Jumia Technologies AG (JMIA) Q1 2021 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's results conference call for the first quarter of 2021. [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. Good morning, everyone. Thank you for joining us today for our first 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. With that, I'll hand over to Sacha.

Thank you. Thank you very much, and welcome, everyone. Thank you for joining us today. Before we go into the details of Q1 performance, we would like to talk about our strategy. We know that following our recent offering, this is an important question for our shareholders, and we would like to address it upfront. We founded Jumia in 2012, 9 years ago, with the vision to connect consumers and sellers and make commerce easier in Africa. We spent the first few years understanding the dynamics of our markets, consumers, the sellers, logistics, payments, and we then built the Jumia platform, which we think is uniquely adapted to the specifics of our markets. About 3 years ago, we decided to set the business on a clear path towards profitability. And we chose to do that instead of growing and scaling as fast as we can because we wanted to make sure that as the business scales, it turns profitable. I believe we've made very good progress on this over the past 18 months. We have significantly diversified our category mix and increased our exposure to product categories that are very relevant to consumers as part of their daily lives. We have also increased the penetration of JumiaPay to 26% of GMV, 37% of orders. On profitability, we've now posted 6 consecutive quarters of positive gross profit after fulfillment. I think we can now confidently say that we are making money after logistics. For 5 consecutive quarters, we have been reducing our adjusted EBITDA loss in absolute terms year-over-year. And we have also multiple countries, which are breakeven before tech and G&A expenses in a number of quarters. And as you are well aware, all this progress has been achieved with no particular tailwind from COVID-19. Finally, of course, we have significantly strengthened our balance sheet, raising a total of $570 million in net proceeds over the past 6 months, which gives us very strong strategic flexibility. If we take a look at where we are today, we have in Q1 an EBITDA loss of EUR 27 million, which is 20% less than a year ago. And if you look at the recent quarters, it's been very much under control. That's what you see on Page 4. And if you turn to Page 5, you can see that our unit economics have completely changed between 2019, 2 years ago, and 2020 a year ago and where we are now. You can see that as we continue to drive the business towards everyday product categories, our order value is smaller, but the orders are much more profitable. Gross profit margin as a percentage of GMV increased by 266 basis points. Fulfillment expense have gone down by almost EUR 1 in the last 2 years. Our orders are now consistently generating positive contribution after fulfillment expenses. And we have a gross profit after fulfillment, which is standing at EUR 0.90 in Q1 2021. If you continue to go down, you see that those orders take much less marketing to generate. We have increased the marketing efficiency, the sales and advertising per order by a factor of 2 since 2019. We are very pleased with this progress in unit economics. And in a way, we are reaching now in Q1 in points where for us, the focus is very clear. We are now in a very good position to accelerate usage growth. Flipping to Page 6, our priorities are: accelerate usage growth, continue to deliver profitability milestones and put more resources behind JumiaPay. What that means for the next few quarters. We will ramp up investments in sales and advertising as well as technology to support the usage growth and JumiaPay. We're going to do that gradually. And with the same focus on categories that drive attractive consumer lifetime value and good economics, no big bank, if you will. In terms of usage, it's pretty clear to us that we're going to grow faster on orders and consumers than on GMV. We believe that the everyday categories will continue to outgrow the other categories of Jumia. Also, the economic tensions generated by COVID on the consumer spending will make consumers more focused on essentials, even more than they are now. We also have some currency fluctuations. All those, they will for sure weigh on GMV growth. And as a result, the growth of orders and consumers, we think, will be greater than GMV. In terms of profitability, our focus is going to be on improving our profitability ratios. In the next few quarters, we're going to measure progress rather on EBITDA as a percentage of GMV, EBITDA per order than in absolute terms. Having said that, we still think that the total loss for 2021 will be lower than 2020, probably by a small margin. And finally, in the next few quarters, we will seek to bring the case study, the geographical case study of breakeven at local adjusted EBITDA level. And last but not least, JumiaPay where we intend to allocate more capital for the build-out of payment and financial solutions, both for sellers and consumers. This will not translate into CapEx. We will continue to be CapEx-light from this perspective, but rather additional marketing, technology and G&A expenses allocated to the development of JumiaPay. Our business model has proven the success of companies like Mercado Libre, Alibaba, Amazon and all the other ones. I don't think there's any doubt about that. The potential of Africa is huge. And we think we are extremely well positioned to drive the adoption of e-commerce and payments. E-commerce in Africa is very relevant in a continent where the distribution of goods and services is very challenging off-line. And I think we have proven that we can operationally overcome the major challenges in Africa, payments, logistics. We've built a very scalable marketplace for consumers and sellers Today, we will tell you a bit more about our great food delivery business. And we have now significantly improved our unit economics, our costs are under control, and it's time now to grow faster. Now I hand over to Jeremy, who is going to walk us through the performance of Q1 in more details.

