Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Second Quarter of 2019. [Operator Instructions] I would now like to turn the call over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you, Alisa. Good morning, everyone. Good morning everyone. Thank you for joining us today for our second quarter 2019 earnings call. With us today are Sacha Poignonnec, Co-Founder and Co-CEO of Jumia, and Antoine Maillet-Mezeray, CFO. 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 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 final prospectus filed in connection with our initial public offering on April 15th 2019. In addition, on this call, we would refer to certain financial measures not reported in accordance with IFRS. You can find a 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, Safae. And hello, everyone. It's a pleasure to speak with you today. This is our second quarterly release as a public company, and we are happy to report another strong quarter of delivery on our mission and strategy. Going public in April, we've been pleased to see lots of interest in our company and had the opportunity to interact with a broad base of investors and market participants. We recognize some of you might still be new to Jumia. So I wanted to take this opportunity to briefly remind you of our mission, who we are today, and how we plan to build on the success of Jumia. If you'd like to please turn your attention to Page 5, I'll start with our mission. We are passionate about Africa and deeply convinced that technology can improve everyday life on the continent. We feel, Jumia, with the mission to give consumers access to goods and services in a convenient way and to help sellers distribute their goods and services more effectively, while making positive and sustainable impact across the continent. Moving on to Page 6. Our platform consists of our marketplace, where sellers and consumers can connect and transact. Jumia Logistics, which facilitates the delivery of the goods to consumers, and JumiaPay, which facilitates digital payments between the participants on our platform. Consumers use Jumia to save time and save money. They can buy products across many different categories like phones, fashion, groceries, as well as a number of services like food delivery for example. You can also use Jumia to pay for a number of services, such as data top-up, airtime recharge or utility payment, and all of this is happening under one brand with one single sign-on for the users. We have already achieved significant scale, almost…

Thank you, and hello, everyone. Let's now get into the details of Q2 financial performance. Let's start with two of our top line drivers, GMV and active consumers. We generated very strong GMV growth this quarter of 69% on a yearly basis, so beating our target of 56% -- 60%. This is the strongest level of growth in the last five quarters. This was driven by strong growth of active consumers and spend per active consumer. The last 12 months active consumers as of June 30th was 4.8 million versus 3.2 million a year ago, representing 51% yearly growth. Compared to the first quarter of '19, we added 589,000 consumers versus a quarterly net add of 211,000 consumers over the same period last year. This increase represents the strongest level of quarterly net adds in the last five quarters. The acceleration in consumer growth speaks to the increasing relevance of our platform, which drives consumer adoption and engagement. In parallel, with the strong growth of those top line drivers, we are able to increase the monetization of our platform. On Page 17, I would like to remind you that the most relevant monetization metrics for us are marketplace revenue and gross profit. We don't see revenue as a meaningful metric to assess the monetization of our business, as it is impacted by shifts in the mix between the first-party and marketplace. In the second quarter of '19, we continued to see a reduction in the proportion of first-party with national GMV. Our marketplace revenue increased by 90% on the back of strong growth across all components of marketplace revenue. Our gross profit margin increased by 78 bps taking our gross profit margin as a percentage of GMV to 6.2% as a result of an increased rate of monetization. As we…

