Q1 2020 Earnings Call
Welcome to drill results cultural scroll through the first quarter of 2020.
At this time all participants are they listen.
After managements prepared remarks.
Sure it's recession.
Oh no during the call over to shuffle, the mirror head of Investor Relations for Germany.
Please go ahead.
Okay.
Thank you.
Good morning, everyone.
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Exactly like you said our discussion today includes forward looking statement.
Actual results may differ materially from Dave indicated in the full would make it speeds.
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Looking statements made on our expectation I guess.
We undertake no obligation to publicly update or revise its state.
What a discussion of some of the risk factors could cause actual results could differ from the forward looking statements excite me.
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Thank you and welcome everyone. Thanks for joining the call.
Before diving into Q1 of course, I would like to give some context, how covidien gene is affecting our business so far and the actions that we have taken in response to that.
The current 19 is bringing a complex combination of scale economies and operational.
Yes.
First I want to start by acknowledging the work of our teams working on the phone blinds cheering out essential jushi and in particular, those in our warehouses and they need me hubs.
Mission.
I see the taken king consumers access to goods and services, helping sellers reach those consumers in a seamless way, while making a positive impact on the African continent has never been more relevant.
It is difficult times, we think than we have a crucial role to play.
The thing that consumers and communities, we serve stay safe and as much as possible functioning true. The crisis. We are also hopeful that it will accelerate and help accelerate the long term shifts towards E commerce.
Let me walk you through how.
We have adapted to the situation as well as the business the business impact we have observed so far I'm not one page sprint.
Our number one priority has been and remains the health and safety parties consumers and communities.
To wrap it action to adjust all our operations, we implemented work from home across all our offices.
We took actions to operate our logistics infrastructure in accordance with high standards safety and Hi, Jim.
Measures, we put in place.
Includes setting at separate teams shift.
Checking employees temperature.
I think because he just several times a day.
We we acquired the use of masks and grows as well as sanitizers for the handling and indeed, we have the holders and all members of our warehouse stuffs and our didn't even Panthers were trained.
On all the best practices, a personal hygiene and social distancing.
We.
I have also facilitated social dispensing of course by implementing contactless safe then you've read.
Which has been unable copyright union pay which allows consumers to prepay their older is online and have them then even without the need for cash exchange or physical contact with continued reagents.
Again, making those changes has been a huge task and we are incredibly grateful to our colleagues and David there is working on the phone.
Moving onto page four we bounced a broad effort two of our consumers and communities celebrates and thanks, what we call the Julia heroes through social media campaign. After a week after launching its the aspect you mean heroes was already trending on social media. We also establish the so slowly.
He is fun for our junior euros, which is on the complete the voluntary voluntary by the junior employees and country nationally by stuff contributions.
And more broadly in these difficult times, we think than we ever responsibility to support our can reach easily leveraging our assets.
Thanks to our team in cross border platform in China, we were able to donate helping many masks to help ministries across Africa for use by health workers you can see in the right side of the page if you pictures of the degree meetings.
And there was done that's across multiple countries. We also supports it local governments in nine countries, which free educational campaigns on our platform to help consumers access reliable health and safety information and the campaign was set up within 48 hours and generated over 5 million impressions today.
This is also what we are about making peoples life easier and contributing to the community not only during good times of course, but doing also challenging times.
Now in terms of business impacts if you turn to page fives.
Yes team combination those short term supply and logistic challenges.
And positive impacts slash unique opportunity is for the long term.
Most of these trends of course emerged in the in the final houses March 20 to 20, and they're not yet fully reflected in the Q1 results that we are publishing it right after that but we expect those impact to continue playing out in the copel coming cultures. So under one hand, we see substantial.
Good.
On supply and logistics in some parts of the business.
Supply.
The cross border operations were disrupted some manufacturing shut down in China.
This supply chain disruptions in China also impacted some of our local sellers, especially those who source their goods from China.
In consumer electronics phones fashion category.