Thanks, Sacha. Hello, everyone. So our focus in Q1 was to drive the usage in a selective and thoughtful manner with a robust level of marketing efficiency. And that was and is made possible by the strength of the Jumia brand in the countries where we operate. And we had a very good illustration of the Jumia brand strength with the result of the 2020 most influential brand survey in Egypt that was released by IPSOS in March this year. The survey is a global initiative. Was conducted in Egypt for the first time in 2020. And it assessed the brand's impact on Egyptian consumers based on multiple dimensions, such as trustworthiness, leadership presence, leading edge. Jumia ranked 7th among 120 national and international brands in Egypt and ranked number one in the digital and e-commerce category in Egypt. This high level of recognition by the consumer is a key enabler of our marketing efficiency, while our annual sales and advertising per annual active consumer declined by 46%, annual active consumers reached 6.9 million, up 7% year-over-year as we continue to acquire new consumers and engage existing ones. In the context of a decrease in the sales and advertising expense per order of 12%, total orders for the quarter reached EUR 6.6 million, up 3% year-over-year. This is a reversal of the declining trend observed over the prior 2 quarters. The fastest-growing categories in terms of volumes continue to be everyday product category, such as beauty, food delivery, fashion, while we continue to see volume declines in electronics albeit with a modest recovery observed in the phone category. As we reduced our sales and advertising spend by 9% year-over-year, GMV was down 13%, reaching EUR 165 million in Q1. It's also worth noting that the FX impact this quarter was material with the Nigerian naira, the Egyptian pound and the Kenyan shilling declining 15%, 9% and 19%, respectively, against the euro in Q1 2021 compared to Q1 2020. So on a constant-currency basis, GMV was down 5% year-over-year, while sales and advertising expense was EUR 8.8 million, down 1% year-over-year. Our GMV mix continues to shift towards lower ticket size everyday product categories, which are affordable entry points into the Jumia ecosystem, while ultimately supporting repurchase dynamics. So on Page 9, you can see that phones and electronics accounted for 30% -- 37%, sorry, of GMV in Q1 2021 compared to 45% of GMV in Q1 2020. In parallel, average order value decreased by 16% from EUR 29.5 in Q1 2020 to EUR 24.9 in Q1 2021, reflecting the shift towards those everyday categories. While smaller in average value, our orders are also more profitable as gross profit after fulfillment expense per order more than doubled from EUR 0.40 in Q1 last year to EUR 0.90 in Q1 this year. In the context of this increased focus on every day and high-frequency categories, I'd like to give you more color on our food delivery and on-demand business. This is a strategic component of our ecosystem that has performed quite strongly over the past few years and where we see significant potential for future growth. On Page 10, you see -- you can see that we have been operating this business since the inception of Jumia in 2012. And this is now a leading Pan-African platform covering 10 countries and 48 cities. It is very much an urban model where we target cities with high density of population and restaurant supply. For the 12 months period ending in March 31, we had over 5,700 restaurants and other convenience outlets active on our platform. We have long-standing relationships with blue chips QSR franchisees such as McDonald's, KFC, Burger King, Pizza Hut, Subway alongside local restaurant concepts as well as convenience outlets such as grocery shops and others. It's a meaningful part of our business and accounted for 22% of orders and 9% of the GMV in Q1 2021, and its share in the business has been growing over time, which speaks to the relevance of the food delivery for our consumers. On Page 11, you can see that we built Jumia as a comprehensive ecosystem of physical goods and digital services with multiple entry points for our consumers. With an average order value of around EUR 10, food delivery and on-demand service has historically been an entry point for the more affluent consumer base that we seek to retain and reengage across the other parts of our ecosystem. We have observed that as we continue to expand our restaurant offering as well as the price point of this offering, we are now able to attract a more diverse consumer base. Our food delivery and on-demand services have been growing very strongly over the past 3 years. Monthly orders on the platform have increased by a factor of more than 4 between January 2018 and March 2021, which demonstrates the relevance of this offering for our consumers. You can also see on the chart the effect of