Jumia Technologies has released its 2019 first quarter (Q1) results which show strong momentum in gross merchandise volume (GMV) growth of 57.6 percent year on year (yoy) to €240 million in Q1 2019, from €152 million in Q1 2018. This is on the back of improved numbers of active consumers and spend per active consumer which has seen its marketplace revenue grow by 102.3 percent.
The company, which suffered a sharp fall in its share price by over 50 percent after being accused of fraud by Citron last week, showed strong improvements in its books, growing its active consumers by 1.3 million to 4.3 million in Q1 2019, from 3 million in 2018.
Jumia says that a major driver of growth in its active consumers is the continued expansion of its products and offerings, as well as the growing relevance of its platform which drives consumer adoption and engagement. The e-commerce company increased its technology and content expense by 15.3 percent from €5.1 million in 2018 to €5.9 million in 2019.
“We see a lot of great momentum in the business, especially as we delivered on our four major pillars which are to grow GMV, increase monetisation, drive Jumia Pay and improve efficiency,” said Sacha Poigonnec, co-CEO and co-founder of Jumia Technologies.
In Q1 2019, Jumia reduced operating loss by 356 basis points (bps), grew marketing and advertising by over 200 percent and sustained Jumia Pay momentum with a €50 million investment by Mastercard. This is a strategic deal that will help Jumia reduce the numbers from payment on delivery and spread its payment platform across other markets.
“We are seeing appetite from international sellers on the e-commerce platform, with keen interest to sell in Africa and you will see more of these partnerships in the future. We have already rolled out Jumia Pay in three new markets after being launched in Nigeria and Egypt and in the next few months, we will launch in other markets where we operate but for now, it’s too early to talk about how fast the evolution from prepaid to postpaid is,” Poigonnec said during a conference call to announce the results on Monday.
Showing pre-tax profit for the fiscal year ended 31 December 2018, Jumia reported a net loss of -€162 million in 2017. Its losses increased to -€170.1 million in 2018 as a result of economic crisis in Nigeria, its biggest market. However, the company is projected to reduce losses this year with -€166.3 million. Estimates for 2020 and 2021 are -€139.1 million and -€117.9 million, respectively.
“We are working towards reducing the amount of losses made each year and the company should see profitability in the last quarter of 2022,” Juliet Anammah, CEO, Jumia Nigeria, told BusinessDay.
The €50 million investment by Mastercard into Jumia, in a concurrent private placement with its initial public offering (IPO), marked another milestone in the development of Jumia Pay and a validation of its potential.
Jumia’s gross profit margin as a percentage of GMV increased from 5.6 percent in Q1 2018 to 6.5 percent in Q1 2019. The company has leveraged its strong brand awareness and highly localised market approach in Africa to gain 205bps of marketing efficiency this quarter, bringing sales and advertising expense from 7.2 percent of GMV in Q1 2018 to 5.1 percent in Q1 2019.
“We believe that Jumia is increasingly relevant for consumers and sellers in Africa. Looking ahead, we remain focused on our core operations, driving consumer adoption and engagement on our marketplace, increasing the penetration of Jumia Pay, while continuing to improve our financial profile and making a sustainable impact on the continent,” Poignonnec and Jeremy Hodara, co-CEOs of Jumia, said.
Jumia’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss as a percentage of GMV improved from negative 19.8 percent in Q1 2018 to negative 16.4 percent in Q1 2019. On January 1, 2019, Jumia adopted IFRS 16 accounting guidance. This led to a reduction of G&A by approximately €1.1 million in the first quarter of 2019 and an increase in depreciation and amortisation by approximately €1.3 million, resulting in a positive impact on adjusted EBITDA of €1.1 million in the first quarter of 2019 and a negative impact on operating loss of €0.2 million. Prior period amounts were not retrospectively adjusted.
Jumoke Akiyode-Lawanson
