Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Third Quarter of 2019. At this time, all participants are in a listen-only mode. After Management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you, Eileen. Good morning, everyone. Thank you for joining us today for our third 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 15, 2019. 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 over to Sacha.

Thank you, Safae, and welcome everyone. Thanks for joining the call. I'd like to kick off by stating our confidence and the lease in the powerful secular shifts we're seeing in Africa today. Every day, there are more consumers online; and every day, there are more businesses looking for ways to leverage technology to improve their operations and growth. As the leading e-commerce platform in Africa, we are at the heart of this transformation. We have the vision, platform and talent to benefit from this tremendous opportunity. Our strategy remains centered around the same four key pillars; driving the growth of Jumia usage, developing our strategic priority in the fintech space with JumiaPay, dragging monetization and continuously improving cost efficiencies. And all this is geared towards taking the Company forward on our roadmap to profitability. Let's take a look on Page 3, at where we stand on each of those pillars at the end of the fourth quarter of 2019. On growth, we're making great progress on the usage and relevance of our platform, firmly positioning Jumia as the new digital destination of choice for everyday needs in Africa. GMV increased by 39% year-over-year, and number of orders increased more than twice as fast by 95%. We reached 5.5 million annual active consumers, almost 2 million more than a year ago. On payments, we're making great strides with JumiaPay, which is showing very strong growth momentum in both volume and transaction terms. The JumiaPay on-platform total payment volume increased by 95% year-over-year, while the number of JumiaPay transactions accelerated by 262% over the same period. These are excellent results. We're very pleased with the development and traction of JumiaPay. In parallel with this growth momentum of the marketplace and JumiaPay, we are able to effectively drive monetization of this usage…

Thank you, Sacha. Hello, everyone. In parallel with driving adoption and usage of our platform, we seek to monetize this usage and transactional activity in a gradual and sustainable manner. Let's please go to Page 15. As we've discussed in the past, we believe 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 revenue mix between first party and marketplace. In the third quarter of '19, we continued to see a reduction in the proportion of first-party business in our GMV on a yearly basis. Our marketplace revenue increased by 52%, while our gross profit margin expanded by 28 bps from 6.3% to 6.6% of GMV. Here, I would like to point out the reclassification of certain types of vouchers from sales and advertising expense to a deduction of revenue in accordance with IFRS 15. This reclassification was recorded in Q3 '19, and the prior periods shown in our financial statements have not been retrospectively adjusted. You can see on this page, the Q3 '19 numbers of marketplace revenue and gross profit margin trial to the reclassification. Had we applied the same accounting treatment as prior quarters, marketplace revenue in Q3 '19 would have been EUR20 million, corresponding to a 60% yearly increase. Similarly, gross profit margin in Q3 '19 would have been 7%, corresponding to a 72 bps margin expansion. A full reconciliation of these figures has been included in the appendix. Moving on to Page 16. We continue to drive monetization from diversified marketplace revenue streams. Commissions, which are charged to our sellers, grew by 27%. Here, the reclassification mentioned earlier impacted this revenue line, and growth on a comparable basis…

Thanks Antoine. And let's wrap up on Q3 performance and I'm now on Page 22. If I assess the delivery against our strategic objectives. I'm very pleased with the growth of Jumia usage, especially active consumers and orders. I'm also very pleased with the progress on JumiaPay. And on the monetization front, the take-up of marketing and advertising is very encouraging. When it comes to cost efficiency, I think the Sales and Advertising performance is really good. We are very efficient on this item, especially considering the growth in platform usage and JumiaPay adoption. What I am less pleased with this quarter is around the Fulfillment expense. And here, it's not about the absolute amounts where we are actually making good progress on efficiency on a volume basis, but it's rather about how much of this amount we are passing through to our sellers. And especially our cross-border sellers who are seeing very strong growth momentum at the moment. We are addressing this and fine-tuning our shipping matrix on our cross-border business to ensure more effective pass through. Overall, we are absolutely convinced that we have the right strategy to build a winning e-commerce platform in Africa and to take Jumia to profitability. The strong momentum we're seeing on our platform usage and the traction we have with consumers and sellers give us a lot of confidence in the great opportunity we have ahead of us. Let's now look ahead and talk about initiatives and trends for the coming two quarters. First, growth. Here, our long-term objective is to drive adoption, engagement and the usage of Jumia. This usage is ultimately what drives sustainable revenue and margins, as well as the engine for the adoption of JumiaPay. It's very simple. The more people use Jumia, the more data we have,…

