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TechCabal Daily – Jumia’s losses slow down for another quarter even as revenues fall by 10%

Olumuyiwa Olowogboyega 13th August 2020

Jumia has been in the news in recent weeks following a stock market rally which saw the ecommerce company briefly regain its unicorn status.

At the time, we talked about how it was unclear what was driving investor confidence. After Jumia’s IPO which saw shares open at $14.50, the company’s shares hit an all-time low of $3.95 in May 2020.
But the feeling at the company in the last year is that it is now crunch time and the company has made important tweaks to its business as it charts a path to profitability.

Its first quarter results for 2020 were decent, and the most important note was a reduction in its operating loss for the first time in six quarters. At the time of its earnings call for Q1, the company said a big part of its plans was cutting marketing spend.

The results for Q2 (PDF) show that Jumia
stayed the course, as its sales and advertising expense fell to €7.2 million, the lowest absolute since 2017. More importantly, Jumia’s operating losses reduced again in this quarter to €37.6 million, from €47.4 million in Q1.

Here are some of the highlights from its Q2 results:

GMV was €288 million, representing a 13% year-on-year decrease in GMV compared to Q2 2019
Jumia has agreed on a settlement payment of $5 million in respect of the court cases brought against it for alleged misstatements and omissions in connection with its IPO
JumiaPay transactions reached 2.4 million, a year-on-year increase of 36%
Revenues declined 10% to 34.9 million euros, better than analyst estimates of an 18.7% decline in revenue.

The results are a mixed bag for Jumia. On one hand, while it gained more customers because of the COVID-19 pandemic, the total value of goods sold on the platform fell.

It says this is because many consumers shopped more for home essentials and moved away from high ticket purchases. The market reacted quickly to Jumia’s earnings call, with the company’s shares closing at $13.15, down 19% from the day before.

While the ink is barely dry on the sixth amendment to Nigeria’s broadcasting code, content creators in Lagos, Nigeria have new worries.

The Lagos State Film and Video Censors Board (LSFVCB) has issued a 30-day notice on content producers to duly register their content with the body. While that sounds innocuous, the real problem is that “all audio and visual content produced and
sold within Lagos State shall attract the payment of five per cent levy on each item. ”

The announcement was made by the Executive Secretary of the LSFVCB, Mr Bamidele Balogun. For now, it is unclear what “5% levy on each item” exactly means.

It is also unclear how this levy will be implemented and collected in Lagos state. Despite all of this uncertainty, it is sure to add another layer of complexity to business for broadcasters in the state.

The Kenyan retail-tech startup MarketForce, is the only Sub-Saharan African company selected for the Y Combinator Summer 2020 batch, securing US$150,000 in funding and the inspiration for a new product.

According
to Disrupt Africa: “MarketForce has now secured an extra US$150,000 in funding from Y Combinator, and has also announced the launch of a new business line, MarketForce Troops, which enables FMCGs and financial service providers to grow their retail distribution channels in Africa. ”

Joanna Bichsel wanted to build something for women. So she launched Kasha, named after her second child, and possibly Africa’s first femtech e-commerce platform. Kasha is now present in Rwanda and Kenya and more countries will follow soon. Bichsel talks about her journey in tech and experiences as a first-time founder in this edition of My Life in Tech.

Here’s an excerpt from Kay’s conversation with Joanna: “In emerging markets, mostly, it’s [solutions] like NGO related and that’s crazy,” Bichsel says on our call.

“It’s like, there are not solutions for the most influential consumers!”

This Friday, August 14th, for the 7th episode of “Building in Africa” we are interviewing, Victor Basta – Founder and Managing Partner of M&A advisory firm, Magister Advisors. Basta has advised on over 120 transactions across 25 years and helped found and build three successful corporate finance firms in the process. His firm is focused on M&A exits and larger financing rounds.

Some of the African transactions Basta’s Magister Advisors has participated in include Twiga Foods’ Series B round and Cellulant’s $47.5 million Series C round. Also, Magister has invested in Kenyan-based transport startup,
Sendy.

Basta will answer questions about how big mergers, acquisitions and public offerings get done. Attendees will be able to ask him burning questions in an interactive session.

The event is open to experienced and aspiring entrepreneurs as well as everyone else who is playing in the African technology industry. Register here to attend the event.

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TechCabal Daily – Jumia’s losses slow down for another quarter even as revenues fall by 10%

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