Q3 2022 Jumia Technologies AG Earnings Call
[music].
Good morning, ladies and gentlemen, thank you for standing by welcome to <unk> results Conference call for the third quarter of 2022.
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 suffer to mirror head of Investor Relations for Julia. Please go ahead.
Thank you.
Good morning, everyone. Thank you for joining us today for our third sports our 2022 earnings.
Excuse me.
I think absolutely, yes, and <unk> <unk> executive Vice President Finance and operation.
As previously announced a new management team have been important.
Uh huh.
Especially when you net.
It sounds from your question.
The supervisory board has appointed Kaki and offline as members of the company's management and board Husky, our acting CEO has been with the company since 2014 and handheld multiple senior leadership roles, including CEO of hybrid.
He was executive Vice President Africa with responsibility for the E Commerce business across Africa.
He has a track record of successfully scaling E Commerce operations in Africa with a strong focus on profitability. He has been based in Ivory coast in 2014, and he's a night worrying national he brings a deep understanding of our business and the markets that we operate in.
One who you know with previously group CFO and has now been elevated to executive Vice President Finance and operation.
One has been resumed yet for over six years and plays a very important role in the organization. He has expanded areas of responsibility.
Would that benefit from his expertise and deep knowledge of the business.
We now operate a deep hybrid.
We would like to remind you that our discussions today will include forward.
Actual results may differ materially from those indicated in the forward looking statements.
Moreover, these forward looking statements made only to our expectations and up to date, we undertake no obligation to publicly update or revise these statements.
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.
Published on April 29, 2022.
That's our mission.
In addition on this call we refer to certain financial measures not reported in accordance with I have Brian you can find reconciliations of these non <unk> financial measures.
Corresponding I embracement actually measures in our earnings press release.
Which is available on our Investor relations website with that I hand over to.
Thank you Stefan.
Welcome everyone and thanks for joining us today.
On this call we will walk you through our Q3 performance and provide you with an overview of our strategy to take the business to profitability.
While the results of the third quarter show some progress towards breakeven.
Want to make even more meaningful progress and further reduce our cash utilization.
Adjusted EBITDA loss reached its lowest level in five quarters.
At $45 $5 million down 13% year over year.
Adjusted EBITDA loss as a percentage of Jimmy.
Just below 20%.
18, 9% of Jim.
The reduction in adjusted EBITDA loss was driven by strong increase in gross profit, which was up 29% year on year and a significant reduction in sales and advertising expense, which was down 32% over the same period.
This is very much in line with what had been communicated to the markets. This year, which is an acceleration with aviation coupled with cost reduction.
If the results and progress on <unk>.
Thanks for the question why we need to revise strategy to take advantage of profitability.
Yes, Sir.
Because that's where our confidence that we can do much better across a number of areas.
And this will help us make even more meaningful progress towards profitability.
We want to drive sharper execution, which is even more critical in the context of a challenging macroeconomic environment.
We have outlined on page six the highlights of the strategy.
Yes.
Neither strategic levers of our path to profitability users growth just discipline monetization and the continued development of <unk>.
And that's no surprise to us profitability when your larger scale more revenue and a much more efficient cost structure.
However.
This is all about the details of execution, what levers to pull to drive growth in a sustainable manner.
Where to cut cost in a way that doesn't affect our long term goals and how to monetize while adding value to the citizens.
And this we believe requires two things.
One is a deep knowledge of the market dynamics and operations underground markets.
And two obviously focus and discipline.
On the first point.
Execution details of our strategy are well rooted in deep knowledge of the impressions in the market specifics.
We use the learnings from our 11 markets in many case studies of success to inform the strategy.
The execution of the strategy happens Undergrounds in Africa.
That's why we have taken very swift action over the best week significantly reducing our presence in Dubai and relocating most of the group leadership to Africa.
On the second point.
We need much more focus in terms of scope of projects and activities that we undertake.
We cannot be sharp execution, if we're spreading yourself too thin across too many projects we.
We need to stop projects that bring limited value to the platform and focus on what matters.
And again to know which projects matter. The most we need to be underground with Mexico, the feedback from the markets.
So before providing you with more details on the strategy and we'll pass it onto Antoine.
<unk> for the Q3 performance. Thank you.
Thanks, Frances Hello, everyone.
I'll start with the operating performance and Kpis of E Commerce and Juliet.
