Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Fourth Quarter of 2020. [Operator Instructions] After management's prepared remarks, there will be a question and answer session. I'd now like to turn the call over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for our fourth quarter and full year 2020 earnings call. With us today are Sacha Poignonnec and Jeremy Hodara, Co-Founders and Co-CEOs of Jumia; as well as 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 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 20-F as amended on July 8, 2020. 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. Thank you very much. Welcome, everyone. Thanks for joining the call. I hope that you are all staying safe and well. The focus of our strategy has been very clear and remains unchanged, build a sustainable platform to capture this great opportunity of e-commerce in Africa. And what we mean by sustainable is to bring indisputable facts and evidence that our business model positions us well to become profitable. And as you can see in our results, here are the facts for the culture [ph]. Number one, we have reduced our adjusted EBITDA loss by 47%. We are now for five quarters in a row profitable after fulfillment at group level. The majority of our country is now breakeven before G&A. We are growing the usage of Jumia in the categories which we have chosen to focus on. And we do all of the above with lower G&A expenses and lower sales and advertising expenses. So, overall, we feel very strong about those results, which clearly bring more evidence of the strength of our business model. If we look into a few more details on Page Four on the usage of Jumia, of course, 2020 was marked by the business mix rebalancing towards the highest share of everyday product categories and by a strong focus on efficiency, ensuring that the usage would drive attractive unit economics. We drove down the share of phones and electronics from 66% to 43% of GMV. We achieved the five point improvements in cancellations, failed deliveries and returns, which went from 30% to 25%, meaning that the usage we drive is more efficient and can be better monetized. GMV and orders, post-CFDR, has been growing by 16% and 19% on all the business outside phones and electronics, which is the business we…

Thank you. Hello, everyone. Our focus in Q4 2020, and in fact, throughout the whole year was to drive the usage with one, high level of marketing efficiency, and two, in a disciplined and selective manner, favoring the categories that supported the consumer lifetime value and profitability. On Slide 11, on the first point, you can see that in Q4, 2020, we continued driving usage with very strong marketing efficiency. Having built over the past nine years, one of the strongest brands in Africa, we are now able to be much more tactical and much more efficient in our sales and advertising spend. As we reduced our sales and advertising spend by 34% year-over-year, the GMV was down 21% year-over-year, reaching EUR231 million in Q4. Sales and advertising expense per order decreased by 33%, while orders declined by 3%. On the other hand, while the annual sales and advertising expense per annual active consumer decreased by 48% year-over-year, our annual active consumers were up 12% with both new and returning consumers. It's worth noting that the GMV and the orders accelerated by 23% and 21%, respectively, in Q4 2020, compared to Q3 2020, supported by the Black Friday event that we did in November 2020. And despite a significant reduction in marketing spend, in the 2020 edition of the events, we still registered record level of consumer engagement. Page views across all platforms reached 1.5 billion during the event, that's 33% compared to last year, and our Black Friday video content registered almost 100 million views, which is three times higher compared to the 2019 events. And this speaks to the relevance of our platform and the content for consumers. One aspect that we monitor very closely when it comes to the usage growth is cancellations, failed delivery and return…

Thank you, Jeremy. Hello, everyone. Moving on to cost, I'm now on Page 23. We have been driving strong efficiencies across the full cost structure. Fulfillment expense decreased by 18% in Q4 2020, compared to Q4 2019, as a result of operational enhancements across all logistics operations. These include the optimization of all cross-border shipping metrics, staff cost savings in our fulfillment centers, and a change in our daily repricing model from cost-per-package to cost-per-stop. In addition, we were able to pass on an increasing proportion of our fulfillment expense to the combination of consumers and sellers via our fulfillment and value-added services revenue streams, respectively. The pass-through of all fulfillment expense measured at the ratio of fulfillment plus value added services, revenue over fulfillment expense increased from 64% in Q4 2019, to 76% in Q4 2020. As a result, we are pleased to report the fifth consecutive quarter of positive gross profit after fulfillment expense, which reached a record of EUR8.4 million in Q4 2020. And now on Page 24, sales and advertising expense decreased by 34% from EUR15.5 million euros in Q4 2019 to EUR10.2 in Q4 2020. All marketing efficiency metrics are showing strong improvement. Sales and advertising expense per order decreased by 33% from EUR1.9 in Q4 2019, down to EUR1.3 per order in Q4 2020. Annual sales and advertising expense per annual active consumer decreased by 48% from EUR9.2 per annual active consumer to EUR4.8, and sales and advertising as a percentage of GMV decreased by 88 basis points from 5.3% to 4.4%. These efficiencies are made possible by the strength of our brand. They are also attributable to continued enhancements in 2020, through our performance marketing strategy across search and social media channels, including through more granular segmentation for target markets, with differentiated campaigns…