the start of the pandemic in Africa with a strong dip in orders around April, May last year. However, the business has been quite resilient despite significant disruption from the curfews with orders rebounding above pre-pandemic levels starting from June last year. Overall, the food delivery and on-demand service are an important growth engine for the platform, and the key assets in terms of consumer acquisition and reengagement. It's also a key component of our program, Jumia Prime, that we have been testing over the past few quarters. Jumia Prime is a loyalty program as part of which consumers can set up a monthly subscription to get free delivery and access to a number of other benefits within the Jumia ecosystem and from third-party partners. It's a great value proposition for consumers to have within the same program, both the food delivery as well as the e-commerce. It is also a strong differentiator versus competition. The last aspect in relation to food delivery that I'd like to spend some time on, Page 12, is a dedicated logistics infrastructure that we have built for this business and that has meaningful synergy potential with the rest of the platform. On Page 12, you can see we operate a delivery-enabled marketplace model where 90%-plus of the orders placed are fulfilled through the Jumia on-demand logistics infrastructure. Similar to our physical goods logistics, we operate an asset-light model for on-demand delivery, leveraging the fleet and the drivers of around 140 third-party logistic partners. We have a dedicated tech stack that supports all on-demand logistics workflows, including restaurants and point-of-sales module, smart order assignment and delivery associates scheduling, customer interface, et cetera. This strong tech backbone, alongside tried and tested logistics processes and infrastructure allow us to continuously reduce our average delivery time, which stood at 40.5 minutes in Q1. This is a remarkable achievement when you keep in mind the traffic and the road conditions of the larger frequent cities where we operate. And we intend to further decrease delivery time as we continuously improve our machine learning algorithm to better manage each step of the delivery experience. As part of this focus on continuously improving customer experience, we see increased convergence of e-commerce and on-demand delivery. The on-demand logistics infrastructure we beat is a tremendous asset to develop a few commerce proposition and offer consumers on-demand delivery for a broader range of FMCG and everyday items. We are already working with large retail chains as well as smaller outlets to offer grocery and fresh product delivery, and we believe this is an also another very exciting area for future growth. We are very excited by the momentum we are seeing in our food delivery business as well as its future growth prospects. I now would like to move on another strategic area of our business, JumiaPay on Page 14. The TPV increased by 21% from EUR 35.5 million in Q1 last year to EUR 42.9 million in Q1 this year. On a constant-currency basis, TPV in Q1 this year was up 35% year-over-year. JumiaPay penetration as a percentage of GMV increased from 18.7% last year to 26% this year. On the next page, JumiaPay transactions increased by 7% from 2.3 million in Q1 last year to 2.4 million in Q1 this year. JumiaPay transactions above EUR 10, which include prepaid purchase on the Jumia physical good marketplace and Jumia food platforms, increased by 30%. JumiaPay transactions below EUR 10, which mostly consists of transactions on JumiaPay app, declined by 3%. This trend was concentrated in the airtime recharge category as we reduced consumer incentives within this category, which has historically been promotionally intensive. Overall, 36.7% of order placed on the Jumia platform in Q1 this year were completed using JumiaPay compared to 35.5% last year. Beyond the payment processing activities that we capture in the TPV and transactions, JumiaPay also functioned as a financial service marketplace for both consumers and sellers. For sellers and SME sellers in particular who have historically been underserved by financial institutions, JumiaPay leveraged their business data for credit scoring purpose and connect them to financial institution who offer them short-term loans and working capital financing. In Q1, this year, 380 loans were disbursed as part of this activity, 90% more than Q1 last year. These loans were allocated to 291 unique sellers, 62% more than in Q1 last year. It is synergistic with our marketplace activities as it helps fund the inventory needs of our sellers, but is also very much in line with our mission of leveraging technology to empower SMEs and help them grow their business. I now hand over to Antoine, who will walk you through our financial performance into more detail.

