Jumia Technologies AG Q4 FY2025 Earnings Call

Good morning, ladies and gentlemen. Thank you for being here. Welcome to Jumia's Results Conference Call for the Fourth Quarter of 2025. I would now like to turn the call over to Ignatius Njoku, Head of Investor Relations for Jumia. Please proceed.

Thank you. Good morning, everyone. Thank you for joining us today for our fourth quarter 2025 earnings call. With us today are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations. We would 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. Moreover, 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 report on Form 20-F as published on March 7, 2025, as well as our other submissions with the SEC. In addition, on this call, we will refer to certain financial measures not reported in accordance with IFRS. You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our Investor Relations website. With that, I'll hand over to Francis.

Good morning, everyone, and thank you for joining Jumia's Fourth Quarter and Full Year '25 Earnings Call. 2025 was the year we demonstrated that we can turn the playbook we began building several years ago into tangible results. Over the past few years, Jumia has been building an e-commerce model designed specifically for Africa, adapted to the unique structural, logistical and consumer realities of our markets. In 2025, we proved that this model positions us to scale with the right economics. As we shared at our Investor Day in November, the question was never whether Africa is ready for e-commerce. Demand has always existed and much of it remains underserved. The real question was when e-commerce would be ready for Africa. We believe that Jumia has now answered that question. This foundation drove our strong operating momentum in the fourth quarter. Physical goods GMV grew 38% year-over-year, adjusted for perimeter effects. Growth accelerated as the quarter progressed, reflecting strengthening demand and improved execution across our markets with seasonal events, including Black Friday, contributing to volume acceleration during the fourth quarter. At the same time, profitability metrics continued to move in the right direction. Adjusted EBITDA improved, cash burn was meaningfully reduced and the business absorbed higher volumes with increased efficiency. Based on the progress we made in '25 and the momentum exiting the year, we remain focused on achieving our target of adjusted EBITDA breakeven and positive cash flow in the fourth quarter of '26 and delivering full year profitability and positive cash flow in 2027. Let me now walk you through the key highlights of the quarter. Usage trends remain strong across our platform. Adjusted for perimeter effects, physical goods orders grew 32% year-over-year, driven by expanding geographic coverage, improved assortment and sustained consumer demand. Our focus remains squarely on physical goods, which accounted for nearly all of total orders and GMV this quarter. Digital transactions through the JumiaPay app now represent a residual share of our orders as we continue to prioritize transactions with stronger economics. Adjusting for perimeter effects, quarterly active customers increased 26% year-over-year, reflecting continued traction in both acquisition and retention. Repeat behavior continued to improve with 46% of new customers from Q3 '25 making a repeat purchase within 90 days, up from 42% in Q3 '24. Demand was broad-based across electronics, phones, Home & Living, Fashion and beauty and consistent across both countries, reflecting a similar quality of execution and inputs across our markets. Adjusted for perimeter effects, physical goods GMV grew 38% year-over-year in reported currency. Average order value for physical goods increased to $37 from $35 in Q4 '24, reflecting a mix shift towards higher-value categories such as appliances. Revenue totaled $61.4 million, up 34% year-over-year, driven by higher usage and improved monetization. First-party sales represented 49% of total revenue, supported by continued strength from international partnerships, including Starlink in Nigeria and Kenya. Now turning to profitability. The progress made over the past 3 years continues to translate into measurable operating leverage. Cost improvements across general and administrative, technology and fulfillment are structural. In addition, we renegotiated third-party logistics contracts and implemented increases in commissions and take rates across most countries in mid-January '26, reflecting the scale of our platform and improved service levels delivered to vendors. These changes are consistent across markets and reflect stronger marketplace fundamentals. Headcount declined 7% in '25 to approximately 2,010 employees. This is a more focused organization built to support significantly higher volumes without proportional cost growth. Looking ahead, we are targeting a further reduction in headcount in '26, primarily across technology and G&A, driven by continued efficiency initiatives and organizational streamlining. Fulfillment cost per order improved to $1.97, a 12% year-over-year reduction on a reported basis, reflecting productivity gains and economies of scale in fulfillment operations, increased call center automation and improved logistics partner rates. Technology and content expenses declined 6% year-over-year, reflecting automation, platform simplification and the benefit of renegotiated vendor agreements, including cloud infrastructure. As a result, adjusted EBITDA loss narrowed to $7.3 million from $13.3 million in the prior year quarter. Loss before income tax was $9.7 million, a 45% decrease year-over-year or 17% decline on a constant currency basis. Quarterly cash burn declined to $4.7 million in Q4 '25 compared to $15.8 million in Q3 '25, reflecting tighter working capital management and improved operating efficiency. While we may continue to look opportunistically at financing options, based on our current trajectory, we continue to believe our existing liquidity is sufficient to reach profitability without raising additional capital. Turning to operational highlights and execution at the country level. Black Friday was a standout moment in our history. The event delivered strong volumes, higher customer engagement and improved repeat behavior. Performance during and after the event highlighted a strengthening marketplace flywheel as improvements in assortment, affordability and reliability reinforced our value proposition for Africa's value-conscious customers. We also continue to strengthen our international sourcing capabilities, particularly in China. To support this priority, we recently opened a new office in Yiwu, China, our second in the region and located within one of the world's largest wholesale commodities. This expansion strengthens our direct sourcing capabilities and deepens collaboration with a broader set of international suppliers. This enables us to expand assortment at attractive price