[Operator Instructions] Our first question comes from Aaron Kessler with Raymond James.

Maybe just first on the GMV growth. Can you just discuss that a little bit more in detail? And was there any seasonality in the quarter? Any specific kind of categories or regions that were softer as well. And then if we look at Page 7 of the presentation. Let's say, some of the categories actually had pretty strong growth. We've been orders may thickness reconcile in the strong growth that we see on Page 7 with the reported GMV growth. Thank you.

Of course Aaron and thanks for the question regarding the calendar effects to be very precise. So you have the exact dates. Last year we reorganized the Jumia anniversary campaign excluded in July. This was between July 16 of 2018 and July 29 and this year it was organized between June 24 and July 7. Right. So here again we sometimes move the date based on the date of Ramadan. For example sometimes there is other criteria. So here there is VAT and if you adjust for that you have about 50% drop in Q3 19 which would have been the growth rate. If you apply this impact, and then yes on page 7, you can see the growth is we on the growth that you see in the square next to the circles is in items sold and this growth is the growth on a year-to-date number, right. So here we wanted to show what type of categories the consumers are buying, and how is it changing over time. So here you have really on the year-to-date basis, the volume growth in items sold. And then the GMV growth year-to-date, I don't have the number on top of my head, but it's certainly above 39%. Right. So those numbers are in items sold and year-to-date. And so that's maybe your explanation here.

Maybe if I could follow up on the Jumia Mall, can you just maybe give us - I know it's just launched, but any update on adoption there maybe awareness among the Jumia customers thus far for Jumia Mall, as well as maybe monetization structure. Is that going to be fairly similar to your current platform?

Yes, good question. It's a bit early. We announced Jumia Mall really on September 15, right. So this was part of our - kind of back to school launch, and we - it's a bit too early to tell. Certainly, you can see the success from a brand perspective, and this is a lot of brands we have been working with over the years, as well as a few of them which are new. And so here it's a little bit too early to tell. Certainly on the monetization front. Right. And really we have can structure of monetization, which includes the usual, which is the commission and some of the value-added services. Of course, the intention was Jumia Mall to provide also and quite a lot of advertising and visibility and data services, and we know that those sellers and typically those brands are very eager to get more data on their consumers and online business. It also eager to build their brand and build their awareness with some consumers, which don't necessarily know the brand. And of course they are using Jumia Express, which is part of our monetization. So definitely here, this is how we see the monetization and feel pretty confident that the value proposition is extremely relevant to that effect.

Our next question comes from Ralph Schackart with William Blair.

Sacha on the call, you talked about a few strategic initiatives for 2020, reducing losses, increasing marketing services expanding JumiaPay et cetera. Maybe just take a step back and summarize your top strategic priorities for 2020 and then after you sort of execute against some of these initiatives. How should we think about GMV growth sort of coming out of that. I think in the near term you talked about 20% to 30%, but obviously the platform has grown more than double that historically. Just sort of, if you could summarize those thoughts and help us think about the long-term GMV opportunity be helpful. Thanks a lot.

