Growth momentum in topline drivers

We are focused on growing consumer adoption, usage and engagement on our platform. While our GMV increased by 39% this quarter compared to the third quarter of 2018, our Annual Active Consumers for the 12-month period ending September 30, 2019 grew by

56% and number of Orders for the quarter grew by 95% on a year-on-year basis.

The fastest growing categories on our platform in terms of items sold are digital services offered on our JumiaPay mobile application, such as airtime recharge and utility bills payments, which are growing at triple digits, followed by Fast Moving Consumer Goods (“FMCG”), such as groceries and staples, which increased by 99% over the 9-month period ending September 30, 2019 compared to the same period last year. While these categories typically include lower average value items, we believe they drive strong engagement of our users and contribute to repeat purchases and increased consumer lifetime value, while providing consumers with an affordable entry point into our ecosystem.

In an effort to enhance our value proposition to sellers and consumers continuously, we have launched Jumia Mall in September 2019. Jumia Mall provides a dedicated space for brands or their official distributors to reach consumers through a customized e-shop with multiple services available to build their brand awareness and online sales performance. These services include marketing and visibility packages, business intelligence and data analytics as well as seamless logistics through the Jumia Express program. As of September 30, 2019, a couple of weeks after its launch, Jumia Mall was already home to approximately 50% of the top 100 Forbes consumer brands, which we believe is a strong validation of the relevance of Jumia as a platform of choice for brands.

Development of JumiaPay

JumiaPay remains a key focus area for us, and we aim to drive the adoption of JumiaPay on our platform in a gradual manner, in order to expand into off-platform payments in the future.

Our Total Payment Volume (“TPV”) reached €32 million in the third quarter of 2019, up 95% from the same period last year. Our number of JumiaPay Transactions reached 2.1 million, up 262% from the same period last year, demonstrating robust traction of digital payments on our platform. In the third quarter of 2019, approximately 31% of Orders at Group level were settled via JumiaPay compared to 16% a year ago, demonstrating our ability to leverage the marketplace flywheel to drive the adoption of JumiaPay.

As of September 30, 2019, JumiaPay is available in six markets: Nigeria, Egypt, Ivory Coast, Ghana, Morocco and Kenya. We continue to prepare the rollout into selected new markets in the near future.

Our financial services marketplace, which is part of JumiaPay, is a core element of our fintech ecosystem. Jumia Lending, which today acts as an intermediary between sellers on our platform and third-party financial institutions, is making great progress in driving financial inclusion and access to credit for SMEs. Jumia Lending is instrumental in the credit underwriting process, providing valuable business data to financial institutions to help pre-score the credit of our sellers. We typically take no credit risk and have no balance sheet exposure to such loans. As of September 30, 2019, Jumia Lending is available in the six countries where JumiaPay is active. Jumia Lending helped in the origination of approximately €5 million worth of loans to more than 770 sellers on our platform since its launch in early 2017. The average loan amount is around €3,200 for an average duration of 5 months.

Increased monetization

In parallel with driving topline growth and development of JumiaPay, Gross profit increased by 45% compared to the third quarter of 2018, while Marketplace revenue increased by 52% over the same period, demonstrating our ability to effectively drive monetization while sustaining robust growth of our platform. Driving revenue and gross profit is an important part of our strategy and a primary focus for us.

Our monetization strategy aims to create diversified revenue streams from transaction activity and usage of our platform, particularly through the monetization of services that enhance our sellers’ performance, such as Jumia Express or Jumia Advertising.

Jumia Advertising is set up as an in-house advertising agency with dedicated marketing and advertising professionals. Leveraging the unique reach and data of the Jumia platform, Jumia Advertising aims to drive measurable results to brands and sellers, external advertising agencies and third-party advertisers. We offer them a comprehensive range of solutions, including sponsored product ads, sponsored display, and CRM tools that can target consumers in a granular manner at different stages of their shopping journey.

Cost efficiencies

Our financial strategy seeks to balance robust topline growth and development of JumiaPay with growing monetization and cost efficiencies.

We are seeing very significant improvements in our Sales and Advertising efficiency. While delivering robust growth of topline drivers and usage of our platform, Sales & Advertising expense as a percentage of GMV decreased by 143 basis points (“bps”), from 6.1% of GMV in the third quarter of 2018 to 4.7% in the third quarter of 2019, reflecting the strong Jumia brand awareness, our discipline in terms of Sales & Advertising investments as well as the strong momentum of our offering among existing and new consumers.

Adjusted EBITDA loss as a percentage of GMV improved from negative 18.0% in the third quarter of 2018 to negative 16.5% in the third quarter of 2019.

Portfolio optimization

We regularly conduct portfolio reviews which assess the allocation of our resources to business verticals and geographies against multiple criteria, including financial performance, commercial environment as well as the ease and cost of doing business. As part of this year’s portfolio review, a number of initiatives are underway. We expect these initiatives to collectively account for less than 10% of our GMV, Gross profit and Operating loss for the 9-month period ending September 30, 2019.

These initiatives are aimed at enhancing our business focus and allocating investment, resources and talent to those areas that we believe present the best opportunities to support the Company’s long-term growth and path to profitability.

Marketplace KPIs

GMV corresponds to the total value of orders for products and services including shipping fees, value added tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns for the relevant period.

Annual Active Consumers means unique consumers who placed an order for a product or a service on our platform, within the 12-month period preceding the relevant date, irrespective of cancellations or returns.

Number of Orders corresponds to the total number of orders for products and services on our platform, irrespective of cancellations or returns, for the relevant period.

