Q4 2021 Jumia Technologies AG Earnings Call
Good morning, ladies and gentlemen, thank you for standing by welcome to Jimmy as results Conference call for the fourth quarter of 2021 at this time all participants are in a listen only mode.
After managements prepared remarks, there will be a question and answer session.
I would now like to turn the call over to <unk> Damir head of Investor Relations for Julia. Please go ahead.
Thank you good morning, everyone. Thank you for joining us today for our fourth quarter 2021 earnings call with US today are such that when your neck and Jason <unk> co founders and co Ceos assume yeah, as well as ultra and Magnum is very useful.
This call is also being webcast on the IR section of our corporate website.
Start by covering the safe Harbor wed 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, which speak only to our expectations as of today.
We undertake no obligation to publicly update or revise these statements.
For a discussion of some of the risk factors that could cause actual results to differ from the forward looking statements expressed today. Please see the risk factors section of our annual report on form 20-F as published on March 12, 2021, as well as our other submissions with the FCC.
In addition on this call we will refer to certain financial measures not reported in accordance with Iron Gray you can find reconciliations of these non <unk> financial measures to the corresponding <unk> financial measures in our earnings press release, which is available on our Investor relations website with that ill.
Handover to session.
Thank you welcome everyone and thank you very much for joining us today.
Before going into the results I would like to remind you of our current strategy and where we stand right now.
We are currently focused on scaling our platform with a fundamental and unchanged strategic objective of reaching profitability.
To get there we have very clear priorities accelerate usage grow <unk> consumers holders.
Increased monetization and cost efficiency.
Two new developing generic.
And this is the natural next step in the journey, we've been on since inception, we have a vast and large and in tough markets of almost 600 million consumers across 11 countries.
To capture this opportunity we have spent the first years of our journey of building a solid foundation for our platform across E Commerce logistics and payment and this platform is uniquely tailored to the specifics of our markets.
With this foundation in place we focused over the past three years.
<unk> seen the fundamentals of our business, we made tremendous progress building everyday product categories on our platform has never been more diverse and relevant to consumers as part of their daily lives.
We have also strengthened our unit economics and cost.
Major milestone of positive gross profit after fulfillment expense and it has now been the case consistently for the past nine quarters.
Lastly, we've raised over $517 million in cash over the past two years, giving us a strong balance sheet to finance our strategy.
Leveraging the strong fundamentals, we turned our focus in 2021 to accelerating usage growth.
To scale, our business and take it to profitability.
We are pleased to report very good progress on growth acceleration during Q4, and please turn to page four.
For the highlights of the quarter.
Best use age ever <unk> reached all time high active consumers reached all time high orders reached all time high this is.
Very good we're now back to growth the acceleration strategy is paying off.
Monetization highest revenue ever higher.
Highest gross profit before consumer incentives ever.
EBITDA loss stood.
Stood at minus $17 million in Q4.
Mainly driven by strong investments in advertising and consumer incentives we invested.
<unk> 7 million more into sales and advertising and consumer incentive and last year. We are comfortable with this level of investment because of the strength of our unit economics.
And because we are seeing the dynamics on usage growth acceleration.
So overall, a good quarter in our view, yielding the acceleration of usage, we all wanted to see and some great progress on monetization.
Now, we still want to see more of course and it will be more precise guidance for 2020 towards the end of the call.
We view our usage metrics on page 15.
Quarterly active consumers reached a record of $3 8 million in Q4.
29% year on year drew.
Driven by all time high you consumer adds during the quarter.
This is a new API that we will now provide every quarter. So that will give even more granularity on music performance and we will still provide the annual active consumers on a yearly basis and you can see in the presentation. Later that we've reached this year 8 million active consumers also a record.
Orders accelerated by 40%.
Also reaching an all time high of $11 3 million.
And this acceleration.
And both consumers and older is driving what we believe to be an inflection and GMB, which was up 20% year.
Year over year, reaching again, all time high of 300.
In USD.
Very encourage WC by this acceleration in Uinta.
Long evidence that our strategy is paying off.
Tend to build on this momentum to further scale, our platform and continue to accelerate.
In parallel.
Turn to page 16.
Underlying monetization is also reaching new highs.