Thanks, Antoine. Looking ahead, if you please move to Page 22, and building on this momentum, you can see that we have multiple additional opportunities to drive long-term growth and value creation. Today, and this is something that we have repeatedly said, we are very disciplined. We are only focusing on our existing business and the path to profitability through scale. This means that we stick to our existing regions and categories, we drive the growth of Jumia with a clear focus on cost efficiency and path to profitability. Once this is achieved, there are lots of other opportunities to go after, in order to create even more value. New business lines like, for example, digital content, new geographies, and maximize value creation from our logistics, payment and marketing assets. There's so much more we can go after. But for now, we are fully focused on our core business. Now, before I wrap up, I would like to give you a bit of context and color to the sales practice review, including in our release, when we became aware of allegations concerning improper sales practices, we started a review. This was disclosed in our prospectus and we are now proactively giving you an update. This is part of our continued effort to be very transparent with the market. As you can read, so far, we're talking about isolated instances that had only a modest GMV impact and virtually no impact on our financial statements. We are constantly reviewing and improving our systems and controls to help us avoid such instances in the future. It's been a very solid quarter. At Jumia, we've all our teams executing on our strategy. We grew our top line drivers GMV, active consumers very strongly. Our gross profit grew even faster at 94%. So far in 2019, we are positive after fulfillment and we have also made a lot of good progress on cost efficiency. We just celebrated our seventh anniversary this summer and we took the time to reflect on the tremendous journey we've had so far and remind ourselves of why we have embarked on it. This celebration is also a moment of gratitude towards our consumers, sellers, partners and shareholders that are making this possible, our mission to improve everyday life in Africa through technology is what keeps us going. We are very excited by the opportunity that lies ahead of us. In our 14 markets, there are about 700 million people and almost 350 million Internet users. Nigeria itself is set to become the third most populous country on the planet by 2050, according to the United Nations. And we believe that this digitally born new generation will provide huge momentum for Jumia in the decades to come. Thank you very much for your attention, and we are now ready to take your questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question today comes from Scott Devitt with Stifel. Please go ahead.

Hi. Thank you. Sacha, I apologize if this isn't in deck. I don't have it in front of me. But I just wonder if you could speak to the business in terms of strengths and weaknesses by market, you know, our big contributors to the business are Nigeria and Egypt, and if you could just speak to where you think you're doing better or worse? And then second, in terms of some of the initiatives that you've noted on the call intended to reduce longer term friction and drive growth in the business. Could you just highlight some of the areas where you think that could be more influential in the business in the near term if there's two, three, four things that you would highlight? Thank you.

Of course. And thanks for those questions. And I think in terms of markets, and here, I appreciate it's not in the deck. We have not included the geographical disclosure here in this quarterly release. Nigeria and Egypt and we have explained that are the two regions which represent roughly 50% of our business and then we have North Africa, West Africa, East Africa and South Africa. And when we look at those markets, we also sometimes look at the maturity of those markets, right So some of the countries we launched them six, seven years ago, and some of them were launched more recently. So generally what we see is a quite very strong dynamism across the region and across the continent. We see good macro in Nigeria, good macro in Egypt. And overall -- and our diversification here is a big strength, because we have 14 markets and two of those make about 50% of the business and the rest make the other 50%. So we are very protected from a diversification perspective. What we tend to see in terms of profitability is that the countries which are a bit more advanced have better economics and better unit economics, of course, because they're --- they have reached more scale and they're more advanced in terms of marketplace developments in terms of monetization and cost efficiency as well. And in the other ones, which are -- a little bit less major, we still see more growth or faster growth. And we see them a little bit behind, of course, in terms of profitability because they are more new. So I think this is --- here what we can say. And then, you know, that the business really is a combination of bringing a very good and very strong consumer…

Thanks, Sasha.

Thank you.

The next question today comes from Aaron Kessler with Raymond James. Please go ahead.

Hi, guys. Thanks for the questions. First maybe just on the monetization, you saw, I think about 5% growth quarter-over-quarter in kind of the commission growth versus much stronger growth on a GMV basis, maybe you can talk about that gap and then maybe the opportunity to also increase take rates? And then if you can also maybe just talk about kind of repeat purchase behavior and how that's been trending as well? Thank you.

Of course. So when we look at the monetization, we have today commissions, fulfillment, value-added services and marketing and advertising. You can see that we have grown the gross profit by I think 94% and the marketplace revenue by 90% over the -- from Q2 2019 to Q2 -- versus Q2 2018, we've the growth of the GMV, which is 69%. So we are able to extract more monetization from the GMV. Now, for us, it's always a focus to make sure that we extract this monetization from diversified streams and from I would say services which create value for the sellers. So as you can see, the commissions have been growing generally if you look at our development over the last quarters, they have been growing less fast than the other streams and usually we like to generate this monetization rather from value-added services or from fulfillment or marketing and advertising rather than just commissions and there is -- to some extent the sellers pay commissions and then they pay marketing and advertising and then they pay value-added services, and for them, they look at those as the cost of doing business with Jumia. And so we need to be very subtle in the way we are pushing the various services when we think about the sellers. And sometimes, we would increase the monetization pressure on certain services. And as we do that, we may decide to reduce the commission. So there is a, I would say, we are driving the intensity on the various services based on how the sellers are reacting to the pressure that we put. Now, when we think about this monetization and how we can drive the take rate, they are really four, you know, -- there are four initiatives that we are working…

Great, thank you.

