Jumia, one of Africa’s leading e-commerce companies, has made significant strides in the second quarter of 2024, cutting its losses considerably as it aims for profitability.
Despite a reduction in cash burn and cuts in sales and marketing expenses, the company experienced a decline in revenue to $36.5 million.
Financial Performance and Market Valuation
Over the last three weeks, Jumia has witnessed a market rally, boosting its valuation to over $1.3 billion. The company’s total losses for the quarter decreased to $19 million, a substantial improvement from the $38 million loss in Q2 2023.
CEO Francis Dufay commented, “Our performance this quarter reinforces our belief that our strategy is working. Our deep understanding of the African e-commerce market, along with our unique asset base and strategy, positions Jumia for growth as we progress towards profitability.”
Challenges and Strategic Initiatives
A major challenge for Jumia has been currency depreciation in key markets, which contributed to the decline in the value of total orders to $170 million, despite an increase in the number of orders to 4.8 million.
To address this, the company aims to diversify its product range to attract more customers and leverage its JForce network.
Revenue growth was driven by third-party commissions from corporate sales to local and regional retailers, distributors, and other corporate buyers.
Operating across 11 African countries, Jumia continues to navigate a difficult economic landscape. Although cost-reduction measures have shown positive results, sustained profitability will depend on overcoming macroeconomic challenges.
Key Financial Metrics
- Revenue: $36.5 million for the quarter
- Operational Losses: Reduced to $20.2 million
- Quarterly Active Users: Stable at 2 million
Based on the positive impact of its growth strategy, Jumia projects an increase in both orders and Gross Merchandise Volume (GMV) in 2024, excluding potential foreign exchange impacts.
Customer Engagement and Cash Efficiency
Jumia’s efforts to attract a more loyal customer base through search engine optimization (SEO) and customer relationship management (CRM) have been successful. These initiatives led to a 6% sequential increase in active customer count and continued improvements in the 90-day repurchase rate.
The company maintains a cash balance of $45.1 million and a liquidity position of $92.8 million, with 67% of its liquidity held in USD. This helps limit Jumia’s exposure to local currency fluctuations and improves its cash repatriation strategy.
Growth in JumiaPay Transactions
A notable highlight of Jumia’s report is the growth in JumiaPay transactions, which reached $1.9 million in Q2 2024, marking a 30% year-over-year increase.
This growth was fueled by higher penetration of JumiaPay on delivery and cashback campaigns and incentives implemented in Q2 2024.
JumiaPay has been established as the primary receiver of transactions on the e-commerce platform. In June 2024, Jumia terminated its commercial agreement with Mastercard Asia/Pacific, allowing it to broaden its relationships with other payment service providers while continuing to accept Mastercard as a payment method.
Stock Performance
In recent months, Jumia’s share price has surged by 252%, impressing Wall Street analysts and renewing shareholder confidence. The stock currently trades at $10.59, down nearly 100% due to the impact of global carry trades affecting markets worldwide.
Conclusion
Jumia’s progress in reducing losses and driving growth, despite facing currency challenges, underscores its resilient strategy and strong market position. As the company continues to diversify its offerings and enhance its payment solutions, it is well-positioned for future growth and profitability in the African e-commerce landscape.