Before moving on to commentary all financial metrics.
In terms of e-commerce dynamics, we sustained growth across all relevant usage kpis, despite more challenging macro environment.
What's all the active consumers reached $3 1 million.
3% year on year, as we continue to acquire new consumers and grow the base of returning consumers.
Powders reached nine 4 million.
11%, John Yao with sustained volume growth across product categories with the exception of <unk> digital services, where we scaled back marketing investments and incentives to support unit economics.
The fastest growing category in order terms was food delivery, which continues to exhibit strong momentum with orders up 38% year on year.
Food delivery remains a core aspect of our consumer value proposition.
And we will continue driving its development across our largest markets and in Nigeria and talk to you at all.
Jim We reached 247 million USD at 1% year on year and up 14% on a constant currency basis.
<unk> wasn't material Edwin to Jimmy performance in the third quarter of 2022 with all local currency depreciating against the U S.
In particular, all during the nine months period, ending September <unk> 2022.
Compared to the same period of 2021, the Nigerian naira.
<unk> down in the West African CFA depreciated by 514, and 13% respectively against the door.
In terms of category trends, we started to see a stabilization of the Jim do you get to go remix phones and electronics accounted for 36% of Jimmy in Q3 dollars 22 in line with our contribution in Q3 'twenty one.
The fastest growing category in Jimmy Choo them towards delivery of 25% year on year.
Funded by the strong volume growth in this category.
While usage growth LDAP in Q3, we observed a softening of usage growth trends as we move towards the end of the quarter due to a deteriorating macro environment.
The combination of inflation and commodities.
In food prices alongside the stronger dollar and weaker local currencies, you're waiting on consumer spending sentiment.
Industrial makes it more challenging for centers to source goods, particularly for those more exposed to imports.
With that in mind, we took the decision to suspend the Jimmy growth guidance for the full year.
We will come back to that at the end of this section.
Let's now turn to Jimmy at the operating metrics.
CPD reached $66 6 million USD.
At 3% year on year, and 16% on constant currency basis.
It was supported by the strong growth in both Jimmy MTBE ethanol food delivery platform.
I'll bet, Shawn penetration of G&A as a percentage of Jim will remain stable at 28% in Q3 'twenty to <unk>.
<unk> 27 in Q3, two in Q1, as we maintained a disciplined marketing approach to driving on platform penetration.
Jimmy I pay transactions reached $3 million in Q3, 'twenty to down 1% year on year.
<unk> software transactions performance and the Juliet.
As we scaled back marketing investments and promotional intensity in the at.
Overall, 32% of orders placed on the junior platform in Q3 dollars 22 were completed using zoom they're paid.
236% in Q3 'twenty one.
As you may have to penetration is almost 100% from the junior pay at the reduced share of junior App and the transaction mix led to a decline, although all Jimmy IP transactions penetration as a percentage of orders.
It remains a core part of our platform.
And we intend to continue driving each development both on <unk>.
In off platform in a very disciplined manner.
Let's now move on to financials, starting with revenue.
Revenue reached 55 million USD.
At 18%, John you're at 33% on a constant currency basis.
This was driven by strong momentum in marketplace revenue, which was up 27%, John Deere and 41% on a constant currency basis.
First off the revenue growth was softer at 2% genre and 17% on a constant currency basis as we enter two less business on the <unk> basis compared to Q3 'twenty one.
We retained an opportunistic approach to our first study activity.
The aim is to bridge gaps in the assortment on our platform.
Doc basis, we intend to announce for study business margins by improving the processes and systems in this business and reducing business complexities by scaling back to FMT do category in certain countries.
Other revenue was 53% year on year, and 69% on a constant currency basis, largely due to the momentum of our logistics of the salaries offering which generated over 1 million USD fruit and you during the quarter.
Let's now unpack the growth dynamics of our marketplace revenue.
Marketplace revenue reached.
$32 2 million USD in Q3, 2002, boosting its fastest year on year growth rate in nine quarters.
Two third of the marketplace revenue growth came from commissions.
Which reached an all time high of $12 6 million USD.
56% year on year, driven by commission take rate increases implemented over the past couple of quarters.
Value added services was our second largest source of market based revenue at $8 4 million USD, 32% year on year.
This was a result of increased logistics revenue from local and international centers due to increased price selling of services.
