Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Second Quarter of 2022. At this time all participants are in 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 2022 earnings call. With us today are Sacha Poignonnec and Jeremy Hodara, Co-Founders and Co-CEOs of Jumia; and Antoine Maillet-Mezeray, CFO. This call is also being webcast on the IR section of our corporate website. We will start by covering the safe harbor. We would like to remind you that our discussions today will include forward-looking statements. Actual results may differ materially from those indicated in the forward-looking statements. Moreover, these forward-looking statements may speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For 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 reports on Form 20-F as published on April 29, 2022, as well as our other submissions with the SEC. In addition on this call, we would 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 Sasha.

Thank you very much, Sasha. Welcome everyone and thanks for joining us today. I would like to share a few highlights of our Q2 performance and give you an update on our strategy and guidance. We are committed to taking the business to breakeven, and in that regard have delivered a strong quarter with very good progress on each building block of our path to profitability. Number one, usage growth. As you know, scale is a driver of profitability. Orders and quarter active consumers were up 35% and 25%. GMV grew by 21% in Q2, 34% on a constant currency basis. This happened in a volatile macro context with increasing pressure on consumer spend and access to supply for our sellers. It also happened with very strong discipline on marketing investments from our site. For us, it's a clear sign that our focus on relevant everyday products, competitive prices and consumer experience is paying off. Number two, monetization acceleration. Revenue was up 42% and 56% on a constant currency basis. We posted the fastest marketplace revenue and gross profit growth rates of the past five quarters at 17% and 14% respectively. We want larger scale to be a catalyst for revenue growth and the diversified monetization engine we have built allows us to drive revenue from both consumer usage and the assets of our platform. Number three, cost efficiency. Cost discipline is a top priority for us even more so in the current context. We drove use usage growth and monetization acceleration with lower than expected marketing investments. Sales and advertising expense reached $41 million in H1 compared to our guidance of $50 million to $55 million. G&A was another area of increased efficiency for us with G&A excluding share-based compensation expense being flat year-over-year and declining sequentially by 12%.…

Thanks a lot, Sacha. Hello everyone. I will start with the progress on the first building block of our path to profitability: usage growth, and we're on Page 7. Usage growth is the result of coordinated defaults across all the areas of the business. And we've been working relentlessly across the platform to earn and to keep the trust and the loyalty of our customers. We have outlined on the page recent examples of what we are doing on the marketing, commercial logistics and tech fronts to support the usage growth. On the marketing front, we're investing in both consumer adoption and retention, and we're seeing very strong level of engagement on our platform. During the Jumia Anniversary campaign, our video content views reached a record of 116 million at 55% year-over-year. This demonstrates our thorough understanding of what resonates with customers and our ability to produce engaging content for them. On the commercial front, we offer consumers a wide range of relevant products and services with a particular focus on everyday categories. This is even more important in a challenging micro context where consumers can rotate away from higher value discretionary items towards staples and everyday products. While we are seeing sustained volume growth across categories, FMCG was the fastest growing category in terms of items sold in Q2 up 95%. On the logistic side, we remain focused on improving the speed and the cost of our deliveries, offering our consumers even more convenience. In Q2, 60% of shipped packages reached consumers within 24 hours of placing the order. This is a great achievement considering the volume step up, we experienced as part of the Junior Anniversary Campaign. And last but not least, we are reaping the benefits of our sustained technology investments over the past year to enhance…

Thank you, Jeremy. Hello everyone. I will start with the monetization performance, which speaks to our progress on the second building block of our path to profitability, monetization acceleration. Let's first unpack revenue growth dynamics on Page 15. Revenue reached $57.3 million in Q2 2022, up 42% year-over-year and 56% on a constant currency basis. The largest contributor to revenue growth was first-party revenue, which increased by over 90% year-on-year, supported by the strong momentum in the FMCG and grocery sub-category in particular. The second observation I’d like to make here is that the newer revenue streams such as value-added services and marketing and advertising are starting to have a material contribution to revenue growth. The combined contributions of value-added services and marketing and advertising to revenue growth surpassed the combined contributions of commissions and fulfillment revenue. The growth across a broad range of revenue streams is allowing us to continue making growth investments in the form of consumer incentives, which were up by US$3.6 million year-on-year in the second quarter. Let’s now dive deeper into the marketplace revenue trajectory on Page 16. Marketplace revenue posted its fastest growth rate of the past seven quarters up 17% year-on-year and 28% on a constant currency basis with a numbers of revenue streams reaching record levels. I’d like to reiterate the point I made on the prior slide, which is the diversification of revenue streams. Here, you see clearly the growing contribution to marketplace revenue from marketing and advertising and value-added services, which reached an all-time high in Q2 at 41% of marketplace revenue compared to 33% a year ago. And this is the result of the very strong growth rate we’ve been driving across these two activities. Marketing and advertising revenue reach an all-time high of $4.6 million surpassing the previous…

