Jumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year

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Jumia Technologies AG announced today its financial results for the quarter ended June 30, 2020.

Results highlights

  • Usage growth
    • Annual Active Consumers reached 6.8 million, a year-over-year increase of 40%.
    • Orders reached 6.8 million, a year-over-year increase of 8%.
    • GMV was €228 million, a year-over-year decrease of 13% compared to GMV1 in the second quarter of 2019.
  • Monetization development
    • Gross profit reached €23.3 million, a year-over-year increase of 38%.

Jumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year

  • Cost efficiency
    • Gross profit after Fulfillment expense reached a record €6.0 million, compared to a loss of €0.7 million in the second quarter of 2019.
    • Sales & Advertising expense was €7.2 million, the lowest absolute amount since 2017, and a year-over-year decrease of 51%. 12-month Sales & Advertising expense per Annual Active Consumer decreased by 38% from c. €10.8 in the second quarter of 2019 to €6.7 in the second quarter of 2020.
    • Adjusted EBITDA loss reached €32.9 million, decreasing by 26% on a year-over-year basis. Excluding a net expense of €3.6 million related to the class action settlement described below, Adjusted EBITDA loss would have been €29.3 million, decreasing by 34% on a year-over-year basis.
    • Operating loss was €37.6 million, a 44% decrease year-over-year.
  • JumiaPay development
    • TPV reached an all-time high of €53.6 million, a year-over-year increase of 106%, more than doubling on-platform TPV penetration from 9.9% of GMV in the second quarter of 2019 to 23.5% of GMV in the second quarter of 2020.
    • JumiaPay Transactions reached 2.4 million, a year-over-year increase of 36%, representing 35.6% on-platform penetration in terms of Orders.

“We have made significant progress on our path to profitability in the second quarter of 2020, with Operating loss decreasing 44% year-over-year to €37.6 million. This was achieved thanks to an all-time high Gross Profit after Fulfillment expense of €6.0 million and record levels of marketing efficiency with Sales & Advertising expense decreasing by 51% year-over-year,” commented Jeremy Hodara and Sacha Poignonnec, Co-Chief Executive Officers of Jumia.

“We are navigating these uncertain times of COVID-19 pandemic with strong financial discipline and operational agility which positions us to emerge from this crisis stronger and even more relevant to our consumers, sellers and communities.”

SECOND QUARTER 2020 – SELECTED BUSINESS HIGHLIGHTS

Driving usage and monetization

  • During the second quarter of 2020, we celebrated the 8th Jumia Anniversary with a commercial campaign themed “Stronger Together” aimed at supporting our communities in these challenging times. Our focus was to offer the broadest possible range of relevant products at the best prices, in partnership with a number of high-profile brands who made marketing investments on the Jumia platform as part of the event. Participating brands included: L’Oreal, Unilever, Nestle, Coca-Cola, P&G, Reckitt Benckiser, Henkel, Samsung, Xiaomi, Nokia, Intel, HP, Philips and many more.

Generating cost efficiencies

  • During the second quarter of 2020, we continued implementing a number of cost efficiency initiatives, including the logistics and fulfilment front.
    • Changed the volume pricing model from a price per successfully delivered package to a price per successful stop which led to a c. 8% reduction in cost per order for a given route. Our third-party logistics partners are now paid per successful stop at customer address, regardless of the number of packages included in the delivery.
    • Introduced a network of proximity warehouses (“mother-daughter” warehouse system) dedicated to essential products. This helps bring the assortment closer to customers, thereby reducing the delivery time as well as last-mile delivery costs.

Commitment to community

  • As a number of informal market sellers saw their livelihoods threatened by the onset of the COVID-19 crisis, Jumia partnered with the United Nations Development Programme (“UNDP”) to allow these sellers to reach consumers online. While the UNDP provided smartphones, airtime and data to selected market sellers, Jumia trained these sellers on the basics of selling online. This initiative was piloted in Uganda and brought on board more than 1,000 sellers who are now able to offer fresh produce to consumers via the Jumia Food on-demand delivery app.

