African e-commerce giant, Jumia, has released a report of its earnings for the last quarter of 2021. 

The e-commerce platform shared healthy numbers as a result of accelerated growth across core usage KPIs. Some of the KPIs include orders, annual active customers and gross merchandise volume (GMV) - however, the markets responded differently with the stock price dropping by 20%.

Before sharing details of the report, Jumia had earlier changed the functional currency of its financial report from euros to dollars in Q2 2021. And this will continue into the foreseeable future.

Key highlights from the report

EBITDA: The e-commerce's adjusted earnings before interest, tax, depreciation, amortisation and operating losses in Q3 2021 went up by 94% and 93% year-over-year, respectively, to $52.5 million and $64 million.

The increase in loss was reportedly driven by a hike in the company’s investment in sales, advertising and technology. 

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The highlighted figure for sales and advertising expenses reached $24.0 million, up 228% year-over-year, while technology and content expenses upped by 27% to $9.4 million - a continuation of its return to aggressive advertising which slowed during the pandemic.

Speaking on this result, the company’s Co-CEOs Jeremy Hodara said: “We believe that these investments are long-term in nature and that accelerating growth will ultimately contribute to profitability, leveraging the strong efficiency gains achieved throughout 2020 and the first half of 2021.”

Jumia ended the quarter with $185 million in cash and cash equivalents and $399 million in financial assets.

Number of quarterly orders: Another major highlight from the report was the number of orders made on Jumia. The number reported reached an all-time quarterly high of 8.5 million, representing a 28% year-over-year growth. This remains the fastest growth rate of the past seven quarters, according to Jumia.

Number of annual consumers: A major update is the number of Jumia’s annual active consumers that reached 7.3 million with gross merchandise value (GMV) reaching $238 million, both up 8% year-over-year.

In the previous quarter, FMCG inventories and stores overtook fashion inventories as the fastest-growing category in terms of items sold. The former posted the highest ever volume number, almost doubling on a year-over-year basis.

Following that, food delivery, grew by almost 40% year-over-year. This category posted its highest ever quarterly volume with over 2 million orders, surpassing a previous record registered in the fourth quarter of 2020.

JumiaPay - a Fintech Ambition

In the second quarter, JumiaPay—Jumia’s financial and digital services—posted its largest-ever quarterly GMV processed. The company followed by disclosing in its third-quarter report that JumiaPay processed 36% of all orders on Jumia, a significant feat considering that it competes with numerous payment options. Riding on that wave, JumiaPay has continued to grow as the company expands the range of services available to consumers on JumiaPay App. 

In Nigeria for example, customers are now able to book bus tickets via the JumiaPay App, including a proprietary seat mapping selection that will be rolled out in other markets in the near future. In Egypt, JumiaPay added new consumers, including several universities which students can now pay their tuition fees online via the JumiaPay app as well as a major Arabic content streaming platform, Shahid.

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Optimistic about its fintech ambitions for JumiaPay, the company shared a picture of its roadmap. In the near future, it plans to launch payment cards, savings, insurance and ‘buy now pay later’ offerings to consumers of JumiaPay. For merchants, it’s looking to roll out point of sale, QR Codes, consumer financing, and other offerings.

Source: Jumia

Logistics services

For its logistics service to third parties, Jumia reached a major milestone by recording $1 million revenue from this service. It delivered 2.9 million packages on behalf of 766 clients, this was a 123% increase on the 1.3 million packages that were delivered in Q2 2021.

The company also mentioned that it took part in impact initiatives such as Giga, a global initiative to connect every school in Africa to the Internet and every young person to information, opportunity and choice. It also partnered with Solar Taxi, a modern eco-friendly mobility company, to provide an affordable and eco-friendly delivery solution in Ghana. 

The increase in losses incurred by Jumia in the third quarter wasn’t good news to some investors but the company sees it as a necessary path to achieving its goal of profitability and scale.

(Source)