Jumia narrows losses by more than 90% in Q4 amid focus on restoring orders and GMV growth

In 2023, Jumia revised its adjusted EBITDA loss guidance three times: from $100 million to $120 million in Q1; $90 million to $100 million in Q2; and $80 million to $90 million in Q3, a 57% to 61% reduction year-over-year if the target is met.

The company exceeded these expectations and significantly outperformed in this regard. It ended the year with $58.2 million in adjusted EBITDA loss, which represents a 68% decrease from 2022, and ended Q4 with less than $1 million in adjusted losses, which is a 99% decrease. Jumia’s operating loss shrank 90% to $4 million in the quarter and 64% to $73 million for the full year, improving its liquidity position and ending the year with $121 million. As per its Q4 2023 and full year financials,

These losses were primarily driven by reductions in tax provisions in specific countries, a non-recurring event that occurred in the last quarter of 2023. In addition, selling and advertising expenses were significantly reduced, falling 63% year-on-year, and general and administrative expenses also decreased. Contributed 54% less year-on-year. For the latter, Jumia’s notable exit from the food delivery business in Q4 led to layoffs and departmental restructuring, resulting in a 17% decline in employee costs within G&A expenses year-on-year.

“We will continue to look for greater efficiencies on a daily, monthly or weekly basis. We keep looking for new opportunities to be a little leaner and spend a little less money not only on employees but also on equipment, logistics, etc. In some countries, we have recognized that we may be a little weak in some departments. It’s an ongoing adaptation and we’re driving adjustments, so it’s business as usual for us,” Jumia CEO Francis Dufay said on a call with TechCrunch.

In addition to macroeconomic conditions such as currency devaluation affecting consumers’ purchasing power, Jumia’s strategic decisions including exiting the food delivery sector and reducing customer promotions led to a 4% decline in orders to 6.6 million, 16 million in active customers. Contributed to the reduction of %. 2.3 million, and GMV (gross merchandise value) declined 8% year-on-year to $233 million.

Nevertheless, the company remains optimistic that its focus on physical goods like electronics and fashion items will improve these metrics while keeping losses to a minimum. A modest indicator is quarter-on-quarter growth in quarterly active customers, orders and GMV by 16%, 17% and 42% respectively, driven primarily by the successful Black Friday and Christmas sales campaigns. The average order value for physical goods also increased, from $40.6 in 2022 to $45.5 in 2023, reducing the impact on the company’s revenue by a slight 2% year-over-year decline to $59.4 million Could.

“In 2024, we expect to further improve our economy and reduce cash usage better than in 2023 and achieve growth on orders and GMV, excluding foreign exchange impact,” Dufay said. “We will also maintain the same strategy on the marketing side so that we remain very prudent and conservative on all expenses and the overall cost base, and with that, we believe we have everything we need to grow profitably “

Investors have approved of Jumia’s cost-cutting measures throughout the year, sending its share price up 40% at the time of publication.

Meanwhile, JumiaPay’s total payment volume (TPV) stood at $59.3 million in Q4 2023, representing a 10% decline year-on-year. However, transactions increased and reached 3 million, an increase of 41% year-on-year; 45% of orders on the Jumia platform in Q4 2023 were fulfilled using JumiaPay, up from 31% in Q4 2022.