And we also face cross border logistics challenges you to country loved down which have impacted the cargo operations.
At local level.
The consignment measures restrict sell their operations. So in some areas some sellers do not even have physical access to their inventory.
In some areas nikam funded measures prevent them from dropping their package into the junior logistics.
In some countries many of the restaurants, that's simply closed until further notice.
Then on logistics.
We are facing capacity limitations, which of course effect.
Our ability to fulfill consumer demand.
We have curfews in many countries, which are impacting the operating hours and of course in turn can train the delivery capacity.
In South Africa. For example did you read the fashion items were just competing suspended for a few weeks.
And overall the implementation of the safety measures, which I mentioned in our warehouses like came shifts or safety understand thing our leading to reduced older processing capacity. Those are the challenges then on the overhang of course, we are seeing unique opportunities for long term E Commerce and.
Payment adoption.
More and more sellers are embracing E commerce and their kids, who joined drew me out because of course offline distribution channels or disrupted we are seeing unprecedented demand from Brandon sellers and since March we have started to announce many new partnerships, including with household care and attention you brands like reckon thinking.
There are you need lever PNG nesting Coca Cola.
On June yes would we see grocery and convenience retailers, they're eager to join our on human platform, which has been logistic infrastructure to it you can see deliveries in less than 45 minutes. We also did some problems shifts to very very fresh foods.
On the demand, France, we have seen a surge in demand for all the essentials starting of course, the second week of much and the grocery category has experienced a big four time increase in terms of items sold compared with last year.
And we hope of course that those dynamics will help accelerate the consumption shifts towards online.
As demand is also helping us generate sales in advertising efficiency.
On the advertising, France, and the advertising revenue prong, we've seen resilient demand as the advertisers Favre direct response online channels that can deliver it measurable results and last but not least allowed show contact lets say delivery.
Is helping us to further promote junior pay which provides an opportunity to drive long term payments adoption.
So now we should turn to page six you can see on this page if she illustrations of those demand and supply trends here you have a weekly evolution of items sold for selected parts of the business over March and April and the data has been Rebased 100, starting on the first week of.
Much. So you see on the Black line at group level. We ended the month of April above 3% of both the first week of March.
And you can see that there's some negatives and some positives.
She didn't you green.
Was and continues to be affected by the fact that many restaurants are just coast right around the across many of our geography.
We managed to launch a number of convenience grocery stores, but it remains very effective.
In South Africa, we post all deliveries.
And we're starting to see now some recovery.
I'm recovery as did they need reserve resuming on Silverton apparel categories.
In Nigeria.
The confinement measures how to big impact on our sellers and their ability to bring their packages to us.
All of our top sellers simply stopped operating for a few weeks.
And you can see that since then part of the sellers have resumed their activities some partially need them entirely and volumes I've got any picked the right and by the end of April volumes were almost back to their early March level.
On the upper end of the spectrum, you have countries like more local or Tunisia here that we have put as examples where we are experiencing and we have experienced a surge in volumes picking mid April.
More than twice the volumes of the first week of much and throughout April we continue to see volumes at least 40% above the levels Oh.
And of course those volumes are also somewhat constrained by the logistic capacity challenges, which I mentioned before.
So again here you see some positive and some challenges.
Of course, we're going to continue to adapt to the situation as it continues to never look and overall, we think that we are very well positioned to become even more relevant to consumers sellers and into the broader communities and in the coming month.
And if you turn to page seven we can see here the highlights of Q1.
Our strategy as you all know is based on four pillars.
Grow the U.S age of junior.
Trace the penetration of Jimmy I pay.
Increase money type vision.
And to do all this while improving cost efficient.
In 2019, we have started to focus on what is proving to be crucial to navigate the current situation.
The focus on everyday product categories is supporting use age and consumer adoption.
While all the actions we undertook on the cost are starting to pay off as we're making progress.
On our path to profitability.
You'll actually if consumers reached 6.4 million and orders grew 28%.
