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By Merit Ibe
Jumia, the leading e-commerce platform in Africa, has announced that its operating loss decreased by 41percent in the fourth-quarter of 2022.
The company disclosed in its report that its fourth quarter operating loss decreased by 41 per cent year-over-year, reaching $49.8 million.
“Adjusted EBITDA loss also decreased by 30 per cent year-over-year, reaching $49.2 million. These are significant improvements that reflect Jumia’s commitment to achieving profitability.”
According to the company, the figures are impressive considering the global economic realities. With growing monetisation and reduced losses, the company is making significant progress towards profitability. In fact, the FY2023 Adjusted EBITDA loss is expected to decrease by up to 50 per cent compared to FY2022. This is excellent news for the company and its investors and it is a testament to the strength of Jumia’s new strategy.
“Jumia has been on a journey of transformation over the past few months. The company has been working to streamline its operations, improve its financial performance, and position itself for sustainable growth in the long term. One of the key elements of Jumia’s new strategy is its focus on enhanced cost discipline. The company is working to reduce costs across its operations and to optimise its organisational structure to drive meaningful savings. This strategy is already bearing fruit. In the fourth quarter of 2022, Jumia’s operating loss decreased by 41 per cent year-over-year, reaching $49.8 million. Adjusted EBITDA loss also decreased by 30 per cent year-over-year, reaching $49.2 million. These are significant improvements that reflect Jumia’s commitment to achieving profitability.
“One of the ways Jumia is achieving cost savings is through a significant reduction in headcount. In the fourth quarter of 2022, the company terminated over 900 positions, representing a 20 per cent reduction in headcount…”
This streamlining effort has resulted in a leaner, more effective organizational structure that is fully committed to executing the company’s new strategy.
“Another key element of Jumia’s new strategy is its focus on accelerating monetization. Despite the challenging macroeconomic environment in some of its markets, Jumia has posted robust Gross Profit growth, which increased by 22 per cent year-over-year. Marketplace revenue also reached an all-time high of $41.2 million. This growth is a result of Jumia’s proactive measures to support Commissions and Advertising revenue, which both reached record highs during the quarter.
“Jumia’s new leadership team, led by CEO Francis Dufay, has been instrumental in driving the company’s transformation. Dufay was appointed as Acting CEO in 2022 and has now been officially appointed CEO by Jumia’s Supervisory Board.
“The Jumia leadership team has taken a number of decisive actions to set the business on a path to profitability. One of their key priorities has been to significantly improve resource allocation, focusing on core areas with attractive returns on investments and clear ecosystem benefits. In the third quarter of 2022, Jumia announced its intention to cease a number of activities that did not meet these criteria. These business exits have now largely been completed, including the discontinuation of Jumia Prime and the scaling back of first-party grocery in Algeria, Ghana, Senegal, and Tunisia. These moves have helped to support Jumia’s unit economics and reduce business complexities.
“Jumia’s leadership team is also working to drive efficiencies across the company’s cost structure. They are streamlining their organizational structure and reducing costs to drive meaningful savings.
“ For example, the headcount reductions, mostly in the Dubai office implemented in the fourth quarter of 2022 are expected to save the company over 30 per cent in monthly staff costs starting from March 2023, as compared to the October 2022 staff cost baseline.”
