The first quarter earnings for Africa’s leading e-commerce platform, Jumia, signals an array of hope for investors that the online retailer is on its way to profitability. Figures released in the report revealed that Jumia has managed to endure a decent quarter despite the economic challenges of COVID-19 pandemic, as the company finally recorded a notable decrease in its operating losses. Jumiapay is showing signs of living up to its potential, the balance sheet looking better and cash reserves looking stronger.
According to the 2020 Q1 scorecard, Jumia’s operating losses dropped for the first time in six quarters. Its losses stood at $47.4 million in Q1, which is lower than losses from both the previous quarter ($69.2 million) and Q1 2019 ($49.4 million).
Jumia recorded an annual gross profit that grew to €2.5m in the year ended March 31, 2020, compared to less than €0.1m in the same period in 2019. Also, the company’s adjusted Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) losses decreased by 10 per cent year-over-year. Its annual active consumers also hit 6.4 million, indicating 51 per cent a year-over-year growth when compared to the same period in 2019. Orders through Jumia grew to 6.4 million, which was 28 per cent higher than the same period in previous year.
“In 2019, we focused on what is proving to be crucial to navigate this crisis: affordable, high purchase frequency product categories and cost efficiency. We are driving Annual Active Consumers growth, which was up 51 per cent year-over-year, and orders, up 28 per cent, at the same time as reducing sales and advertising expense by 25 per cent over the same period. Our adjusted EBITDA loss decreased by 10 per cent year-over-year, reaching the lowest level in the past six quarters, as we make progress on our path to profitability,” commented Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.
The positive results were achieved amid the coronavirus pandemic, which has hammered the global economy since the beginning of 2020. As contained in the report, the €2.5m gross profit was reached after the fulfilment of all expenses including taxes, levies and others, while its monetisation development increased its gross profit to €18.4m, a year-over-year increase of 21 per cent.
“The onset of the Covid-19 pandemic in the first quarter of 2020 brought about a complex combination of health, economic and operational challenges. Our first priority was to help our employees, consumers and communities stay safe. On the operational side, we took prompt action to ensure business continuity and adjust our logistics to meet high standards of safety and hygiene” the report stated.
The report also added that the Gross Merchandise Volume (GMV) was €190m, a year-over-year decrease of 11 per cent compared to GMV adjusted for perimeter changes as well as previously reported improper sales practices of €214m in the first quarter of 2019.
Jumia also recorded an impressive turnaround in its cash reserve growth. In June 2019 after its IPO, the company had cash reserves of $361.1 million, and just $184.3 million by the end of 2019 . The company however recorded improvement in cash reserves in the Q1 of 2020, with a rise of 12% to $207.24 million while its losses saw the first major decline since the last two years.
JumiaPay is touted to become a major cash cow for Jumia, and the fintech product is showing signs of living up to its billing. JumiaPay processed 2.3 million transactions worth $39 million in Q1 2020. According to the report, JumiaPay almost matched the 2.4 million transaction volume it recorded in the very busy last quarter of 2019. Jumia continued the expansion of JumiaPay in the first quarter. The service is now available in seven of the retailer’s 11 markets.
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