from Jumia Technologies AG (NASDAQ:JMIA)
Jumia Reports Third Quarter 2024 Results
Continued Execution on Fundamentals, Resilient Top-Line Growth in Challenging Macro Conditions and Significantly Improved Liquidity Position
LAGOS, NIGERIA / ACCESSWIRE / November 7, 2024 / Jumia Technologies AG (NYSE:JMIA) ("Jumia" or the "Company") announced today its financial results for the third quarter ended September 30, 2024.
Results highlights for the third quarter 2024
Revenue of $36.4 million, down 13% year-over-year, or up 9% in constant currency.
GMV of $162.9 million, down 1% year-over-year, or up 29% in constant currency.
Operating loss of $20.1 million compared to $18.3 million in the third quarter of 2023, up 10% year-over-year, and up 6% in constant currency.
Adjusted EBITDA loss of $17.0 million compared to $14.8 million in the third quarter of 2023, up 15% year-over-year, and up 10% in constant currency.
Loss before income tax from continuing operations of $17.8 million in the third quarter of 2024, down 17% year-over-year or down 2% in constant currency.
Liquidity position of $164.6 million, an increase of $71.8 million in the third quarter of 2024, that includes the net proceeds from the August 2024 At-the-Market (ATM) offering, compared to a decrease of $19.0 million in the third quarter of 2023.
Net cash flows used in operating activities of $26.8 million compared to $24.0 million in the third quarter of 2023.
Company Commentary
"In the third quarter we continued to strengthen the underlying fundamentals of the business. We saw growth in both Quarterly Active Customers, up 1% year-over-year, and Orders, up 4% over the prior year, as we continue to focus on diversifying our supply and strengthening the Jumia value proposition. We are encouraged to see continued resilience in our usage and business fundamentals despite the significant first quarter currency depreciation headwinds in Nigeria and Egypt that continue to impact reported GMV and topline revenue.
We undertook several major operational steps in the quarter, including improvements to our logistics network and the consolidation of our warehouse footprint to enable greater efficiencies and increase supply capacity. While these changes negatively impacted operations and expenses in the third quarter, we believe that these efforts position us well to scale and drive profitable growth as we expand our footprint beyond the major cities ("upcountry"). We also recently decided to cease operations in South Africa and Tunisia in order to better allocate our resources to markets with stronger growth potential. While these updates will have a near-term impact on our operations and financial performance, we believe that our efforts position the business well to scale on our path to profitability.
As we move forward, we are committed to taking a disciplined approach to managing our operations. The proceeds of our recent capital raise will help to accelerate our growth trajectory. However, we are committed to accelerating our strategy in a disciplined manner that avoids excess spending and will position the business for profitable growth over the long term." - Francis Dufay, CEO
SELECTED FINANCIAL INFORMATION
Financial Results for the third quarter ended September 30, 2024
For the three months ended | For the nine months ended | |||||||||||||||||||||||||||||
As reported | YoY | Constant currency | YoY | As reported | YoY | Constant currency | YoY | |||||||||||||||||||||||
In USD million, unless otherwise stated | September 30, 2023 | September 30, 2024 | September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2024 | ||||||||||||||||||||||||
Revenue | 41.7 | 36.4 | (12.7) | % | 45.5 | 9.0 | % | 127.0 | 121.8 | (4.1) | % | 161.0 | 26.7 | % | ||||||||||||||||
Gross Profit | 22.2 | 22.9 | 2.9 | % | 29.0 | 30.3 | % | 70.0 | 75.6 | 8.0 | % | 101.4 | 44.7 | % | ||||||||||||||||
Fulfillment expense | (9.8 | ) | (10.3 | ) | 5.4 | % | (11.9 | ) | 21.7 | % | (32.2 | ) | (29.0 | ) | (9.9) | % | (36.8 | ) | 14.3 | % | ||||||||||
Sales and Advertising expense | (4.4 | ) | (4.4 | ) | (1.1) | % | (5.9 | ) | 33.8 | % | (15.2 | ) | (12.5 | ) | (17.7) | % | (18.0 | ) | 17.9 | % | ||||||||||
