jumia Pay on page 12. Sorry. JumiaPay TPV increased by 15%, from 56 million in Q3 last year to 64.5 million in Q3 this year, supported by the growth in GMV and JumiaPay app digital services in particular. On-platform penetration of JumiaPay as a percentage of the GMV reached a new high of 27.1% in Q3 this year, up from 25.4% in Q3 last year. If we turn to transactions on page 13, JumiaPay transactions reached 3 million in Q3 this year, up 34% year-over-year, the fastest transactions growth rate of the past five quarters. JumiaPay transactions growth was supported by accelerating volume growth across the business, in the food delivery category in particular. 35.7% of orders placed on the Jumia platform in Q3 this year were completely using JumiaPay compared to 34.1% last year. In parallel, with increasing the penetration of JumiaPay on our platform in a gradual and disciplined manner, we have initiated the first steps of JumiaPay off-platform. This was initiated in Egypt earlier this month, where we are starting to process our first payment off-platform for third-party online merchants. I'd like to take this opportunity actually to explain in more detail our strategy on JumiaPay, and I'm now on page 14. As explained in the past, our strategy with JumiaPay is to offer the two-sided FinTech ecosystem for consumers and merchants. The first and essential layer of this ecosystem is payments. For consumers, we have built a JumiaPay checkout account that can be linked to their payment method of choice. It can be linked to a debit or credit card, bank account, or wallet. There is a huge variety of payment methods in Africa, and we have built the JumiaPay checkout account to embrace and accommodate this diversity. In the future, we intend to turn the JumiaPay checkout account into a full-fledged wallet with an extended range of functionalities, including caching, cash-out features, Q2P transactions, and many more. For merchants, we have built a JumiaPay branded checkout solution that can leverage the existing days of JumiaPay checkout account holders. And that is the solution we are currently rolling out to third-party online merchants in Egypt. On top of the payment solutions, we are overlaying an extensive range of financial solutions for both consumers and merchants. For consumers, we have a number of these solutions already live in the DuniaPay app, offered by third-party service providers, which has microloans, savings products, insurance policies, etc. While these products are live in selected countries, They remain in the early stage of their development, and we intend to further expand and diversify the product offering. For merchants, we are also developing a range of relevant financial services, starting with credit products. Today, we collect junior sellers with third-party financial institutions, helping them access credit by leveraging their business data in anonymized databases for credit story purposes. In Q3, almost 500 loans were disbursed. more than doubling versus last year, and benefiting over 350 unique sellers, a 55% increase over the year. Access to credit and financial inclusion is a meaningful pinpoint for SME sellers, whether on or off the Jumia platform, and we intend to further develop this activity to serve a growing base of merchants. In addition to payment and financial services, we are developing an extensive range of digital services for consumers and merchants. For consumers, we are already offering a broad range of services on the Dumiapay app, and we are constantly expanding it. To give you a sense, we now have more than 300 services available, ranging from paying your university bills to booking your bus tickets. For merchants, we offer user-friendly features to track transactions, balances, and settlements. And we also have access to marketing and loyalty tools to allow them to take our promotions to a specific customer cohort. JumiaPay is a core part of our strategy. We are very excited about the recent development and what's coming ahead, and we have all the relevant building blocks to grow JumiaPay into a payment and fintech champion in Africa. Now, I'll hand over to Safa, who is covering for our front today, and we'll walk you through our financial performance in more detail.

