Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia’s Results Conference Call for the Second Quarter of 2021. 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. Good morning, everyone. Thank you for joining us today for our second quarter 2021 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 published on March 12, 2021. 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. I also would like to cover two housekeeping points. All our numbers will be presented in U.S. dollar going forward. As a result of functional and presentation currency changes from the Euro to the U.S. dollar effective April 1, 2021. For convenience purposes, Q2 2021 results highlight in Euro have been provided in the appendix of this presentation. I also would like to point out that all our growth rates, we will mention in this presentation are on a year-over-year basis unless otherwise noted. With that, I’ll hand over to Sacha.

Thank you, Safae. Welcome, everyone, and thanks for joining us today. Our results for Q2 reflect what we have announced during our last call, increased investments in our platform to support our objectives of driving accelerated usage growth as well as JumiaPay. Jeremy will walk you through in a moment the detailed results, but I can already say that we have started to increase our investments in sales and advertising as well as technology expense to support our long-term growth. We’ve had the fastest growth of transactions of the last five quarters. This is early momentum that we want to build on to accelerate even more. And we have a great milestone on JumiaPay that allows us to process third-party payments. This focus on usage growth in JumiaPay is now possible because our fundamentals are very strong to support our long-term growth and also ensure that as the business scales, it turns profitable. I would like to remind how much the business has changed over the last years on Page 3. First, our marketplace has never been more diverse and relevant for our consumers. The share of GMV from everyday product categories is now 63%. It was 41% three years ago. This diversification has been in the making for many years as we’ve been working on the supply side of our marketplace, developing partnerships with brands and sellers, which put us in a position to make significant inroads in those categories. Secondly, we have transformed our unit economics. Gross profit margin stands at 12% of GMV, almost doubling over the past two years. We’ve been generating positive gross profit after fulfillment for now seven quarters in a row. And obviously, this is very important because we have now set unit economics at a level that gives us the flexibility to…

Thank you, Sacha. Hello, everyone, and thanks for joining us today. Let’s start with the review of the usage trends during the quarter. We’re on Page 6. As Sacha mentioned, we are very focused on accelerating the usage growth. And in this context, Q2 of this year was really a transition quarter where we ramped up our sales and advertising expense after six quarters of reduced marketing spend. Now what has changed versus last year is that we have built sufficient strength in our unique economics to allow us to invest more into growth. First, we are seeing early signs of acceleration in the business. With the orders reaching $7.6 million, increasing by 13% year-over-year, which was the fastest volume growth of the past five quarters. When we look at the details of volume growth by product category, we are seeing areas of strong momentum emerging very clearly. Food delivery was the fastest-growing category on our platform in volume terms, posting the highest ever number of quarterly orders up almost 60% and accounting for 22% of total orders on our platform during the quarter. Food delivery is the first area of the business where we deployed our growth acceleration in force late last year to reignite the user growth following the disruption on the onset of the pandemic. The annual active consumers reached 7 million, up 3% as we continue to acquire new consumers and engage existing ones. GMV was US$223.5 million, down 11% on a currency adjusted basis. In terms of trends by product category, we continue to see diversification of GMV in favor of everyday category. On Page 7, you can see that phone and electronics went from accounting for 43% of the GMV in Q2 last year to 33% of the GMV in Q2 this year. Phone…

Thank you. Hello everyone. I’ll start with our monetization metric. In Q2 2021, marketplace revenue was up 1% and gross profit up 4%. Our gross profit margin as a percentage of GMV continued to expand year-over-year from 10.2% in Q2 2020 to 12% in Q2 2021. Let’s unpack this trend by looking at the details of each marketplace revenue stream on Page 16. Having achieved the robust level of unit economics with gross profit after fulfillment at US$1 per order. We made the deliberate choice to reinvest some of this profitability back into growth. As part of that, we took targeted actions to support usage growth, increasing consumer price incentives and shipping discounts. These drove a decrease in commissions and fulfillment revenue by 7% and 2% respectively. On the other hand, value-added services revenue increased by 10%, the fastest growth rate of the past six quarters. This was the result of increased volumes in our platform, which led to higher shipping contributions collected from salary. It was also supported by increased take-up by sellers of our warehousing services, particularly cross-border sellers, collaborate on our local storage facilities to reduce delivery times for our consumers. As we use the monetization intensity on the commissions and fulfillment revenue, we are ramping up new monetization streams to give us further flexibility to invest into growth. One of these streams is marketing and advertising, which increased by 18% in Q2 2021, supported by robust growth of our sponsor product at solutions. We are constantly enhancing the user experience and relevance of our ad products to drive increased click-through rates, and we do so through better audience segmentation, innovative ad placement and overall improved ad operations and analytics. Another key monetization stream for us is our logistics offering to third parties on Page 17. This…

Thank you, Antoine. Thank you very much. In summary, Q2 was a transition quarter where we ramped up our sales and advertising expense after six quarters of reduced marketing spend. We started to see some early positive signs, and we are confident about the impact of those investments on usage growth acceleration. As we have highlighted, the past two years have been transformational, for Jumia and have set strong foundations for us to accelerate execution on our priorities. We’re very excited by the new phase we are entering. We see a vast and untapped market opportunity, both on the e-commerce and fintech fronts, and we believe that we are uniquely equipped to capitalize on this opportunity. The objectives for us going forward are very clear. Accelerate usage growth, development of JumiaPay, we’re deploying more capital, particularly in marketing and technology to achieve these objectives. And as we mentioned also during the last call, the acceleration will not happen overnight. We accept – we expect it to be gradual. We have already seen some early signs of success in Q2 with accelerating orders growth pocket a very strong moment term, whether it’s food delivery or the JumiaPay app services. And we plan to continue sharing with you milestones of success as we execute on our strategy. Many of the investments we are making now and that Jeremy told you more about earlier are long-term in nature. And we will take no shortcut in pursuit of quick wins. We are committed to building a successful business in the thriving ecosystem for our consumers and partners for decades to come. And of course, while we are currently very focused on growth acceleration, reaching breakeven remain very much on the agenda. Our capital allocation and approach to cost will continue to be disciplined. We may see some fluctuation unit economics in the near term as we ramp up investments, but we ultimately expect usage growth and the diversification of our monetization streams to support our path to profitability. Thank you very much for your attention. And operator, we are now ready to take questions.

Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Your first question for today is coming from Aaron Kessler. Please announce your affiliation then pose your question.

Great, thank you. I’m Aaron Kessler, Raymond James. Just quickly, if you can discuss maybe the COVID impact you’re seeing in the quarter, maybe into Q3 as well. Obviously, still a top of mind for a lot of investors. And then second, just on the marketing side. What are some of the key measures that we should be watching to analyze the success there? Is it more focused on user growth near term, GMV? And just kind of one of the key metrics you’re going to be looking at to analyze the success? And should we start to expect the benefit in Q3? Or is this more of a multiyear quarter or a multiyear journey on the marketing side? Thank you.

Thanks very much for the questions. I think on the COVID impact, as you all know and as you know, we’ve been commenting quite a lot on that. Perhaps it’s been more of a disruption than a tailwind. And this has been largely because in Africa, we’ve not seen lockdown, the same way we have seen in, for example, Europe or the U.S. And people could still shop, they could still go to stores normally during the day. And what we have seen on the contrary is a lot of restrictions of movement, things like curfew, preventing our delivery partners from doing deliveries at night, preventing restaurants from opening at night and even for delivery. And so it’s been a lot of that. And there are still some of that happening here and there, right? So in the last few weeks, a few big cities have announced curfews at 8:00 PM, for example, limiting our ability to do night deliveries and, of course, limiting the restaurants from doing food delivery at home. So look, we still see some of that, but I would call those rather minor. And we believe that we are operating more normally right now, right, as we have been over the last few months. So no particular change in the last few weeks, some rather minor here and there. But again, keep in mind that for us, it’s been overall more of a disruption on a net basis than a tailwind. When it comes to marketing, it’s a very good question. And of course, as you start to see, there’s obviously some lag between the investments that we’re doing in sales and advertising and some of the benefits that we are seeing in terms of usage acceleration. And over time, what we want to see, obviously, is an acceleration of the three usage metrics that we see, which are the GMV, the orders the active consumers, right? Given our focus and given our priorities, clearly, the orders is the metric that tends to grow the fastest because we are focused on driving the everyday categories, and they’re engaging with the consumer. So we think that this metric of orders will be the one to watch a bit more than the others. But again, over time, we want to grow the various usage metrics. And the KPIs that we want to look at over time are, of course, the ratio of the growth acceleration, I would say, year-over-year of those metrics as well as the efficiency of the marketing, both over GMV, over the number of orders as well as the proactive consumer on an annual basis, right? And – when can we see those benefits? I think they will be gradual. So again, we start to see some of them in Q2, and we are very confident that we will see more and more of them gradually in the next few quarters.

Great. Thank you, Sacha.

Your next question is coming from Sarah Simon. Please announce your affiliation then pose your question.

Hi, Sarah from Berenberg. I have got two questions, please. First one was, as you ramped up marketing investment, can you give us sort of color on what you’re seeing in terms of the evolution of customer acquisition costs? And the second one is, if we look at Slide 7, and that’s obviously becoming quite familiar in terms of the shift away from Foods & Electronics. So you’ve talked about FMCG build-out. I’m assuming that FMCG is growing faster than overall fashion, you said is the biggest – is growing faster than FMCG because that would be physical goods. And food and delivery is up from 9 to 14. So I’m just wondering what’s the category which is not within the blue section, which isn’t growing or is maybe shrinking? If you can just give us a bit more color there? Thanks.

Yes, of course. Thanks, Sarah. On the customer acquisition cost, it’s a tricky question, because it’s tricky for us, but it’s tricky because right now, we’re doing a lot of investments on consumer education and on the bottom line, as we call them and off-line activities like billboards and YouTube videos and so on and so forth. And one has to be careful when you decide to make some allocation about how much goes to new consumers versus how much goes through returning consumers, right? And so depending on those assumptions, you can really have a very different view of how the customer acquisition cost is looking. So this is why we like to look at the efficiency of our marketing dollars over a period of four quarters. Looking at the LTM, last 12-month active consumers and the marketing that we invest in order to engage those consumers. But I think with time, we’ll see this metric continue to trend in the right direction. At the same time, given how much we have reduced marketing investment over the last few quarters. And over the last six quarters, we’ve reduced and reduced and now we have brought the sales and advertising back to the level of 2019. I think we’ll deviate from the last 12 months efficiency, right? So we’ll have to see how the next few quarters shape up, but I think that the efficiency will not be as good as the last 12 months, obviously, because they were quite unique. But over time, over a longer period of time, multiple years, I think it will keep trending in the right direction and become more efficient with time as consumers get comfortable with the online transactions and e-commerce in general. Now on Slide 7, it’s hard to just tell you here. I think it’s – overall, the trend is that Fashion, Beauty and FMCG are doing well. I think fashion is doing well. I think last year in Q2, maybe we were having a lot of masks and COVID-related items for the first time. So maybe that is changing here, but there’s not one big trend or one big category that I could name that is not doing well. I think it’s more a generic trend. Perhaps there is some of that from last year, specifically Q2 because it’s when it started to happen and changed a bit the mix because of that, but that’s the only thing that can come to mind right now. There’s not something that is major out there.

Okay. And then within digital, I think last quarter, you highlighted that you actually scaled back some of the digital payments like which weren’t particularly profitable for you. But in this presentation, you’ve highlighted digital services as a growth category. So have you changed that kind of philosophy because I think stuff like mobile phone recharge and things you scaled back on in Q1, but have you switched that more back on in Q2?

No, not specifically. I think the trend is continuing that those categories are still there and still very important for us. But we tend to see them and to make decisions based on customer lifetime value with those categories, right. So no, that trend continues, and we’ve not done a lot more of those in Q2. The trend that we talked about in Q1 continues. And I think it’s a good trend because it means that we have more users on the JumiaPay app doing more than just their time, right. And we see lots of momentum in categories like gaming and financial services, micro loans and so on. So I think it’s very good. And we hope that this will continue.

Okay. Sorry, final follow-up on that would be, I mean, given that some of the digital services, you are emphasizing less as you said, if we think about growth in food delivery, separately from digital services. Do you think the growth has been – has the growth been higher than from 9 to 14 would imply, if that makes sense? Did digital service maybe stay flat, I mean did digital services grow the sense of GMV given the pluses and the minuses you talked about?

And so on the – because on the digital services, you have more usage on those services that I mentioned and probably a bit less usage on airtime. I think on food delivery, in the quarter last year, which was quite strongly impacted by the disruption, right. So I think we had shown this graph last year where we had shown food delivery going down quite significantly starting in May or something like that. And this year, of course, we’ve seen less of those disruptions. So some of the food delivery has gone faster on the – in this quarter because, of course, some of the disruptions from the previous quarter, if that makes sense, Sarah.

Yes, yes. Cool. Thanks very much.

Your next question is coming from Lamont Williams. Please announce your affiliation and pose your question.

Hi, Lamont Williams with Stifel. So just a quick question. When we look on – look at marketing expense for the balance of the year, is this level that we saw this quarter kind of the run rate we can expect from investment going for the balance of the year? Or should we see this ramp even more?

We would hope to be able to ramp up gradually from this level. Of course, we – part of the marketing is an investment in the brand, part of it is more performance and conversion driven. So please don’t take it as a definitive view, but the intention would be to gradually increase from that level?

Okay. And is – as you look – I’m sorry, go ahead.

I was – I think you have to look also this as a two per year perspective, right? And I think you can see that in 2019, we had almost the same level as the level that we just had here, right? And if we think about Q3, Q4, we have Black Friday coming and so on. So I think you need to take two per year perspective to appreciate when I say gradual increase. It means from both from the level of Q2 but also from the level of historical years because Q3, Q4, of course, you have the ramp up of Black Friday.

Okay. Great. And just as a follow-up, is there any callouts in terms of just the volume growth by geography?

No, nothing special. We’re still very, very well diversified. Nigeria, about 25% of the activity. Egypt, about 20% and then we’ve got North Africa, West Africa, East Africa, South Africa, nothing outstanding out there. I think it’s still valid and – of course, there are some countries always doing better and some countries a bit less than this and on that. But I think overall, it’s a pretty consistent story.

Okay, great. Thank you.

[Operator Instructions] There are no more questions in queue.

Great. Well, thank you very much, everyone, and looking forward to updating you in the next few months. And as always, if there’s any feedback any questions, we are available. Thank you so much. Take care, everyone. Bye-bye.

Thank you, ladies and gentlemen. This does conclude today’s conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.