Q2 2020 Jumia Technologies AG Earnings Call
Welcome to <unk> results conference call.
Second quarter of 20 to 22.
At this time, all participants are in listen only mode.
After managements prepared remarks, there will be a question and answer session.
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I would now like to turn the conference over to selfless Amir.
Oh Investor Relations for Jamil. Please go ahead.
Thank you good morning, everyone. Thank you for joining us today for our second couture Twentytwenty earnings calls we that's today are such that when your net engineering.
So I wonder if includes no I'm sure.
Oh 20, you need today, yes.
Cool it also dealing with God.
Section of our could break website.
Sorry by covering the food hybrid.
We'd like to remind you that our discussions today will include forward looking statement actual results may differ materially from they've indicated its forward looking statements. Moreover, these forward looking statements may speak or beat our expectations as of today, we undertake no obligation to sub Mickey.
Update or revise each basin.
Our discussion of some of the risk factors that could cause actual results could differ from to forward looking statements expressed today. Please see the risk factor section of our Deakin 20-F filing.
Jim on this call.
Sorry to certain financial measures that's reported in accordance with I guess.
You can find reconciliations of these nor am I correct. If I know she measures to the Coty funding our yet for his financial measures.
<unk> earnings press release, which you did they go on our Investor Relations website, we that's handover to session.
Thank you very much welcome everyone and thanks for joining the call I hope that you are all staying safe and well.
We're pleased to share with you today results that I think demonstrate.
Oh progress on our cost of profitability.
And before diving into the details we would like to acknowledge the hard work and dedication of all employees all I wouldn't logistic partners, although we're still others restaurants, Jake horse agents, who have been collaborating together in order to keep serving consumers indeed, there yet.
He can turbulent times and we are very simple and we send them all further.
Our mission of providing consumers with access to goods and services, helping sellers and sunday's reach consumers and goal, while making a positive impact on the African continent has never been more relevant.
We explained we explained during our Q1 results all the actions that we have been taking to adopt our operating model of course, including social distancing contactless degree work from home and many others.
As well as all the actions that we had been taking an older to support the community.
For example, introducing price control mccown his hands on essential goods supporting that they need we also shape.
Throughout the gymnasts yours program and many others.
Goes without saying that we will continue to carry on with all those initiatives as long as the situation remains and we're very happy to take questions on all this again of the cool.
Now, let's talk about the results and I know on page three of the presentation.
We will start today with the bottom line since it's been a big part of our focus laser beams and also something that we we all wanted to see.
I think in Q2, we make we made great progress on our cost across the region.
We had sets for ourselves to strong objectives to delever your trends in reducing our loss in absolute terms.
In Q1, we achieved the 10% reduction year over year, Yeah, just still to be.
In Q2, adjusted EBITDA was 33 million lots of 33 million.
The best level in absolute terms of the past six quarters.
You May also have no just in our press release that we have successfully entered into an agreements concerning the settlement of all ongoing cost actions, which is also good news and without the one off expense related to this yeah, just it'd be good loss would have been 29 million.
I mean, if 34% reduction year over year.
What we're very happy about is that this improvement is driven by strong fundamentals.
And those fundamentals our growth of the usage of junior orders on consumers improved unique economies strong discipline on cost both on marketing and GMI.
One very good ways to to see this is through the evolution of our unique economies, which you can see on page four.
Our strategy.
To increase the focus on what we called the everyday categories gradually monetize the marketplace, while driving cost saving is really yielding very good results. We are now generating almost one year old for older.
Gross profit after fulfillment.
And in fact, we are almost breakeven after selling advertising.
With the business makes rebalancing that we initiated last year, we are shifting more business towards categories like beauty fashion or fast moving consumer goods, which have higher commission rates.
And our less promotionally intensive than categories like phones in electronics.
In parallel our money type vision keeps improving as we roll out new revenue streams I wish fulfillment efficiency keeps improving as we continue see roll out new projects, New technology features as we increase the volumes as well.
