Jumia Technologies AG (JMIA) Q4 2022 Earnings Call Transcript

Jumia Technologies AG (NYSE:JMIA) Q4 2022 Earnings Conference Call February 16, 2023 8:30 AM ET

Company Participants

Safae Damir - Head of Investor Relations

Francis Dufay - Acting CEO

Antoine Maillet-Mezeray - EVP Finance & Operations

Conference Call Participants

Luke Holbrook - Morgan Stanley

Aaron Kessler - Raymond James

Lamont Williams - Stifel

Operator

Good day, ladies and gentlemen. Thank you for opinionated by. Welcome to Jumia's Results Conference Call for nan Fourth Quarter of 2022. At this time, each participants are successful a listen-only mode. After management's prepared remarks, location will beryllium a question-and-answer session.

I would now for illustration to move nan telephone complete to Safae Damir, Head of Investor Relations for Jumia. Please spell ahead.

Safae Damir

Thank you. Good morning, everyone. Thank you for joining america coming for our 4th fourth 2022 net call. With america coming are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations. We will commencement by covering nan Safe Harbor.

We would for illustration to punctual you that our discussions coming will see forward-looking statements. Actual results whitethorn defer materially from those indicated successful nan forward-looking statements. Moreover, these forward-looking statements whitethorn speak only to our expectations arsenic of today. We undertake nary responsibility to publically update aliases revise these statements.

For a chat of immoderate of nan consequence factors that could origin existent results to disagree from nan forward-looking statements expressed today. Please spot nan consequence factors conception of our Annual Report connected Form 20-F arsenic published connected April 29th, 2022, arsenic good arsenic our different submissions pinch nan SEC.

In addition, connected this telephone we will mention to definite financial measures not reported successful accordance pinch IFRS. You tin find reconciliations of these non-IFRS financial measures to nan corresponding IFRS financial measures successful our net property release, which is disposable connected our Investor Relations website.

With that, I'll manus complete to Francis.

Francis Dufay

Thank you, Safae. Welcome everyone and acknowledgment for joining america today. I would for illustration to commencement pinch a little update connected our strategy. Antoine and I took connected our caller roles complete 4 months agone now. Our instruction is very clear taking Jumia to nan breakeven and building a increasing and profitable business successful Africa.

We took swift action to support our way to profitability, and while it is still early days and there's a batch much that we're moving on, nan first results are very encouraging. In Q4 '22, we made bully advancement connected our strategical priorities. One, we person importantly reduced our losses. Two, we person enhanced business attraction terminating a number of non-core activities to support our portion economics. Three, we person driven meaningful costs reduction. In Q4, it's mostly visible connected fulfillment and trading expenses, but we're moving to thrust much savings crossed nan full costs structure. And four, we person accelerated connected monetization, which has reached all-time highs successful Q4.

Let maine commencement pinch nan simplification successful losses connected Page 5. Operating nonaccomplishment was down 41% year-on-year reaching $49.8 million. Operating nonaccomplishment arsenic percent of GMV decreased by complete 8 percent points year-on-year to 17.6%. Similarly, adjusted EBITDA nonaccomplishment was down 30% year-on-year reaching $49.2 million. This takes full-year '22 adjusted EBITDA nonaccomplishment to $207 cardinal adjacent nan bottommost extremity of nan guidance scope we provided of $200 cardinal to $220 million.

So while this is bully progress, we judge that we tin do much, overmuch amended and this is reflected successful our guidance. We expect adjusted EBITDA nonaccomplishment for 2023 to alteration by up to 50% versus 2022. We'll travel backmost to that astatine nan extremity of our presentation. To accelerate our advancement towards profitability, we request to beryllium overmuch much focused and disciplined successful our scope of activities. We've had a inclination successful nan past to dispersed ourselves excessively bladed crossed a very wide scope of activities.

We announced successful our Q3 net call, our volition to heighten business attraction and terminate a number of projects. This business exits person now been mostly completed. We person discontinued Jumia Prime, nan consequence from Prime successful position of user traction and stickiness fell short of our targets arsenic our markets are astir apt not awesome capable for this type of offering yet. We person besides scaled backmost connected our first statement market activity successful Algeria, Ghana, Senegal and Tunisia to support our portion economics and trim business complexity.