Thank you, Jeremy. Hello, everyone. Let's start with our monetization metrics. In Q1 '21, marketplace revenue was up 6% and gross profit up 11%. FX headwinds mentioned earlier by Jeremy affected materially these figures. On a constant currency basis, marketplace revenue was up 16%, while gross profit was up 21% year-over-year. Taking a closer look at our various marketplace revenue streams on Slide 18, we can see that commissions increased by 9% year-over-year due to an increase in the share of higher commission rate categories, including fashion, beauty or food delivery. Fulfillment revenue increased by 11% as a result of pricing changes within our cross-border logistics, where we were initiated in the second half of 2020. As part of these changes, part of the international shipping fees that were previously charged to sellers were instead passed on to consumers. This change resulted in some of our international logistics revenue being recorded as fulfillment revenue instead of revenue from value-added services. That is also what drove the 13% decline in value-added services. Marketing and advertising revenue increased by 36% year-over-year. This is a result of the robust takeup by advertisers, both Jumia sellers and third parties of Jumia advertising solutions as we continue to improve the relevance and user experience of our ad solutions. As part as our efforts to continuously diversify our monetization streams and extract value from the broader asset of our platform, we piloted last year the opening of Jumia Logistics to third parties. On the back of the positive result of this pilot, we rolled out these services more broadly in Q1 '21. During the quarter -- I am now on Page 19, over 750,000 packages were delivered more than the total handled in 2020 as part of the pilot. We worked with over 250 logistics as a service clients, and I'd like to go through some examples to give you a sense of the diversity of the clients we work with. In Kenya, Jumia was appointed as preferred logistics partner for Weetabix to undertake their deliveries to modern trade across Kenya. In Ivory Coast, We work for ZECI Solar Panel, which is a JV between Zola Electric, an American off-grid electricity company and Electricité de France, the French utility company. The JV provides solar power to rural communities and a means to eradicating poverty. Jumia Logistics offered to give the storage and distribution of solar panels from Abidjan to up-country households. In Nigeria, we work with Zaron, which is a leading cosmetics brand in West Africa. Jumia Logistics provides delivery services for their customer orders across Nigeria, whether these orders were placed within or outside the Jumia platform. We also do full truckload transportation to support in the distribution within Lagos and the southwest region. The diversity of the clients we work with speaks to the large addressable market we have for logistics services. Pretty much every industry and service sector faces logistics pain points in Africa, and we are uniquely positioned to help address these pain points which makes it a meaningful potential revenue stream going forward. Moving on to costs on Page 21. We have done a lot of work on costs over the past 18 months, driving strong efficiencies throughout the P&L. Gross profit after fulfillment expense reached EUR 6.2 million, increasing by a factor of 2.5 compared to Q1 '20. This is our sixth consecutive quarter of positive gross profit after fulfillment expense. Fulfillment expense decreased by 11% on a currency-adjusted basis and by 3% on a constant-currency basis, while orders increased by 3% in Q1 2021 compared to Q1 2020. This was mostly a result of fulfillment staff cost savings as well as the change in our delivery pricing model from cost per package to cost per stock which was implemented starting from the second quarter of 2020. In addition, we were able to pass on an increasing proportion of our fulfillment expense, the combination of consumers and sellers via our fulfillment and value-added services revenue streams, respectively. The pass-through of our fulfillment expense measured as the ratio of the sum of fulfillment and value-added services revenue over fulfillment expense, increased from 69% in Q1 '20 to 78% in Q1 '21. I would like to spend a few minutes on the strategic asset of our platform, which is our pickup station network on Page 22. Pickup stations are physical locations where consumers can come to collect their packages. This growing network is a huge asset for us, which goes way beyond logistics. Our pickup stations are Jumia branded locations almost entirely operated by third-party partners. We have today over 1,600 stations in our network. And in Q1 2021, 23% of packages were delivered to pickup stations, while the rest was door delivered. Let me tell you all these pickup stations drive convenience, cost