If we look at our monetization metrics before consumer incentives, which are counted as deductions from the revenue line we see.
Clear trend of acceleration with new records achieved in Q4.
Revenue before consumer incentives reached $74 million.
39%.
Fastest revenue growth in the past two years gross profit before consumer incentives.
<unk> $45 million of 24%.
While the margin as a percentage of <unk> reached 13, 6%.
And finally.
Gross profit after fulfillment expense and still of course before consumer incentives.
Also reached a new high at $14 million.
90% year over year, while margin as a percent of GMP here remained at above 4% at four 3%.
Very pleased to drive both strong usage growth and strong monetization and this is giving us the flexibility to further invest in the growth of our platform on page seven.
You can see that we continued leaning into growth investments in Q4, which is what we had initiated earlier in 2021. There are two key areas of investments for us.
First is consumer adoption.
We are increasing our investments in sales and advertising and consumer incentives and we're doing so in a targeted and disciplined manner.
Over 57% of the increase in sales and advertising is coming from increased offline marketing costs, which are largely geared towards brand awareness and consideration.
And second area of investment is platform development technology and G&A.
<unk> is the backbone of everything we do at junior we are accelerating the development of products and features which are creating a more engaging and seamless user experience more effective operations.
With a fully dedicated tech stack for payment and Fintech as well.
We are comfortable with the increased level of adjusted EBITDA loss during this quarter and the pace of investments for a number of reasons.
Number one these investments are coming from a place of strength our levels of monetization have never been higher and we have the financial firepower to make those investments.
It's the right time for us to be making that investment there is strong momentum in the business in terms of usage and we are building on this momentum to drive even more growth.
And three these investments are of course creeping even more strength in the platform more compelling experience and more compelling value proposition for all participants as well as the biggest scale, which ultimately contributes to the path to profitability.
Now, let's go into more detail in the performance and Jeremy will take it from there.
Thank you Vishal Hello, everyone and thanks for joining today are you start with a review of the usage trends during the quarter on page nine.
On page nine we have a very clear acceleration into use this growth in Q4, we have posted during the quarter the fastest sequential growth rate in almost three years across consumers, others and gyms and we've reached all time high across each one of these metrics in the quarter.
We're adding more consumers than ever before in quarter objected consumers reached a new high of $3 8 million up 29% year over year. Our consumers are also purchasing more often with almost reorders placed on average by an active consumer in the fourth quarter.
Orders reached a record high of $11 3 billion at 40% as a result of both increased consumer.
And the increased purchase frequency of existing consumers.
Driven by the acceleration in both consumers and older gross we're reaching what we believe to be a clear inflection into Jimmy trajectory, which increased by 20% year over year, reaching a record of $330 million during the quarter.
Very strong growth momentum in the business and Thats, partly a result of the success of our strategy to increase the focus on everyday product categories.
Page 10.
Can see a fundamental shift in our Jimmy.
In Q4, 2019, we had half of our gem vehicles from Fortinet clinics.
In Q4 2021.
5% of our gyms coming from put an extra day with 65% coming from categories, which are relevant to consumers as part of their everyday lives such as Russia and home lifestyle did you agree SMC GE exit.
Average order value now stands at 29 donor as we further and further penetrate.
And smaller size categories.
On page 11 the.
The growth trends by product category convinced similar message.
<unk> tons of everyday categories.
The fastest growing categories in both Jimmy and items sold are categories that are relevant to consumers as part of their everyday lives in particular, the food related categories, which are food delivery and FMC.
Going in excess of 50% year over year in both gmg and items short terms.
And then electronics are showing some early signs of improvements.
In excess of 10% in terms of items sold also the global supply chain situation for these categories remain volatile with continued pressure on the chipset supply side.
I'd like to give you more color on the FMC did you get the glory, which more than doubled in volume terms demonstrating strong relevance for consumers in our markets.
Pitched with.
You've heard us talking in the past about our efforts commercial efforts to build out the assortment of the FMC decided with a view to cover the full product spectrum of a typical grocery basket.
Each one of our markets.
We also placed particular emphasis and focus on developing our relationships with.
With Blue Chip Mcg brands, such as P&G, you never Coca Cola, and the slim or delays and minimal debt.
