Jumia Shares Jump As Losses Fall 71% In First Quarter, Currency Woes Linger
Jumia, Africa’s top e-commerce retailer, today unveiled its first-quarter 2024 financials, marked by a blend of promising growth and strategic recalibrations. Riding the waves of a tumultuous market, the company demonstrated resilience despite facing headwinds from macroeconomic challenges.
In the wake of a bumpy 2023, CEO Francis Dufay highlighted the company’s strides in aligning with strategic priorities while reining in expenditure. Notable among the financial highlights was a 19% year-over-year revenue increase, reaching USD 49 M. Dufay credited this growth to a relentless focus on strengthening the core business and enhancing cash efficiency.
“We continued to execute against our strategic priorities focused on strengthening our core business and improving cash efficiency while establishing a leaner organisation primed for growth,” Dufay shared. “We have proven that with the right team and the right strategy, growth does not require heavy spending.”
The quarter saw a 5% uptick in Gross Merchandise Volume (GMV) to USD 181 M, accompanied by a commendable 39% surge in constant currency. Operating loss narrowed significantly by 71% year-over-year, showcasing the efficacy of the company’s cost management strategies.
The NYSE-listed company’s shares, as of the time of publishing, spiked nearly ~21% on news of financial recovery, which comes as a good sign for a company that has contended with upheavals since its history-making IPO in 2019.
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Dufay also noted Jumia’s adaptability in navigating the challenging African market landscape. Despite currency devaluations in key markets like Nigeria and Egypt, the company maintained consumer engagement through diversified product offerings and competitive pricing.
“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,” the CEO said.
Jumia incurred a USD 5.9 M cash loss associated with currency translation related to devaluations in two of Jumia’s largest markets, Egypt and Nigeria, in the three months ended March 31, 2024, the results show.
“However, our ability to secure sufficient inventory and offer diversified product assortment at competitive prices continues to keep consumers engaged on our platform,” Dufay adds.
Building on the momentum of past successes, Jumia remains steadfast in its commitment to curbing losses and propelling towards profitable growth. The CEO reiterated projections for 2024, emphasising a reduction in cash utilization and an optimistic outlook for orders and GMV growth.
However, the journey to profitability hasn’t been devoid of hurdles. A retrospective glance at Jumia’s recent history reveals a rollercoaster ride of successes and setbacks. In 2023, the company exceeded adjusted EBITDA loss guidance, marking a substantial decrease from previous years. Strategic manoeuvres, including a pivot towards high-value items, yielded mixed results, leading to a 15% decline in revenue amid a challenging macroeconomic backdrop.
The company’s response to market challenges has been dynamic. From exiting the food delivery sector and executing mass layoffs to re-evaluating its product portfolio, Jumia’s evolution reflects a pragmatic approach towards sustainability. Dufay’s commentary sheds light on the company’s continuous quest for efficiency, signalling ongoing optimisation efforts across all facets of the business.
Looking ahead, Jumia’s foray into rural areas signals a strategic expansion aimed at capturing untapped markets. With an eye on customer acquisition beyond urban centres, the company aims to rejuvenate growth amid market uncertainties.
Despite the lingering spectre of inflation and currency fluctuations, Jumia’s resilience shines through. As the company navigates the complex landscape, it would hope its strategic realignments and optimisation for a healthier bottom line position it for sustained success.