Thank you, Jeremie. I will start with our monetization metrics. Let's look at the trends of our market-based revenue on page 16. Marketing and advertising revenue increased by 14% supported by robust seller take-up of our ad solutions. We have doubled the number of monthly seller ad campaigns in Q3 21 compared to the monthly average of the first half of the year. This was partly upset by generally tighter budgets from third-party advertisers and agencies in particular. Value-added services revenue increased by 11% year-over-year. This was a result of increased volumes on our platform, enhanced higher shipping contributions collected from sellers, as well as increased take-up by sellers of our warehousing services. Commissions and fulfillment revenue are both impacted by consumer incentives. Excluding this impact, commissions revenue was up 18%, driven by usage growth, and fulfillment revenue was down 2% as we chose to reduce the shipping pass-through to customers. One of the key features of our revenue model is the diversity of our monetization streams. And this gives us the flexibility to adjust the monetization intensity to serve our strategy. Part of the monetization strategy is also to drive revenue and margin from our platform assets, Journia Logistics and Journia Pay. I now would like to give you an update on Julia Logistics on page 17. We are seeing strong momentum in this business and we reached a new milestone in Q3 21 with revenue generated from this activity reaching the million dollar mark. This was driven by a record volume of 2.9 million packages shipped, more than doubling quarter on quarter on behalf of over 700 clients. Our clients span a very broad range of sectors, and we have laid out on the page a few examples of logistics as a service clients we worked with during the quarter. In Kenya, we collaborated with Galana Oil, a leading oil marketing company, to expand their logistics capacity and serve their sales outlets and third-party clients across the country. In Ivory Coast, we worked with Platinum, the sole distributor for payloads, to serve wholesale and modern trade clients across the country. In Tunisia, we worked with Camion, a leading FMCG distributor, to serve their retailers across the greater Tunis area. We are very pleased with this momentum and milestone. We believe we have created a very unique logistics platform, very relevant to large and small companies across many sectors. Moving on to gross profit trajectory on page 18. Growth profit before the impact of consumer incentives shows a steady increase over the past two years, accelerating by 14% year-over-year in Q3 2021. Similarly, the margin at percentage of GMB increased to 14% in Q3 2021 from 13% in Q3 2020, which was a 478 basis point step-up for this Q3 2019. We made the decision to reinvest some of these monetization gains into our price competitiveness, increasing consumer incentives to $7.5 million in Q321 to $2 million in Q320. I would point out here that the Q320 levels were very modest and were down 53% compared to Q319. As a result, gross profit, which is net of consumer incentives, decreased by 6% from $27.1 million in Q320 to $25.5 million in QC21, which is 21% higher than QC19. Similarly, gross profit as percentage of GMV decreased from 12% in QC20 to 11% in QC21, remaining 346 basis points above the margin level of QC19. Moving on to cost on page 20, While we are in a phase of expansion and increased investments, we are maintaining strong cost discipline. And you can see that we continue generating logistics efficiency on a volume unit basis. Fulfillment expense increased by 13% year over year, while orders accelerated by 28% over the same period. And while our orders in QC21 were 22% higher than in QC19, our full payment expense in QC21 was 5% lower than in QC19, which speaks to the significant step-up in logistics efficiency. Moving on to sales and advertising costs, page 21. Sales and advertising expense reached $24 million in QC21, up 228% year-over-year and up 57% compared to QC19. we picked up the pace of marketing investments in June 21 and maintained a similar level of monthly marketing investments throughout Q3 21 on the back of 18 months of reduced marketing expense. The increase in marketing investments was implemented across marketing channels, with 60% of the increase allocated to online performance marketing across the full consumer journey funnel. The remaining 40%, was allocated to offline media and video advertising, which were largely curtailed in 2020. And you can see that the split of our sales and advertising expense in Q3 21 is largely in line with that of Q3 19, albeit with a slight reduction in the share of staff costs. I now would like to give you a bit more color on the nature of our marketing investments and activities with a few illustrations from Q321 on page 22. We consider consumer incentives as marketing investments, and that's because price and shipping adjustments are key to support consumer acquisition and loyalty. In Q321, we deployed our newly launched AI-powered CRM growth tool across geographies. This tool allows us to retarget specific customer cohorts with tailored incentives based on their purchase history and user signals. Above-the-line marketing, i.e. radio, TV, and out-of-home advertising, was very limited in 2020 and at the beginning of 2021. We are now ramping up investments in this channel with dedicated brand building and awareness campaigns. Our out-of-home campaigns are aimed at increasing our awareness and reach in strategic geographical areas which are still underpenetrated. Below the line and online performance marketing continues to account for the largest share of our marketing investments. As we increase our investments in online marketing channels, we constantly seek to optimize the efficiency of these investments. In Facebook marketing, for example, we have moved to a full funnel approach. This consists of going beyond the bottom of the funnel, direct response ads, into brand awareness campaigns to broaden our audience reach and drive new user adoption. To increase the efficiency of our investments, our data science teams are working very closely with Facebook to enhance campaign structure and brand awareness KPIs, including ad recall, uplift, app installs, and content views. On social media, we are building a leading network in Africa of key opinion leaders, or KOLs. In September alone, our network counted over 260 active KOLs across Africa. In Q321, we rolled out a proprietary KOLs management platform that allows us to acquire, manage, and compensate KOLs in a fully automated manner. turning to technology and G&A expenses on page 23. Technology is another area of increased investment, with technology and content expense reaching $9.4 million, up 27% year-over-year and 21% compared to Q3 2019. Tech is the backbone of our platform, and we are increasing investments in this area to build more products and features to enhance user experience and engagement on our platform. General and administrative expense, excluding SBC, reached $25.2 million, up 10% year-over-year. This was mostly due to an uptick in staff costs as we strengthened the management bench in selected areas of the business to support growth. The G&A costs, excluding SBC, in QC21 remained 11% lower compared to their levels in Q319 as we maintain cost discipline in this area. Moving to adjusted EBITDA loss on page 24. We have clear objectives of usage growth acceleration and junior pay development, and our capital allocation reflects that. Adjusted EBITDA loss reached $52.5 million in Q321 compared to $27 million in Q320, as a result of increased growth investments in the form of consumer incentives, sales and advertising, and technology investments. Let's now turn to balance sheets and cash flow items, page 25. We are increasing our growth investments in an asset-light manner, leveraging specific benefits of our operating model. CAPEX and QG21 was $0.8 million as we operate Jumia Logistics as a platform with very limited CapEx requirements. Net change in working capital recorded resulted in an inflow of $7.1 million in QP21. This was mainly a result of an increase in payables relating to the uptick in first-party activity as well as a shorter receivable cycle. Cash utilization for the quarter defined as cash used in operating and investing activities, excluding investments in financial assets, was $47.6 million in Q3 21, supported by the working capital inflow during the quarter. At the end of September 21, we had a liquidity position of $584 million, comprised of $185 million of cash and cash equivalents, and $399 million of financial assets. With that, I'll hand over to Sacha for concluding remarks.

