Jumia Technologies AG Q1 FY2026 Earnings Call

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the First Quarter of 2026. With us today are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations. We'll start by covering the safe harbor. 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 February 24, 2026, 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 will hand the call over to Francis.

Good morning, everyone, and thank you for joining Jumia's first quarter 2026 earnings call. 2025 was the year we demonstrated the resilience and scalability of our model and 2026 is the year we plan to demonstrate our path to profitability. Q1 2026 showed that our momentum towards profitability is continuing and in several important ways, accelerating. Over the past few years, Jumia has been building an e-commerce model designed specifically for Africa, adapted to the unique structural supply, logistical and consumer realities of our markets. In 2025, we proved that this model delivers scale with improving economics and Q1 2026 confirms that the flywheel is turning. This foundation drove our strong operating momentum in the first quarter. GMV grew 32% year-over-year adjusted for perimeter effects. Growth was broad-based across our core markets, reflecting the continued strengthening of our marketplace fundamentals and efficient execution. Profitability metrics continue to move in the right direction. Adjusted EBITDA loss narrowed to $10.7 million from $15.7 million in Q1 2025. The business absorbed higher volumes with increasing efficiency while maintaining a disciplined approach on costs. Excluding the one-time costs related to our Algeria exit in February 2026, adjusted EBITDA loss would have been $9.7 million, reflecting an underlying improvement of 38% year-over-year in our core business. Based on the progress we made in 2025 and the momentum continuing into Q1 2026, we remain focused on achieving our target of adjusted EBITDA breakeven and positive cash flow in the fourth quarter of 2026 and delivering full year profitability and positive cash flow in 2027. I should also note that we are monitoring the broader macro environment, including cost increases in memory chips and the ongoing geopolitical tensions in the Middle East as well as the potential effects on global supply chain, shipping costs and commodity prices. While we have observed limited impact on our business to date, we remain attentive to downstream risks, including potential pressure on smartphone components availability and transport costs. We believe the resilience of our model and the diversity of our supplier base positions us well to navigate this uncertain environment. Notwithstanding these external matters, we reiterate our guidance for 2026. Let me walk you through the key highlights of the quarter. Usage trends remain strong across our platform. Adjusted for perimeter effects, physical goods orders grew 31% year-over-year, driven by expanding in-country geographic coverage, improved assortment and sustained consumer demand. Our focus remains clearly on physical goods, which accounted for nearly all 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. Relatedly, TPV and Jumia Payments gateway transactions have become less meaningful as indicators of our operating performance and effective as of the first quarter of 2026, we will discontinue the quarterly disclosure of these KPIs. Adjusting for perimeter effects, quarterly active customers increased 25% year-over-year, reflecting continued traction in both acquisition and retention. Repeat behavior continued to improve with 47% of new customers from Q4 2025 making a repeat purchase within 90 days, up from 45% in Q4 2024. Demand was broad-based across electronics, home & living, fashion and beauty and consistent across most countries, reflecting a similar quality of execution and inputs across our markets. Adjusted for perimeter effects, GMV grew 32% year-over-year in reported currency. Average order value for physical goods increased to $36 from $35 in Q1 2025. Revenue totaled $50.6 million, up 39% year-over-year, driven by higher usage and improved monetization. First-party sales represented 46% 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 three 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 in February and March and implemented increases in commissions and take rates across most countries in mid-January 2026. This reflects the scale of our platform and improved service levels delivered to sellers. Importantly, these commission increases had limited impact on growth, validating our strategy of progressive monetization increases on the back of greater volumes and better seller experience. We also drove meaningful growth in higher-margin revenue streams with marketing and advertising revenue up 44% year-over-year and value-added services revenue nearly tripling, which both reflect improved platform monetization. These changes are consistent across markets and reflect stronger marketplace fundamentals. Fulfillment cost per order was $2.06, flat year-over-year on a reported basis or down 10% year-over-year on a constant currency basis. This reflects productivity gains and economies of scale in fulfillment operations, increased call center automation and improved logistics partner rates. Most fulfillment operating expenses are incurred in local markets and denominated in local