And this is while sales in advertising expense decreased by 25% over the same period.
Jimmy I pay grew very strongly in volumes and transaction terms TPV increased by 71% and transactions by 77%.
Monetization market based revenue grew 22% and gross profit, 21% and on costs gross profit after fulfillment reached a record 2.5 million.
And our adjusted EBITDA loss decreased by 10% compared with last year.
Which is the best level in absolute terms in the past six quarters.
So with this I'll pass it onto Jeremy who will walk you through our Q1 performance in more detail.
Thanks yourself and Hello, everyone.
On page nine <unk>, let's take a closer look at our topline growth dynamics.
We decided to rebalance our business mix last year and we first.
The first quarter night of the changes in the demand that the result of liquid nitrogen.
I thought that the business mix rebalancing and she ballpark that's books that.
Decrease the promotional intensity and the consumer incentive.
On the lower consumer lifestyle, but your business.
And in parallel we increased our focus on everyday product categories, driving long term consumer adoption and usage.
Looking at the gym be growth trends on the chart on the left and site.
What we see that the majority of product category, but just be grows above 20 persons.
So in the Nike and.
And two or three extent that exactly.
<unk>.
Promotional discipline.
Welcome to the business mix rebalancing.
The mobile phone category was also affected.
Scaling down of the mobile promotional campaign.
In market also at the result of liquid nitrogen supply disruption.
The suspension of older processing and did you read out then do.
I was actually that's probably in South Africa God, you too strict confinement measures you get back to the fashion category.
You got the item. So we have seen consistent growth across all product categories with the exception of mobile phones.
Well you can gross what parts of the largest from <unk> FMCG categories.
Which surpassed 80% year over year.
And as mentioned by <unk> or your growth of the grocery category.
Did I see can be look much as the confinement measures were put in place in a number of countries.
Moving on to our topline growth drivers I group living on like can you.
We see that Jim <unk>, what's under the 90 million euro down 11% year over year.
Reflecting the effect of the business makes rebalancing combined with the cooks 19 related supply disruption.
Yeah, and you are actually consumers reached 6.4 million at 61% year over year.
And your orders.
<unk>, 8%, reaching 6.4 million in Q1 22 inches.
And our focus remains on driving consumer adoption and usage.
Let's now look at how do we have been driving <unk> in the time of 19 on page 11.
You know their right to use each.
Securing supply of essentials, and probably category has been a major focus for us in the latter part of the culture you want.
I thought that default, we launched the stay safe Comping in partnership with Ricky Big concern.
If the consumers access to hygiene.
Products I checked your pricing.
I thought that the Comping, Ricky big user financing free shipping what we are waiting commissions on the relevant products.
We have also seen a surgeon men from centers and Brendan particular joined the gene that platform and we have probably done boarding of sitters critical product categories.
We launched a number of partnerships covering multiple countries with high profile FMCG brands, such as you deserve PNG must lead by your store Coca Cola.
We have also further solidified our partnership with careful.
We did such a.
How did your now.
And you can yeah, we announced a partnership with we got suits.
Equinix producers and farmers we've been doors.
Offering our consumers online access and fresh food you directly from farmers.
In terms of merchandising.
<unk> product collections targeting specific reason, resulting from confinement measures.
<unk>.
The group to stay feet that full collection, featuring sports and fitness products from entertainment collection, including children games, Tony's or did he took lovers prediction featuring full and than projected salaries.
As a result of treated reliance on social media and you do it couldn't agree to each other.
And lastly on the social media phones.
We seek to engage our consumers bespoke life content.
We launched the state entertain Weve left there.
We like Newsy exceeding even and you just said digital party formats, but have you gotten though.
Partnership with Brent, including and primary car and gifts.
Let's now move on page 13 through cut our progress on from epic.
In Q1 Twentytwenty.
We continue to expanding to reach up to let's say.
Launching relevant features and payments use cases for consumers.
We don't think ginger.
You know like seven country major yacht Jeep more local.