Thank you, guys. Thank you, Safa. Thank you very much, Jeremy. I think in Q3, you can see that it marks the beginning of our phase of scaling the platform. And by scaling the platform, we mean, again, accelerating use age growth, developing junior pay, diversifying monetization, all this to drive the path to profitability. And we're leveraging, of course, the strong fundamentals and the strong unit economics and efficiency gains that we have achieved over the past two years. I think if we look at our results, we, on growth, we've got record order number, plus 28% year-over-year. We've got record quarterly active consumers. We've got GMB growing, so we're pleased with that. I think on developing Jumia Play, we see good growth, 15% growth of volume, or value, sorry, 34% of volume. Also, the first transactions of platforms in Egypt, so very pleased with that. On diversifying monetization, we see that efforts on Jumia Logistics are starting to be meaningful, and we reached the 1 million mark, so I think the strategy is well underway, and we have put more capital to work during the quarter with good signs, I would say, of usage acceleration of JumiaPay and of diversifying the monetization. We have this vast, untapped market opportunity, both on e-commerce and payment fronts. And in this context, we really want to establish Jumia as the go-to destination for consumers. And we want to develop JumiaPay into a payment and fintech champion on the continent over the next few quarters. Building upon this momentum, we intend to continue, further accelerate the pace of usage growth, accelerating orders, consumers, driving further G&B inflection, and to fuel this growth, we will continue stepping up our consumer adoption and technology investments. In the near term, of course, we may see some fluctuation in unit economics as we ramp up investments, but we ultimately expect that the usage growth and the diversification of our monetization streams will support them. We are very confident that achieving scale through growth acceleration, junior pay development, and monetization will ultimately take the business to break even, and we do this, of course, maintaining a disciplined approach to cost and to capital allocation. Thank you very much for your attention, and we are now ready to take your questions.

Certainly. The floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold a moment while we poll for questions. Your first question is coming from Aaron Kessler with Raymond James. Please pose your question.

Great. Thanks, guys. A couple questions. First, on the increased level of marketing, can you talk a little bit about what is the quality of the customers you're getting. I was just always concerned with some of the incentives that maybe these are more short-lived customers. And then how long are you planning with this increased level of marketing spend? Do you expect this to analyze some of the data after this, or do you think this will sustain for several quarters, maybe until you can get that unit economics to drive overall profitability? Thank you.