Year 2021, we added over 850, new brands on our platform and we are also adapting our operating model to work efficiently with these brands to secure relevant stuck at the best price.
Led us to do more business on the first party basis was almost 40% of <unk> did you get the glory generated on the first part of your business thesis.
If I understood your category starting to account for a meaningful share of the business, 14% of items sold versus 9% a year ago, which we see as a great news because this is a category where the annual purchase frequency, 25% higher versus deals or categories on the platform.
Development of Fmc's GE is a case study of a rep identify relevant categories, where consumers and build them out in a giant veneer adapting our operating model for win win partnership with suppliers and then Thats our key.
Opposition for consumers.
We are overall very pleased with the accelerating usage growth on the platform and have clear priorities for 2022 to further build on that momentum.
On page 13, we have outline key initiatives to drive the usage growth in 2022.
First one is the continued development of what we call <unk>, which are the everyday product categories, including SMC G that they have just touched upon on the supply front, we intend to further expand our assortment leveraging both our third party centers.
Well as our first party sourcing capabilities on the delivery front, we intend to leverage our e-commerce logistics infrastructure for the delivery of planned for <unk> as early as the next day when you get the ring also to immediate needs with under one hour delivery via our on demand platform.
I can't live Europes usage growth is the rollout of targeted free shipping.
At this stage free shipping is available in certain cities for baskets above a minimum size comprised of Julia Express items.
Items are the one we are holding our warehouse and that are picked and packed by junior debt.
Just sort of your take driven user experience enhancements, we plan to further increase the level of personalization across the platform improve our search algorithm and featuring modules.
By increasing our gamification for an even more engaging experience.
We expect these three pillars of yours to drive user growth acceleration support conversion rate consumer acquisition and loyalty.
With respect to the free shipping specifically, we expect the sales generated by et cetera that free shipping to help us drive more revenue from Jimmy Express which is burden.
We're confident accelerated usage growth and increased scale will help us further improve marketing efficiency and <unk> contributes to our path to profitability.
Let's now move on to Jim yet, we're also seeing good momentum here and are constantly enhancing our platform and expanding the range of financial and digital services available to consumers.
We've highlighted on page 15 on some key developments related to <unk> in Q4 2021.
To support the growth of on and off platform. We conducted a great of a risk infrastructure. In addition to appropriate in <unk>.
Risk in China, which scans each transaction real time against over 300 factors, we rolled out to third party device fingerprinting technology is to aggregate over 1000 data points, providing an even more precise visits for fraud detection and prevention.
We further expanded the range of consumer finance products available to our consumers as part of the Black Friday campaign.
We established a partnership with value in Egypt, but leading buy now pay later fintech platform, allowing consumers to pay through interest free installments over nine months. We're currently working on extending the range of 10 years for the by now but it's already.
In addition, we partnered with seven different banks, that's part of the Black Friday campaign in Egypt to offer installments to consumers.
Did you get the App, we continued adding more relevant every day services in Nigeria, we set up an integration with <unk>, the largest being able to get through in Nigeria. This partnership allows us to offer over 70 additional bidders on the junior.
Including government services Internet service provider airlines them anymore.
Moving onto the <unk>.
Seven 4% in Q4 this year up from 25, 5% in Q4 2020.
Turning to transactions on page 17 junior debt transactions reached $3 9 million in Q4, 2021, 46% year over year, the fastest transactions growth rate of the past seven quarters.
The transactions growth was supported by accelerating volume growth across the business and in particular, the food delivery category, which more than doubled year over year. Overall 34, 7% of orders placed on the junior platform in Q4 were completed using zoom yesterday compared to 33% in <unk>.
Q4 last year, we made good progress on <unk> throughout 2021, and we intend to build on this momentum further expand the range of payment and Fintech solutions for both merchants and consumers.
On page 18, we have outlined selected initiatives that we're driving towards the development of <unk> in 2022. The first one is the development of our payment processing activities of platform. We intend to start offering in 2022, our payment processing solutions of platform to third party merchants starting in Egypt.
Shifting of platform TPB and payment processing revenue 2021 marked an important milestone for <unk> as we obtained in Egypt under the sponsorship of National Bank of Egypt, the relevant licenses to process payments on behalf of third party off platform in 2022, we intend to secure the relevant licensees and syndicate also.
