Q4 2022 Jumia Technologies AG Earnings Call
Good day, ladies and gentlemen, thanks for standing by welcome to Jimmy OS results Conference call for the fourth quarter of 2022 I guess.
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 stop with the mirror head of Investor Relations for Julia. Please go ahead.
Thank you.
Good morning, everyone. Thank you for joining us today for our fourth quarter 2022 earnings calls.
Yesterday I foresee did you say.
You, obviously want me out.
Oh twin Maggie Masonite executive.
Vice President Finance and operations, who will start by covering the safe Harbor.
Well, we'd 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.
These forward looking statements may speak only to our expectations as of today, we undertake no obligation to publicly update or revise these statements.
For a discussion of some of the risk factors that could cause actual results to differ from the forward looking statements expressed today. Please see the risk factors section of our annual reports on form 20-F.
Published on April 29, 2022.
As well as our other submissions with the SEC.
In addition on this call, but we'd refer to certain financial measures not reported in accordance with Diaphorase you can find reconciliations of these non <unk> financial measures to the corresponding financial measures in our earnings.
<unk> press release, which is available on our Investor relations website with that I hand over to Francis.
Thank you Stefan.
Welcome everyone and thanks for joining us today.
I would like to start with a brief update on our strategy.
So Antoine and I took on their new roles over four months ago now.
That's very clear. Thank you, Jim you have to breakeven and building a growing and profitable business in Africa.
We took swift action to support our path to profitability.
While it is still early days and there's a lot more that we're working on the first results are very encouraging.
In Q4 'twenty two we made good progress on those strategic purchase.
One.
Have significantly reduced our losses.
Sure.
We have enhanced business focus.
A number of non core activities to support our <unk> mix.
Right.
Have driven meaningful cost reduction.
Q4, it's mostly visible unfortunate events and marketing expenses.
We're working to drive more savings across the Holdco structure.
And four we have accelerated the monetization, which has reached all time highs in Q4.
Let me start with the reduction in losses on page five.
Operating loss was down 41% year on year, reaching $49.8 million operating loss as a percentage of Jim did decrease by over eight percentage points year on year to <unk>, 6%.
Similarly, adjusted EBITDA loss was down 30% year on year, reaching $49 $2 million.
This full year 'twenty adjusted EBITDA loss of $207 million.
Near the bottom end of the guidance range, we provided of $200 million to $220 million.
So while this is the progress.
We believe that we can do much much better and this is reflected in our guidance.
We expect adjusted EBITDA loss for 2023 to.
The decrease by up to 50%.
'twenty two.
We'll come back to that agenda for presentation.
So accelerates our progress towards profitability.
To be much more focused and disciplined no scope of activities we have.
The tendency in the past to spread ourselves too thin across a very broad range of activities.
We announced in our Q3 earnings call, our intention to enhance business focus and terminated a number of projects.
Business exits I have now been largely completed.
We have discontinued Jimmy or frame the results from prime in terms of consumer traction and stickiness official thoughtful targets. Although markets are probably not made sure enough for these type of offering gifts.
We have also scaled back on the first part of your grocery activity no answer yet again.
And again in Tunisia.
What are you into economics and reduced business complexity.
Grocery comes with a number of procurement and logistics challenges and requires a different scale for it to work.
It doesn't make sense for us at this stage to continue investing in this category in countries, where it's remains subscale.
In addition, we have suspended all logistics as a service offerings and a number of countries. We continue to be big believers in the logistics opportunities for generic across Africa. However.
However, we need to first improve the efficiency of our logistics to serve better our owned E Commerce business.
That said, we continue developing our logistics as a service acuity manager of Morocco in Ivory Coast, where our logistics is ready to support third party volume and were proof of concept has been established.
Last but not least.
We have discontinued in Q4, our full our food delivery operations in Egypt, Ghana and Senegal.
In Egypt, although it's a large market it is already very competitive with a number of established players.
We will later entrants in this space I'm single repressions in summer of 'twenty one.
<unk> for market share in such a crowded territory would have diluted our unit economics, and the midterm with unclear upside.
So again, I'm, saying again, we're talking about smaller markets in terms of opportunity and well food delivery operations with subsidies.
We did not see attractive returns in the midterm to justify the investments.
If we take all of this business exists combines we're talking about relates really modest financial impact in.