points and deliver competitively priced goods to African consumers at scale. In the fourth quarter, we saw 6.1 million gross items internationally, up over 80% year-over-year, reflecting the continued scaling of our Chinese vendor base and a more diversified supply pipeline. Operationally, we continue to extend our reach beyond major urban centers. Orders from upcountry regions accounted for 61% of total volumes, up from 56% in the prior year quarter. These regions are delivering strong growth while benefiting from a cost structure that we believe scales efficiently with volume. In secondary cities, we are addressing clear customer pain points, including limited product availability and elevated prices from local traders. As a result, our value proposition continues to resonate strongly, driving both adoption and repeat purchase. Now at the country level. Nigeria delivered a standout quarter. Physical goods GMV increased 50% year-over-year, while physical goods orders grew 33%, marking the fourth consecutive quarter of double-digit growth. Performance was broad-based across key categories and channels with geographic expansion continuing to deliver results. Initiatives launched in the Northern region in the third quarter of '25 are translating into steady active customer growth, while the South-South and Southeast regions sustained strong performance. This momentum was supported by an improving macro environment in '25, including greater currency stability as well as the positive effects of structural reforms. Kenya performed strongly with physical goods orders up 50% year-over-year and physical goods GMV increasing 48% in reported currency. Performance was driven by a strong shopping season with Black Friday delivering a clear uplift. Ivory Coast delivered a strong performance with physical goods orders up 15% year-over-year and physical goods GMV increasing 31% in reported currency, reflecting higher value baskets and improved mix. Growth was driven by strong momentum in home and appliances as well as TVs alongside solid performance in Beauty. Ivory Coast remains a significant growth opportunity, and our market-leading position supports a continued focus on profitable growth. Egypt's performance this quarter validated the growth turnaround. Physical goods orders increased 23% year-over-year, while physical goods GMV grew 2% year-over-year, reflecting a return to positive growth. Excluding corporate sales, physical goods GMV grew 56% year-over-year, confirming a full market recovery. Growth was broad-based across core categories, supported by an optimized mass market assortment and a strong Black Friday campaign that contributed over half of quarterly volume. The buy now, pay later offering continued to deepen with record penetration in high-value categories, driving stronger conversion and higher ticket sizes. Upcountry expansion remained a tailwind with volumes shifting further towards these areas. Ghana delivered an exceptional quarter with physical goods order up 82% year-over-year and physical goods GMV increasing 124% in reported currency. This performance was supported by continued expansion of an increasingly loyal customer base, underscoring improving engagement and highlighting the scalability of our model in Ghana. Our other markets portfolio also performed well, collectively delivering 18% physical goods GMV growth and a 16% increase in physical goods orders. In February '26, we announced our decision to cease operations in Algeria, which represented approximately 2% of GMV in 2025. We expect a short-term impact from employees and lease exit costs and asset liquidation. Over the medium to long term, this decision simplifies our footprint and improves operational focus, allowing us to allocate resources more efficiently towards markets with stronger growth and profitability profiles. The competitive environment remained rational during the quarter with competitive intensity continuing to normalize across our markets. We are seeing less aggressive behavior from certain global entrants in selected countries, including Nigeria, while our local market share continues to build. At the same time, we are seeing increased regulatory scrutiny on nonresident and cross-border platforms across several countries. Recent examples include the introduction of a new tax on the profits of nonresident e-commerce platforms in the Ivory Coast as well as Ghana's VAT Amendment Act, which requires nonresident digital and e-commerce platforms supplying services into Ghana to register for VAT and comply with local VAT requirements. These regulatory developments contribute to a more level playing field. As we begin '26, our focus shifts from rebuilding to scaling. First, we plan to accelerate top line growth across our existing markets. Upcountry regions already represent the majority of our volumes, and we still see significant opportunity to deepen penetration by leveraging the infrastructure and partnerships already in place. Second, we will continue to strengthen our value proposition by expanding and refining our product assortment. Improving availability, affordability and relevance remain central to driving higher conversion and order frequency. Third, marketing represents a meaningful growth lever for us in 2026 and an important contributor to operating leverage. After rebuilding and stabilizing our offline channels, we see significant opportunity to scale and optimize online marketing channels that remain underpenetrated, including CRM, paid online marketing, SEO and affiliate partnerships. As volumes increase, these channels benefit from improving efficiency and targeting, allowing us to support growth while maintaining attractive returns on investment. Fourth, 2026 is about operating leverage. With our current cost base, we believe the platform can support meaningfully higher volumes. As scale increases, we expect fulfillment, technology and G&A costs to grow materially slower than revenue, driving margin expansion. We also intend to scale high-margin revenue streams. We believe that advertising remains underpenetrated and offers meaningful upside while Jumia delivery improves asset utilization and contributes incremental margin with limited additional cost. Taken together, these priorities reinforce our confidence that Jumia has entered its scaling phase, delivering stronger growth with improving profitability and having what we believe to be a clear path to breakeven. Let me close with this. Jumia operates in markets that remain significantly underpenetrated for e-commerce. Through years of on-the-ground execution, we have built meaningful barriers to entry, a trusted consumer brand and a playbook that demonstrably works. We believe that we are now in the right markets at the right time and finally, with the right product market fit. Our fourth quarter results reinforce that conviction. With that, I will now turn the call over to Antoine to walk you through the financials in more detail.