efficiency while being a powerful asset for the development of an online to off-line or O2O strategy as well as the development of JumiaPay. In terms of convenience, many consumers actually prefer to go and collect their packages rather than have someone come with the package to their home or office. It's a great alternative for consumers when ordering on Jumia. We also charge cheaper delivery fees so consumers can also save money on delivery fees. In terms of cost efficiency, pickup stations are great as they are on average, cheaper for us than door delivery. With respect to O2O, pickup stations served as a bridge between the digital ecosystem and the off-line daily life of our consumers. They are the touch points that brings the Jumia brand closer to consumers while creating further trust in our brand because consumers start to see Jumia as an integral part of their local communities. We are also increasingly leveraging them as ordering points where consumers can place orders with the help of a pickup station staff which helps educate consumers. In some cases, JForce agents helped drive footfall to the ordering points and assist with the education process of consumers. We have included in our release a case study of all pickup stations helped expand our penetration beyond primary cities in Ivory Coast. To support equitable economic development, and the inclusion of secondary cities and rural areas, we established a scalable pickup station model in partnership with CDC, the U.K.'s development finance institution. These outlets sale as both pickup stations and ordering points. They are operated by local entrepreneurs who earn an income from the delivery fees and the commissions on orders placed from the outlet. This is a great illustration of the impact we can have on the inclusion of consumers in remote areas as well as job creation. Lastly, we intend to leverage our network of pickup stations for the future development of the e-wallet activities of JumiaPay, whether it's cash-in, cash-out transactions or over-the-counter everyday services such as airtime recharge and utility bill payments. Moving on to sales and advertising costs. Sales and advertising cost expense decreased by 9% from EUR 8.9 million in Q1 '20 and to EUR 8.1 million in Q1 '21. On a constant currency basis, sales and advertising expense was down 1% year-over-year. We continue to make progress on the marketing efficiency metrics. Although sales and advertising as a percentage of GMV increased by 21 basis points from 4.7% to 4.9%, we continued to make good progress on per order and per consumer basis. Sales and advertising expenses per order decreased by 12% from EUR 1.4 in Q1 2020 to EUR 1.2 per order in Q1 '21. And annual sales and advertising expense per annual active consumers decreased by 44% from EUR 8.2 per annual active consumer to EUR 4.6. These efficiencies are a result of continued programmatic marketing improvement with better targeted and more engaging campaigns across social media and search engines. As mentioned by Sacha at the beginning of the call, we expect to gradually increase our sales and advertising expense to drive further usage growth, leveraging the strong unit economics we have achieved. Finally, our third major cost is technology and G&A. G&A expense, excluding SBC, reached EUR 20.3 million down 17% year-over-year. This decrease was attributable to staff cost savings as a result of the portfolio optimization and headcount rationalization initiatives launched in the first quarter of 2020, alongside a decrease in professional fees, including legal expense. Moving on to the balance sheet and cash flow items, our path to profitability is further supported by our asset-light business model. CapEx in Q1 '21 was EUR 0.4 million as we operate Jumia Logistics as a platform with very limited CapEx requirements. Net change in working capital resulted in an outflow of EUR 4.8 million in Q1 '21. We have seen a decrease in payables in Q1 '21 due to a shorter payable cycle and the payment of -- in Q1 of Black Friday-related invoices from Q4 '20. Cash utilization for the quarter defined as cash used in operating and investing activities, was EUR 29.7 million in Q1 '21. This compares to a cash utilization of EUR 39.6 million in Q1 '20 and represents a 25% decrease year-over-year. Cash and cash equivalent position at the end of March '21 was EUR 485.6 million. This includes approximately EUR 205 million of the total gross proceeds from the offering completed on March 30, with a remaining EUR 88 million of cash received in April '21. Having significantly strengthened our balance sheet we now have the flexibility to further invest behind growth, and accelerate the development of some of our strategic initiatives, including payment and financial services for consumers and sellers. With that, I'll hand over to Sacha for concluding remarks.