You can see these dynamics playing in the average order value, which is now 34 euros and in the gross profit after from Simmons, which like I said is now 0.9 year old for older in Q2.
If you continue going down the marketing efficiency has never been has good.
During the culture on the one hand, we have been very cautious in our investments given the level of uncertainty as well as some of the disruptions in the operations that we faced in Nigeria, South Africa asked what did you Dream and we had mentioned those in Q1 person, but most importantly, we are able to meaningfully.
Reduce our seven advertising expense today, because we have.
Eight years building one of the strongest blends in Africa.
Good example of that is June that was featured in the top 10 of the 100, most admired brands in Africa in Maine. According to the ranking of brand Africa and that is just one example, and something which makes a very confident for the future.
Finally, our tech and Genie keeps improving to thanks to our cost discipline, but also all the restructuring actions that we had initiated last year and are now starting to pay off so overall.
Very pleased with the evolution of the unit economics, and the adjusted EBITDA trajectory.
And what makes us very confidence about the future is that those improvements are not caused by a sudden surge or spike in volume during the quarter.
Instead, they are really driven by improving the underlying drivers of the piano and but I think is very important to note.
If we turn to page five we.
Fought it was there are important to comment on the measures taken by the governance, so far as part of the Kabi response in order to understand the behavior of consumers in particular towards ecommerce.
So far we've seen in its got the most countries of arc footprint.
They did not enplanement brogues nationwide loved down like the ones, we have seen most western country.
And in fact, oneq or country impose nationwide loved down.
And these countries would present about 24% of our addressable market.
Everywhere else can find that measures consisted in either localized, though downs or partial movement restrictions like curfews during evening hours.
This is very important consideration to keep in mind, because localized loved downs partial curfews led to less drastic changes in consumer lifestyles and behavior.
In other words in those countries, we have not seen a surge in demand.
In terms of supply disruptions certain parts of our business as as you know from our Q1 and release were strongly impacted mostly Nigeria in South Africa, you Didnt agree as well as the cross border marketplace.
We've been gradually returning to relate to me normal course of business over the course of the culture.
So once again.
As you read the Q2 results you have to keep in mind and appreciate that our progress on the path to profitability in particular, our record gross profit. That's important month is driven by strong fundamentals rather than a surgeon volumes.
It's taking crazed also despite some significant disruption in some countries.
Where we continued to see positive impact is with the sellers and big brands in particular and how they look at ecommerce. If you. Please turn to page six.
We have seen both small foundries and lost friends turns of E commerce as a important route to markets on the brand side in particular, we had been deepening our partnerships with many brands and many brands are now putting in place dedicated commercial and marketing strategies for E Commerce in Africa.
We've had very strong engagement from those as part of our Jumonville sorry.
More than 100 brands across many sectors joined us where the event.
We're very encouraged of course by this momentum because more sellers means more choice.
It's better prices for the consumers and it of course validates junior as you platform of choice to reach consumers online in Africa.
With this let me now handover the call to journey, who will give you more details on the Q2 performance.
Thanks, Josh on or ahead of everyone well now on the page seven this.
So our focus during the second quarter of Twentytwenty, whether it's very much on the financial discipline and on making progress on our pet superstores <unk>.
You use age on the platform was resilient with and you're Lucky consumers, reaching 6.8 million an older was up 8% on a year over year basis, what did we reduced our season advertising expense by more than 50% imparted on New York figure basis.
Did you get the TPV more than doubled growing by 800 than 6% year over year.
Why do they transactions increased by 46%.
We also made meaningful progress, although many tradition fault, we though gross profit.
Increasing by 38% year over year.
And the gross profit after the first few months expense, reaching a record six minute.
On the cost if you some people we reduced our registry data loved by 26% year over year.
Excluding the net settlement expense, we would have reduced a registered did those makes 54 cents.
And we also reduced operating loss by 44% over the same period.