currencies. Technology and content expenses declined 8% year-over-year, reflecting ongoing headcount optimization, automation, platform simplification and the benefit of renegotiated seller agreements, including cloud infrastructure. As a result, adjusted EBITDA loss narrowed to $10.7 million from $15.7 million in Q1 2025. Loss before income tax was $17.8 million, an 8% increase year-over-year or 21% decline on a constant currency basis, primarily reflecting noncash foreign exchange losses. Quarterly cash burn increased to $15.3 million in Q1 2026 compared to $4.7 million in Q4 2025. The shift from the previous quarter is consistent with typical seasonal dynamics. This compares favorably to the $23.2 million decrease in liquidity in Q1 2025, demonstrating the improvement in our financial trajectory. Now turning to operational highlights and execution at the country level. Q1 2026 demonstrated continued execution strength across our markets. Supply fundamentals remain solid with improvements in both local and international sourcing. Growth was supported by strong performance across multiple categories with fashion and beauty among the top contributors to items sold growth year-over-year and with international items continuing to gain share. Efficient marketing deployment, including CRM, paid online and SEO channels, supported customer acquisition at attractive unit economics. In the first quarter, we sold 4.9 million gross items internationally, up 87% year-over-year adjusted for perimeter effects. This reflects the continued scaling of our Chinese seller base as well as growing volumes from our supply base from affordable fashion in Turkey. Operationally, we continue to extend our reach beyond major urban centers. Orders from upcountry regions accounted for 62% of total volumes, up from 58% in the prior year quarter, both adjusted for perimeter effects. These regions are delivering strong growth while benefiting from a cost structure that 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 strong quarter. Physical goods GMV increased 42% year-over-year. Sustained growth was driven by a broad range of categories with home & living performing particularly strongly alongside continued traction from a country expansion, where a large part of the addressable market remains untapped. We opened over 80 additional pickup stations during the quarter, further extending our delivery network. I should note that Nigeria experienced a significant increase in local fuel prices during March, which created headwinds in our 3PL cost negotiations. However, consumer demand remains sustained and strong. Kenya performed strongly with physical goods GMV up just below 50% year-over-year. Performance was driven by continued strong supply fundamentals and efficient marketing despite similar headwinds to other countries in the phones category. Strong performance in home & living driven by local suppliers and in fashion, driven by international suppliers, more than offset the tighter supply in phones. Kenya remains a relatively underpenetrated market for Jumia with vast opportunities upcountry and we continue to invest in expanding our reach. Ivory Coast growth gradually moderated over the course of the quarter. Physical goods GMV was up 16% year-over-year. Growth was affected by two converging headwinds. First, supply disruption in appliances, which is market-specific, and in smartphones, which is a global dynamic, both felt directly in the market where we have our highest penetration levels. Second, a sharp decline in regulated cocoa farm gate prices down nearly 60% effective in March 2026 reduced the purchasing power of a large share of the upcountry population. Cocoa is the primary export of Ivory Coast and approximately six million people depend on it for their livelihoods. This is a meaningful demand-side headwind that we expect to persist in the second quarter. However, we remain confident in the fundamentals of our business in Ivory Coast, where we hold a very strong position with a trusted brand and healthy monetization. Egypt's performance this quarter confirmed sustained recovery. Physical goods GMV grew 3% year-over-year, excluding corporate sales, which were still material in Q1 2025 but have since been deprioritized. Physical goods GMV grew 56% year-over-year, confirming genuine market level recovery. Very strong dynamics on the supply side of our marketplace are driving top line acceleration, supported by improved assortment and seller engagement. Our buy now, pay later offering continued to gain traction with strong penetration in high-value categories. Egypt experienced a fuel price increase in March as well, which we are monitoring. However, core marketplace dynamics remain positive. We are also expanding our delivery network through pickup stations in more remote regions, which are poorly served by physical retail. Ghana delivered an exceptional first quarter with physical goods GMV increasing 142%, driven by a country expansion, the scaling of local marketplace and strong supply from international sellers. Ghana was largely unaffected by the disruption in the electronics segment. Our current focus is to continue building logistics capacity to sustain this rapid expansion with stronger customer experience and cost efficiency. Our other markets portfolio also performed well, collectively delivering 10% physical goods GMV growth. Uganda experienced a nearly one-week internet blackout during the quarter, temporarily impacting volumes, though the market still delivered growth for the period. In February 2026, we completed our exit from Algeria, which represented approximately 2% of GMV in 2025. The winddown resulted in total one-time exit costs of approximately $1 million, reflecting employee termination benefits and asset impairment, which were all recognized in our Q1 2026 results. 