Jumia, the African e-commerce giant, has announced its second-quarter financial progress. In the report, Jumia’s shares gained more than 15% in early trading to $8.12 per share and rose slightly to $8.30 per share.
Reason For The Jumia Rise
Most of Jumia’s performance metrics went up in the second quarter, including revenue that was better than expected.
The company’s active users, orders, GMV, and revenue increased by more than 10% compared to the same quarter last year. Active consumers reached 3.4 million in Q2 2022, up 25% yearly. Orders grew by 35% year over year to 10.3 million. GMV climbed 21% to $271.1 million over the same timeframe, while revenue jumped 42% to $57.3 million. The same indicators were up compared to Q1 2022 and their 2021 report.
Jumia also improved in gross profit and marketplace revenue, with those metrics growing 14% and 17% year over year to $30.4 million and $30.7 million, respectively. Each posted its fastest growth rates in five quarters.
Jumia’s results came despite a volatile macro environment, which put additional pressure on consumers and limited supply access for its sellers. This was said by Jumia’s co-CEO, Sacha Poignonnec, during an interview.
He explained further that it also happened with a very strong discipline in marketing investment. It clearly signifies that our focus on relevant, everyday products, competitive prices, and consumer experience is paying off. Q2 2022 was a quarter of continuation without any particular change in strategy.
The executive said that Jumia’s results show that it is getting closer to being profitable because more customers are placing more orders, leading to more money and strict cost control.
“We’re going to double down on that to show some meaningful steps toward profitability, which remains the central objective of our strategy,” the co-chief executive said.
Read: How You Can Own Shares in Apple, Amazon, Facebook The Trove Finance Way
Jumia’s adjusted earnings before interest, taxes, depreciation, and amortization. When it comes to category trends, everyday categories like fashion, beauty, fast-moving consumer goods, items for the home, food delivery, and JumiaPay made up 66% of the company’s GMV, while phones and electronics only made up 34%. million.
Mr Poignonnec said the company plans to cut spending and reduce its adjusted EBITDA loss to between $87 million and $107 million in the second half of 2022 (12% to 29% lower than what it recorded in H2 2021). If achieved, Jumia will be able to meet its expectation of losing not more than $220 million this year in adjusted terms.
Jumia’s marketplace KPIs detailed some upbeat news for the company. When it comes to category trends, everyday categories like fashion, beauty, fast-moving consumer goods, items for the home, food delivery, and JumiaPay made up 66% of the company’s GMV, while phones and electronics only made up 34%. The ratio was 57%–43% as of Q2 2020. Most of the change in the metrics was caused by Jumia’s decision in Q2 2021 to push frequent purchases of FCMGs instead of big-ticket electronics and appliances. In the same way, the number of orders per user on Jumia went up from 2.8 in Q2 2021 to 3.1 in Q2 2022, which was the highest number ever.
People are seeing inflation and facing price increases. And indeed, the fact that we offer those categories makes us attractive and relevant to the consumer. “The positioning of the everyday product is a big driver for us, and what is fueling growth is that consumers come back more often and buy multiple times,” said Poignonnec. However, within this timeframe, the platform’s average order value fell from $37.2 to $26.3.
Observations
Nigeria’s top bank, the Central Bank of Nigeria, has not yet given the platform its Payment Service Solution Provider (“PSSP”) license so that it can process payments for third-party businesses in Nigeria. Poignonnec said it’s only a matter of time before The service is live in Nigeria. But JumiaPay has started a test run in Egypt, where the platform has a license similar to the one in Kenya.
In related news, Jumia grew its logistics arm by 103% in the volume of packages processed in Q2 2022, compared to 1.3 million a year ago. But that is smaller than what it managed last quarter when it completed 3.5 million package deliveries.
Jumia closed Q2 2021 with a liquidity position of $637.7 million. A year later, that almost halved to $350.8 million in Q2 2022: $53.8 million in cash and $297.0 million in cash equivalents. The company is overjoyed as its shares, and e-commerce business grew in Q2.