In the nine first months of 'twenty two periods exited businesses represented less than 4% of total gyms, and 9% of revenue and two 2% of it.
That said.
That helped us to significantly reduce business complexity.
Free up capital and management bandwidth to focus on coal prices such as golf topics.
One of these approaches.
As to significantly reduce costs and operates at a much higher level of efficiency.
What is this about into Q4 'twenty. Two results is the significant decrease in fulfillment and citizen advertising expense expenses, which declined by 21 and 41% respectively doing here.
And we're working to drive further efficiencies this year for shipments in marketing costs and finally provide you more color on this later on.
What is it to favorably impact our P&L is the significant actions that we have taken and G&A costs.
We took some tough decisions on head count in Q4.
This has led to the termination of over 900 positions to expanding to 20% of it come prediction.
We have done this for work of streamlining functions to create leaner more productive teams.
<unk> committed to the execution of our strategy.
As part of that.
We have significantly reduced reduced.
Oh presents in Dubai, cutting head count by over 60%.
Most of the remaining stuff have been relocated to African offices closer to our consumers and.
On the operations.
The implementation of these changes resulted in $3 7 million in one off restructuring costs booked in Q4 2002.
We expect it to hit some predictions taught us to save about 30% and monthly stuff costs starting from March 23.
Compared to October 23 staff cost baseline.
Accelerating our path to profitability requires both tighter cost control as we've seen and revenue growth.
A major driver in the reduction just to be the loss in Q4 2002 was the acceleration of amortization to record highs.
Gross profit was up 22% year on year, and such 8% in constant currency terms.
Gross profit margin reached an all time high of 14, 5% of Jimmy.
The step up of over four percentage points compared to Q4 'twenty one.
This was driven by record highs reached across commissions advertising and value added services.
Okay.
Clearly we've made very good progress this quarter across monetization nickels prediction.
And this positions us very well to further reduce our losses.
Let's now dive deeper into Q4 performance I will cover operating Kpis, well Antoine will walk you through our financials.
Let me start with UNH dynamics on page 10.
Yes.
We're facing very significant macro challenges in several important markets and this is affecting usage performance on our platform inflation is reaching new highs in Ghana for example, inflation reached 54% in December .
Highest level in over two decades.
I know, it's another example in Egypt, which is the second largest markets.
The latest CPA print came in at 26% in January of this year.
It's the highest level in over five years.
Inflation is putting significant pressure on consumer spend.
And the <unk> the ethics Grinch that we're seeing in many of our countries.
Major supply issues.
Egypt for instance.
A crisis of goods accumulated imports throughout 2022 due to a shortage of U S dollars.
And we're seeing we're seeing similar challenges in other countries with Justin is an agile.
Which is inevitably impacting all states.
That is important background to have in mind when looking at although we use edge performance.
Quarterly active consumers reached $3 2 million down 16% year on year. This is partly a reflection of the macro challenges I just mentioned.
We also took deliberate action on our side to reduce emphasis on categories with more with more challenging unit economics.
Including grocery as well as a number of digital services on the <unk> App.
Similarly.
<unk> declined by 12% year on year as a result of both macro changes in the bread category rationalization.
G M D reached $283 million.
<unk> 14 per sensor owner and flat on a constant currency basis.
FX was a material headwind to Jimmy performance in Q4, with all local currency depreciating against the U S dollar.
In particular, all the Egyptian pound, Nigerian naira, and West African CFA depreciated by respectively, 23, six and 12% against the U S totaling 22 compared to 21.
On the other hands.
We made meaningful progress in the reduction of the overall rates of cancellations failed deliveries and returns.
The FTR.
It is an important indicator of operational efficiencies to reduce reversals.
We made particularly good progress in the consumers' conciliation, France as a result of enhanced user interface and experience as well as improving consumer education.
The shipyard rates as a percentage of <unk> improved from 22% in 2021.
20% in 2022.
The <unk> rate as a percentage of older improved from 15% in 2021% to 15% in 2022.
Okay.
To conclude and usage dynamics.
I would like to emphasize that despite the macro challenges that we're seeing today.
We are more than ever confidence about the long term growth opportunities in our markets.
In fact, our.
A core part of our strategy is to further strengthen our fundamentals to drive sustainable long term growth with healthy unit economics.