I'm showing the meaningful progress on purpose for stability.
So overall, we're seeing very good progress across the <unk> and we're now going to look at the dynamics of the usage on page nine.
So pitch and I know, what we can see the fundamental strengths of the Trulia brand and the demand. It drives me, but she goes for us to maintain he was age we the recording to those marketing efficiencies.
With 51% lower season advertising expense.
Jim was lower by searching per cent compared to Q2 nitrogen.
Yeah.
I'd like to point out that the effect of the business mix rebalancing you sheets that end of two inch Nineteena continued to play out drink to twentytwenty affecting the Jimmy trajectories.
To support our best books stability and to long term usage on our platform, we have deeper Ritchie reduced.
Emphasis on lower consumer like same but you business, what's driving the growth of everyday product categories.
Just category either typically use the lower basket size than the purchase of high ticket items like mobile phone already 20 device.
And you know this proved to be a very good move given the focus of consumers on those categories. As the result of the situation.
Turning to the annual I keep consumers.
Increased and you want to keep consumer by 40% on new year over year before.
Reaching 6.8 million of consumers at the end of Q2, twentytwenty, well, you're reducing debt and you'll see that advertising expense per and you would actually consumer by 38%.
Oh, there's increased by 8% year over year way, we spent one point when you roll off season advertising for older which is 55% less than Q2 29000.
Throughout the second quarter of Twentytwenty, we're continuously adjusting our seasoned advertising expense as we experienced a really didn't you meant in fats in phase three of the reducing marketing spend.
I will also point out that we see meaningful disruptions in nature Young South Africa, and you know should you be business, which was also affected by restaurant shut down for part of Q2 Twentytwenty.
All three business either gradually went back to normal levels from Q2, but did not contribute so of course to their normal shows overall.
Turning to page 10.
Yeah early days of the.
The mobile phone and yet it wouldn't be used to be the main ecommerce entry point for consumers these categories and productivity because you how you pricing did you.
And for change that drive consumer to do extensive product research and price benchmark, which naturally take them on like [noise].
As we increase the breadth of product categories and guess what went on our platform where it goes to serve consumers across a broader spectrum up there.
She's have you done by the evolution of our category.
We wouldn't index funds.
Freezing from 59%, though for Jim <unk> in Q2, 2018% to 43% you do twentytwenty.
He is and that's what anybody shun Oh, so consumer behavior that we have supports you'd actually to reach with up to an extent as we're able to extract bits or you need economy out of just categories.
[noise] white everyday products tend to be lower average evaluate them.
Lead you to 20% would you can you average order value on the younger your biggest they also tend to be more profitable.
Gross profit after a few months expense per older reached 90 cents.
Compared with 10 cents loss in Q2 2019.
And that's I mentioned earlier, we are also very close to breakeven on a per order basis after for she's not than say and advertising expense.
Yes, we've been in thing, which wasn't to making for a few years.
<unk> increased our relevance in light of liquid Cookie 2019 situation.
Over the past few months Demandware spots, you could argue trunk across essential and every their product categories.
Our fastest growing category, we triple digit growth rates in both Jim and volume terms, what is the beauty and personal care category supported by the state of hygiene products.
FMCG also experienced kinda momentum.
Consumer turn to drop for the portrays of essential products.
We're pleased to see that you know used to do a household name we strong relevance.
<unk> everyday life was consumers in Africa.
Queued up onto use these dynamics were driving use itouch record levels of marketing efficiency.
Thanks to the strength of the junior brand as well as the relevance of our offering.
Our aim is to anticipate and meet the emerging needs for consumers.
The way that make it couldn't it makes sense for us that's what led up to an increased focus on everyday products, which are driving meaningful step up.
You need economy.
Let's now move to another key focus area for us, which is really not they'd beach 12.
We are very piece was the continued adoption and the momentum of do not pay on our platform.