Thank you, Francis, and thank you, everyone, for joining us today. I will now walk you through our financial performance for the fourth quarter. Starting with revenue. Fourth quarter revenue reached USD 61.4 million, up 34% year-over-year or up 24% on a constant currency basis. Results reflect sustained consumer demand and consistent execution across our platform. Marketplace revenue for the fourth quarter totaled USD 31 million, up 36% year-over-year and up 24% on a constant currency basis. Third-party sales were USD 26.7 million, up 33% year-over-year or 22% on a constant currency basis. Growth was driven by solid performance in the marketplace, including healthy usage trends and higher effective take rates. Marketing and advertising revenue was USD 2.9 million, up 42% year-over-year or 33% on a constant currency basis. The improvement was driven by continued growth in sponsored products, with advertising revenue currently representing roughly 1% of GMV, we see meaningful opportunity to scale this channel. Value-added services revenue was USD 1.4 million, up 79% year-over-year or up 64% year-over-year on a constant currency basis. Revenue from first-party sales was USD 29.1 million, up 33% year-over-year or up 23% year-over-year on a constant currency basis, driven by strong momentum with key international brands. Turning to gross profit. Fourth quarter gross profit was USD 34.2 million, up 43% year-over-year or up 31% year-over-year on a constant currency basis. Gross profit margin as a percentage of GMV was 12.2% for the quarter compared to 11.6% in the fourth quarter of 2024, reflecting continued progress in marketplace monetization. As we enter 2026, we implemented broad-based increases in commissions across most countries, leveraging the scale and improved service levels we have built with vendors. These changes are expected to support gross profit growth going forward. Now moving to expenses. We continue to see the benefits of our cost initiatives in the fourth quarter with additional improvements expected to materialize over the coming quarters. Fulfillment expense for the fourth quarter was USD 14.8 million, up 15% year-over-year and up 5% in constant currency, primarily due to higher volumes. Fulfillment expense per order, excluding JumiaPay app orders, was $1.97, down 12% year-over-year or down 20% year-over-year on a constant currency basis, reflecting productivity gains and economies of scale in fulfillment operations, increased call center automation and improved logistics partner rates. In January 2026, we also closed a new cycle of third-party logistics renegotiations, securing meaningful cost savings that are expected to further support fulfillment efficiency and margin progression in 2026. Sales and advertising expense was USD 7 million for the fourth quarter, up 47% year-over-year and up 39% in constant currency. The increase reflects targeted investment in customer acquisition, particularly across high ROI online channels, supporting efficient top line growth. Technology and content expense was USD 9.4 million for the fourth quarter, representing a decrease of 6% year-over-year or a decrease of 8% on a constant currency basis, driven primarily by continued headcount optimization and ongoing renegotiated vendor contracts. Fourth quarter G&A expense, excluding share-based payment expense, was USD 13 million, up 1% year-over-year and down 3% on a constant currency basis. Staff costs within general and administrative expense, excluding share-based compensation expense, decreased by 18% to USD 8.2 million. The fourth quarter of 2025 included a tax benefit of USD 4.3 million compared to $8.4 million tax benefit in the fourth quarter of 2024. Turning to profitability. Adjusted EBITDA for the quarter was negative $7.3 million or negative $10.2 million on a constant currency basis. Loss before income tax was $9.7 million, a 45% decrease year-over-year or 17% decline on a constant currency basis. Turning to the balance sheet and cash flow. We ended the fourth quarter with a liquidity position of USD 77.8 million, including $76.7 million in cash and cash equivalents and $1.2 million in term deposits and other financial assets. Our liquidity position decreased by USD 4.7 million in Q4 '25 compared to a decrease of $13.6 million in Q4. Net cash flow used in operating activities was $1.7 million in the quarter, including a positive working cap impact of $9.6 million. The improvement reflects the continued strengthening of our marketplace flywheel driven by higher volumes, improved payment flows and stronger bargaining power with large third-party accounts. CapEx in Q4 '25 was USD 1.7 million compared to $1.8 million in the fourth quarter of 2024, primarily reflecting investments in supply chain equipment ahead of the end of the year season. In summary, we delivered another quarter of solid execution and strong top line growth while continuing to improve cost efficiency. Progress on structural cost reductions, automation and cash discipline reinforces our confidence in meeting our near-term objectives and moving closer to profitability. Looking ahead, we remain focused on operational discipline, margin expansion and prudent and informed capital allocation, positioning Jumia for sustainable growth and long-term value creation. I'll now turn the call back over to Francis for a discussion of our updated guidance.

