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Jumia stock rises as company's e-commerce business turns around in Q2 TechCrunch

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African e-commerce giant Jumia Second quarter financial results todayFollowing this morning’s financial report, Jumia’s stock price surged, rising more than 15% to $8.12 a share in early trading, rising slightly to $8.30 a share at the time of issuance.

What made the stock so high? Jumia showed growth across most performance metrics in the second quarter. This includes higher than expected earnings.

The company’s performance metrics across active users, orders, GMV and revenue are up double digits compared to the same quarter last year. Active consumers reached 3.4 million in Q2 2022, up 25% year-on-year. Orders reached his 10.3 million, up 35% year-on-year. GMV climbed 21% to $271.1 million over the same timeframe, while earnings rose 42% to $57.3 million. (In addition to prior year performance, the same metrics are up compared to Q1 2022 metrics.)

Jumia also improved in both gross profit and market revenue, with those metrics up 14% and 17% year-over-year to $30.4 million and $30.7 million, respectively. Each recorded the fastest growth rate in his five quarters.

During the earnings call, Jumia co-CEO Sacha Poignonnec said the company’s performance was on track despite “volatile macro conditions that put increasing pressure on consumer spending and access to supply for merchants.” said the achievement was achieved. “It has also been driven by a very strong discipline on our marketing investment from our side. That our focus on relevant commodities, competitive pricing and consumer experience is paying off. is clear.”

The second quarter of 2022 was a quarter without any particular change in strategy, Poignonnec told TechCrunch by phone. Executives say Jumia’s results show it’s on track to profitability with more consumers placing more orders, leading to higher revenue and disciplined cost control .

“We will double that to demonstrate a meaningful step towards profitability, which remains a central objective of our strategy,” said the co-CEO.

What about the profit side of the company? Jumia’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) loss increased compared to the previous quarter (+37.4%) and Q1 2022. The company ended the quarter with an adjusted EBITDA loss of $57.2 million. In the first half of this year, that figure will be $112.5 million.

Poignonnec said the company plans to cut spending in the second half of 2022, cutting its adjusted EBITDA loss from $87 million to $107 million (12% to 29% lower than recorded in the first half of 2021). I said yes. If achieved, Jumia will be able to meet expectations that his adjusted losses this year will not exceed $220 million.

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Jumia’s Marketplace KPIs detail the good news for the company. In terms of category trends, everyday categories (including fashion, beauty, fast-moving consumer goods, home goods, food delivery, and JumiaPay) accounted for 66% of the company’s GMV, while phones and electronics accounted for 34%. occupies. The ratio was between 57% and 43% as of Q2 2020. The metric has changed significantly thanks to Jumia’s decision in Q2 2021 to push for frequent purchases of FCMG instead of expensive electronics and appliances.

Similarly, Jumia improved its quarterly purchase frequency, reaching a record 3.1 orders per user in Q2 2022 compared to 2.8 in Q2 2021. “People are facing inflation and they are facing rising prices. And certainly the fact that we offer these categories makes us attractive and relevant to consumers. Commodity positioning is a big driver for us, and what’s driving growth is consumers coming back more often and making repeat purchases,” said Poignonnec. However, it should be noted that the average order value on the platform fell from $37.2 to $26.3 during this period.

JumiaPay also posted impressive numbers in Q2, with TPV up 31% year-on-year to $74.2 million and transactions reaching 3.4 million in Q2 2022, up 25% year-on-year Did. This platform has not yet used a Payment Service Solution Provider (“PSSP”) license granted by the Central Bank of Nigeria, Nigeria’s apex bank, to process payments for third-party companies, for use in Nigeria . Poignonnec said it’s only a matter of time before the service launches in Nigeria. However, JumiaPay has started piloting in Egypt, where the platform has a similar license.

In related news, Jumia grew its logistics division by 103% in the volume of packages processed to 2.6 million packages in Q2 2022, compared to 1.3 million a year ago. But that’s less than the number he completed 3.5 million parcel deliveries last quarter.

Jumia closed Q2 2021 with a liquidity position of $637.7 million. A year later, in Q2 2022, he nearly halved to $350.8 million. $53.8 million in cash and $297 million in cash equivalents.