Q4 2024 Jumia Technologies AG Earnings Call
Speaker Change: [music].
Good morning, ladies and gentlemen, thank you for standing by.
Welcome to <unk> results conference call for the fourth quarter of 'twenty 'twenty four.
At this time all participants are in a listen only mode.
After managements prepared remarks, there will be a question and answer session.
Ignatius Njoku: I would now like to turn the call over to Ignatius Njoku.
Head of Investor Relations for Julia.
Speaker Change: Please go ahead.
Speaker Change: Thank you good morning, everyone. Thank you for joining us today for our fourth quarter 2024 earnings call.
Speaker Change: Today, our president and CEO, Jim Yeah.
Speaker Change: As far as Meli, Missouri, Executive Vice President Finance and operations.
Speaker Change: We would like to remind you that our discussions today will include forward looking statements actual results may differ materially from those indicators in the forward looking statements.
Speaker Change: Moreover, these forward looking statements may speak only to our expectations as of today.
Speaker Change: We undertake no obligation to publicly update or revise these statements.
Speaker Change: A discussion of some of the risk factors that could cause actual results to differ from the.
Speaker Change: Forward looking statements expressed today, please see the risk factor section of our annual report.
Speaker Change: Form 20-F as published on March 28, 2024.
Speaker Change: As well as our other submissions with the SEC and.
Speaker Change: In addition on this call we will refer to certain financial measures not reported in accordance with Ifr S. You can find reconciliations of these non <unk> financial measures to their corresponding Ifr S financial measures in our earnings press release.
Speaker Change: Which is available on our Investor Relations website.
Francis: I'll hand, it over to Francis.
Francis: Good morning, everyone and thank you for joining us today.
Speaker Change: Start the call with an update on the business in greater detail on our growth strategy for 2025 and beyond I will then turn things over to Antoine for a deeper look at our financials.
Overall 2024 was a year marked by continued progress against our strategic growth initiatives.
Speaker Change: Our focus was on building the business and positioning Jimmy I for long term success.
Speaker Change: Throughout the year, we extended our reach beyond main urban centers into upcountry market expanded our product assortments improved our cost structure and enhanced our logistics capabilities driving higher customer engagement and improve do you need it couldnt mix.
Speaker Change: So it was the end of the year, we streamlined operations by consolidating all warehouse footprint and exiting non strategic markets South Africa Tunisia.
Speaker Change: Clothing does exits we continue to operate in nine countries.
Speaker Change: These strategic actions have been crucial to our success, excluding South Africa, Tunisia, our core marketplace business accelerated in Q4 24.
Speaker Change: He's he could've as older grew by 18% year over year with even stronger growth in December I.
Speaker Change: Highlighting the increased demand on our platform.
Speaker Change: What are your active customers increased by 8% underscoring the strength of our platform and the value we deliver.
Speaker Change: Notably these results were achieved while reducing marketing expense from $6 2 million Daus in Q4, 'twenty three two full points 8 million daus in <unk>.
Speaker Change: Q4 24.
Speaker Change: Demonstrating our commitment to impactful just efficient marketing strategist.
Speaker Change: The key growth driver in Q4, 24 was all Black Friday says, even our largest of the year held across nine countries in November.
Speaker Change: The strong performance of events demonstrates our ability to provide the right product at the right price for Africa value conscious customers.
Speaker Change: In Q4, 'twenty full demand was particularly robust in your priority categories, such as electronics influence.
Speaker Change: In this quarter.
Speaker Change: Or extending intestinal full thing play distinct controlling the success with $3 4 million gross items saw something intestinal centers, mostly from China.
Speaker Change: <unk>, 431% of gross items up 61% year over year.
Speaker Change: We also strengthened our black Friday partnerships with global brands like L'oreal and show me booked up sponsors of Stephens.
Well, perhaps knowledge, we continue to improve our efficiency and the customer experience.
Speaker Change: Our net promoter score rose to 63 in Q4 24 seven.
Speaker Change: 17 points year over year increase while all 90 day repurchase rates increased 375 basis points year over year.
Reflecting stronger customer loyalty and satisfaction.
