Jumia’s revenue declines by 17% in Q2, 2024, despite 7% increase in orders

Jumia has reported its financial results for the second quarter of 2024. According to the reports, the e-commerce company witnessed a 17% revenue decline to $36.5 million. This, the company said is as a result of the impact of regional currency devaluations, which affected both GMV and Total Payment Volume (TPV).

According to a statement shared with Technext, the company has focused on enhancing cash efficiency, refining its customer value proposition, and leveraging strategic partnerships, resulting in notable operational and financial metrics improvements under the leadership of CEO Francis Dufay.

Despite a 17% decline in reported revenue to $36.5 million, Jumia saw a 15% increase on a constant currency basis, indicating strong underlying performance masked by currency devaluations in key markets.

Gross Merchandise Value (GMV) experienced a similar pattern, with a 5% decrease in reported terms but a robust 35% growth in constant currency, reaching $170.1 million in reported currency. These metrics reflect Jumia’s adaptive strategies and its emphasis on core business strengths, such as optimizing its product assortment and improving customer engagement.

Read also: Jumia, Alerzo, Renmoney top the list of 10 African tech companies with highest layoffs since 2020

Improved Cash Efficiency and Cost Management

The company reduced its operating loss by 8% year-over-year to $20.2 million and its Adjusted EBITDA loss by 10% to $16.3 million. This indicates that the company’s concerted efforts in cost management are yielding significant results.

Notably, the company’s cash burn was cut by more than half, declining to $8.7 million, demonstrating a disciplined approach to expenditure and efficient use of resources.

According to the statement, this was partly achieved through a 19% reduction in marketing expenses, focusing on high-return channels like CRM, SEO, and targeted offline initiatives.

Strategic Operational Insights

Jumia’s focus on enhancing customer value and experience continued to show dividends. Orders increased by 7% year-over-year, highlighting Jumia’s success in attracting and retaining high-quality customers.

The company also reported a 31% increase in JumiaPay transactions, supported by the growing penetration of JumiaPay on delivery and strategic cashback campaigns.

The company’s logistics network, a critical component of its asset-light business model, expanded with new warehouses in Nigeria and Morocco. These expansions are strategically important for increasing storage capacity and improving supply chain management, without significantly impacting the balance sheet due to a focus on leasing rather than owning facilities.

Navigating Economic and Operational Challenges

The company’s financial performance did not escape the impact of regional currency devaluations, which affected both GMV and Total Payment Volume (TPV). TPV saw a 7% decline, largely mirroring the decrease in GMV.

However, its decision to hold 67% of its liquidity in USD mitigated some currency risks, illustrating a prudent approach to financial management.

Jumia’s recent decision to end its commercial agreement with Mastercard Asia/Pacific marks a strategic shift, allowing the company to explore broader partnerships with other payment service providers.

This move aims to strengthen JumiaPay’s position as a key pillar of the company’s e-commerce ecosystem, ensuring a seamless and secure payment experience for customers.

Jumia’s customer metrics and market expansion

Jumia’s strategic focus on enhancing the customer value proposition and efficient marketing spending led to a 6% quarter-over-quarter increase in quarterly active customers, while the 90-day repurchase rate for new customers improved by 262 basis points to 36%.

The shift in product mix towards categories like fashion, which have a lower AOV, was reflected in a 7% decline in AOV for physical goods to $39.2, yet contributed to a broader customer base.

The company’s efforts to penetrate secondary cities yielded positive results, with a notable shift in the order mix from capital cities to secondary regions, now comprising 53% of total orders.

This geographic diversification is critical for future growth, particularly as Jumia aims to serve underrepresented markets with its expansive logistics network.

Looking Ahead

According to the statement, Jumia remains committed to its long-term strategy of reducing losses and driving towards profitability.

The company plans to continue its focus on cash efficiency, targeting further reductions in cash utilization as compared to FY 2023. With a renewed emphasis on expanding its supplier base, enhancing its logistics network, and leveraging innovative marketing and vendor technologies, Jumia is poised for continued growth.

The launch of additional BNPL partnerships in Nigeria reflects Jumia’s intent to strengthen its financial services offerings, aiming to facilitate greater consumer access to e-commerce. These initiatives, combined with the company’s disciplined financial management, position Jumia to capitalize on the growing demand across African markets.

In conclusion, Jumia’s Q2 2024 results underscore a period of careful yet determined execution against its strategic priorities. As the company continues to successfully navigate market challenges and drive sustainable growth, it remains a pivotal player in connecting millions of African consumers with a diverse range of products and services.

The post Jumia’s revenue declines by 17% in Q2, 2024, despite 7% increase in orders first appeared on Technext.