Jumia Reports Fourth Quarter and Full Year 2023 Results

Improvement in growth trends and significant reduction in operating loss, validating strategic choices

Forecasting to return to growth in 2024 and to further reduce cash utilization

LAGOS, NIGERIA / ACCESSWIRE / February 15, 2024 /- Jumia Technologies AG (NYSE:JMIA) ("Jumia" or the "Company") announced today its financial results for the fourth quarter ended December 31, 2023.

Results highlights for the fourth quarter 2023

• Revenue of $59 million, down 2% year-over-year, and up 28% in constant currency.
• GMV of $233 million, down 8% year-over-year, and up 21% in constant currency.
• Operating loss of $4 million compared to $45 million in the fourth quarter of 2022, down90% year-over-year, and down 101% in constant currency.
• Adjusted EBITDA loss of $1 million compared to a loss of $44 million in the fourth quarter of 2022, down 99% year-over-year, and down 111% in constant currency.
• Loss before Income tax from continuing operations of $17 million compared to $45 million in the fourth quarter of 2022, down 62% year-over-year, and down 66% in constant currency.
• Liquidity position of $121 million marking a decrease of $27 million in the fourth quarter of 2023 compared to a decrease of $57 million in the fourth quarter of 2022.
• Net cash flows used in operating activities $10 million compared to $53 million in the fourth quarter of 2022, down 80% year-over-year.

Results highlights for the full year 2023

• Revenue of $186 million, down 8% year-over-year, and up 20% in constant currency.
• GMV of $750 million, down20% year-over-year, and up 1% in constant currency.
• Operating loss of $73 million compared to $202 million in 2022, down 64% year-over-year, and down 64% in constant currency.
• Adjusted EBITDA loss of $58 million compared to a loss of $182 million in 2022, down68% year-over-year, and down 70% in constant currency.
• Loss before Income tax from continuing operations of $99 million compared to $206 million in 2022, down 52% year-over-year, and down47% in constant currency.
• Liquidity position of $121 million marking a decrease of $107 million in 2023 compared to a decrease of $285 million in 2022.
• Net cash flows used in operating activities $74 million compared to $240 million in 2022, down 69% year-over-year.

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(1) Restated 2022 figures to reflect the impact of i) the restatement of direct costs of providing logistic services to non-sellers at Jumia from ‘Fulfillment Expense' to ‘Cost of Revenue', ii) the reclassification of payment processing costs from ‘Cost of Revenue' to ‘Fulfillment Expense‘ and iii) the reclassification of payment processing costs from ‘General and Administrative Expense' to ‘Fulfillment Expense'. In the appendix, we have provided restated quarterly 2022 figures for ‘Cost of Revenue', ‘Gross Profit', ‘Fulfillment Expense' and ‘G&A Expense, excluding SBC'. Further information on our accounting policy changes can be found in our Annual Report on Form 20-F for 2022.

(2) All periods adjusted for exclusion of food delivery operations in 2023.

Dear Shareholders,

2023 has been a transformative year for Jumia.

Upheavals on the global stage have had a significant impact on African economies and its people. High inflation rates and currency depreciation have led to a scarcity of supply and have adversely impacted the purchasing power of customers. These have been challenging times for tech and retail businesses across the continent.

Against that unsettling backdrop, we embarked on a fundamental transformation of our company in order to rapidly improve our financials and establish a stronger foundation for our e-commerce business. This transformation obviously came with a painful short-term impact, as we discontinued activities with poor growth prospects, stopped expensive marketing practices, and radically streamlined our organization.

These bold, swift and early decisions have paid off yet we still have some way to go . We have closed 2023 in a much stronger position, looking at both financials and business fundamentals. Our Adjusted EBITDA loss for the full year of 2023 decreased to $58.2 million (2022: $182.1 million), steadily improving quarter after quarter. Our Loss before tax from continuing operations for the full year of 2023 decreased to $98.6 million (2022: $206.2 million). Most importantly, we saw a reduction in the pace of the decrease of our liquidity from $285.4 million in 2022 to $106.9 million in 2023, leaving us with a liquidity position of $120.6 million at the end of 2023.