On the flip side fulfillment revenue, which includes shipping fees charged to consumers reached $7 9 million USD down 11% year on year as a result of the selected deployment of next day free delivery.
We are currently making adjustments to the free shipping program, introducing higher minimum basket size and further restricting geographical scope to support our unit economics.
But in the case.
Marketing and advertising was our fastest growing revenue streams.
64% year on year, reaching $3 3 million USD.
This was the result of our sustained floor to enhance the value proposition of fault AD solution throughout centers and third party advertisers.
The accelerating marketplace revenue growth drove strong gross profit growth, which was up 29% year on year and 43% on a constant currency basis, reaching 33 million USD.
And gross profit margin as a percentage of <unk> reached an all time high of 13, 7%.
Moving onto costs.
Starting with fulfillment expense, which reached $23 6 million USD up 7% year on year and 22% on a constant currency basis.
This was a result of volume growth.
With orders up 11% during this period, but also inflationary pressure on fuel and wages.
While we expect continued inflationary pressure and discuss line in the near term, we intend to improve fulfillment economics in the Midtown by driving scale efficiencies and enhancing productivity physical infrastructure.
Sales and advertising expense was $16 4 million USD down 32% year on year and 28% on a constant currency basis, as we grow to more discipline to our marketing investment.
This led to an improvement of marketing efficiency ratios with sales and advertising expense for order decreasing by 38% from two eight to $1 $7.
To order.
Sales in <unk> expense as a percentage of Jimmy decreased to six 8%, which was a 325 basis points improvement year on year.
While this progress is encouraging we intend to drive even further marketing efficiencies by improving the relevance and cost efficient effectiveness of our marketing channels.
Let's now turn to tech and G&A costs.
Starting with the hiccup.
Content expense, which reached $13 6 million.
84% year on year, and 56% on a constant currency basis.
This was mostly due to technology staff cost increases due to headcount increases completed in <unk> last year.
That said, we have been much more disciplined on the headcount front over the past few months.
We drove a decline in technology staff growths on the sequential basis, which explains the 5% decline in between.
Between the second and the third quarter of this year.
G&A, excluding share based compensation reached $28 3 million USD.
<unk> percent, you're on there and 22% on a constant currency basis.
This was mostly a result of staff cost increases on a year on year basis.
That being said the hiring freezes implemented earlier this year started paying us as the staff cost component of G&A, excluding share based compensation declined by over 6% on sequential basis in Q3 two.
We intend to drive even more staff cost savings and are implementing headcount reductions across a number of areas in the business to create a leaner and more general organization.
Rather than cost we have made good progress in the sales and advertising front and increased staff cost discipline is starting to pay us that said, we do have room to take even more decisive action across cost lines to drive further efficiencies and.
And we have a clear action plan to achieve that.
Let's now move on to balance sheet and cash flow items.
Capex in Q3 2002.
It was $3 million, mostly relating to logistics and technology equipment purchases.
Net change in working cap at a no show impact of $13 1 million USD largely as a result of a significant decrease in trade payables corresponding to the payment of Jimmy anniversary campaign invoices during Q3 2002.
Cash utilization for the quarter was $62 2 million, which is a 5% decline compared to Q2 'twenty two.
At the end of September 22, we had a liquidity position of 200.
85 million USD comprised of 104 million of cash and cash equivalents and $180 million.
Idea of term deposits and other financial assets.
I'll conclude my part with the review of our guidance.
As mentioned earlier in the light of the Haynesville, Italian and predictable macro environment, we have decided to suspend full year 2022, GMB growth guidance as well as gross profit guidance for <unk> through 'twenty two.
Which is linked to Jeremy.
That said, we reiterate our guidance for all the other metrics that we guided earlier this year.
We continue to expect to spend between 75 and $45 million Samsung advertising through 'twenty two.
This implies 700 <unk> expense of $19 million to $29 million in Q4 22 for.
For the full year 2022, we continue to expect an adjusted EBITDA loss of 200 to 220 million and USD. This implies adjusted EBITDA loss of 42% to 62 million in Q4 'twenty two.
For the full year 2023, we expect adjusted EBITDA loss to be lower than for the full year 2022.
We'll be providing quantitative guidance.
That's a spot therefore, Q4 'twenty two earning release.
Leslie we reiterate our capex guidance for the full year 2022 of 10 to 15 million USD.