Thank you, Antoine. Thank you, guys. Just final thoughts before questions. Everything we've done over the past couple of years and what we intend to do going forward is geared towards capturing this huge market opportunity we see in e-commerce and payment in Africa. We're very focused on the long term, and we strongly believe that the platform we have built is uniquely adapted to our markets to win in the long term. We're constantly improving and strengthening our value proposition to better serve the consumers and the sellers. Today, we talked about the pickup station network, which I think many of you may not know about. Also, our food delivery business, which probably some of you did not know about and both of which are great illustrations of the strategic assets that we have and how we can offer more convenience to our consumers, bring Jumia even closer to them and be at the heart of the communities. The situation is pretty simple. Our unit economics in Q1 are very good. They are outstanding, I think. All the work that we've done on monetization, cost efficiency is really paying off. We've been making money now for 6 consecutive quarters after fulfillment. We're seeing many countries getting closer to breakeven at local level. We've been consistently reducing our adjusted EBITDA loss in absolute terms, on a year-over-year basis, and that's for 5 quarters now. And all this is what we said we would do, and we are pleased with those results. And the path ahead is also very clear, we want to accelerate growth across the platform to take the business further on its path to profitability. And I think as we have said a little bit in the call, we are quite clear on what we will do and we will not do. We will not seek to grow at any cost. The way we will drive the growth will continue to be disciplined, thoughtful guided by the needs of our consumers, the relevance for our markets, and we are focused on growing the users. The orders, probably more than the GMV, but also the GMV in a very thoughtful manner. And we're not going to do any big bank, right? We're going to drive increase in sales and advertising and technology expenses in a gradual manner, right? Before any large-scale deployment of product or initiatives, we always conduct AB tests, pilots. That's why we have lots of countries we can use a handful of countries to test pilot and to establish proof of concept before we do any broader rollout in this framework of development and investments will remain unchanged. The mindset of discipline will also apply in the way we develop JumiaPay. And an important part of the investments in JumiaPay are allocated to compliance, risk management processes. And we view those investments as essential infrastructure to scale JumiaPay services, on platform and off platform. And as we introduce new services and solutions, which we will do in a gradual manner, we will continue to drive those investments. In summary, we're very excited by the opportunity and both on e-commerce and payments. And we are very confident that we have the platform and the people, the resources to capture this opportunity, and further strengthen the competitive moats that we've built. Thank you very much for the attention, and we are now very happy to take questions.