Grocery comes pinch a number of procurement and logistics challenges and requires different standard for economics to work. Doesn't make consciousness for america astatine this shape to proceed investing successful this class successful countries wherever it remains subscale. In addition, we person suspended our logistics arsenic a work offering successful a number of countries. We proceed to beryllium large believers successful nan logistics opportunity for Jumia crossed Africa. However, we request to first amended nan ratio of our logistics to service amended our ain e-commerce business.

That said, we proceed processing our logistics-as-a-service activity successful Nigeria, Morocco and Ivory Coast wherever our logistics is fresh to support third-party measurement and wherever impervious of conception has been established.

Last but not least, we person discontinued successful Q4 our nutrient transportation operations successful Egypt, Ghana and Senegal. In Egypt, though it's a ample market, it is already very competitory pinch a number of established players. We were precocious and spot successful this space, launching our operations successful nan summertime of '21. Competing for marketplace stock successful specified a task territory would person diluted our portion economics successful nan midterm pinch unclear upside. For Ghana and Senegal we're talking astir smaller markets successful position of opportunity and wherever our nutrient transportation operations were sub-scale, we did not spot charismatic returns successful nan midterm to warrant nan investments.

If we return each this business exists combined, we're talking astir a comparatively humble financial impact. In nan 9 first months of '22 periods, exited businesses correspond little than 4% of full GMV, 9% of revenue, and 2% of EBITDA loss.

That said, they thief america to importantly trim business complexity and free up superior and guidance bandwidth to attraction connected halfway priorities specified arsenic maturation topics. One of these priorities is to importantly trim costs and run astatine a overmuch higher level of efficiency. What is visible successful nan Q4 '22 results is nan important alteration successful fulfillment and income and advertizing expenses, which declined by 21% and 41% respectively year-on-year. And we're moving to thrust further efficiencies this twelvemonth successful our fulfillment and trading costs. Antoine will supply you much colour connected this later on.

What is yet to favorably effect our P&L is nan important action that we person taken connected G&A costs. We took immoderate reliable decisions connected headcount successful Q4. This has led to nan termination of complete 900 positions for expanding to a 20% headcount reduction. We person done a solo activity of streamlining functions to create linear, much productive teams, and afloat committed to nan execution of our strategy.

As portion of that, we person importantly reduced our beingness successful Dubai, getting headcount by complete 60%. Most of nan remaining staffs are being relocated to our African offices, person to our consumers, sellers, and operations. The implementation of these changes resulted successful $3.7 cardinal successful 1 of restructuring costs booked successful Q4 '22. We expect this headcount reductions to let america to prevention complete 30% successful monthly unit costs starting from March '23 arsenic compared to October '23 unit costs baseline.

Accelerating our way to profitability requires some tighter costs power arsenic we seen and gross growth. The awesome driver successful nan simplification successful nan adjusted EBITDA nonaccomplishment successful Q4 '22 was nan acceleration of monetization to grounds highs. Gross profits was up 22% year-on-year and 38% successful changeless rate terms. Gross profit separator reached an all-time precocious of 14.5% of GMV, a measurement up of complete 4 percent points compared to Q4 '21. This was driven by record-highs reached crossed commissions, advertising, and value-added services.

Clearly we've made very bully advancement this 4th crossed monetization and costs reduction, and this positions america very good to further trim our losses. Let's now dive deeper into Q4 performance. I will screen operating KPIs, while Antoine will activity you done our financials.

Let maine commencement pinch usage dynamics connected Page 10. We're facing very important macro challenges successful respective important markets, and this is affecting usage capacity connected our platform. Inflation is reaching caller highs. In Ghana, for example, ostentation reached 54% successful December, its highest level successful complete 2 decades. Another illustration successful Egypt, which is our 2nd largest market. The latest CPI people came successful astatine 26% successful January this year. That's nan highest level successful complete 5 years.

Inflation is putting important unit connected user walk and nan FX crunch that we're seeing successful galore of our countries is creating awesome proviso issues. Egypt, for lawsuit faced a situation of equipment accumulated successful ports passim 2022 owed to a shortage of U.S. dollars and we're seeing akin proviso challenges successful different countries arsenic Tunisia, Nigeria, which is inevitably impacting our sales. That is important inheritance to person successful mind erstwhile looking astatine our usage performance.

