Jumia Technologies AG

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's results conference call for the third quarter of 2024. There will be an opportunity to ask questions after today's presentation. If you'd like to ask a question, please press star 1 on your telephone keypad at any time. With us today are Francis Dufay, CEO of Jumia, and Antoine Mele-Mézeret, Executive Vice President, Finance and Operations. We'll 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 28, 2024, as well as our other submissions with the SEC. In addition, on this call, we will 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 it over to Francis.

Good morning, everyone. Thank you for joining us. I will start today's call with a brief overview of our Q3 performance. I will then focus our discussion on our plans for the use of proceeds from our completed ATM offering before turning the call over to Antoine for a deeper dive into our financials. The third quarter marked a continuation of our efforts to strengthen the underlying fundamentals of our business. We made tangible progress in advancing several structural updates to our operations, building on the progress we have made over the last several quarters. This includes significant improvements to our logistics network, as well as the consolidation of several of our warehouses into larger, more tech-enabled locations across our footprint. While these improvements caused temporary disruptions to day-to-day operations in the quarter, we are confident that our efforts have positioned us well to scale and drive profitable growth. Usage KPIs this quarter were mixed. While we saw improvements in active customer count and physical goods orders, we experienced softness in GMV and total orders due to currency devaluations, flat JumiaPay orders, and the aforementioned warehouse consolidation. Quarterly active customers grew year-over-year for the first time since the third quarter of 2022, improving 1% to 2 million. We also continue to attract and retain what we believe to be stickier and higher quality customers. Our Q2 90-day repurchase rate increased 304 basis points year over year, as the number of new customers who placed an order in Q2 24 and then placed another order within 90 days grew to 39% from 36% in Q2 23. Attracting a higher quality cohort has been an important proof point for our value proposition. showing we can drive repeat orders from returning customers without the use of promotions or discounts. Orders this quarter totaled 5.9 million, a 4% year-over-year improvement. This growth was given by a 5% year-over-year increase in physical goods orders, illustrating our success improving our supply, price points, and overall value propositions. GMV grew by 29% in constant currency and was down 1% in reported currency year-over-year. Similar to last quarter, softness in GMV in reported currency was mainly the result of the ongoing effects of devaluations in Nigeria and Egypt in Q1 of 2024. Devaluations also put pressure on top-line revenue, which remained flat quarter-over-quarter but declined 13% year-over-year to $36.4 million. To support future growth and enhance efficiency, we are in the final steps of the process of relocating several fulfillment centers across four of our six largest markets, including Ghana, Nigeria, Egypt, and Côte d'Ivoire. In each country, we consolidated several smaller fulfillment centers into one centrally located warehouse. These new fulfillment centers are now strategically located to enable upcountry expansion while providing us with increased supply capacity improvements in efficiency, and reduced delivery times. The relocation and transition did, however, negatively impact operations and expenses in Q3-24 as we temporarily shifted supply and resources to these new fulfillment centers. We do not anticipate any major additional impact to the business in Q4-24 and beyond. Operating loss was $20.1 million in Q3-24 compared to $18.3 million in Q3-23. Adjusted ABDA loss increased to $17 million in Q3-24 from a loss of $14.8 million in Q3-23. This is mainly due to a one-time $6 million beneficial impact from provision release in Q3-23 that did not recur in Q3-24. Loss before income tax improved to $17.8 million compared to a loss of $21.4 million a year ago, primarily driven by the evolution of operating loss and the shift from net foreign exchange losses in Q3-23 to net foreign exchange gains in Q3-24. As many of you know, we have completed an at-the-market offering in August. which generated $94.7 million in net proceeds, which includes all relevant equity transaction costs. At the end of Q3-24, our liquidity position was $164.6 million, which includes proceeds from the capital raise. We remain committed to a disciplined approach to allocate these funds as we accelerate our current initiatives with a particular focus on streamlining operations and driving growth. As a reminder, our strategic priorities are the following. First, focusing and committing to Africa and the African e-commerce market. Second, improving cash efficiency. And third, building a strong customer value proposition. In terms of investment, we are deliberately focusing on the consumer value proposition as the driving force behind our growth objectives. Specifically, we will be focusing on the following buckets. refocusing on the company's most promising markets and opportunities, improving vendor technology, expanding customer acquisition, scaling the company's logistics network, and expanding our supplier base and overall assortment. Let me now provide broader context into how we plan to leverage these funds to support our growth. First and foremost, We continue to focus on strengthening our business primarily through stripping away non-strategic businesses and offerings. We are convinced that e-commerce demand in our key market is huge, growing, and largely underserved. We believe that we're in the early stages of capturing that latent demand and that we have only just scratched the surface of the customers we can ultimately serve. By exiting non-strategic business units and countries, we believe that we can better serve our customers and drive growth while expanding supply in key categories to improve our value proposition across remaining markets. Recall that in late 23, we moved to exit businesses deemed non-strategic, including our food delivery operations while also reducing headcounts. In October 24, we announced that we will be seizing operations in South Africa and Tunisia, to focus on markets where we currently see the greatest growth potential. In the first nine months of 2024, South Africa and Tunisia together accounted for just 2% of orders and 3% of GMV of Trumia. South Africa and Tunisia presented unique challenges due to their respective market dynamics. We believe that our decision to exit these countries allows us to streamline operations and concentrate resources on strengthening our overall business. By doing so, we can focus on regions where we currently see the strongest potential for growth and profitability. We remain confident that this strategic realignment will not impact our near or medium term growth prospects. We expect to incur costs associated with the closure of both of these markets. Short term impacts include employee termination costs, lease termination costs, asset liquidation, and impairments. While the decision to close this market is a difficult one, when we think about our teams in these countries, I want to thank all of our team members for their hard work and commitment to the business. These teams have shown true resilience and dedication in the face of challenging market conditions, and we are grateful for their years of service to Jumia. Beyond our footprint, we are also enhancing tech across several areas to improve the customer experience and overall efficiency. We continue to invest strategically in technology by leveraging AI and CAT-engaged tools to enhance efficiency across the group. Our initiatives focus on strengthening platform security, enhancing our marketing tools, and improving warehouse and orders management systems. We believe these efforts drive greater efficiency, enabling us to deliver higher quality service to both vendors and customers while keeping costs effectively managed. We believe we have refined our core value proposition for the African market and consumer and have a stronger understanding of the most effective marketing channels to reach our customers, as well as how to keep them in funnel. As we move forward, we will continue to focus on leveraging local channels like radio, local influencers, and print, while also identifying additional pathways to expand our CRM and SEO marketing channels. Diversifying our marketing mix is a key part of our strategy and enables us to become more relevant to local consumers, which leads to more efficient consumer acquisition. Broader upcountry expansion will be another focus area for us. Today, over 54% of orders come from outside of major capital cities, and these areas are key growth markets for us. For example, this past quarter in Nigeria, Year-over-year growth orders outside of Lagos and Abuja grew by 22% as we expanded upcountry. We plan to continue to extend our footprint outside of major urban areas in the coming years. Over time, we would increase J-Force activations in these markets to meet more potential consumers where they lack significant capital investment. We believe these initiatives are among the most efficient strategies for growth and do not expect them to require significant capital investment. we will continue to exercise discipline in allocating capital towards marketing and upcountry expansion. Finally, we continue to prioritize expanding our supply, which we see as a key pillar to our value proposition. Not only have we made incremental improvements to our vendor platform to improve the vendor experience, but we continue to expand our Chinese vendor base to provide a diverse and affordable section of products to our growing customer base. We are also scaling our teams across countries for both local marketplace vendors and large global brands, which we believe is an important investment in medium-term growth. We are optimistic about Jumia's future. We believe we have the right strategy and resources in place that will enable us to accelerate growth. Our results show that we can tap the massive demand in Africa while operating efficiently as we move towards profitability. I will now turn the call over to Antoine.