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

A couple of questions. First, just maybe on the seasonality. It looks like it's a little bit more than we expected from Q4 to Q1 in terms of marketplace revenues. Is that -- was that primarily just seasonality? Or was there other headwinds, whether it's COVID or something else in the quarter? And then the 1P revenues as well was a little bit lower. I know that's kind of an intentional shift away from 1P revenues. Is that kind of a new base level we should be looking at for those revenues? Or do you think that continues to drift down from where it is really shifting out of 1P at this point? And then finally, just maybe just use of cash, and congrats on the recent equity raises. I know you talked about maybe it gives you some flexibility to invest in some new areas or continue to invest. Any specific areas you would call out that you're focused on investing with that increased cash position.

Thanks, Aaron. Thank you very much. Look, no particular seasonality in Q1, I would say, right? It's a quarter that is obviously the beginning of the year. And this year, nothing really special. So I think that's on that. I think the Ramadan this year started sometime in mid-April, and at some point, it's coming earlier every year. So maybe next year, there will be an impact from that because sometimes it drives a specific consumer behavior. But I would say, nothing special to call out this year, honestly. On the 1P, it's interesting. It's a very good question. We've been very clear that for us, there's no particular objective in terms of how small or how big do we want 1P to be, and we are primarily focused on building a marketplace. But 1P is very useful and very important for us because it's a strategic way sometimes to engage in certain categories. And for example, sometimes if there is a shortage of supply, or if there is a seller who does not carry certain goods, which are very relevant to the consumers, we are able to act as the seller, right? And it's a very helpful tool, if you will, for us to address the consumer relevance. And we feel pretty good about where we are, right? For now a number of quarters, it's been anywhere around 10%, plus or minus, right, of our GMV. And it's a level that is -- that we are comfortable with. And it may increase in the future as well, right? We're not solving to make it particularly lower than this. And it could be that if we see a shortage of supplies or supply disruptions, that we decide to drive a little bit more 1P. So again, for us, what's important is that 1P remains a minority of the transactions in the GMV. But we feel good with the current level for Q1. In the future, it may go up if we feel that's necessary, and it's something that we know how to do. We have the know-how to operate certain level of 1P. So I think it's a good thing for us to be able to do that. In terms of use of cash, in the next few quarters, we're going to be extremely focused on our core business, right? So really e-commerce. And by e-commerce, we mean the physical goods marketplace and food delivery, for us, that's e-commerce. And then JumiaPay, right? So all our resources are focused on those in order to continue to drive good path to profitability and to accelerate the growth of the usage and develop some new services for JumiaPay. And within that, of course, there's a lot of innovations and new products and new features and new services that we are working on. But I would say, clearly, clearly, clearly, within this core mandate, right? And same thing geographically, we're extremely focused on our 11 countries with no intention to go anywhere in the near future. And then as we see the growth accelerates and the path to profitability continue, we may reassess that, but for the foreseeable future, extremely focused on the core e-commerce for physical goods, food delivery and JumiaPay. And of course, I don't mention logistics for us is a core part of the platform, which is empowering the core. So some investments there as well. But overall focus on the core.

Got it. Maybe finally, just can you briefly talk about the overlap. You mentioned the food delivery and on-demand, the overlap between food delivery and core retail that you're seeing or maybe how that's increasing?

Yes, very much, it's fascinating to see the overlap growing with time. And you can see -- you can take a few angles to think about this overlap. You see, one, more consumers are starting to use both, right? And in the past, for us, we were observing that the food delivery business tended to be for the upper middle class. The people who can afford to go to a restaurant, right? And of course, then they can afford to order a restaurant at home. And we're seeing more and more of our historical consumers from the physical goods marketplace also discovering that service as they find it attractive. And also as we have more and more restaurants, which -- to choose from. There is a big overlap also in terms of vendors, right? We have many of our vendors want to be able to offer a 30-minute delivery, and they want to be able to also offer e-commerce nationwide, right? Many of the FMCG grocery players, they think about newcomers in a way to where you can reach consumers and give them something that is immediate, a purchase that maybe is unplanned and more impulsive and a convenience purchase, right? So it's a great channel for the vendors to address this impulse, convenience and instant delivery. But of course, you also want to be shipping goods on the other side of the country with a few days' delay and we want to be able to serve the needs of the consumers who are not in the big cities, they're outside the big cities. And also for purchases, which are maybe less planned -- or maybe more planned, I should say, and more prepared, right? So the vendors are extremely eager to explore both platforms as a way to address 2 different consumer needs. And then from a logistics perspective, obviously, having the ability to deliver very, very fast in the big cities is a very strong competitive advantage for us to use for the e-commerce deliveries, but also to use for the monetization of Jumia Logistics. And today, we offer the Jumia Logistics as a service to third parties, and we mainly focus today on giving them those clients last-mile delivery and more e-commerce traditional deliveries and which time we will expand this to instant delivery. So it's overall very attractive. And last but not least, it makes our subscription program very attractive, right, which is a competitive advantage as well because the members of the Jumia Prime program they have advantages both for the e-commerce but also for the food delivery. And that is, of course, very attractive because then it creates more reasons for consumers to use both.

