Jumia Technologies AG

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's results conference call for the fourth quarter of 2024. At this time, all participants are in the listen-only mode. And after the management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Ignatius Njuku, Head of Investor Relations for Jumia. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for our fourth quarter 2024 earnings call. With us today are Francis Dufay, CEO of Jumia, and Antoine Mele-Mezere, Executive Vice President, Finance and Operations. 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 factor section of our annual report on form 20 as 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, and thank you for joining us today. I will start the call with an update on the business and greater detail on our growth strategy for 2025 and beyond. I will then turn things over to Antoine for a deeper look at our financials. Overall, 2024 was a year marked by continued progress against our strategic growth initiatives. Our focus was on building the business and positioning Jumia for long-term success. Throughout the year, we extended our reach beyond main urban centers into upcountry markets, expanded our product assortment, improved our cost structure, and enhanced our logistics capabilities, driving higher customer engagement and improved unit economics. Towards the end of the year, we streamlined operations by consolidating our warehouse footprint and exiting our non-strategic markets, South Africa and Tunisia. Following these exits, we continue to operate in nine countries. These strategic actions have been crucial to our success. Excluding South Africa and Tunisia, our core marketplace business accelerated in Q4-24. Physical goods order grew by 18% year-over-year, with even stronger growth in December, highlighting the increased demand on our platform. Quarterly active customers increased by 8%, underscoring the strength of our platform and the value we deliver. These results were achieved while reducing marketing spend from $6.2 million in Q423 to $4.8 million in Q424, demonstrating our commitment to impactful, cost-efficient marketing strategies. A key growth driver in Q424 was our Black Friday sales event, our largest of the year, held across nine countries in November. The strong performance of the event demonstrates our ability to provide the right product at the right price for Africa's value-conscious customers. In Q424, demand was particularly robust in priority categories such as electronics and phones. In this quarter, our expanding international sourcing played a significant role in the success, with 3.4 million gross items sourced from international sellers, mostly from China, accounting for 31% of gross items, up 61% year-over-year. We also strengthened our Black Friday partnerships with global brands like L'Oréal and Xiaomi, both top sponsors of the event. Operationally, we continue to improve our efficiency and the customer experience. Our net promoter score rose to 63 in Q4 24, a 17 points year-over-year increase, while our 90-day repurchase rate increased 375 basis points year-over-year, reflecting stronger customer loyalty and satisfaction. Notably, 40% of our new customers who placed an order in Q3 2024 made another purchase within 90 days, up from 37% in Q3 2023. Despite strong momentum and robust customer demands, macro headwinds continue to affect our performance. GMV declined 12% in USD, but grew 13% year-over-year in constant currency, reflecting the impact of early 2024 currency devaluations and a reduction in corporate sales. As a reminder, Beginning in Q4-23, Jumia benefited from strong corporate sales to local and regional distributors, particularly in Egypt. However, this trend reversed in Q4-24, highlighting the cyclical nature of demand. Average order value for physical goods orders decreased from $45.5 in Q4-23 to $35.5 in Q4-24. This decline was driven by currency devaluations and lower corporate sales. We view this mixed shift as an opportunity to improve our relevance in selected categories, improve order level profitability, and support healthy usage growth. Revenue in the quarter was $45.7 million, down 23% euro value in USD, and down 2% in constant currency, driven by the same factors that I've just mentioned. Adjusted EBITDA was negative $13.7 million, compared to negative $0.6 million in Q4-2023. Loss before income tax from continuing operations was $17.6 million in the quarter compared to $17.1 million in Q4 23. Antoine will elaborate shortly on Q4 24 loss before income tax from continuing operations. Cash burn for the quarter was $30.6 million compared to $26.8 million in Q4 23. This was primarily driven by the following. One-time termination costs of $1.3 million related to the closure of our operations in South Africa and Tunisia. Working capital increase of $13.5 million aligned with our strategy to expand assortment and secure more goods