Thanks, Antoine. Let me now turn to our expectations for '26. As we enter the next phase of scaling, we are refining how we frame profitability. Given our increasing focus on operating leverage and the underlying performance of the business, we believe adjusted EBITDA is the most appropriate metric to assess progress towards profitability. It provides a clearer view of operating performance and unit economics as non-operating items and non-cash charges become less representative of the business trajectory. Importantly, this does not change our underlying profitability objectives, and we believe we remain on track to achieve adjusted EBITDA breakeven and positive cash flow in the fourth quarter of '26 and delivering full year profitability and positive cash flow in 2027. With that context in mind, our focus for '26 remains on accelerating growth, driving further operating efficiency and continuing our progress towards profitability. We are seeing encouraging trends early in the year, which give us confidence in establishing our full year 2026 outlook. For the full year of 2026, we anticipate GMV to grow between 27% and 32% year-over-year adjusted for perimeter effects. On profitability, we expect adjusted EBITDA to be in the range of negative $25 million to negative $30 million. We confirm our strategic goal to achieve breakeven on an adjusted EBITDA basis and positive cash flow in the fourth quarter of '26 and to deliver full year profitability and positive cash flow in 2027. Looking specifically at the first quarter, GMV is projected to grow between 27% and 32% year-over-year adjusted for perimeter effects, and we expect higher cash outflows in the first quarter, reflecting typical seasonality and the timing of annual contract renewals for technology and insurance. As part of ongoing operational optimization, the company has announced it will exit Algeria in February '26 and expects to incur related one-time costs. Thank you for your attention. We'll now be happy to take questions.

Your first question for today is from Brad Erickson with RBC Capital Markets.

I guess just to start, if you had to kind of rank order the accelerants in 2026, you're talking about, I guess, you've got improving assortment, you're going to spend more on marketing, it sounds like, and then there's obviously just kind of the rising tide of underpenetrated e-commerce, which of those is kind of most impactful to the acceleration you see in 2026? And any other clear drivers you'd call out along those lines?