[Operator Instructions] Our next question is from Lamont Williams from Stifel.

First question I had was on this food delivery unit economics. Can you talk a little bit about how the unit economics on the food delivery and on-demand compares with some of the traditional e-commerce business? And then could you also just talk about the competitive landscape in food delivery?

Yes, of course. I think the unit economics for us have been pretty attractive, I would say, and definitely contributing to the good results that you have seen in our unit economics over the last few quarters. The average basket size is -- it differs by country, but even the, let's say, low double digit, right? So between EUR 10 and EUR 15 depending on the month, depending on the cities, et cetera, but that's more or less what we're talking about. And then you have commission levels, which have been varying, of course, by countries, but they are generally above -- or around 20%, right? So that's more or less what we've been seeing. And then the logistic costs are, of course, tend to be lower than e-commerce, right? So because it's more instant delivery. In e-commerce, we have quite a significant share of the businesses outside the big cities. And it's also sometimes in the rural area, right? So you have to deleverage it. When we look at the average in the big city, you have a cost which is pretty similar, right? So when we look at the cost of delivering a pair of shoes on a next-day basis in Lagos, for example. And when we look at the cost of delivering a pizza in 30 minutes, it's pretty comparable, right? And generally, most of the orders they include what we call a shipping fees. So the consumers are participating to this logistic cost. So all in all, it's an attractive business from a unit economic perspective. And in terms of competition, there's quite a number of players who are acting in our countries of operations. In some of them, you have some historical player who have been there even before we were there. You have a few international players who are active in certain markets like Uber Eats or Glovo. And you have also a lot of the ride-hailing companies who have tried to enter into ride hailing some local companies doing better are attempting to expand into food delivery because it's obviously a very natural expansion as we all know. And so yes, it's a rather competitive offering. But I think we're very well positioned because we have the Jumia brand, obviously, which is huge, and we benefit from all those investments. We've been doing this business for 10 years, which is a lot. I don't know any player multi-country who has done it for longer than us. And we've got a lot of experience and we've got the scale of the infrastructure of Jumia to leverage, right, the brand, the logistics, the payments, the consumer base, the relationship with advertisers, the relationship with the restaurants, the Jumia Prime subscription model. So it's -- for us, it's something that we feel very strong about. And we think that we have a very competitive and very effective value position for consumers and for restaurants.

Our next question is from [Edgar Durke] from Blackrock.

I've got only two quick questions. The first is, can you just explain your increase in trade and other receivables from EUR 10 million to roughly EUR 100 million. And then the second is on your GMV, it's just a technical question. Does the EUR 165 million you quote, is that gross of returns, discounts and vouchers or net? And if it's gross, please, can you provide the net number?

Thank you for the question. Probably Antoine, you should take those, please?

Yes, I can take both. In the increase of receivable includes the third tranche of the offering that we made in May, and that was collected received in April. It accounts for USD 88 million. The revenues we are showing all net of vouchers.

I think maybe your question. The first one is like cash basically. And.

Yes. It's no cash for sure. No, it's not cash.

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

Great. Thank you very much, everyone, for attending, as always, Very happy to take follow-up questions and very much looking forward to next steps. Thank you very much, and take care. All the best.

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