Speaker Change: Notably, 40% of all new customers, who placed an order in Q3 24 made another put chase within 90 days up from 37% in Q3 2023.
Speaker Change: Despite strong momentum in the robust customer demands macro headwinds continue to affect our performance.
Speaker Change: Jim He declined 12% in USD, but it grew 13% year over year in constant currency.
Speaker Change: <unk> the impact of early 2020 for currency devaluations and the reduction in corporate space.
Speaker Change: As a reminder.
Speaker Change: Beginning in Q4 23.
Speaker Change: Jimmy had benefited from strong corporate sales to local and regional distributors, particularly in Egypt.
Speaker Change: However, this trend reversed in Q4, 'twenty full highlighting the cyclical nature of demand.
Average order value for physical goods oldest decreased from 45.5 levels in Q4 23.
Speaker Change: It was 35.5 dollars and <unk> 24.
Speaker Change: This decline was driven by currency devaluations and lower corporate service with.
Speaker Change: We view this mix shifts.
Speaker Change: The poultry and seek to improve our relevance in selected categories improve oldest ship all delivered profitability in soup, both healthy usage growth.
Speaker Change: Revenue in the quarter was 45 $7 million down 23% year over year in USD and up 2% in constant currency driven by the same factors that I've just mentioned.
Speaker Change: Adjusted EBITDA was negative $13 $7 million compared to negative <unk> 6 million barrels in Q4 23.
Speaker Change: Loss before income taxes from continuing operations was $17 6 million daus in the quarter compared to 17.1 million Daus in Q4 23.
Speaker Change: Antoine will elaborate shortly on Q4 'twenty four loss before income tax from continuing operations.
Speaker Change: Cash burn for the quarter was $36 million compared to $26 8 million Daus in Q4 23.
Speaker Change: This was primarily driven by the following.
Speaker Change: One time termination costs of $1 $3 million related to the closure of our operations in South Africa Tunisia.
Speaker Change: Working capital increase of $13 $5 million aligned with our strategy to expand assortments and stickier more goods at competitive prices.
Speaker Change: Why did we significantly increased our working capital in the second half of 'twenty four we expect smaller adjustments in the future.
Speaker Change: Capital expenditure of $1.8 million, primarily invested in logistics equipment or push them incentives opened in 2024.
Speaker Change: And the payment of $2.1 million of equity transaction costs.
Oh, just at the market offering.
Speaker Change: Looking ahead, we are consistent in our path forward.
Speaker Change: G&A as a much stronger and much more efficient business than it was just two years ago.
Speaker Change: We have introduced greater professional disciplines started a clear usage growth trajectory and established a solid foundation to build upon in the coming years.
Speaker Change: In 2025, we will continue building on this foundation with a focus on two key areas.
Speaker Change: Driving topline growth and achieving broader operational efficiencies to enhance profitability on strength and cash flow.
Speaker Change: We see multiple levers to drive growth.
Speaker Change: Bursts that country expansion, we are doubling down on the upcountry extension to unlock new markets and address underserved regions without increasing fixed costs.
Speaker Change: The outside the main urban centers remain strong with.
Speaker Change: With upcoming Reorders accounting for 56% of Q4, 24, and 54% of full year 'twenty four oldest.
Speaker Change: Up from 49% and 48% in Q Fulton Street, and full year 23, respectively.
Speaker Change: Leveraging our differentiated logistics network and deep partnerships with third party providers.
Speaker Change: We're expanding pickup stations outside meant urban centers.
Speaker Change: We believe this expansion will drive lower fulfillment costs, why strengthening customer trust and engagement.
Speaker Change: Our extensive three P. M network represents a competitive moat, although e-commerce players lacking the necessary infrastructure for delivery beyond major switches.
Speaker Change: Seconds.
Speaker Change: Its ultimate extension.
Speaker Change: We plan to expand our product assortment at affordable prices by sourcing directly from international instead of <unk>.
Speaker Change: This approach allows us to procure high demand products directly from key manufacturing countries like China and Turkey.