The coast gotten a good job and Tunisia.
Well, so our Kentucky, Let's say you did you have recompete, what's parky nibbled.
So we moved the need for physical contact or cash extended <unk>, we encouraged to consumers to prepare orders on nine using from yesterday and we rolled out to pay on did you read feature leveraging to nothing.
And lastly, we launched new consumer use case, that's part of the drop it out.
She bought the site again cookies, 19th we introduced a direct the nation teach them zadran, yet they opt covering side relevant charities in these countries.
And that's part of the home entertainment.
We launched a number of games on did you get the apps, including free file your UBI G night, and you got diligence to Merck and for cheap game subscriptions or credit for enough for cheated on <unk>.
Now if we move to be Traci not on the performance of <unk> in Q1 Twentytwenty.
Yeah, they keep TV.
Treated like 71 person year over year.
Reaching 35.5 million Euro in Q1.
Mistakes on platform penetration as a percentage of Jim from 9.7% in Q1 twins and thank you.
18.7% each one just yet.
If we move to page 15.
Did you got big growth trends, even stronger on the transaction basis.
The number of transactions.
Like 77% year over year.
You Sledding twin creeks, India on touch trumpet attrition searching 5.5% of orders.
Q1 Twentytwenty that's.
25.5% in Q1, Prince you're thinking.
It's from growth of dreamed up there, what's paci attributable to the rent.
Do you have to open positions in getting <unk> end market.
We toward you launched the first quarter of 29, King and setting up where we launched during the second quarter of 2019.
It was also a result of increasing penetration of the.
The countries, where it was or <unk>.
Entrench, making driven by continued consumer education around payments and enhancement of the junior <unk> value proposition.
I now hand over to booked one who's going to walk you through our financial performance at that.
Thank you Jeremy Hello, everyone. We all know on page 17.
In parallel who is driving you say done consumer adoption in the fall platform, we seek to monetize this use age and transactional activity in a granular manner.
Marketplace revenue reached 19.1 million euros in Q1 Twentytwenty.
The 22% your overall, you're all why the gross profit increased by 21% over the same period.
Let's now take a look at all volume small could place revenue streams on slide 18.
Commissions, which all fees charged to all sitters increased by 35% your although ya.
Commissions grew despite Jimmy reduction thanks to the category mix rebalancing and its promotional DCP and reduce deployment of consumer incentives, which all bulky accounted for as deductions from commission revenue.
14 months, which comprises delivery fees charged to consumers increased 29% into first quarter of twentytwenty when the euro although you'll beaches in parallel with all those growth.
Well you other tell you soon.
Which includes revenue from this is Jon Stewart centers, such as logistic services, but caging all content creation decreased by 3% in deferrals Coffeyvilles Twentytwenty I know you all your basis.
This was largely a result for shopped reduction in international logistics revenue starting from February as all cross border business was affected by the manufacturing facilities shut downs in China and Cabo disruption.
Here I would like to point out that we made changes to the pricing of Jumei global products, which will cause a shift well for large spot of international logistics revenue.
From the value added services accounts to the fulfillment for new accounts.
Marketing and advertising, which corresponds to the revenue generated from the sale of a diversified your engine solutions to senators and advertisers increased by 34% in Q1 Twentytwenty I know you all are you all bases.
Why marketing and advertising revenue grew by triple digits rates in the first two months of the quarter compared to the premature.
March 19 wasn't marked by large marketing contributions I start off last year was more by two week, which was scaling down. This your other result of because he's nigel outbreak.
Drop on the money dilution from.
Say that the she's a box office business, which has been quite sensitive to the government 19.
Bulky due to the impact of all cross border business.
We have also been careful not to increase when utilization pressure on all centers as we all can trust of the challenges they are facing in the current environment.
And we also want to avoid any detrimental impact that an increasing monetization may have on prices fall customers.
Let's now move on to the progress on cost efficiency.
These doesn't mean and the real strong focus for us since 19, and one when we see all efforts starting to bear fruits.
