E-commerce giant Jumia has released its second-quarter financial results. Shares of Jumia jumped more than 15% in early trading after the company reported its financial results this morning, rising to $8.12 per share and pushing up slightly to $8.30 per share at the time of this writing.
What was the catalyst for the rise in its stock price? In the second quarter, Jumia outperformed expectations in terms of sales and almost every other performance parameter.
Compared to the same quarter last year, the company’s performance metrics rose by double digits in terms of active users, orders, GMV, and revenue. On a year-over-year basis, there were 3.4 million active users in Q2 2022, an increase of 25 percent. There were 10.3 million orders, a 35% year-over-year increase. Sales rose 42% to $57.3 million over the same time period, while GMV increased by 21% to $271.1 million. When compared to Q1 2022 indicators and year-ago results, (the same indicators were higher).
Jumia’s gross profit and marketplace sales increased by 14 percent and 17 percent, respectively, year over year, to $30.4 million and $30.7 million. Growth rates for both companies were at their highest levels in five quarters.
When asked about the firm’s performance, Jumia co-CEO Sacha Poignonnec remarked that despite “a turbulent economic setting with rising pressure on consumer expenditure and access to supply for our merchants,” the company has achieved its goals. In addition, it was achieved with a high degree of marketing expenditure discipline from our side. I think this is a good indication that our emphasis on everyday items, competitive pricing & user experience is paying off.”
The second quarter of 2022 was a continuation quarter, according to Poignonnec. Executives say that Jumia’s statistics prove that company is on a road to profitability since more customers are making orders, resulting in more sales, and cost-control measures are being implemented.
It was said by the co-chief executive officer that “we are going to double down on that to demonstrate some substantial progress towards profitability, which remains the central target of our strategy”.
Where’s the company’s bottom line? To put it another way, Jumia’s EBITDA losses climbed by 37.4% in the first quarter of 2022 (to $57.2 million) compared to the same time last year (to $112.5 million), which represents a loss of $112.5 million so far this year.
In the second half of 2022, Poignonnec estimates that the company’s adjusted EBITDA loss would be between $87 million and $107 million, down 12 to 29 percent from H2 2021. If these goals are met, Jumia will be on track to have a net loss of no more than $220 million for the year.
Away from the numbers:
For Jumia, its marketplace KPIs provided some encouraging news. The company’s GMV accounted for 66% of the company’s daily categories (which include fashion, beauty, fast-moving consumer goods, home-focused products, food delivery, and JumiaPay) compared to 34% from smartphones and gadgets. Q2 2020 showed a 57% to 43% split. Jumia’s Q2 2021 choice to promote more frequent purchases of FCMGs rather than larger-ticket goods and appliances had a significant impact on the KPIs, as well.
Similarly, Jumia’s quarterly purchase frequency increased from 2.8 in Q2 2021 to 3.1 orders per user in Q2 2022 (an all-time high).
As a result, many people are feeling the pinch of rising prices.” And, of course, the fact that we provide those options makes us more appealing to customers. Consumers are returning more often and purchasing multiples, which is a direct result of our daily product’s prominent position, according to Poignonnec. The platform’s average order value dropped from $37.2 to $26.3 throughout this time period, though.
In the second quarter of 2022, JumiaPay’s TPV increased by 31% year over year to $74.2 million, while the number of transactions reached 3.4 million, up by 25% year over year. A Payment Service Solution Provider (“PSSP”) licence has been issued by Nigeria’s central bank to the platform, although it has yet to be put into practise in the country. According to Poignonnec, the service would soon be available in Nigeria. A test has already started in Egypt, where the JumiaPay platform has a licence identical to the one in the United States.
The amount of parcels handled by Jumia’s logistics arm increased by 103% to 2.6 million packages in Q2 2022, up from 1.3 million a year earlier. However, this is a lower number than the 3.5 million package deliveries company performed in the previous quarter.
Jumia has $637.7 million in liquid assets at the end of the second quarter of 2021. Almost a year later, the figure has dropped to $350.8 million: $53.8 million in cash and $297.0 million in cash equivalents.
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