Yes, sure. I think we have 3, maybe 4 main drivers. I mean the most important one, structurally speaking, would be assortment and our ability to bring more assortment, more availability at lower price points for value-driven customers. And that's been an effort that's been pushed for the past 3 years. So it's a long-term impact. Second big driver that's quite structural as well is coverage, market coverage. So we've significantly expanded our network back in '24 and in early '25 as well, and it will continue in '26. And as we cover a greater share of the population, well, the addressable market simply increases, and that's been a big push over the past few years as well. And then marketing started playing a more important role, I would say, in the second half of the year. And you've seen in the numbers that we've ramped up slightly our marketing investments in Q3 and Q4. And we see very strong return investments, particularly on the online channels that we have kind of revived in the process, and it's been contributing definitely to the acceleration you see in the second half of the year. And then you have a more diffused but very important factor, which is the improvement in quality of service and satisfaction. That is really hard to pinpoint in terms of very direct impact, but it's really happening on the ground.

Got it. That's helpful. And then to the point on capacity, you've said, I think, many times, including today that you have kind of what you need in place to support a lot higher volumes. As we look forward maybe over the next few years, how should we think about lead times for kind of further investment in capacity expansion?

You can view this in several ways. When we discuss capacity, I typically think of fulfillment and supply chains. There's also the platform to consider, which I'll address. Regarding fulfillment capacity, the typical constraint for a growing e-commerce business, we believe we are well-positioned in nearly all countries through the end of 2026 or possibly into 2027. The next two years should be quite manageable with our current capacity, primarily concerning warehouse space and equipment. Some countries will need to expand and transition to larger fulfillment centers, such as Ghana in 2027, but most will be fine. We do not anticipate significant capital expenditures in this area since we have already made substantial progress in 2024 and 2025 by moving to larger fulfillment centers in many countries. Looking at our tech platform, we are confident that our technology can handle two to three times the volume we expect in 2025 without requiring any major additional investment beyond our current fixed costs to manage those higher volumes.

Got it. That's great. And then following up kind of on the tech stack, and you mentioned the take rate expansion and some of the drivers there. Would you say that was kind of like a step-up to what we might consider now a market rate? Or is that more like an ongoing, say, annual thing? How should we think about that?

Take rate expansion is essential for us as a marketplace. As we grow, we expect to capture a larger share of transactions, which is typical for major players in our industry. We're already seeing this with our customers and vendors. Earlier this year, we renegotiated rates across all our marketplace operations in various countries. This process needs to be viewed as a gradual trend. We see it as a natural result of scaling, with gradual improvements coming from enhanced commissions, which we adjust annually, better retail margins, reduced waste, and significantly improved advertising monetization. Currently, our retail advertising accounts for about 1% of gross merchandise volume, but we aim to reach closer to 2%. While we didn't achieve everything we intended in 2025, we've implemented the necessary structural changes to scale our retail advertising effectively. We've introduced a new platform for sponsored products, restructured our team, and increased volume with key accounts, allowing us to offer more campaigns to brands. We are definitely anticipating acceleration in this area for 2026.

Got it. Can you provide guidance for the year regarding the mix of first-party and third-party corporate revenues? Also, are there any changes due to foreign exchange, or is it assumed that foreign exchange rates will remain stable?

I'll take the mix, and I will let Antoine elaborate on the foreign exchange. Regarding our guidance this year, we’re not anticipating any significant volume in corporate sales, as we've de-prioritized that area. We expect the mix of marketplace versus retail to remain stable. If we perform well, we might slightly increase the share of marketplace, but overall, we are assuming the mix will stay largely unchanged. Antoine, please address the foreign exchange.

Yes. It's a bit of the same. On the FX side, we do not factor any potential improvement in our guidance. And typically, if you look at the recent evolution of the naira, this is not taken into account into the way we forecast. So a very cautious approach.

Got it. That's helpful. And then just on the exit of Algeria, I wonder, are there other countries that could be exit opportunities? And conversely, I guess, are there any countries you'd consider entering?

So I'll start with the second half of your question. We're not considering entering any new country until we hit full year breakeven. So we don't want to get distracted. And we don't want to delay the target for breakeven because we know that any new country we would open would be loss-making for at least 2 years. So that's not part of the plan until we hit full year breakeven. And then other countries to exit, at this stage, we believe we have the right footprint with 8 core markets that all have pretty big scale and profitability potential. I think the message we gave to the teams as well in all countries is that all countries, all business units are expected to deliver scale and profitability in a very reasonable time frame. That's the message within the whole company. And we're not shy of taking the tough decisions even though the company is doing a lot better at group level, we'll still be able to reassess the portfolio and take tough decisions if needed. But no other country where we're contemplating an exit at this stage or thinking of.

