Earnings Call Transcript - JMIA Q3 2025

Operator, Operator

Good morning, everyone, and thank you for being here. Welcome to Jumia's Results Conference Call for the Third Quarter of 2025. I would now like to pass the call to Ignatius Njoku, Head of Investor Relations for Jumia. Please proceed.

Ignatius Njoku, Head of Investor Relations

Thank you. Good morning, everyone. Thank you for joining us today for our third 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 it over to Francis.

Francis Dufay, CEO

Good morning, everyone, and thank you for joining Jumia's third quarter 2025 earnings call. This quarter marks a significant acceleration in customer demand and order growth, reflecting strong execution across our markets and growing consumer trust in the Jumia brand. What's particularly encouraging is the continued acceleration in usage across our platform. Physical goods GMV grew by 26%, adjusting for perimeter effects and by 37% when excluding corporate sales, in line with similar acceleration in physical goods orders and active customers across markets. This momentum is translating into higher order frequency, deeper customer engagement, and continued market share gains in our core categories. We believe Jumia has reached an inflection point. The combination of rising consumer adoption of e-commerce, a compelling value proposition, and improving operational discipline is driving durable momentum. We are building a solid foundation for sustainable, profitable growth and the results are becoming increasingly visible. Looking ahead, our focus remains on driving profitable growth through efficiency, disciplined execution, and strategic investments in customer acquisition, technology, and logistics. These efforts are strengthening our competitive position and creating long-term value for shareholders. And let me reiterate, we remain fully committed to our strategic goal of achieving full year profitability in 2027. Let me now walk you through some of our key highlights for the quarter. We continue to build momentum in usage trends, driven by solid execution across our markets. Adjusted for perimeter effects, physical goods orders grew 34% year-over-year, driven by strong customer demand, improved product offering, increased marketing efficiency, and our expansion into secondary cities. Our core focus remains physical goods, which represented 100% of total orders and nearly all GMV this quarter. The remaining share came from digital products sold through the JumiaPay app, such as airtime and vouchers. As we scale our core marketplace, we are phasing out these noncore digital transactions to streamline operations and enhance organizational efficiency. Adjusted for perimeter effects, quarterly active customers increased 22% year-over-year, reflecting healthy customer acquisition and retention and marked the highest increase in the past three years. Customer loyalty also strengthened with our NPS score increasing to 64 from 63 in the prior year period. In addition, 43% of new customers from Q2 '25 made a repeat purchase within 90 days, up from 40% in Q2 '24. Demand remained strong across key categories, including electronics, phones, home and living, fashion, and beauty. Adjusted for perimeter effects, physical goods GMV grew by 26% year-over-year in reported currency. And excluding corporate sales, GMV increased 37%, reflecting accelerating momentum in our core consumer business. The average order value for physical goods in Q3 '25 stood at $35, down from $38 in Q3 '24, mainly reflecting reduced corporate sales in Egypt. We expect GMV growth to accelerate over the remainder of the year as underlying demand remains robust, business fundamentals continue to strengthen, and we begin to lap the impact of lower corporate sales. Revenue reached $45.6 million, up 25% year-over-year, with first-party sales representing 52% of total revenue. In addition to top line growth, we continue to make progress on monetization initiatives that enhance revenue quality and support margin expansion. Importantly, we believe that acceleration in usage is not coming at the expense of monetization. We're driving both growth and improved unit economics simultaneously. Our new retail advertising platform launched in the second quarter of '25 continues to scale across our seller base and represents a strategic high-margin revenue opportunity, supporting our path to profitability. With advertising revenue at 1% of GMV, Jumia sees substantial upside potential. In addition to our third quarter performance, we are sharing early fourth quarter trends to provide further visibility into the current momentum. In October and adjusting for perimeter effects, physical goods orders and GMV each grew over 30% year-over-year. These results highlight sustained customer demand and a strong start of the final quarter of the year, reinforcing our confidence in achieving our full year outlook. Now let's discuss our progress towards profitability. We remain on track towards our profitability objectives, driven by disciplined execution and continued efficiency gains across the business. Our initiatives in G&A, technology, and fulfillment are delivering meaningful and sustainable cost improvements. We continue to streamline the organization. The total headcount declined by 7% since December '24 to just over 2,010 employees on payroll at the end of the third quarter, reflecting a leaner, more agile organization and ongoing efforts to strengthen operating leverage. Fulfillment cost per order decreased 22% year-over-year to $1.86, driven by structural efficiencies across our logistics network. Technology and content expenses decreased by 10% year-over-year, benefiting from automation, platform optimization, and improved vendor terms. As a result, adjusted EBITDA loss improved to $14 million compared to $17 million in the same quarter last year, reflecting both operating leverage and continued cost discipline. Loss before income tax was $17.7 million, a 1% decrease year-over-year, or 8% decline on a constant currency basis. Cash used in operating activities declined year-over-year to $12.4 million, underscoring our focus on prudent capital management. We continue to make strong operational progress during the quarter, particularly in 2 strategic areas that are driving growth. First, our upcountry expansion is unlocking meaningful opportunities beyond major urban centers. We're leveraging our logistics and commercial infrastructure to efficiently serve secondary cities and rural regions, which are now driving some of our fastest growth. Orders from upcountry regions represented 60% of total volumes this quarter, up from 54% in the same quarter last year. Second, we significantly expanded our international seller partnerships, particularly with suppliers from China. In the third quarter, we sourced 3.4 million growth items from international sellers, representing a 52% year-over-year increase, adjusted for perimeter effects. This allows us to offer a broader selection at more competitive prices while maintaining healthy unit economics and strengthening our overall value proposition. Turning to country-level execution. Nigeria delivered strong performance with physical goods orders up 30% year-over-year and physical goods GMV up 43%, reflecting sustained momentum following the macroeconomic and currency challenges of 2024. Our upcountry expansion strategy is driving tangible results, fueling steady growth in our active customer base nationwide. Performance in the Southwest and Southeast regions remains robust, and we are seeing encouraging traction as we expand into the North, building on a more balanced geographic footprint. Kenya also performed strongly, with physical goods orders up 56% year-over-year and physical goods GMV increasing 38% in reported currency. Growth was driven by our upcountry expansion as secondary cities and smaller towns continue to outpace Nairobi and other major urban centers. Operationally, we reduced logistics costs through better shipment consolidation, volume leverage, and route optimization, underscoring our ability to scale efficiently. We also launched a new initiative, Jumia Instant, offering 4-hour delivery in Nairobi, focusing on more convenience-driven customers. Ivory Coast delivered a solid performance with physical goods orders up 23% year-over-year and physical goods GMV increasing 22% in reported currency, both accelerating from the second quarter. The growth acceleration demonstrates Jumia's ability to win market share even in a major market. We remain focused on deepening engagement, improving monetization, and expanding penetration from our clear leadership position. Egypt showed very clear signs of recovery. Physical goods orders increased 27% year-over-year, while physical goods GMV fell 23% in reported currency due to strong corporate sales in Q3 '24. However, excluding corporate sales, physical goods GMV grew 44% year-over-year, marking an important inflection point after several quarters of restructuring. This improvement was driven by 3 factors: a rebuilt supply base with a broader assortment in both high-value and high-frequency categories, growing adoption of buy now pay later for phones and TVs, and early momentum from our upcountry expansion, which is driving higher volumes outside major cities. Ghana delivered outstanding performance with physical goods orders up 94% year-over-year and physical goods GMV increasing 157% in reported currency. This exceptional growth came despite significant currency volatility and was driven by our upcountry expansion and a broader product assortment that includes both local and international. Our other markets portfolio also performed well. Collectively, our remaining markets delivered 18% physical goods GMV growth and a 15% increase in physical goods orders. The competitive environment remained stable during the quarter. We continue to see a pullback from certain global entrants in some markets like Nigeria, while we continue to steadily gain local market share. Our localized operating model built on strong vendor partnerships, cost-efficient logistics, and deep market knowledge remains a clear competitive advantage that is proving to be difficult to replicate. Looking ahead, we are very encouraged by the progress we are making across the business. Our focus remains on consistent execution, strengthening our unit economics, and capturing the significant growth opportunities ahead of us. We are building a stronger, more efficient, and more trusted Jumia, one that can deliver sustainable, profitable growth and create long-term value for our shareholders, customers, and partners across Africa. With that, I will hand it over to Antoine to walk you through the financial performance in more detail.

Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations

Thank you, Francis, and thank you, everyone, for joining us today. Let me now walk you through our financial results for the third quarter. Starting with our top line performance. Third quarter revenue was USD 45.6 million, up 25% year-over-year or up 22% on a constant currency basis. The increase reflects strong consumer demand and ongoing execution. Marketplace revenue for the third quarter was USD 21.5 million, up 4% year-over-year and up 1% year-over-year on a constant currency basis. Third-party sales came in at USD 19 million, up 5% year-over-year or 2% on a constant currency basis. Growth was driven by strong momentum in our core marketplace business, where we continue to see healthy usage trends and higher take rates. This strength was partially offset by a USD 3.5 million decline in third-party corporate sales, mainly in Egypt. Excluding corporate sales, third-party sales were up 30% year-over-year or 26% on a constant currency basis, reflecting the solid performance of our marketplace platform. Marketing and advertising revenue totaled USD 1.3 million, down 24% year-over-year or 26% on a constant currency basis. The decline reflected lower spending from large sellers as brands reassess their budgets from '25 and '26. This was partially offset by strong momentum in sponsored products, which continue to ramp up following the launch of our new retail advertising platform in the second half of 2025. With advertising revenue currently representing just 1% of GMV, we see significant upside potential as this revenue stream continues to scale. Value-added services revenue was USD 1.1 million, up 59% year-over-year or up 56% year-over-year on a constant currency basis. Growth was driven by higher usage and improved take rates, partially offset by lower commissions from third-party corporate sales in Egypt. Revenue from first-party sales was USD 23.8 million, up 54% year-over-year or up 50% year-over-year on a constant currency basis, driven by strong momentum with key international brands. Turning now to gross profit. Third quarter gross profit was USD 23.8 million, up 4% year-over-year or up 1% year-over-year on a constant currency basis. Gross profit margin as a percentage of GMV for the third quarter was 12% compared to 14% in the third quarter of 2024 and 13% in the second quarter of 2025. The year-over-year margin decline is primarily due to reduced corporate sales in Egypt. The sequential decline is mainly driven by currency depreciation in Ghana, which reduced reported revenue and gross profit quarter-over-quarter. Turning to expenses. While we continue to see benefits from our cost initiatives, we expect further improvement to materialize over the next few quarters. Let me walk you through the key expense lines. Fulfillment expense for the third quarter was USD 10.4 million, up 1% year-over-year and down 2% in constant currency. Fulfillment expense per order, excluding JumiaPay app orders, was $1.86, down 22% year-over-year or down 25% year-over-year on a constant currency basis. Sales and advertising expense was USD 5.2 million for the third quarter, up 18% year-over-year and up 19% in constant currency. The increase reflects targeted investment in sales and marketing, particularly across high ROI social media channels, allowing us to efficiently scale top line growth. Technology and content expense was USD 8.7 million for the third quarter, representing a decrease of 10% year-over-year and down 11% in constant currency. The decrease was primarily driven by ongoing headcount optimization and savings from recently renegotiated contracts. Third quarter G&A expense, excluding share-based payment expense, was USD 16.2 million, down 8% year-over-year and down 10% on a constant currency basis. The year-over-year decrease was primarily driven by lower tax expenses, partially offset by higher staff costs and professional fees. Staff costs within general and administrative expense, excluding share-based compensation expense, increased by 1% to USD 8 million, mainly reflecting currency translation effects. Turning to profitability. Adjusted EBITDA for the quarter was negative USD 14 million or negative $14.1 million on a constant currency basis. The loss before income tax was USD 17.7 million, a 1% decrease year-over-year or 8% decline on a constant currency basis. The loss in the quarter reflects a USD 0.1 million improvement in gross profit alongside $1.8 million lower operating expenses and a $2.6 million reduction in net finance results, driven by lower net foreign exchange gains. Turning to the balance sheet and cash flow. We ended the third quarter with a liquidity position of USD 82.5 million, including $81.5 million in cash and cash equivalents and $1 million in term deposits and other financial assets. Overall, Jumia's liquidity position decreased by USD 15.8 million in Q3 2025 compared to an increase of USD 71.8 million in Q3 2024, which included net proceeds from the August 2024 at-the-market offering. Net cash flow used in operating activities was USD 12.4 million in the quarter, including a positive working capital impact of $0.4 million. CapEx in Q3 2025 was USD 1.4 million compared to $0.9 million in the first quarter of 2024, primarily reflecting investment in supply chain equipment ahead of the end of year season. In summary, we delivered another quarter of solid execution and strong top line growth while continuing to reduce underlying costs. Our progress on structural cost reductions, automation, and cash efficiency reinforces our confidence in achieving our near-term targets and advancing toward profitability. Looking ahead, our focus remains on operational discipline, improving margins and maintaining prudent capital allocation. These priorities will position 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.

Francis Dufay, CEO

Thanks, Antoine. Based on current business trends, we are refining our 2025 financial guidance as follows: we expect physical goods order growth to be in the 25% to 27% range. GMV is projected to grow between 15% and 17% year-over-year. We anticipate loss before income tax to be approximately negative $55 million to $50 million. For 2026, we are maintaining our target for loss before income tax to be in the range of negative $25 million to $30 million, reflecting continued improvement. We confirm our strategic goal to achieve breakeven on a loss before income tax basis in the fourth quarter of '26 and deliver full year profitability in 2027. Thank you all for your attention. We are now ready to take questions.

Operator, Operator

Our first question is coming from Tracy Kivunyu with SBG Securities.

Tracy Kivunyu, Analyst

My first question is on the guidance for PBT. At $55 million at the top end, it is suggesting a very significant drop in costs in the fourth quarter, considering what you've seen in the third quarter already. And I just wanted to get some feedback regarding how you're thinking of the attribution for that. Is it that we're going to see very strong revenue acceleration considering you're going into a high seasonality period? Or do you also see some additional benefits from cost management? I think from my view; I feel like the tech expenses and the G&A expenses did not fall off as much as initially expected. So, will we see a bit more deceleration in costs from that end? Or will we actually see both? My second question would be on fulfillment. How should we think about fulfillment? There was a material deceleration in fulfillment per order in 3Q. Is that our new baseline? Or should we expect an uptick considering the sale that we're factoring into 4Q?

Francis Dufay, CEO

Tracy, thanks for your questions. I will comment on those 2 questions, and I will let Antoine add to that on some financial topics. So, your first question about Q4. So, we're definitely expecting a significant acceleration in usage in Q4. There's obviously very strong seasonality in this quarter with the Black Friday that we've already started at the beginning of the month. It actually lasts 4 weeks for Jumia. It's a franchise that we really own in Africa that's driving a lot of traffic and a lot of expectations from customers. And then the Christmas season is usually pretty strong in most of our countries, even in some Muslim countries. So definitely some acceleration in usage that will translate in revenue and monetization. And on the cost side, we are usually confident if you look at the past, that further growth in usage will bring economies of scale on the fulfillment side in particular. So, you can already see some clear progress on the fulfillment side this quarter at $1.86 per order, 20% down versus last year same quarter. This is definitely the new baseline. So, answering your second question, there's no specific one-off element that impacted this figure this quarter. This is really the result of a bit more scale and efficiency across our fulfillment centers and better work with our logistics partners. So, this will play in Q4. I mean we expect this to play in Q4 as well. We expect also continued improvement on the fixed cost base. So, you see that the tech costs are decreasing by about 10% this quarter versus the same quarter last year. We expect to keep on gaining on some items in the fixed cost basis. Antoine, do you want to add to that?

Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations

Not much to add to what you just said. Q4 is indeed a very strong quarter, and we expect better efficiency from scale. And as you mentioned, we’ll see also the continuation of the work we've been doing on cost and efficiency, which led us to this guidance.

Tracy Kivunyu, Analyst

And if I could ask one more question on working capital movements for the fourth quarter. How are you thinking about that? And how is that feeding into your liquidity expectations and impact on shareholder equity?

Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations

So maybe I can take this one, Francis. On working capital, you see that we showed a small improvement in Q3, which shows that we now are able to ramp up our inventories much faster than in the past. A few years ago, we would have been in a position where we would have started 1 month ahead of a Tier-1 event such as Black Friday to beef up the offer. Today, it's no longer the case. We are able to go much faster. And that's why we were able to prepare a very good supply for this event without impacting drastically the working capital. Going forward, what we always say is that supply is key in the countries where we are operating, and we always capture the opportunity when they present. So, it might happen that we have ups and downs in the working capital, but we do not expect significant modification in the working cap cycle.

Tracy Kivunyu, Analyst

Sorry, if I may, just a clarification. Are you saying that most of the working capital requirements for Black Friday have already been factored in, and we do not expect a significant shift in terms of working capital management in the fourth quarter?

Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations

Sorry, I'm not sure I heard properly. What I said is that we do not expect any significant changes because we are now able to ramp up our inventory much faster. And what we're going to buy, let's say, for retail in October will be sold before the end of the quarter. So, the movement we'll be seeing probably will be intra-quarter movement. And to your last point, we do not expect any significant changes in the working cap dynamics of this quarter.

Operator, Operator

Our next question is coming from Brad Erickson with RBC.

Bradley Erickson, Analyst

I have a few. First off, when you look at the 30% order and GMV growth in October you called out. I guess if we kind of run rate that through the quarter, I think that may bring you up maybe a bit below the low end of the guidance, at least for GMV. And so, I guess just is there an implied acceleration in the latter part of the quarter in there? I certainly could be doing the math wrong, but just any color there would be great.

Francis Dufay, CEO

Yes. Brad, thanks for the question. So, we said above 30%. So, it's kind of a range, if you want to take it this way. We wanted to give some color about the early acceleration of Q4, but we're still in the middle of Q4, so we don't want to create the wrong expectations either. So, it's more an indication of the continued momentum, and we stick to the refined guidance that we've given, so between 15 and 17 points of GMV growth for the whole year.

Bradley Erickson, Analyst

And then I guess just with the slight adjustment to the guidance, I guess just generally, what changed in your visibility to the end of the year on order growth and GMV? So yes, start there.

Francis Dufay, CEO

Yes. As you mentioned, it's slight adjustments, right, on growth numbers. It means we're going to be on the lower end of the range that we had provided earlier this year. There's no massive change in the dynamics. We're still factoring in quite an acceleration in the last quarter, as you mentioned. We just refined it based on mid-quarter trends just to make sure that we don't go too bullish. I mean we just want to be conservative enough. So, it's not a surprise to anyone. And no massive shift in market dynamics. I mean you can see the trends at country level. I mean all countries are accelerating. We have no cause for concern, if that's the way you're asking.

Bradley Erickson, Analyst

I'm curious about supply. You mentioned some nice metrics regarding the increase in order growth from China. Looking ahead to Q4, are there any factors that might affect access to supply? I understand that the overall direction is positive, but I'm wondering if there are any temporary issues this quarter that might have limited availability compared to what could have been achieved.

Francis Dufay, CEO

No, I think the medium- to long-term trend remains consistent with what we described previously. There are two very positive trends at play. First, currency stability is significantly benefiting us. This supports demand in the marketplace, but more importantly, it aids the supply side as both local importers and international sellers are increasingly willing to commit more inventory and hard currency to Africa. This is effectively filling the supply pipeline and driving performance. The acceleration we see in October is partly due to improved supply. Additionally, we are benefiting from the gradual shift of Chinese manufacturers towards new markets, including Africa, which is helping to put Africa back on the map. We're observing strong momentum in China, with many new sellers onboarding, and our existing sellers are willing to ship a wider assortment to Africa in consignment, taking the risk to commit inventory. Overall, we only see positive trends ahead that will continue to impact our numbers in the coming quarters. I would even suggest that Q3 was a bit early to fully recognize the impact of this trend.

Bradley Erickson, Analyst

And then when you look at some of the countries where you said your competitors seem to be maybe retreating a little bit. From your perspective, I guess it would just be curious to hear what you think is kind of happening in terms of the competitive environment related to those comments.

Francis Dufay, CEO

The comment primarily addresses international nonresident platforms, such as Shein or Temu. In these markets, we observe a decrease in marketing investment and rising price points in places like Nigeria. Our assessment is that operating at scale in these markets is quite challenging for these players. The situation in Africa differs significantly from the U.S., Europe, or other established markets where nonresident platforms can easily enter. For example, there are many prerequisites lacking in our markets. These platforms require reliable customs processes, which we don't have, leading to delays of one week to two months and unpredictable costs. They struggle to establish a major logistics network and find the right partners for distribution at scale. The largest distribution network, particularly in Nigeria, is operated by us, Jumia, which means we’re unlikely to assist them in this process. As a result, they often rely on smaller third-party logistics providers at much higher costs and limited country coverage. Additionally, we've adapted our services to meet customer needs effectively, offering payment and delivery solutions that foreign platforms cannot provide. Having local customer support is crucial in a market like Nigeria, where there’s a considerable skepticism towards e-commerce. This support allows customers to communicate easily with someone they trust. On the pricing front, we are able to deliver a competitive range of products through our international, primarily Chinese vendors, enabling us to compete with those platforms. In many respects, we are well-positioned to compete, and we believe our leadership position is strengthening in Nigeria. While Africa presents its challenges, establishing the right business model can lead to profitable operations. However, if a business model does not fully account for the unique challenges of the continent, it becomes tough to succeed, and many players are beginning to understand this reality.

Bradley Erickson, Analyst

That's great insight. Lastly, from a top line perspective, if we were to remove the impact from Egypt on the corporate sales you mentioned several times, would we arrive at the right mix considering that part of the business versus the marketplace going forward? Are there any other mix drivers you'd like to highlight?

Francis Dufay, CEO

No, I don't see any major shift in the mix to expect, excluding the corporate sales of Egypt. I assume you're referring to retail versus marketplace, or 1P versus 3P. As explained by DNA, we’re a marketplace and we generally prefer 3P. However, we approach 1P tactically when the right opportunities arise or when it's necessary to participate in certain categories in specific countries. There's no reason to anticipate any significant change in the mix.

Bradley Erickson, Analyst

And then you mentioned the Jumia Instant product. Talk about how kind of important that can be and particularly talk about the net profit impact from that when we balance kind of the incremental demand, maybe offset by any margin differences versus the core?

Francis Dufay, CEO

Jumia Instant is a pilot program we launched in Nairobi a few months ago, allowing us to deliver items from our warehouse within four hours. The objective is to compete with quick delivery services and offer more convenience to customers willing to pay for faster service. We understand that this is only a small part of our customer base, as most of our customers prioritize value and prefer lower-cost, slower delivery options. However, we also want to serve that segment without completely changing our strategy. This pilot in Kenya uses limited resources to avoid distractions during Black Friday, and we are seeing some early success. If it proves successful, we could expand it to other countries. Regarding margins, at this point, it is neutral since we charge more for these quick deliveries. We are not competing with free delivery services; instead, we pass the additional costs of quick deliveries to those customers who value the convenience.

Bradley Erickson, Analyst

And then on the fulfillment costs, you mentioned the cost per order, I think, down 25% constant currency. Can you talk about the drivers there? You mentioned scale, I think, earlier in the call is the driver. But maybe just give a sense of any of the other important inputs to that kind of output metric and what's there to continue driving the number down.

Francis Dufay, CEO

Yes. Compared to last year, in Q3, we were operating in several countries with multiple smaller fulfillment centers, which have since been consolidated as of the end of Q3 last year. We are now seeing a significant improvement in productivity. We have implemented stringent cost and productivity improvement programs across countries. This includes tracking the productivity of pickers and packers, introducing some basic automation, and focusing on cost centers where we have automated many processes that were previously managed by human agents. The consolidation of fulfillment centers, automation, and increased productivity across all operations, including fulfillment and call centers, are helping us utilize our fixed cost base more effectively.

Bradley Erickson, Analyst

And then one last one, if I can. When you kind of look at adjusting the range for the pretax loss a bit too versus your prior outlook, is that just a function of the kind of slightly lowered order outlook? Or just any other callouts you'd want to mention that are embedded in that new pretax outlook?

Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations

Antoine speaking. It's just a refinement. We have changed the phasing of some costs, notably in G&A, and we want to make sure that we are in the right sense. But there is nothing significant. And this is not linked to the new guidance on the top line.

Bradley Erickson, Analyst

Maybe one more, if I could. Just as we look longer-term, you kind of reiterated your targets. And as you think about exiting '26 breakeven and profitability in '27, can you remind us just what is the kind of top line algorithm as you think about that, whether it be order volumes or anything like that from where we stand today?

Francis Dufay, CEO

So at this stage, we've not provided top line growth guidance for '26 or '27. What I can say, though, is that what you see in Q3 is a strong starting point, right? I mean, to put it differently, there's no reason for the growth rate of '26 to be very different from the exit rate of '25. I believe we're in a healthy B2C business that's driven by strong fundamentals, much better supply, efficient and reliable delivery, efficient and relevant marketing. And what we see is pure clean, healthy B2C growth with the right unit economics. It doesn't just vanish overnight. We believe that's a long-term trend that we're starting here.

Operator, Operator

Our next question is coming from Fawne Jiang with the Benchmark Company.

Yanfang Jiang, Analyst

First, I want to dig a little bit deeper on your active customer growth was very solid this quarter. Just wonder what drove the acceleration. And also, any demographic profile you could share on this new user group? And any color on how sustainable this pace of the customer growth might be, that would be very helpful.

Francis Dufay, CEO

Sure, thank you for your question. We're very pleased with the increase in active customers this quarter, reaching the highest level we've seen in several years. This growth stems from significant changes we've made to our business over the past three years, including improved product assortment, greater variety, better pricing, and expansion into new markets. In the last year and a half, we have opened hundreds of new cities within our reach, particularly in Nigeria, which has effectively expanded our addressable market and potential customer base. We have also refined our marketing strategy to better appeal to a diverse audience; for digital natives, we utilize Google Ads, TikTok, and other apps, while for those who are offline, we focus on local languages, print catalogs, and incentivize our sales team on the ground. All of these efforts are contributing to a much stronger value proposition, driving customer growth. We are seeing very healthy trends, which is why we report all three KPIs—GMV growth, active customer growth, and order growth—simultaneously. These metrics are beginning to align well. The only factor leading to some disparity is corporate sales in Egypt, but as we move past the last year's strong corporate sales, we expect better alignment among these three factors, indicating robust trends. The growth is not limited to one category or market; it is widespread across all our key markets, which we believe is fundamental. Therefore, we do not foresee any reasons for this growth to slow down.