Market.
Platform payment processes.
Second initiative is to further develop our consumer finance solutions offering multi note that at our option for consumer in order to drive usage growth on outlets.
I'll now hand over to Antoine work, you through our financial performance <unk>.
Thank you Jeremy Hello, everyone.
As mentioned by Sunshine control monetization performance in Q4, 'twenty. One was very strong as we reached record highs in terms of revenue gross profit and gross profit margin before incentives.
And this is allowing us to increase investments in the long term growth.
Julia.
I would like to start with a recap of the building blocks of our revenue on page 20.
We presume revenue in all financials under three main buckets.
The first one is first party revenue, which are the proceeds generated from our retail activity.
Second one is marketplace revenue, which are the values that we perceive from our third party activity.
The third bucket is other revenue, which at this stage mainly includes revenue from all logistics as a service activity loans in 2020.
This bucket will include in our future revenue from off platform payment processing.
This activity up and running.
Let's now look at the overall revenue trajectory in Q4 'twenty one.
Here, we observed three main things.
The first one is the overall revenue growth, which was up 26% year on year, the fastest growth rate of the past two years.
I would like to point out that the particularly strong performance.
First about the revenue, which was up over 79% before consumer incentives, which is also the fastest growth rate of the past two years.
And this is the result of the undertaking more business on the <unk> basis, particularly for the build out of the grocery subcategory.
The second observation is the development of new monetization streams, such as hygiene, all logistics as a service.
Major part of the other revenue.
The third observation is that this revenue growth momentum is giving us the flexibility to invest more into growth.
All of consumer incentives, including sales discount keeping with gallons and appreciating.
Let's now deep dive deeper in the volume component of marketplace revenue on page 21.
Marketing and advertising revenue increased by 20% supported by Robert take up of.
AD solutions, particularly during the Black Friday campaign.
<unk> revenue increased by 63% year over year, mostly as a result of an increase in international logistics revenue.
Commissions and fulfillment revenue are both impacted by consumer incentives.
Excluding this impact commissions revenue was up 25% driven by usage growth widely Finland revenue was down 2%.
We chose to reduce the shipping passed through to customers.
The diversity of our revenue sources gives us the flexibility to adjust the monetization and density on certain revenue streams as we execute on our usage growth acceleration strategy.
And why do we are driving much faster usage growth.
Also reaching record levels of monetization.
On page 22, you can see that gross profit before the impact of consumer incentives reached an all time high at $44 8 million USD accelerating by 24% John you outlined the margin.
<unk> reached 13, 6%.
We made the decision to reinvest some of these monetization gains into our price competitiveness and more attractive shipping tariffs, increasing consumer incentives to 11 million anyway.
Q4, 'twenty one from three.
<unk> 3 million in Q4 2000.
I would point out here that the <unk>.
Q4, 'twenty levels were very modest and were down 45% compared.
Q4 19.
Despite more than tripling consumer incentives level gross profit, which is net of consumer incentives was still up by 2% year on year and up 22% compared to Q4 19.
Gross profit as a percentage of Jimmy decreased from 12% in Q4, 2002, 10-Q, four 'twenty, one which is more than one five percentage points above the margin level.
Q4 19.
We are overall very pleased with the strong performance of degradation in Q4, 'twenty, one and we continue building your monetization streams, such as advertising all logistics as a service to further increase the earnings power.
Let's now move onto cost on page 24.
Why do we are in the phase of expansion and increased investment we are maintaining strong cost discipline.
As you can see we continue generating logistics efficiencies on a volume unit basis.
We've seen rent expense increased by 32% Julio why orders accelerated by 40% over the same period.
We've seen an expense on a per order basis is showing a steady decline over the past two years, reaching two seven USD per order in Q4 'twenty one.
Moving onto sales and advertising costs page 25. This has been a key area of investment for us in the second half of 'twenty one after six.
Six quarters of significantly reduced marketing spend.
In Q4, 'twenty, one we continued ramping up marketing investments across channels.
<unk> at a slower pace compared to Q3 'twenty one.