Quarterly progressive consumers reached $3.2 cardinal down 15% year-on-year. This is partially a reflection of nan macro challenges I conscionable mentioned and we besides took deliberate action connected our broadside to trim accent connected categories pinch much challenging portion economics, including market arsenic good arsenic nan number of integer services connected nan JumiaPay app. Similarly, orders declined by 12% year-on-year arsenic a consequence of some macro changes and a complaint class rationalization.

GMV reached $283 million, down 14% year-on-year and level connected a changeless rate basis. FX was a worldly headwind to GMV capacity successful Q4 pinch each section currencies depreciating against nan U.S. dollar, successful peculiar nan Egyptian Pound, Nigerian Naira, and West African CFA depreciated by respectively 23%, 6% and 12% against nan U.S. dollar successful '22 compared to '21.

On nan different hand, we made meaningful advancement successful nan simplification of nan wide complaint of cancellations, grounded deliveries and retransfer of CFDR. This is an important parameter of operational efficiencies to trim flows. We made peculiarly bully advancement connected nan consumer's cancellation beforehand arsenic a consequence of enhanced personification interface and acquisition arsenic good arsenic improving user education.

The CFDR complaint arsenic a percent of GMV improved from 22% successful 2021 to 20% successful 2022, while nan CFDR complaint arsenic a percent of orders improved from 16% successful 2021 to 15% successful 2022. To reason connected usage dynamics, I would for illustration to stress that contempt nan macro challenges that we're seeing today, we're much than ever assured astir nan semipermanent maturation opportunity successful our markets. In fact, a halfway portion of our strategy is to further fortify our basal to thrust sustainable semipermanent maturation pinch patient portion economics.

I had covered that successful much item successful our November call, but I'd for illustration to telephone retired 1 of nan initiatives that I had mentioned astir proviso improvements. Some countries person been connected this travel for a fewer months now and are already showing bully signs of improvements. Just 1 illustration successful Senegal that I was overseeing arsenic portion of my role, we stepped up our commercialized efforts successful nan user electronics class successful 2022, focusing connected attracting much brands and value suppliers to nan platform. This is already yielding very affirmative results pinch GMV uplift of almost 90% year-on-year successful Q4 '22 successful nan user electronics class and we're evidently replicating akin actions crossed categories and crossed countries.

Now moving connected to JumiaPay connected Page 11, JumiaPay TPV and transactions are intimately linked to nan underlying usage of our platform. So successful nan discourse of declining GMV and pinch nan simplification of trading centers to thrust prepayment penetration, JumiaPay TPV posted nan diminution of 18% year-on-year successful Q4 '22. On a changeless rate basis, TPV was level year-on-year. FX was a important headwind to TPV performance, peculiarly nan 23% depreciation connected nan Egyptian Pound versus nan U.S. Dollar successful '22.

On-platform penetration of JumiaPay arsenic a percent of GMV remained comparatively unchangeable astatine 26% successful Q4 '22 compared to 27% successful Q4 '21. JumiaPay transactions reached $2.9 cardinal successful Q4 down 26% year-on-year. This was a consequence of nan diminution successful orders during nan quarter, peculiarly sorry connected nan JumiaPay App wherever we meaningfully scaled backmost promotional strength to support portion economics.

Overall, 29% of orders placed connected Jumia successful Q4 '22 were completed utilizing JumiaPay compared to 35% successful Q4 '21. This is mostly a consequence of nan transactions diminution connected nan JumiaPay App. As JumiaPay App penetration is almost 100% connected nan JumiaPay App, whereas JumiaPay penetration is 100% connected JumiaPay App, nan reduced stock of JumiaPay App successful nan transactions operation led to a diminution successful nan wide JumiaPay transactions penetration arsenic a percent of orders.

JumiaPay continues to beryllium a strategical privilege for Jumia and we're moving connected merchandise and UI, UX to make it an moreover much effective enabler for e-commerce business. That said, we do not intend to subsidize prepayment penetration connected nan level and our privilege is very overmuch connected supporting our margins. Last but not least, we stay focused connected expanding our costs processing activities successful Nigeria and Egypt wherever we person antecedently obtained nan applicable licenses to do so.

I'll now manus complete to Antoine, who will locomotion you done our financials.

