Jumia Technologies Reports Mixed Growth and Challenges

Jumia Technologies ((JMIA)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Jumia Technologies painted a picture of both progress and ongoing challenges. The sentiment expressed during the call was cautiously optimistic, highlighting significant growth in physical goods orders and increased customer engagement. However, the company also faced hurdles such as a decline in revenue, negative adjusted EBITDA, and an increased cash burn, indicating that while strategic initiatives show promise, financial difficulties remain a significant concern.

Physical Goods Order Growth

Jumia Technologies reported an 18% year-over-year growth in physical goods orders, underscoring a strong demand on their platform. This increase suggests that customer interest in their product offerings remains robust, contributing positively to the company’s performance metrics.

Increased Customer Engagement

The platform’s ability to attract and retain customers was evident with an 8% increase in quarterly active customers. This growth highlights Jumia’s strength and value proposition in the market, indicating successful engagement strategies.

Efficient Marketing Spend

Jumia has achieved cost efficiencies in its marketing strategies, reducing its marketing spend from $6.2 million in Q4 ’23 to $4.8 million in Q4 ’24. This reduction reflects the company’s ability to optimize its marketing expenses while maintaining customer acquisition and retention.

Black Friday Success

The Black Friday sales event emerged as the largest of the year for Jumia, showcasing strong performance through major brand partnerships and significant international sourcing. This success highlights the company’s capability to leverage key sales events effectively.

Operational Efficiency Improvements

Improvements in operational efficiency were demonstrated by an increase in the Net Promoter Score by 17 points year-over-year, along with a 325 basis point rise in the 90-day repurchase rate. These metrics reflect enhanced customer loyalty and satisfaction.

Upcountry Expansion

Expanding beyond main urban centers proved fruitful, with upcountry orders accounting for 56% of Q4 ’24, up from 49% in Q4 ’23. This growth underscores the success of Jumia’s strategy to reach new markets and customer segments.

Revenue Decline

Despite positive growth in certain areas, Jumia faced a 23% year-over-year decline in USD revenue, primarily due to reduced corporate sales in Egypt. This decline is a critical point of concern for the company’s financial health.

Negative Adjusted EBITDA

Jumia reported a negative adjusted EBITDA of $13.7 million, a significant increase from the negative $0.6 million in Q4 ’23. This figure highlights the ongoing operational challenges facing the company.

GMV Decline

The Gross Merchandise Volume (GMV) saw a 12% decline in USD, although it grew 13% year-over-year in constant currency. This discrepancy was influenced by currency devaluations and reduced corporate sales.

Increased Cash Burn

The company’s cash burn rose to $30.6 million compared to $26.8 million in Q4 ’23, driven by factors such as termination costs and increased working capital. This increase in cash burn is a significant financial challenge.

Loss Before Income Tax

Jumia’s loss before income tax from continuing operations increased to $17.6 million compared to $17.1 million in Q4 ’23, further emphasizing the company’s financial struggles.

Forward-Looking Guidance

Looking ahead, Jumia provided guidance for 2025 with expectations of physical goods orders growing between 15% and 20% year-over-year. The company projects the GMV to reach between $795 million and $830 million, marking an increase of 10% to 15%, excluding foreign exchange impacts. Jumia also forecasts a reduction in loss before income tax to a range of negative $65 million to negative $70 million, indicating a substantial year-over-year decrease. The company’s strategy will focus on expanding product assortment, enhancing operational efficiencies, and leveraging its logistics network and international sourcing.

In summary, Jumia Technologies’ earnings call revealed a mixed but promising outlook. While the company is experiencing significant growth in specific areas like physical goods orders and customer engagement, it continues to grapple with financial challenges such as revenue decline and increased cash burn. The forward-looking guidance suggests a strategic focus on growth and efficiency improvements, aiming to address the financial hurdles ahead.