Thanks very much, Alan. Lots to unpack here. I think on the strategy in terms of marketing, we're definitely investing across the full spectrum of the consumer journey, right? We're investing at the very top of the funnel in brand awareness, education. We're investing into consideration. We're investing into conversion. We're investing into loyalty. So very much across the spectrum because as we know that we have a large number of consumers who are yet to start transacting online. And so we are really investing across the full spectrum. And certainly we have a view to optimize the consumer lifetime value, right? And consumer incentives are part of that. And the share of the consumer incentive over the top, the total marketing dollars that we invest, we think is reasonable. And And certainly we invest all consumer incentives with a consumer lifetime value in mind. And I agree with you that there will always be, you know, deal seekers and quality of customers who may not be as good as others. But over time, we are optimizing based on CLB. And our ultimate goal is to have very loyal customers who are repeat customers. And consumer incentives, I think, are a good way to drive conversion or sometimes to drive certain behaviors. and, for example, to help consumers discover a new category or, as we have done in the past, to help them overcome the junior pay. For example, we give discounts for consumers to transact on junior pay. So we see the consumer incentive as very strategic and as part of driving the right consumer lifetime value and not necessarily as tactical. Now, in terms of level... certainly we want to continue to invest and to continue to invest more. I think what we want to see is increased efficiency with time, right? So certainly the question will be about how fast can we improve the efficiency of those marketing investments. Obviously, based on what I said, a lot of those marketing investments are for the long term, right, brand awareness, consideration, And we want to see the marketing efficiency improve over time. And as we see that, we would be very comfortable continuing to increase the absolute dollars that we are investing in marketing, right, if that makes sense. So we'll have to navigate based on how the efficiency is evolving. And as the efficiency evolves, we will allocate more dollars, right? So I think it's an equation here. that we are solving for and that over time what I can say is that we want to increase the absolute dollars that we invest and we want to see also the efficiency increasing, right? Again, over time. It may not be the case exactly one quarter to the other, but over time we want to do those two things.

Great. And a quick follow-up. For the incentives, can you just say where you're recognizing those? Is that contra revenues, COG, sales and marketing, and then for the – It looks like we saw a decline in third-party revenues, but then an increase in first-party revenues. I think that was kind of an intentional shift, made more fast-moving goods in the quarter.

Yeah, so they are accounted for as a minus of revenues, and mainly minus in the buckets of commissions and in the buckets of shipping, right? So that's where they are accounted for as a minus of that. And this is why we are presenting here in this presentation a few aggregates before and after consumer incentives so that comparisons can be made within the cultures from last year and the year before. And what was your second question, Aaron? Sorry.

Yeah, I think that was related to that. So if you had that, then you would have grown third-party revenues in aggregates.

Yeah, exactly, because that's why we presented on this page the commissions before and after consumer incentives, and you can see that without the consumer incentives, the commissions are growing by 18% after they are declining by 21%, right? So we consider those to be as part of our effort to drive consumer education, consumer adoption, and so that's why we present both charts.

Okay, great. Thank you. Of course.

Your next question is coming from Lamont Williams at Steeple. Please pose your question.

Hi, thanks for taking the question. You talked a little bit in the letter about doing more 1P in the grocery category. Is this more just to get more stews in the category? How do you think about long-term with the 1P portion in the category? Is this something you'll need to do or Will you kind of shift back to a more marketplace view?

It's a good question. I think we're doing this on grocery especially because of the complexity for the big brands and the big suppliers to operate a marketplace business that they're not really used to, right? And the big FMCG players in our market, they don't operate a B2C business, right? They don't do dropshipping and they don't, They're not geared for that, right? What they want is to sell to distributors who are then distributing to consumers. And recognizing this, recognizing also that we have the knowledge and the capabilities to operate the 1P business because we've always operated a 1P business. We have the systems, the processes, the capabilities, the standard procedures to operate 1P. We're deciding right now that we want to operate a large part of the grocery on 1P. And that's a great, I would say that's a great strength and that's a great advantage because we are able to accelerate even faster and adapting to the operating models that the big brands and the big distributors are used to. And for us, as always, you know, we see 1P as something that we do and we know how to do it. So it's not really a problem. I don't know if in the future this will move to marketplace or no. We'll see. Maybe it will, maybe it will not. At the end of the day, we think that generally neutral on a gross profit basis because the margin that we make on a 1P corresponds or would correspond more or less to the commission that we would take and to the type of revenue that we would make on a marketplace basis. So I think financially this is something that we're prepared to do and that really makes sense for us to drive the growth of the category.

Okay, and just a separate question. With holidays coming up, it looks like the promotional environment has moved a little earlier. Could you just talk about how you're thinking about holiday and maybe some of the trends you're seeing post-quarter, if you can?