Antoine Maillet-Mezeray

Thanks, Francis. Hello everyone. I'll commencement pinch nan reappraisal of our apical statement capacity connected Page 13. Despite nan awesome challenges we are facing successful nan macro front, we posted very beardown apical statement capacity successful Q4 '22. Revenue was up 7% year-on-year, and 23% connected nan changeless rate basis. This was driven by marketplace based gross momentum, which accelerated by 27% year-on-year and 45% connected nan changeless rate basis.

On nan different end, first-party gross was down 15% year-on-year and level connected a changeless rate basis. This was mostly a consequence of our determination to standard backmost nan market class to trim operational complexity and support our margins. Other gross was down 9% year-on-year and up 2% connected a changeless rate basis, partially owed to nan suspension of our logistics-as-a-service offering successful a number of geographies. Let's now unpack nan gross dynamics of our marketplace revenue.

Marketplace gross reached an all-time precocious of $41.2 cardinal successful Q4 '22. Commissions was nan fastest increasing marketplace gross watercourse up 81% year-on-year and up 105% successful changeless rate reaching a grounds of $16 million. This was nan consequence of committee return complaint increases implemented successful Q2 and Q3 '22. Marketing and advertizing was nan 2nd fastest increasing gross watercourse up 76% year-on-year and up 96% successful changeless rate reaching an all-time precocious of $7.4 million. This was driven by nan beardown momentum successful third-party advertisers revenue, which much than double year-on-year.

Value-added services besides reached grounds precocious astatine $9.5 million, up 11% year-on-year and up 27% successful changeless rate arsenic a consequence of a beardown summation successful warehousing work revenue. On nan different hand, fulfillment gross was down 23% year-on-year and down 11% successful changeless rate arsenic a consequence of nan selected deployment of adjacent time free transportation earlier successful 2022. We are presently making adjustments to nan free shipping program. We are introducing higher minimum handbasket sizes and further restricting its geographical scope to support portion economics.

The beardown marketplace gross momentum is driving an acceleration successful gross profits. Gross profit reached an all-time precocious of $41 million, up 22% year-on-year and 38% connected a changeless rate basis. This besides led to an all-time precocious gross profit separator arsenic a percent of GMV astatine 14.5%. I'm now moving connected to costs. Fulfillment disbursal reached $24 cardinal down 21% year-on-year and 6% connected a changeless rate basis, partially arsenic a consequence of orders declining 12% during this period.

The ratio of fulfillment disbursal per bid excluding JumiaPay App orders, which do not incur logistic costs decreased by 17% from 3.24% successful Q4 '21 to 2.17% successful Q4 '22. As a percent of GMV, fulfillment disbursal dropped 74 bps from 9.2% successful Q4 '21 down to 8.5% successful Q4 '22. These ratio gains are encouraging and we are focused connected driving moreover much savings pinch a number of initiatives underweight. And these see optimizing our footprint and logistics routes, improving warehousing unit productivity and reducing packaging costs.

Sales and advertizing disbursal reached $18.5 cardinal down 41% year-on-year and 35% connected a changeless rate basis, arsenic we proceed to bring much subject to our trading investments. This led to an betterment of trading ratio ratios pinch income and advertizing disbursal per bid decreasing by 32% from $2.80 successful Q4 '21 down to $1.9 successful Q4 '22. As a percent of GMV, income and advertizing disbursal reached 6.5% successful Q4 '22, almost 3 points betterment year-on-year. We still person room to make moreover much efficiencies by improving nan relevance and costs effectiveness to our trading channels.

There is an important distinction, I'd for illustration to make here. Reducing trading walk and seeking much efficiencies does not mean we are readying to sacrifice maturation successful pursuit of profitability. I do admit that successful nan past periods of faster maturation came pinch trading inefficiencies and that's thing we scheme to change. We firmly judge that we tin thrust usage growth, while improving portion economics and efficiencies. In fact, we person countries wrong our portfolio specified arsenic Ivory Coast aliases Senegal that are increasing astatine faster rates than successful nan group pinch overmuch amended trading economics. And this is simply a exemplary we intend to replicate crossed nan group.

Moving connected to exertion cost, we proceed investing successful our tech backbone. Tech and contented disbursal reached $14.5 cardinal up 10% year-on-year and 20% connected a changeless rate basis. This was partially owed to nan higher hosting fees during nan quarter. That said, connected a sequential basis, tech unit costs were down 14% arsenic nan headcount cuts undertaken earlier successful 2022 are paying off. We expect to thrust further tech costs efficiencies arsenic unit reductions proceed to salary disconnected and infrastructure optimizations starts yielding reserves.