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. We have not seen significant changes in our competitive environment in Q1 2026. The softening of competitive intensity trends observed in the second half of 2025 has continued with competitive intensity remaining subdued across our core markets. The recent disruption of air freight going through the Middle East is expected to create headwinds for non-resident platforms that rely on direct international shipping, contributing to a more level playing field for locally embedded operators like Jumia. Most of our supply comes via sea freight, which was not impacted. We are also seeing increased regulatory scrutiny on cross-border platforms across several of our markets, further reinforcing this dynamic. We are navigating an international environment that is evolving quickly with two main developments having the potential to impact our business. First, the memory chips and CPU price increases. We saw a delayed impact on entry-level phone prices and the availability of components for products like smart TVs taking place gradually over Q1. Phone prices increased by approximately 20% between late 2025 and early April. We do not see this as a fundamental long-term shift, but it is impacting our business in the near term as supply chains reorganize. Distributors remain temporarily reluctant to release fresh inventory, while prices may increase further and older, cheaper inventory in some markets is still temporarily competing with our more recent supply. We are mitigating this by diversifying our supplier base for smartphones and scaling our marketplace across both local and international sellers. Second, the war in the Middle East. The most immediate impact was the disruption of air freight through the UAE from Asia, which affected some smartphone distributors. Supply routes have since reorganized through other hubs. There are also delayed effects. Disruption to helium supplies creates additional uncertainty for chip production and the majority of our markets have seen fuel prices begin to rise from March, which is expected to weigh on local logistics costs, particularly for middle-mile trucking operations run by our local partners. The impact on our Q1 P&L has been limited with extra costs primarily in Nigeria. If high fuel prices persist, we should expect greater pressure in Q2, potentially partially offsetting the savings from our 3PL rates renegotiations. That said, our strategy of building pickup stations throughout countries is very helpful in this regard as it means that we have already decorrelated a significant share of our delivery costs from fuel prices. In particular, 74% of our shipped packages are fulfilled through pickup stations rather than door delivery in Q1 2026, up from 67% in Q1 2025, both adjusted for perimeter effects. We have also taken steps to electrify our last-mile delivery fleet in Uganda and we are looking to replicate this successful pilot in more countries as we continue to reduce our dependence on fuel in logistics operations. 2025 was the year when we showed that our business model is on the right track. It delivered growth and improved economics at the same time. 2026 is the year when we intend to show that this model will take us to profitability. In this regard, Q1 is a strong data point that is consistent with Q4 2025 trends. We see sustained growth despite an uncertain environment, continued operational leverage and improved unit economics across the whole P&L, resulting in significantly reduced losses. We are committed to delivering trajectory to breakeven by chasing more scale in a disciplined way, improving operational execution and further streamlining our fixed cost base. While we are currently navigating an uncertain international environment, we believe that our business fundamentals, which were rebuilt from 2022 to 2025 mostly in much tougher times, are strong. We do expect some temporary disruption, but it does not change our midterm profitability targets or our belief in Jumia's long-term opportunity for growth. 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 first quarter. Starting with revenue. First quarter revenue reached $50.6 million, up 39% year-over-year or up 28% on a constant currency basis. Results reflect sustained customer demand and consistent execution across our platform. Marketplace revenue for the first quarter totaled USD 27 million, up 50% year-over-year and up 35% on a constant currency basis. Third-party sales were USD 23.2 million, up 45% year-over-year or up 31% 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 2.2 million, up 44% year-over-year or up 31% on a constant currency basis. The improvement was driven by continued growth in sponsored products, supported by strong tools rolled out in mid-2025 that increased seller adoption, improved return on ad spend and drove greater density and competition on our marketplace. With advertising revenue currently