That's great. And then one last one for me. Thanks for putting up with me here. You mentioned the balance sheet, not needing to raise capital. Obviously, you've been through this kind of period the last couple of years of being just incredibly judicious with your liquidity here. Is there any other reason or areas where you maybe think about playing a little bit more offense at some point where a capital injection might make sense?

It is crucial for us not to need to raise capital. We want to maintain control of our future. If we had more liquidity, which is uncertain, there could be opportunities for us. We could push harder on working capital to secure a wider range of products and better prices, similar to what we did last year following the ATM. We could also invest more in marketing, especially since we're seeing a strong return on investment in key online channels. Additionally, there are areas in tech and product where we could invest to achieve greater efficiencies and reach profitability more quickly. However, this is purely hypothetical. We believe we have the resources we need to achieve profitability without requiring additional cash.

Your next question is from Fawne Jiang with Benchmark.

First of all, I just want to focus a bit more on your underlining core markets. Tremendous growth momentum across the board. Just wonder how should we look at the overall macro and consumption dynamic for 2026? Related to that, Egypt is clearly on a recovery trajectory. Are you expecting Egypt to catch up in terms of the overall growth rate in 2026 or longer term? Or is the market somewhat structurally disadvantaged growing at a slower pace? Just want to get a sense on the potential of that market.

Thank you. On the macro front, we are becoming cautiously optimistic. Africa is starting to appear more stable relative to the rest of the world. Over the past 1.5 years, we've noticed that the macro environment is stabilizing, with currency stability being the key indicator. For instance, the Nigerian naira has been appreciating against the dollar for over a year, and the Egyptian pound is stable. Most other currencies are stable or have improved as well. This stability fosters trust among our customers and significantly enhances supply chain operations, as importers gain confidence to start importing again knowing that currency rates will remain relatively stable. This renewed confidence allows Chinese sellers to resume shipping to Africa, anticipating fair payment in the future. Across our eight-country footprint, we are not expecting major disturbances in 2026 or any elections that could disrupt business operations. We are reasonably optimistic about macro stability and potential improvements in many countries, with Nigeria being a prime example. Nigeria has made significant strides after enduring tough conditions for several years, implementing unexpected political reforms that are proving effective, and the economy is starting to recover, positioning Jumia to benefit from this progress. Regarding Egypt, we anticipate that it will catch up, as there's no reason for it to lag behind others in Jumia's portfolio. We still view ourselves as a relatively small player in a large market with substantial room for growth. While there is increased competition in major cities, we still see opportunities to expand, particularly in less urbanized areas, as we have successfully done in other countries. Thus, we hold high expectations for Egypt.

Understood. That's helpful. My second question is actually on the operating leverage. You guys have made substantial headway across fulfillment, G&A, R&D. One item like sales and marketing, you guys seem to be still fairly aggressive in 2025. I guess the question here is for 2026, how do you balance your user acquisition and retention, which is an important driver for your overall growth versus your marketing efficiency? Are we expecting like operating leverage for sales and marketing line for 2026? Any color on that, especially your cohort user behavior, repeat purchase? And yes, any granularity, that would be helpful.

Yes. So just to explain first. So we've indeed scaled our marketing spend in H2 this year, but we believe for the right reasons. When you look at the presentation on Page 19, you have the breakdown of the whole operating leverage. It does make sense for us to push a bit harder on volumes because, well, all unit economics are a lot better. So now with 36% growth, we're able to get plus 100% on gross profit after free segment and after marketing. So the leverage is working and a slight acceleration in marketing, we believe, does make sense. However, our North Star is to become profitable at the end of this year and then full year '27, most important. That's the most important thing to us. We need to hit EBITDA breakeven. So we'll remain extremely reasonable in the way we spend our marketing money. So I think ballpark, H2 this year gives you an idea of what aggressive means for us in terms of marketing spend.

Understood. Francis, another question I have is actually on your sourcing of supply. You mentioned that you opened a new center in Yiwu. How could that impact your potential, I don't know, assortment? Would that change your category exposure? How would that shape up your, I guess, AOV for 2026 and potential margin impact? Any color on yes, incremental, I think, availability?