Thank you, Jeremy. Thank you, Antoine. I think we have clearly made very good progress over the first half of this year delivering very strongly on each building block of our path to profitability. We have very strong momentum to double down on those profitability efforts. GMV growth in H1 was the highest in the past two years. Last year in the same Q2 earning call, we promised to the market that we would accelerate usage growth. And that’s exactly what we did. Looking ahead, we intend to maintain growth, and we have reiterated our guidance. In Q2 marketplace revenue growth was the highest of the past seven quarters. Gross profit growth was the highest of the past five quarters. And in H2 of this year, we intend to double if not triple the growth rate of gross profit to reach 27% to 44%. Importantly, we expect to drive the growth of the usage and the accelerate – the acceleration of the monetization with strong cost discipline. In particular, H2, for H2 higher marketing efficiency. We’ve already seen the pace of our Sales & Advertising investments slow down sequentially in the first half of this year. For the second half, we intend to reduce Sales & Advertising by 18% to 37%. We’re also working, of course, on initiatives to drive efficiencies across the full cost structure. On fulfillment, we are focused on generating scale efficiencies, and productivity enhancements to mitigate the impact of inflation. We also remain very disciplined on the G&A front, you have seen our G&A expense excluding share-based compensation come down over the past two quarters, and we intend to maintain the discipline. As a result, we expect adjusted EBITDA loss year-over-year, starting to reduce in the second half of this year. And beyond that, we expect the loss to decline on a yearly basis starting next year. We are very much aware of the increased market focused on profitability, our strategy and business execution are very much aligned with that. I think our performance and the guidance we have provided speak clearly to that. Importantly, there is no disconnect here between the near-term profitability objectives and the long-term attractiveness and strengths of our platform. As we pursue our scale and profitability objectives, we are building an even more attractive and relevant platform for our consumers, as well as win-win partnerships with our sellers and broader ecosystem participants. Thank you for your attention. And we are now ready to take your questions.

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

Great. Thank you. A couple questions. First maybe just you can comment about kind the plan to further drive the kind of gross profits less incentive growth over the next, maybe several quarters and maybe specific to incentive, kind of how should think about payments going forward as well. Second, increase on the marketing revenues, I think as you highlight, if you have any more color around that, should we think about this increase is pretty sustainable going forward as well, and kind of change on the market revenues. And maybe third, just on commission increase, can you just quantify kind of how much that was as a percentage? Thank you.

Thanks, Aaron. I think maybe it was me that you were breaking a little bit, so I’ll try to answer, but if I’m off topic, please let know. Right? The first question is, is on the gross profit and the incentive part, right?

Yes. It’s a gross profit less fulfillment kind of plans to expand that. And then, yes, second part of question incentive [ph] amounts.

So the first one is on the gross profit Aaron? Or in the gross profit typically you want to hear about the incentives?

Yes. Gross profits minus fulfillment kind of plans to expand that amount over time.

Yes. So look, I think on this one, I think we give a bit less guidance and then the gross profit, because there is a lot of unknowns on the fulfillment efficiencies and the inflation that is underlying, right? So that’s why we give guidance on a gross profit for H2. And it’s a bit harder for us to give a guidance on the gross profit after fulfillment, because this – the fulfillment right now is a lot impacted by inflation. Of course, as we said, we have a lot of initiatives to drive efficiencies and savings on fulfillment, but it’s harder. I would say to predict definitely in order to drive the EBITDA reduction or the loss reduction that we aim for H2, we want to expand the gross profit after fulfillment, right. And that’s our objective. And we have not given a precise guidance over that because of the nature of fulfillment deficiencies at the moment. But definitely we want to drive that forward. Now, advertising revenues, as we said in the call, and we are still, we believe in the early days to some extent of this revenue stream and we have very big admission for those in the long term. We think that we very unique value proposition for both the big brands and the big sellers. We have also a lot of smaller sellers who are using our solutions of sponsored ads and sponsored products. And then we have also a lot of third-party advertisers who will come to Jumia in order to reach consumers and this revenue stream being in the early days. And also being to some extent dependent on our campaigns. I think you see that over time, there’s been some volatility. So there’s going to be some fluctuation of growth over time. But we believe that overall it’s one of the revenue streams, which is in the midterm going to grow very well and very fast, right. So there will be fluctuation, as you know, you’ve seen the last, if you look at the few quarters in 2021, of course, Q4 was much bigger because of Black Friday, right? And so here, we’ll see in Q3, Q4, but generally speaking, this is one that we intend to grow fast. And we believe we’re still in the early days of this one. And then commission increases we are very careful about that. So we have passed some increases and we’re going to keep doing that. At the same time, we want to do that in a very thoughtful way, because as a marketplace, of course, the commission level is very important for the sellers. And we want to do that in a thoughtful way. And I would say almost in partnerships with sellers, right? So we’re going to – I think, continue to see some commission growth driven by the volume growth and the commission increase that we are passing, but we want to do that in a thoughtful way.

