Jumia Q1 Earnings: Losses Continue to Fall, Growth Slows

Jumia Reports Q1 2021 Earnings Amidst Pandemic Recovery

African e-commerce leader Jumia has released its financial results for the first quarter of 2021, concluding in March. Although the platform experienced growth in its customer base, a decline in revenue indicates ongoing repercussions from the COVID-19 pandemic.

Regional Restrictions and Supply Chain Impacts

While many African regions where Jumia operates have lifted lockdown measures, certain nations, including Morocco and Kenya, maintain curfew restrictions. Jumia stated that these limitations didn’t significantly alter consumer habits, but did cause disruptions within its supply and logistics network – particularly impacting its food delivery service, JumiaFood.

Financial Performance Overview

Having secured over $570 million in the last six months to bolster its financial standing, Jumia reported Q1 revenues of €27.4 million. This represents a 6% decrease compared to the €29.3 million recorded in Q1 2020. Its operating loss for Q1 2021 totaled €33.7 million, with an adjusted EBITDA loss of €27.0 million. Both figures experienced reductions of 23% and 24% respectively, year-over-year, as the company progresses towards profitability.

Path to Profitability

Jumia has historically operated at a loss, but co-CEOs Jeremy Hodara and Sacha Poignonnec have consistently emphasized the company’s commitment to achieving profitability. This objective was reiterated during today’s investor discussions.

“Our first-quarter results demonstrate consistent progress towards profitability. The key factors driving this trend are strategic growth, measured monetization efforts, and continued cost control. The first quarter of 2021 marked the sixth consecutive quarter of positive gross profit after fulfillment expenses, reaching €6.2 million – more than double the previous year’s figure. Simultaneously, Adjusted EBITDA loss decreased by 24% year-over-year, totaling €27.0 million,” they explained in an official statement.

Key Metrics and Growth Areas

Beyond reduced losses, Jumia showcased other positive indicators. The platform’s active customer base expanded by 7% year-over-year, reaching 6.9 million. Orders also increased by 3% to 6.6 million, reversing a downward trend observed in the previous two quarters. However, the total value of goods sold through Jumia during the quarter (GMV) amounted to €165.0 million, a 13% decrease from the €189.6 million reported in Q1 2020.

The company’s gross profit also rose to €20.4 million in 2020, a year-over-year increase of 11% from €18.4 million in Q1 2020.

Factors Affecting Revenue

Jumia attributed the revenue decline to two primary factors. Firstly, currency devaluation impacted the value of the Nigerian naira, Egyptian pound, and Kenyan shilling against the euro – the currency used for reporting. The company reported declines of 15%, 9%, and 19%, respectively, against the euro in Q1 2021. Secondly, the company’s top-performing product category, phones and electronics, experienced weaker performance. In Q1 2020, these items represented 45% of GMV, falling to 37% this quarter.

JumiaPay Performance

JumiaPay, the company’s payment platform, continued to demonstrate moderate growth. Last year, the platform processed 2.3 million transactions totaling €35.5 million. In Q1 2021, JumiaPay transactions increased by 6.7%, reaching 2.4 million transactions year-over-year. Total payment volume also grew by 21% to €42.9 million.

Expanding Financial Services

Jumia has enhanced the capabilities of its payment product. It now provides access to short-term credit for SMEs across the continent, utilizing business and transactional data to assess creditworthiness anonymously. The company disbursed 380 loans in Q1 2021, a 90% increase from Q1 2020. These loans were extended to 291 sellers on its platform, a 62% increase from the number of sellers who received loans last year.

Cash Position and Market Reaction

Jumia reported €485.6 million in unrestricted cash at the end of Q1 2021. This includes approximately €205 million raised from an offering completed on March 30, 2021, and an additional €88 million in cash received in April 2021.

Prior to today’s earnings announcement, Jumia’s stock traded at $21.60 per share. Following the market opening this morning and as of this writing, the company’s share price has risen by approximately 3.2% to slightly over $24.21. Investors appear optimistic about the company’s growth potential, particularly its payments division and its pursuit of profitability, despite ongoing operating and adjusted EBITDA losses.