African e-commerce company Jumia experienced a significant boost in its stock price following the release of its second-quarter financial results. The company’s shares rose by over 15%, closing at $8.30 per share. This increase came as Jumia demonstrated strong growth across key metrics, exceeding revenue expectations for the quarter.
Performance Overview
Jumia reported double-digit growth across several indicators compared to the same quarter last year. Active users increased by 25% to 3.4 million, while orders grew by 35% to 10.3 million. Gross Merchandise Volume (GMV) climbed 21% to $271.1 million, and total revenue rose by 42% to $57.3 million. Additionally, gross profit and marketplace revenue showed strong growth, up 14% and 17% year-over-year, respectively.These improvements occurred despite a challenging economic environment marked by inflation and supply chain disruptions. The company’s co-CEO, Sacha Poignonnec, credited this success to Jumia’s focus on offering competitive prices, everyday products, and a better consumer experience.
Strategic Focus on Profitability
Jumia’s leadership emphasized that the company’s primary objective is profitability. This is being achieved by increasing consumer engagement and controlling costs. Poignonnec highlighted that Jumia plans to intensify its efforts to achieve meaningful steps toward profitability, including reducing spending. The company aims to cut its adjusted EBITDA loss by 12% to 29% in the second half of 2022, targeting a full-year loss of no more than $220 million.
Marketplace Insights
The company’s marketplace strategy continues to evolve. Everyday product categories, including fashion, beauty, and fast-moving consumer goods (FMCGs), accounted for 66% of Jumia’s GMV, up from 57% two years ago. This shift aligns with Jumia’s strategy to prioritize frequent purchases over high-ticket items like electronics.Quarterly purchase frequency also hit a record high of 3.1 orders per user, up from 2.8 in the previous year. However, average order value fell to $26.3, reflecting the focus on lower-cost everyday items.
JumiaPay and Logistics Growth
JumiaPay, the company’s payment platform, saw its Total Payment Volume (TPV) grow by 31% year-over-year to $74.2 million, with transactions increasing by 25% to 3.4 million. The platform is set to expand its services in Nigeria and Egypt, leveraging recently acquired licenses to process payments for third-party businesses.On the logistics front, Jumia doubled the volume of packages processed, reaching 2.6 million in Q2 2022, up from 1.3 million a year ago. However, this was a slight decrease from the previous quarter’s 3.5 million packages.
Financial Position
Despite these gains, Jumia’s liquidity position has declined significantly. The company’s cash and cash equivalents dropped from $637.7 million in Q2 2021 to $350.8 million in Q2 2022.Jumia remains focused on sustaining growth while optimizing operations for profitability. As the company continues to expand its offerings and refine its strategy, it aims to strengthen its position in the competitiveAfrican e-commerce landscape.
