Jumia, the leading e-commerce platform in Africa, has achieved a significant milestone by reducing its losses by over 90% in the fourth quarter of 2023. This remarkable achievement comes as a result of the company’s strategic focus on restoring order and driving growth in Gross Merchandise Value (GMV).
Key Takeaway
Jumia achieved a remarkable 90% reduction in losses in Q4 2023, signaling a significant turnaround in its financial performance.
Jumia’s Financial Performance
In 2023, Jumia revised its adjusted EBITDA loss guidance multiple times, aiming for a 57% to 61% year-over-year reduction. However, the company exceeded expectations, ending the year with $58.2 million in adjusted EBITDA loss, marking a 68% decrease from 2022. The fourth quarter concluded with less than $1 million in adjusted losses, a 99% decrease. Jumia’s operating loss decreased by 90% to $4 million in that quarter and by 64% to $73 million for the entire year, leading to an improved liquidity position, closing the year with $121 million.
Factors Contributing to the Reduction in Losses
The reduction in losses was primarily attributed to decreased tax provisions in specific countries and significant decreases in sales and advertising expenses, down 63% year-over-year. Jumia’s exit from the food delivery business in Q4 led to layoffs and departmental restructuring, resulting in a 17% decrease in staff costs within general and administrative expenses year-over-year.
Strategic Shift and Focus on Physical Goods
Jumia made strategic decisions to discontinue food delivery across seven markets and shift its focus to expanding its physical goods business. This shift, along with a reduction in customer incentives, contributed to a 4% decrease in orders, a 16% reduction in active customers, and an 8% decline in GMV year-over-year. However, the company remains optimistic about driving improvements in these metrics through its focus on physical goods, such as electronics and fashion items.
Optimistic Outlook and Investor Response
Jumia’s CEO, Francis Dufay, expressed optimism about improving the company’s economics further in 2024 and reducing cash utilization better than in 2023. Investors have shown approval for Jumia’s cost-cutting measures, with its share price rallying up 40% at the time of publication.
Positive Indicators and Future Growth
Despite the challenges, Jumia reported GMV growth in physical goods across five countries and the lowest losses since its IPO. The company’s focus on driving growth in orders and GMV, along with the surge in transactions completed using JumiaPay, indicates positive momentum for the future.