Sales and advertising expense increased by 159% year on year in Q4, 'twenty, one compared to 228% year on year in Q3.
On a compounded basis sales and advertising expense was 35% comparable.
19.
Over 57% of the year on year increase in sales and advertising expense is coming from the increase in above the line marketing such as offline TV and video advertising, which are aimed at driving brand awareness and consideration.
All sales and advertising spend is discipline and targeted.
To optimize our overall marketing spend allocation by channel. In addition to our existing marketing optimization tools, we are deploying and enhance return on marketing investment.
Rami model.
This is a customized enzyme train of multiple years of do me a data to model the differentiated the impact of various marketing activities and channels.
Summer acquisition and loyalty informing the marketing budget allocation.
Informed by the rummy modality as well as in depth customer research in selected markets.
We rebalanced, our marketing investment mix.
We have done so by increasing the share of offline media and video advertising to drive awareness and activation and replenish the funnel of consumers.
In Q4, 'twenty, 150% of all sales and advertising expense was allocated to online marketing campaigns.
1% offline media and digital advertising and 9% of staff cost.
In Q4 2000.
Your line in video advertising accounted for only 17% of sales on advertising expense.
With online marketing campaigns, and staff costs, representing 63% and 20% respectively.
We are confident.
These targeted and disciplined approach will allow us to further improve marketing efficiency as we move beyond the initial phase upfront.
Turning to technology and G&A expense on page 26.
Technology is another area of increased investments in technology and content expense, reaching $13 1 million USD.
51% John .
<unk> three compared to Q4 19.
<unk> is the backbone of our platform and we are increasing our investments in this area to enhance user experience and engagement on our platform as well as overall operational efficiency.
In Q4, 'twenty, one we initiated a revamp of our own base structure and content to simplify navigation and product discovery to.
To support these efforts, we have been expanding our technology yet.
In H two 'twenty, one we opened a new tech.
So which out over 120 technology professionals at the end of 'twenty, one taking the total count of technology staff across the group to over 400.
G&A expense, excluding share based compensation reached $32 million in Q4, 'twenty, 122% year on year.
This was mostly due to a temporary increase in professional fees.
And uptick in staff cost.
As we strengthen the management team selected areas to support the growth of the business.
G&A costs, excluding SBC remains 15% lower in Q4, 'twenty, one Concord to Dell level in Q4 19, as we mentioned cost discipline in this area.
Before moving onto the balance and cash flow items I'd like to wrap up on monetization and cost with another view of our priorities on these fronts in 2022.
Page 27 outlines selected initiatives, we intend to pursue in 'twenty, two to increase monetization and cost efficiency.
On the monetization front.
Diversify our revenue streams and drive more revenue from our platform assets.
We want to grow advertising by expanding the range and efficiency of our advertising solutions, while increasing the take up of these services.
Sellers and third party advertisers.
Jeremy receptor audio to Julia Express in the context of free shipping.
<unk> is a promising revenue streams that we intend to further develop in conjunction with free shipping.
<unk> start to see sales at least from free shipping.
Last but not least we intend to further develop our logistics as a service offering to third party businesses.
This activity was rolled out in 2021, and we have seen very good traction there last year, we plan to build on this momentum to acquire knowledge experience and increased revenue from this activity.
The development of newer revenue streams out.
Reduced reliance on commissions and shipping fees from consumers, which since making support usage growth.
On the cost front, we intend to drive more operating leverage and efficiency as we scale. The platform, we expect increased volumes to support fulfillment cost efficiency.
On the sales and advertising front, we expect our brand awareness and activation investments to gradually translates into new consumer add other than GMB growth, thereby supporting marketing efficiency.
Let's now turn to balance sheet and cash flow items page 28.
Apex in Q4, 'twenty, one was $4 4 million USD.
Third to less.
In Q4, 2020, mostly due to purchases of technology and logistics equipment.
Net change in working cap resulted in an inflow of $4 1 million and noise in Q4 'twenty one.
This was mainly a result of an increase in payables related to the uptick in the first part the activity as well as the psalter receivables cycle.
Cash utilization for the quarters defined as cash used in operating and investing activities excluding investments in financial assets was $66 6 million USD in Q4 'twenty one.