representing roughly 1% of GMV as we are improving this figure, we see meaningful opportunity to scale this profitable source of revenue. Value-added services revenue was USD 1.7 million in the first quarter of 2026, compared to USD 0.6 million in the first quarter of 2025, driven by strong growth in warehousing fees, reflecting higher volumes flowing through our storage infrastructure, largely driven by demand from Chinese sellers and improved monetization of our warehousing services. Revenue from first-party sales was USD 23.1 million, up 30% year-over-year or up 21% year-over-year on a constant currency basis, driven by strong momentum with key international brands. Turning to gross profit. First quarter gross profit was USD 29.4 million, up 48% year-over-year or up 33% year-over-year on a constant currency basis. Gross profit margin as a percentage of GMV increased by 160 basis points to 13.9% for the quarter compared to 12.3% in the first quarter of 2025, 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 sellers. Q1 2026 was already tracking the expected impact with gross profit margin expanding by 160 basis points year-over-year, marketing and advertising revenue up 24% and value-added services revenue nearly tripling. We expect these trends to continue supporting gross profit growth going forward. Now moving to expenses. We continue to see the benefits of our cost initiatives in the first quarter with additional improvements expected to materialize over the coming quarters. Fulfillment expense for the first quarter was USD 12.2 million, up 29% year-over-year and up 17% in constant currency, primarily due to higher volumes. Fulfillment expense per order, excluding JumiaPay app orders, was $2.06, flat year-over-year or down 10% 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. Sales and advertising expense was USD 5.1 million for the first quarter, up 64% year-over-year and up 54% in constant currency. We view this increase positively. We are scaling high ROI marketing investment on the back of stronger product fundamentals, improved quality of service and higher platform reliability, driving not only top line growth, but also better unit economics as higher volumes and improved customer retention contribute directly to operating leverage and margin improvement. Technology and content expense was $8.9 million for the first quarter, representing a decrease of 8% year-over-year or a decrease of 10% on a constant currency basis, driven primarily by continued headcount optimization and ongoing renegotiated seller contracts. First quarter G&A expense, excluding share-based compensation expense, was $16.8 million, up 4% year-over-year and down 3% on a constant currency basis. The year-over-year increase was primarily driven by staff costs with general and administrative expense, excluding share-based compensation expense, which increased by 16% to USD 9.1 million, driven by approximately USD 0.8 million in one-time termination benefits related to our Algeria exit and the appreciation of local currencies against the U.S. dollar compared to the first quarter of 2025. We continue to streamline the organization. The total headcount has declined by 8% since December 31, 2024, with just over 1,980 employees on payroll as of March 31, 2026. At the end of the fourth quarter of 2022, when current leadership was installed, we had 4,318 employees. We are actively working to further reduce headcount, continue process automation and leverage AI tools. We expect to reduce our headcount by at least an additional 200 full-time employees over the next two quarters. More broadly, AI and automation are becoming meaningful drivers of efficiency across Jumia. We are deploying AI tools across our operations, finance processes and headcount efficiency programs in our technology organization, encompassing cybersecurity monitoring and software development, which supported the net FTE reduction and drove efficiency gains year-over-year. Importantly, AI is also helping us solve problems on the ground. In logistics, it improves routing and reduces failed deliveries. In customer services, it enables faster resolution with fewer agents and in sellers operation, it streamlines onboarding and compliance monitoring. This is not only reducing cost but also improving the quality of service we deliver to customers and sellers, reflecting our ongoing commitment to structural cost efficiency. Turning to profitability, adjusted EBITDA for the quarter was negative $10.7 million or negative $10.9 million on a constant currency basis. Loss before income tax was $17.8 million, an 8% increase year-over-year or 21% decline on a constant currency basis, primarily reflecting noncash foreign exchange losses. Turning to the balance sheet and cash flow. We ended the first quarter with a liquidity position of $62.6 million, including USD 61.5 million in cash and cash equivalents and $1.1 million in term deposits and other financial assets. Our liquidity position decreased by $15.3 million in Q1 2026 compared to a decrease of $23.2 million in Q1 2025. Net cash flow used in operating activities was $12.5 million in the quarter, including a broadly neutral working capital contribution. 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. 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 now turn the call back over to Francis for a discussion of our updated guidance.