As a reminder, we have three main cost it all PNM.
Fulfillment expense, which is largely viable.
Sales and advertising expense, which is discretionary to a certain extent.
General and administrative expense.
Let's start with fulfillment expense slide 20.
We are pleased to report another quarter of positive gross profit after fulfillment expense, reaching 2.5 million euros in Q1 Twentytwenty.
Compared to breakeven in Q1 Brinci 90.
If we look at all fulfillment expense in absolute terms in Q1, Twentytwenty compared to Q1 29, Jim we see an increase of 5% while orders increased by 28%, although the same Terry.
This was partially due to a lower proportion of cross border packages, which reduced all phrase and shipping expense per package.
All sit on main cost component is sales and advertising I'm now on slide 21.
Say done advertising expense decreased by 25% in Q1, 20, reaching 8.9 million euros, which is the lowest level in almost 12 quarters, while orders increased by 28% you all year.
The reduction in said on advertising expense was spotted recently and it fault do I, just demand to supply and logistics constraints as well as a focus on all path to profitability.
Seven advertising expense and you're like you've gone tumor decreased by 26% from 11.1 year old <unk> and you want to keep consumer in the first quarter almost 19.
To 8.2 year wrote in the first quarter off Twentytwenty.
We have made a number of announcements to all through for months marketing strategy across search and social media channels, allowing us to acquire new users and drive conversion in the more effective manner.
We also improve the performance of all CRM channels, Yeah cross selling initiatives aimed at driving rebid brewed chased based on the purchase history of consumers.
Finally, all third major cost the reality is technology and Ginny.
I'm now on slide 22.
All technology and content expense increased by 22 per cent compared to the first quarter off nine Jim as we continued investing in all take infrastructure.
DNA, excluding SBC reached 24.4 million euros upsell per cent compared to the first quarter off nicely.
Yeah, I would like to point out that the first quarter of 29, Jim did not fully reflect a number of organizational enhancements made in of course of 29 to operate the business is at least at company.
We therefore believe that the amount of DNA expense, excluding SBC Oh, the fourth quarter off 19, he's a more relevant compressive base for the first quarter of Twentytwenty.
DNA expense, excluding SBC and restructuring expense was 31.7 million euros in Q4 19.
In Q1, 20, DNA, excluding gig BC expense decreased by 23% or more than 7 million euros compared to Q4 19, partly due to stuff cost and professional fees savings.
As a result of increased use age monetization on cost efficiencies are you need economics are improving and we're making progress on all back to profitability.
And now on slide 23.
Oh, I just didn't media love.
Decreased by 10% you all are euro, reaching 35.6 million euros in Q1, twentytwenty the lowest level in the best ICSC while others.
The business sneaks rebalancing, we undertook alongside cost discipline is paying off and driving key or improvement in our unit economics.
I never age, we have smaller size, but more profitable others.
On the table on the right on side you can see that why all average order value decreased by 31% from 42.5 Euro do 29.5.
Older contribution.
All gross profit minus fulfillment expense on the older bases.
Moved from breakeven.
240 cents per order in Q1 Twentytwenty.
Oh, seven advertising expense or older decreased by 42% to 1.4.
You will fill all your Y Tec engineered to order decreased by 16% to 4.9 euros.
As a result of these efficiencies adjusted to get lost their order decreased by 29% from 7.9 year Rose to 5.6 euros in Q1 Twentytwenty.
We are pleased by the progressing to you need to connect France, which illustrates all progressed towards profitability.
Moving onto page 24.
All back to profitability is further supported by all I said like business model.
Capex in Q1, Twentytwenty was less than awesome, you entered rose as we operate Jimmy other just mix as a platform with very limited capex requirements.
Net change in working capital resulted in an outflow of 5.9 million. It rose during the quarter, mostly due to a shoulder b. I both cycle.
Are the result of these features or adjusted it used to close proxy for cash utilization and the delta between operating cash flow and I just said it was approximately 10%.