Well, I'm not sure I get the first part of the question, but the promotions and incentives for us, again, is really something that we are driving in a strategic way. So, again, I make the example of offering a discount for consumers to pay with JuniorPay, right? Or, for example, doing free shipping on a certain size of basket for grocery items, right? So we're using those incentives to drive consumers towards the categories of product and towards the type of payment methods that we think really make sense. It's really the objective of that. And that's, for us, completely part of the consumer adoption and the CLV, Customer Lifetime Value, strategy. And it's very integrated into everything that we do into our plan and strategically. And then, of course, Our intention, I think we're pleased with the usage that we are seeing and the recent acceleration, but our intention is certainly to continue that, right? And we want to scale the platform and accelerate the growth, right? So that's certainly the intention, and that's certainly something that we hope to see in Q4 and in the quarters to come, right? So, again, good numbers, but we don't want to stop here, and the intention is to grow faster than this.

Okay, thank you.

Your next question is coming from Joshua Corrin with Musketeer Capital. Please pose your question.

Hi, thank you so much, and congrats to everybody on the inflection quarter and the acceleration to growth. My question is twofold. First of all, maybe you can give us some color on how the end of the quarter kind of trended relative to the beginning of the quarter. So knowing that you started to send the sales and marketing towards the end of Q2, did the growth rate continue to kind of pick up through Q3? And any kind of color that you can give us on exit growth rate for GMB in Q3 or some kind of expectation for what we can roughly expect in terms of the further acceleration for Q4 would be really helpful. Thanks.

And of course, Josh, thanks for asking the question. I think maybe I will just go back to what I just said, right, which is, like, at the end of the day, We are engaging in that phase where it's about scaling the platform, which is accelerating usage growth, premium pay, and diversification of monetization. And we're not going to stop where we are now. And the intention is to accelerate even further. And we're very confident that this will happen.

Awesome. And were you seeing that acceleration continue to kind of pick up as we left the third quarter and now as we move into the fourth quarter, as the acceleration growth rate is increasing now?

Well, it's not something that we will disclose because I think there can always be some year-on-year effect in August and September and so on and so forth. But I think we'll have to see how Q4 is playing out. But again, we're very confident about accelerating the acceleration.

I love it here. And one more question. Maybe we could just dive into a bit further kind of your barrier to entry in Africa and your position relative to anybody else that could be in e-commerce in Africa. I mean, it seems like, you know, you have a leading market position. You know, how do we all kind of understand, you know, how that barrier to entry, you know, kind of really stands and what the competitive landscape in Africa is and how dominant Jumia really is in that landscape?

Yeah, thanks for the question, Josh, and last question. I think the To start a bit with the barrier to entry and what it takes to be successful in those markets and stepping back a bit on what does it take for e-commerce to be able to operate at scale and providing great customer experience in Africa, there's definitely a number of components behind that which are extremely hard to create and therefore to replicate. If you think about the brand that is needed in the market where consumers have never or almost never transacted online, the amount of brand equity that you need to create to build the trust for users to transact for the first time online is something that takes a lot of time, a lot of money, a lot of efforts, and a lot of localization. So I think the strength of the Jumia brand is very big and important. Sometimes some investors, they're looking at the app ratings and app rankings, and you always see Junior has one of the biggest downloads of the apps everywhere. And that is something that takes years and a lot of effort to drive. I think, obviously, the supply, right? To be able to bring the right products to the consumers and to work with brands, local sellers, international sellers, local brands, international brands, It takes a great deal of time. It takes a great deal of investment to build the right marketplace platform, to build the right one-piece capabilities, and to be able to do that at scale. We have 100,000 sellers around the world from the biggest distributors and the biggest brands. We have a cross-border program for international sellers to sell in Africa, and we work also with small sellers who are very relevant because they have very local assortment and they're very agile and And all this is, you know, this ability to bring the marketplace and the 1P together and the small sellers and the big sellers and the brand and the non-branded and the local and the international is what, at the end of the day, gives the relevance for the consumers. And, of course, the relevance in terms of choice, but also the relevance in terms of price because those sellers are competing. So the second aspect, obviously, is supply. The third, in fact, and only this one, excuse me, is the logistics, which, you know, it's not easy in Africa to create a logistic platform that can ship packages across all the areas of the country and as fast as one hour or even 20 minutes in the case of studio food and that is something that we have created over the last years which is obviously a huge asset you can see in our fulfillment expense they keep going down it's a very efficient system and You know, it's not just me saying it. Now we have third-party sellers who are coming to use it. We crossed $1 million of revenue from third-party merchants who are choosing to make logistics. You know, they're choosing it over other players to do logistics services, right? So that's a great testimony of the efficiency as well, and I think a lot more to come. And... Maybe last but not least, but of course payment, being able to operate cash on delivery because we are still in very cash-oriented countries, cash-oriented economy, and complementing that with junior pay is obviously very difficult to reproduce for players who are not necessarily savvy with that. I think doing this at scale in multiple countries is something that I think takes a lot of passion, a lot of skills, time, energy, and money to do and create, and that's what we have done. So I think it puts us in a pretty good position.

