Despite efforts at cutting costs and reducing losses, Jumia’s loss widened by 4.8 percent to $237.84 million in 2022 from $226.9 million in 2021.
In its financial statement obtained by BusinessDay, Jumia said cost reduction is a key priority in the company’s strategy going into 2023.
Some of the locations affected include Egypt, Ghana and Senegal. Also, Jumia’s Dubai office was shut down, with the firm relocating its staff to Africa.
Jumia disclosed that its “logistics-as-a-service” business was suspended in some markets, while food delivery operations were discontinued in Egypt, Ghana and Senegal.
“In the fourth quarter of 2022, we undertook significant headcount reductions, resulting in over 900 position terminations, corresponding to a 20 percent headcount reduction.
“We have streamlined our organisational structure, creating leaner, more effective teams fully committed to the execution of our strategy.
“As part of our streamlining efforts, we have significantly reduced our presence in Dubai where certain management functions were located, reducing headcount by over 60 percent. Most of the remaining staff are being relocated to our African offices, closer to our consumers, sellers, and operations.
“We expect these headcount reductions to allow us to save over 30 percent in monthly staff costs starting from March 2023, as compared to the October 2022 staff cost baseline. The implementation of these organisational changes resulted in $3.7 million in one-off restructuring costs booked in the fourth quarter of 2022,” Jumia said.
The Pan-African e-commerce platform also reported total revenue of $221.9 million in 2022, up 25 percent from $177.9 million in 2021 owing to revenue growth across the board.
Marketplace revenue grew by 20.6 percent to $130.5 million in 2022 from $108.2 million in 2021, primarily driven by a 67.4 percent increase in marketing and advertising.
“This growth was supported by the strong momentum in third-party advertiser revenue which more than doubled year-over-year. This reinforces the attractiveness of Jumia as an advertising platform for sellers and third-party advertisers Alike,” Jumia said in a note.
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Supported by a robust increase in warehousing services revenue, and increased logistics revenue from local and international sellers due to higher pricing of logistics services to sellers, value-added services grew by 28 percent to $32.8 million in 2022, while commissions grew by 35.3 percent to $47.8 million in 2022 due to commission take-rate increases implemented earlier in the year.
Fulfillment revenue was however down by 12.7 percent to $31.8 million in 2022 as a result of the prior deployment of next-day free shipping.
“We are currently making adjustments to the free shipping program, introducing higher minimum basket size thresholds and further restricting geographical scope in order to support unit economics,” Jumia said.
The e-commerce company also generated $85 million from first-party revenue in 2022, 30.5 percent up from $65.1 million in 2021, and $6.4 million from other revenue, 38.5 million up from $4.6 million in 2021.
However, the cost of revenue grew faster than its total revenue by 33.2 percent to $89.77 million in 2022 from $67.39 million in 2021.
It also reported a 12.4 percent increase in fulfillment expenses totaling $99.7 million in 2022 from $88.7 million in 2021. This was a result of volume growth with orders up 14.4 percent during the period to 38.9 million in 2022, as well as inflationary pressure on fuel and wages.
“We intend to improve fulfillment economics by driving scale efficiencies and enhancing productivity in our physical infrastructure,” Jumia said.
Selling & advertising expenses declined by 7.3 percent to $75.9 million in 2022 from $81.9 million in 2021, owing to discipline in marketing investments, which led to an improvement of marketing efficiency ratios with sales & advertising expense per order decreasing by 24 percent to $1.95 in 2022 from $2.41 in 2021.
Furthermore, technology and content expenses increased by 41 percent to $55.3 million in 2022 from $39.2 million in 2021, partly as a result of higher hosting fees and technology staff costs increases during the year.
However, general and administrative expenses dipped by 8.6 percent to $130.4 million in 2022 from $142.8 million in 2021.
Due to the high-interest rate environment in 2022, Jumia reported an 83 percent increase in finance costs to $18.86 million in 2022 from $10.33 million in 2021, while finance income declined by 39 percent to $14.98 million in 2022 from $24.76 million in 2021.
“In the fourth quarter of 2022, we started implementing our strategy to accelerate our path to profitability and further strengthen our fundamentals. While the fourth quarter results only reflect a fraction of the actions we are taking, we are seeing early signs of success and remain focused on execution. In light of these encouraging signs, we expect a sharp reduction in Adjusted EBITDA loss from $207 million in FY2022 down to $100-120 million in FY2023,” commented Francis Dufay, CEO of Jumia.
“We remain more than ever confident about the growth opportunity across our markets and are making fundamental improvements to our consumer value proposition which will help us drive sustainable long-term growth,” he added.
Total assets declined by 43 percent to $330 million in 2022 from $578 million in 2021, while total shareholder’s equity declined by 58 percent to $175 million in 2022 from $413 million in 2021 on the back of $1.96 billion accumulated losses.
Net cash flow from operating activities for the period was negative amounting to $240 million in 2022, indicating that the e-commerce company is not generating cash from its core business activities.
Net cash flow from investing activities for the period stood at $213 million in 2022 primarily due to the $220 million movement in term deposits and other financial assets, $4.76 million in interests received, and $11 thousand from the proceeds it got from the sale of property, plants, and equipment during the period.
Net cash flow from financing activities on the other hand was negative, amounting to $8.76 million due to the repayment of lease liabilities and lease interests.
Consequently, cash and cash equivalents for the period decreased by 38 percent to $72 million in 2022 from $117 million in 2021.