I have covered that in more detail in the November call, but I'd like to call out one of the initiatives that Todd mentioned around some rate improvements.
Some countries have been on this journey for a few months now.
<unk> already showing good signs of improvements.
Just one example in Senegal with overseeing as part of my Provo.
We stepped up our commercial efforts in the consumer consumer electronics category in 2022, focusing on attracting more brands and quality supplies to the platform.
This is already yielding very positive results with <unk> of almost 90% year on year in Q4 2002 in the consumer electronics category.
And we're up just lubricating similar actions across categories and across countries.
Now moving onto Virginia.
Page 11.
Jimmy up ATV and transactions are closely linked.
The underlying usage of our platform.
So in the context of declining Jimmy and with the reduction of marketing incentives to drive prepayment penetration zumiez.
<unk> posted a decline of 18% year on year in Q4 2002.
On a constant currency basis, CPG was flat year on year.
FX was a significant headwind to PD performance, particularly the 23% depreciation on the Egyptian pound versus the U S totaling 22.
On platform penetration of <unk> as a percentage of GMP remains related to the stable at 26% in Q4 22.
27% in Q4 'twenty one.
Jimmy page transactions reached $2 9 million in Q4, 22, 26% year on year.
This was a result of the declining orders during the quarter, particularly on the particularly on the <unk> App.
We're we're meaningfully scaled back promotional intensity to support student academics.
Overall, 29% of oldest place some junior in Q4, 2002, where computing completed using <unk>.
Compared to 35% in Q4 'twenty one.
This is mostly a result of the transactions declined under Jeanette the App.
<unk> penetration is almost.
100% on the dramatic that yep.
Jimmy <unk> penetration is 100% something dramatically up.
The reduced share of Truing up the app into transactions mix.
Led to a decline in the overall, Jimmy page transactions penetration as a percentage of orders.
<unk> continues to be a strategic priority for <unk>, and we're working on product and UI UX to make it an even more effective enabler for E Commerce business.
That said we.
We do not intend to subsidize prepayment penetration on the platform and our priority is very much on supporting our margins.
Last but not least we remain focused on the spending.
Our payment processing activities in Nigeria, and Egypt, where we have previously obtained the relevance licensees to do so.
I will now hand over to Antoine who will walk you through our financials.
Thanks, <unk> and Hello, everyone.
I'll start with a review of our top line performance on page 13.
Despite the major challenges, we're all facing in the macro fronts, we posted very strong top line performance in Q4 22.
Revenue was up 7% year on year, and 23% on a constant currency basis.
This was driven by market based revenue momentum, which accelerated by 27% year on year and 45% on a constant currency basis.
On the other hand first party revenue was down 15% year on year and flat on a constant currency basis.
This was largely a result of our decision to scale back the grocery category.
To reduce operational complexity and support all margin.
Although revenue was down 9% year on year and up 2% on a constant currency basis.
<unk> due to the suspension of our logistics of the Zalviso <unk>.
Of geographies.
Let's now impact the growth dynamics of our marketplace revenue.
Okay.
Marketplace revenue reached an all time high of $41 2 million in Q4 22.
Commission was the fastest growing marketplace revenue stream.
81% year on year at 105% in constant currency, reaching a record.
Seven.
$16 million.
This was the result of the Commission rate Commission take rate increases implemented in Q2 and Q3 2002.
Marketing and advertising was the second fastest growing revenue stream.
96% John Keogh.
At 96% in constant currency, reaching an all time high of $7 4 million USD.
This was driven by the strong momentum and third party advertisers revenue, which more than double year on year.
Value added services also reached a record high.
Nine point highs.
7% year on year and up 27% in constant currency as a result of a strong increase in warehousing salaries revenue.
On the other hand fulfillment revenue was down 23% year on year and down 11% in constant currency as a result of the selected deployment.
Next day free delivery earlier in 2022.
We are currently making adjustments to the free shipping program.
We are introducing higher minimum basket sizes, and further restricting geographical scope to support unit economics.
The strong marketplace revenue momentum is driving an acceleration in gross profit.
Gross profit reached an all time high of 41 million USD.
22% year on year, and 38% on a constant currency basis.
<unk> also led to an all time high gross profit margin as a percentage of Dnb at 14, 5%.
Moving on to costs.
Fulfillment expense reached 24 million USD, 21% John Euro six.