Speaker Change: China remains a strong sourcing hub and we are strengthening our teams and deepening supplier relationships.
Speaker Change: Our progress in international full thing gets evidence you know 2020 for full year performance.
Speaker Change: It was $9 5 million gross items sourced from international centers, mostly from China accounting for 28% of course items up 38% year over year.
Speaker Change: Outside China.
Speaker Change: Diversifying our sourcing network by Onboarding, new sellers, and adding products from other countries, including Egypt and Turkey.
Speaker Change: In late 'twenty four we partnered with hips people have the leading Turkey's e-commerce platform to introduce affordable Turkish brands to junior.
Speaker Change: Building on this momentum we will continue scaling our international sourcing initiatives to drive rapid extension.
Speaker Change: Third customer instead of experience.
Speaker Change: In 2024 week data they'll set a platform to streamline and simplify the seller experience.
Speaker Change: Beyond growth driving greater efficiency is critical to achieving breakeven.
Speaker Change: We remain focused on marketing efficiency by prioritizing low cost or free channels.
Such as our revamped CRM and localized offline channels like paper catalogs remain incentives I couldn't axial sketch out looking to U S.
Speaker Change: These offline strategies, including bottom of the pyramid initiatives drove strong engagement and credibility.
Speaker Change: Well also increasing O J falls presents with a number of active J false agents, reaching 29000 in Q4 'twenty for reprise.
Speaker Change: Representing a 13, 9% increase year over year.
Speaker Change: Looking ahead to 'twenty five we plan to further expand our J false presents particularly in regions outside the main urban centers.
Speaker Change: Then in logistics, we aim to increase productivity and benefits from a more streamlined warehouse footprint established in 'twenty four.
Speaker Change: We're also increasing productivity with automation in our call centers, where it said boats and the more basic customer inquiries.
Speaker Change: We believe our tech platforms can scale significantly without metal your additional costs.
Speaker Change: Overall, I'm energized by our progress on business fundamentals and actually visible in usage growth and efficiency metrics.
Speaker Change: We believe we have the right strategy and the right team in place to drive meaningful expansion across the business.
Speaker Change: By driving top line growth, improving operational efficiencies and maintaining disciplined expense management, we have a clear line of sight to achieve profitability.
Speaker Change: Well delivering positive gross profit after deducting all for she meant expenses in 'twenty to 'twenty four was $57 $6 million, which is 8% of total gyms hen.
Speaker Change: Hence our focus is on building scale, while further improving efficiency do.
Speaker Change: The usage trends and Jim G growth trajectory, we delivered this quarter give us confidence that's where on the right path.
Speaker Change: To summarize we're optimistic about <unk> future as two years of coming to the airports are now delivering results.
Speaker Change: I'd like to thank our employees for their hard work and dedication during this time.
Speaker Change: Well now well positioned for growth and acceleration and further progressed was supposed to be.
Speaker Change: I will now turn the call over 21 for a review of our financials.
Speaker Change: Thank you and policies and thank you everyone for joining us today.
Speaker Change: Let's start with a review of our top line performance.
Speaker Change: Fourth quarter revenue was $45 7 million USD down, 23% year over year and down 2% on a constant currency basis for the quarter.
Speaker Change: The decline in revenue was primarily due to lower corporate sales in Egypt.
Speaker Change: As a reminder, Jimmy experienced strong corporate sales in Egypt, stocking Q4 'twenty three.
Speaker Change: It isn't like I volume purchases from local and regional distributors.
Speaker Change: This trend reversed in Q4 plentiful as corporate buyers kept back their chase's macroeconomic uncertainties and shifting procurement cycles.
While the full year revenue was 167 5 million USD down 10% year over year at 17% on a constant currency basis for the year.
Speaker Change: Market. Thanks for the new for the fourth quarter was $22 8 million USD.
Speaker Change: 31% year over year, and 11% on a constant currency basis for the full year marketplace revenue was $89 4 million USD down 9% year over year.
Speaker Change: <unk>, 1% in constant currency.
Speaker Change: Fourth quarter revenue from first Boston sales was $22 5 million USD down, 14%, but 8% on a constant currency basis.
