icon
icon
icon
icon
Upgrade
icon

Jumia Technologies (JMIA) 7 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 8:20 pm ET
2min read

In Jumia's recent earnings call, the e-commerce giant provided a comprehensive update on its performance for the third quarter of 2024. The call, led by CEO Francis Dufay and Executive Vice President of Finance and Operations, Antoine Maillet-Mezeray, outlined key trends, strategic initiatives, and financial highlights, offering valuable insights into the company's trajectory and future outlook.

Focus on Fundamentals and Strategic Exits

Jumia reported a mixed performance for the third quarter, with a focus on strengthening its underlying business fundamentals. The company highlighted significant improvements in its logistics network and the consolidation of several warehouses into larger, tech-enabled locations. While these changes caused temporary disruptions, Jumia expressed confidence in their long-term benefits, positioning the company for scalable growth.

Despite the challenges, Jumia reported a 5% increase in physical goods orders, illustrating its success in improving supply and overall value proposition. However, the company experienced softness in gross merchandise volume (GMV) due to currency devaluations and flat JumiaPay orders. Nonetheless, Jumia's quarterly active customers grew year-over-year for the first time since 2022, reaching 2 million, underscoring the company's efforts to attract and retain high-quality customers.

Jumia also announced its strategic exit from South Africa and Tunisia, citing unique market dynamics and a focus on markets with greater growth potential. The company expects to incur costs associated with these exits but remains confident that this strategic realignment will not impact its near or medium-term growth prospects.

Investing in Technology and Customer Value Proposition

Jumia's strategic investments in technology have been a cornerstone of its growth strategy. The company is leveraging AI and cutting-edge tools to enhance efficiency across its platform, focusing on strengthening platform security, improving marketing tools, and optimizing warehouse and order management systems. Jumia believes these efforts will drive greater efficiency, enabling the delivery of higher quality service to both vendors and customers while managing costs effectively.

The company also plans to diversify its marketing mix, leveraging local channels like radio, local influencers, and print, while expanding its CRM and SEO marketing channels. This diversification is a key part of Jumia's growth strategy, enabling it to become more relevant to local consumers and drive more efficient consumer acquisition.

Financial Performance and Future Outlook

Financially, Jumia reported a $36.4 million revenue, down 13% year-over-year but up 9% on a constant currency basis. The company's focus on reducing cash utilization and increasing orders and GMV is expected to drive growth in 2024, excluding the potential impact of foreign exchange. Jumia's annual Black Friday sale, which kicked off on November 1st, is seen as a pivotal event for driving nationwide e-commerce adoption and capitalizing on the holiday shopping season.

A Focus on Continuous Improvement

Jumia's executives expressed confidence in the company's future, citing its disciplined approach to capital allocation and strategic growth initiatives. Despite the challenges faced in the third quarter, Jumia remains optimistic about its path to profitability, underscoring its commitment to focusing on Africa and the African e-commerce market, improving cash efficiency, and building a strong customer value proposition.

In conclusion, Jumia's third-quarter earnings call provided a comprehensive overview of the company's performance, strategic initiatives, and future outlook. Despite facing challenges, Jumia remains focused on its long-term growth trajectory, leveraging its investments in technology, customer value proposition, and strategic exits to position itself for sustainable success.

Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.