Jumia Technologies AG-ADR (JMIA) Q4 2021 Earnings Call Transcript

Jumia Technologies AG-ADR (JMIA -0.93%)
Q4 2021 Earnings Call
Feb 23, 2022, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, thank you for standing by. Welcome to Jumia's results conference call for the fourth quarter of 2021. [Operator instructions]. I would now like to turn the call over to Safae Damir, head of investor relations for Jumia.

Please go ahead.

Safae Damir -- Head of Investor Relations

Thank you. Good morning, everyone. Thank you for joining us today for our fourth quarter 2021 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 annual report on Form 20-F as published on March 12, 2021, as well as our other submissions with the SEC. In addition, on this call, we will refer to certain financial measures not reported in accordance with IFRS.

You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our investor relations website. With that, I'll hand over to Sacha.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Thank you, Safae. Welcome everyone. And thank you very much for joining us today. Before going into the results, I would like to remind you of our current strategy and where we stand right now.

We are currently focused on scaling our platform with a fundamental and unchanged strategic objective of reaching profitability. To get there, we have very clear priorities, accelerate usage growth, GMV consumers orders, increase monetization and cost efficiencies, continue developing JumiaPay. And this is the natural next step in the journey we've been on since inception. We have a vast and largely untapped market of almost 600 million consumers across 11 countries.

To capture this opportunity, we've spent the first years of our journey building the solid foundation for our platform across e-commerce, logistics, and payment. And this platform is uniquely tailored to the specifics of our markets. With this foundation in place, we've focused over the past three years on enhancing the fundamentals of our business. We made tremendous progress building everyday product categories, and our platform has never been more diverse and relevant for consumers as part of this daily lives.

We have also strengthened our unit economics and crossed a major milestone of positive gross profit after fulfillment expense. And it has now been the case consistently for the past nine quarters. Lastly, we've raised over $517 million in cash over the past two years, giving us a strong balance sheet to finance our strategy. Leveraging these strong fundamentals, we turned our focus in 2021 to accelerating usage growth, to scale our business, and take it to profitability.

We are pleased to report very good progress on growth acceleration during Q4. And let's please turn to Page 4 for the highlights of the quarter. Best usage ever, GMV reached all-time high, active consumers reached all-time high, orders reached all-time high. This is very good.

We're now back to growth. The acceleration strategy is paying off, monetization, highest revenue ever, highest gross profit before consumer incentives ever. EBITDA loss stood at minus 70 million in Q4, mainly driven by strong investments in sales and advertising and consumer incentives. We invested 27 million more into sales and advertising and consumer incentives in last year.

We're comfortable with this level of investment because of the strengths of our unit economies and because we're seeing the dynamics on usage growth acceleration. So overall a good quarter in our view, building the acceleration of usage we all wanted to see and some great progress on monetization. Now we still want to see more, of course, and I will give more precise guidance for 2022 at the end of the call. If we review our usage metrics on Page 5, please.

Quarterly active consumers reached a record of 3.8 million in Q4, up 29% year on year driven by all-time high new consumer ads during the quarter. This is a new KPI that we will now provide every quarter so that we give even more granularity on usage performance. And we will still provide the annual active consumers on a yearly basis. And you can see in the presentation later that we reached this year 8 million active consumers, also a record.

Orders accelerated by 40%, also reaching an all-time high of 11.3 million. And this acceleration in both consumers and orders is driving what we believe to be in selection in GMV, which was up 20% year over year reaching again all-time high of $300 million. We're very encouraged obviously by this acceleration and view it as strong evidence that our strategy is paying off. We intend to build on this momentum to further scale our platform and continue to accelerate.

In parallel, let's turn to Page 6, please. Underlying monetization is also reaching new highs. If we look at our monetization metrics before consumer incentives, which are counted as deductions from the revenue lines, we see a clear trend of acceleration with new records achieved in Q4. Revenue before consumer incentives reached 74 million up 39%, the fastest revenue growth in the past two years.

Gross profits before consumer incentives reached $45 million, up 24%. While the margin as a percentage of GMV reached 13.6%. And finally, gross profit after fulfillment expense and still of course, before consumer incentives also reached a new high at 14 million, up 9% year over year, while margin as a percent of GMV here remained at above 4% and 4.3%. We're very pleased to drive both strong usage growth and strong monetization, and this is giving us the flexibility to further invest in the growth of our platform.

