E-commerce giant Jumia is launching a secondary share offering to raise over $100 million in capital, aiming to reignite stalled user growth and expand its product diversification strategy following a period of financial volatility.
Orders Rise Amid Revenue Headwinds
The company reported a 7% year-over-year increase in orders, reaching 4.8 million. Jumia attributes this uptick to a broader product assortment, a strategy it plans to aggressively scale using the proceeds from the upcoming share offering.
Despite the growth in order volume, the company faced a decline in Gross Merchandise Value (GMV) and revenue, which fell 5% and 17% to $170.1 million and $36.5 million, respectively. Since the current management took the helm in Q4 2022, Jumia’s reports have consistently highlighted a disparity between dollar-denominated results and constant currency performance, the latter of which shows a more positive trajectory. On a constant currency basis, Jumia’s GMV surged 35.0%, while revenue grew 15%.
Currency Devaluation Impacts Key Markets
CEO Francis Dufay acknowledged the pressure placed on the company’s financials by the devaluation of currencies in Egypt and Nigeria—Jumia’s two largest markets—at the end of Q1. “The devaluation had a significant impact on our revenues quarter over quarter,” Dufay stated. “However, we have seen some signs of stabilization and a sharp reduction of the spread between the official and parallel market rates. More importantly, our ability to drive GMV growth in constant currency illustrates that our value proposition is working.”
Refining the Path to Profitability
Jumia continues to narrow its losses, with the adjusted EBITDA loss shrinking 10% to $16.3 million. Operating loss also saw an 8% year-over-year reduction to $20.2 million, fueled primarily by ongoing cost-saving initiatives across the organization.
While adjusted EBITDA has historically been a primary metric, Dufay emphasized that the 12-year-old platform is shifting its focus toward “loss before income tax from continuing operations.” This metric provides a more holistic view of the business by incorporating finance costs, including foreign exchange impacts and cash repatriation expenses. This figure stood at $22.5 million, marking a 27% year-over-year improvement.
“We’ve emphasized this KPI more over the past quarters due to the currency volatility and the associated costs it creates. Reporting the full picture is essential for companies exposed to such volatility,” Dufay explained. He drew a parallel to Mercado Libre in Latin America, which similarly prioritizes loss before income tax to account for the impact of currency fluctuations in markets like Argentina, ensuring a more transparent financial overview for investors.