The TPV accelerate keys by 806% from 26 million Euro in Q2 Punch 19 to an all time high a 53.6 million Euro Eutwenty <unk>.
I seem to record set during the fourth quarter of 20 thinking a 45.6 million.
On like Trumping attrition of drumming up there as a percentage of Jim beam.
Increased to 23.5% into second quarter, 20, 20.4 times.
Penetration into second quarter of 2019 of 9.9%.
On page 13.
Yeah, they transactions increased by 36% from 1.8 million in Q2 punch thinking to 2.4 million in Q2 Twentytwenty.
Were pleased to see people are starting to you drew me up they Yolanda micro transactions, so talk airtime and your GGB payments and more and more prepayments taking place on our she could goods and to me at food and you've been touched farms.
Transactions off enough reach but you are both the euro including prepaid Portuguese on the GFT could marketplace engineered wood platform are enjoying triple digit growth of transactions.
Overall, our 65.6% of orders placed on to let you do twentytwenty were paid for using from yuppie compared to 28.3% into 2019.
With that we know handover talked one we walked you swelled financial performance a date starting on page 15.
Thank you Jeremy.
Hello, everyone.
We are pleased with the progress a mainstay station Q2 twentytwenty as this season essential component, a full financial strategy and path to profitability.
In the context of 8% you're on your broking orders, both marketplace revenue and gross profit posted 38% growth, although the same period.
As we grow that you say told you know we seem to get you only when he type issue sage two diversified revenue streams that absorbed the growing share awful close Bates.
Taking a closer look at alliance market based revenue streams on slide 16.
Commissions increased by 68% year over year. Despite the decrease in Jim as a result of an increased propulsion in the mix of higher commission rate categories, such as beauty FMCG et cetera.
Marketing and advertising continues to experience rather momentum posting 15% growth as advertisers shift an increasing share oh, they're spending from offline to online pay rate direct restaurants fall much.
We feel that which comprises they refuse just to go chores increased by 34% on the you're on your basis far outpacing orders growth.
This was partly attributable to the continuous optimization of all shipping metrics that the lowest far more efficient pass through before we feel that expense to both consumers and centers.
But do you have to tell this is posted 6% year over year of growth largely in line with Adrs growth.
In Q2, Twentytwenty right here to tell the since it wasn't to get to really impacted by a decline in cross border volume.
Even by Calgary description, which led to or international logistics revenue received from overseas centers.
Moving onto cost efficiencies page 18.
One other key <unk> was the gross profit Astro fulfillment expense, reaching a record level of 6 million euros compared to a loss of 0.7 million in Q2 29, Jim demonstrating continued progress on all path to profitability.
The gross in gross profit alongside the reduction in absolute more into food feed went expense drove this performance.
Pushing on expense decreased by two percentage in Q2 Twentytwenty under your all your basis, while orders increased by 8% of up to same period.
A number of operational improvements drove fulfillment expense efficiencies, including a changing the volume pricing model from a cost first successfully delivered decades to of cost per successfully stopped.
All third party logistics partners, all know paid for successful stuff, that's going to <unk> customer address regardless of the number of packages, including the degree.
If we are able to generate deficiencies today. It just ballpark. It goes we have spent many years building and that's helped license caliber logistics platform that allows us to constantly adjust and improve all pricing what those odds are we getting scale.
I know contributing factor all the fulfillment expense reduction in Q2 Twentytwenty was changed at all mix of packages, we reduced propulsion of cross border packages and packages shipped Oh, it's I'd probably every city.
Moving onto failed an advertising expense and no on slide 19.
Sales and advertising expense decreased by 51% from 14.9 million inroads into your 229 team to 7.2 million in Q2, twentytwenty its lowest level in more than three years.
We are driving record levels of marketing efficiency across all metrics.
Selling into it I think expense for older decreased by 55%.
2.4 Euro in Q2 90 to 1.1 in Q2 20.
And your sales and advertising expense and you're like to consumer reduced by 38% from 10.8, you wrote a new like you've consumer to 6.7.
