Jumia expects losses not to exceed $100M this year, per Q3 financials

Jumia expects losses not to exceed $100M this year, per Q3 financials

In the first quarter of 2023, we reported that Jumia recorded its lowest losses in four years. Its adjusted EBITDA and operating losses dropped to $27 million and $30.9 million, respectively. Those numbers represented a 55% and 57% decrease year-over-year, on track to meet the company’s end-of-year target of $100 million to $120 million in adjusted losses.

Jumia, the e-commerce giant, has revealed positive financial results for Q2 2023. Following its earlier report of decreased losses in Q1, Jumia has continued to reduce losses significantly in Q2, with adjusted EBITDA and operating losses dropping by 66% to $19.3 million and $23.3 million, respectively. This impressive performance has led the company to revise its year-end adjusted loss projection to a range of $90 million to $100 million.

CEO Francis Dufay attributed the improved financials to disciplined efforts to navigate challenging macro conditions. Notably, fulfillment, sales, and advertising expenses were significantly reduced. Jumia had streamlined its operations, including headcount reduction and recalibrating its product and service portfolio in Q4 2022.

While these changes impacted growth metrics such as quarterly active customers, orders, and gross merchandise value (GMV), there are signs of success. Jumia shifted focus from fast-moving consumer goods (FMCG) to electronics and big-ticket items, leading to higher average order values and experiments with buy now, pay later (BNPL) services in certain markets.

JumiaPay, the platform's payment solution, has seen transactions and total payment volume decline but is working to expand its range of payment methods and introduce "JumiaPay on delivery" in additional countries. Additionally, Jumia is developing a white-label checkout solution for third-party merchants.

Despite the positive changes, Jumia faces challenges from high inflation affecting purchasing power and import restrictions in certain markets. The company remains optimistic about its growth prospects, especially in regions like Senegal and Ghana, where key categories such as electronics are performing well. Jumia aims to continue its efforts to reduce losses and foster growth in strategic areas.

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