African e-commerce giant Jumia reported its financial performance second quarter Today. In the wake of this morning’s financial reporting, Jumia shares climbed sharply, rising more than 15% in early trading to $8.12 a share and rising slightly to $8.30 a share at the time of publication.
What drove the stock higher? Jumia showed growth in most performance metrics, including revenue in Q2 that exceeded expectations.
The company’s performance indicators were valued in double digits compared to the same quarter last year for active users, orders, GMV and revenue. Active consumers reached 3.4 million in the second quarter of 2022, up 25% year-over-year. Orders increased 35% year-over-year to 10.3 million. GMV rose 21% to $271.1 million over the same period, while revenue increased 42% to $57.3 million. (The same indicators rose compared to the indicators for the first quarter of 2022, in addition to the results from a year ago.)
Jumia also improved in both gross profit and market revenue, with those metrics growing 14% and 17% year-over-year to $30.4 million and $30.7 million, respectively. Each posted the fastest growth rates in five quarters.
Discussing the results, the company said the results came despite “a volatile macro context with increasing pressure on consumer spending and access to supply for our sellers,” Jumia co-CEO Sacha Poignonnec said during his earnings call. “It also happened with a very strong marketing investment discipline on our part. It’s a clear sign that our focus on relevant everyday products, competitive pricing and consumer experience is paying off.”
Q2 2022 was a quarter of continuation without any specific change of strategy, Poignonnec told londonbusinessblog.com during a phone call. According to the director, Jumia’s results show that it is moving towards profitability thanks to more consumers placing more orders, leading to higher revenues and disciplined cost control.
“We’re going to double that to show some meaningful steps toward profitability, which remains the central objective of our strategy,” said the co-chief executive.
How is the company doing in terms of profit? Jumia’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) losses grew last quarter compared to the same period a year ago (+37.4%) and Q1 2022; the company ended the quarter with $57.2 million in adjusted EBITDA losses; for the first half of the year, that figure comes to $112.5 million.
Poignonnec said the company plans to cut spending in the second half of 2022 and reduce adjusted EBITDA loss to between $87 million and $107 million (12% to 29% lower than what it recorded in H2 2021). ). If this is achieved, Jumia will be able to meet expectations of losing no more than $220 million this year, in adjusted terms.
Inside the numbers
Jumia’s market KPIs contain positive news for the company. In terms of category trends, everyday categories (including fashion, beauty, fast-moving consumer goods, home goods, food delivery and JumiaPay) accounted for 66% of the company’s total revenue, compared to 34% for phones and electronics. The ratio was 57%-43% as of Q2 2020. The stats have largely changed thanks to Jumia’s decision in Q2 2021 to encourage frequent purchases of FCMGs rather than larger electronics and appliances.
Similarly, Jumia saw an improvement in its quarterly purchase frequency, reaching 3.1 orders per user in Q2 2022 (a record high) compared to 2.8 in Q2 2021. “People see inflation and are confronted with price increases. And certainly, the fact that we offer those categories makes us attractive and relevant to the consumer. The positioning of the everyday product is a big driver for us and what drives growth is that consumers come back more often and buy multiple times,” said Poignonnec. However, within this time frame, the platform’s average order value dropped from $37.2 to $26.3, we should note.
JumiaPay also posted impressive numbers in the second quarter, with TPV growing 31% year-over-year to $74.2 million, and transactions to 3.4 million in Q2 2022, growing 25% year on year. -on-year. The platform is yet to use its Payment Service Solution Provider (“PSSP”) license – granted by Nigeria’s top bank, the Central Bank of Nigeria, to process payments for third-party companies – in Nigeria. Poignonnec said it is only a matter of time before the service goes live in Nigeria. However, JumiaPay has started a pilot in Egypt, where the platform has a similar license.
In related news, Jumia grew its logistics business by 103% in the volume of parcels handled to 2.6 million parcels in the second quarter of 2022, compared to 1.3 million a year ago. But that’s a smaller figure than last quarter, when it completed 3.5 million parcel deliveries.
Jumia ended Q2 2021 with a liquidity position of $637.7 million. A year later, that has nearly halved to $350.8 million in the second quarter of 2022: $53.8 million in cash and $297.0 million in cash equivalents.