Got it. Great. That’s helpful. Thank you.

Thanks, Aaron.

Thank you. Our next question is coming from Lamont Williams with Stifel. Please go ahead.

Hi. Thanks for taking my question. The first question I have is on what do you think in your consumer base as a result of the macro? Are you seeing trade downs for your orders? Anything you can point to there and what is your guidance contemplating from a macro standpoint going at least for the back half of the year and into 2023? Thanks.

Thanks, Lamont. Look, I think it’s a big question. I wish I would know what’s going to happen, right. I think what we’re saying in terms of consumer, and I would say I’m going to speak also about the sellers, because both are impacted by the macro, right? So of course the consumers are impacted by the inflation, across the board and in particular commodity and food prices. The consumer sentiment is under pressure and the spending is under pressure. On the seller side, the sellers are also under pressure because of weaker, local currencies, right? And a lot of the sellers depend on access to hard currencies in order to trade in order to import in order to operate. And so we see also some sellers struggling with access to supply and ability to import products or to even just to go into production, right. So we see that, at the same time, I mean, I don’t want to make it sound like nothing is happening, but challenging macro for us is nothing new. It’s something that we have been exposed pretty much from day one. And we are used to navigating periods of high volatility hyperinflation. And in the past, we have sometimes fared better than over channels in periods of hyperinflation or increased consumer price sensitivity. Because at the end of the day, we have a lot of competitive advantages to appeal to the consumers. We have price transparency. We have a very healthy marketplace flywheel where the consumers can benefit from multiple sellers competing together. We have the ability to offer also the 1P [ph] where we can decide to price ourselves and intervene if you will on the market. And we have access also to cross-border channels. We have a very attractive base of sellers in China that we can work with when we see gaps of supply and gaps in certain categories. So I think what we are seeing now and what we've seen in Q2 and what we're seeing and what we're saying for H2 is that we're going to keep growing and we're going to keep growing while accelerating monetization and saving and marketing. So I think we are quite confident. We are quite confident that despite the macro, people can trade down but so as long as they need to buy products they will come to Jumia and they will look for options and we will be well positioned. So I think, the guidance we give on keeping grow in the context of macro challenges and savings and investments of marketing combined with monetization, I think is a very strong sign of confidence.

Okay, great. Thank you.

Thank you. Our next question is coming from Catherine O'Neill with Citi. Please go ahead.

Great. Thank you. My first question is on the JumiaPay monetization potential. Could you provide a bit more detail on how you're thinking about the monetization plan and the timing of launches of different products and services and how meaningful that could be for 2023? Secondly, on sort of advertising marketing spend and incentives. I guess you're fairly comfortable that when you cut sales and marketing spend, as you plan to year-on-year that won't detrimentally impact the growth. And then on the other side, how should we think about the incentives going into the second half? And then finally on CapEx I know you've taken down your CapEx guidance for this year. Is that sort of permanent reduction or you pushing some of that CapEx spend into 2023?

Thank you. Thank you very much for that. JumiaPay monetization for us is a very big strategic priority that we are – as you mentioned undertaking at the moment, right? So in the past couple of quarters, we obtained our licenses to offer merchant payment processing services in Nigeria and Egypt, which is great because those are our two largest markets, right? And we've been over the last few months preparing the launch and starting to pilot it, right? So we are actually lies in Egypt with a number of pilot merchants. And we are about to go live in, in Nigeria with some pilot merchants. And we were operating JumiaPay only for our platform and so we are undertaking a number of changes and adaptations in order to operate for third party merchants and creating features and product especially which work for that. And it's a bit too soon for us to give guidance in terms of how much revenues do we expect, et cetera, in 2023. But it's already live; it's something that the first step for us was to obtain the license, which is a very big achievement. The second step was to adapt the product and start piloting it, which is ongoing. And the first step will be to scale it, right? So I think probably in the coming, maybe one or two quarters will be able to give an update on the pilot and then probably more precise guidance. But again we don't expect revenues yet this year, probably next year how much is a bit too soon to tell. We are also of course looking at more countries to be in a position to offer those services in the other countries. And I think we are very uniquely positioned to offer payment processing services…

Great. Thank you.

[Operator Instructions] Sir, ma'am, there appear to be no further questions in queue. So do you have any closing comments, you'd like to finish with?

Well, thank you very much for joining as always. And we are available, if there are any follow ups and we look forward to a great second half of the year. Thank you very much, everyone. Take care.

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