Technology and Content expense | (9.7 | ) | (9.7 | ) | (0.6) | % | (9.9 | ) | 2.0 | % | (31.6 | ) | (27.5 | ) | (13.0) | % | (28.3 | ) | (10.3) | % | ||||||||||
G&A expense, excluding SBC(1) | (15.5 | ) | (17.6 | ) | 14.0 | % | (19.5 | ) | 26.0 | % | (56.9 | ) | (50.5 | ) | (11.3) | % | (59.6 | ) | 4.8 | % | ||||||||||
Adjusted EBITDA(1) | (14.8 | ) | (17.0 | ) | 15.0 | % | (16.3 | ) | 10.1 | % | (57.6 | ) | (37.6 | ) | (34.7) | % | (33.7 | ) | (41.4) | % | ||||||||||
Operating Income/ (Loss) | (18.3 | ) | (20.1 | ) | 9.6 | % | (19.4 | ) | 5.8 | % | (68.8 | ) | (48.7 | ) | (29.3) | % | (46.4 | ) | (32.6) | % | ||||||||||
Loss before Income tax from continuing operations(2) | (21.4 | ) | (17.8 | ) | (16.8) | % | (19.2 | ) | (1.5) | % | (81.5 | ) | (79.9 | ) | (1.9) | % | (66.0 | ) | (5.0) | % | ||||||||||
(1) See "Non-IFRS and Other Financial and Operating Metrics" for a reconciliation of non-IFRS measures to IFRS measures.
(2) Loss before income tax from continuing operations in constant currency, and the corresponding year-over-year change, excludes the impact of foreign exchange recorded in finance income/costs. Net foreign exchange gains/(losses) in reported currency were $(1.9) million in the third quarter of 2023 and $1.7 million in the third quarter of 2024. For the nine months ended September 30, these amounts were $(12.0) million in 2023 and $(11.7) million in 2024, respectively.
Revenue
Revenue[1] of $36.4 million, down 13% year-over-year or up 9% year-over-year on a constant currency basis.
Marketplace revenue, comprised of commissions, fulfillment revenue, value added services and marketing and advertising revenue was $20.6 million, up 7% year-over-year or up 37% year-over-year on a constant currency basis. The increase was primarily driven by commissions from third-party corporate sales in Egypt, partially offset by the impact of foreign exchange devaluations.
First-party sales revenue was $15.5 million, down 29% year-over-year or down 14% year-over-year on a constant currency basis, driven by lower first-party corporate sales in Egypt, and the impact of foreign exchange.
Gross Profit
Gross profit was $22.9 million, up 3% year-over-year or up 30% year-over-year on a constant currency basis, largely in line with the evolution of third-party sales.
Gross profit as a percentage of GMV was flat at 14%, when compared to the third quarter of 2023.
The percentage of orders of physical goods benefiting from customer incentives decreased from 27% in the third quarter of 2023 to 26% in the third quarter of 2024.
Expenses
Fulfillment expense amounted to $10.3 million, up 5% year-over-year or up 22% year-over-year on a constant currency basis. This increase was primarily driven by one-time costs associated with ongoing warehouse consolidations and growth in orders. The impact was partially offset by currency devaluations, primarily in Nigeria and Egypt. The Company expects these consolidation efforts to drive operational efficiencies and cost savings in the coming quarters.
Fulfillment expense per Order, excluding JumiaPay app Orders, which do not incur logistics costs, remained flat year-over-year at $2.40 or up 16% year-over-year on a constant currency basis.
Sales and Advertising expense remained flat year-over-year at $4.4 million or up 34% year-over-year on a constant currency basis, driven by targeted spending on online marketing.
Technology and Content expense remained flat year-over-year at $9.7 million or up 2% year-over-year on a constant currency basis. This was driven by savings from reduced staff costs offset by ongoing investments to improve the platform's quality and integrity.
General and Administrative expense was $18.9 million, up 13% year-over-year or up 24% year-over-year on a constant currency basis.
General and Administrative expense, excluding share-based compensation, was $17.6 million, up 14% year-over-year or up 26% year-over-year on a constant currency basis.
The year-over-year increase in General and Administrative expense was primarily due to the non-recurrence of a $6.0 million provision reversal recorded in the third quarter of 2023, which did not recur in the third quarter of 2024. The impact was partially offset by reductions in various cost components, including staff costs, reflecting the Company's ongoing cost management initiatives.