Thank you, Antoine. Let me now turn to our expectations for 2026. Our focus for 2026 remains on accelerating growth, driving further operating efficiency and continuing our progress towards profitability. We are seeing continued strong momentum validated by our Q1 results, which give us confidence in reaffirming our full year 2026 outlook. We are navigating an evolving international environment. While we expect some temporary disruption from memory chips and CPU price pressures and the ongoing conflict in the Middle East, our business fundamentals are strong. Our Q1 2026 results demonstrate continued execution and we have not changed our midterm profitability targets or our belief in Jumia's long-term opportunity for growth. For the full year 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 2026 and to deliver full year profitability and positive cash flow in 2027. Looking specifically at the second quarter, GMV is projected to grow between 27% and 32% year-over-year adjusted for perimeter effects. Thank you for your attention. We will now be happy to take your questions.

Your first question for today is from Jack Halpert with Cantor Fitzgerald. 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 2026 and to deliver full-year profitability and positive cash flow in 2027. Looking specifically at the second quarter, GMV is projected to grow between 27% and 32% year-over-year, adjusted for perimeter effects. Thank you for your attention. We will now be happy to take your questions.

I just have two, please. So on the memory chip inflation, are you able to quantify this at all in terms of the impact in the quarter? And maybe how much of this has been resolved already versus expected to continue in Q2 and beyond? And is it more about consumers deferring purchases or trading down, or is it more of a supply availability issue? That's the first question. And then the second question, just on the AI efficiency you mentioned and the planned 200 reduction in headcount. First, how much of this headcount reduction is tied to the Algeria exit, if at all? And on the AI side, what are a few examples of areas you're seeing the most efficiency in the business from AI currently?

Let me take the two questions and Antoine will also comment on the AI impact across our business. Starting with memory chips and CPU price inflation. To quantify the impact, you can look at our presentation where we show the share of the smartphones category in our mix. Directionally, smartphones are roughly 10% of our sales in GMV. This category has lower contribution compared to categories such as fashion, so it is not a major share of our gross profit. It can impact the growth of the category and it did in the first quarter. It's likely to continue in the second quarter. But we're not talking about a major impact to Jumia's top line. It's a fraction of our total business and it will not wipe out a substantial portion of sales. We see it as temporary. The timing was delayed: many people asked questions late in 2025 and in the first month of 2026 and not much changed then. The price increase directionally of 20% on entry-level smartphones was mostly felt in March across key countries. We are used to supply disruptions and market reorganizations; they do not last forever. Some brands were more affected than others. For example, Samsung had lower price increases because of better integration of the supply chain. We see both consumer and supply effects. Consumers are trading down to lower-spec phones when prices increase. We also see pure supply availability issues for specific brands in specific markets. For example, Ivory Coast was more impacted than Kenya in terms of supply availability. All of that has some impact, but it is temporary. We will continue selling smartphones and the market will reorganize. What matters is that we have access to the best supply, competitive prices and our distribution is an advantage for selling smartphones across Africa. Regarding headcount, the 200 target is not tied to Algeria. Most of the impact from Algeria is already behind us. The 200 FTE reduction we mentioned has nothing to do with the exit from Algeria. Antoine, do you want to comment on the use of AI across our team?

Yes, I can take this one. We are using AI in tech, including cybersecurity and coding, and we are much more productive thanks to the tools we are using. We are careful to remain agnostic in terms of tools so we do not end up with one or two suppliers that could change pricing policy overnight. We go beyond pure tech. We use AI in accounting to automate bank reconciliations. A pragmatic example is HR: we have many structured databases that AI can consume, allowing us to produce smarter reporting much faster and share information across our footprint, resulting in better efficiency.

Your next question is from Brad Erickson with RBC Capital Markets.

Just a couple of follow-ups on that first question. With maintaining the full year guide, it looks like maybe a little deceleration is built in through the year. Would you say the outlook reflects the idea that some of these headwinds are dynamic and adjusting and reflected in Q2, but then stabilize through the year? Or is there any contemplation in the range that maybe things get worse?

In the current international environment, there's inherent uncertainty. We accounted for some level of uncertainty in our guidance for the full year and for the second quarter. That range includes potential headwinds. We believe most of the disruption is temporary. The demand-side headwind in Ivory Coast due to cocoa prices is real, and smartphone price increases and supply disruptions are real, but we view them as temporary and not structurally challenging our business or our midterm targets. We are also seeing continued strength in several countries, notably Nigeria and Ghana. So the 27% to 32% growth range for Q2 and for the year reflects our best assessment in the current environment and our confidence in the business model.

Got it. You highlighted marketing as a strong point in your prepared remarks. How much flexibility do you have on marketing given the headwinds? How much offense can you play in 2026 in terms of increasing marketing spend versus remaining measured given macro factors? What are the upside and downside considerations for marketing spend?

Three points on marketing. First, our spend ratios are reasonable for an e-commerce company of our size and are slightly lower than many larger peers in emerging markets, which shows frugality and efficiency. We are confident in our ability to spend marketing budget efficiently and drive strong returns. Second, we expect major improvements in marketing efficiency over the year from better use of our channels, especially online. Third, we are highly reactive: much of our budget is online and can be adjusted monthly, weekly or even daily. We can reallocate quickly if we see lower traction in a market. At this stage, we believe the spend is justified by traction, but we remain flexible and can react rapidly if trends change.

One last question: on the journey to cash flow positive, you mentioned headcount reductions. Besides that, what are the major remaining items you need to get through to reach that goal?

I would not call them 'pain points'; the path is clear and it's an execution game. The numbers show we can scale, improve unit economics, get operating leverage and reduce fixed costs. We need to keep scaling the top line, continue improving unit economics and further reduce fixed costs in absolute terms. The trajectory over the last two quarters is consistent and points to breakeven if we continue executing well. A major macro disruption could change this, but absent such a disruption, it's about continued execution.