On a constant currency basis.
Lastly, as a result of orders declining 12% during this period.
The ratio of fulfillment expense per order, excluding junior pay up.
Orders, which do not incur logistic cost decreased by 17% from three points.
For <unk> hundred 21 to two point 17 Q4 2002.
As a percentage of G. M D fulfillment expense dropped 74 bps from nine 2% in Q4, 'twenty one down to eight 5% in Q4 2002.
These efficiency gains are encouraging and we are focused on driving even more savings with a number of initiatives underway.
These include optimizing our footprint and logistics routes, improving warehousing staff productivity.
And reducing packaging costs.
Sales and advertising expense reached $18 5 million down 41% year on year, and 35% on a constant currency basis.
We continue to bring more discipline to our marketing investments.
This led to an improvement of marketing efficiency ratios with sales and advertising expense, although decreasing by 32% from 2.8 dollars in Q4 'twenty one.
Down to one nine in Q4 2012.
As a percentage of <unk> sales and advertising expense reached six 5% in Q4 2002 of them.
Most three points improvement year on year.
We still have room to generate even more efficiencies by improving the relevance and cost effective tool marketing tenants.
There is an important distinction I'd like to make here.
Reducing marketing spend and seeking more efficiency does not mean, we are planning to sacrifice growth in pursuit of profitability.
I do recognize that in the past periods of faster growth came with marketing inefficiencies and that's something we plan to change.
We firmly believe that we can drive usage growth, while improving unit economics and efficiencies in fact, we have countries.
In our portfolio such as Iraq coast authentic that's growing at faster rates than in the group with much better marketing economics.
And this is a model we intend to replicate across the group.
Moving on to technology cost.
We continue investing in I'll take backbone tech.
Tech and content expense reached $14 5 million USD, 10% year on year, and 20% on a constant currency basis.
This was partly due to the higher hosting fees during the quarter.
That said on a sequential basis fixed staff costs were down 14% as the Edcon kits undertaken earlier in 2022 op Ngos.
We expect to drive further cost efficiencies as staff reductions continue to payoff and infrastructure optimization stocks yielding results.
Let's now turn to <unk>.
G&A, excluding share based compensation reached 13.
37, 1 million USD at 16% year on year, and 28% on a constant currency basis.
G&A included $3 2 million USD of restructuring costs associated with headcount rationalization conducted during the quarter.
Excluding restructuring costs and share based compensation.
<unk> cost were down 12%, both Sean and.
Quarter on quarter.
We expect these head count reductions to allow us to save over 30% in monthly staff cost starting from March 23, as compared to the October 22 staff cost baseline.
To wrap up on cost we have made good progress in cost reduction in Q4 22. However, these only reflect a fraction of the work we are doing across the P&L and we expect to drive more savings throughout 'twenty, three which is reflected in our guidance.
Let's now move on to balance sheet and cash flow items.
Capex in Q4, 2002 was $2 8 million USD, most key relating to logistics and technology equipment purchases.
Net change in working cap at an outflow impact of 13 million USD largely due to a significant increase in trade receivable and prepayment. This was mostly related to the prepayment of hosting fees for 'twenty three to secure better pricing.
Cash utilization for the quarter was $58 2 million, which is 6% decline compared to Q3 'twenty.
And 15% reduction compared to Q4 'twenty one.
At the end of December 'twenty, two we had a liquidity position of 228 million USD comprised of $72 million of cash and cash equivalents and $156 million of term deposits and other financial assets.
I know endometriosis, who will walk you through our guidance on page 20.
Thanks Kelvin.
We remain fully committed to accelerating our progress towards breakeven.
For 2023.
We expect adjusted EBITDA loss to reach between the hundreds.
$120 million.
At the bottom of this guidance range. This means cutting adjusted EBITDA loss by more than half. This is 2022.
The progress we made in Q4 2002 alongside the initiatives. We're currently working on.
Gives us confidence in ability to hit this range.
We have baked into this guidance realistic assumptions in terms of usage dynamics.
The macro situation remains a headwinds so we essentially assume a continuation of the same usage trends observed in Q4 2002.
What's supporting the adjusted EBITDA loss reduction.
Significant cost savings that results from efficiency initiatives that's all.
Largely underway.
We've done some lines.
