E-commerce giant, Jumia has denied fraud allegations levelled against it by Citron Research regarding irregularities in its listing document, last week, Jumia shares lost a quarter of its value.
Sacha Poignonnec, co-chief executive and co-founder Jumia, said the company “completely stands by” the numbers it included in its initial public offering filings, which were questioned by Citron.
“We will not be distracted by those who seek to create doubt to profit at our expense and that of our long-term stakeholders.”
According to Poignonnec, the discrepancies between a private investor presentation and its official filings that Citron claimed as evidence of fraud were actually examples of figures from different time periods, and in some cases describing different aspects of the business, being inaccurately compared.
He added that the co-chief executive Jeremy Hodara did not profit from the sale and repurchase of the company’s Tanzania business, which was another issue raised by Citron.
“Jeremy did not profit from these transactions,” he said. He said the company was “looking at our options”, including regulatory and legal options, in response to the allegations.
Andrew Left editor at Citron said that he welcomed an official challenge from the company. “There’s nothing that would make me happier — I would walk into the SEC office tomorrow, me against Jumia,” he said.
The Africa-focused e-commerce company released its Q1 2019 results which showed 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, 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. Brand recognition and gradual migration of Nigerian consumers to digital shopping improved revenue and merchandising volume.
The company’s active consumers increased from 3m in Q1 2018 to 4.3m in Q1 2019, representing a rise of 43% Year-on-Year while on a Quarter-to-Quarter basis active consumers grew from 4m in Q4 2018 to 4.3m in Q1 2019.
Increased Monetisation of the order-to-delivery process was a robust 102%. Market place revenue rose from Euros 7.9m to Euros 16m in absolute terms.
Gross Profit margin as a percentage of Gross Merchandise Volume GMV increased from 5.6% in Q1 2018 to 6.5% in Q1 2019, as a result of the increased GMV monetization rate. Jumia’s Gross Profit also exceeded fulfilment expense in Q1 2019.
Leveraging on its brand awareness and localized marketing approach, Jumia was able to achieve an improved 2.05% of marketing efficiency in Q1 2019, bringing the Sales & Advertising expense own from 7.2% of GMV in Q1 2018 to 5.1% in the Q1 2019.
However, the problem that still makes the books sour, is the persistence of cash purchases which Poignonnec says the company is addressing frontally in 2019 by increasing digital transactions to reduce the incidence of returned items and purchase cancellation.
Jumia, which operates in 14 African countries, reported a loss of €45.4m in the first quarter, against a €34.2m loss in the same period a year earlier. Revenues rose 12.3 per cent from a year earlier, to €31.8m. The company also announced a partnership with Mastercard for its payments system JumiaPay.