Expanding our presence in Yiwu will enhance our category exposure. Previously, we only had an office in Shenzhen, which was a logical starting point, but that area is primarily recognized for electronics. While we have numerous suppliers for electronic accessories and devices, moving into Yiwu allows us to tap into a broader supplier network that includes more fashion and home products. This diversification will enable us to improve the product mix we receive from international vendors. While this move may lead to increased sales of lower value items compared to our current offerings, these items are expected to yield higher profit margins. It's challenging to predict the overall impact on the average order value at Jumia, but we believe that this expansion in China, particularly in this region, will drive greater volume from Chinese vendors in categories where the selling price may be lower, yet profitability will be robust.

Understood. I have one last question. You mentioned that buy now, pay later has been an important factor in your Egypt market. Can you remind us if you offer that product across your markets? If not, how do you view the potential of that service as a driver for future growth?

Absolutely. When discussing Africa, particularly in the fintech space and consumer finance, it's important to note the heavy fragmentation. Regulations vary significantly from one market to another, leading to diverse local ecosystems. For instance, in Egypt, the ecosystem is well-structured with strong banking regulations and enforcement, which has facilitated a robust buy now, pay later market supported by local providers that are eager to integrate with e-commerce platforms. We've made significant efforts to onboard these players, resulting in consumer finance solutions being offered fully online. This has led to a substantial share of our sales in Egypt, especially for high-value products like appliances and TVs. However, this situation is quite unique to Egypt. Other markets we operate in lack similar ecosystems, with fewer players available—especially in regions like Eastern Africa, where buy now, pay later is primarily asset-backed using phones that can be disabled. Generally, the ecosystem remains underdeveloped in many countries we serve. Therefore, any potential for expansion will be assessed on a country-by-country basis, and I cannot provide a timeline for when we might extend this offering to more markets.

Your next question is from Ryan Sigdahl with Craig-Hallum Capital Group.

A lot has been asked here. I'm going to ask one and then just one follow-up here. I guess to be clear, I mean, very, very strong operational performance, nice acceleration fundamentals, a lot of things going very well. Curious if anything negatively surprised you in Q4. And I know we don't want to focus necessarily, but just looking at Q4 results relative to your guidance, anything to call out there?

Yes, not everything went as well as we hoped. While I won’t go through everything, one notable point is that our advertising monetization is still below our expectations for Q4 and actually for the entire year. This has negatively impacted our bottom line. We had anticipated better performance in 2025, especially towards the end of the year. However, we believe we have taken the right steps. Earlier in the year, we made significant changes to our sponsored products for retail advertising, and we are now seeing revenue improve weekly. We have also been restructuring our team and processes to better monetize brands with larger campaigns, and we look forward to seeing the results in 2026, especially with significantly increased volumes that will aid our advertising sales.

Good segue, Francis. My next question is just on the ads. I think it was mentioned 1% of GMV. Where do you think that can go in '26? Or what's implied? Where can that go longer term? And then what are you specifically doing today that you're going to improve brand advertising campaigns, et cetera. But are these sponsored listings? Is this advertising around the outside of the website, but help explain, I guess, really what you guys are doing and what you're going to do incrementally.

In the fourth quarter, our advertising revenue accounted for about 1% of GMV. We aim to increase that to around 2% over the medium term, which we believe is the right benchmark for e-commerce companies in emerging markets. However, reaching this goal won't happen by 2026; it will take a few years to achieve that 2% target, but we expect gradual improvement along the way. In 2025, we have initiated two distinct segments. One is retail advertising, primarily sold to medium-sized and smaller marketplace vendors, and the other is marketing campaigns directed at official distributors and brands. Regarding retail advertising, we introduced a new tool from Mirakl in the first half of the year. Its implementation took some time and caused some operational disruptions during the transition, but we are now back on track. The teams appreciate the tool, and vendors are providing positive feedback. It is reliable and stable, and we are seeing good profitability from the ads. Consequently, we expect to surpass last year’s figures in 2026. On the other hand, our campaign revenue, mainly from large distributors and brands, has been disappointing this year. A significant factor has been the reduced revenue from FMCG brands since we deprioritized them in 2023 and 2024, leading to a decrease in marketing spending as well. This year, we've restructured our team, organized our processes, set new targets, and established appropriate incentives. We are also launching specific tools and features tailored for brands, like the ability to bid for sponsored brands on the platform, a feature that was released only a few weeks ago. We now have a more focused and better-organized team, supported by increasing volumes for our brands on the platform due to growth in most of our markets. We believe this will position us much better for 2026.

Your next question is from Deepak Mathivanan with Cantor Fitzgerald.