On Page 7, you can see that we continued leaning into growth investments in Q4, which is what we had initiated earlier in 2021. There are two key areas of investments for us. First is consumer adoption, we are increasing our investments in sales and advertising and consumer incentives, and we're doing so in a targeted and disciplined manner. Over 57% of the increase in sales and advertising is coming from increased offline marketing costs, which are largely geared toward brand awareness and consideration.

And second area of investment is platform development. Technology, and G&A, tech is the backbone of everything we do at Jumia. We are accelerating the development of products and features, which are creating a more engaging and seamless user experience, more effective operations with a fully dedicated tech stack for payment and FinTech as well. We are comfortable with the increased level of adjusted EBITDA loss during this quarter and the pace of investments for a number of reasons.

Number one, these investments are coming from a place of strength. Our levels of monetization have never been higher and we have the financial firepower to make those investments. Secondly, it's the right time for us to be making this investment. There is strong momentum in the business in terms of usage, and we are building on this momentum to drive even more growth.

And three, these investments are of course creating even more strength in the platform, more compelling experience and more compelling value proposition for all participants as well as bigger scale, which ultimately contributes to the path to profitability. Now let's go into more details in the performance and Jeremy will take it from there.

Jeremy Hodara -- Co-Founder and Co-Chief Executive Officer

Thank you, Sacha. Hello everyone. And thanks for joining today. And I start with the review of the usage trends during the quarter on Page 9.

On Page 9, we have a very clear acceleration in the usage growth in Q4. We have posted during the quarter, the fastest sequential growth rate in almost three years across consumers, orders, and GMV. And we have reached all-time high across each one of these metrics in the quarter. We're adding more consumers than ever before and quarterly active consumers reached a new high of 3.8 million, up 29% year over year.

Our consumers are also purchasing more often with almost three orders placed on average, by an active consumer in the first quarter. Orders reached a record high of 11.3 million at 40%, as a result of both increased consumer adds and increased purchase frequency of existing consumers, driven by the acceleration in both consumers and order growth were reaching what we believe to be a clear inflection in the GMV trajectory, which increased by 20% year over year reaching a record of $330 million during the quarter. There is strong gross momentum in the business, and that's partly a result of the success of our strategy to increase the focus on everyday product categories. On Page 10, you can see a fundamental shift in our GMV mix.

In Q4 2019, we had half of our GMV coming from phone and electronics. In Q4 2021, only 35% of our GMV is coming from phone and electronics, with 65% coming from categories, which are relevant to consumers as part of their everyday lives such as fashion, home, lifestyle, food delivery, FMCG, etc. Average order value now stands at $29 as we further penetrate more affordable and smaller ticket size categories. On Page 11, the growth trends by product category conveys similar message about the importance of every day categories, the fastest growing categories in both GMV and items sold are categories that are relevant to consumers as part of their everyday lives.

In particular, the food related categories, which are food delivery and FMCG are growing in excess of 50% year over year in both GMV and items sold terms. Phone and electronics are showing some early signs of improvements, growing excess of 10% in terms of items sold. Also the global supply chain situation for these categories remain volatile with continued pressure on the chipset supply side. I'd like to give you more color on the FMCG category, which more than doubled in volume terms, demonstrating its strong relevance for consumer in our markets.

On Page 12, you've heard us talking in the past about our efforts, commercial efforts to build out the assortment on the FMCG side, with a view to cover the full product spectrum of a typical grocery basket in each one of our markets. We also placed particular emphasis and focus on developing our relationships with blue chip FMCG brands, such as P&G, Unilever, Coca-Cola, Nestle, Mondelez, and many more. In the full year 2021, we added over 815 new brands on our platform. And we're also adapting our operating model to work efficiently with these brands to secure relevant stock at the best price.

This led us to do more business on a first-party basis with almost 40% of GMV in the FMCG category generated on the first-party basis. The FMCG category is starting to account for a meaningful share of the business. 14% of items sold versus 9% a year ago, which we see as a great news because this is a category where the annual purchase frequency is 25% higher versus the other categories on the platform. So development of FMCG is a case study of our ability to identify relevant categories for our consumers and build them out in an agile manner, adapting our operating model for win-win partnership with suppliers and an attractive value proposition for consumers.