Of course, and thanks for the question. I think we are very much focused on the same key four pillars. Right. And those are showing the usage, JumiaPay, monetization, and cost efficiency. Right. Then we manage this equation, if you will, because each of those objectives. It somehow conflicting with each other on a dynamic basis. And when we look at 2020 we definitely wants to push on those four. But we want to put special emphasis on cash discipline, cost efficiency and this is why we are taking some of those measures. I mentioned we want to very much continue on monetization in JumiaPay. And in terms of growth, we want to be a bit more selective with our growth. We want to be focused on profitable growth and we want to assume faster growth of volumes and users rather than the GMV. Right. So I think that's how we really see the 2020. Again it's the same priority but with different nuances and ultimately for us again it's really been focusing on the usage of Jumia, I think even longer term than 2020. E-commerce today is less than 1% and I think we all hear realize that the opportunity is huge. And we have in terms of meaningless consumers to go after in the long-term and we have the billions of GMV to go after. Right. So for us, it's all about solving for the right equation at the right time and making sure that we build and the really a strong platform for the long-term. And right now we feel that this, for the next five quarters is that the real and the good priorities for us to continue to drive the usage and make good steps towards profitability, together with JumiaPay.

Our next question comes from Mark Mahaney with RBC Capital Markets.

Can I throw three questions out? First, could you provide a little color on which countries seem to be performing better than others? Secondly, could you lay out some expectations for JumiaPay adoption? At what point do you think the JumiaPay could be reached 50% of GMV? And then third, maybe most important thing. Could you talk about the path to profitability? Update us on your thoughts as to when and how you're reach EBITDA breakeven. Thank you.

Thanks, Mark. And on the countries, and we do not disclose this information. So I'll have to keep this one. And at some point we may provide some geographical break down. What I can tell you is that we see a lot of momentum, pretty much across the board, but, and we don't disclose that. In terms of JumiaPay something that we want to drive in a very effective and gradual manner. If you look at Nigeria and Egypt where we have launched JumiaPay in 2017. Actually that the penetration is already above 50%, because this is what we have published last year in Q4. Right. So we have already achieved that milestone as in two markets, and I can tell you that the penetration right now is even higher. Right, it - kept increasing in those markets. And so here we want to continue to drive this increase. It's hard to tell when it will take place at the Group level, because we have announced recently a few more markets and we try to balance, of course, the penetration of JumiaPay with the efficiency of our sales and advertising and investments as well as the growth of the market today. So it's really a combination that I think it will happen sooner or later, and given that it's already happened in Egypt and Nigeria. We think we can confidently say that it will happen in the future also at the Group level. Then when it comes to path to profitability. This is something that we have really been focusing and between clearly explaining that our strategy is not just about growth, but about reaching profitability and this remains completely valid and we are very focused on that and what matters for us right now is we need to continue to execute on those four pillars because we really believe those are the key to drive profitability, right. So driving the usage extracting more revenues in gross profit from that usage on with our monetization stream and working on our cost efficiency in order to make steps toward profitability. And here right now, we are really focused for the next five quarters to start. We do think our adjusted EBITDA loss. Right. And our cash utilization. So we want to start and seeing a clear trend and we've been reporting and measuring the progress rather as a percentage of GMV and now we want to start over the next five quarters, the trend in absolute. Right and we want to see the cash burn going down and we want to see the existing EBITDA going down, again over the next five quarters, this is really our priority to deliver and we're going to do that by just doing and what I have been saying, which is to grow the usage efficiency, focus on profitable growth, focus on very attractive categories and GMV, drive monetization effectively and cost efficiency, and you've heard some of the measures we're taking on cost efficiency.

Our next question comes from Brian Nowak with Morgan Stanley.

Thanks for taking my question I have two - just - Sacha. The first one is that sort of the comments around more profitable and disciplined growth. Just so we can sort of understand from an external perspective. Can you sort of give us a couple of tangible examples of areas in which you see yourself changing the strategy where you were previously acquiring unprofitable growth now you kind of want to focus more on profitable growth. What's changing sort of mechanically, a couple of examples there and then the second one just to kind of go back to the last question. So it sounds like the next five quarters are a focus on profitability. So the way to think about it. You see a path to our breakeven five quarters from now or is it still further out from a breakeven perspective. Thanks.