With that.
<unk> fallen nowhere in view of our strategic plan.
Thanks Anton.
We are committed to making meaningful progress towards profitability.
We have a clear plan to get there and have already made significant management changes to ensure that we have the best team to execute on this strategy.
I will start with the first delivery of the strategy, which is enhanced business Lucas.
This is an overarching principle of our strategy that will guide the execution across all areas of the business.
We intend to do less and better.
We plan to allocate our resources and teams to projects that bring proven value to our platform.
System.
This means that we will be pausing or stopping projects does not meet those criteria.
Here are some examples.
First we plan to discontinue junior frame.
Over the past couple of years, we tested the concept of a monthly subscription program offering free delivery to consumers.
The results from these experiments in.
In terms of consumer traction and stickiness fell short of our targets as the market is probably too early in terms of adoption drove.
That's why we are not stopping these initiatives.
This is an example of how we plan to drill really some confusion in the timely manner from the experiments we do we.
We aimed to assess within a reasonable timeframe with our pilots are successful on that.
And take action accordingly to avoid committing resources for too long to projects that do network.
In addition.
We're suspending logistics services to an unequal with clients in several countries.
We believe management's defaults in many countries will be better invested in improving the logistics efficiency for the core E Commerce business.
However, we will continue developing this activity in countries, such as Nigeria, Morocco and in every case, where the proof of concept for this service has already been established.
And where we are able to allocate the right resources.
We are also scaling back our first party grocery e-commerce in geographies, where the category remain subscale in order to support our uniti for them.
Grocery can be a very relevant category for more advanced markets with sufficient for cement efficiency.
In smaller markets.
It has added significant operational complexity.
Without providing much upside in terms of consumer adoption and stickiness.
Priority is to master the basics in the smaller markets hence.
Hence our decision to discontinue first party grocery there.
Does that two examples of first party grocery and logistics of the service.
Think of how we intend to drive execution and a more nuanced manner by geography.
It is difficult to push projects uniformly across all markets given the differences in scale and development of our platform.
We need to do what's right for.
For each market given stage of development.
Sometimes.
Just firstly focusing on the basics.
But I have just covered is.
As a non exhaustive list of discontinued or amended project that we will be constantly reviewing.
To optimize our capital and resource allocation.
Moving onto the system and the vertical strategy.
Driving sustainable long term growth.
To enhance e-commerce fundamentals.
Historically.
<unk> growth was mostly fueled by higher promotional intensity on marketing spend.
Which led to a deterioration of unit economics in phases of growth acceleration.
We are confident that we can simultaneously improve our economics and support long term growth by working on the core E Commerce fundamentals.
I will that translate in terms of infections.
Mastering the ecommerce basic subscription price and convenience across all geographies.
One of our first priority is to offer customers the best prediction with sufficient stock at the best prices in each one of our core categories.
We're also very early stage of E Commerce development in Africa, and shifting relevant and sufficient supply online can sometimes be challenging.
We have a clear action plan to address that with a focus on core categories.
We mean by core categories, the bread and butter categories of the vessel the phones and consumer electronics home appliances fashion and beauty.
For this category.
We are developing stronger relationships with brands and local distributors to secure supply and get better prices.
Last but not least.
We have room to further improve customer experience and.
Further embed mindset of customer Centricity within the organization.
We plan to continue investing in our technology backbone do in a more disciplined manner to make our platform even easier to use and more engaging focused customers.
To conclude on the usage front.
We are taking a fundamentals led approach to usage growth.
Marketing and consumer incentives are very important and.
And as a place for that to no strategy.
With marketing cannot compensate for gaps and fundamentals product supply.
To address these trends.
Let's now move onto cost discipline.
We intend to take more decisive action on the cost front to drive efficiencies across the full cost structure.
It is of course easy to cut marketing and consumer incentives budgets.
It is much harder to open the box on each and every cost line and ensure that we are operating at the best level of efficiency across each one.
And this is what we plan to do.
On the logistics side for example, we intend to work on each growth components, we plan to optimize our freight and shipping costs by launching type negotiations with our third party partners to ensure we're getting the best prices on each logistic routes.
We are within our physical infrastructure.
In Sam.
To increase staff productivity by enhancing our processes, while working on consumable costs, such as reducing the use of packaging.
We will also take a more disciplined approach.