The next question today comes from Mark Mahaney with RBC Capital Markets. Please go ahead.

Great. Thank you. This is Shweta for Mark. Two questions, please. So first, on payment, on JumiaPay, could you, Sacha, talk a little bit about how much adoption there has been in your two primary countries of 54% of transactions as of Q4 of '18, any update there? And then also across the other four countries now, what the adoption has been like? And then how that has impacted returns and cancellations on the platform. Any quantifiable improvements on that driven by JumiaPay? That's first. And then the second one, any update on the value-added services decelerated compared to Q1 of '19. Any thought on what -- decelerated a little bit more than expected. What was that from? And how much the Jumia Express drives the monetization growth? Thank you.

Yeah, of course, Shweta. For payment, we are very much seeing a continuous progress. So this 54% was for Q4 of 2018 and this is something that we -- number that we had published as part of the offering and we are considering various KPIs that we can disclose on payments so that we can give you good progress. What I can tell you is that this 54% is higher now, right? So it's continued, right? And so this is continuing in Nigeria and Egypt. And we are seeing very good progress there. In the other markets, it's a bit early to tell, right? Because there's some -- it's still the early days. So I think it's too early to comment. But again, we are looking for ways to give you the disclosure. What I can tell you is the 54% is now higher, and this is really, really, really good. In terms of quantifiable impact, we're definitely seeing higher success rates for the transactions which are processed under JumiaPay in terms of delivery and we see less or we see just a higher success rate, which is good from the fulfillment expense. At the same time, we have certain fees associated with payments. So, I think overall this has for now, I would say, quite a neutral impact so far this year, right? So in a way, it is positive. We have more --- we have more success, but there are also costs associated with payments. So there's some of that. But I think I would not say that there is a big quantity there. And then the value-added services, yes, I think we have to look at them and take the perspective on them. So, of course, those value-added services, they were introduced last year, right? So in…

Thank you, Sacha.

The next question today comes from Mark Mahaney with RBC Capital Markets. Please go ahead.

I've got two questions as well, please. Sacha, just back on marketing and advertising. Sacha, can you just tell us what marketing and advertising products is implemented and in which markets? Just so we can get a feel for how developed that is. And then the second one was on the proposed VAT system leveling the playing field in Nigeria. I mean, that seems to me to be very positive for anyone domestic like yourselves. But would you say that you suffer from that not being a level playing field now, as indeed, do you see this as a meaningful upside to you, versus alternative platforms? Or how should we think about that? Thanks.

Thank you, Sarah. So the marketing and advertising is a mix of different products, right? And those products are tailored to both the small sellers who are mostly looking for performance marketing tools to increase visibility and increase sales, and products which are more appealing for big sellers or brands which are looking more for to build awareness and more visibility and different types of campaigns. So, we have performance tools such as sponsored products or newsletters and push notification and display ad banners and things like that. And we have also specific visibility campaigns that we can tailor for some of the bigger sellers. And this is something that we have been developing in the past and is working very much in I would say more of our advanced markets, of course, because we are dealing there with more advanced version of the marketplace. So we have very good success, for example, in Morocco, but also in Nigeria, Egypt, Kenya, and Ivory Coast, those are the markets where we're seeing good trends. But certainly, we have and I think you're seeing the across the various marketplaces, right? We have such a unique platform to tailor the advertising campaigns and we have data about the interest of the users et cetera, et cetera. So we haven't even started to sell our search results, right? So we are we are just barely scratching the surface here with banners and sponsored products. But yet, we are seeing a lot of the appetite from all the sellers, both the small and the big ones. So we're certainly very excited about this. And our ecosystem of goods and services is also something which is very attractive because we have different platforms and different portals where we can really target the users and we also have our seller center, right, we have a lot of advertisers who are trying to go after the SMEs and because we work with all those SMEs, we can provide them with amazing opportunities to target those sellers and those restaurants and those hotels et cetera. So we are really pulling all the assets of the ecosystem together to create something very attractive here. And it's a very good question on VAT and thanks for asking it. I think, as always, with those, it's always hard to predict and how things can play out because there's always something delay between when those schemes are announced and how they are being completely in real life implemented. So we'll have to see how this is playing out and generally we are very much a reflection, we are an extension of the marketplace and the retail dynamic. So, I think we will have to see how this plays out. It's too early to tell to be honest. 1q

