Jumia’s Net Loss Expands by 28% to $40.65mln in Q1
Jumia Technologies net loss widened by more than 28% year on year to $40.65 million, details from the Africa’s ecommerce giant’s financial results for the first quarter ended March 31, 2024.
In the comparable period in 2023, the ecommerce company posted $31.77 million net loss amidst pressures. The company said in its regulatory filing that loss before income tax from continuing operations in the first quarter of 2024, was up 36% year over-year, largely driven by a $11 million increase in net foreign exchange losses.
It stated that the loss grew as a result of currency devaluations in Nigeria and Egypt and an increase in finance costs related to Jumia’s treasury and investment portfolio management activities
According to details, gross merchant value (GMV) increased by 5% year-over-year to $181.5 million and orders increased by 2% year-over-year. The company said the growth in GMV and orders was driven by continued efforts to enhance and diversify product assortment, more efficient marketing spend and reductions in customer incentives.
“Jumia is off to a strong start to the year. Following a transformational 2023, we continued to execute against our strategic priorities focused on strengthening our core business and improving cash efficiency while establishing a leaner organization primed for growth.
“Our efforts drove a 5% year-over-year and 39% constant-currency improvement in GMV in the quarter, while order growth also expanded, a clear sign that our strategy is working.
“Disciplined expense management and further streamlining of our logistics network reduced our quarterly cash burn1 to $19.1 million from $22.0 million in the first quarter of 2023”, Jumia Chief Executive Officer, Francis Dufay said..
Dufay added that efforts to orient spend toward more efficient marketing channels along with reductions in customer discounts also helped attract a stickier and higher quality customer base, driving a 300 basis-point improvement in repurchase rates versus the prior year.
“Our success is more notable when considered against the challenging macro environment in Africa. Significant currency devaluations in some of our largest markets impacted both purchasing power and supply availability, making for a difficult operating environment.
“However, our ability to secure sufficient inventory and offer a diversified product assortment at competitive prices continues to keep consumers engaged on our platform. Importantly, we are also beginning to see early signs of general stabilization in select markets, leaving us hopeful that conditions will continue to improve.
“For example, despite the volatile conditions, we are seeing order growth in Nigeria and Ghana, illustrating Jumia’s value proposition. Additionally, in Egypt, the government floated the Egyptian pound and significantly increased interest rates, resulting in higher U.S. dollar inflows from foreign investors.
“Overall, I am pleased with our progress to date and remain energized about Jumia’s potential for the future. We have proven that with the right team and the right strategy, growth does not require heavy spending. Rather, a deep understanding and appreciation of the African ecommerce market, along with a targeted growth strategy leaves us well positioned to drive continued growth in 2024 and beyond.”, Jumia Chief Executive explained.
In Q1, Africa’s ecommerce giant reported revenue of $48.9 million, up 19% year-over-year or up 57% year-over-year on a constant currency basis.
The company reported that marketplace revenue, comprised of commissions, fulfillment revenue, value added services and marketing and advertising revenue was $25.9 million, up 11% year-over-year, driven by higher commissions and corporate sales, partially offset by the impact of foreign exchange.
First-Party sales revenue was $22.4 million, or up 29% year-over-year. This was driven by sales of larger ticket items, such as electronics and home & living items, partially offset by the impact of foreign exchange.
Jumia’s gross profit was $31.2 million, up 25% year-over-year. Gross profit as a percentage of GMV was 17% compared to 14% in the first quarter of 2023, driven by corporate sales, improved marketplace margins and a reduction in spending on customer incentives and promotions.
The results revealed that the company’s fulfillment expense amounted to $9.4 million, down 21% year-over-year. It said fulfillment expense per order, excluding JumiaPay app orders, which do not incur logistics costs, decreased by 20% year-over-year to $2.40.
Its sales and advertising expense printed at $3.7 million, down 30% year-over-year. Technology and content expense settled at $9.1 million, down 19% year-over-year. General and administrative expense cleared lower at $17.5 million, down 31% year-over-year.
It added that the company’s general and administrative expense, excluding share-based compensation came at $15.3 million, down 37% year-over-year.
This decrease was driven primarily by a reduction in tax provisions as well as a decline in staff costs during the quarter, the Q1 results stated.
Jumia’s operating loss was $8.3 million at the end of Q1-2024, down by 71% year-over, driven by significant cost reductions and improved gross margins.
Loss before income tax from continuing operations was $39.6 million, up 36% year-over-year, primarily driven by an increase in net foreign exchange losses.
The company said in its regulatory filing that the increase was largely driven by a $11.3 million increase in net foreign exchange losses as a result of currency devaluations in Nigeria and Egypt and an increase in finance costs related to our treasury activities.
“The increase also reflects losses associated with our investment portfolio management activities”, the ecommerce company added.
As of March 31, 2024, Jumia said its liquidity position was $101.5 million, comprised of $28.6 million in cash and cash equivalents and $72.8 million in term deposits and other financial assets.
Jumia said the company’s liquidity position decreased $19.1 million in the first quarter of 2024 as compared to a decrease of $22.0 million in the first quarter of 2023, and a decrease of $26.8 million in the fourth quarter of 2023.
Jumia incurred a $5.9 million cash loss associated with currency translation related to devaluations in two of its largest markets, Egypt and Nigeria, in the three months ended March 31, 2024.
Management noted that the continued improvement in Jumia’s cash management illustrates its ongoing efforts to effectively preserve its cash resources as it executes on its growth strategy.
Notably, the Company continues to refine it cash repatriation strategy. As of the first quarter of 2024, 79% of its liquidity position was held in US Dollar, helping to limit risk and the company’s exposure to shifts in local currency valuations, according to its unaudited financial statement.