Category developments scaling back on product categories with changing fulfillment for the mix such as groceries that for each of these things.
On the marketing fronts.
We intend to improve marketing efficiency by leveraging best practices from countries with the best efficiency ratios.
We have made some progress in improving marketing efficiency, bringing.
Bringing it down to $1 $7 per order and six 8% unchanged.
That said, we have countries was much better marketing efficiency ratios.
And importantly listens to learn from these markets.
With that in mind, we intend to focus our spend on the marketing channels that drive the best returns on investments. We will also put more focus on local marketing channels.
Including the above the line education and activation initiatives.
This will allow us to shift to a higher share of marketing expense and to local currencies.
While adopting an approach tailored to our markets.
With respect to technology.
We plan to continue investing in our technology backbone.
We intend to do so with very with more discipline prioritizing our development roadmap on products and features the data immediate benefits in terms of UX for consumers and for service.
Last but not least jenny.
We have started seeing some progress from the hiring freeze implemented earlier this year with staff cost coming down by 6% in Q3 compared to Q2.
We intend to drive most of the cost savings and reduced headcounts will.
We have taken steps to significantly reduce overhead expenses in Dubai with meaningful G&A savings for the group.
And long term benefits from locating decision centers back to Africa.
To conclude on the cost discipline topics.
We intend to work with a very granular manner across the full cost structure and take very deliberate action to fiscal <unk>.
That's nothing to monetization.
We will continue to adhere to a balanced approach to drive growth across multiple revenue streams.
We have made good progress on major addition in Q3 with gross profit accelerating by 29% and gross profit as a percentage of <unk> reached an all time high at 13, 7%.
However.
We are being more cautious with the level of monetization Fisher will play on incentives.
As we also need to improve fundamentals of product assortments supply and prices.
Means depths in the near term.
We do not intend to implement any meaningful take rate increases.
On the other hand.
We will continue developing services that bring value to our sellers.
And broader ecosystem participants such as advertising.
To conclude on monetization.
We look at monetization very much as a byproduct of scale and are focused on driving growth and value for sellers.
To monetize.
Let's now move onto <unk>.
The development of GSA.
End of platform remains a priority for us.
And here again.
<unk> principal of business focus and discipline in place.
We will work on making it a strong enabler for E Commerce business.
<unk> on the multitude of number of products and ventures.
We will retain a disciplined approach to driving on platform payments penetration with disciplined marketing spend and consumer instances.
Lastly.
We continue to be focused on extending our off platform payment processing solution in Nigeria and Egypt.
We have previously obtained obtained the relevance license exclusive.
To conclude.
The strategy that I've, just outlined remains consistent with our core pillars.
The important change is.
Is that it addresses at the same time profitability and growth with a greater sense of urgency.
And there are concrete roadmap of decisive actions.
I'd like to emphasize that the transplant CRO volatility does not affect in any way a very positive long term outlook for Africa.
Africa remains less from CFO increments in the world with very attractive demographics and Digitization dynamics.
Has spent the last decade with junior devoting E Commerce Undergrounds in Western Africa.
I know firsthand the challenges of operating in all markets and successfully balancing growth and profitability.
But I also know firsthand.
We have a great brands, a very strong platform and increased incredibly talented and dedicated teams.
I am very confident that we can build a large and profitable e-commerce platform in Africa.
With that we're ready to take your questions.
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 ask that while posing your question. Please pickup your handset with sitting on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Your first question for today is coming from Aaron Kessler at Raymond James.
Great. Thanks for the questions a couple of questions first just any way to size, maybe the GMB impact from.
From scaling back some of these initiatives that you talked about second.
I think you talked about kind of excess of commission rate increases in the release.
Hey.
For a little bit more details around that and it sounds like you're slowing that increase going forward, but any impact on DMV you felt in the quarter from the higher commission rates as well and then I have a follow up question.
Okay. Let me answer the first two in EMEA will be discussed on this.
And Jim's impacts from scaling back a couple of initiatives.
When we assess the initiatives.
As a function of benefits was discussed in.
In recent basically returning business.
We believe that we can scale back some initiatives.
Without meaningfully humming our top line.
We believe that refocusing.
Thus having dosing.
On the shorter number of projects, depending on geographies will enable them to deliver greater impact on other topics.
Basically the whole point of <unk>.