Finally at March 31st Twentytwenty, We had 191 million euros of cash available.
With that.
End the call back over to Sasha.
Thank you very much and just a few remarks before we open to join me.
Of course, the current situation is challenging in many respects, but it also gives us even more confidence on the relevance of Jamil ecommerce and online payments in Africa.
When we look ahead.
One we think that for some time, there will often be here and there's some level of supply and logistic disruption.
But we have another levers to navigate them and we also expect them to be more short term and somehow eventually result.
No.
We are preparing for potentially very tough economic times ahead.
You already know that we stopped in many actions last year the portfolio optimization exits from travel.
Three countries cost reductions promotional discipline and the way. This is very good for us because we are somewhat ahead of the curve from that perspective, and I want to say that we have not stopped our efforts until this opinion and expense reduction than we have continued to carry on some actions already in Q1.
Stream.
During those challenging times.
Combine or not with the need for social dispensing or sometimes periods of confinement, we have seen consumers turned to dream yeah.
As we strive to give them the best prices and very convenient and safe experience and we believe that this.
And we'll continue and we'll continue to see strong consumer adoption and usage.
And for similarly on the seller side, we have already started saying.
Precedented demand to join the junior platform and especially from Big brand and this is of course very good for us because it enables us to bring more choice and selections, which helps consumer adoption and also to drive the trust Andrea.
So we believe those dynamics will help accelerate the shifts towards online on both the demand and supply side, which again gives us a lot of confidence in the relevance of to the company and for July in Africa, we remain committed to reducing our adjusted EBITDA loss in absolute terms and twentytwenty.
Okay, well driving consumer adoption and use eights and now I want to thank you for at your attention than we are ready to open up the call for acuity.
Thank you well now begin to question answer session.
Who asked the question in your press Star then one.
If there isn't a speakerphone please pick up your handset pressing the keys. So what's your question. Please press Star then to.
This time, we will pause momentarily.
Yes, Sir.
And today's first question comes from Mark Mahaney with RBC. Please go ahead.
Okay. Let me try two things one the trends that you're seeing a at the end at the last quarter into this quarter in Morocco in Tunisia look so different than what you're seeing in Oh, and your overall company and the other markets can you explain again why you would see a surgeon what looks like an order volume and specifically in those.
Two markets versus the others.
And then secondly could you just again address the liquidity issues for the company it sounds like you're able to bring down your goals to bring on EBITDA losses for the full year do you think you've got enough.
How far do you think the existing cash can can take you how do you think about.
What an appropriate minimum level of cash you need to have in order to run the business with confidence. Thank you.
Thanks Mark.
On the first question you know here we'd put.
Four of our geography, as well as the junior food business right or it could take over your service.
And here is more of an illustration to show that we have some positive and some negative.
And where we see the positive it's because there's a combination of confinement measures, but which are not disrupting the supply in a way which have been tree mental to addressing the C met right. So pretty much everywhere I mean, that's the demand is there right, but the question is more the.
Beachy for the supply and to some extend the logistics and payments to full feel that demand and immoral khlintunesia. We have typical examples of situations, where we have the demand and the supply and logistics, which are working together and in Nigeria. We.
Yes, very big disruption in supply. So if you ever been very big discretion and supply then of course.
You know you can't generate the right level of doing that and so this you know surge in those two countries is really driven by the combination of those elements.
And let me know if that answers your question.
The second one you know U.S. seen our cash level, we have about a 119 million euro which makes very clear that we want to drive gradual reduction and clear trend in the reduction of our cash burn on quarterly basis and to the same per the adjusted EBITDA loss I think you see already in Q.
One that to some of the choices that we have made are starting to pay offs and for now that's what you know that's that's what we comment on it and then we continue to to be committed to a two the strategy, which will add driving lower cash burn on a quarterly basis and trend towards cost of EG and.
That's where you know that's that's where we'll take it.