at competitive prices. While we significantly increased our working capital in the second half of 2024, we expect smaller adjustments in the future. Capital expenditure of $1.8 million primarily invested in logistics equipment for full treatment centers opened in 2024, and the payment of $2.1 million of equity transaction costs from the August at-the-market offering. Looking ahead, we are confident in our path forward. Lumia is a much stronger and much more efficient business than it was just two years ago. We have introduced greater operational disciplines, started a clear usage growth trajectory, and established a solid foundation to build upon in the coming years. In 2025, we will continue building on this foundation with a focus on two key areas, driving top-line growth and achieving broader operational efficiencies to enhance profitability and strengthen cash flow. We see multiple levers to drive growth. First, upcountry expansion. We are doubling down on upcountry expansion to unlock new markets and address underserved regions without increasing fixed costs. Demand outside main urban centers remains strong, with upcountry orders accounting for 56% of Q4-24 and 54% of full year 24 orders, up from 49% and 48% in Q4-23 and full year 23, respectively. Leveraging our differentiated logistics network and deep partnerships with third-party providers, we are expanding pickup stations outside main urban centers. We believe this expansion will drive lower fulfillment costs while strengthening customer trust and engagement. Our extensive 3PL network represents a competitive moat over other e-commerce players lacking the necessary infrastructure for delivery beyond major cities. Second, product assortment expansion. We plan to expand our product assortment at affordable prices by sourcing directly from international sellers. This approach allows us to procure high demand products directly from key manufacturing countries like China and Turkey. China remains a strong sourcing hub, and we are strengthening our teams and deepening supplier relationships. Our progress in international sourcing is evident in our 2024 full year performance, with 9.5 million gross items sourced from international sellers, mostly from China, accounting for 28% of gross items, up 38% year over year. Outside China, while diversifying your sourcing network by onboarding new sellers and adding products from other countries, including Egypt and Turkey. In late 24, we partnered with HepsiBohada, a leading Turkish e-commerce platform, to introduce affordable Turkish brands to Jumia. Building on this momentum, we will continue scaling our international sourcing initiative to drive rapid expansion. Third, customer and seller experience. In 2024, we updated our seller platform streamline and simplify the seller experience. Beyond growth, driving greater efficiency is critical to achieving breakeven. We remain focused on marketing efficiency by prioritizing low-cost or free channels, such as our revamped CRM and localized offline channels like paper catalogs, reminiscent of the iconic sales catalog in the US. These offline strategies, including bottom-of-the-pyramid initiatives, drive strong engagement and credibility. We are also increasing our J-Force presence with the number of active J-Force agents reaching 29,000 in Q4-24, representing a 39% increase year-over-year. Looking ahead to 2025, we plan to further expand our J-Force presence, particularly in regions outside the main urban centers. Then in logistics, we aim to increase productivity and benefit from our more streamlined warehouse footprint established in 2024. We're also increasing productivity with automation in our call centers, where chatbots handle more basic customer inquiries. We believe our tech platforms can scale significantly without material additional costs. Overall, I'm energized by our progress on business fundamentals, now clearly visible in usage growth and efficiency metrics. We believe we have the right strategy and the right team in place to drive meaningful expansion across the business. By driving top-line growth, improving operational efficiencies and maintaining disciplined expense management, we have a clear line of sight to achieve profitability. We are delivering positive gross profit after deducting all fulfillment expenses. In 2024, it was $57.6 million, which is 8% of total GMV. Hence, our focus is on building scale while further improving efficiency. The usage trends and GMV growth trajectory we delivered this quarter give us confidence that we're on the right path. To summarize, we're optimistic about Dreamia's future as two years of committed efforts are now delivering results. I'd like to thank our employees for their hard work and dedication during this time. We are now well positioned for growth and acceleration and further progress towards profitability. I will now turn the call over to Antoine for a review of our financials.