We expect sales and advertising expense to reach between $4 million to $6 million at the bottom of the range, we're talking about a reduction of over 60% versus 2022.
<unk> made an important distinction or during the call.
Let me stress that again.
I think marketing does not does.
Does not mean neglecting growth.
We are doing we're doing sort of a work on.
Supply logistics and customer experience to drive sustainable growth for the long term.
We are in the near term the macro remains challenging which is likely to continue to affect usage on the platform.
And this goes for even more caution and discipline cost management.
In that spirit.
We expect G&A, excluding share based compensation to range between 90 and $105 million compared to $122 million in 2022.
The organizational changes.
Q4 'twenty two.
It will help us drive meaningful cost savings in 2000 to industry.
I was wondering I took a number of decisive actions in the very first days of our mandate. Some of these were difficult such as.
It sounds skips and business exits.
But we believe they were necessary to set the business on a solid foundation to reach profitability.
We are also driving a number of cultural changes of Germany.
Fostering a culture of innovation with a soft sharper focus on cost discipline.
We have also removed layers of central management in business complexity.
To empower management in Africa to own and drive that country's agenda.
We're focused on profitability.
Long term sustainable growth.
There is very strong buy and commitments across the organization to deliver on our strategy and we look forward to updating you on our progress on the next call.
With that we're ready to take your questions.
At this time, we will be conducting a question and answer session.
I would like to ask a question. Please press star one on your telephone keypad.
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One moment, while we poll for questions.
Your first question for today is coming from Luke Holbrook at Morgan Stanley .
Yes, good afternoon, everyone and thanks, so economical and we've made a significant reduction in staff 900 positions at you having your sales and advertising expense. This year I think you've discussed consumers face macro pressures. So I guess, putting that altogether what are the assumptions that you're making from a topline perspective at the hit the adjusted EBITDA guidance this year.
So as we as we just said in the call Hi look thanks for the question as we said in the call. We're.
We're not giving you guidance on top line for this year, but assumptions.
We.
Basically do not see but do not forecast or foresee material changes to the trends that we've seen in Q4.
Put it this way.
However, we are working very very hard to reverse the trends and to deliver much better complaint that what you've seen and the best quarter.
Working on some them until the supply fundamentals of customer experience UX and distribution.
Okay understood and just historically, we've had I guess supply chain issues macro conditions apply and underperformance in terms of profitability and from what Youre, saying is there is a deviation on top line trajectory from what Youre expecting you will take further actions is that correct just making sure.
Youre hitting that adjusted EBITDA loss guidance is that is that right and taxation.
We will make sure that we hit the guidance definition.
That's it thank you.
Your next question for today is coming from Aaron Kessler at Raymond James.
Great. Thank you a couple of questions. One just the decline in customers and orders on a year over year basis that you saw I think you said that was mostly macro or was there any other factors though.
Scaling back some of these initiatives that weighed on the kind of the customer and order growth in the quarter.
I'm, sorry, I didn't get the second half of the question.
Is there any other factors besides macro that drove kind of a decline in customers and orders such as newer.
Scaling back some of these initiatives.
No I think that there are many trends at play I mean definitely macro is the biggest driver.
When you talk about the macro the two big things at play one is inflation and the other ones supply disruption. So inflation. We mentioned for example has gone out of the 54% joined inflation. This is obviously.
Impacting purchasing power for our customers.
The second big piece is hot currencies.
Missing half currency in each of our countries.
That is.
Impacted heavily ability to imports in some countries like in Egypt.
So this is by far the biggest driver. There are also some of the drivers for example, we have made conscious and deliberate decisions.
To optimize and rationalize some categories such as Mcg.
Ultimate the App, so we're seeing negative trends in those in those segments, but we know why this is a very deliberate choice.
On the other hand, we have some segments and some categories that are growing because we are.
Performing way better than the average because we've already starting to.
So the reasonable fundamentals in those segments.
Got it any.
Any more details you can provide on you saw a nice growth in commission revenues in the quarter I guess, how much of that was kind of from higher pricing that you've rolled out or cutting back the level of couponing, you've used previously as well.
Yes, yes.
Yes, absolutely. So in this quarter, we have reached an all time high as 40 14, 5% of gross profit this is Jimmy.
That's mostly the consequence of commissions increase and that was undertaken mid 'twenty two.
