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Photo credit: Jumia
In the third quarter of 2023, Jumia reported an adjusted EBITDA loss of $15 million, which was its lowest level since its IPO in 2019 (up from the $27 million in the first quarter and $19.3 million in the second quarter) and a significant decrease of $32 million compared to the third quarter of 2022, a decrease of 67% year-over-year and a decrease of 70% on a constant currency basis. Year-to-date adjusted EBITDA loss is $61 million, down 61% from the first nine months of 2022.
Jumia also took strategic actions that resulted in a significant improvement in liquidity, with a reduction of $19 million in its position in Q3 2022, a decline of 71% year-on-year, compared to a decline of 66.0 million US dollars in the third quarter of 2022.
Other key financial highlights include an 11% year-over-year decline in revenue to $45 million, an increase of 19% on a constant currency basis, and GMV of $181 million, down 25% year-over-year, but at 3% rose. based on constant exchange rates. Quarterly active customers and orders also decreased compared to the same period last year. Jumia’s customer base is approximately 2.3 million, down 24.3% from Q3 2022, and orders received from these customers were 7.2 million, down 23% from Q3 2022.
Meanwhile, sales and advertising expenses also fell 74% year-on-year to $4.3 million in the third quarter of 2023 as the company continued to be disciplined in its marketing investments. And there’s the operating loss of $19 million compared to $43 million in the third quarter of 2022, a decline of 57% year-over-year.
Activities behind the numbers
GMV growth of physical goods in five countries
Despite declining user numbers compared to the previous quarter, there was a positive increase in orders for Jumia by 11% from Q2 to Q3 2023. This growth can be attributed to an increase in Jumia Pay app orders, mainly due to promotional activities in digital categories such as airtime. Orders for physical goods remained almost stable quarter-on-quarter, only down 1%.
That brings us to what CEO Francis Dufay, speaking to TechCrunch, describes as the key highlight of the company’s third quarter of 2023: GMV of physical goods is increasing year-over-year in five countries.
“The news this quarter is that we are still making significant progress in profitability and maintaining liquidity. “This is very important when you see the impact of our growth strategy, because we now have an obvious and tangible influence in all countries that we can share,” commented Dufay.
“For example, we are seeing growth in physical goods in some of the 11 countries. Compared to last year, we are now seeing GMV growth in five countries. This is very positive news because compared to the year we had much larger losses and three times more marketing budgets. The fact that we can drive growth again in five countries with significantly more efficient economies is welcome evidence that our strategy is working and gives us great confidence that other countries will follow the same path.”
However, overall, Jumia observed a 17% year-over-year decline in GMV in its core physical goods e-commerce business in actual dollars, but a 10% increase on a constant currency basis. According to Dufay, the number of orders for physical goods is relatively stable, but the average order value has improved compared to the third quarter of 2022. This is largely due to efforts in core categories such as phones, electronics, home, fashion and beauty. By introducing better assortments, brands and sellers in these categories see an improvement in average order value and enable higher repeat purchase rates, which is due to the attractiveness of our assortment rather than increased marketing spend.
Dufay said that Jumia’s partnership with Starlink in October is crucial to the e-retailer’s overall strategy to refresh its range, offering and brand offerings, adding that Jumia will become the preferred distributor for international brands and a diverse and want to offer an updated product range to Africa. “We plan to begin distributing Starlink housing kits in Nigeria in the coming weeks by the end of the year. And we are discussing expansion into other countries in Africa. It has not yet impacted the business, but it is a great opportunity and partnership where both sides can create a lot of value.”
Meanwhile, Jumia’s total payment volume (TPV) was $48.1 million in the third quarter of 2023, down 28% year-on-year but up 3% at constant exchange rates. During the same period, TPV as a percentage of GMV remained stable at around 27% and maintained its stability as of the third quarter of 2022. Notably, JumiaPay transactions recorded a positive trend, reaching 3.2 million in the third quarter of 2023, an annual increase of 8%. Year-on-year growth. An impressive 44.7% of orders placed on the Jumia platform in Q3 2023 were fulfilled via JumiaPay, compared to 31.9% in Q3 2022.
Finally, as already begun, Jumia has revised its adjusted EBITDA loss guidance. Based on the original Q1 2023 guidance of $100 million to $120 million and adjusting to $90 million to $100 million in the second quarter, the current target is between $80 million and $90 million. If successful, this will mean a 57% to 61% reduction in adjusted EBITDA loss compared to the previous year. The favorable financial outlook helped Jumia shares rise 7.5% on Wednesday, reflecting increased investor confidence.
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