Thank you. So if we step back, once again, our strategy has been to build a sustainable platform to capture this great opportunity of e-commerce in Africa and by sustainable wins, to bring those facts, those evidences that the business model positions us well to become profitable. And here, why is that so important to us? Because, as we discussed in the past, we operate, what we think is a completely proven business model, very successful everywhere in the world, make every brand [ph] Amazon. Two, we have a great macro opportunity, we operate in a huge continent, which we see as untapped with amazing growth prospects. And three, we have proven that we can operationally overcome the major challenges in Africa, payments, logistics, consumer, and building a marketplace. And so, the only remaining point, the only remaining point is to make sure that as the business scales, it is profitable. And this is why for us, we are so engaged in this phase. And the facts, that I think we have been bringing over the last few quarters are, I think, very good, and they are very clear. We have reduced our adjusted EBITDA loss 47% last quarter, this was a clear objective and was delivered on it. Two, we are making money, I would say, almost structurally after fulfillments. In 2019, we were not making money after fulfillment. And now for five quarters in a row, we are doing that. The more usage of Jumia, the more profit. I think it's pretty clear that the model works. Three, we're still growing, and we are growing the profitable usage where we put our focus, the GMV, orders, post the cancellations in CFTR, have been growing by 15% and 90% of all the business outside from electronics. And we have…

[Operator Instructions] Our first question is from Aaron Kessler with Raymond James. Please go ahead.

Thank you. A couple of questions, first from a macro perspective. What do you think will be the catalyst for maybe an inflection in e-commerce adoption across some of your key markets? We've, I believe, seen smartphone adoption increased meaningfully over the last couple of years, which has been a catalyst in other markets for more e-commerce adoption. So what do you think what's going to be the key catalyst over the next couple of years? And then, I think you mentioned leaning back into marketing a little bit. Should we start to see that in early 2021, late 2021, or how are you thinking about timing of leaning back into marketing? Thank you.

Thanks, Aaron, thanks for the question. I think on the macro in a way it's -- we can call that the million dollar question in some way. And what's important here is to share a few thoughts. Number one, we did not built the business expecting or hoping an inflection. We've built our business so that as we continue to scale, if there is never an inflection, that if we just continue to grow, it works out. It's not like we have yield [ph] ourselves and we must hit that inflection point or that J-curve, or that hockey stick, or however you call it, we are geared so that if we continue gradually like this for the years to come, we will be in a very good place. So that's one thing, which is very important. Secondly, what are today the barriers for the adoption of e-commerce, when you look at it, we have published some data and now it's since about a year ago, but I think it remains very true about the barriers to usage for the people who have never used e-commerce. And we took in our largest market some people who have never shopped online, and we asked them, do you know Jumia? And back then, we answer was 74% of the people knew Jumia. We asked those people, do you consider trying, and 66% said that they were keen to try it. So, very good awareness, very good consideration. And then, when we asked them, why are you not shopping online, the three answers which were coming out the most were, because I don't know how to shop, because I don't think products are genuine, or because I cannot check the quality of the products. And when we look at those facts, this consumer survey,…

Great, thank you.

The next question is from Camille [ph] with Renaissance Capital. Please go ahead.

Hi, everyone. Thanks for taking my questions. Two questions from me, please. Firstly, could you comment on your growth outside phone and electronics category? I think it was about 15% of the CFDR, which last year -- which doesn't look particularly high, given the stage of market development. So just wondering what prevents the faster growth in your view? And how do you see trends evolving going forward? That's the first one. And secondly, could you update us on the competitive situation in Egypt? How does your growth that compared to the overall market or your main rival, and generally given a tougher competitors there versus other countries? Do you need to do anything differently in Egypt, versus your other markets in terms of marketing investments or logistics or anything else? That's it for me, thanks.

Thanks for those questions. And I think on the first one, over the quarters, and over the years, I've always wanted to appreciate the growth together with, I would say, equation of efficiency, both from a marketing efficiency and from a unit economic perspective. And I think on this US team that we have put a lot of emphasis on marketing efficiency. We've reduced the silver advertising by almost a third, by 34%, between the two quarters, and we are comparing with reduced. And, of course, we'll increase the efficiency with that. So I think, one needs to appreciate that. And, as well, you know, the growth can be a function together with the marketing efficiency with I would say monetization pressure that you apply, right, you can see that our pass through of the fulfillment expense to the consumers and the sellers has been continuously increasing. So, we are really being very disciplined in terms of free shipping, discounts, price subsidies and marketing campaigns, and so on, so forth, right. And I think we are definitely happy to see that we're growing 16%, considering the amount of efficiency improvements that we are generating in sales and advertising, as well as the amount of efficiency that we have driven from a gross profit perspective. And as we think about the future in, you know, when we enter the next phase, we think that we can relieve some of the efficiency constraints, right. And that, of course, the growth will go also faster. So I think it's an equation here and again, it has to be appreciated together with the other components of the equation. When it comes to Egypt and, of course, Egypt is a very big focus for us, it's a market that we have been active for many…

Okay, great, thank you.