We are also hitting a record level of advertising revenues.
However, going forwards.
We will be very disciplined and monetization and.
And we'll take it more as a byproduct of scale.
So we do not expect further commission increases in the near term and we do not foresee material increase in gross profit margin for the future quarters versus Q4.
Got it so basically so sort of that just from balloons sales contribution from advertising and another size from kind of mandatory take rates from commissions.
On that.
And that we want to be careful about because we don't want to hertz. They couldnt make your question of our vendors and we want to make sure that the platform remains attractive.
New vendors between.
Got it great.
Your next question for today is coming from Mark Williams at Stifel.
Hi, Thanks for taking the question.
As you bring down sales and marketing expense.
<unk> expense for next year could you just talk about this shift.
That you are planning and marketing makes sense historically you have done.
Mostly most of the mix has been performance marketing can you talk about how youre thinking about next year.
So.
Very good question. Thanks, a lot and let me give you also a broader and circuit so very important points.
So in this case back on sales and advertising expense.
And as Antoine mentioned, we're cutting on significant inefficiency EMEA, even say waste from the past.
And we believe we can do that because we see little correlation between marketing spend and growth of the countries. When you look country by country.
So we're quite comfortable.
Going going forward with this plan.
But we're doing I mean, we're not just reducing stuff.
We also have a very clear plan to enable sustainable growth with healthy economics.
So while reducing marketing budgets. We're also launching much more structural actions mediate with medium to long term impact.
That of course more difficult to execute them.
<unk> money on marketing.
But that will have the best long term and most the biggest long term impact.
So we're rebuilding the value proposition of our platform category by category in each country.
Focusing on the key categories fashion, <unk> home and living.
Basically what we're doing is we're on boarding a re onboarding the right brands and vendors securing best prices and selection.
This.
Just on this one this may sound a bit basically can of just from western countries.
It is absolutely critical in emerging markets in Africa with suppliers of equipment incentives for both consumers and retailers and.
And it's a battle for us.
Second we are expanding to reach outside of our capital cities to reach consumers outside of the big cities.
So we are expanding the consumer base through a broader distribution network and more relevant marketing channels to target those customers. So to your question, we are adding to our mixed while marketing mix much more.
Underground activation.
Much many programs that are tailored for people who are not.
So early front with the new communication needs communication channels, who don't have access to the Internet for example, and we have many many good proof of concept from them from a number of countries that we cannot that's kind of reached out.
And then we improving CX, removing pinpoints, such us didn't get pretense and we're doing a lot of take work to improve our UX. We were not delivering I mean, we're not planning on delivering new fancy features and Jeff we will rather focus on fixing basics fixing issues and simplifying the experience.
To give you. An example at the moment, we are working on fixing issues with our look with are looking process that was negatively impacting our customers.
We prefer to focus on that rather than delivering new.
Creative features at the moment, because we want to make sure that did you.
Is strong enough and supports our growth story.
So that's the overall picture and as part of that's changing the mix of marketing obviously has a very very important so what's what's happening specifically on marketing as I was mentioning so we're increasing the share of budgets and management's focus on.
Underground activation and marked incentives that are relevant for customers, who are poorly connected to the internet.
So.
Print and print.
<unk>.
Local regionals.
Street activation and spun out very good examples.
We are also scaling up our efforts and focus.
CRM.
Our onsite improvements.
We have great who have huge customers database and we can leverage the leverage it even more with.
With better CRM tools and processes. So we're working on that a lot.
And we are improving our onsite performance. So we are we make better use of to direct traffic.
Platform.
We of course still have paid marketing channels, but with much lower budget in much greater focus on efficiency.
Okay great.
Thank you thanks for that and just you're talking about.
Some changes or reductions in business lines and the digital categories could you just.
Touch on that.
Is that what you did with some of them going into digital.
Business lines.
So.
So in the past quarter, we've been deliberately more disciplined in marketing investments are across.
Across the board of course and.
And Jimmy <unk>, and <unk> pay App in particular.
So we have pulled back to spend on some of the heavily promotional categories under Jamil <unk> app, such as airtime sales in.
In the virtual space.
Which is a consequence, obviously has impacted the states.
In this quarter.
But as we're focused on getting better economics, we do not intend to subsidize heavily to grow for such a such categories in the near term.
Okay, great. Thank you.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.