E-commerce giant Jumia Technologies AG has reported a $20.1 million operating loss for the third quarter of 2024, marking a 10% increase from the same period last year.
This year-on-year rise in losses follows a revenue decline, with the company recording $36.4 million in revenue, down 13% from Q3 2023.
The company’s financial challenges are largely attributed to currency depreciation in its core markets, particularly in Nigeria and Egypt.
Jumia’s Gross Merchandise Value (GMV) also fell slightly, reaching $162.9 million, down by 1% from last year.
However, Jumia managed a 29% increase in GMV on a constant currency basis, showing some resilience in operational markets despite economic hurdles.
“We are encouraged to see continued resilience in our usage and business fundamentals despite the significant currency depreciation headwinds in Nigeria and Egypt,” said Jumia’s CEO, Francis Dufay.
Dufay explained that Jumia had taken several steps to strengthen its operations, including enhancing logistics and consolidating warehouse spaces.
“While these changes negatively impacted operations and expenses in the third quarter, we believe that these efforts position us well to scale and drive profitable growth as we expand our footprint beyond the major cities,” he added.
Despite these financial setbacks, Jumia recorded a slight increase in its active customer base, which rose by 1% from last year.
Quarterly orders also saw a 4% increase, suggesting steady user engagement amid the company’s operational changes.
The company’s liquidity position improved significantly, with a reported $164.6 million in available resources, boosted by its August 2024 At-the-Market (ATM) offering.
This is a notable improvement from Q3 2023, when the company experienced a $19 million decline in liquidity.
Dufay emphasized the importance of Jumia’s financial strategy, noting that the additional resources would help the company maintain growth while keeping expenses under control.
In a strategic shift, Jumia also recently exited the South African and Tunisian markets to focus on higher-growth regions.
According to Dufay, this decision came after an “extensive review of the company’s footprint” and is aimed at improving efficiencies within Jumia’s logistics and warehousing network.
“While these updates will have a near-term impact on our operations and financial performance, we believe that our efforts position the business well to scale on our path to profitability,” Dufay said.
Jumia’s exit from South Africa and Tunisia aligns with its plan to prioritize resources for markets like Nigeria, where growth potential is stronger.
In a statement, Jumia explained that both countries represented only a small portion of the company’s overall business, contributing just 3.5% and 2.7% of total orders, respectively, and 4.5% and 3.0% of GMV for 2023 and the first half of 2024.
The shift away from less profitable regions is part of Jumia’s broader effort to reduce operational costs and focus on profitability.
After experiencing a 64% decrease in operating loss for 2023, Jumia has continued to streamline its business to achieve growth while managing its financial losses.
Dufay, who has led Jumia’s recent cost-cutting strategies, expressed optimism about the company’s path forward.
“Our recent quarters have shown clear steps towards Jumia’s strategic focus, positioning us for topline growth and improved cash utilization for 2024,” he said.
In 2022, as part of its restructuring efforts, Jumia reduced its workforce by 20%, resulting in the layoff of 900 employees.
The company also discontinued its food delivery service, Jumia Food, which it described as unprofitable.
This decision marked a significant shift for Jumia, which had previously invested heavily in expanding its food service.