[noise] Sasha one follow up do you have visibility into when some of those confinement measures will change and supply supply challenges, you're seeing will be lifted in some of your other.
Large in some of your larger markets like Nigeria art conditions on the ground improving enough that it looks like that confinement measures that affect your supply base are going be change this month or next month any visibility there.
Yes and.
You can see already on that shops at the end of April may Jerry I was almost back at the level at the beginning of much right and ER. So already a number of says you know a number of signs were were happening and we're driving the business back to back to normal I seen here, maybe it's worse, but I I sort of.
To tell you the type of actions, we do to secure the supply right and there. There's a large number of actions that we're doing one instead, we are strengthening the partnerships with the big sellers and the big sellers and tend to have more and you know stocks more in battery and stronger operations to we are lever.
Merging junior express our own warehouses, where we can store the goods from the sellers. So as soon as the sellers can access the inventory they can put it on Jimmy Express three we can do a retail as you know we have the ability to do one p. and sometimes we decide to engage into one team, especially if we want to secure the supply.
Some cases that can be very helpful. We have multi warehouse and capabilities sometimes in the countries you have transportation between regions, which has disrupted so it's very interesting to locate some of the Jumei Express inventory in the region, where the consumers are older Inc. from we have a lot of new big cell.
Others, and big brands, which are joining which is also.
Bringing that and you know we have a mill ticket they've already approach multi country approach and because we are marketplace. We have the you know.
Dozens of thousand the sellers that we can go through so in a way you know we are leveraging and pulling a lot of levers to drive both minimal disruption and using all the tools and the levers we have to minimize the disruption. If there is disruption. The good news is we are we have so many countries that when a country.
He is down well there was a country, which is okay, right, which is the benefit of being Pan African multi category marketplace, because when parts of the business is suffering temporarily than you have enough a cost which is doing well, which is one of the big benefits of our platform, which is somehow not the risks compete the but with a lot of say you know we've a lot.
Levers to to the risk it.
Thank you session.
Our next question today comes from Aaron Kessler with Raymond James. Please go ahead.
Great. Thanks, guys, maybe just a couple of question first maybe on gauge where consumer engagement. If you could talk a little bit too.
Traffic, you've seen maybe app downloads, just trying to get a sense for kind of how consumers are responding in terms that demand.
And then maybe on the side, we're going to think about you want to kind of at base level or is that not fuller buckets. We expect kind of further kind of <unk> reductions and kind of Q2 and as we think about expense level throughout the year as well and third if any update on a Egypt.
Like your second biggest country. If you can write any updates on Egypt as well. Thank you.
Yeah. Thanks Aaron.
On the first one definitely you know we've seen against <unk> engagement curves in terms of traffic app downloads, which are similar to the Juno somehow to the curve of items sold so where where the demand has been the surging of course, it's been also coming together with a very strong and take engagement very strong app downloads.
And.
And the overall you know.
Hi, good dynamics on traffic and engagement I think if we have that situation pretty much everywhere people are turning to online and they're looking for solutions and the you know. This is this is overall driving a lot of goods engagement and we are seeing what's important the I think you're seeing this from the number those are happened.
During its really a very good marketing efficiency levels right. Because you can always have to always look a and b the growth of the U.S age together with the evolution of the cells in advertising expense. So I think here definitely PD engagement is is helping a lot.
If you take our expense levels. Yeah, we have three three types of expense fulfillment sales advertising and the gionee.
Fulfillment to some extent it will depend on a lot of factors, whether the cross border business will you know come back or or stay where it is.
Whether you know more pickup stations are more doors that degree and all those those factors right that we explain.
What matters here is that we are able to pass.
Healthy part of those expenses to the consumers into the sellers and if you look at the evolution of fulfillment expense together with the evolution of set fulfillment revenue and value added services you can see very healthy development.
So in a way and we will continue to capture some efficient he had fulfillment level and we will continue to see a healthy bathroom. So and this we're very confident under seven advertising you can see a sharp reduction in absolute terms and I think if we continue to see that level of engagements which is somehow.
