Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Second Quarter of 2020. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Please note the conference is being recorded. [Operator Instructions] I would now like to turn the conference 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 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 recent 20-F filing. 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 very much. Welcome everyone and thanks for joining the call. I hope that you are all staying safe and well. We are pleased to share with you today results that I think demonstrate meaningful progress on path to profitability. And before diving into the detail, we would like to acknowledge the hard work and dedication of all our employees, all our logistic partners, all our sellers, restaurants, JForce agents who have been collaborating together in order to keep certain consumers in this very unique and turbulent time. And we are very thankful and we thank them all for this. Our mission of providing consumers with access to goods and service, helping sellers and SMEs reach consumers and grow, while making a positive impact on the African continent as never been more relevant. We explained during our Q1 results all the actions that we've been taking to adapt our operating model of course including social distancing, contactless delivery, work from home and many others, as well as all the actions that we've been taking in order to support the community. For example, introducing price control mechanism on essential goods, supporting the delivery associates throughout the Jumia Heroes Program and many others. It goes without saying that we will continue to carry on with all those initiatives, as long as the situation remains, and we're very happy to take questions on all this at the end of the call. Now let's talk about the results. And I am now on Page 3 of the presentation. We will start today with the bottom line since it's been a big part of our focus lately, and also something that we all wanted to see. I think in Q2, we made great progress on our path to profitability. We had set for ourselves…

Thank you, Sacha. Hello, everyone. We're now on the Page 7 please. So our focus during the second quarter of 2020 was very much on the financial discipline, and on making progress on our path to profitability. The Usage on the platform was resilient with annual active consumers reaching 6.8 million, and orders up 8% on a year-over-year basis. While we reduced our sales and advertising expense by more than 50% in parallel on a year-over-year basis. The JumiaPay TPV more than doubled growing by 106% year-over-year, while JumiaPay transactions increased by 36%. We also made meaningful progress on the monetization front with our gross profits increasing by 38% year-over-year and the gross profit after the fulfillment expense reaching a record EUR million. On the cost efficiency front, we reduced our adjusted EBITDA loss by 26% year-over-year. Excluding the net settlement expense, we would have reduced our adjusted EBITDA loss by 34%. And we also reduced our operating loss by 44% over the same period showing the meaningful progress on our path to profitability. So overall, we are seeing very good progress across the four pillars of our strategy. And we are now going to look at the dynamics of the usage on Page 9. So Page 9, what we can see is the fundamental strength of the Jumia brand and the demand it drives made it possible for us to maintain usage with record levels of marketing efficiency. With 51% lower sales and advertising expense, the GMV was lower by 13% compared to Q2, 2019. Here, I'd like to point out that the effects of the business mix rebalancing initiated at the end of 2019 continue to play out during Q2, 2020 affecting the GMV trajectories. To support, our path profitability and the long-term usage on our platform, we…

Thank you, Jeremy. Hello, everyone. We are pleased with the progress on monetization in Q2, 2020 as this is an essential component of our financial strategy and path to profitability. In the context of an 8% year-over- year growth in orders, both marketplace revenue and gross profit posted 38% growth over the same period. As we grow the usage of Jumia, we seek to gradually monetize this usage through diversified revenue streams that we saw a growing share of our cost base. Taking a closer look at our marketplace revenue streams on Slide 16. Commissions increased by 68% year-over-year despite a decrease in GMV as a result of an increased proportion in the mix of higher commission rate categories such as beauty, FMCG et cetera. Marketing and advertising continues to experience robust momentum posting 50% growth as advertisers ship an increasing share of their spend from offline to online favoring direct response formats. Fulfillment which comprises delivery fees charged to consumers increased by 34% on a year-over-year basis for outpacing orders growth. This was totally attributable to the continuous accumulation of our shipping metrics that allows for more efficient pass-through of our fulfillment expense to both consumers and sellers. Value-added services posted 6% year-over-year growth largely in line with orders growth. In Q2, 2020 value-added services was negatively impacted by the decline in cross-border volumes, driven by cargo description, which led to lower international logistics revenue receipts from overseas centers. Moving on to cost efficiencies page 18, one of the key highlight of the quarter was the gross profit after fulfillment expense reaching record level of EUR 6 million compared to a loss of EUR 0.7 million in Q2, 2019, demonstrating continued progress on our path to profitability. The growth in gross profit alongside the reduction in the absolute amount…

Thank you very much. And before we go into Q&A, three remarks to conclude the call. First remark, I think that looking at Q2 results and also, if you look at H1 2020 was made a lot of important choices last year and these choices are starting to pay off, right. The focus on everyday category is making us very relevant, very efficient with marketing and also more profitable. We launched Jumia Mall last year. It's proving to be very relevant today for sellers and brands, existing countries and categories and in notably the travel business. And if you look at Q2 or H1 despite not seeing any surge overall in demand from COVID, we are delivering very good results across the board and that makes us very confident for H2 and beyond. Second remark, I want to clarify our priorities for the quarters to come, as well as how we are driving the execution. On the usage of Jumia, our priority is to continue to grow while driving efficiency improvements. We think that we are very well positioned in terms of categories, and we're going to continue to focus on those everyday categories, we're going to continue to drive adoption of Jumia by new users and retention of existing users. Sometimes people tend to oppose growth and profitability; for us, they somehow grow together and we look at the usage of Jumia with multiple lenses: GMV, active consumers and orders. Over time, we want to see all metrics going up even if in some quarter’s one metric or the other is going down or growth is higher or lower but over time we want to see those going up. On JumiaPay, our main priority today is to gradually increase penetration within our platform. You've seen that JumiaPay transactions accounted…

[Operator Instructions] The first question comes from Mark Mahaney of RBC Capital Markets. Please go ahead.

Okay, thanks. If I could throw in three questions, please. Is it a reasonable expectation that gross profit after a fulfillment can continue to rise? Do you have enough structural improvements and as the mix shift do you have enough visibility into the revenue mix shift, if that's a probability that gross profit after fulfillment can continue to rise? Secondly, you on that slide 6, you listed a series of large number of pretty large brands, are there brands that are missing, I'm sure there are some, but there are a couple of key brands that you would really like to bring in that you think would be could really move the needle for Jumia? And then finally could you talk about if there's been a change in your customer acquisition channel strategy, are you finding part of that advertising efficiency, is it driven by the fact that you found more efficient advertising channels than you had discovered in the past and what are those? Thank you very much.

Thanks, Mark, very good questions as always. And I think, I mean the first one on the gross profit after fulfillment, the answer is, yes, definitely, right. And then -- and here to give you some color, of course, the gross profit after fulfillment is the sum of our revenues minus the fulfillment expense. If you look at our monetization streams and their level of maturity, you can see how much potential we are still seeing ahead of us both for the existing monetization stream as well as new ones. If you look at for example marketing and advertising, we’ve barely started, right. Many marketplaces around the world are very lengthier and for us this is something that we started a year ago, and we are seeing a lot of good traction and we are just at the very early days of that. We have also been talking in the past about Jumia Express, which we have barely started to monetize, and many more with our existing sellers. Then there is all the monetization from the new revenue streams, which today we are not doing yet at all. And here I'm talking about monetization of JumiaPay as a payment platform. Monetization of Jumia Logistics as a third-party logistic platform as well as, I think we can side those two for now. And this is not even yet today in our P&L. So we see a lot of upsides in revenue. Then in terms of fulfillment expense, I think here we are consistently seeing improvements quarter-over-quarter based on number of drivers. Of course, one is the increase of volume because the more volume we have, the more partners we are able to use, and the more competition between them; and the more scale they get. So it's really a volume gain…

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

Great. Thanks a lot. A couple of questions; first, just any further details maybe GMV growth by category across the electronics versus kind of others, but if there’s any more details and some of the trends you're seeing there. Also maybe on the commission rate, look like it mostly maybe a change of mix that drove the higher kind of commission dollars. Was there also any change of commission kind of rates in absolute as well and maybe how much room do you think there is to increase kind of commission rates longer term as well? Thank you.

Yes, very good questions. And at this stage we'll have to kind of stick to page 10 where we provided the breakdown by category per Q2 in 2019 and 2020 where you can see that the share of the fashion, beauty and FMCG has grown to 57% from 41%. And certainly those have been the ones growing the fastest both in volume and value, and we'll try to provide more color or more break down as the quarters keep developing. In terms of commission, it's a very important question and something that we very often discuss a lot also internally. And we are of the view that as a marketplace, it's very important to be attractive to the sellers and in our history every now and then, we went on and increased commissions. And most of the time when we did that the sellers was completely fine with it. But some of those sellers were just re-impacting their selling prices with the commission increased impact. And they were accepting completely the increase, but essentially we were changing the price of the product they were selling on Jumia. And that is not really the direction we want to go, especially now with the economic crisis that we think is likely to unfold. We want to make sure that we are able to be very competitive for the sellers, so that the sellers can offer very low prices. And part of our monetization strategy is to drive revenue streams, which are both outside commission, right. So if you remember two years ago, we were almost only commission and we started to introduce more streams, so that we didn't have to raise those commissions but instead we're selling more services to the sellers. And secondly, also leverage our platform to generate revenues from third parties. And as we are able to monetize JumiaPay or Jumia Logistics in the future, we may decide to actually reduce the commissions, and by doing that we think that our marketplace is going to be even more competitive. So again here it doesn't mean that every now and then we don’t increase commission on a given category. We try to find the right balance. But certainly it's not something that we want to drive brutally or in general we see more value long-term in reducing commissions and increasing commission even though on the face of it we have the power to do that.

Got it. Great. And quickly on the JumiaPay transactions, it looks like it was up nicely year-over-year but more flattish sequentially. Is there any sort of maybe near term ceiling on JumiaPay transactions that would just give more penetration insertion of your markets and you need to open up more to get that penetration higher or was that just maybe just not a linear growth there?

Yes. I think on this that the penetration of JumiaPay is a function of the penetration of JumiaPay both for the countries where it operates but also the different platforms. We have Jumia Food for the food delivery and the Jumia e-commerce and we have the JumiaPay app with the digital transactions. So I think it's a function of all this and something in here we have been very clear also that it's not our goal to be 100% JumiaPay in the short-term or even in the mid term, right. We think that our success with JumiaPay and with Jumia in general have been to also recognize that cash on delivery is key, and is very important. So we certainly want to maximize the penetration of JumiaPay, but we in a way want to go with the market and drive the adoption efficiently. And right now we're at 36% overall as a group of transactions. And it’s 10 points more than a year ago; there are many countries where we still don't operate JumiaPay, and still many consumers who don't want to transact online; and we just want to recognize that. So we're pretty comfortable with the level where we are now. We think it's going to continue where we live plateau or where will we be in two years, we'll see Certainly, it’s been going up and up; at some point, we're not solving for a 100%, but we know that in Nigeria and Egypt we are well above 50%, right; and we’ve published that in the past. So we feel pretty confident that mainly two-thirds of the transaction in the mid term will be on JumiaPay, I am talking really 18 month from now or two years from now because this is what we have seen in Nigeria two years after the launch. So that's how you have to look at it I think, Aaron.

Next question comes from Ralph Schackart of William Blair. Please go ahead.

Hi, guys. Good morning. Thanks for taking the questions. Two calls or two questions, if I could please. I jumped in on the call a little late, so I apologize if you have touched in this, but maybe if you could share some perspective given the dynamics of the pandemic. How the business has trended up post quarter? Any color for us on fulfillment expense initiative for the progress there, customer additions, anything you could add would be helpful? And maybe Sacha, just kind of taking a step back, I know you called it out in the prepared remarks in the letter about being able to emerge from the crisis stronger. Just curious in your perspective on the business going forward with an unfortunate event, the pandemic, but how the business may strengthen going forward as a result? Thank you.

Thanks Ralph. I think the situation has been pretty stable for -- from a business perspective in relation to the pandemic for the last two months. We had team in April, a mix of quite strong disruptions in some markets and some parts of the business, right, and we have published that. And some countries, where especially those where there was like a real lockdown where we’re seeing a bit of a surge in volume. And then throughout the quarter, throughout Q2 and also in July things went back to normal pretty much everywhere, right. Being I mean normal -- I mean the normal -- that the same level of business that we had before the beginning of the crisis. Of course, there's a lot of question marks around what will the country do? What will the countries do in terms of back to school and so on so forth? So there's a lot of uncertainty about it but from a Jumia business perspective things went we can say back to normal sometime during Q2, and since then I think pretty steady with no significant disruptions and no significant surge. So I would say normal business. And what makes us feel good and I think I was listening to Jeremy and Antoine, I was hearing a lot of word, please, please and is really that I think if you consider the improvement of the P&L across the board, and you put it in relation with the growth of the business of 8% of the orders. It does mean that the improvement is driven by fundamental actions on the key drivers of the P&L, right. And that’s for us makes us very confident in a way because it's not -- we're not able to deliver this gross profit after fulfillment, which is like by far our record because we have seen like a big surge and now it’s happening because we are doing the hard work on monetization, cost efficiency, restructuring, sales and advertising and all that. And I think that we made lot of choices like I said last year and some of them were not easy, closing countries, exiting travel, doing the rebalancing and so on. And that in a way we entered the crisis, right; already with all these actions well executed or almost done. And for that we’ve been in a way luck to make those decisions ahead of what has come because no one could have predicted this crisis. And now we are very agile and very nimble. So in a way it’s something that is causing further development of Jumia that we made those decisions by then. Any more questions?

No. This concludes both our question-and-answer session and Jumia’s second quarter 2020 conference call. Thank you for attending today’s presentation. You may now disconnect.

Thank you, all. Stay safe and take care. Bye-bye.

Once again the conference has ended. You may disconnect your line. Thank you.