Speaker Change: For the full year revenue from <unk> sales was 76 point by Dominion.
Speaker Change: The only 11%.
Speaker Change: 14% on a constant currency basis.
Speaker Change: Turning now to gross profit.
Speaker Change: Fourth quarter gross profit was 23.9 million USD, 136% year over year or 18% on a constant currency basis.
Speaker Change: For the full year gross profit was $99 5 million USD, reflecting a 7% decline year over year.
Speaker Change: 23% on a constant currency basis.
Speaker Change: Gross profit margin was impacted by macroeconomic headwinds, including currency devaluation and reduction incorporate sales as discussed avia.
Speaker Change: Gross profit margin as a percentage of G. N V for the fourth quarter was 12% compared to 16% in Q4 23.
Speaker Change: For the full year gross profit margins to that 14% compared to 14% in 2023.
Speaker Change: Turning to expenses, we are pleased with the progress reducing costs and remain committed to driving further operational efficiencies in 2025.
Speaker Change: <unk> expense for the quarter was 12.9 million USD.
Speaker Change: At 11% you called out here.
Speaker Change: 36% of the goldstar currency basis.
Speaker Change: Well the school year Hussein won't expense was 41.9 million you raised.
Speaker Change: A 4% decrease yoga, yeah, but at a 20% increase on a constant currency basis, partly driven by external factors such as fuel prices denominated in USD.
Speaker Change: Fulfillment expense per order exclude.
Speaker Change: Excluding Julia pay up orders.
Speaker Change: Two to $24 down, 4% or up 19% year over year, but it got some turnkey.
Speaker Change: Currency basis.
Speaker Change: Sales and advertising expense was 4.8 million U S knee for the quarter.
Speaker Change: 24% by year end up 2% in constant currency driven by targeted online marketing expense as we focus on growing the authors who supply expansion at least minimal incremental marketing spend.
Speaker Change: While the full year sales global tightening expense was $17 3 million down, 19%, but up 13% to look on started during two basis.
Speaker Change: As a percentage of sales and advertising expense was 2% to 36 basis points decrease from Q4 'twenty three.
Speaker Change: For the full year sales and then with diving expense as a percent of Jimmy was 2% compared to 3% in 2023.
Speaker Change: The quality of content expense was 10 million anyway for the fourth quarter, representing an increase of 1% and 5% in constant currency.
Speaker Change: For the full year technology, and total expense was $37 5 million USD down 10% year over year.
Speaker Change: <unk>, 7%.
Speaker Change: Great.
Speaker Change: Fourth quarter G&A expense, excluding share based payment expense was 12.9 million USD.
Speaker Change: It's 5% year over year.
Speaker Change: 9% on a constant currency basis.
Speaker Change: It's important to note that Q4 2023 G&A cost included a 9 million USD of nonrecurring tax benefits and full Q4, 'twenty 'twenty four 8.2 tax benefits reversal.
Speaker Change: Staff cost component of G&A expense, excluding share based compensation expense increased to 10 million USD, Brian learnings Regal by termination costs associated with all exit from Japan, and South Africa.
Speaker Change: For the full year G&A expense, excluding share based compensation expense was $63 4 million USD down 8%, you're all about you and five just hoping against other currency basis.
Speaker Change: That's a component of G&A expense, excluding share based compensation expense decreased to $34 6 million of S D down 13% year over year.
Speaker Change: Turning to profitability adjusted EBITDA declined to a negative $13 7 million or negative 12.2 million USD on a constant currency basis for the quarter.
Speaker Change: For the full year adjusted EBITDA was negative.
Speaker Change: Q1 point 3 million USD.
Speaker Change: Why do we use adjusted EBITDA as of September until measure of operational performance. When you would like to reiterate net loss before income taxes from continuing operations chapters items that are not included in adjusted EBITDA.
Speaker Change: One of these items is not finance cost.
Speaker Change: Net tynan discussed include effects related to our treasury activities, notably doing bad dose cash repatriation.
Speaker Change: These effects are not captured in that just that immediate.
Speaker Change: In Q4 'twenty to 'twenty three.