Refocusing on basics.
So we believe that the total outcome for the business and the positive.
When it comes to commissions increase.
So our point here is very much that we need to create value for the vendors and all virtual.
What drives that.
And it does need to see the value and the benefit from working with seniors and we very much see monetization industry as the <unk>.
I predict a scale.
So scaling with vendor sourcing their pain points will enable us to monetize.
The take rate pressure.
To be monitored very carefully as wonderful cultural kilos for group now.
It's focused on supplier.
Very much pumps to the supply and strong supply.
Our core categories.
And we don't want to.
From high take rates to come in the way. So this is why.
I would tend to be relatively.
Yes.
Zero.
Great and finally, just stay in terms of operating expenses, where do you think the biggest areas for leverage or actual reductions going forward as the G&A or something else.
So I mean.
As we say that we're really going down the whole Janet and we're opening the books every type of cost that we had across the structure.
So we of course looking at G&A, which is.
Possibly one of the most short term impact.
We are already reviewing our central structural.
Headquarter structure into bank with meaningful impact as we speak.
We look at most of the leadership towards Africa.
And with two streamlining of governance and leadership structure across all countries. That's one but we also believe that we were actually quite sure that we have meaningful impact to capture from logistics efficiency.
You'll see that you'll see the evolution of costs that we posted this quarter.
I would not say that we're super happy with the trend and we believe that we can do better.
We can capture a lot of efficiencies.
With many details measures across our business lines.
One very simple and basic example is our use of packaging material.
That varies a lot across different countries and potential sprain many countries towards the best benchmark that we have.
Douglas for logistics, we can also generate significant savings in marketing.
Also have countries that Shaw better practices.
And so we can learn from those countries to drive greater efficiency.
So we do really believe that we have efficiency and cost cutting conjecture pretty much across the board agenda.
And we're confident that we can achieve with them with the team and the plan that we have.
Great. Thank you.
Your next question for today is coming from Catherine O'neill at Citi.
Okay.
Okay.
I just wanted to ask if you could comment in a bit more detail on that.
One of the things you mentioned in the release about seeing something if its trend towards the back to the third quarter.
We should expect to persist in the fourth quarter could you maybe just provide a bit more detail on what you are saying that vary by market.
How much you sold out so it deteriorate because we went through the third quarter.
And the other thing I want to talk about with the product mix I think you said youll even away from CJR might've misheard that but you seem to be that.
Siding consumer electronics section GG et cetera.
Stay how should we think about.
The sort of take rate.
If Youll me thing.
Perhaps toward back to work.
Could you made excellent 8%, specifically that would take rate and then the other thing I want to talk about with the cash balance it looks like a similar <unk> about $70 million in each quarter and I just wondered if you could give us any sort of idea on when you think this should start to vacate in 2017 initiatives kick in on the cash side.
Okay. So let me let me take the fluctuations are manifest and transform them.
When it comes to catch them.
Regarding sourcing usage trends that you mentioned.
You see I mean do you see this in the quarterly reports, we stay 1% GNP growth shareowner over the quarter.
So you can I mean, I guess, everyone can draw their own conclusions about what something here.
Obviously, we've been.
We've been dealing with the volatile and difficult microeconomic context.
Significant local currency depreciation in Brazil.
Which list, particularly and it's a great thing.
Example of how it can impact us.
Led to many governments are taking measures to protect the currencies for example, restricting imports.
Which directly impacted our ability to get supply on the platform.
So this is a kind of.
And that would have to fight against.
And this is very much something that we see across all the markets. There are some differences of course, some markets are more affected by those initiatives.
But this is something that we see across Africa at the moment.
However, we're very confident that our plan to focus on supply and distributors and increasing our relevance to the biggest players in the market.
Ken can mitigate those impacts and is the right one.
Complicated macroeconomic conditions.
Then on your second question when it comes to the mix of categories.
So as I mentioned with getting back first party grocery and some geographies not all of them by the way.
Want to make sure that we keep pushing and we keep investing in that segment and <unk> rapidly makes sense.
We actually I mean.
The fact that we want to be more reasonable and more focus.
In the new categories that we developed.
Prevent us from doing the right things on the other categories. So we are also developing hydro AIG categories, such as consumer trends the convention.
This does not conflict with our push on the everyday categories such as.
Juicy.
In session for example.
