Jumia expects losses not to exceed $100M this year, per Q3 financials


Jumia delivery motor bikes
Image Credits: Jumia

In the first quarter of 2023, we reported that Jumia recorded its lowest losses in four years. Its adjusted EBITDA and operating losses dropped to $27 million and $30.9 million, respectively. Those numbers represented a 55% and 57% decrease year-over-year, on track to meet the company’s end-of-year target of $100 million to $120 million in adjusted losses.

Surprisingly, Jumia’s Q2 2023 financials show that the e-commerce giant outperformed its first-quarter efforts in this regard. The company’s adjusted EBITDA and operating losses fell 66% to $19.3 million and $23.3 million, respectively; as a result, Jumia has lowered its adjusted loss projection for the whole year, predicting a loss of $90 million to $100 million.

“We are navigating challenging macro conditions with discipline and focus, doubling our efficiency efforts. Compared to the second quarter of 2022, fulfillment and sales and advertising expenses were down 50% and 74%, respectively,” said Jumia CEO Francis Dufay in a statement. “We are also starting to reap the benefits of our actions on overhead costs with G&A excluding share-based compensation decreasing by a third year-over-year, reaching a 4-year low at $17.7 million.”

Jumia reaches lowest losses in four years under new management

In Q4 2022, Jumia embarked on a streamlining effort that reduced its headcount by 20%, affecting 900 roles across 11 markets. In an interview the following quarter, Dufay told TechCrunch that more layoffs could happen throughout the year. The e-commerce giant expects to reduce G&A costs by as much as $28 million by Q4, he said.

Other streamlining efforts have come from Jumia intentionally recalibrating its product and service portfolio in Q4 2022. The company suspended its first-party grocery offering, logistics-as-a-service and food delivery operations in specific key markets where the economics weren’t sustainable. It also reduced the promotional intensity behind several services on the JumiaPay app.

Growth affected by internal changes and macroeconomic conditions

Since the decision, a decline in quarterly active customers, orders and gross merchandise value (GMV) have followed. In Q2 2023, Jumia’s quarterly active customers, orders and GMV declined 28%, 37% and 25% year-over-year to 2.4 million, 6.5 million and $202.3 million, respectively. As a result, total revenue dropped 15% to $48.5 million.

Similarly, other macroeconomic conditions have contributed to the drop in numbers in these three categories. For one thing, high inflation is reducing customers’ purchasing power and retailers’ capacity to obtain products owing to import restrictions. The average inflation level across Jumia’s footprint reached 14.1% across the board, with countries like Ghana, Egypt and Nigeria witnessing record-high inflation and currency devaluations these past few months.

“Building supply is the right thing to do, especially in a tough market and macroeconomic context. People want cheaper products and better deals. And that’s what we’re building on our platform,” Dufay said in an interview with TechCrunch. “As we keep reducing losses, we’re also working on other growth areas that aren’t showing yet, but we’re confident will pay off. We’re seeing positive signs across many countries where we are reaching inflection points in volumes and sales.”

These early signs of success can be seen in markets like Senegal and Ghana, where the electronics and phones categories grew the fastest in GMV in Q2 2023. Jumia pushed into the general merchandise categories (which include phones, electronics and appliances) as it shifted focus from fast-moving consumer goods (FMCG) and JumiaPay services in the last quarter of 2022.

Focusing on electronics and big-ticket items

These are big-ticket items (average item value of $42) compared to FMCG products ($7). In addition to increasing Jumia’s average order value to around $31, these general merchandise items have also provided Jumia with an avenue of testing buy now, pay later (BNPL) services in Egypt via JumiaPay. The 10-year-old e-commerce platform has partnered with over 10 banks and fintech players to scale this effort.

“Many markets are already well structured, and consumers have a big demand to buy and pay in installments. It’s complex because we need to work with specialized consumer finance providers,” commented Dufay on the call. “There’s a pretty good BNPL system in Egypt and in these countries where there’s a good ecosystem for consumer finance, we’re building the tool to integrate them into the platform and give consumers the right options.”

Jumia laid off 20% of staff in Q4 2022 amid work to reduce losses by half this year

JumiaPay saw its transactions drop 38% to 2.1 million and total payment volume (TPV) decline 23.3% to $56.9 million. To improve these numbers, JumiaPay, which is an enabler for the platform’s commerce and food delivery businesses, is in the process of expanding the range of payment methods that its users can link to and is also deploying “JumiaPay on delivery” in Morocco, Ghana and Uganda after a successful rollout in Kenya and Nigeria in Q1 2023. Jumia noted that in Kenya, 50% of post-paid transactions in Q2 2023 were completed using JumiaPay, compared to 7% in Q1.

In related news, Jumia says it’s also working on a white-label checkout solution for third-party merchants that will allow them to accept payments on their platforms under their brand name. Meanwhile, Jumia finished the quarter with a liquidity position of $166.3 million, comprising $61 million of cash and cash equivalents and $105.3 million of term deposits and other financial assets.

Jumia to cut products and overhead as new management chases profits

More TechCrunch

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

20 hours ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

22 hours ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo

Sony Music Group has sent letters to more than 700 tech companies and music streaming services to warn them not to use its music to train AI without explicit permission.…

Sony Music warns tech companies over ‘unauthorized’ use of its content to train AI

Winston Chi, Butter’s founder and CEO, told TechCrunch that “most parties, including our investors and us, are making money” from the exit.

GrubMarket buys Butter to give its food distribution tech an AI boost

The investor lawsuit is related to Bolt securing a $30 million personal loan to Ryan Breslow, which was later defaulted on.

Bolt founder Ryan Breslow wants to settle an investor lawsuit by returning $37 million worth of shares

Meta, the parent company of Facebook, launched an enterprise version of the prominent social network in 2015. It always seemed like a stretch for a company built on a consumer…

With the end of Workplace, it’s fair to wonder if Meta was ever serious about the enterprise

X, formerly Twitter, turned TweetDeck into X Pro and pushed it behind a paywall. But there is a new column-based social media tool in town, and it’s from Instagram Threads.…

Meta Threads is testing pinned columns on the web, similar to the old TweetDeck

As part of 2024’s Accessibility Awareness Day, Google is showing off some updates to Android that should be useful to folks with mobility or vision impairments. Project Gameface allows gamers…

Google expands hands-free and eyes-free interfaces on Android