Litigation update

  • As previously disclosed, several putative class action lawsuits were filed in the U.S. District Court for the Southern District of New York and the New York County Supreme Court against us and other defendants, including current and former members of our supervisory and management boards. The cases assert claims under federal securities laws based on alleged misstatements and omissions in connection with, and following our initial public offering. On August 11, 2020, we reached an agreement to fully resolve all of the actions, subject to standard conditions including court approval. Under this agreement, in which the defendants do not admit any liability or wrongdoing, Jumia will make a settlement payment of $5 million, $1 million of which will be funded by insurance coverage.

SELECTED OPERATIONAL KPIs

  • Annual Active Consumers reached 6.8 million in the second quarter of 2020, up 40% compared to the second quarter of 2019, Orders reached 6.8 million up 8%, while GMV was €228.3 million, down 13% on a year-over-year basis.
  • There were a number of drivers behind the usage performance during the quarter:
    • We decided to reduce our Sales & Advertising expense by 51% year-over-year in light of the macro uncertainty and to support our path to profitability, allowing us to drive usage with a high level of marketing efficiency.
    • The effects of the business mix rebalancing continued playing out during the second quarter of 2020, affecting GMV in particular. To support our path to profitability, we decreased promotional intensity and consumer incentives on lower consumer lifetime value business while increasing our focus on every-day product categories to drive consumer adoption and usage. In the second quarter of 2020, the sharpest year-over-year GMV contraction was registered in the phones category. The fastest-growing categories in GMV terms were beauty & personal care, which includes hygiene products sold as part of the fight against COVID-19, alongside Fast Moving Consumers Goods (“FMCG”) and digital services which are every-day services such as airtime recharge or utility bills payments offered on our JumiaPay app. The strong momentum of essential, every-day categories on our platform speaks to the relevance of Jumia as part of the every-day life of consumers in Africa.
    • The COVID-19 pandemic continued to affect the business and its impact varied greatly from one country to the other:
      • In Nigeria and South Africa, we faced significant disruption as a result of movement restriction. This disruption persisted during the early part of the second quarter of 2020, before gradually easing towards the later part of the quarter. Our food delivery business, Jumia Food, which was negatively impacted by restaurant shutdowns starting mid-March, resumed normal operations in late May / early June in most cities where we operate the service.
      • Across the majority of our addressable market, we experienced no meaningful change in consumer behaviour, aside from increased demand for essential and every-day products and reduced appetite for higher ticket size, discretionary purchases. The nature of lockdown measures put in place consisted mostly of localized restrictions of movement and partial curfews rather than nationwide lockdowns, with the former leading to less drastic changes in consumer lifestyles and behaviour than all-encompassing, nationwide lockdowns. In selected countries, including in Morocco and Tunisia, where nationwide lockdowns were implemented, we experienced a surge in volumes starting mid-March with sustained momentum throughout the second quarter of 2020.
      • Across all geographies, we have seen increased demand from brands and sellers to join and expand their business on our platform as the COVID-19 crisis further established e-commerce as an important route to market.
  • TPV accelerated by 106% from €26.0 million in the second quarter of 2019 to an all-time high of €53.6 million in the second quarter of 2020, surpassing the record set during the fourth quarter of 2019 of €45.6 million. On-platform penetration of JumiaPay as a percentage of GMV increased to 23.5% in the second quarter of 2020, more than twice the level of penetration in the second quarter of 2019 of 9.9%.
  • JumiaPay Transactions increased by 36% from 1.8 million in the second quarter of 2019 to 2.4 million in the second quarter of 2020, with triple-digit growth of Transactions above €10, including prepaid purchases on the Jumia physical goods marketplace and Jumia Food platforms. Overall, 35.6% of Orders placed on the Jumia platform in the second quarter of 2020 were paid for using JumiaPay, compared to 28.3% in the second quarter of 2019.
Read Also:  Average price of Smartphone in Nigeria drops to $95