Sorted by the working cap inflow during the quarter.
At the end of December 21, we.
We added liquidity position of 500.
13 million USD.
Of $117 1 million of cash.
And cash equivalent of $395 7 million USD of time deposits and other financial assets.
With that.
In order to <unk> for concluding remarks.
Thank you Antoine.
We closed 2021 with strong momentum executing successfully on our growth acceleration strategy and we posted all time high levels of consumers orders T&D, new highs in terms of when utilization and the combination of accelerating usage growth and increased monetization.
Our essential stepping stone towards profitability.
We have brought forward today an illustration.
Ladies and gentlemen, please hold a moment, while we reconnect the speaker.
Hello, everyone I think over from <unk> I think he is weakening.
<unk> Q1, Jeremy.
Okay, and then ill.
Yes.
Okay.
Okay, Great sorry, guys I got dropped off.
On the call and we were about to show the Nigeria case study. So we are on page 29, and then Pierre.
This slide.
We are illustrating how the scale is taking us towards possibly you can see that we have been exited.
This is the Blue line on the chart. One case you are looking at the presentation, we have grown GMB over the last two years.
And during Q4 by a factor of one seven.
At the same time, we have been accelerating monetization.
That is represented here as the gross profit after fulfillment and before consumer incentives.
So those again looking at the presentation here, we are looking at the Orange bar and you can see that we have been growing steadily over the last two years.
And by a factor of two four in Q4.
And finally, you can see on this chart as well, our local G&A, which represent our cost structure to run the business locally.
Now for.
For the last five quarters.
Monetization has been paying for the local G&A base.
This is one new milestone that we wanted to bring forward is another positive development on the Baskin possibility.
On the benefit that scale brings to the business.
As you are well aware is our largest market represents about 2025% of the business depending on the metrics you think so it's great to see that our largest market as reached this milestone.
On page 30, we.
We have recapped here the key initiatives for 2022.
And we would like to share some guidance for 2022.
We intend to further accelerate <unk> growth.
As a reminder, we grew G&P by 15% in each to 2021, and we intend to continue to build on that momentum in terms of investments.
We are going to deliver that growth acceleration with similar levels of investments as in 2021.
For example, we expect to invest between 50% and $55 million in sales and advertising expense in the first half of 2022.
This compares with $55 million during H two of 2021, so overall.
A very similar level of investments and no further increase in absolute terms during the first half of 2022% of advertising.
For EBITDA, we expect the overall adjusted EBITDA loss for the full year to be in the range of 200 to 220 and again. This compares with $1 97 in 2021.
Finally, we expect to invest between 15 and $25 million Capex. This year. This is an increase versus 2021 during which we invested $7 million and this investment is focused on our logistics platform and will allow us to increase our reach improve the speed of delivery and deliver also cost efficiencies going forward.
Allotment increased monetization and cost efficiency.
We're very excited by the prospects of the business in 2022 and beyond and believe we have in <unk>.
All of the building blocks to take to get to profitability.
Very much for your attention and we're now ready to take your questions.
Thank you ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that if you are listening via speaker phone that you. Please pick up your handset for optimum sound quality. Once again, if you have any questions or comments. Please.
Press Star one on your phone now if you wish to leave the queue. You May press Star Q. Please hold a moment, while we poll for questions.
And our first question today is coming from Aaron Kessler at Raymond James Your line is live you may begin.
Great. Thank you and congrats on the acceleration a couple of questions first just maybe ill, let the new buyer cohorts can you just talk about some of the quality of the new buyers in terms of repeat activity.
Engagement is always kind of concern.
Centers that youre tracking some non repeat buyers as well. So if you can maybe talk through that and then maybe in terms of the brand advertising opportunity as well we've seen obviously in the U S.
Opportunities with FMC G advertisers on platforms like Amazon If you can just talk about.
What youre seeing there today and maybe the opportunity going forward on the brand advertising side. Thank you.
Great. Thank you Erinn.
Yes, very good question on cohorts and incentive.
Something that we have observed also as well in the past that the type of incentives that are being used can drive.
Better.
And cohorts or worst cohorts in some cases and very clearly for us the increasing the customer lifetime value and optimizing the customer acquisition cost at the same time is very critical and key objectives.