Let's now move to G&A costs. G&A excluding share-based compensation reached $37.1 cardinal astatine 16% year-on-year and 28% connected a changeless rate basis. G&A included $3.2 cardinal of restructuring costs associated pinch headcount rationalization conducted during nan quarter. Excluding restructuring costs and share-based compensation unit costs were down 12% some year-on-year and quarter-on-quarter. We expect these headcount reductions to let america to prevention complete 30% successful monthly unit costs starting from March '23 arsenic compared to nan October '22 unit costs baseline.

To wrap up connected cost, we person made bully advancement successful costs simplification successful Q4 '22. However, this only bespeak a fraction of nan activity we are doing crossed nan P&L, and we expect to thrust much savings passim '23, which is reflected successful our guidance.

And let's now move to equilibrium expanse and rate travel items. CapEx successful Q4 '22 was $2.8 cardinal mostly relating to logistics and exertion instrumentality purchases. Net alteration successful moving headdress astatine an outflow effect of $13 million, mostly owed to a important summation successful waste and acquisition receivable and prepayments. These was mostly related to nan prepayment of hosting fees for '23 to unafraid amended pricing.

Cash utilization for nan 4th was $58.2 million, which is 6% diminution compared to Q3 '22 and 15% simplification compared to Q4 '21. At nan extremity of December '22, we had liquidity position of $228 cardinal comprise of $72 cardinal of rate and rate equivalents and $156 cardinal of word deposits and different financial assets.

I'll now manus complete to Francis who will locomotion you done our guidance connected Page 20.

Francis Dufay

Thank you, Antoine. We stay afloat committed to accelerating our advancement towards breakeven. For 2023, we expect adjusted EBITDA nonaccomplishment to scope betwixt a $100 cardinal to a $120 million. At nan bottommost of this guidance range, this intends cutting adjusted EBITDA nonaccomplishment by much than half versus 2022. The advancement we made successful Q4 '22 alongside nan initiatives we're presently moving connected gives america assurance successful our expertise to deed this trench.

We person baked into this guidance realistic assumptions successful position of usage dynamics. The micro business remains a headwind, truthful we fundamentally presume nan continuation of nan aforesaid usage trends observed successful Q4 '22. What's supporting nan adjusted EBITDA nonaccomplishment simplification is important costs savings that results from ratio initiatives that are mostly underway. With that successful mind, we expect income and advertizing disbursal to scope betwixt $30 cardinal to $46 million.

At nan bottommost of nan range, we're talking astir nan simplification of complete 60% versus 2022. Antoine made an important favoritism earlier successful nan call, and fto maine accent that again. The point trading does not mean neglecting growth. In fact, we're doing solo activity connected supply, logistics, and customer acquisition to thrust sustainable maturation for nan long-term. However, successful nan near-term, nan macro remains challenging, which is apt to proceed to impact usage connected nan platform, and this costs for moreover much be aware and subject successful nan costs management.

In that spirit, we expect G&A including share-based compensation to scope betwixt $90 cardinal and $105 cardinal compared to $122 cardinal successful 2022. The organizational changes conducted successful Q4 '22 will thief america thrust meaningful unit costs savings successful 2023.

Antoine and I took a number of decisive actions successful nan very first days of our mandate. Some of these were difficult, specified arsenic headcount cuts and business exits, but we judge they were basal to group nan business and nan coagulated instauration to scope profitability. We're besides driving a number of taste changes astatine Jumia. Fostering a civilization of invention pinch a specified sharper attraction connected costs discipline.

We person besides removed layers of cardinal guidance and business complexity to empower guidance successful Africa to ain and thrust nan country's schedule pinch a clear attraction connected profitability and semipermanent sustainable growth. There is very beardown buying and commitments crossed nan statement to present connected our strategy. And we look guardant to updating you connected our advancement connected nan adjacent call.

With that, we are fresh to return your questions.

Question-and-Answer Session

Operator

At this time, we will beryllium conducting a question-and-answer session. [Operator Instructions]. Your first mobility for coming is coming from Luke Holbrook astatine Morgan Stanley.

LukeHolbrook

Yes, bully day everyone. Thanks for letting maine connected nan call. You've made a important simplification successful unit 900 positions. You're harboring yourselves connected advertizing disbursal this year. I deliberation you discussed consumers facing macro pressures. So I conjecture putting that each together, what are nan assumptions that you each are making from a top-line position to deed nan adjusted EBITDA guidance for this year?