Revenue

  • Marketplace revenue reached €23.6 million in the second quarter of 2020, up 38% compared to the second quarter of 2019. This was mostly driven by an acceleration in Commissions and Marketing & Advertising revenue which increased by 68% and 50% year-over-year respectively. Commissions grew despite a decrease in GMV as a result of increased proportion in the mix of higher commission rate categories including fashion, beauty or FMCG. Marketing & Advertising continues to experience robust momentum as advertisers shift an increasing share of their spend from offline to online, favouring direct response formats.
  • First Party revenue decreased by 49% in the second quarter of 2020 compared to the second quarter of 2019. As our marketplace continues to gain depth, we are able to undertake fewer sales on a first-party basis. Shifts in the mix between first-party and marketplace activities trigger substantial variations in our Revenue as we record the full sales price net of returns as First Party revenue and only commissions and fees in the case of Marketplace revenue. Accordingly, we steer our operations not on the basis of our total revenue, but rather on the basis of Gross profit, as changes between third-party and first-party sales are largely eliminated at the Gross profit level.

Gross Profit

Gross profit increased by 38% to €23.3 million in the second quarter of 2020 from €16.8 million in the second quarter of 2019 as a result of the increase in Marketplace revenue

Fulfilment Expense

  • Fulfilment expense decreased by 2% in the second quarter of 2020 on a year-over-year basis while Orders increased by 8% over the same period. A number of operational improvements drove fulfilment expense efficiencies, including a change in the volume pricing model from a cost per package to a cost per stop as well as productivity enhancements in our fulfilment centres. Another contributing factor was a change in our mix of packages, with a reduced proportion of cross-border packages and packages shipped outside primary cities.
  • During the second quarter of 2020, Gross profit after Fulfillment expense reached a record €6.0 million compared to a loss of €0.7 million in the second quarter of 2019, demonstrating continued unit economics improvement as we grow usage on our platform.

Sales & Advertising Expense

  • Sales & Advertising expense decreased by 51% from €14.9 million in the second quarter of 2019 to €7.2 million in the second quarter of 2020, its lowest level in more than 3 years. This is driving strong marketing efficiency with Sales & Advertising expense per Annual Active Consumer decreasing by 38%, from €10.8 per Annual Active Consumer in the second quarter of 2019 to €6.7 in the second quarter of 2020.
  • This development is partly attributable to continued enhancements to our performance marketing strategy across search and social media channels, notably through more granular segmentation of our target market with differentiated campaigns and content for each segment.

General and Administrative Expense

  • General & Administrative expense excluding SBC reached €28.5 million, up 17% on a year-over-year basis. The increase was due to a settlement provision of €4.5 million.
  • Excluding the settlement provision, General & Administrative expense excluding SBC would have reached €24.0 million, down 2% on a year-over-year basis, mostly attributable to the cost rationalization initiatives undertaken to start from the end of 2019.
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Adjusted EBITDA

  • Adjusted EBITDA loss was €32.9 million in the second quarter of 2020, decreasing 26% on a year-over-year basis, demonstrating meaningful progress on our path to profitability.
  • Net settlement expense included in the Adjusted EBITDA amounted to €3.6 million and is calculated as a settlement provision of €4.5 million accounted for in G&A, net of insurance reimbursement of €0.9 million accounted for in Other Income. Excluding the net settlement expense of €3.6 million, Adjusted EBITDA loss would have been €29.3 million, decreasing by 34% on a year-over-year basis.

Operating loss

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Operating loss was €37.6 million in the second quarter of 2020, decreasing 44% on a year-over-year basis, demonstrating meaningful progress on our path to profitability.

Cash Position

At the end of June 30, 2020, we had €174.3 million of cash on our balance sheet. During the second quarter of 2020, our cash utilization, which corresponds to the change in Cash & cash equivalents taking into account exchange rate effects, was €16.8 million, a 69% decrease year-over-year. Cash utilization during the second quarter of 2020 was supported by a working capital inflow of €13.0 million resulting mainly from a longer payables cycle and improved accounts receivable management.

GUIDANCE

The ongoing COVID-19 pandemic, as well as the ensuing economic challenges, result in substantial uncertainty concerning our business and financial outlook.

We expect the effects of the business mix rebalancing to continue to play out over the course of 2020. Any supply and logistics challenges that we may encounter as a result of the COVID-19 pandemic may further exacerbate such effects. As a result, we currently expect continued GMV softness over the course of 2020, with better Order and Annual Active Consumers growth, on a year-over-year basis.

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We remain committed to reducing our Adjusted EBITDA loss in absolute terms in 2020 compared to 2019.

