Pan-African e-commerce platform, Jumia Technologies recently released its Q1 2023 earnings report, providing valuable insights into its financial performance and growth trajectory.
Jumia’s first quarter 2023 results showcased a significant reduction in losses and a commendable effort towards profitability. The company’s operating loss decreased by a remarkable 54 per cent year-over-year, reaching its lowest quarterly level in over four years at $31 million.
According to Jumia, the substantial reduction in losses can be attributed to its successful cost reduction initiatives, with all operating costs decreasing sequentially and on a year-over-year basis.
Another highlight of Jumia’s Q1 2023 results is the remarkable 70 per cent reduction in marketing and advertising expenses. This disciplined approach to marketing investments has led to an improvement in marketing efficiency ratios, with sales and advertising expenses per order decreasing by 58 per cent and as a percentage of GMV improving by 451 basis points. Despite the significant cut in marketing expenditures, Jumia still managed to achieve growth in revenue. While overall revenue experienced a slight decline of three per cent year-over-year, it demonstrated a substantial 24 per cent increase on a constant currency basis. Marketplace revenue, particularly commissions, experienced significant growth, increasing by 40 per cent year-over-year. This growth was driven by commission take-rate increases implemented in mid-2022.
Jumia’s ability to reduce marketing expenses while maintaining revenue growth reflects a fundamental shift in their approach to sustainable and cost-effective growth, the report said.
According to the report, fulfillment expenses decreased by 34 per cent year-over-year, aligning with the decline in orders, while fulfilment expenses per order, showed a notable improvement of 20 per cent. Sales and advertising expenses witnessed a remarkable reduction of 69 per cent year-over-year, indicating a more disciplined approach to marketing investments. General and administrative expenses also decreased by 16 per cent year-over-year, reflecting the impact of organisational changes implemented in the fourth quarter of 2022. These cost reduction efforts contributed to an overall operating loss reduction of 54% year-over-year. With a focus on enhancing the fundamentals of the platform and implementing comprehensive cost efficiency measures, Jumia remains on track to achieve long-term growth and profitability.
One of the standout takeaways from Jumia’s Q1 2023 earnings is its gross profit, which reached an impressive $28.6 million, marking a notable five per cent increase compared to the same period last year. Furthermore, the growth was even more substantial, reaching a monumental 24 per cent on a constant currency basis. The gross profit margin as a percentage of GMV improved significantly, rising to 14.4 per cent compared to 10.8 per cent in the same quarter last year. Jumia’s continued focus on driving operational efficiencies and implementing strategic initiatives led to significant year-over-year growth in gross profit, demonstrating Jumia’s ability to deliver value to its stakeholders.
While Jumia reported a total revenue of $46.3 million for Q1 2023, reflecting a marginal decline of three oer cent on a year-over-year basis however, when considering constant currency, the revenue increased by a noteworthy 24 per cent. Further findings showed Jumia’s payment solution, JumiaPay transactions, declined by 38 per cent. Despite the setback, 29 per cent of orders placed on the Jumia platform during the first quarter of 2023 were completed using JumiaPay, the financial report said.
Speaking on what to expect for the rest of the year, the CEO of Jumia, Francis Dufay, stated that the company would be shifting its strategy to pursue a different approach to growth.