Jumia Technologies Reports Strong Growth Amid Challenges

Jumia Technologies ((JMIA)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Jumia Technologies painted a picture of robust growth tempered by ongoing challenges. The sentiment during the call was largely positive, with significant strides noted in physical goods GMV, revenue, and operational efficiencies. However, the company continues to grapple with declining gross profit margins and persistent pre-tax losses.

Strong Growth in Physical Goods GMV

Jumia reported a remarkable 26% year-over-year growth in physical goods GMV, which climbs to 37% when excluding corporate sales. This growth is attributed to strong consumer demand and an increase in order volumes, underscoring the company’s successful market penetration and customer engagement strategies.

Revenue Increase

The company achieved a 25% year-over-year increase in revenue, reaching $45.6 million. This uptick is driven by robust consumer demand coupled with effective execution of strategic initiatives, marking a positive trend in Jumia’s financial performance.

Improved Fulfillment Costs

Jumia’s logistics network efficiencies are evident in the 22% year-over-year reduction in fulfillment cost per order, now at $1.86. This improvement highlights the company’s focus on optimizing its operations to enhance profitability.

Significant Growth in Ghana

Ghana emerged as a standout performer, with physical goods orders surging by 94% and GMV increasing by 157% year-over-year. This growth reflects Jumia’s successful market strategies and expansion efforts in the region.

International Seller Partnerships

The company reported a 52% increase in items sourced from international sellers, totaling 3.4 million. This expansion enhances Jumia’s product selection and competitive pricing, strengthening its market position.

Expansion into Secondary Cities

Jumia’s strategic expansion into secondary cities is paying off, with orders from these regions now representing 60% of total volumes, up from 54% last year. This move unlocks new growth opportunities beyond major urban centers.

Gross Profit Margin Decline

Despite operational successes, Jumia’s gross profit margin declined to 12% from 14% in Q3 2024. This drop is primarily due to reduced corporate sales in Egypt, highlighting areas for potential improvement.

Loss Before Income Tax

Jumia’s loss before income tax was $17.7 million, a slight 1% decrease year-over-year. This figure underscores the ongoing financial challenges the company faces, despite operational improvements.

Decline in Marketing and Advertising Revenue

Marketing and advertising revenue fell by 24% year-over-year to $1.3 million, indicating reduced spending from large sellers. This decline suggests a need for Jumia to reassess its advertising strategies to boost this revenue stream.

Forward-Looking Guidance

Looking ahead, Jumia is optimistic about its growth trajectory, with a 22% year-over-year increase in quarterly active customers and improved customer loyalty. The company remains committed to achieving full-year profitability by 2027, supported by reduced fulfillment costs and improved adjusted EBITDA loss. Expansion into secondary cities and strengthening international seller partnerships, particularly with Chinese suppliers, are expected to drive sustained growth.

In summary, Jumia Technologies’ earnings call reflects a company on a growth path, with significant achievements in GMV and revenue. However, challenges remain, particularly in profit margins and pre-tax losses. The company’s strategic focus on operational efficiencies and market expansion provides a solid foundation for future growth, with a clear goal of achieving profitability by 2027.