Speaker Change: Adjusted EBITDA being essentially at breakeven level.
Speaker Change: The loss for the period was significantly affected by the financial cost incurred from treasury activities repatriate guests to our headquarters.
Speaker Change: Discussed I am putting in understanding the overall financial health of the company.
Speaker Change: By focusing on the loss before income tax from continuing operations. We include these financial expenses, which helps us get a comprehensive picture of junior financial performance.
Speaker Change: In Q4, 'twenty 'twenty four.
Speaker Change: The lower corporate sales reduce the need for repatriation, thereby lowering financial cost.
Speaker Change: Adjusted EBITDA does not fully reflect this change as it does not account for these sign them select duties.
Therefore loss before income tax from continuing operations should be considered in order to get a full review of Jimmy outside of some states capturing both operational efficiencies and the impact of the financial results, which we believe are important to understand the companys overall progress towards sustainable profitability.
Speaker Change: Loss before income tax from continuing operations for the fourth quarter was 17 6 million USD, a 3% increase year over year or 19% decline on a constant currency basis.
Speaker Change: The higher loss was primarily driven by.
Speaker Change: It was $13 2 million decline in gross profit largely due to reduced corporate sales in Egypt.
Speaker Change: 0.3, many new ways of increasing operating expenses.
Speaker Change: 12.3 million UA and the reduction in net finance costs during the quarter, we boast partially offsetting the impact on gross profit compared to Q4 2023.
The loss before income tax from continuing operations for the full year was 97.6 million USD, 1% down year over year and 8% decline.
Speaker Change: Let's see basis.
Speaker Change: Turning to the balance sheet and cash flow.
Speaker Change: We ended 2024 with a solid liquidity position of 133.9 million USD.
Speaker Change: Including $55 4 million in cash and cash equivalents and $78 6 million USD deposits and other financial assets.
Speaker Change: Let me stop there is two time deposits and other financial assets of $85 1 million in Q4 2023.
Speaker Change: 78, 8 million USD in Q3 2024.
Speaker Change: Jimmy Hasnt quiddity position decreased by $13 6 million in Q4, 2024 compared to a decrease of $26 8 million in Q4 of 23.
Speaker Change: In the fourth quarter net cash using operating activities was 26 5 million USD.
Speaker Change: Even by approximately one 3 million USD in market exit cost related to South Africa and Asia.
Speaker Change: The working capital impact of $13 5 million anyway.
Speaker Change: Which was driven by prepayments to suppliers and payable cycles aimed at extending the supplier base and all of the old product assortment.
Speaker Change: Capex in Q4, 2024 was $1 8 million USD.
Higher than that in Q4, 'twenty 'twenty due to investments we quick the new warehouse in the way, we recently started operations.
Speaker Change: For the full year totaled 3.7 million USD.
Speaker Change: We also paid 2.1 million equity transaction costs from the August ATM offering.
Speaker Change: For the full year net cash flow used for operating activities was $57 2 million USD.
Speaker Change: In conclusion, despite the challenging macroeconomic environment, we delivered strong usage growth and those scoring that our strategy is working well.
Speaker Change: We remain focused on optimizing costs, while positioning the business for a long time, Ralph and profitability.
Speaker Change: Our ongoing defaults to improve operational efficiency, we remain a key priority in 2025.
I will now turn the call back over to fall so useful guidance.
Speaker Change: Thanks, something let me turn to our expectations for 2025.
Speaker Change: Our focus remains on driving healthy growth, improving operational efficiency and positioning junior for profitability.
Speaker Change: We are currently observing favorable trends in the first quarter you.
Speaker Change: Do you mean, just confidence in establishing a full year of 2025 guidance as follows.
Speaker Change: We anticipate physical goods, all those to grow between 15 and 20% year over year.
It reflects the strong demand for physical goods items, driven by your strategic initiatives outlined earlier.
Speaker Change: Jim D is projected to be between $795 million and 806 million barrels in 2025, a year over year increase of 10% and 15% respectively, Excluding foreign exchange impact.
Speaker Change: We forecast a loss before income tax to be in the range of negative $65 million when they get to $70 million.