FrancisDufay

So arsenic we conscionable said successful nan telephone outlook. Thanks for nan question. As we said successful nan telephone we are not giving nan guidance connected top-line for this year. But successful our assumptions, we fundamentally do not spot -- we do not forecast aliases foresee worldly changes to nan trends that we've seen successful Q4. We put it this way. However, we are moving very, very difficult to reverse nan trends and to present overmuch amended word scheme that's what we've seen successful nan past 4th moving connected fundamentals of supply, fundamentals of customer experience, UX and distribution.

LukeHolbrook

Okay, understood. And conscionable historically, we've had, I conjecture proviso concatenation issues and macro conditions blamed connected underperformance successful position of profitability. From what you are saying, if location is simply a deviation connected apical statement trajectory from what you're expecting, you'll return further actions. Is that correct? Just make judge that you're hitting that adjusted EBITDA benignant of mislaid guidance, is that correct interpretation?

FrancisDufay

We will make judge that we deed nan guidance definition.

LukeHolbrook

Perfect. Thank you.

Operator

Your adjacent mobility for coming is coming from Aaron Kessler astatine Raymond James.

AaronKessler

Great. Thank you. A mates of questions. One, conscionable nan diminution successful customers and orders connected a year-over-year ground that you saw. I deliberation you said that was mostly macro. Was location immoderate different factors though, including scaling backmost immoderate of these initiatives that weighed connected nan benignant of nan customer bid maturation successful nan quarter?

FrancisDufay

Sorry, Aaron, I didn't get nan 2nd half of nan question.

AaronKessler

Yes, was location -- is location immoderate different factors too macro benignant of nan declining customers and orders specified arsenic immoderate of nan newer scaling backmost immoderate of these initiatives?

FrancisDufay

No, I deliberation that location are galore trends to play. I mean decidedly macro is nan biggest driver. When you talk astir macro, location are 2 large things astatine play. One is ostentation and nan different 1 is proviso disruption. So ostentation we mentioned, for example, Ghana that has 54% year-on-year inflation. This is evidently impacting purchasing powerfulness for our customers. The 2nd large portion is basking rate and missing basking rate successful each of our countries that has impacted heavy expertise to import successful immoderate countries for illustration successful Egypt which arsenic a consequence is impacting our expertise to get nan correct proviso connected nan level and nan correct lineup of products. So this is by acold nan biggest driver. There are besides immoderate of nan drivers, for example, we person made conscious and deliberate decisions to optimize and rationalize immoderate categories specified arsenic SMCG, aliases JumiaPay App. So we are seeing antagonistic trends connected those segments, but we cognize why, and this is simply a very deliberate choice.

On nan different hand, we person immoderate segments and immoderate categories that are increasing because we are each that are performing measurement amended than nan mean because we've already starting nan reappraisal of fundamentals connected those segments.

AaronKessler

Got it. And immoderate much specifications you tin supply connected nan -- saw a bully maturation and committee revenues successful nan quarter. I conjecture really overmuch of that was benignant of from higher pricing that you've rolled retired aliases cutting backmost nan level of couponing you've utilized antecedently arsenic well?

FrancisDufay

Yes, absolutely. So successful this 4th we've reached an all-time precocious of 14.5% of gross profits versus GMV. That's mostly nan consequence of commissions increase, that was undertaken mid-'22. We're besides hitting a grounds level of advertizing revenues. However, going guardant we will beryllium very disciplined connected monetization and we'll return it much arsenic a byproduct of scale. So we do not expect further committee increases successful nan near-term, and we do not foresee worldly summation successful gross profit separator for nan early quarters versus Q4.

AaronKessler

Got it.

FrancisDufay

Basically, yes, truthful a stock of that is from [indiscernible], I mean income publication from advertizing and different stock is from benignant of mandatory return complaint from commissions that, and that we want to beryllium observant astir because we don't want to wounded nan economical equation of our vendors and we want to make judge that nan level remains charismatic for caller vendors to join.

AaronKessler

Got it, great.

Operator

Your adjacent mobility for coming is coming from Lamont Williams astatine Stifel.