Loss before income tax from continuing operations
Operating loss was $20.1 million, up by 10% year-over-year or up 6% year-over-year on a constant currency basis. This increase reflects the net impact of revenue and expense dynamics described above, primarily driven by the absence of the prior year's non-recurring tax provision benefit recognized under General and Administrative expense.
Loss before income tax from continuing operations was $17.8 million, down 17% year-over-year. This improvement was primarily driven by a shift from net foreign exchange losses in the third quarter of 2023 to net foreign exchange gains in the third quarter of 2024. These positive effects more than offset the increase in operating loss, particularly the impact on General and Administrative expense from the non-recurrence of the prior year's tax provision benefit.
Loss before income tax from continuing operations, which excludes the impact of foreign exchange recorded in finance income and finance costs, was down 2% in constant currency.
Cash Position
As of September 30, 2024, the Company's liquidity position was $164.6 million, comprised of $85.8 million in cash and cash equivalents and $78.8 million in term deposits and other financial assets.
Jumia's liquidity position increased $71.8 million in the third quarter of 2024 as compared to a decrease of $19.0 million in the third quarter of 2023, and a decrease of $8.7 million in the second quarter of 2024. This increase in the third quarter of 2024 was primarily driven by the proceeds from the Company's recently completed ATM offering.
The net proceeds from the offering were $94.7 million after accounting for all equity transaction costs. In the statement of cash flows for the third quarter of 2024, Jumia reported $96.7 million related to this transaction. The remaining transaction costs will be reflected in subsequent periods as they are paid
Net cash flow used in operating activities was $26.8 million in the third quarter of 2024 as compared to $24.0 million in the third quarter of 2023, driven by negative working capital contribution, notably impacted by third-party sales cycles, and a one-time provision settlement of $1.8 million. The change in liquidity position in the third quarter of 2024 was also impacted by technology subscription fees, aimed at enhancing platform quality and integrity, and the continued optimization of the warehouse network.
Jumia continues to adhere to a disciplined cash management approach while advancing strategic growth initiatives.
USE OF PROCEEDS OF THE AUGUST CAPITAL RAISE
Following the completion of Jumia's August capital raise, which generated $94.7 million in net proceeds, the Company plans to allocate the funds to support key operational and strategic growth initiatives. Specifically, the Company expects that the proceeds will be directed towards:
Refocusing on the Company's most promising markets and opportunities: Stripping away non-strategic businesses and offerings, including ceasing operations in South Africa and Tunisia by year end 2024.
Improving vendor technology: Making investments to improve the Company's technology across several areas with a focus on the customer and vendor experience and improving overall operating efficiency.
Expanding customer acquisition: Amplifying efforts to attract and retain customers by leveraging relevant local marketing channels and diversifying the Company's marketing mix.
Scaling the Company's logistics network: Strengthening and expanding the Company's logistics capabilities to improve delivery efficiency, service quality and to continue extending the Company's footprint outside of major urban areas.
Expanding the Company's supplier base and overall assortment: Broadening the Company's supplier network and increasing our product offering to meet growing demand.
The precise allocation of these funds may vary based on future revenue, operational cash flow, and other influencing factors. Jumia retains broad discretion in deploying the net proceeds to ensure alignment with its long-term strategic goals.
[1]In addition to marketplace revenue and first-party sales, revenue included other revenue of $0.6 million in the third quarter of 2023 and $0.3 million in the third quarter of 2024. In the nine months ended September 30, 2024, other revenue was $1.3 million compared to $1.8 million in the nine months ended September 30, 2023.