Speaker Change: A year over year decrease of 33% and 28% respectively.
Speaker Change: Thank you all for your attention we are now ready to take questions.
Yeah.
Speaker Change: Thank you at this time, we'll be conducting a question and answer session.
Speaker Change: If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: Have a question from Brad Erickson with RBC capital markets. Your line is live.
Brad Erickson: Hey, guys. Good morning, Thanks for taking the questions.
Speaker Change: To start Francis just right before you said, you're observing certain trends in Q1 can you maybe just give us a little bit more color on kind of what you're seeing right now.
Speaker Change: Hi, Brett Yes of course, so we're seeing in Q1, our continued progress on on oldest growth in usage, which gives us confidence to issue the guidance.
Speaker Change: 15 to 20 points of growth year over year, we all see we're also seeing continued strong execution and discipline on the cost side.
Speaker Change: It just gives us confidence to guide on the on the net loss.
Speaker Change: Based on the well and improved efficiency and cost management, we continue to see in Q1.
Speaker Change: Got it that's helpful and then on order growth.
Speaker Change: Obviously, you saw the nice acceleration with the added inventory for the holiday.
Speaker Change: I guess question is like is there anything preventing you from bringing on say more selection and it kind of seems like you know you're in some ways you almost supply constrained.
Speaker Change: So what would be preventing you from kind of bringing on more selection leading to incremental demand or is that just as simple as that is what we're seeing in kind of your full year guidance.
Speaker Change: Yeah, I mean, I think we've always been very clear that the challenge is more on the supply side on the demand side in all markets are we believe there's ample demand in Africa, but just 40 supply to overall and we I mean, we have junior can really help fix up GAAP and solve the problem.
Speaker Change: So most of our focus has been on increasing supply and improving value from when you <expletive> estimates.
Speaker Change: I would say there's no magic fix so that's a it's a lot of operational improvements on the long list of actions to get there.
Speaker Change: And it's not like we can double the assortment to more money. It's a long process, what we see at what's happening at the moment, we see that we have I mean, we expanding again all customer base with gringo older is big I mean.
Speaker Change: Because we have more supply better value for money better price points, but just the result of a couple of Joseph work focusing on that plan to deliver better value for money from Onboarding, new suppliers are local suppliers, bringing supply from overseas.
Speaker Change: Improving the tools that we give to a windows. So it's easier for them to list improving vendor experience and putting operations for them.
Speaker Change: It's a very long list of actions. So there's no there's no there's no magic fix here.
Speaker Change: But it's a continued focus to keep on growing supply coupon Green day window base local and international.
Speaker Change: Got it that's helpful and then just.
Speaker Change: On the kind of one P versus three P mix, you mentioned, the kind of cyclical trends in Europe, sorry in Egypt that affected things you kind of just elaborate on sort of why that was how to think about that mix and kind of your opportunities to acquire that that first party inventory.
Speaker Change: Tori and how that will kind of continue to evolve in terms of the mix between first party and third party.
Speaker Change: Yeah. So I think 222 possible to my answer first of all we indeed see a decline in corporate sales, which are largely post balti, possibly in Egypt.
Speaker Change: So we saw reduced purchases from regional distributors in Egypt scaled back about a mile and I'm, sorry, I mean, it's somebody if enough macroeconomic uncertainty our purchase cycles have changed. So we we were hitting kind of a low point when it comes to our corporate itself at the company level at this stage are we in.
Speaker Change: It is the cyclical nature of demand here, but.
Speaker Change: But we keep on changing its opportunity.
Speaker Change: And then when you look at all of them make between one P. M. C. P. I mean, you were very clear that we were pragmatic here, we're not aiming to increase when Pete we use when P. Whenever it gets us bits of supply and better value for money for customers. So are we we don't foresee message changes in the mix of Wendy excluding for the impact of.
Speaker Change: <unk> of corporate safe.
Speaker Change: Perfect and then maybe if you could just unpack the physical order growth from the overall order growth, what's kind of behind that mix shift and what's the a O V effect as well from that mix shift and just kind of how to think about that going forward mix wise.