We use of course themselves amortizing into consumer incentive to drive just that.
And we're very confident that the type of consumer incentives that they're deployed or incrementally driving the customer lifetime value and they are driving overall long term.
<unk> of the consumer lifetime value certainly.
And in.
In order to to measure that of course, we look at a number of Kpis you can see that the number.
A number of holders for consumers has been trending in the right direction. If you look at the quarterly active consumers that we're providing now the GPI, we can see that the number of orders for consumer is increasing.
And certainly we've seen that all the initiatives around what we call. The junior everyday <unk> drive also our free shipping and more personalization convenience FMC G. All of that is there to increase the frequency and the loyalty of the consumers.
And.
We will continue to see increased kpis with this still very much confident here in terms of the SMC youre very right.
Certainly we have with many of those big brands that we have and displayed on the slide and that Jeremy talked about we have what we call joint business plan and we work hand in hand with them in order to grow the business in order to grow to the online business that they are generating for junior.
And as part of that we have joint business plan and we are joined advertising clients Southern Edison.
Driving for us very promising prospects for the advertising revenue.
And as we have mentioned in the presentation. We also have a significant part of the FMC G that we do on <unk> basis, which is in the retail and the Brent there. They are also willing to participate into advertising campaigns and they are supporting.
Our retail with advertising campaigns. So certainly we think that the evolution of junior towards this mix of category is going to also support the advertising revenues going forward.
Great. Thank you Sasha.
Thank you. Our next question today is coming from Lamont Williams at Stifel. Your line is live you may begin.
Hi, guys. Thanks for taking my question.
So could you just talk a little bit about the.
The change in the operating model for Jimmy.
In Nigeria could you just give us a little more color on whats.
And what that entails and then secondly.
You mentioned and then.
In the release.
Study from Boston Consulting group.
I think it appears it looks it looks like some of the customers looking for more free shipping is there anything that study else anything else that that study would have.
Revealed about what's our consumers are asking from a platform.
Thanks, Dan.
Sure.
On the first question.
We have discussions with local regulators Virginia.
Of course on an ongoing basis, and sometimes we are making adjustments to the to the operating model and to the type of integration.
Processes and flows that are that are happening and here. This is the one that is taking place in Nigeria and for US it's very important to maintain the dialogue with the relevant regulators obviously and.
<unk> compliance with existing or anticipated regulations, because regulations in fintech and payments in general or are evolving are evolving.
On a regular basis.
And so here its in the data the model and.
And we will actually see it's hard to estimate.
The heads whether the impact of those type of changes that we expect this arrangement to be.
If there is any disruption, we expect any disruption to be transitory.
Alright.
And then.
And.
I'm sorry. Your second question alignment is to make sure is on the.
Yes.
Findings from this study with them.
This study of course right.
So I think the study is really.
In depth market study.
About a range of topics around the consumer and the expectations and and their perception of.
The value proposition and how can we maximize that.
Any change that we're making to the value proposition right. So it's very <unk> and help us to do more targeted.
Offering and have a value proposition towards segments, which are more likely to use ecommerce and so on and so forth I think free shipping is one of the conclusions that we have made rate and we've taken a hard look at the.
And the ROI of the implementation I appreciate being especially on the <unk> Expressway of course, we don't Nutri shipping on everything we're going to depreciate. The <unk> Express, which is going to enable us to drive more use AG in general, but it is going to also enable us to address some of the of the concerns that ore or the expectation.
Around the speed of the degree because for example, when you're experiencing.
And then even faster than the marketplace and also the consistency of the quality of the products, which are a third engine express because of course, we have more control in those and so.
There is a number of I would say.
Adaptations of the customer experience, which can have higher return on investment than others.
Moving the return experience for example, accelerating the speed of delivery in certain categories.
And so I think there is a lot of.
There is a lot of let's say quote unquote small findings, which are going to help us.
Drive the value proposition for <unk> and.
Those are some of the encompass.
Okay, great. Thank you.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone now.
Our next question today is coming from Luke Holbrook at Morgan Stanley . Your line is live you may begin.
Alright. Thanks.
On the call I had a question just on the sales and advertising spend that's ramped up quite significantly over the last few quarters. It looks at states out in next couple of quarters as well can.