We are overall very pleased with the accelerating usage growth on the platform and have clear priorities for 2022 to further build on that momentum. On Page 13, we have outlined selected initiatives to drive the usage growth in 2022. The first one is the continued development of what we call Jumia Everyday, which are the everyday product categories, including FMCG that I have just touched upon on. On the supply front, we intend to further expand our assortment, leveraging both our third-party sellers, as well as our first-party sourcing capabilities.

On the delivery front, we intend to leverage our e-commerce logistics infrastructure for the delivery of planned purchases as early as the next day, while catering also to immediate needs with under one hour delivery via our on-demand platform Jumia food. The second lever of usage growth is a rollout of targeted free shipping. At this stage, free shipping is in certain cities for baskets above a minimum size comprised of Jumia express items. These items are the one we hold in our warehouse and that are picked and packed by Jumia.

The third lever is tech-driven user experience enhancement. We plan to further increase the level of personalization across the platform, improve our sort algorithm and filtering module while increasing our gamification for an even more engaging experience. We expect these three levers to drive usage growth acceleration, support conversion rate, consumer acquisition, and loyalty. With respect to the free shipping specifically, we expect the sales uplift generated by sellers via free shipping to help us drive more revenue from Jumia express, which is barely monetized today.

We're confident accelerated usage growth and increased scale will help us further improve marketing efficiency and ultimately contribute to our path to profitability. Let's now move on to JumiaPay. We're also seeing good momentum here and are constantly enhancing our platform and expanding the range of financial and digital services available to consumers. We're highlighted on Page 15, some selected development related to JumiaPay in Q4 2021.

To support the growth of JumiaPay on and off platform, we conducted an upgrade of our risk infrastructure, in addition to our proprietary in-house risk engine, which scans each transaction real-time against over 300 factors. We rolled out a third-party device fingerprinting technology. This tool aggregates over 1,000 data points providing an even more precise basis for fraud detection and prevention. We further expanded the range of consumer finance products available to our consumers as part of the Black Friday campaign.

We established a partnership with valU in Egypt, a leading buy now pay later FinTech platform, allowing consumers to pass-through interest-free installments over nine months. We're currently working on expanding the range of tenures for the buy now pay later installments. In addition, we partnered with seven different banks as part the Black Friday campaign in Egypt to offer installments to consumers. On the JumiaPay app, we continued adding more relevant everyday services.

In Nigeria, we set up an integration with Quickteller, the largest building aggregator in Nigeria. This partnership allows us to offer over 70 additional billers on the JumiaPay app, including government services, internet service provider, airlines, and many more. Moving onto the TPV on Page [Technical difficulty] from $70 million in Q4 2020 to $90 million in Q4 2021, supported by the growth in GMV and JumiaPay app digital services in particular. On platform penetration of JumiaPay as a percentage of the GMV reached a new high 27.4% in Q4 this year, up from 25.5% in Q4 2020.

Turning to transactions on Page 17, JumiaPay transactions reached 3.9 million in Q4 2021, up 46% year over year, the fastest transactions growth rate of the past seven quarters. JumiaPay transactions growth was supported by accelerating volume growth across the business and in particular, the food delivery category, which more than doubled year over year. Overall, 34.7% of orders placed on the Jumia platform in Q4 were completed using JumiaPay, compared to 33% in Q4 last year. We made good progress on JumiaPay throughout 2021.

And we intend to build on this momentum to further expand the range of payment and FinTech solutions for both merchants and consumer in 2022. On Page 18, we have outlined selected initiatives that we are driving to push the development of JumiaPay in 2022. The first one is the development of our payment processing activities off-platform. We intend to start offering in 2022, our payment processing solutions off-platform to third-party merchants, starting in Egypt, initiating off-platform TPV and payment processing revenue.

2021 marked an important milestone for JumiaPay as we obtained in Egypt under the sponsorship of National Bank of Egypt, the relevant licenses to process payments on behalf of third-party off-platform. In 2022, we intend to secure the relevant licenses in selected other market for off-platform payment processes. The second initiative is to further develop our consumer finance solutions offering more buy now pay later option for consumer in order to drive usage growth on our platform. I'll now hand over to Antoine, who will walk you through our financial performance in more detail.

Antoine Maillet-Mezeray -- Chief Financial Officer

Thank you, Jeremy. Hello, everyone. As mentioned by Sacha in the intro monetization performance in Q4 2021 was very strong as we reached recognized in terms of revenue, gross profit, and gross profit margin before incentives. And this is allowing us to increase investments in the long-term growth of Jumia.

I would like to start with the recap of the building blocks of our revenue on Page 20. We present revenue in our financials under three main buckets. The first one is, first-party revenue, which are the proceeds generated from our retail activity. The second one is marketplace revenue, which are the various fields that we proceed from our third-party activity.

The third bucket is, are the revenue which at this stage mainly includes revenue from our logistics as a service activity launch in 2020. This bucket will include in the future revenue from off platform payment processing, once this activity is up and running. Let's now look at the overall revenue trajectory in Q4 2021. Here, we observed three main things.

The first one is the overall revenue growth, which was up 26% year on year, the fastest growth rate of the past two years. I would like to point out that the particularly strong performance of the first-party revenue, which was up over 79% before consumer incentives, which is also the fastest growth rate of the past two years. And this is the result of us undertaking more business on 1P basis, particularly for the built out of the gross reset category. The second observation is the development of new monetization streams, such as advertising or logistics as a service, the major part of the other revenue.

The third observation is that this revenue growth momentum is giving us the flexibility to invest more into growth in the form of consumer incentives, including sales discounts, shipping discounts, and free shipping. Let's now deep -- dive deeper in the value components of marketplace revenue on Page 21. Marketing and advertising revenue increase by 20% supported by robust sell take up of ad solutions, particularly during the Black Friday campaign. Value-added services revenue increased by 63% year over year, mostly as a result of an increase in international logistics revenue.

Commissions and fulfillment revenue are both impacted by consumer incentives. Excluding this impact, commissions' revenue was up 25%, driven by usage growth, while fulfillment revenue was down 2% as we chose to reduce the shipping back to customers. The diversity of our revenue sources gives us the flexibility to adjust the monetization intensity on certain revenue streams as we execute on our usage growth acceleration strategy. And while we are driving much faster usage growth, we are also reaching record high levels of monetization.

On Page 22, you can see that gross profit before the impact of consumer incentives reach an all time high at $44.8 million, accelerating by 24% year on year, while the margin as percentage of GMV reached 13.6%. We made the decision to reinvest some of these monetization gains into our price competitiveness and more attractive shipping tariffs, increasing consumer incentives to 11 million in Q4 2021 from 3 million in Q4 2020. I would point out here that the Q4 2020 levels were very modest and were down 45% compared to Q4 2019. Despite more than tripling consumer incentives levels, gross profit, which is net of consumer incentives was still up by 2% year on year, and up 22% compared to Q4 2019.

Similarly, gross profit as a percentage of GMV decreased from 12% in Q4 2020 to 10% in Q4 2021, which is more than 1.5 percentage point about the margin level of Q4 2019. We are overall very pleased with the strong performance of modernization in Q4 2021. And we continue building new monetization streams, such as advertising all logistics at the service to further increase the earning power. Let's now move on to cost on Page 24.

While we are in the phase of expansion and increasing investments, we are maintaining strong cost discipline. As you can see, we continue generating logistics efficiencies on a volume unit basis. Fulfilment expense increased by 32% year on year, while orders accelerated by 40% over the same period. Fulfilment expense on a per order basis is showing a steady decline over the past two years, reaching $2.7 per order in Q4 2021.

Moving on to sales and advertising costs Page 25. This has been a key area of investment for us in the second half of 2021 after six quarters of significantly reduced marketing spent. In Q4 2021, we continued ramping up marketing investment across channels, albeit at a slower pace compared to Q3 2021. Sales and advertising expense increased by 159% year on year in Q4 2021, compared to 228% year on year in Q3.

On a compounded basis, sales and advertising expense was at 35% compared to Q4 2019. Over 57% of the year-on-year increase in sales and advertising expense is coming from the increase in above the line marketing such as offline, TV, and video advertising, which are aim at driving brand awareness and consideration. Our sales and advertising spend is discipline and targeted to optimize our overall marketing spend and location by channel, in addition to our existing marketing optimization tools, we are deploying an enhanced return on marketing investment or ROMI model. This is a customized engine trained on multiple years of Jumia data to model the differentiated impact of various marketing activities and channels on customer acquisition and loyalty, informing the marketing budget allocation.

Informed by the ROMI model as well as in-depth customer research in selected markets we'd rebalance our marketing investment mix. We have them so by increasing the share of offline media and video advertising to drag awareness and activation and relining the funnel of consumers. In Q4 2021, 50% of our sales and advertising expense was allocated to online marketing campaigns, 41% to offline media and video advertising, and 9% to staff costs. In Q4 2020, offline and video advertising accounted for only 17% of the sales and advertising spend with online marketing campaigns and staff cost representing 63% and 20% respectively.

We are confident this targeted and discipline approach will allow us to further improve marketing efficiency as we move beyond the initial phase of a ramp up. Turning to technology and G&A expense on Page 26. Technology is another area of increased investments with technology and content expense reaching $13.1 million up 51% year on year, and 53% compared to Q4 2019. Tech is the backbone of our platform.

And we are interesting our investments in this area to enhance user experience and engagement on our platform, as well as overall operational efficiency. In Q4 2021, we initiated an event of our own page structure and content to simplify navigation and product discovery. To support these thoughts, we have been expanding our technology headcount. In H2 2021, we opened a new tech hub in Cairo which housed over 120 technology professionals at the end of 2021, taking the total count of technology staff across the group to over 400.

G&A expense excluding share-based compensation, reached 32 million in Q4 2021, up 22% year on year. This was mostly due to a temporary increase in professional fees, as well as an uptake in staff cost as we strengthen the management team selected areas to support the growth of the business. G&A excluding SBC remained 15% lower in Q4 2021 compared to their levels in Q4 2019, as we maintain cost discipline in this area. Before moving on the balance and cash flow items, I'd like to wrap up on monetization and cost with an overview of our priorities on this front in 2022.

Page 27 outlines selected initiatives we intend to pursue in 2022 to increase monetization and cost efficiency. On the monetization front, we want diversify our revenue streams and drive more revenue from our platform assets. We want to grow advertising by expanding the range and efficiency of our advertising solutions, while increasing the pickup of these services by our sellers and third-party advertisers. Jeremy reflected earlier to Jumia express in the context of free shipping.

This is a promising revenue stream that we intend to further develop in conjunction with free shipping as our sellers start to see sales at least from free shipping. Last but not least, we intend to further develop our logistics as a service offering to third-party businesses. This activity was rolled out in 2021, and we have seen very good traction there last year. We plan to build on this momentum to acquire more logistics clients and increase revenue from this activity.

The development of newer revenue streams helps us reduce reliance on commissions and shipping fears from consumers, which ultimately support usage growth. On the cost front, we intend to drive more operating leverage and efficiency as we scale the platform. We expect increased volumes to support fulfillment cost efficiency. On the sales and advertising front, we expect our brand awareness and activation investments to gradually translate into new consumer ads order and GMV growth, thereby supporting marketing efficiency.

Let's now turn to balance and cash flow items, Page 28. Capex in Q4 2021 was $4.4 million, compared to less $1 million in Q4 2020, mostly due to purchases of technology and logistics equipment. Net change in working cap resulted in an inflow of $4.1 million in Q4. This was mainly a result of an increase in payables relating to the uptick in the first-party activity, as well as a shorter receivable cycle.

Cash utilization for the quarter, refinanced cash used in operating and investing activities, excluding investments in financial assets was $66.6 million in Q4 2021 supported by the working cap inflow during the quarter. At the end of December 2021, we had a liquidity position of $513 million, $170.1 million of cash, and cash equivalent of $395.7 million of term deposits and other financial assets. With that, I'll hand over to Sacha for concluding remarks.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Thank you, Antoine. We closed 2021 with strong momentum executing successfully on our growth acceleration strategy. And we posted all time high levels of consumers, orders, GMV new highs in terms of monetization. And the combination of accelerating usage growths and increased monetization are essential stepping stones toward profitability.

We have brought forward today administration of [Technical Difficulty]

Questions & Answers:

Operator

Ladies and gentlemen, please hold a moment while we reconnect the speaker.

Jeremy Hodara -- Co-Founder and Co-Chief Executive Officer

Hello everyone. I'll take over from Sacha. I think he's reconnecting.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

I'm back if you want Jeremy.

Jeremy Hodara -- Co-Founder and Co-Chief Executive Officer

OK. No, no, Sacha if you're back. No, no, go on. Yes, go on Sacha.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

OK. Great. Sorry guys, I got dropped off from the call and we were about to show the Nigeria's case study. So we are on Page 29.

And here on this slide, we are illustrating how the scale is taking us toward profitability. You can see that we have been accelerating [Inaudible]. This is the blue line on the chart in case you're looking at the presentation and we have grown GMV over the last two years. And during Q4, by a factor of 1.7, at the same time, we have been accelerating monetization that is represented here as the gross profit after fulfillment and before consumer incentives.

For those, again, looking at the presentation here, we are looking at the orange bar and you can see that we've been growing steadily over the last two years and by a factor of 2.4 in Q4. And finally, you can see on this chart as well, our local G&A, which represent our cost structure to run the business locally. Now for the last five quarters, the monetization has been paying for the local G&A base. This is one new milestone that we wanted to bring forward as another positive development on the path to profitability.

And on the benefit that scale brings to the business. Nigeria, as you are well aware is our largest market represents about 20, 25% of the business, depending on the metrics you take. So it's great to see that our largest market has reached this milestone. On Page 30, we have recap here, the key initiatives for 2022, and we would like to share some guidance for 2022.

We intent to further accelerate GMV growth. As a reminder, we grew GMV by 15% in H2 2021 and we intend to continue to build on that momentum. In terms of investments, we are going to deliver that growth acceleration with similar levels of investments as in 2021. For example, we expect to invest between 50 and 55 million in sales and advertising expense in the first half of 2022, this compares with 55 million during H2 of 2021.

So overall, a very similar level of investments and no further increase in absolute terms during the first half of 2022 for sales and advertising. For EBITDA, we expect the overall adjusted EBITDA loss for the full year to be in a range of 200 to 220. And again, this compares with 197 in 2021. Finally, we expect to invest between 15 and 25 million of capex this year.

This is an increase versus 2021 during which we invested 7 million. And this investment is focused on our logistics platform and will allow us to increase our reach, improve the speed of delivery, and deliver also cost efficiencies going forward. Once again, we have three priorities for 2022, usage growth, JumiaPay development, increased monetization, and cost efficiency. We have very clear initiatives already ongoing to support each.

We're very excited by the prospects of the business in 2022 and beyond and believe we have the -- all the building blocks to take Jumia to profitability. Thank you very much for your attention. And we're now ready to take your questions.

Operator

Thank you. [Operator instructions]. And our first question today is coming from Aaron Kessler at Raymond James. Your line is live.

You may begin.

Aaron Kessler -- Raymond James -- Analyst

Great. Thank you and congrats on the acceleration. A couple questions. First, just maybe on some of the new buyer cohorts.

Can you just talk about some of the quality of the new buyers in terms of repeat activity engagement as always kind of concerned with incentives that you were tracking some non-repeat buyers as well? So if you can maybe talk through that. And then maybe in terms of the brand advertising opportunity as well, we see obviously in the U.S. some nice opportunities with FMCG advertisers on platforms like Amazon. If you can just talk about what you're seeing there today and maybe the opportunity going forward on the brand advertising side.

Thank you.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Great. Thank you, Aaron. Yes, very good question on cohorts and incentive. It's something that we have observed also as well in the past the type of incentives that are being used can drive better cohorts or worse cohorts in some cases.

And very clearly for us, increasing the customer lifetime value and optimizing the customer acquisition cost at the same time is very critical. It's a key objective and we use of course, the sales advertising and the consumer incentives to drive just that. And we're very confident that the type of consumer incentives that are deployed are incrementally driving the customer lifetime value, and that are driving overall long-term increase of the consumer lifetime value, certainly. And in order to measure that, of course, we look at number of KPIs, you can see that the number of orders per consumers have been trending in the right direction.

If you look at the quarterly active consumers that we are providing now the KPI, you can see that the number of orders per consumer is increasing. And certainly we think that all the initiatives around what we call the Jumia every day, the FMCG, the drive also of free shipping and more personalization, convenience, FMGC, all that is there to increase the frequency and the loyalty of the consumers and that we will continue to see increased KPIs with this, so very much confident here. In terms of FMCG, you are very right. Certainly we have with many of those big brands that we have displayed on the slide and that Jeremy talked about, we have what you call joint business plan, and we work hands in hands with them in order to grow the business in order to grow the online business that they are generating through Jumia.

And as part of that, we have joint business plan and we have joint advertising plans. Certainly this is driving for us very promising prospects for the advertising revenue. And as we have mentioned in the presentation, we also have a significant part of the FMCG that we do on 1P basis, which is on the retail and the brands there, they're also willing to participate into advertising campaigns and they're supporting our retail with advertising campaigns. So certainly we think that the evolution of Jumia toward this mix of category is going to also support the advertising revenues going forward.

Aaron Kessler -- Raymond James -- Analyst

Great. Thank you, Sacha.

Operator

Thank you. Our next question today is coming from Lamont Williams at Stifel. Your line is live. You may begin.

Lamont Williams -- Stifel Financial Corp. -- Analyst

Hi guys. Thanks for taking the question. Sacha, could you just talk a little bit about the change in the operating model for JumiaPay in Nigeria? Could you just give us a little more color on what's -- on what that entails? And then secondly, you mentioned in the release the study from Boston Consulting Group, I think it appears -- looks like some of the customers are looking for more free shipping. Is there anything that study else --anything else that that study would have revealed about what your consumers are asking from the platform?

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Thanks, Lamont. On the first question, we have discussions with local regulators with JumiaPay, of course, on an ongoing basis. And sometimes we are making adjustments to the operating model and to the type of integrations and processes and flows that are happening. And here this one that is taking place in Nigeria and for us, it's very important to maintain this dialogue with the relevant regulators, obviously.

And ensure compliance with existing or anticipated regulations because regulations in FinTech and payments in general are evolving on a regular basis. And so here, it's an update to the model and we'll have to see, it's hard to estimate ahead, what are the impacts of those type of changes. But we expect this arrangement to be any way if there's any disruption, we expect any disruption to be transitory right? Then -- I'm sorry, your second question Lamont is to make sure is on the --

Lamont Williams -- Stifel Financial Corp. -- Analyst

Yes. Any kind of finding from the study with --

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

The study, of course, sorry. Yes. So I think the study is really in-depth market study about a range of topics around the consumer and the expectations and the perception of the value proposition and how can we maximize the -- any change that we're making to the value proposition, right? So it's very 360 and help us to do more targeted offering and have a value proposition toward segments, which are more likely to use e-commerce and so and so forth. I think free shipping is one of the conclusions that we have made, right? And we've taken a hard look at the ROI of the implementation of free shipping, especially on Jumia express, right? Of course, we don't do free shipping on everything, we're going to do free shipping on Jumia express, which is going to enable us to drive more usage in general, but it's going to also enable us to address some of the concerns that or the expectations around speed of delivery.

Because for example, Jumia express is delivered faster than the marketplace. And also the consistency of the quality of the products, which are filled on Jumia express, because of course we have more control on those. And so I think there's a number of I would say adaptations of the customer experience, which can have higher return on investment than others, improving the return experience for example, accelerating the speed of delivery in certain categories. And so I think there's a lot of let's say, "small findings" which are going to help us drive the value proposition forward, right? And those are some of the examples.

Lamont Williams -- Stifel Financial Corp. -- Analyst

OK, great. Thank you.

Operator

Thank you. [Operator instructions]. Our next question today is coming from Luke Holbrook at Morgan Stanley. Your line is live.

You may begin.

Luke Holbrook -- Morgan Stanley -- Analyst

Great. Thanks. Thanks for letting me on the call. I had a question just on your sales and advertising spend, that's ramped up quite significantly over the last few quarters, it looks up to do so in the next couple of quarters as well.

Can you give us any more detail on where that's being spent on a geographic basis? Is this more seen as a push into Nigeria, as you kind of alluded to on Slide 29 or is this into Egypt more? So any color there would be useful and just anything you can provide on your long-term plans here, is this something that we should expect more sustained level of sales and advertising heading into the back part of this year and also kind of 2023 as well. Any color there would be useful? Thanks.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Yes, of course. Very good questions, spend is really I would say, well spread across the portfolio of countries and there's not like one very specific geographic will push in one country or the other. And we have accelerated the level of spend pretty much across all countries in H2 of 2021, right. So there would be some nuances to that, but in general, this is an increase that is really well spread and certainly not focused on Nigeria or focused more on Egypt and quite well balanced, right.