And several other tightening as a percentage of Jim.
Decreased by 229 basis points from 5.7% two or 3.2%.
These efficiencies all made possible by the strength of whole brand and resilience Oh man on all platforms.
We also continued to make announcements to all performance marketing strategy of course search and social media channels No tapped me through more granular or segmentation of all target market with differentiated campaigns and content for each segment.
Finally.
All three major cost <unk> technology and yet any.
No on slide 20.
Oh technology and content expense increased by 5% compared to Q2 19.
As we continue to that you know tech infrastructure.
Gee any expense excluding share based compensation and the settlement expense from the class action settlement reached 24 million euros down 2% both on the your although your basis compared to Q2 19, and then the sequential basis compared to Q1 20.
The decrease was mostly attributable to the cost rationalization initiatives undertaken starting from the end of 29 to it.
Moving on to page 20 to one on balance sheet.
Oh path to profitability is further supported by all asset light business model.
Capex in Q2 Twentytwenty was less then also million euros as we offer a junior logistics as a platform we've been very limited capex requirements.
Mitch engine working kept strong resulted in an inflow of 13 million euros.
We consider a because if you're working capital effect on these scale to be one off in nature.
Why do we have meaningfully improve working capital management over the years.
And usually large working capital inflow was supported by a longer payables cycle and then what did you supply as prepayments.
As a result guess utilization reached 16.8 million euros, taking all cash position at the end of June 30, 2020 to 174 million euros.
Assuming a neutral working capital affect.
Cash utilization from the quarter or would have been around 30 million euros, which is still a very good performance. If we compare it to the quarterly cash utilization of the best eight minutes you.
He did a saving of more than 10 million euros.
The 3.6 million euros net settlement expense for the class actions, we likely be disbursed early Q4 twentytwenty.
You May have noted that we made a shelf filing on July 20, potentially guns, which went effective on July 3rd just allowing us to issue to 18 million adss over the course of the next three years.
This is a matter of good cooperate housekeeping to allow us to take advantage of opportunity in market trace kept still in the future.
With that I'll end the call back over just session.
Thank you very much and there or are we going to chew in a brief remarks to conclude the call.
So first remark.
I think that looking at Q2 results and also if you look at H. One to 2020 was made a lot of important choices last year and these choices are starting to pay off lights. The focus on everyday gifting worried as making us very relevant very efficient marketing and also more.
Profitable.
We launched do me a mall last year is proving to be ready very relevant today for sellers and brands.
Existing countries and categories I mean, what they need to travel business.
And if you look at Q2 were each one despite not seeing any surge overall in demand from Cobiz. We are doing very good results across the board and that makes us very confident for each two and beyond.
Second we mark.
I want to clarify our priorities for the quarters to come as well as how we are driving the execution.
On the usage of junior our priority is to continue to grow while driving efficiency improvements.
We think that we're very well positioned in terms of categories and we're going to continue to focus on those everyday categories were going to continue to drive adoption of junior by new users and retention of existing users.
Sometimes people tend to oppose growth and profitability for us. They somehow go together and we look at the U.S age of drum yet with multiple then to DMV axes consumers and older is.
Over time, we want to see all metrics going up even if in some quarters, one metric or the other is going down or the growth is higher or lower but over time, we want to see those are going to going up.
Jimmy I pay our main priority today is to gradually entries penetration within our platform.
You've seen that to me at the transactions accounted for 36% or voters in H., one almost 10 points more then each one last year.
We still see of course cashman delivery as a key part of our value proposition going forward, but we aim to drive the on platform penetration gradually.
And we also want in the months to come to start expanding our payment and Fintech solutions off platform.
On the path to profitability, we will continue to focus on gradual increase when utilization as well as cost efficiency.
I think the key term here a gradual when you are a marketplace. We think that it's very important to maintain strong attractiveness to the participants and to drive monetization together with increased volumes and business.