Speaker Change: Yep.
Speaker Change: So when we look at the physical the oldest growth it's definitely driven by all the levers we've been pulling over the past two years. So upcountry extension as we explained them better assortment and better value for money in pretty much all the countries better customer experience as we explained today and.
Speaker Change: Our mortgage he sent the more relevant marketing tactics and yeah, I mean relevant to the countries where we operate.
Speaker Change: That translates into growth by category and drives all mix also in the sort of the way. So are we explained I think and one of the previous quarters that we had a mix shift towards more fashion that's decreased.
Speaker Change: At the time, we explained this quarter that we saw quite some success in categories such as electronics that has.
Speaker Change: Slightly higher ABV the way we'd look at it is the following.
Speaker Change: He's just a consequence of the mix, we want to be the best I can deliver the best value for them and in each of our priority categories fashion beauty and smartphones are electronics, and the home and living and by delivering the best value for money and you just got degree while we grow the best business in each country. This leads to a difference I mean to to make streets.
Speaker Change: Mix of categories at the country level, but we don't see it as a problem. We don't see a lower a O V is a problem because we're very very focused on you need they couldn't accept ultra liberal.
Speaker Change: We make sure that we maintain the right to cause I mean, even if it is lower and it depends on the categories to give you. A quick example for example for electronic accessories, Oh, he would be lower than full appliances.
Speaker Change: But I will take rates the commission, who will be making would be obviously significantly higher.
Speaker Change: So all in all we make sure that we are profitable at all the level after Fukushima and costs are what they are they kept agreeing with whatever the whatever the impact of the mix.
And and with that we'd see the mixed used it as an opportunity because it's extra enables us to penetrate them to increase penetration in specific categories. Knowing what you know and in all markets and it enables us to feed to shoot our growth in active customers outgrowing oldest this quarter.
Speaker Change: Because we're managing to penetrate bits of specific categories that may have a lower ABV, but that's not a problem for all for business.
Speaker Change: Yep Yep understood that's great.
Speaker Change: And then when you talk about consolidating you know what you've been doing in terms of consulting your warehouse footprint in some market.
Speaker Change: Can you help us just maybe at a market level like what does that do efficiency wise from like a service level perspective, and then obviously cost perspective anything you can share there would be helpful.
Speaker Change: Of course, so we had the inherited a really 'twenty three logistics setup with messaging inefficiencies.
Speaker Change: For example in countries like Egypt, all major we had three in warehouses or more in the same city.
Speaker Change: So smaller with smaller locations that's required a lot of moves in between and really <unk>.
Speaker Change: Prevented us from getting greater efficiencies and economies of scale, but what's happened in 'twenty. Four is that we have consolidated and more I mean in most of our countries. We have consolidated several smaller warehouses softball, frishman centers into one big one.
Speaker Change: That's actually able to get to two full more product and that enables us to have a much better control and efficiency staff productivity securities and going forward did you buy much better efficiencies when you would get for Shimon costs. So all of those changes have been done mostly in the second half of 'twenty four.
Speaker Change: Which took us some time to get some focus and took us some money.
Speaker Change: And that's why you also see limited improvements at the end of 'twenty four in terms of for humans efficiency tool for human Gulf of older but it gives us confidence when it comes to achieving a lot more savings on the unforeseen event in 'twenty five now that the hard work the structural work has been done.
Speaker Change: Yeah.
Speaker Change: Got it that's great I have a maybe a few more here thanks for putting up with me.
Speaker Change: Maybe one for Jeff, one where where are we from a kind of a fixed cost basis. As we start out 25, we made a lot of reductions obviously over the past year or two just where are we kind of in terms of the fixed cost base here going forward.
Speaker Change: Hi, Thank you.
Speaker Change: As you saw that although 2024, we've been able to reduce drastically the coast I mean over the last two years well. We all know is for fully under the going to divide by two the the.
Speaker Change: The level of stuff no the level of our deck Cook with what we believe is two things first we can get another 20% efficiency and that's what we are doing as we speak so 20% of cost will sneak.