Specifically on your question on the take rates on those.
Specifically to <unk> indeed.
Indeed, we don't sell a phone or laptop or TV with the same margin at that.
And that we would capture the 400 CFO shoes.
However, with metals to us as the whole.
All equation with our logistics costs and lower marketing costs.
Perfect.
On the consumer electronics categories are operating model works and we can get very had fee economics across vertical markets from those categories. So we're very confident in the fact that we need to develop.
Supply in these categories.
Conflicts with.
We focus on everyday categories.
That should take the cash on cash I think the third one.
The cash burn is the function of three things.
Ex working get movement in the media regarding the Capex 2022 has been so far year of investment and we intend to decrease the capex investment coming.
Quarters on working cap, we have been this quarter impacted by payment of Jimmy under certain marketing invoices, which impacted significantly.
And.
We must keep in mind that in the market. We are operating in given the current macro.
Trust with suppliers is very important and we have consulted.
Decided to be Super sharp on payment terms and even from time to time to secure the product to pay in advance instead will be conducted at all Paul Castro.
The key driver to reduce cash burn.
Reducing the costs and we're going to reduce EBITDA.
It's a bit too early to give more guidance. Although it gives you more information in the Q4 release.
Okay.
Your next question for today is coming from La Mark Williams at Stifel.
How are you doing thanks for taking my questions.
The first is on food delivery has been one of the faster growing categories over the last couple of quarters could you just talk about the unit economics.
So that category for food delivery overall.
And then secondly on the sales and marketing cost.
How are you thinking about the balance between what level you can have for.
Marketing costs and still grow here.
Customer basically at a pretty healthy rate, how do you think about where that debt balances in the channel.
How long will they kind of an absolute.
Right.
Thank you.
Alright.
First question.
With delivery, so thats a restaurant segments.
So as you mentioned the trends are pretty good plus 25% <unk> growth and we're very happy with the dynamics that we see in the sector.
This is very much a core part of our business and we intend to keep on pushing.
Sigma is just being very successful geography, Luke mentioned here.
Any way you mentioned that Couldnt mix.
This is a segment that we intend to manage with the same level of increased discipline.
Increased focus and increased.
Increased level of execution across the board, we are open to stopping projects on a country by country basis, it could be leased.
And we really apply the same principle.
Turning to the rest of the business.
On your second question towards the balance between marketing and growth.
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Very interestingly.
We have many success cases.
And the group of countries that have been able to manage very very very good levels of efficiency in marketing spend while building new categories and building growth for the whole business and the Adobe has a theory.
Hello, Sir.
So we don't really see.
We don't really see a balance between growing spending in marketing, it's more about doing the right thing spending right.
On the right channels within their own with the rideshare business issues.
Having said that for Q4, we reiterate our guidance of muscle.
And we of course must extend remains part of the strategy.
Yes.
And I may have missed your first question.
Yes.
No that's it but actually can I just follow up question on the on the assortment.
You're talking about there are some gaps in the assortment and you kind of even move back into consumer electronics are there any other categories, where you might see some gaps.
Absolutely and assortment.
That you can give us give a little more detail on it.
Very good question. So as we mentioned we I mean.
We want to open that country by country Jewbush debate tuition is what makes sense for the business.
Level of granularity.
When you look country by country.
The over I mean, the big picture is that our core categories are more or less the same across the board and that's where that's where we know that we have very good customer traction and we can have healthy couldnt be counterintuitive effect.
Electronics, including televisions computing.
Consumer appliance home categories fashion and beauty. These are the bread and butter categories.
E Commerce in general.
And across those categories, we see that all countries are not at the same level of development and we are trying to do the right decision country by country category by category distributor by distributor brand by brand to two to improve our assortments and get the supply.
These are really the basics, we want to we want to win.
At this stage of course, there are ways to go launch with deeper into Q2 extending to new new.
New categories.
So I can give you. An example, that's sure I've recorded great progress.
In the category of agricultural inputs.
Agricultural tools and implants and instruments.
This is just an example, we're open to expanding into new new categories Thats really at this stage, we just want to make sure we get the basics right.
Okay, great. Thank you.
There appear to be no further questions in queue I would like to turn the floor back over to Francis for any closing comments.
So I would like to thank all of you for joining the call today, we will be very much looking forward to sharing with you more progress on our plan two months. Thank you very much.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.