As we enter what looks like a severe economic crisis across the world. It.
It will become increasingly important for us to offer the best pricing and value to the consumers and others. So we need to be very careful with our pricing.
Last but not east we are starting to monetize our platform weve. So poppies. Some of you have picked up that we are opening up our logistics to felt potty customers that we are opening up also and Jimmy advertising platform to non to others and ER, we will gradually see more of that in the future.
And third and last remark.
To conclude the call we want to reiterate that we are still at the very beginning of E Commerce in Africa.
In the recent months pretty much everywhere in the world, we have seen how relevant ecommerce payment technology, our two people business isn't governments.
In Africa, we are still in the early days as this journey with less than 1% penetration of E Commerce, and we certainly see huge important you ahead of US we have built a very efficient very scalable platform for the years indicates to can.
Great and asset light marketplace, very relevant delivery service unique logistic platform junior pain, which we think has the potential to to become the leading payment system on the continent, and we really believe theres another potential that had for drumming up and that we are very well positioned thanks.
You again for attending the calling your attention we're now ready to open up the call for doing it.
We will now begin the question and answer session to ask a question you make press Star then one on your telephone keypad, if you're using these speakerphone. Please pick up your handset before pressing the key.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then too.
At this time that we'll pause momentarily to assemble our roster.
First question comes from Mark My Happy of RBC capital markets. Please go ahead.
Okay. Thanks, if I could throw in three questions. Please is it a reasonable expectation that gross profit after fulfillment can continue to rise do you have enough.
Structural improvements in is the mix shift do you have enough visibility into the revenue mix shift that that's a probability that gross profit after fulfillment and continue to rise secondly, you you on that slide six you list a series of.
A large number of pretty large brands are there. Other other brands that are are missing a I'm sure. There are some but are there a couple of key brands that you would really like to bring in that you think would be could really move the needle for Jimmy up and then finally could you talk about if there's been this change in your customer acquisition a channel.
Strategy are you finding.
Part of that advertising efficiency is it driven by the fact that you found more efficient advertising channels.
In a than you had discovered in the past and what are those thank you very much.
Thanks, Mark very very good questions as always.
And I think on the first one then the gross profit after called him into the answer is yes definitely rights and.
And here to give you some color of course, the gross bucket. That's it will commit that there's some of our revenues minus the fulfillment expense.
If you look at a war.
Money patient threem and their level of maturity.
You can see how much potential we are still and you know seeing ahead of us both for the existing monetization stream as well as new ones.
You look at for example, marketing and advertising with barely sounded like many market places around the world or are there yet Ben your and arrest isn't something that we started a year ago and we are seeing a lot of good traction and we are just at the very young data that we have also been talking in the past about June.
I Express, which we had been stopping to money guide and a you know many more with our existing feathers. Then there's all the money position from the new revenue streams, which to be we're not doing yet at all and here I'm talking about money hydration from yet pay as the payment platform.
When you pay vision of junior logistic as the stuff HM.
You know a logistics platform and as well.
No I think we can we get inside those who are now and this is not even here today in our PNM. So we see a lot of upside in the revenue burn in terms of fulfillment expense.
And here, we have consistently you know improvement quarter over quarter based on a number or drivers of course, one is the increase of volume because the more volume we have the more partners, we are able to to use and the more competition between then and the more scale. They get so its three new volume gain and burn.
<unk> operational improvements in the press release, we give you two examples or or projects that we did during this quarter, but there are many others.
<unk> number one that the projects was around the fact that we change the cost model with the partners and we were before the project thing then per package that even though we're paying them per stuff. This is one example, but there's lots of <unk> is though.
Technology, driven but also just scale and efficiency and operational excellence to to reduce before you make sense or older. So something very confident about that.
In terms of brands.
Not really you know there. So many brands that are looking to that Africa, and they're looking for ways to answer the continent and and in the past you know for brand to enter new emerging market. You know the brand you need to think about finding a distributor establishing.
