Despite economic headwinds, e-commerce platform Jumia Technologies AG has announced an 8% year-over-year drop in operating loss to $20.2 million.
Jumia provided an explanation of the effects of the unstable economic environment on its business operations in a statement accessed by BrandSpur local news brand. These effects included a drop in revenue and a marginal drop in gross merchandise value.
It reported that in the second quarter of 2024, its revenue dropped by 17% to $36.5 million. On a constant currency basis, nevertheless, revenue went up 15%.
The online retailer explained the numbers by pointing to strong underlying performance despite currency depreciations in important areas. The business recorded a 35% gain in constant currency for Jumia’s gross merchandise value, despite a 5% decline to $170.1 million.
The company stated that by effectively adapting and focussing on its core competencies, like improving customer interaction and product offers, its GMV demonstrated effectiveness.
Jumia reported that its strategic cost control measures produced noteworthy outcomes, such as an 8% year-over-year decline in operating loss to $20.2 million, a 10% fall in adjusted EBITDA loss to $16.3 million, and a 7% reduction in cash burn to $8.7 million.
According to Jumia: “This efficiency was partly achieved through a 19 percent reduction in marketing expenses, with a focus on high-return channels like CRM, SEO, and targeted offline initiatives.”
Jumia disclosed its initiatives to improve customer value and experience have resulted in a 7% year-over-year increase in orders and a 31% increase in JumiaPay transactions, which have been fuelled by strategic cashback promotions and increased JumiaPay on delivery penetration. To support its asset-light business strategy, the company opened new facilities in Nigeria and Morocco, therefore expanding its logistics network.
The company, meanwhile, reported a 7% fall in its total payment volume and GMV as a result of regional currency devaluations. It saw that having 67% of its cash in US dollars helped it avoid some currency risks and provided a safety net against the currency decline.
Jumia announced that, among other things, it had terminated its business arrangement with Mastercard Asia/Pacific to investigate more expansive collaborations with alternative payment service providers to fortify JumiaPay.
Continuing, the company reported that its strategic emphasis boosted the 90-day repurchase rate for new customers by 262 basis points to 36% and increased quarterly active customers by 6% from quarter to quarter.
With plans to further improve cash efficiency and aim for lower cash utilization than in FY 2023, Jumia reaffirmed its commitment to cutting losses and moving towards profitability.
Jumia stated that the inclusion of new Buy Now Pay Later agreements in Nigeria demonstrated its intention to improve the financial services it provides and increase the accessibility of e-commerce for its customers.
According to the statement: “These initiatives, combined with disciplined financial management, position Jumia for continued growth.”