But do you think that consumers use foreign platforms because they're cheaper, because obviously with the VAT differential say in theory there is a price advantage for somebody to buy from a different platform, even if they have to wait longer. Do you ever feel like you leaves out in terms of revenue because of that VAT being imposed on you and not the others?

Yeah, look, it's -- there's always with this cross-border e-commerce, there's always some questions, right? So those platforms do not contribute to the local economy. They do not pay taxes. They do not create jobs. They just ship goods, basically, essentially. And I think we want to develop the marketplace in a sustainable way for the local economy. So we're working hands in hands with all the stakeholders to make sure that we contribute and we bring our share of the development of the economy. So, here we have to see how the government decides to apply this VAT and how they apply also other types of rules for all the different players, right? So and -- I think it's something that honestly, we have to see how they how they play it. It depends. But to some extent, I think e-commerce is still very new in those markets. And I don't see those as having a very, very big impact. Whatever is done in reality at the end of the day, I don't see them as having a huge impact. I think it's just -- it will -- those rules will keep coming and moving as e-commerce is developing and what we certainly see is a lot of engagement, I would say, from all the governments we are -- in all the countries where we operate because they really see that e-commerce is something very positive for job creation, for creating also access for the consumers who live in the rural areas, so inclusion and the development of small sellers and creating jobs et cetera. So I think it will go into the right direction.

Okay, thanks.

The next question today comes from Brian Nowak with Morgan Stanley. Please go ahead.

Hey, guys, this is Alex Chavdaroff on for Brian. Thanks for taking the question. Can you talk a little bit about what controls you're putting in place to avoid issues with JForce sales? And then how confident are you that this is an isolated incident? And then second, can you talk a little bit about how much your Ramadan event boosted GMV or active customers in the quarter? And you know, more broadly, like what worked and what didn't? Thank you.

Sure. So, can you repeat your first question, Alex, please. Just to make sure I get it? I know it's about JForce. But --

Yeah. Yeah, sure. So I was just asking around, you know, what controls you're putting in place to make sure you avoid issues with the JForce sales.

Of course. Yeah, I mean, over time, JForce is an excellent channel, because it's -- it really provides us with the opportunity to interact physically with a lot of consumers. And it's a great educational channel. Of course, it's a decentralized salesforce with dozens of thousands of agents et cetera. So there's a lot of controls that we have and we have built over time, right? So we've been working on that channel for a long time and we've been constantly improving it, right? So this is part of what we do all the time. We identify something or there's an incident and then we take corrective actions, we take any sanctions and then we improve it. So it's always about creating better data-driven systems, where the system can flag any potential issue, and when this flag is created, that we are able to investigate or analyze, right? So we have the same for JForce, but we have also the same for the customer profiling system, and we are always improving those. And this is a tool that we use and which job is to detect or flag any potential issue and then we look into it. So every time we see something or we uncover any incident and we always improve that. So here we are tightening the controls to make sure that whenever we see certain patterns or whenever we see some concentration in orders or some patterns basically of transactions which are taking place in a certain way, then we are able to flag those and look into them, right? So I think it's a very efficient channel, but it requires this constant improvement whenever we see some deviations, and JForce always a channel which is always very much around optimization, right? So when we change the…

The FMCG category and Ramadan was certainly helping there because, of course, during Ramadan, there is a lot of food-related goods which are being transacted on the platform. And there was overall something which was positive for us, Ramadan. But again, I don't want to make it sound like it drove the quarter. The performance of this quarter, and similarly to all the other quarters, is really driven by just everyday bringing more products, good prices and good customer experience, and this we have combined with good marketing, creates just good engagement and usage of the platform, right?