Local presence building and you know marketing campaigns multimillion.
Dollars them or marketing campaigns to build the brand and be able to local president and I would go with the cross border market Creek and with the market prison generally to really providing efficient route to market for all the brands, which are not present in Africa to start a certain to consumers and building their presence. So you know it's not like there's one name that comes to mind.
And where it would be a game changer and.
Because the consumers you know they didn't add alternatives from anything but something the more we bring the better but there's not like one I think live game changer that comes to mind.
And in terms of consumer acquisition.
Then you know the marketing efficiency.
Driven by lever a lot of disadvantaged improvements across the board rather than done one particular channel, which which have you know, which which bridge, which showed different deficient you weren't surgeon and patient improvement a lever across the board and the hard work and so the junior <unk> than the junior daytime.
Technology to just see my though our online channel as well as the leverage a you know the assign channels that we use like Jay Force Telesales and all those so it's really across the board more in a general improvement from efficiency than than anything else and.
And that also makes us confident because all those improvements there, they're not relating to one topic or change, but rather like across the board improvement.
Okay. Thank you very much.
The next question comes from Aaron Kessler of running burdens. Please go ahead.
Great. Thanks, a lot a couple of questions. The first with any further details maybe can be growth by category, the electronics versus kind of other slippages anymore details on some of it trends you're seeing there also maybe on the commission rates.
It looks like it was mostly maybe a change of mix that drove the higher kind of commission dollars was there also may change a commission kind of rate an absolute as well and maybe just how much room do you think there as to increase kind of commission rates longer term as well. Thank you.
Yeah, very good questions and at this stage, we'll have to to kind of stick to page 10, where we provided the you know the breakdown by bank. If they were repurchased two and <unk> 2019, and 20, where you can see that are the share of the fashion beauty intensity a as drawn.
You know, 2% to 57% from 41% and something he goes up in the ones growing the fastest both in you know volume and and value and and we'll try to provide more color or more breakdown.
The Coulters can keep developing in terms of commission. It's it's a very important question and something that meet the real and then discuss a lot also insulin and.
We are in the view of the view that as the marketplace.
It's very important to be attractive to this heathers and a you know in our history. Every now and then we went on and increased commissions.
And most of the time when did that this others were completely fine with it but some of those others were just.
Greetings impacting their selling prices.
You know Weve the commission increase impact.
And they were accepting complete could increase the essentially we're changing the price of the product we're selling Andrea and that is it is not really the direction. We wanted to go, especially now with the economy crisis that we think is likely to unfold and we want to make sure that we are able to to be very competitive.
For the sellers, so that the sellers can offer very low prices.
And part of our monetization strategy is to drive revenue streams, which are.
Both outside commission right. So if you remember two years ago, we were almost only commission and we started to introduce more streams. So that you didn't have to raise those commission, but instead, we're selling more services to the sellers and secondly, also leverage our platform to generate revenues from sub posses.
And as we are able to money that is doing a thing or demand logistics in the future. We may decide to actually reduce the commissions and by doing that we think that our market prices going up even more competitive. So again here you know it doesn't mean that every now and then we don't increase commission on a given category, we try to find the right bonds.
But certainly it's not something that we are we want to drive brutally or in general we see more value long term in reducing commission the increasing commission, even though on the face of it we have the power to do that.
Got it greatly makes me quickly on that you me a pay transactions like that was up nicely year over year, but more flattish sequentially is there anything maybe near term ceiling on give me a pay transactions, they're just getting more penetration searching of your markets and ready to open up more to get that penetration higher or was that just maybe just I'm not a linear.
Growth there.
Yeah.
Yeah, I think on this you know that the penetration of Jeanette Paisner is a function of the of the penetration of said to me it they both for the countries where it operates but also the different platforms. We have junior food for the food delivery and that junior E Commerce, and we have the junior pay up with the digital transactions.