SELECTED OPERATIONAL KPIs
Marketplace KPIs
For the three months ended | For the nine months ended | ||||||||||||||||||||||||||||||
As Reported | YoY Change | Constant currency | YoY Change | As Reported | YoY Change | Constant currency | YoY | ||||||||||||||||||||||||
September 30, 2023 | September 30, 2024 | September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2024 | ||||||||||||||||||||||||||
Quarterly Active Customers (million) | 2.0 | 2.0 | 1.1 | % | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||
Orders (million) | 5.7 | 5.9 | 4.1 | % | n.a. | n.a. | 14.7 | 15.3 | 4.3 | % | n.a. | n.a. | |||||||||||||||||||
GMV (USD million) | 164.1 | 162.9 | (0.7) | % | 211.6 | 28.9 | % | 516.5 | 514.5 | (0.4) | % | 693.7 | 34.3 | % | |||||||||||||||||
TPV (USD million) | 42.4 | 45.0 | 6.1 | % | 59.1 | 39.3 | % | 133.0 | 136.3 | 2.5 | % | 210.5 | 58.3 | % | |||||||||||||||||
JumiaPay Transactions (million) | 2.7 | 3.0 | 9.8 | % | n.a. | n.a. | 5.4 | 6.8 | 25.3 | % | n.a. | n.a. | |||||||||||||||||||
GMV declined by 1% year-over-year to $162.9 million and Orders increased by 4% year-over-year. The decline in GMV was heavily impacted by currency devaluations, as on a constant currency basis GMV increased by 29% year-over-year. The growth in Orders was driven by continued efforts to enhance and diversify Jumia's product assortment as part of the increased focus on the customer value proposition.
Jumia continues to take a disciplined and selective approach to marketing spend focused on targeting more efficient marketing channels, such as search engine optimization ("SEO"), customer relationship management ("CRM") and relevant offline local channels (e.g. radio and print) while also leveraging its JForce network.
As a result of these efforts, Jumia is attracting what it believes to be a stickier and higher quality customer base as evidenced by a 304 basis point year-over-year improvement in repurchase rates with reference to the second quarter of 2024.
Jumia's cohort analysis indicates that 39% of new customers, who placed an order for a product or a service on the platform in the second quarter of 2024, completed a second purchase within 90 days. This represents an improvement compared to 36% of new customers from the second quarter of 2023, who reordered within 90 days.
JumiaPay Transactions reached 3.0 million, an increase of 10% year-over-year mainly driven by increased penetration of JumiaPay on delivery in the third quarter of 2024.
Ongoing efforts to streamline the user experience and the continued rollout of JumiaPay on delivery to increase cashless orders has positioned JumiaPay as an enabler of the Company's e-commerce platform.
TPV increased by 6% year-over year, largely due to the increased use of JumiaPay on delivery. TPV as a percentage of GMV increased to 28% in the third quarter of 2024 compared to 26% in the third quarter of 2023.
EVENTS AFTER THE REPORTING DATE
In October 2024, Jumia announced its decision to cease operations in South Africa and Tunisia by year end 2024. In the first nine months of 2024, South Africa and Tunisia together accounted for just 2% of orders and 3% of GMV. The Company anticipates that ceasing operations in South Africa and Tunisia may temporarily negatively impact its financial metrics. Short term effects will include employee termination costs, lease termination costs, asset liquidation and impairments. In the longer term, these changes to Jumia's geographic footprint are expected to enhance operational efficiency and resource allocation, enabling the Company to focus on markets with stronger growth trajectories. The Company believes this strategic realignment will support its path toward sustainable growth.
GUIDANCE
Jumia remains committed to reducing its losses and accelerating its progress towards cash efficiency and profitable growth.
The Company reiterates its outlook for 2024:
It aims to further reduce its cash utilization as compared to FY 2023.
Based on the positive impact of its growth strategy, Jumia projects an increase in both orders and GMV in 2024, excluding the potential impact of foreign exchange.
The above forward-looking statements reflect Jumia's expectations as of November 7, 2024, are subject to change and involve inherent risks, which are partially or fully beyond its control. These risks include but are not limited to political and economic conditions across countries where it operates, the broader economic impact of the ongoing regional conflicts and global supply chain issues.
CONFERENCE CALL AND WEBCAST INFORMATION
Jumia will host a conference call to discuss its third quarter 2024 results at 8:30 AM ET on November 7, 2024.
Interested parties can access the conference at :
US Dial-in (Toll Free): 888-506-0062
International Dial-in: 973-528-0011
United Kingdom Dial-in: 44 20 3355 4169
Entry Code: 910892
The live call will also be available via webcast on Jumia's Investor Relations Website: https://investor.jumia.com/investor-relations/default.aspx.
A replay of the call will be available until Thursday, November 21, 2024 and can be accessed by dialing 877-481-4010 for toll free access or 919-882-2331 for international access using the replay passcode: 51388.
(UNAUDITED)
Consolidated statement of comprehensive income as of September 30, 2023 and 2024
For the three months ended | |||||||