LamontWilliams

Hi, acknowledgment for taking nan question. Can you conscionable arsenic you bring down income and trading disbursal for adjacent year, could you conscionable talk astir nan displacement that you are readying successful nan trading mix? I deliberation historically you've done mostly, astir of nan operation has been capacity marketing. Can you conscionable talk astir really you're reasoning astir adjacent year?

FrancisDufay

So very bully question. Thanks a lot, and fto maine springiness besides a broader answer, it's a very important point. So successful this getting backmost connected income and advertizing disbursal and arsenic Antoine mentioned, we're cutting connected important inefficiency and whitethorn I moreover opportunity discarded from nan past. And we judge we tin do that because we spot small relationship betwixt trading walk and maturation of nan countries, erstwhile you look state by country. So we're rather comfortable going guardant pinch this plan, but we are doing, I mean, we're not conscionable reducing stuff. We besides person a very clear scheme to alteration sustainable maturation without nan economics. So while reducing trading budgets, we're besides launching overmuch much structural actions, pinch mean to semipermanent effect that are of people much difficult to execute than throwing money connected marketing.

But that will person nan champion semipermanent and nan biggest semipermanent impact. So we are rebuilding nan worth proposition of our level category-by-category successful each state focusing connected cardinal categories, fashion, work electronics, phones, location living. Basically what we're doing is we're onboarding aliases re-onboarding nan correct brands and vendors securing champion prices and selection. This, I mean, I insist connected this one. This whitethorn sound a spot basal and evident point from Western countries, but this is perfectly captious successful emerging markets successful Africa wherever proviso is simply a imperishable situation for some consumers and retailers, and it's a conflict for us.

Second, we are expanding to scope extracurricular of our superior cities to scope consumers extracurricular of nan large cities. So we are expanding nan user guidelines done a broader distribution web and much applicable trading channels to target those customers. So to your question, we are adding to our mix, to our trading operation overmuch much underground activation overmuch many, I mean, programs that are tailored for group who are not needfully fluent pinch nan caller connection channels who don't person nan entree to nan Internet for example, and who person many, galore bully proof-of-concept from number of countries that tin leverage there. And past improving CX, removing symptom points specified arsenic pining of returns, and we are doing a batch of tech activity to amended our UX.

We're not delivering, I mean, we're not readying connected delivering caller fancy features connected nan app. We are alternatively focused connected fixing basics, fixing issues, and simplifying nan experience. We springiness you an example, astatine nan moment, we are moving connected fixing issues pinch our login process that was negatively impacting our customers.

We for illustration to attraction connected that alternatively than delivering caller imaginative features astatine nan infinitesimal because we want to make judge that nan UX is beardown capable and supports our maturation story. So that's nan wide picture. And arsenic portion of that, changing nan operation of trading evidently has a very, I mean, it's very important. So what's happening specifically connected marketing, arsenic I was mentioning. So we're expanding nan stock of fund and guidance attraction connected nan crushed activation and trading channels that are applicable for customers who are poorly connected to nan Internet. So people flyers, section radios, thoroughfare activation and truthful connected are very bully examples. We are besides scaling up our efforts and nan tech attraction successful our CRM and our onsite improvement.

We person great, I mean, we person immense customers database and we tin leverage, leverage it moreover much pinch amended CRM devices and processes. So we're moving connected that a lot. And we are improving our onsite performance. So we make amended usage of nan nonstop postulation connected nan platform. We of people still person paid trading channels, but pinch overmuch little fund and pinch overmuch greater attraction connected efficiency.

LamontWilliams

Okay, great. Thank you. Thanks for that. And conscionable you talked astir immoderate changes aliases reductions successful business lines and nan integer categories. Could you conscionable touch connected that and what precisely you did pinch immoderate of your integer business lines?

FrancisDufay

So successful nan past quarter, we've been deliberately much disciplined successful trading investments crossed nan board, of course, and successful JumiaPay and JumiaPay App successful particular. So we person pulled backmost spends connected immoderate of nan heavy promotional categories connected nan JumiaPay App, specified arsenic airtime income and virtual sales, which arsenic a consequence evidently has impacted nan income successful this quarter. But arsenic we're focused connected getting amended economics, we do not intend to subsidize heavy nan maturation of specified categories successful nan near-term.

LamontWilliams

Okay, great. Thank you.

Operator

This concludes today's conference, and you whitethorn disconnect your lines astatine this time. Thank you for your participation.