Very organic we're going to take advantage of that but of course continuing to invest so here, we will drive that I would say quite tactically and depending on what we see and you know for example, the moment the restaurants can open back well, we would be very happy to invest more and more so than advertising to drive the consumer back to the platform. So again.
With you know this is a very discretionary investments. So we will drive it's based on the traction that we see and the level of engagement that we want to drive and then in terms of DNA.
We have still to see here some benefits and so some of the actions that we had done so on this one we can confidently see those those those DNA to continue to reduce but a you know.
Alright speed right because the goal of the you know for our strategy is to keep genia as stable as possible need to see a trend.
Downward trend.
But most importantly is to drive took off they use age and monetization.
And lastly on Egypt, any update there and performance on Egypt.
Oh, Yeah on Egypt, Egypt isn't the is in the upper part of the child. So it's a you know it's doing well and it's benefited from a from a from some good trends. So it's a country, which is which is the you know which is closer to the blue and the Red Green and the.
[laughter].
Okay, great. Thank you.
Our next question comes from Sarah Simon.
Please.
Oh, Hi, I put a couple of question I'm wondering who.
Oh I'm sorry.
He was saying about the shift Oh revenue between.
<unk> global logistics.
I mean gossip.
That beds that was one I'm in the second question was on competition.
Hi, So obviously you kind of you'll come back to all single country players.
And I'm just wondering what they think that through this process those single country play a single country class.
Oh, losing market share to do and how you see the competitive landscape at the moment.
Just to kind of pre k., but thanks.
So maybe can you take the first one on ones you want to take the first keys.
I was not able to here sorry, he loves and then the first one is just too.
No problem, it's clarifying the impact of the reclassification of the Jumei global revenues.
And so remaking the point and re explaining the reclassification the upcoming reclassification.
Okay.
Okay. So yes. So first this was not yet included in our financial statement.
It was on but and of March and what a gun to do is that we're going to assist the thought of means unless a little logistics revenue from the value added services account to the field force in month of and you're going to go it's more on that off a reclassification that anything else.
Okay. So we should expect further contraction in value added services obese or not but that fulfillment, but yes. It can you give us an idea kind of proportion of value added services revenue.
That represent.
Well, it's a little bit too early to come out from that of these days, we'll have more clarity at the end of Q2 I guess.
Okay. Thanks.
And ladies and gentlemen, this concludes question and something that would not change the gross profit that's their performance.
Right.
Sorry, I think Sarah added question competition as well operator that I will take.
Hey, you know I agree with you if it's a huge benefits for us to be Pan African because because you know we make sense to natural partner for all the global brands gives US you know and more economies of scale and also for town and mobility import de risking the business as well right because sometimes.
And you're in a given geography and the did given your breath. She is not a going the way you want then you are suffering so much more so yeah I think it's been very.
They read.
Very good asset for us to have this this benefit can present in its driving a lot of value.
Marketshare is very hard to measure because no one else publishing data.
And we have some competition in that in free markets may need and then we have a looks or local players and an initiative at the moment, we're really focusing on on growing the markets and and growing the U.S age. So no of course, I think all the benefits of being Pan African they're paying out and and we see.
We are doing very well, but at the same time, there's really no reliable baytown marketshare. So right now we're really focused on driving a lot of consumer use age and having a lot of the users coming to drew me out a lot of sellers coming to join me on driving a lot of sufficient.
And you know transactions and we think Thats the right strategy and that's when you do that ultimately you're in good position. So it's a bit of a vague answer I'm, sorry, sorry, but you know there's no no no no date, I'm missing and we're focusing on doing what's right and and driving the business forward here.
Thank you. This concludes the question answer session I'd like to turn the conference back over to the management team for any final remarks.
Thank you everyone and as always we are available if you if you need any follow up and most importantly, I hope everyone is safe and Stacy. Thank you guys take care Bye bye.
Thank you. This concludes todays conference call. Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful.