Jumia Technologies AG (JMIA) 2020 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's results conference call for the second quarter of 2020. (Operator Instructions) I would now like to turn the conference over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for our second quarter 2020 earnings call. With us today are Sacha Poignonnec and Jeremy Hodara, Co-Founders and Co-CEOs of Jumia; as well as Antoine Maillet-Mezeray, CFO.

This call is also being webcast on the IR section of our corporate website. We will 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 recent 20-F filings.

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 Sacha.

Thank you very much. Welcome, everyone, and thanks for joining the call. I hope that you are all staying safe, staying well. We're pleased to share with you today results that, I think, demonstrates meaningful progress on our path to profitability. And before diving into the details, we would like to acknowledge the hard work and dedication of all our employees, all our logistic partners, all our sellers, restaurants, JForce agents, who have been collaborating together in order to keep serving consumers in these very unique and turbulent times. And we are very thankful, and we thank them all for this.

Our mission of providing consumers with access to goods and services, helping sellers and SMEs reach consumers and grow while making a positive impact on the African continent has never been more relevant. We explained during our Q1 results all the actions that we have been taking to adapt our operating model, of course, including social distancing, contactless delivery, work from home and many others as well as all the actions that we have been taking in order to support the communities.

For example, introducing price control mechanisms on essential goods, supporting the delivery associates throughout the Jumia Heroes program and many others. It goes without saying that we will continue to carry on with all those initiatives as long as the situation remains, and we're very happy to take questions on all this at the end of the call.

Now let's talk about the results, and I am now on Page 3 of the presentation. We will start today with the bottom line since it's been a big part of our focus lately and also something that we all wanted to see. I think in Q2, we made great progress on our path to profitability. We had set for ourselves a strong objective to deliver a clear trend in reducing our loss in absolute terms.

In Q1, we achieved a 10% reduction year-over-year of the adjusted EBITDA. In Q2, adjusted EBITDA was $33 million -- a loss of $33 million. This is the best level in absolute terms of the past 6 quarters. You may also have noticed in our press release that we have successfully entered into an agreement concerning the settlement of all ongoing transactions, which is also good news. And without the one-off expense related to this, the adjusted EBITDA loss would have been $29 million, meaning a 34% reduction year-over-year.

What we are very happy about is that this improvement is driven by strong fundamentals, and those fundamentals are growth of the usage of Jumia, orders and consumers, improved unit economics, strong discipline on cost, both on marketing and G&A.

One very good way to see this is through the evolution of our unique economics, which you can see on Page 4. Our strategy to increase the focus on what we call the everyday categories, gradually monetize the marketplace while driving cost savings is really yielding very good results. We are now generating almost EUR 1 per order of gross profit after fulfillment. And in fact, we are almost breakeven after sales and advertising.

With the business mix rebalancing that we initiated last year, we are shifting more business towards categories like beauty, fashion or fast-moving consumer goods, which have higher commission rates and are less promotionally intensive than categories like phones and electronics.

In parallel, our monetization keeps improving as we roll out new revenue streams. Our fulfillment efficiency keeps improving as we continuously roll out new projects, new technology features, as we increase the volumes as well. And you can see this dynamics playing in the average order value, which is now EUR 34. And in the gross profit after fulfillment, which, like I said, is now EUR 0.9 per order in Q2.

If you continue going down, the marketing efficiency has never been as good. During the quarter. On the one hand, we have been very cautious in our investments given the level of uncertainty as well as some of the disruptions in the operations that we faced in Nigeria, South Africa, food delivery, and we had mentioned those in Q1. But most importantly, we are able to meaningfully reduce our sales and advertising expense today because we have spent 8 years building one of the strongest brands in Africa.

A good example of that is Jumia was featured in the top 10 of the 100 Most Admired Brands in Africa in May according to the ranking of Brand Africa, and that is just one example and something which makes us very confident for the future.

Finally, our tech and G&A keeps improving, too, thanks to our cost discipline, but also all the restructuring actions that we had initiated last year, and are now starting to pay off. So overall, very pleased with the evolution of the unit economics and the adjusted EBITDA trajectory. And what makes us very confident about the future is that those improvements are not caused by a sudden surge or a spike in volume during the quarter. Instead, they are really driven by improving the underlying drivers of the P&L. And that, I think, is very important to note.

If we turn to Page 5, we thought it was very important to comment on the measures taken by the government so far, as part of the COVID response, in order to understand the behavior of consumers, in particular, towards e-commerce. So far, what we've seen in -- is that in most countries of our footprint, they did not implement broad nationwide lockdowns like the ones we have seen in most western countries. In fact, only 4 countries imposed nationwide lockdowns, and these countries represent about 24% of our addressable market. Everywhere else, confinement measures consisted in either localized breakdowns or partial movement restrictions like curfews during evening hours.

This is a very important consideration to keep in mind because localized lockdowns, partial curfews led to less drastic changes in consumer lifestyles and behavior. In other words, in those countries, we have not seen a surge in demand. In terms of supply disruptions, certain parts of our business, as you know from our Q1 release, were strongly impacted, mostly Nigeria, South Africa, food delivery as well as the cross-border marketplace. We've been gradually returning to relatively normal course of business over the course of the quarter.

So once again, as you read the Q2 results, you have to keep this in mind. And appreciate that our progress on the path to profitability, in particular, our record gross profit after fulfillment is driven by strong fundamentals rather than the surge in volumes. And it's taking place also despite some significant disruptions in some countries.

Where we continue to see positive impact is with the sellers and big brands, in particular, and how they look at e-commerce. If you please turn to Page 6. We have seen both small sellers and large brands turn to e-commerce as an important route to market. On the brands side, in particular, we have been deepening our partnerships with many brands and many brands are now putting in place dedicated commercial and marketing strategies for e-commerce in Africa. We've had very strong engagement from those as part of our Jumia anniversary, and more than 100 brands across many sectors joined us for the event.

We're very encouraged, of course, by this momentum because more sellers means more choice, means better pricings for the consumers and it, of course, validates Jumia as the platform of choice to reach consumers online in Africa.

With this, let me now hand over the call to Jeremy, who will give you more details on the Q2 performance.

Thank you, Sacha. Hello, everyone. We are now on the Page 7, please. So our focus during the second quarter of 2020 was very much on the financial discipline and on making progress on our path to profitability. The usage on the platform was resilient, with annual active consumers reaching 6.8 million and orders up 8% on a year-over-year basis, while we reduced our sales and advertising expense by more than 50% in parallel on a year-over-year basis.

The JumiaPay TPV more than doubled, growing by 106% year-over-year; while the JumiaPay transactions increased by 36%. We also made meaningful progress on the monetization front, with our gross profit increasing by 38% year-over-year and the gross profit after the fulfillment expense reaching a record EUR 6 million.

On the cost efficiency front, we reduced our adjusted EBITDA loss by 26% year-over-year. Excluding the net settlement expense, we would have reduced our adjusted EBITDA loss by 34%. And we also reduced our operating loss by 44% over the same period, showing the meaningful progress on our path to profitability.

So overall, we are seeing very good progress across the 4 pillars of our strategy. And we are now going to look at the dynamics of the usage on Page 9.

So Page 9, what we can see is the fundamental strength of the Jumia brand and the demand it drives made it possible for us to maintain usage with record levels of marketing efficiency. With 51% lower sales and advertising expense, the GMV was lower by 13% compared to Q2 '19. Here, I'd like to point out that the effect of the business mix rebalancing initiated at the end of 2019 continued to play out during Q2 2020, affecting the GMV trajectory.

To support our path to profitability and the long-term usage on our platform, we have deliberately reduced the emphasis on lower consumer lifetime value business while driving the growth of the everyday product categories. These categories typically yield lower basket size than the purchase of high-ticket items like mobile phone or electronic device. And this proved to be a very good move given the focus of consumers on those categories as a result of the COVID situation.

Turning to the annual active consumers. We increased annual active consumer by 40% on a year-over-year basis, reaching 6.8 million of consumers at the end of 2020, while reducing the annual sales and advertising expense per annual active consumer by 38%. The orders increased by 8% year-over-year, while we spent EUR 1.1 of sales and advertising per order, which is 55% less than in Q2 2019.

Throughout the second quarter of 2020, we have been continuously adjusting our sales and advertising expense as we experienced a resilient demand, in Phase 3 of the reducing marketing spend. I will also point out that we faced meaningful disruptions in Nigeria, South Africa and in our food delivery business, which was also affected by restaurant shutdown for part of Q2 2020. All 3 businesses gradually went back to normal levels through Q2, but did not contribute, of course, to their normal shares overall.

Turning to Page 10. In the early days of Jumia, the mobile phone and the electronics used to be the main e-commerce entry point for consumers. These categories and products are typically highly priced in cities and purchase that drive consumer to do expensive product research and price benchmark, which naturally takes them online.

As we increase the breadth of product categories and the assortment on our platform, we're able to serve consumers across a broader spectrum of their needs. This is evidenced by the evolution of our category mix, with phone and electronics decreasing from 59% of our GMV in Q2 2019 to 43% in Q2 2020. This is a natural evolution of consumer behavior that we have supported and accelerated to a certain extent as we were able to extract better unit economics out of these categories.

While everyday products tend to be lower average value items, leading to 20% reduction in the average order value on a year-over-year basis, they also tend to be more profitable. The gross profit after fulfillment expense per order reached EUR 0.90 compared to a EUR 0.10 loss in Q2 2019.

And as Sacha mentioned earlier, we are also very close to breakeven on a per order basis, after fulfillment and sales and advertising expense. This rebalancing, which was in the making for a few years, further increased our relevance in light of the COVID-2019 situation.

Over the past few months, demand was particularly strong across essential and everyday product categories. Our fastest-growing category with triple-digit growth rates in both GMV and volume terms was the Beauty & Personal Care category, supported by the sale of hygiene products.

FMCG also experienced strong momentum as consumers turn to Jumia for the purchase of essential products. We are pleased to see that Jumia is today a household name, with strong relevance as part of the everyday life of consumers in Africa.

To conclude on the usage dynamics. We are driving usage at record levels of marketing efficiency, thanks to the strength of the Jumia brand as well as the relevance of our offering. Our aim is to anticipate and meet the evolving needs of our consumers in a way that makes economic sense for us. That's what led to the increased focus on everyday products, which are driving a meaningful step-up in our unit economics.

Let's now move to another key focus area for us, which is JumiaPay, Page 12. We are very pleased with the continuous adoption and the momentum of JumiaPay on our platform. The TPV accelerated by 106%, from EUR 26 million in Q2 2019 to an all-time high of EUR 53.6 million in Q2 2020, surpassing the record set during the fourth quarter of 2019 of EUR 45.6 million.

On-platform penetration of JumiaPay, as a percentage of GMV, increased to 23.5% in the second quarter of 2020, 2.4x the level of penetration in the second quarter of 2019 of 9.9%.

On Page 13. JumiaPay transactions increased by 36%, from EUR 1.8 million in Q2 2019 to EUR 2.4 million in Q2 2020. We are pleased to see people starting to use JumiaPay beyond micro transactions, such as airtime and utility bill payments. And more and more prepayments taking place on our physical goods and Jumia food-on-demand platforms. Transactions of an average value above EUR 10, including prepaid purchases on the Jumia physical good marketplace and Jumia Food platform are enjoying triple-digit growth of transactions. Overall, 35.6% of orders placed on Jumia in Q2 2020 were paid for using JumiaPay compared to 28.3% in Q2 2019.

With that, I will now hand over to Antoine, who will walk you through our financial performance update, starting on Page 15.

Thank you, Jeremy. Hello, everyone. We are pleased with the progress on monetization in Q2 2020 as this is an essential component of our financial strategy and path to profitability. In the context of an 8% year-over-year growth in orders, both Marketplace revenue and gross profit posted 38% growth over the same period. As we grow the usage of Jumia, we seek to gradually monetize this usage through diversified revenue streams that absorb a growing share of our cost base.

Taking a closer look at our lines Marketplace revenue streams on Slide 16. Commissions increased by 68% year-over-year despite the decrease in GMV as a result of an increased proportion in the mix of higher-commission rate categories, such as Beauty, FMCG, et cetera. Marketing & advertising continues to experience robust momentum, posting 50% growth as advertisers shift and increasing share of their spend from off-line to online, favoring direct response format.

Fulfillment, which comprises delivery fees charged to consumers, increased by 34% on a year-over-year basis, far outpacing orders growth. This was partly attributable to the continuous optimization of our shipping metrics that allows for a more efficient pass-through of our fulfillment expense to both consumers and sellers. Value-added services posted 6% year-over-year growth, largely in line with orders growth. In Q2 2020, value-added services was negatively impacted by a decline in cross-border volumes driven by cargo disruption, which led to lower international logistics revenue receipt from overseas sellers.

Moving on to cost efficiencies, Page 18. One of the key highlights of the quarter was the gross profit after fulfillment expense, reaching record level of EUR 6 million compared to a loss of EUR 0.7 million in Q2 2019, demonstrating continued progress on our path to profitability. The growth in gross profit, alongside a reduction in the absolute amount of fulfillment expense, drove this performance.

Fulfillment expense decreased by 2% in Q2 2020 on a year-over-year basis, while orders increased by 8% over the same period. A number of operational improvements drove fulfillment expense efficiencies, including a change in the volume pricing model from a cost per successfully delivered package to a cost per successfully stop.

Our third-party logistics partners are now paid per successful stop at customer address regardless of the number of packages included in the delivery. If we are able to generate set efficiencies today, it is partly because we have spent many years building an asset-light and scalable logistics platform that allows us to constantly adjust and improve our pricing models as we gain scale. Another contributing factor to the fulfillment expense reduction in Q2 2020 was a change in our mix of packages with reduced propulsion of cross-border packages and packages shipped outside primary cities.

Moving on to Sales & Advertising expense. I'm now on Slide 19. Sales & Advertising expense decreased by 51%, from EUR 14.9 million in Q2 2019 to EUR 7.2 million in Q2 2020, its lowest level in more than 3 years. We are driving record levels of marketing efficiency across all relevant metrics. Sales & Advertising expense per order decreased by 55%, from EUR 2.4 in Q2 '19 to EUR 1.1 in Q2 '20.

Annual Sales & Advertising expense per annual active consumer reduced by 38%, from EUR 10.80 per annual active consumer to EUR 6.7. And Sales & Advertising as a percentage of GMV decreased by 249 basis points, from 5.7% to 3.2%. These efficiencies are made possible by the strength of our brand and resilience of demand on our platform. We also continue to make enhancements to our performance marketing strategy across search and social media channels, notably through more granular segmentation of our target market with differentiated campaigns and content for each segment.

Finally, our third major cost area is technology and G&A. I'm now on Slide 20. Our technology and content expense increased by 5% compared to Q2 '19 as we continue to invest in our tech infrastructure. G&A expense, excluding share-based compensation and the settlement expense from the class action settlement, reached EUR 24 million, down 2%, both on a year-over-year basis compared to Q2 '19 and on a sequential basis compared to Q1 '20. The decrease was mostly attributable to the cost rationalization initiatives undertaken starting from the end of 2019.

Moving on to Page 21. On balance sheet. Our path to profitability is further supported by our asset-light business model. CapEx in Q2 2020 was less than EUR 0.5 million as we operate Jumia Logistics as a platform with very limited CapEx requirements. Net change in working capital resulted in an inflow of EUR 13 million. We consider a positive working capital effect of this scale to be one-off in nature.

While we meaningfully improved working capital management over the years, the unusually large working capital inflow was supported by a longer payable cycle and reduced suppliers prepayments. As a result, cash utilization reached EUR 16.8 million, taking our cash position at the end of June 30, 2020, to EUR 174 million.

Assuming a neutral working capital effect, cash utilization from the quarter would have been around EUR 30 million, which is still a very good performance if we compare it to the quarterly cash utilization of the past 18 months. It is a saving of more than EUR 10 million. The EUR 3.6 million net settlement expense for the class actions will likely be disbursed early Q4 2020.

You may have noticed that we made a shelf filing on July 22, which went effective on July 30, allowing us to issue up to 18 million ADS over the course of the next 3 years. This is a matter of good corporate housekeeping to allow us to take advantage of opportunity in the market to raise capital in the future.

With that, I'll hand the call back over to Sacha.

Thank you very much. And before we go into Q&A 3 remarks to conclude the call. First remark, I think that looking at Q2 results. And also, if you look at H1 2020, we've made a lot of important choices last year, and these choices are starting to pay off, right? The focus on everyday categories is making us very relevant, very efficient with marketing and also more profitable.

We launched Jumia Mall last year. It's proving to be very relevant today for sellers and brands, exiting countries and categories, I mean, notably the travel business. And if you look at Q2 or H1, despite not seeing any surge overall in demand from COVID, we are delivering very good results across the board, and that makes us very confident for H2 and beyond.

Second remark, I want to clarify our priorities for the quarters to come as well as how we are driving the execution. On the usage of Jumia, our priority is to continue to grow while driving efficiency improvements. We think that we are very well positioned in terms of categories, and we're going to continue to focus on those everyday categories. We're going to continue to drive adoption of Jumia by new users and retention of existing users. Sometimes, people tend to oppose growth and profitability. For us, they somehow go together. And we look at the usage of Jumia with multiple lenses, GMV, active consumers and orders.

Over time, we want to see all metrics going up, even if in some quarters, one metric or the other is going down or the growth is higher or lower. But over time, we want to see those going in -- going up. On JumiaPay, our main priority today is to gradually increase penetration within our platform. You've seen that JumiaPay transactions accounted for 36% of orders in H1, almost 10 points more than H1 last year. We still see, of course, cash on delivery as a key part of our value proposition going forward, but we aim to drive the on-platform penetration gradually. And we also want, in the months to come, to start expanding our payments and fintech solutions off-platform.

On the path to profitability, we will continue to focus on gradual increased monetization as well as cost efficiency. I think the key term here is gradual. When you are a marketplace, we think that it's very important to maintain strong attractiveness through the participants and to drive monetization together with increased volumes in business.

As we enter, what looks like, a severe economic crisis across the world, it will become increasingly important for us to offer the best prices and value to the consumers and the sellers, so we need to be very careful with our pricing.

Last but not least, we are starting to monetize our platform with third parties. Some of you have picked up that we are opening up our logistics to third-party customers that we are opening up also Jumia Advertising platform to non-sellers, and we will gradually see more of that in the future.

And third and last remark. To conclude the call, we want to reiterate that we are still at the very beginning of e-commerce in Africa. In the recent months, pretty much everywhere in the world, we have seen how relevant e-commerce, payment, technology are to people, businesses and governments.

In Africa, we are still in the early days of this journey, with less than 1% penetration of e-commerce. And we certainly see a huge opportunity ahead of us. We have built a very efficient, very scalable platform for the years and decades to come. We operate an asset-light marketplace, very relevant, food delivery service, a unique logistic platform, JumiaPay, which we think has the potential to become the leading payment system in the continent. And we really believe there's a lot of potential ahead for Jumia, and that we are very well positioned.

Thank you again for attending the call and your attention. And we are now ready to open up the call for Q&A.

(Operator Instructions) The first question comes from Mark Mahaney of RBC Capital Markets.

Okay. If I could throw in 3 questions, please. Is it a reasonable expectation that gross profit after fulfillment can continue to rise? Do you have enough structural improvements? And is the mix shift -- do you have enough visibility into the revenue mix shift that, that's a probability that gross profit after fulfillment can continue to rise?

Secondly, you -- on that Slide 6, you list a series of a large number of pretty large brands. Are there other brands that are missing? I'm sure there are some, but are there a couple of key brands that you would really like to bring in that you think could be -- could really move the needle for Jumia?

And then finally, could you talk about if there's been a change in your customer acquisition channel strategy? Are you finding part of that advertising efficiency? Is it driven by the fact that you found more efficient advertising channels than you had discovered in the past? And what are those?

Thanks, Mark. Very good questions, as always. I think on the first one, on the gross profit after fulfillment, the answer is yes, definitely, right? And here, to give you some color, of course, the gross profit at the fulfillment is the sum of our revenues minus the fulfillment expense. If you look at our monetization streams and their level of maturity, you can see how much potential we are still seeing ahead of us, both for the existing monetization stream as well as new ones.

If you look at, for example, marketing and advertising, we've barely started, right? Many marketplaces around the world are very advanced here, and for us, this is something that we started a year ago, and we are seeing a lot of good traction, and we are just at the very early days of that. We have also been talking in the past about Jumia Express, which we have barely started to monetize. And many more with our existing sellers. Then there is all the monetization from the new revenue streams, which today, we are not doing yet at all.

And here, I'm talking about monetization of JumiaPay as a payment platform, monetization of Jumia Logistics as a third-party logistics platform as well as -- yes -- no, I think we can cite those 2 for now. And this is not even yet today in our P&L. So we see a lot of upside in revenue. Then in terms of fulfillment expense, I think, here, we have consistently seen improvements quarter-over-quarter based on a number of drivers.

Of course, one is the increase of volume because the more volume we have, the more partners we are able to use and the more competition between them and the more scale they get. So it's really a volume gain. And then a lot of operational improvements.

In the press release, we gave you two examples of projects that we did during this quarter, but there are many others. For example, one of the projects was around the fact that we changed the cost model with the partners, and we were -- before the project paying them per package delivered, and now we are paying them per stock. This is one example that there's a lot of initiatives, both technology-driven, but also just scale and efficiency and operational excellence, to reduce the fulfillment expense per order.

So certainly, very confident about that. In terms of brands, not really. There are so many brands that are looking today at Africa, and they're looking for ways to enter the continent. And in the past, for a brand to enter new emerging markets, the brand we need to think about finding a distributor, establishing local presence, building marketing campaigns, multimillion dollars marketing campaigns to build the brand and build a local presence. And our goal with the cross-border marketplace and with the marketplace in general is to really provide an efficient route to market for all the brands, which are not present in Africa, to start serving the consumers and building their presence.

So it's not like there's one name that comes to my mind where it would be a game changer. Because the consumers, they have alternatives for many things. But certainly, the more we bring, the better. But there's not like one particular game changer that comes to mind. And in terms of consumer acquisition, it's been -- the marketing efficiency has been driven by rather a lot of discipline and improvements across the board rather than one particular channel, which showed different efficiency or a surge in efficiency improvement.

Rather, across the board, the hard work of the Jumia team and the Jumia data and technology to just optimize all our online channels as well as leverage the off-line channels that we use, like JForce, telesales and all those. So it's really, across the board, more general improvement and efficiency than anything else. And yes. And that also makes us confident because all those improvements there, they're not relating to one particular change, but rather like across-the-board improvements.

The next question comes from Aaron Kessler of Raymond James.

A couple of questions. First, just any further details, maybe GMV growth by category, I saw the electronics versus kind of other slippage. Any more details on some of the trends you're seeing there? Also, maybe on the commission rates. It looks like it was mostly maybe a change of mix that drove the higher kind of commission dollars. Was there also any change in commission kind of rates in absolute as well? And maybe just how much room do you think there is to increase kind of commission rates longer-term as well?

Yes. Very good questions. At this stage, we'll have to kind of stick to Page 10, where we provided the breakdown by category for Q2 and 2019 and '20, where you can see that the share of the Fashion, Beauty and FMCG has grown to 57% from 41%. And certainly, those have been the ones growing the fastest, both in volume and value. And we'll try to provide more color or more breakdown as the quarters keep developing.

In terms of commission, it's a very important question and something that we very often discuss a lot also internally. And we are in the view of the view that as a marketplace, it's very important to be attractive to the sellers. And in our history, every now and then, we went on and increased commissions. And most of the time when we did that, the sellers were completely fine with it. But some of those sellers were just re-impacting their selling prices with the commission increase impact. And they were accepting completely the increase, but essentially, we're changing the price of the products that we're selling on Jumia.

And that is not really the direction we want to go, especially now with the economic crisis that we think is likely to unfold. We want to make sure that we are able to be very competitive for the sellers so that the sellers can offer very low prices. And part of our monetization strategy is to drive revenue streams, which are both outside the mission, right?

So if you remember, 2 years ago, we were almost only-commission, and we started to introduce more streams so that we didn't have to raise those commissions. But instead, we're selling more services to the sellers. And secondly, also leverage our platform to generate revenues from third parties.

And as we are able to monetize JumiaPay or Jumia Logistics in the future, we may decide to actually reduce the commissions. And by doing that, we think that our marketplace is going to be even more competitive. So again, here, it doesn't mean that every now and then, we don't increase commission on a given category. We try to find the right bands. But certainly, it's not something that we want to drive brutally.

Or in general, we see more value long term in reducing commission than increasing commission even though on the face of it, we have the power to do that.

Got it. Great. And just may I quickly on the JumiaPay transactions. It looked like that was up nicely year-over-year but more flattish sequentially. Is there any kind of maybe near-term sealing on JumiaPay transactions, maybe just give more penetration in certain of your markets and you need to open up more to get that penetration higher? Or was that just maybe -- just -- it's not a linear growth there?

Yes, yes. I think on this, the penetration of JumiaPay is a function of the penetration of JumiaPay, both for the countries where it operates, but also the different platforms. We have Jumia Food for the food delivery and Jumia E-commerce, and we have the JumiaPay app with the digital transactions.

So I think it's a function of all this. And certainly, here, we've been very clear also that it's not our goal to be 100% JumiaPay in the short term or even in the midterm, right? We think that our success with JumiaPay and with Jumia, in general, have been to also recognize that cash on delivery is key and is very important.

So we certainly want to maximize the penetration of JumiaPay, but we, in a way, want to go with the market and drive the adoption efficiently. And right now, we are at 36% overall as a group of transactions, and it's 10 points more than a year ago. There are many countries where we still don't operate JumiaPay. And still many consumers who don't want to transact online. And we just want to recognize that. So we're pretty comfortable with the level where we are now. We think it's going to continue. Where will it plateau or where will we be in 2 years, we'll see.

Certainly, it's been going up and up. At some point, we're not solving for 100%, but we know that in Nigeria and Egypt, we're well above 50%, right? And we've published that in the past. So we feel pretty confident that maybe 2/3 of the transaction in the midterm would be on JumiaPay. And I'm talking maybe 18 months from now or 2 years from now because this is what we have seen in Nigeria 2 years after the launch. So that's how you have to look at it, I think, Aaron.

Next question comes from Ralph Schackart of William Blair.

Two calls -- or two questions, if I could, please. I jumped in on the call late, so I apologize if you touched on this. But maybe if you could share some perspective given the dynamics of the pandemic, how the business has trended post quarter? Any color perhaps on fulfillment expense initiative, for the progress there, customer additions? Anything you could add would be helpful.

And maybe, Sacha, just kind of taking a step back. I know you called it out in the prepared remarks in the letter about being able to emerge from the crisis stronger. Just curious on your perspective on the business going forward within fortunate events, the pandemic, but how the business may strengthen going forward as a result?

Thanks, Ralph. I think the situation has been pretty stable for -- from a business perspective in relation to the pandemic for the last 2 months. We had seen, in April, a mix of quite strong disruptions in some markets and some parts of the business, right? And we have published that. In some countries, where -- especially those where there was like a real lockdown, we're seeing a bit of a surge in volume. And then throughout the quarter, throughout Q2 and also in July, things went back to normal pretty much everywhere, right?

Being -- what I mean normal, I mean, the same level of business that we had before the beginning of the crisis. Of course, there's a lot of question marks around what will the country do -- what will the countries do in terms of back-to-school and so on and so forth. So there's a lot of uncertainty about it. But from a Jumia business perspective, things went we can say back to normal some time during Q2. And since then, have been pretty steady, with no significant disruptions and no significant surge.

So I would say, normal business. What makes us feel good, and I think I was listening to Jeremy and Antoine, and I was hearing a lot of word, please, please. And it's really that, I think if you consider the improvement of the P&L, across the board, and you put it in relation with the growth of the business of 8% of the orders, it does mean that the improvement is driven by fundamental actions on the key drivers of the P&L, right? And that, for us -- makes us very confident in a way because it's not -- we're not able to deliver this gross profit after fulfillment, which is like, by far, our record because we had seen like a big surge.

And no, it's happening because we're doing the hard work on monetization, cost efficiency, restructuring, sales and advertising and all that. And I think that we made a lot of choices, like I said last year, and some of them were not easy, closing countries, exiting travel, doing the rebalancing and so on. And that -- in a way we entered the crisis like already with all those actions well-executed or almost done. And for that, we've been, in a way, lucky to make those decisions ahead of what has come because no one could have predicted this crisis. And now we are very agile and very nimble.

So in a way, it's something that is positive for the development of Jumia that we made those decisions back then.

Great. Well, operator, any more questions?

No. This concludes both our question-and-answer session and Jumia's Second Quarter 2020 Conference Call. Thank you for attending today's presentation. You may now disconnect.

Thank you all. Stay safe, and take care. Buh-Bye.

Once again, the conference has ended. You may disconnect your lines. Thank you.