Jumia, one of Africa’s most prominent e-commerce businesses, cut its operating losses in Q4 2023 to $4.5 million after several important strategic changes, but there are still questions about profitability. One difficult decision it made in Q4 was shutting down Jumia Food, given the tough macroeconomics of the food delivery business.
It also reduced its workforce and moved away from a focus on low-ticket items. Nevertheless, profitability has remained elusive in a Q4 where the company lost 500,000 active customers compared to the same period last quarter.
Key takeaways:
Jumia’s reported revenue of $59.4 million for the quarter
It cut its operational losses to $4.5 million
Quarterly active users declined to 2.3 million
Under Francis Dufay, who was hired as CEO in February 2023, the firm continues to demonstrate impressive cost discipline and improve cash utilisation.
“We believe that Jumia is now a much leaner, more agile and more focused company. We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value,” the company said in its statement.
The company reduced its sales and advertising spend to $6.2 million, reducing advertising on consumer incentives like vouchers and free shipping. The drop in advertising spending is 62.8% compared to Q3 2022. Its general and administrative spending was also down to $12.3 million.
Its Gross Merchandise Value, a measure of the value of all goods bought on its platform, declined to $233.3 million. The company blamed the reduction on currency devaluation across markets.
“Eight out of ten local currencies in our countries of operation depreciated against the US Dollar in 2023, compared to 2022,” Jumia said in its financial report.
High inflation rates and currency depreciation impacted the purchasing power of customers. However, the firm experienced growth in commissions driven by corporate sales to local and regional retailers and distributors in some countries it operates in.
“We are seeing signs of stability and growth in other markets,” Dufay said in the earnings call that was held today after the results were released.
In terms of runway, Jumia has a cash balance of $35.5 million and a liquidity position of $120.6 million.
A bright spot in its report is the growth in JumiaPay transactions which reached $3 million in the fourth quarter of 2023, up 41% year-over-year. Dufay said the company was exploring plans to roll Jumia Pay delivery in Nigeria as he estimates that 50% of transactions could be cashless by 2024 ending.
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