African e-commerce company, Jumia has released its earnings report for Q4 2022 and the full year 2022. With revenue of $66 million for Q4, the company made a full year loss of $207 million and a Q4 loss of $49.2 million, and it projects that it will reduce its losses even further in 2023 to a range of $100 -$120 million. Several metrics were down for Q4 2022: order volume dipped to 9.9 million, Gross Merchandise Volume (GMV) dipped to $283.1 million. Jumia Pay, which has been a crown jewel for Jumia in recent years, also saw a decline in total processed volume.
What will Jumia take comfort from in their Q4 2022 results?
One of the key things Jumia announced is the appointment of Francis Dufay as CEO. After being named interim CEO in December, there was a sense that Jumia needed to appoint a permanent CEO and stave off uncertainty. On that front, it can now rest easy and focus on supporting Dufay in executing his mandate.
On Jumia’s earnings call, the company’s leadership was clear about their mandate: to drive the company to breakeven point in the short to medium term. A lot of that will be done by making important decisions such as cutting promotional and advertising cost, and narrowing its focus. Jumia acknowledged on its investor call that it has spread itself too thin in the last few years and will begin to correct that. Related to that is its decision to shut down Jumia Prime, after it saw little traction.
Additionally, Jumia’s advertising expense fell by 40% in Q4 as part of efforts to reduce promotional costs across board. It aims to reduce promotional spend in-app in the hopes that cutting these kinds of costs will reduce losses without affecting growth. Another big part of cutting cost is moving its operations from Dubai.
Moving workers from Dubai and layoffs
It’s unclear the number of staff Jumia has in Dubai, but the company says it has now reduced its headcount in the emirate by 60%. It says the rest of its staff in Dubai will be relocated to Africa, but did not provide a timeline. Jumia also put a number to the number of staff it laid off last year, sharing that 900 people were sacked within the organisation- it is unclear what the company’s total headcount is at the moment.
Stronger cost discipline was a key theme of Jumia’s earnings call, with many decisions centred on this. The company will discontinue its logistics-as-a-service offering for instance and will roll back food delivery in Ghana, Egypt and Senegal. These moves are in line with Jumia’s cash position of $72.1 million and a liquidity position of $227.8 million. In the end, Jumia is talking tougher than other quarters, and it’ll be interesting to see through 2023 if it’s able to execute on its aim to breakeven.