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Jumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year - Brand SpurJumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year - Brand Spur

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Jumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year - Brand SpurJumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year - Brand Spur

Latest News

Spackman Entertainment Group’s Upcoming Musical Film THE BOX, Starring EXO’s Chanyeol, Scheduled To Be Released In The Spring Of 2021

  • Following the art film STONE SKIPPING, THE BOX is the next film production of the Company's wholly‐owned indirect subsidiary, Studio Take, founded by veteran movie producer, Mr. Song Dae‐chan
  • THE BOX will be EXO's Chanyeol's first lead acting role in a film
  • Directed by Yang Jung Woong, the Executive Producer of the 2018 PyeongChang Winter Olympics opening and closing ceremonies, THE BOX is set to be screened in Korea in the spring of 2021

SINGAPORE - Media OutReach - 3 March 2021 - Spackman Entertainment Group Limited ("Spackman Entertainment Group" or the "Company" and together with its subsidiaries, the "Group"), one of Korea's leading entertainment production groups, wishes to announce that its upcoming musical film THE BOX, produced by the Company's indirect wholly-owned subsidiary, Studio Take Co., Ltd. ("Studio Take"), is set to be released in Korea in the spring of 2021.


Following the art film STONE SKIPPING, THE BOX is the next film production of Studio Take, which was founded by veteran movie producer, Mr. Song Dae‐chan.

THE BOX is about the musical journey of an aspiring singer and a once popular producer.

Directed by Yang Jung Woong, the Executive Producer of the 2018 PyeongChang Winter Olympics opening and closing ceremonies, THE BOX stars EXO's Chanyeol who plays the aspiring singer and Jo Dal Hwan who acts as the once popular producer. This is Chanyeol's first lead role for a Korean commercial film. Jo Dal Hwan is known for his role in SECRET HEALER (2016), TRAFFICKERS (2012) and THE CON ARTISTS (2014).


About Spackman Entertainment Group Limited

Spackman Entertainment Group Limited ("SEGL" or the "Company"), and together with its subsidiaries, (the "Group"), founded in 2011 by Charles Spackman, is one of Korea's leading entertainment production groups. SEGL is primarily engaged in the independent development, production, presentation, and financing of theatrical motion pictures in Korea. According to Variety, Korea was the world's fourth largest box office market in 2019, behind only North America, China and Japan.


The Group also invests into and produces Korean television dramas. In addition to our content business, we also own equity stakes in entertainment-related companies and film funds that can financially and strategically complement our existing core operations. SEGL is listed on the Catalist of the Singapore Exchange Securities Trading Limited under the ticker 40E.

Production Labels

SEGL's wholly-owned Zip Cinema Co., Ltd. ("Zip Cinema") is one of the most recognised film production labels in Korea and has originated and produced some of Korea's most commercially successful theatrical films, consecutively producing 10 profitable movies since 2009 representing an industry leading track record. Recent theatrical releases of Zip Cinema's motion pictures include some of Korea's highest grossing and award-winning films such as CRAZY ROMANCE (2019), DEFAULT (2018), MASTER (2016), THE PRIESTS (2015), COLD EYES (2013), and ALL ABOUT MY WIFE (2012). For more information on Zip Cinema, do visit http://zipcine.com


SEGL also owns Novus Mediacorp Co., Ltd. ("Novus Mediacorp"), an investor, presenter, and/or post-theatrical distributor for a total of 79 films (58 Korean and 21 foreign) including ROSE OF BETRAYAL, THE OUTLAWS and SECRETLY, GREATLY, which was one of the biggest box office hits of 2013 starring Kim Soo-hyun of MY LOVE FROM THE STARS, as well as FRIEND 2: THE GREAT LEGACY. In 2012, Novus Mediacorp was also the post-theatrical rights distributor of ALL ABOUT MY WIFE, a top-grossing romantic comedy produced by Zip Cinema. In 2018, THE OUTLAWS, co-presented by Novus Mediacorp broke the all-time highest Video On Demand ("VOD") sales records in Korea. For more information on Novus Mediacorp, do visit http://novusmediacorp.com.