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

Very nice quarter and execution. Given the crosswinds in Q1 into Q2, outside of those, the business seems to be outperforming because you reiterated the guide and outperformed in Q1. Normalizing for many outside factors, how do you feel about progress thus far in the year internally?

We are deeply engaged in the business and it's useful to step back and recognize progress. This quarter shows clear positives: significant GMV growth alongside improving unit economics. The 31% GMV growth translated into a meaningful improvement—64% improvement—of gross profit after fulfillment and marketing, demonstrating operating leverage. We are further reducing fixed costs, with notable work in technology and G&A. Adjusted EBITDA improved by about one third. The key message is consistent improvement after Q4, with sustained growth despite the environment and continued progress on unit economics and fixed costs. We expect that trend to continue.

You mentioned expansion of pickup stations in Nigeria and other markets. Can you discuss the upcountry expansion strategy with pickup stations, whether the strategy has evolved or changed recently as you have rightsized cost structure and infrastructure?

Across countries we continue to expand reach by opening pickup stations in new cities and densifying the network in existing cities. This increases the addressable market and is a cost-efficient way to grow top line. We partner with local entrepreneurs; without a distribution network in a city, that city is outside our addressable market. Nigeria is a striking example: a few months ago we covered about one third of the addressable population; there's significant room for improvement. Nigeria's growth is largely driven by upcountry expansion, distribution growth and favorable category trends such as home & living. We are seeing stronger supply from international vendors, from China and Turkey. Competitive intensity has reduced around us, and post-devaluations local unit costs are lower, making scaling in Nigeria economically attractive.

Your next question is from Fawne Jiang with Benchmark Company.

First, your international seller growth appeared very strong. How should we think about merchant ramp-up and the typical lead time from onboarding to more meaningful GMV contribution, particularly considering you are opening a new sorting center in the country, and how would that potentially impact your take rate going forward?

The growth from international sellers is the result of three to four years of work. When a new Chinese vendor is onboarded, meaningful contribution typically takes more than a year, sometimes two years or more, because vendors need to learn the markets and scale inventory gradually. What you see today is the result of multi-year work. Since tariff changes last year, we've seen stronger enthusiasm from Chinese vendors to join our platform. The pipeline of vendors and supply coming to Africa is strengthening and will reflect over time. International supply is accretive to our margins because these vendors often sell in categories with higher gross profit ratios such as fashion, accessories and home & living. They also purchase advertising services and use our storage services more, which increases monetization.

A follow-up on fulfillment leverage. You continue to show leverage there while growing rapidly. How sustainable is the fulfillment leverage and are there any logistics capacity constraints or upcoming investments we should be mindful of?

Fulfillment is our largest cost bucket and we saw leverage this quarter: fulfillment cost per order declined 10% in local currency, though in dollar terms it's flat year-over-year at $2.06 per order. We are not satisfied and want further improvement. We expect cost per order to continue declining over time with scale. Specific temporary cases of inefficiency can occur with very high volumes, but over the long run we expect scale to be a tailwind. We have been working on fulfillment staff productivity and automation, deploying new tools in warehouses to increase productivity and workforce tracking. On transport, which is the majority of the cost paid to logistics partners, we renegotiated fees and expect some of that to be offset by short-term fuel surcharges. Over time, as fuel prices normalize, surcharges should go away. We are also developing tools to make middle-mile trucking more efficient for our partners and plan to share savings. We will continue to use AI and technology to capture efficiencies.

Lastly, can you provide color on the latest FX trends for your key countries?

We saw a disconnect between improvements on adjusted EBITDA and net loss before tax driven by noncash FX. In Q1 2025 we had a net FX gain of $2.1 million and this year we recorded a loss of $3.5 million. That swing is noncash and reflects FX impact on intercompany balances between the holding and operations. We are actively working to reduce FX impact by accelerating cash repatriation and restructuring. On the business side, movements have not been violent and so far vendors are not reluctant to import into our countries. We are managing FX swings appropriately.

To add briefly, over the past four years we've seen large FX swings in key countries like Nigeria and Egypt. That's not happening now. Local currencies have been more stable in recent months. Most importantly, the movements are not impacting suppliers' confidence or customers' purchasing power significantly and we are not seeing business disruption due to FX at this stage.

We have reached the end of the question-and-answer session and conference call. You may disconnect your phone lines at this time. Thank you for your participation.