On Jumia’s recent quarterly earnings, let’s focus on JumiaPay, the double play for Jumia: “The total payment value (TPV) of its fintech arm, JumiaPay, grew by 36.7% to $70.7 million in the first quarter, primarily supported by solid growth in GMV. Total transactions on JumiaPay reached 3.2 million in Q1 2022, indicating a 32% year-over-year increase.” Also, JumiaPay was granted a Payment Service Solution Provider (“PSSP”) license by the Nigerian government. With that, it can process 3rd party transactions.
Great numbers but … the problem: losses: “Jumia’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss was $53 million in Q1 2022, a 70% year-over-year increase. But it’s a sequential-quarter drop from the $70 million recorded in Q4 2021”.
Wall Street is not happy; Jumia is down more than 6% as I write, losing some of the gains it picked yesterday. From all elements, Wall Street wants to see “profit” or a path to it in this company. Indeed, the best investors are profitable customers!
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Moving on: Jumia’s losses are not coming down. Last quarter, the company said it planned to spend up to $55 million in sales and advertising in the first half of 2022. So far, it has coughed out $18.8 million this quarter in that category, up 94% year-over-year.
The e-commerce company traded at $5.53 per share before its earnings call, a significant drop from the $25 range it traded in on the bourse this time last year. But its share prices fare better now at $6.87 (at the time of writing) as it has shown steady growth in the vital parts of its business in its earnings report. But mounting losses with profitability far in the future, blended with continued share sell-offs of tech companies from Q4 2021 up until now, has contributed to its depressed valuation compared to historical levels.
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Jumia has been searching for the missing profitability, but it hasn’t located the coordinates, so the search continues.
The gains of JumiaPay are still tied to Jumia e-commerce, so it’s not like it’s smashing those numbers independently.
Jumia may never become profitable, it all depends on how far the carriers are willing to go, before everyone gives up.
Thanks for the info. I have been taking a close study at jumia for my case study.