Jumia Technologies AG (NYSE:JMIA) Q3 2023 Earnings Call Transcript November 15, 2023

Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Jumia's Results Conference Call for the Third Quarter of 2023. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. With us today are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations. We will start by covering the Safe Harbor. We would like to remind you that our discussions today will indicate 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 May 16, 2023, as well as our other submissions with the SEC. 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 Francis.

Francis Dufay: Thank you. Welcome everyone, and thanks for joining us today. The third quarter was very important for Jumia, as we were able to achieve much of what we had planned when we changed both the strategy and the leadership of the company. We made clear then that the overriding objective was to reduce losses and move towards profitability. We are happy to report that this quarter has seen further significant progress in loss reductions, as well as cash management while we now see the impact of our growth strategy. Let's now look at a few key indicators. The adjusted EBITDA loss of $15 million in Q3 ‘23 was the lowest since our IPO in 2019. This represents a decrease in adjusted EBITDA losses by $31 million versus Q3 ‘22, down by 67% year-over-year and by 70% on a constant currency basis.

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For year-to-date, the adjusted EBITDA loss is $61 million, down by 61% compared to the $158 million in the first nine months of 2022. Our liquidity position amounted to $147 million at the end of Q3 ‘23, which reflects a decrease of $19 million in Q3 ‘23, compared to a decrease by $66 million in Q3 ‘22, down by 71% year over year. This is the result of our comprehensive plan to build a lean organization, stop certain unprofitable activities, and capture efficiencies in operations and marketing. We strive to run our business with a key focus on achieving profitability and positive cash flow, and Q3 ‘23 has shown great progress in that regard. There is, of course, still a lot of work, but we are excited by the next phase of the turnaround at Jumia.

As also explained previously, growth is crucial and we are not only focused on cost reduction. We believe in our growth plan as we're already seeing positive signs while spending far less than in the past in all areas. We continue to execute our plan to build stronger fundamentals for growth in our core categories and we are starting to see the impact. Revenue reached $45 million down by 11% year-over-year and up by 19% on a constant currency basis. GMV reached $181 million declining by 25% year-over-year and by 3% on a constant currency basis. This compares to a decrease in adjusted EBITDA losses by 67% year-over-year and 70% on a constant currency basis, and a decrease in sales and advertising expenses by 74% year-over-year and 67% on a constant currency basis.

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