Can you give us any more detail why that's being spent on a geographic basis is this more seen as a push into <unk> do you kind of alluded to tell on slide 29.
Or the headset to Egypt, more and so any color there would be useful and just anything you can provide on your long term plans here as there is something that we should expect more sustained level of sales and advertising heading into the back part of this year and also 2023 as well any color that would be so thanks.
Yes of course, it's very good questions.
The spend is really I would say well spread across the portfolio of countries and there is not like one there is.
The geographical.
Geographical pushing one country or the yogurt and we have accelerated the level of spend pretty much across across all countries and each to 2021 right. So there would be some nuances to that but in general. This is an increase that is really well spread and so at the minute.
Focused on Nigeria, or focus more on Egypt, and quite well balanced right in and respect respecting I would say the size of our existing operations.
And relative to the tight right. So no no particular country focus there that is holding.
Ordinary.
And then I think for each one we really want to invest about $50 million and this is really the same level that we have invested in each too so here.
We don't intend to further increase the levels of investment that we have done in Q3, Q4, but rather maintain them and so we want to see further accelerations of usage metrics with a similar level of spend in absolute terms at least for each one right.
And that's the guidance we have for the first half and then we'll take it from there and.
<unk> TV acceleration and continue to observe the customer lifetime value and the level of acceleration that we see that at least for each one we have similar level returns as the H two.
After that we will have to see.
That's very clear and just one quick follow up just on slide 29, you gave us some.
Illustrative details on launch area do you have any plans to disclose more financials on a geographic basis that we kind of see more of a spread of your operations.
Okay.
Well, we certainly are committed to bringing them.
Any relevant faster profitability milestone right. So we have done that in the past several times.
Certain milestones.
In the country, it's a very good illustration and to show deep dive of how the business is playing out, especially in Nigeria, and the largest country. So certainly we plan to continue to bring those milestones and then we have also.
Always volunteered.
Sort of relative size of the countries, Nigeria, being 20% to 25% <unk> being around 20% and then having the other countries other than being.
Plus or minus between five and 10% rate. So if that were to change I think we would also bringing forward I think the weight of the countries. Although we have never published it per se has not really changed and we have we have always volunteered those ratios to new a sense of the presence and also the geographical.
Diversity of Virginia is one of the amazing asset of the company because we are not overexposed to a given market and and.
And we're not overexposed to a macro situation in one geography right tenants that nice balance I think that is very attractive for for for us to have the presence in all those countries and to have some strong foothold in countries like Nigeria, and Egypt, but also a strong presence elsewhere. So again this we volunteer.
And for now we have more plans to disclose on a regular basis specific geographical kpis that we always would volunteer this.
And highlight if there were any big changes.
Understood Thanks very much.
Thank you once again, if you have any questions or comments. Please press star one on your phone now.
And our next question today is coming from.
Sarah Simon at Darrin Baird. Your line is live you may begin.
Yes, good afternoon.
Ground noise.
But just had a question about the great acceleration that you talk about you referenced greatest acceleration relative to the second half.
Fiscal 'twenty, one, which I think was.
About 15.
Is that the benchmark against which you're expecting to accelerate or should we really be thank you heng.
Q3 was less great in Q4 Q1 should be mobilized.
Q4, Im sorry, Im sorry, just a bit more color on how youre thinking about that.
It would be helpful.
Yeah. It looks alright. Thank you for the question at this stage really I think we we.
We want to see more acceleration versus where we are now right. So the benchmark for us because there can be some quarterly variations and so on and so forth. We want to make sure that we are accelerating versus where we come from at least on an H two basis right. So.
Of course, then there's D&B alders consumers.
We are expecting to accelerate in the benchmark for US right. Now is H. Two then of course as we as we see it coming we will.
Were published more more data, but for now this is the benchmark we use.
Okay. That's helpful. Thanks.
Thank you.
We have no further questions in the queue at this time.
I will now turn it back to management for any closing remarks.
Well, thank you very much and looking forward to a great 2020. So thank you everyone take care bye.
Thank you ladies and gentlemen, this does conclude todays event you may disconnect at this time and have a wonderful day, we thank you for your participation.