Jumia, a leading e-commerce platform in Africa, announced its financial results for the third quarter (Q3) ended September 30, 2024, reporting a decline in revenue despite active customer growth.
The company’s Q3 2024 results revealed a 13% year-over-year revenue decline to $36.4 million, as the company grapples with stagnation despite attempts to weather tough macroeconomic conditions. The drop, largely attributed to currency depreciation in major markets like Nigeria and Egypt, has cast a shadow over otherwise promising operational gains.
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.
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.
Commenting on Jumia’s third quarter (Q3) report, the company’s CEO Francis Dufay howver expressed satisfaction with the company’s progress in strengthening its fundamentals despite revenue decline.
In his words,
“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.”
As the company moves forward, Dufay emphasized Jumia’s commitment to taking a disciplined approach to managing operations. He added that the proceeds from the recent capital raise, will help to accelerate the company’s growth trajectory.
In a bid to ensure profitability, Jumia has remained committed to accelerating its strategy in a disciplined manner that avoids excess spending which will position the business for profitable growth over the long term. The company undertook significant operational improvements, including logistics network optimization and warehouse consolidation.
Notably, Jumia recorded growth in orders which was driven by continued efforts to enhance and diversify its product assortment as part of the increased focus on the customer value proposition.
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.
The company’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.
Jumia’s Strategic Initiatives
• Operational Improvements: Jumia is focusing on improving its logistics network and consolidating its warehouse footprint to drive efficiency and increase supply capacity.
• Market Optimization: The company has ceased operations in South Africa and Tunisia to allocate resources to markets with stronger growth potential.
• Profitability Focus: Jumia is committed to reducing losses and accelerating its path to profitable growth.
While these inititiatives will have a near-term impact on its operations and financial performance, the company believes that its efforts will position the business well to scale on a path to profitability.
As Jumia navigates economic fluctuations, it is keeping profitability in sharp focus. It remains focused on executing its growth strategy, while reducing losses and accelerating its progress towards cash efficiency and profitable growth.
Furthermore, the e-commerce giant aims to further reduce cash utilization and increase orders and GMV in 2024, excluding foreign exchange impacts.
