Jumia, a leading African e-commerce platform, lowered its operating losses by 70% in Q1 2024 after brutal cost-cutting measures that saw it trim advertising costs to $3.8 million, a 30% drop compared to Q1 2023.
Despite these cuts, profitability remained elusive as macroeconomic conditions in most of its markets squeezed consumer purchasing power.
Key takeaways:
- Jumia’s reported revenue of $48.9 million for the quarter
- It cut its operational losses to $8.3 million
- Quarterly active users shrank to 1.9 million
“Significant currency devaluations in some of our largest markets impacted both purchasing power and supply availability making for a difficult operating environment,” said Francis Dufay, Jumia’s CEO, on a Tuesday earnings call.
The e-commerce giant recorded revenues of $48.9 million in Q1 2024, 18.5% higher than Q1 2023 and credited the increase with the sales of big-ticket items such as electronics and home and living items, partially offset by the impact of foreign exchange.
“Our ability to secure sufficient inventory and offer a diversified product assortment at competitive prices continues to keep consumers engaged on our platform.”
The company’s Gross Merchandise Value, a measure of the value of all goods bought on its platform, increased to $181.5 million by 5%, driven by corporate sales, improved marketplace margins, and a reduction in spending on customer incentives and promotions.
The company also shared plans to attract a stickier and higher-quality customer base.
“Jumia’s cohort data shows that 39% of the company’s fourth quarter 2023 cohort of new customers completed a second purchase within 90 days as compared to 36% in the fourth quarter of 2022 cohort re-ordering in first quarter of 2023,” the company said.
The company will undergo a disciplined and targeted approach to marketing spend focused on targeting more efficient marketing channels, such as search engine optimization (SEO) and customer relationship management (CRM).
In terms of runway, Jumia has a cash balance of $28.6 million and a liquidity position of $101.5 million. The company said 79% of its Liquidity Position was held in USD, helping to limit risk and Jumia’s exposure to shifts in local currency valuations.
A bright spot in its report is the growth in JumiaPay transactions which reached $2 million in the first quarter of 2024, up 51.8% year-over-year. The growth was driven by the rollout of JumiaPay on delivery in one of Jumia’s largest markets. Dufay had earlier said the company was exploring plans to rollout Jumia Pay delivery in Nigeria as he estimates that 50% of transactions could be cashless by 2024 ending.
Over the past month, Jumia’s share price has grown 5%, demonstrating some shareholder confidence. The stock currently trades at $5.47 at the time of this report.
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