Thank you.

The next question today comes from Andrew Howe with Citi. Please go ahead.

Hi, Sacha. So a couple of questions from me. On fulfillment expense, it looks like it's trending a bit higher in Q2 relative to GMV -- compared with Q1 or even to 2018 as a whole. I'm just wondering, you know, is there anything maybe some cost inflation in fulfilment or any friction that you're experiencing kind of as you achieve efficiencies, and how do you see the kind of the glide path to getting lower fulfillment expense relative to GMV going forward? Second question, just about the path to profitability. Any update on your latest thinking? I know you in the past you talked about late 2022 is kind of the time to reach break-even. Is that still scenario that you talk about? And related to that kind of the need to raise additional capital before that point, is that something you can update us on? Thank you.

Sure. Yeah. I mean, on the fulfillment, a couple of thoughts and I think in Q2, we had a few factors in the mix of the business, which drove the fulfillment cost slightly higher than before. We had a little bit more cross-border and we had a little bit more of the packages being shipped into secondary cities or in rural areas. And we had a slight higher proportion also of medium and large packages versus the small packages. So I think all of those, they tend to drive higher fulfillment and then some of those, we capture them into the revenues, right? Because we are charging more and we're charging more fulfillment to the consumers and to the sellers, but not necessarily all of that, right? I think this is not necessary a trend. But you know that we have to see that over the course of several quarters. We are still profitable after fulfillment year-to-date, right, which is the first time for us as a Group. We have multiple countries which are contributing to that and some countries which are less mature one which are still negative after fulfillment and are dragging here the performance. But we've -- we're not worried about that, if at all, and I would say that one of the things which is happening also is that we have higher volumes, right? So -- we -- our growth in terms of the items sold is faster than the growth of the GMV and so we have just more packages and more items, which is, in our opinion, very good because it brings more relevance and more usage from the consumers. So that's what we can say for that. I think we're still maintaining what we have said in the past for late 2022 and this is our objectives and on a quarterly basis at Group level towards the end of 2022, right, which is what we have said in the past. And we think we have what we need to achieve that. So that's what we are working on.

Thank you.

The next question today comes from Ralph Schackart with William Blair. Please go ahead.

Good morning. Last quarter, I think you talked about expectation for 2019 GMV to grow in line with historical rates and then in Q2 you saw acceleration built over Q1 of '19 and over 2018 growth rate in general. So just curious about how you're thinking about GMV growth for the balance of the year? Thank you.

Yeah, I mean, we're still maintaining the range of 50% to 60%. And here again, GMV is one of the top line drivers. We also look at active consumers, items sold, transactions, traffic, users who are visiting the platform and which ultimately will be a big driver of our marketing and advertising revenue. So we see all those things. We still maintain the GMV of 50% to 60%. And -- but we look, of course, at all those together, right? So I think we maintain that and -- if we end up being above that, then we are above that, but for now, this is what we maintain.

Okay, great. Thanks, Sacha.

The next question today is a follow-up from Sarah Simon from Berenberg. Please go ahead.

Yeah, just a quick one. I was interested, do you have any first thoughts on how Jumia Prime has been working for you, I know it's only in a couple of cities. But do you have any kind of first* thoughts on the success of that program?

Yeah. I think the question was about Jumia Prime, I don't know if -- the line was difficult to hear at least for me. Yeah. We are really piloting Jumia Prime and we started that in Nigeria at the end of the quarter and it's really, really too early to say, right? So it's been really just two months. And we've focused this offering in two of the cities mostly and we see a lot of good buzz, if you look at the ratings on Jumia -- on the Jumia platform about the Jumia Prime, you see a lot of good things. I think for us we are in the early days of that. It's something, of course, that is very interesting to look at. But it's a bit too early to comment.

Okay, thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Safae for any closing remarks.

Great. Thank you so much for your attention and as always we are very eager to have a very constructive dialogue so, you know, if there are any follow up questions from any none we are happy to do it anytime and thank you so much for attending and being so involved. Take care. Thank you. Bye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.