Yanfang Jiang, Analyst

My next one is actually on your upcountry expansion. It seems like you emphasized you’re going to continue for second-tier cities expansion in Africa and view that as a key growth driver. I guess, can you provide a bit more details in terms of your expansion plan? I don't know whether there's any key milestones you're looking for potentially tied to the 2026 strategy.

Francis Dufay, CEO

Yes. Good question and tough one. So, as you see, the share of orders we're shipping to outside of the capital cities has increased now to 60%. This is a result of the push we've made to secondary cities over the past 2 to 3 years. It's something that started back in the days, 8 years ago, actually in the Ivory Coast and that we're now replicating across markets. What I can tell you to give you some indication, and I hope we can provide a bit more tomorrow during our Investor Day, we see that in most countries where we operate, we're still covering a fairly low fraction of the population in terms of distribution network. So, there are still a lot of cities that are not reached, not yet covered by our distribution network. And we have a lot of upsides, a lot of potential customers to come and serve that we cannot reach today. The country where we have the densest network, obviously, the Ivory Coast because they started way earlier back in 2016. And in a country like Nigeria, which is a good example for us because of the potential customer base we can have there. We're actually starting the expansion only 1.5 years ago, more or less. And so, there's still a lot more to be done. We've made a big push into Eastern Nigeria and Western Nigeria, or mostly Eastern Nigeria actually over the past year. We're just pushing now into Northern Nigeria. We've expanded to give you some tangible examples; a few months back, we opened the route to Sokoto on Northwest and to Maiduguri on Northeast, which are very big cities that were not reached by Jumia in the past. So, this is adding to our addressable market. We have big plans to further expand in countries like, well, Nigeria, obviously, into the North with our local partners. Kenya, Ghana, but also Egypt in the coming year. So sorry, it's hard for me to provide you hard facts and concrete numbers here. But I think the message is just we’re just halfway through, right? There's still a lot we can do to cover many millions of additional customers.

Yanfang Jiang, Analyst

Great color. My last question is actually on your advertising opportunities. It seems like your penetration is still very low. Also, I think for the quarter, specifically, if I'm not mistaken, it seems to be on the softer side. So, I know there's probably a quarterly factor, if you can define it. And more importantly, can you help us to think about your advertising monetization opportunity? I don't know like for mid-, long-term without box down to the specific guidance. How should we think about and how you're going to shape your advertising monetization on the strategic side?

Francis Dufay, CEO

Yes, certainly. Regarding advertising revenue, we're currently at around 1% of GMV, which is considered low for an e-commerce platform. The numbers for Q3 year-over-year aren't particularly strong since this quarter typically sees less commercial and marketing activity. Brands usually allocate their budgets towards Black Friday and our anniversary in June, making Q3 not the best for advertising. Additionally, many brands have become more conservative with their budgets, especially due to the challenging economic conditions in 2024. However, looking forward, we see significant growth potential. Other platforms in emerging markets suggest that a more appropriate benchmark is around 2% of GMV, which we aim to achieve. Our main focus will be on retail advertising, targeting medium-sized and smaller sellers as well as our local marketplace and international sellers. These international sellers are already familiar with advertising tools from other platforms like Amazon and eBay, so we anticipate strong participation from them. We're optimistic about increasing volumes and returns in retail advertising. We're also engaging with major African and international brands to secure better budgets for 2026. Scale is a key factor for both segments of advertising spend; as we grow, we will be able to obtain more favorable terms from vendors. This growth will make us more relevant to larger brands and importers, enabling us to negotiate better rates for advertising. In summary, we believe we can enhance this revenue stream through improved tools, effective execution, and growth from our core business.

Operator, Operator

Ladies and gentlemen, we have reached the end of our question-and-answer session. This will also conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.