This is Jack on for Deepak. I'll start with just a little bit on competition. I know you said things are relatively rational from a competitive standpoint. But are you kind of seeing any outside competitive pressure more from the local or international side? Can you just like talk to that a little bit more about the dynamics you're seeing there?

We haven't observed much change in the fourth quarter. There has been some softening from international competitors, but local platforms have remained relatively stable. In a few countries, we are competing with local platforms, but we continue to be the market leaders in those areas, such as Kenya, Nigeria, and Morocco. Overall, there hasn't been significant change. We believe our advantage over local platforms comes from our scale, our ability to learn across Africa, our sourcing infrastructure in China, and our partnerships with international brands that are more challenging for local platforms to access. Additionally, our technology infrastructure requires substantial investment that isn't feasible for a single market. Regarding international platforms, there hasn't been any notable change. Temu is still active in Nigeria, Ghana, and Morocco, but we’ve observed a slight decrease in pressure from them over the past two to three quarters. There have been strong efforts followed by a slowdown throughout 2025. Interestingly, local regulators are beginning to examine the impact of international nonresident platforms, which has been a slow process, as is often the case worldwide. Local regulators are starting to address that these international platforms do not contribute to the local economy. We've witnessed new regulations in Ivory Coast and Ghana to ensure VAT is applied to their sales and that taxes are paid on their profits. This is positive for us, as it helps create a more level playing field for e-commerce businesses and mitigates the unfair advantages these platforms previously had, as they will now also have to pay taxes like everyone else.

Great. No, that makes a lot of sense. And then just my second question is sort of around fulfillment. Obviously, down again year-over-year, excluding the digital. How much runway is there for kind of more structural improvements through efficiency gains and whatnot versus like do you guys expect to get leverage just from pure like order volumes going forward?

Yes. We have two key factors at work. First, we see opportunities for pure productivity improvements. We can further enhance automation in our call centers to manage higher volumes with fewer employees. This year, we are also planning to upgrade features in our warehouse management system to speed up picking, packing, and inbound processes. There's still significant potential for enhancing productivity, and we've improved our tracking in these areas. Second, we benefit from scale in various ways. In fulfillment operations, fixed costs play a role, and scale certainly aids us here. Additionally, in logistics and distribution, we're able to negotiate better prices with our partners due to increased volumes. Many of our third-party logistics providers operate pickup stations with mostly fixed costs. As we enhance volumes, we’re able to initiate new profit-sharing arrangements and lower fees for each package. We are also optimizing our middle mile logistics for truck moves, allowing us to negotiate more favorable rates and costs. We've been actively working on renegotiating lower fees with our partners in all countries during January and early February, covering both last mile deliveries and middle mile truck moves. This is a direct result of our scale, and we expect continued improvement as we maintain this growth rate. Generally, we anticipate around a 10% year-over-year reduction in unit cost per package delivered.

Your next question is from Tracy Kivunyu with SBG Securities.

I have a question regarding the GMV guidance for next year. I appreciate your insights on whether you are considering constant currency performance. However, even taking that into account, the guidance appears somewhat conservative, especially given the low base effect of corporate sales in the first quarter of 2025, which should enhance the year-on-year comparison. Are there any risks in the markets that you are considering in that guidance, or are you simply adopting a more cautious stance compared to the approach taken when you released your third quarter results?

We are not including any specific market-level risks in our considerations. As I mentioned earlier, we feel confident about the macro environment. There are no anticipated events in the countries where we operate this year that could disrupt the market, as far as we know. Therefore, we are providing guidance that we believe is realistic and slightly conservative. To address your question, while our guidance may appear modest compared to the growth rate we achieved in Q4, we aim to improve our take rate as well. We are increasing commissions and fees, and we will be more strict about certain spending areas. We are seeking better marketing ratios and are imposing additional constraints on growth. We believe this approach strikes the right balance.

Maybe also corporate sales GMV was not extremely high in 2025, so less than USD 20 million, which is not very material.

Okay. And what is the scope of the commission increase in percentage terms, if you could share that you've implemented in this year?

We haven't disclosed specific numbers, but this information is available publicly in each country since we share those figures with our vendors. The increases vary by country; in some, we have raised rates by a few decimals, while in others, the increase has been nearly 2 points. We've implemented a more significant increase for our international vendors because we believe we're now offering a much better service with improved volumes. We also aim to monetize this improvement to ensure it remains profitable for them. Overall, at a group level, we anticipate being between half a point and one full point over the GMV range.

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