So I think you know, it's a function of ER evolve it and something here.
Been very clear also that it's not our goal to be 100% dream yet they in the short term or even in the near term right. We think that's our success with Japan with drew in general that into also recognize that cash on the TV is key and very important. So we certainly want to maximize that then.
Situation of junior paid but we are in a way.
One to go with the market and drive the adoption efficient.
And ER you know right now we are 36% overall as a group of transactions and 10 points more than a year ago. You know there are many countries, where we still don't operate Japan, Germany consumers, we don't want to transact on nine and we just want to recognize that so we're pretty comfortable with that level, where we are now.
We think it's going to continue where we live plateau, or where where where we'd be in two years. You know, we'll see as something it's been going up and look at some point, we're not solving for 100%, but we know that in nature and you get were well above 50% right and with companies that in the past. So you know we feel pretty confident that.
Maybe two thirds of the transaction you know in the mid term would be on Japan talking you do you know 18 months from now two years from now because this is what we have seen in Nigeria two years after the launch so.
That's that's you have to look at it I think John.
Got it great. Thank you.
Next question comes from Ralph Schackart William Blair. Please go ahead.
Hi, good morning, Thanks for taking the questions of two calls or two questions I could please.
Jump in I call. It so I apologize if you touched on this but maybe if you could show some perspective, given the dynamics that pandemic, how that business has trended up post quarter any color, perhaps on fulfillment expense initiative.
For the progress there customer additions and then you could add be helpful. Then maybe soft so just kind of taking a step back and I called it out.
Paired remarks, and the letter about being able to emerge from the crisis stronger.
Just curious your perspective on the business going forward, we look at unfortunate events the pandemic, but you know how the business net strengthened going forward as a result, thank you.
Thanks, Ralph I think there there the situation as Dan.
He stable for for for from the you know business perspective in relation to that to the pandemic for the last two months, we yet in April a mix of are quite strong disruptions in some markets and some parts of the business right and we we had a reset and some countries.
Were especially those where there was like a real love down where we're seeing a bit of a surge in volume and then throughout the quarter throughout Q2 and also in July things went back to normal pretty much everywhere rights are being when I mean normal in the not the same level of business that we.
The before the beginning of the crisis of course, there's a there's a lot of you know a question marks around what will the country dues.
The countries do in terms of back to school and soon so far so there's a there's there's another uncertainty about it but from a junior business perspectives things when we can say back to normal as sometime during Q2 and since then it then you know pretty pretty steady with no significant disruptions and.
No significant search so you know I would say normal business.
What makes us feel good and I think there that was listening to Jeremy and on trend and I was hearing a lot of where you can you then you know.
We need that I think.
If you if you consider the improvement or sort of the piano across the board.
And you put it in relation with the with the with the growth of the business or of 8% of the older is it doesn't mean that improvement is driven by fundamental or actions on the key drivers of the piano right and that's.
For us.
Makes us very confident in a way because it's not we're not able to better you've heard this gross profit after fulfillments, which sounds like by far our record because we had seemed like a big surge and you know no. It's happening because we're doing the hard work on Monday integration cost efficiency restructuring sale not.
Tightening and all that and I think that.
No.
We made.
So it seems like I've heard last year and some of them, we're not vehicles in countries like travel doing the rebalancing and ER, so on and that in a way we entered the crisis.
Our revenue with all those actions well executed or almost done and and for that we've been lifting in the way you know lucky to make those decisions ahead of what are what else can because no. One for that predicted. This this crisis and now we are very a dial and very nimble.
In a way you know, it's something that for that for that or <unk>.
Further development and now that we made the decision.
Great. That's helpful. Thank you Sir.
Great well, that's the operator.
Oh, thank anymore questions. Please.
No. This includes both part question and answer session and Jimmy is second quarter Twentytwenty Conference call.
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Thank you I'll stay safe and take care Bye bye.
Once again, the tougher times I did you may disconnect your lines. Thank you.
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