African e-commerce giant Jumia reported its second quarter financial performance today. In the wake of its financial report this morning, Jumia’s stock rose sharply, gaining more than 15% in early trading to $8.12 per share and rising slightly to $8.30 per share at press time.
What drove its stock higher? Jumia showed growth in most performance metrics in the second quarter, including revenue that beat expectations.
The company’s performance indicators were up by double digits compared to the same quarter last year for active users, orders, GMV and revenue. Active customers reached 3.4 million in Q2 2022, up 25% on a year-over-year basis. Orders rose 35% year-over-year to 10.3 million. GMV increased 21% to $271.1 million over the same time period, while revenue increased 42% to $57.3 million. (The same indicators were increased compared to the indicators of the first quarter of 2022, except for the results of the previous year.)
Jumia also improved on 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 has posted its fastest growth rates in five quarters.
Discussing its results, the company said its results came despite “a volatile macro context with increasing pressure on consumer spending and access to supply for our retailers,” according to Jumia co-CEO Sacha Poignonnec during its earnings call. profits. “This happened even with a very strong discipline for marketing investments on our part. It’s a clear sign that our focus on everyday relevant products, competitive pricing and customer experience is paying off.”
Q2 2022 was a quarter of a continuation without any particular strategy changes, Poignonnec told TechCrunch in a call. According to the executive, Jumia’s results show it is progressing on the road to profitability thanks to more consumers placing more orders leading to expanded revenue and disciplined cost control.
“We will double down on this to show some meaningful steps towards profitability, which remains the central objective of our strategy,” the co-chief executive said.
How is the company doing on the profit front? Jumia’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased last quarter compared to the year-ago period (up 37.4%) and Q1 2022; the company ended the quarter with a $57.2 million adjusted EBITDA loss; for the first half of the year, this figure reaches 112.5 million dollars.
Poignonnec said the company plans to cut expenses and reduce its adjusted EBITDA loss to between $87 million and $107 million in the second half of 2022 (12% to 29% lower than what it recorded in the second half of 2021 ). If achieved, Jumia will be able to meet its expectations of losing no more than $220 million this year, in adjusted terms.
Inside the numbers
Jumia’s market KPIs detailed some upbeat news for the company. In terms of category trends, everyday categories (which include fashion, beauty, FMCG, home-focused items, food delivery and JumiaPay) accounted for 66% of the company’s GMV compared to 34% from phones and electronics. The ratio was 57%-43% as of Q2 2020. The metrics changed largely thanks to Jumia’s Q2 2021 decision to drive frequent purchases of FCMGs instead of bigger-ticket appliances and electronics.
Similarly, Jumia saw an improvement in quarterly purchase frequency, reaching 3.1 orders per user in Q2 2022 (an all-time high) compared to 2.8 in Q2 2021. “People are they see inflation and are facing price increases. And of course, the fact that we offer those categories makes us attractive and relevant to the consumer. Everyday product positioning is a big driver for us, and what’s driving growth is that consumers are coming back more often and buying 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 recorded impressive numbers in the second quarter, with its TPV growing 31% year-on-year to $74.2 million and transactions reaching 3.4 million in the second quarter of 2022, up 25% from year to year. The platform is yet to get its Payment Service Solution Provider (“PSSP”) license – granted by Nigeria’s apex bank, the Central Bank of Nigeria to process payments for third-party businesses – to be used in Nigeria. Poignonnec said it is only a matter of time before the service is 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 arm by 103% in the volume of packages processed to 2.6 million packages in Q2 2022 compared to 1.3 million a year ago. But this is a smaller figure than what it achieved last quarter when it completed 3.5 million package deliveries.
Jumia closed the second quarter of 2021 with a liquidity position of $637.7 million. A year later, this has almost halved to $350.8 million in Q2 2022: $53.8 million in cash and $297.0 million in cash equivalents.