No, and I would agree. And I guess that we're confident in the accelerating momentum here at GOV Growth is something that can continue into 2022. Is that right? Right. Okay, excellent. Great to hear. Thank you so much for taking the time.

Thank you.

Of course.

Once again, if there are any remaining questions or comments, please press star 1 on your phone at this time. Please hold one moment while we poll for any additional questions. We do have one additional question from Sarah with Barenberg. Please pose your question.

Yes, hi. Thanks for taking my questions. I thought I'd already pressed the button. But anyway, I've got two, actually. Can you just remind us of what products go into digital orders? And I seem to recall that a couple of quarters ago, you were back on that. So can you just talk a bit about what's changed there? And then on the shift to grocery 1P, I was on a call with another company doing 1P grocery earlier this morning, and they're obviously incurring significant upfront costs in terms of establishing, you know, dark stores and stuff, which I assume is what you'll have to do as well. So can you just talk about how we should think about factoring the shift to grocery 1P into our forecasts? Thanks.

Thanks, Sarah. Very good questions. What goes into digital holders and financial services is pretty much everything that is happening on the app, which is called Jumia Pay, and that users use to process a number of digital payments and access financial services and so on and so forth. So it's pretty clear from that perspective that those are all those services that are recorded as digital holders. And I think a few quarters ago, one of the reactions that we took was to start kind of moving a little bit away from the microtransactions from those digital holders, right? So those microtransactions, what we mean by that is the recharge of airtime, for example, which is a classic one, and a classic strategy with those services is to attract, for example, the consumers with a with a discount or with a cashback on buying some airtime for a very small amount. And then targeting the consumers and making sure that the consumers over time develop into a consumer that uses the app for other things, right? So I think the microtransaction is a traditional way, I would say, to attract consumers. And I would say back in the days we had... less services than we have today, right? So today we have literally hundreds of different services. Consumers can book a bus ticket, for example, on the app. They can buy movie theater tickets. They can pay their university fees. You can pay your fines. For example, if you have a parking fine, for example, in some countries, you can pay them on the app and so on and so forth, right? So as we have a lot more services, We have less need to attract or to recruit users with those microtransactions. So I think that's what's changed. We added a lot more services. And as a result, we are able to do less of those microtransactions, which are not unattractive. They're good and they're attractive and they drive usage, to be clear. Even the best consumers who are doing all the other services that I do, we also want them to use Trumia Pay to recharge their airtime. So we have nothing against those transactions, but we did less of that, right? So that's something that changed. I think you're referring to that. The wanting grocery is interesting because we see a lot of food delivery focused players moving into that. And, you know, for us, When you think about dark stores, for example, we mentioned that the dark store is a small warehouse. And to operate the dark store, you need to be able to operate a small warehouse, which means that you need to have the capabilities to do that. You need to have the capabilities to do storage, pick and pack, and inventory management, and logistics, right? And logistics in the sense that the warehouse logistics, which is something that we have been doing forever since day one, right? Since when we started Jumia, the first thing we did pretty much was to, you know, rent a warehouse and start doing that for Jumia Express and so on. So for us, a drugstore is nothing else than a small warehouse. And we have already, you know, dozens of warehouses. So for us, it's an extension of what we already do. And... Of course, there may be some investments here and some investments there. They will go into our GMA probably, and maybe you see already some of that, but it's not something that we have not done before and not something that we foresee will have a big financial impact. We already have those warehouses existing in pretty much all the big urban areas, and we're going to stop operating those grocery quick delivery dark store types Maybe there will be dedicated warehouses. Maybe we'll do part inside the warehouses that we have. So for us, it's very much a continuity of what we do.

Okay. That's helpful.

Thanks. There appear to be no further questions in queue at this time. I'd like to turn the floor back over to Sacha for any closing remarks.

Great. Thank you very much for attending as always. And I repeat, every time at the end of the call that we remain available to discuss and exchange and anytime, right? So do not hesitate to reach out, and I hope everyone is staying safe. Take care, and we'll speak soon. Thank you. Bye-bye.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.