GMV increased by 38.7% from €198 million in the third quarter of 2018 to €275 million in the third quarter of 2019, on the back of sustained volume growth on the platform. Comparisons between the third quarters of 2019 and 2018 and between the second and third quarters of 2019 are affected by changes in our commercial calendar dates, particularly the Jumia Anniversary campaign which is a Tier 1 campaign that took place in its entirety in the third quarter of 2018 while approximately half of it took place this year during the second quarter.

The number of Annual Active Consumers as of September 30, 2019 was 5.5 million, up from 3.5 million a year ago and up from 4.8 million at the end of the second quarter of 2019. This corresponds to a quarterly net addition of approximately 636 thousand consumers compared to a quarterly net addition of approximately 300 thousand consumers over the same period last year. This acceleration in consumer growth is a result of our continuous efforts to drive product and service offering relevance while consistently enhancing consumer experience at every touch point of the Jumia platform.

The number of Orders on our platform increased by 95.2% from 3.6 million in the third quarter of 2018 to 7.0 million in the third quarter of 2019. Our Orders growth outpaces GMV growth as a result of consumers purchasing increasing amounts of everyday product categories which are typically lower average value items, on a more frequent basis. Over the 12-month period ending September 30, 2018, we had 3.5 million Annual Active Consumers placing on average 3.4 orders per annum, for an average value of €59.7 per order. Over the 12-month period ending September 30, 2019, we had 56% more consumers - 5.5 million Annual Active Consumers - placing on average 27% more orders - 4.3 orders per annum – for an average value of €46.5 per order. This reflects the ability of our platform to drive consumer adoption and more frequent usage.

JumiaPay KPIs

Total Payment Volume corresponds to the total value of orders for products and services completed using JumiaPay including shipping fees, value-added tax, before any cashback, irrespective of cancellations or returns.

JumiaPay Transactions corresponds to the total number of orders for products and services completed using JumiaPay, irrespective of cancellations or returns.

TPV increased by 94.8% from €16 million in the third quarter of 2018 to €32 million in the third quarter of 2019 while JumiaPay Transactions grew by 262% over the same period. This led to an increase in the penetration of JumiaPay transactions on our platform, as JumiaPay TPV represented 11.6% of GMV in the third quarter of 2019, and JumiaPay transactions represented 30.6% of Orders placed on our platform, up from 16.5% a year ago.

The increase in JumiaPay penetration is driven by a combination of continuous education efforts of consumers on our platform, incentives such as capped cashbacks offered to consumers for the usage of JumiaPay, as well as the roll-out of JumiaPay to more geographies and Jumia properties. We also continued to add relevant digital services to consumers as part of our JumiaPay payment app.

Revenue

Certain types of vouchers and consumer incentives were reclassified from Sales & Advertising to Revenue as further described in “Voucher and consumer incentives reclassification” below. The cumulative effect for the nine months ended September 30, 2019 is included in the results for the three months ended September 30, 2019. Results for the three months ended September 30, 2018 have not been adjusted.

Marketplace revenue increased by 52.1% in the third quarter of 2019 compared to the third quarter of 2018, as we continue to drive monetization in parallel with increased usage of our platform.

Commissions, which are charged to our sellers, grew by 27.5%.

Fulfillment, which are delivery fees charged to consumers, grew by 82.2%.

Marketing & Advertising, which corresponds to the revenue generated from the sale of a diversified range of ad solutions to sellers and advertisers grew by 125.4%. The sustained momentum in this revenue stream shows the appetite from both sellers and advertisers for a compelling offer of digital advertising reaching a broad base of users, capable of driving measurable performance.

Value Added Services, which include revenue from services charged to our sellers such as logistics services, packaging, or content creation, grew by 32.9%.

First Party revenue increased by 1.8% in the third quarter of 2019 compared to the third quarter of 2018. We undertake our first party activity in an opportunistic manner to complement the breadth of product assortment on our platform, usually in areas where we see unmet consumer demand. Over time, it is our goal to reduce the proportion of first party activity in favor of third-party activity at group level. This strategy may however vary from quarter to quarter and from country to country.

Shifts in the mix between first party and marketplace activities trigger substantial variations in our Revenue as we record the full sales price net of returns as First Party revenue and only commissions and fees in the case of Marketplace revenue. Accordingly, we steer our operations not on the basis of our total Revenue, but rather on the basis of Gross profit, as changes between third-party and first-party sales mix are largely eliminated at the Gross profit level.

Gross Profit

Fulfillment Expense

The origin of the goods, for example the cost of shipping a product from a cross-border seller based overseas is higher than shipping from a local seller

The destination of the package and type of delivery, for example main city vs. secondary city vs. rural area, and home delivery vs. pick-up station

The type of goods, for example the cost of delivery is higher for a large home appliance than a fashion accessory

Sales & Advertising Expense

Certain types of vouchers and consumer incentives were reclassified from Sales & Advertising to Revenue as further described in “Voucher and consumer incentives reclassification” below. The cumulative effect for the nine months ended September 30, 2019 is included in the results for the three months ended September 30, 2019. Results for the three months ended September 30, 2018 have not been adjusted.

General and Administrative Expense, Technology and Content Expense

Operating Loss and Adjusted EBITDA

Cash Position

Cash at the beginning of period as at June 30th has been adjusted to reflect a reclassification of investment in term deposits.

as a measurement of operating performance because it assists us in comparing our operating performance on a consistent basis, as it removes the impact of items not directly resulting from our core operations;

for planning purposes, including the preparation of our internal annual operating budget and financial projections;

to evaluate the performance and effectiveness of our strategic initiatives; and

to evaluate our capacity to expand our business.

Adjusted EBITDA does not reflect our share-based payments, income tax expense or the amounts necessary to pay our taxes;

although depreciation and amortization are eliminated in the calculation of Adjusted EBITDA, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any costs for such replacements; and

other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.