The next question comes from Sarah Simon with Berenberg. Please go ahead.

Yes. Hi, afternoon, everybody. I got a few questions. First one is on marketing spend in Q4, obviously, it's stepped up versus Q3 as you'd kind of expect to the seasonality. But customer growth didn't increase very significantly. So can you talk about what you spent the marketing money on? Second one is, obviously, gross profit after fulfillment expenses growing very strongly. But even if you keep all of your fixed costs below the gross profit after fulfillment line flat, you need to basically increase that number by a multiple of four to get to breakeven, but you're not growing that fast at the moment. So I'm just wondering how you weigh up the idea of a sort of steady path to breakeven, but maybe slightly further away versus a more aggressive growth push that would lose you more money more quickly, but probably get you there faster, because you don't have a balance sheet issue now, now that you've raised capital. And then just a question that you obviously highlighted, GDP sensitivity to the post sort of pandemic effects. Would you agree, though, that the cause of the focus and the shift in emphasis towards more small and everyday items that you should be sort of less reliant on GDP are more resistant say to the economy, if you're selling small, everyday items, and if you're selling big mobile phones, for example? Thanks.

Thanks, Sarah. And I think if we start with this one, I would agree with you right. And I think the fact that we are well positioned on the everyday category is definitely positive and helps. At the same time, I mean, you see the share business from phones and electronics, I mean, it's still 43%. Right, in 2020, so there's definitely, for us and exposure to some high value items. And I think the sentiment among the consumer, I mean, is what it is right now with all this uncertainty. So we'll see what happens. And I think we have proven in 2020, very clearly that, we have relevance for the, we are reflection, and of what the consumers do and spend. And you can see how diversified, we've been showing this in the previous release, we have a lot of exposure to fashion, fast moving consumer goods, Jumia foods, all now with the digital transactions, utility, etcetera. So we'll see what happens, I would agree with you. But at the same time, we still have exposure to high value categories. And if the market goes down in those categories, we'll see what happens. Right. So I think generally agree with you, but those facts to keep in mind. Now, on the marketing standard, first question and the increase, I think from the consumer growth we have to be always quite careful if you compare the spend of marketing between Q3 and Q4 and if you look at the last 12 months, consumers because you carry, of course, the last four quarters. And you know, and when you compare the last four quarters, at the end of Q3 is the last four quarters at the end of Q4, there could be some dynamics from last year that you're carrying…

That's really helpful. Can I ask one follow up question, which is, sorry I forgot to ask initially? There's been quite a lot of chat about higher shipping costs coming out of China, higher freight costs. Is that impacting the business at all? And if it is, how are you passing it on to the consumer?

Yeah, very good question. And, yes, you're seeing and our cross border business from China, while let you know double digit or 10% to 15% of the item sold. So that's how much we are talking about for Jumia this cross border business, and it's been working very well. And those increasing trade costs, of course, they are a problem, obviously, and they're not helping. But at the same time look, that's why I say we are so diversified, and this is just one area of the business. So it's not been helping, definitely. And then we use a lot of data science to define the optimal pass through of those trade costs, both to the consumers and to the sellers, right. And there's of course, a relationship between comments you pass to each and conversion rate of the item sold, and the perception also, and so this has been something that I would say is a constant optimization, when you have a certain amount of freight cost, you may decide to hide back “into the price of the product”, or you sometimes want to put it as very identified freight cost. Sometimes you want to give it more to the seller and to the consumer. So it's, you know, long story short, it's a dynamic equation, which is very data driven. But something that of course, is not helping and impacting but again, like you know, we are diversified, so it's something that we did not think was worth like commenting a piece for activity but we are volunteering, of course as an answer.

Thanks a lot.

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

Well, thank you very much as always, for your support for attending and we're very committed also to explain what we do and talk more. So we appreciate, we are still a young company and now, two years listed. So always do reach out and we will be happy to discuss and explain and talk more about what we do. Thank you very much and stay safe. Take care. Bye, bye.

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