Speaker Change: And the second thing is that we discussed trucks around.
Speaker Change: We believe we are able to operate the two process.
Speaker Change: Between two two and three times the volumes we have known.
Speaker Change: So it's a mix of both go through Dixon and increase efficiency.
Speaker Change: Got it and then maybe to expand on that just a little bit that's really helpful. On the kind of volume from it I think you've talked about this in the past I've just kind of like.
Speaker Change: Some sort of.
Speaker Change: The magnitude of order volumes from current levels, what it would be necessary to achieve profitability can you just update kind of relative to your comments a minute ago.
Speaker Change: Yeah.
Speaker Change: I mean, if you look at all.
Speaker Change: Gross margin after a fulfillment cost you'll see that we are in a range of between six and 8% depending on the quarter and the and the Williams until what we believe with the fixed cost which is fixed is that we would require.
Speaker Change: Volume all things being equal.
Speaker Change: Two between double and triple.
Speaker Change: To get to profitability.
Speaker Change: Got it Okay, that's great and then the last one.
Speaker Change: Oh I'm sorry go ahead.
Speaker Change: I would like to take an example of something which is the big bucket of course, you know you know would be in any one thing.
Speaker Change: The funny thing is a is a significant look good and we had never had to do quite expense you said that from the best.
Speaker Change: Not only we've been able to reduce the cost.
Speaker Change: All of these contract, but the way we have said that our AR platform our software now.
Speaker Change: Resulting less consuming operations, so what would take 10, one year ago.
Speaker Change: Today five.
Speaker Change: So it's a double effect of better negotiations of the contract and better utilization of our infrastructure.
Speaker Change: Which result in us, believing that we could do much more much more volumes.
Speaker Change: And and let's say anything more to be onto the U S people write down that we are using.
Speaker Change: Got it and then last one for me.
Speaker Change: You mentioned the balance sheet, obviously, feeling better now given our stronger cash position.
Speaker Change: Just given kind of your inventory strategy in thinking about your volume growth guidance. This year do you feel like you are kind of where you need to be as we look forward into the year and into the holiday and.
Speaker Change: Looking a little further ahead at this point, but how are you feeling from that perspective.
Speaker Change: Maybe I'll take the first part of the question David.
Speaker Change: The second one when you look at the guests really show you can see in the Scottsdale theory.
Speaker Change: You can see that the impact of working cap was a significant.
Speaker Change: And this illustrates what we said we would do when we raised cash and in August we were not going to include the marketing spend but we stick to the strategy, which consists in offering better supply offering, but the supply is a buying more product and making sure in pre.
Speaker Change: Payments or inventory, making sure that weekend be favored by the suppliers and the vendors we are working with and payment terms either in bolt on stuff, we got to get them. There. So we we have increased the liberator for working cap.
Phil: As Phil mentioned.
Phil: We believe that we'll have only.
Phil: I just meant in the future.
Phil: But we are not going to increase it as we did in Q4.
Phil: Yeah, I think that's new languages Antoine we we explained that in Q4, we increased working capital by $35 million, which is significant and is in line with all tried to Jim what we said after the ATM. So we all agree that we were going to push supply and invest in supply. We believe it's a better location of Harman.
Phil: And handing it over to two I mean.
Phil: Excess marketing budget I would say.
Phil: Going forward, we expect this impact quarter over quarter to really motivate them and we're not going to increase of working capital by such thing it should into in the next quarters definitely and it puts us I believe you're in the right place. It really helps us to shoot a growth customer acquisition and oldest growth.
Phil: It puts us in the right place. So we can attract more vendors get better value for money and bits of friction for customers.
Phil: Yeah.
Speaker Change: Got it that's a that's all for me I appreciate it.
Beth: Thank you Beth.
Keith: Thank Keith.
Speaker Change: This does conclude today's question and answer session. So I will hand, it back to Mr. <expletive> Weil for any closing comments.
Speaker Change: No further commencing shield for your attention and looking forward to catching up next quarter.
Speaker Change: Thank you. This does conclude today's conference and you may disconnect. Your lines at this time and we thank you for your participation.