Jumia lost $15 million in adjusted EBITDA in the third quarter of 2023, which was a big step forward for the most significant online store.
This was a significant drop from losing $32 million in the third quarter of 2022. It’s clear from the significant drop of 67% from one year to the next that the company is moving its attention to things that will make it more money.
The minor loss is an intentional move to make the business more successful and effective.
Because of Jumia’s strategic moves, its cash dropped significantly. There was a $19 million drop in Q3 2023, 71% less than the $66 million drop the year before. It also costs 74% less to sell things and advertise, coming in at $4.3 million in Q3 2023. This proves the business wants to spend money wisely on marketing.
In many ways, Jumia saw big drops after this financial change. Sales are down 11% yearly, and active users are down 24.3%. Orders are also down 23%. To adjust its product line, Jumia has stopped offering some services in places it thinks are having tough economic times. For example, these numbers show how those steps look.
High inflation and limits on imports significantly affect the company’s overall success, which is going down. Usage and order numbers have also decreased compared to the last quarter, especially in Q3. This is because of seasonal impacts.
Read also: JumiaPay records 37.8% decline in transactions, gross profit grows by 5%
Big jump in Jumia’s GMV
From Q2 to Q3 2023, monthly usage dropped by 100,000 due to seasonal factors such as extended holidays and back-to-school spending. This movement touched fashion, beauty, electronics, and home & lifestyle.
Even with these obstacles, CEO Francis Dufay reports a 10% constant currency gain in physical goods GMV across five nations.
From Q2 to Q3 2023, orders increased 11%, primarily due to airtime promotions, according to Dufay. Only 1% of physical product orders fell quarter-over-quarter.
Dufay’s focus on key business divisions and physical goods GMV growth in five nations is consistent. He mentioned Ghana, Uganda, Senegal, and two unnamed countries growing. These nations contribute 49% of Jumia’s physical goods GMV.
“This quarter, we’re still improving profitability and cash preservation. Witnessing our growth strategy’s impact across countries is crucial since we can now share it.
We are pleased to see growth in five nations with more efficient economies, demonstrating our successful strategy and inspiring others to follow suit.
Partnerships and core companies
GMV for physical products fell 17% in actual dollars but rose 10% in constant currency. A strategic move toward sustainable growth was seen in improved average order value and repurchase rates in phones, electronics, home living, fashion, and beauty.
Jumia’s cooperation with Starlink and focus on being a preferred distributor for multinational companies reflect a strategic commitment to product diversification and market expansion, particularly in Africa.
The stock rose 7.5% as investors gained confidence in Jumia’s updated outlook for adjusted EBITDA losses of $80-90 million, a 57% to 61% year-over-year decline. This updated prognosis suggests a rebound and supports the company’s financial sustainability.
In the competitive e-commerce industry, Jumia’s strategic relationships and efforts to balance growth and profitability indicate a transitional phase toward resilience and long-term sustainability.