And respecting, I would say the size of our existing operations relative to the size, right. So no particular country focused there that is out of ordinary. And then I think for each one, we really want to invest about 50 million and this is really the same level that we have invested in H2. So here, we don't intend to further increase the levels of investments that we have done in Q3, Q4, but rather maintain them.

And so we want to see further accelerations of usage metrics with a similar level of spend in absolute terms, at least for H1, right. And that's the guidance we have for the first half. And then we'll take it from there and see the acceleration and continue to observe the customer lifetime value and the level of acceleration that we see. But at least for H1, we have similar level in absolute terms as H2.

And after that, we'll have to see.

Luke Holbrook -- Morgan Stanley -- Analyst

That's very clear. And just one quick follow up, just on Slide 29 gave us some illustrative details on Nigeria. Do you have any plans to disclose more financials on a geographic basis that we kind of see more for spread of your operations?

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Well, we certainly are committed to bringing any relevant path to profitability milestone, right. So we have done that in the past several times when [Inaudible] certain milestones in the country, it's a very good illustration and to show deep dive of how the business is playing out especially in Nigeria in the largest country. So certainly we plan to continue to bring those milestones. And then we have also always volunteered the sort of relative size of the countries, Nigeria being 20 to 25%, Egypt being around 20% and then having the other countries, all of them being the plus or minus between 5% and 10%, right.

So if that were to change, I think we would also bring it forward. I think the weight of the countries, although we have never published it per se, has not really changed. And we have always volunteered those ratios to give you a sense of the presence. And also the geographical diversity of Jumia is one of the amazing assets I think of the company, because we are not overexposed to a given market.

And we are not overexposed to a macro situation in one geography, right. And it's that nice balance. I think that is very attractive for us to have the presence in all those countries and to have some strong foothold in countries like Nigeria and Egypt, but also strong presence elsewhere. So again like this, we volunteer and for now we have no plans to disclose on a regular basis, specific geographical KPIs that we always would volunteer this and highlight if there were any big changes.

Luke Holbrook -- Morgan Stanley -- Analyst

That's it. Thanks very much.

Operator

Thank you. [Operator instructions]. And our next question today is coming from Sarah Simon at Berenberg. Your line is live.

You may begin.

Sarah Simon -- Berenberg Capital Markets -- Analyst

Yes. Good afternoon. I apologies if there's background noise, I'm in transit but just had a question about the growth acceleration that you talk about. You referenced growth acceleration relative to the second half of fiscal 2021, which I think was about 15%.

So is that the benchmark against which you are expecting to accelerate, or should we really be thinking Q3 was less growth than Q4, Q1 should be more growth than Q4 and so on. So just a bit more color on how you are thinking about that acceleration would be helpful. Thanks.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Yes. Well, look, Sarah, thank you for the question. At this stage, really, I think we want to see more acceleration versus where we are now, right. So the benchmark for us, because there can be some quarterly variations and so on and so forth.

We want to make sure that we are accelerating versus where we come from at least on an H2 basis, right. So of course then there's GMV orders, consumers we are expecting to accelerate and the benchmark for us right now in H2. Then of course, as we see it coming, we'll publish more data, but for now, this is the benchmark that we use.

Sarah Simon -- Berenberg Capital Markets -- Analyst

OK. That's helpful. Thanks.

Operator

Thank you. We have no further questions in the queue at this time. I will now turn it back to management for any closing remarks.

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Well, thank you very much and looking forward to a great 2022. Thank you everyone. Take care. Bye.

Operator

[Operator signoff]

Duration: 53 minutes

Call participants:

Safae Damir -- Head of Investor Relations

Sacha Poignonnec -- Co-Founder and Co-Chief Executive Officer

Jeremy Hodara -- Co-Founder and Co-Chief Executive Officer

Antoine Maillet-Mezeray -- Chief Financial Officer

Aaron Kessler -- Raymond James -- Analyst

Lamont Williams -- Stifel Financial Corp. -- Analyst

Luke Holbrook -- Morgan Stanley -- Analyst

Sarah Simon -- Berenberg Capital Markets -- Analyst

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