Thanks, Brian. And I'll start with the second question. No, it's still further out. Right, and we are really building for the long-term. And I think what we want is that we are clear and what we are steering the business for in the next five quarters, right. So we want to really go after the same four priorities as we want to clearly see a reduction in cash burn, right? It's not going to take us some profitability within those five quarters, but we want to start seeing some stats. And I think we've made a lot of great steps over the last quarters but we now want to add one which is to reduce our adjusted EBITDA in absolute number and the cash utilization in that - we will need more time than those five quarters to get there. On the first one, it's a very good question and it's very much we know, around a very granular decisions that we make in terms of marketing efficiency, in terms of the category mix, in terms of how we drive the GMV consumers. Right. So again to take a very, very simple example, right. When you do a promotion, and when you do a voucher or coupon for certain consumers you can decide to give 2% reduction or you can decide to be 3% reduction. If you give 3% reduction you will get more people coming that you will spend more money and inevitably, there is a certain level, which is the right level and you can adjust this level with time and overall if you put a little bit more stringent criteria with your investments in terms of marketing intensity, in terms of discount, in terms of commissions or reduction that you give to the sellers, you will have some of that. This is something that we feel very comfortable doing now because you can see the dynamics that you see in the marketplace. I mean if you look at Q3 and you look at the increase in sales and advertising year-over-year. We are at 6% reported in 12%, if you adjust for the reclassification. So we increase certain advertising by about 12% and we doubled the number of holders. We had the fastest growth over the last five quarters of consumers, still 39% of GMV. We doubled the penetration of JumiaPay and we drove almost a point of increase of - gross profit. So it's really about creating the tension in the equation in the commercial equation, to make sure that you see a lot of growth. Well, very tight discipline in sales and advertising and monetization.

[Operator Instructions] Our next question comes from Sarah Simon with Berenberg.

Yes, hi I've got two questions if I may. First of all - first one is around cash flow breakeven. You said before you thought you had enough resources to get to breakeven do you still think that's the case. And then the second one, obviously, you said that if you adjusted for the phasing of Jumia anniversary the kind of 50% in terms of GMV and the new guidance is for - let's say a bit of the range about half of that. Is it reasonable to assume that the categories you're going to be less focused are those over €20 ones that you were showing on Page 7. Or are we talk - because obviously it's quite a big step down or is it something else? Thanks.

Yes, thanks Sarah. On the cash we currently have roughly $300 million of cash and the cash and bank and short-term deposits. And then our Q3 cash utilization was around 44 million. Now obviously, as part of our path to profitability we are working on reducing the cash utilization in the next few quarters. As I was saying and the path to profitability is going to be gradual and a key milestone obviously to reduce the cash utilization and then just EBITDA in absolute value, right. So here, this is our focus and it seems we knew what we want to do over the next five quarters and as we do that, we can talk again about this question. Then in terms of the growth of the GMV again for us, it's really about where do we see the most attractive traction in terms of usage and you are right that certain of those categories and when we look at GMV [ph] in particular great. And those are sometimes categories where you have less frequent purchase and which require more investment either in marketing or discounts. So it's really in the commercial equation that we're going to play and right now we have those amazing food delivery, digital services, FMCG and BG [ph] which are growing so well. So we're going to ride this wave, right. So I think you can see that the mobile phones are still growing very well, but the other ones are growing even better right. So I think it's really going with this opportunity that we have a great and powerful engine with those categories and we want to really leverage that. It's not that we want to go away certainly from the other ones. And I think you’ll see that they are still growing very, very well and consumer electronic is growing 71% in volume this year. But we wanted to be selective in the commercial equation and the commercial intensity and it's that the other ones are growing so fast right. So as we do that the mix in terms [ph] are going to evolve, but not because the other ones are growing so slow it's because they are growing very fast.

As we have no further questions, this will conclude our question-and-answer session and also our conference call for today. Thank you for attending today's presentation. You may now disconnect.