The Company owns a 100% equity interest in Simplex Films Limited ("Simplex Films") which is an early stage film production firm. The maiden film of Simplex Films, JESTERS: THE GAME CHANGERS (2019), was released in Korea on 21 August 2019. Simplex Films has several line-up of films including A BOLT FROM THE BLUE (working title).


The Company owns a 100% equity interest in Take Pictures Pte. Ltd. ("Take Pictures") which produced STONE SKIPPING (2020) and shall release THE BOX and GUARDIAN (working title) in 2021 tentatively.


The Company owns a 100% equity interest in Greenlight Content Limited ("Greenlight Content") which is mainly involved in the business of investing into dramas and movies, as well as providing consulting services for the production of Korean content. Through the acquisition of Greenlight Content, the Group's first co-produced drama, MY SECRET TERRIUS, starring top Korean star, So Ji Sub, achieved #1 in drama viewership ratings for its time slot and recorded double digits for its highest viewership ratings. Greenlight Content was one of the main investors of MY SECRET TERRIUS.


The Company owns a 20% equity interest in The Makers Studio Co. Ltd., which plans to produce and release four upcoming films, the first of which will be THE ISLAND OF THE GHOST'S WAIL, a comedy horror film.


Our films are theatrically distributed and released in Korea and overseas markets, as well as for subsequent post-theatrical worldwide release in other forms of media, including online streaming, cable TV, broadcast TV, IPTV, video-on-demand, and home video/DVD, etc. We release all of our motion pictures into wide-theatrical exhibition initially in Korea, and then in overseas and ancillary markets.

Talent Representation

The Company holds an effective shareholding interest of 43.88% in Spackman Media Group Limited ("SMGL"). SMGL, a company incorporated in Hong Kong, together with its subsidiaries, is collectively one of the largest entertainment talent agencies in Korea in terms of the number of artists under management, including some of the top names in the Korean entertainment industry. SMGL operates its talent management business through renowned agencies such as MSteam Entertainment Co., Ltd. (Son Ye-jin, Lee Min-jung, Ko Sung-hee), UAA&CO Inc. (Song Hye-kyo, Yoo Ah-in, Park Hyung-sik), Fiftyone K Inc. (So Ji Sub, Ok Taec-yeon), SBD Entertainment Inc. (Son Suk-ku), and Kook Entertainment Co., Ltd. (Kim Sang-kyung, Kim Ji-young). Through these full-service talent agencies in Korea, SMGL represents and guides the professional careers of a leading roster of award-winning actors/actresses in the practice areas of motion pictures, television, commercial endorsements, and branded entertainment. SMGL leverages its unparalleled portfolio of artists as a platform to develop, produce, finance and own the highest quality of entertainment content projects, including theatrical motion pictures, variety shows and TV dramas. This platform also creates and derives opportunities for SMGL to make strategic investments in development stage businesses that can collaborate with SMGL artists. SMGL is an associated company of the Company.


The Company owns a 100% equity interest in Constellation Agency Pte. Ltd. ("Constellation Agency"). Constellation Agency, which owns The P Factory Co., Ltd. ("The P Factory") and Platform Media Group Co., Ltd. ("PMG"), is primarily involved in the business of overseas agency for Korean artists venturing into the overseas market. The P Factory is an innovative marketing solutions provider specializing in event and branded content production. PMG is a talent management agency which represents and manages the careers of major artists in film, television, commercial endorsements and branded entertainment.

Strategic Businesses

The Company owns a 100% equity interest in Frame Pictures Co., Ltd. ("Frame Pictures"). Frame Pictures is a leader in the movie/drama equipment leasing business in Korea. Established in 2014, Frame Pictures has worked with over 25 top directors and provided the camera and lighting equipment for some of Korea's most notable drama and movie projects including ITAEWON CLASS (2020), HOW TO BUY A FRIEND (2020), KIM JI-YOUNG, BORN 1982 (2019), FOUR MEN (2019) and ASADAL CHRONICLES (2019).

We also operate a café-lounge called Upper West, in the Gangnam district of Seoul and own a professional photography studio, noon pictures Co., Ltd.

For more details, do visit http://www.spackmanentertainmentgroup.com/

Jumia reports Q2 2020 results; Operating loss decreased by 44% year-over-year - Brand Spur
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