Although GMV for the full year of 2023 declined by 20% and Orders by 22% year-over-year, we have undergone a deep transformation of the company. We believe that this transformation will enable us to achieve growth again during 2024, with improved unit economics and lower cash utilization. We believe that we can meet these goals in 2024, thanks to the lessons we learned in 2023, particularly in the following two areas:

1. Efficiency and better unit economics do not come at the expense of future growth.

We believe that Jumia is now a much leaner, more agile and more focused company. We have reevaluated our portfolio and made tough decisions regarding business activities that did not bring the right value. Recently, we discontinued our food delivery operations as we concluded that the growth prospects did not justify the complexity it created. We believe our focus and resources will be better invested in our physical goods business, where we see more opportunity for revenue growth and higher margins.

We have achieved savings across the whole organization, by shrinking General and Administrative Expense as well as significantly improving operational efficiency. We believe that these changes are enabling better output and laying the foundations for growth in 2024. Smaller and more agile teams can concentrate effectively on key priorities and are benefiting from strategic alignment across all countries and functions. Similarly, we believe that leaner logistics operations will enable us to enter new cities without compromising profitability.

We experienced positive year-over-year growth in GMV of physical goods in five of our eleven operating countries over two consecutive quarters of 2023, while significantly improving unit economics. Looking at all countries, the year-over-year GMV trajectory is improving quarter after quarter, reaching a decline of 8% in the fourth quarter of 2023 (growth of 21% on a constant currency basis), compared to a decline of 23% in the third quarter of 2023 (growth of 1% on a constant currency basis). We expect to be back to GMV and Orders growth, in 2024.

2. We have proved that we can grow without disproportionate marketing spend.

Based on our experience across eleven operating countries for over 10 years, at Jumia, we believe that there is a lot of demand from African customers. However, this demand remains poorly served due to inconsistent supply and prices across different countries and cities. Our mission at Jumia is to bridge this gap between brands and suppliers on one hand and customers on the other hand. We are committed to building better supply in our priority categories (Phones, Electronics, Home & Living, Fashion and Beauty), by working closely with local sellers, global brands, and international sellers.

Along with our strategic focus to improve supply in priority categories, we have deliberately reduced our Sales and Advertising expense by 68% in the full year of 2023 (and 63% in the fourth quarter of 2023) and cut customer incentives such as vouchers and free shipping. This strategy has come across as quite unusual, as many took for granted that growth in the e-commerce business is more or less a function of marketing costs.

After four consecutive quarters of consistently low marketing expenditures, we believe that we have proven our case. In addition to GMV growth in selected countries, we have successfully run large promotional events, such as Black Friday, with very lean marketing budgets (as reflected in the fourth quarter of 2023 figures disclosed below).

Looking at 2024, we are fully committed to bringing our business back to growth, while further reducing losses.

We will continue to focus on our growth priorities in 2024, which are consistent with our efforts in 2023. In particular, we believe that there is still significant untapped potential for growth in all of our priority categories over the next several years. By executing consistently over time, we believe that we will be able to unlock a substantial amount of value.

We look at the recent quarters as clear steps towards our strategic focus, positioning us for topline growth and improved cash utilization for 2024. With the macro situation in several of our African markets starting to recover, we are confident that Jumia has never been in a better position to capture the unique opportunity of e-commerce in Africa.

On a more personal note, as I look back at this first year as CEO of Jumia, I am particularly proud of our company's resilience and its ability to change and adapt fast. I am grateful for what our employees have achieved within this short timeframe, in a challenging context. More than ever, we are committed to provide the best service possible to our customers and sellers, and build a successful business across the continent.

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